JSK INDUSTRIES PRIVATE LIMITED ,MUMBAI vs. DCIT CC-8(1), MUMBAI, MUMBAI

Per Rajesh Kumar, Accountant Member:

The above titled appeals and cross appeals by different assessees as well as by the Revenue have been preferred against the different orders of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 & 2016-17. All these appeals filed by the assessee as well as by the revenue are being decided together as all these appeals relate to same group and the issues involved are common and also for the sake of brevity. First we shall take appeal of the assesse for A.Y. 2010-11. ITA No. 5891/Mum2019 A.Y 2010-11 2. The grounds raised by the assessee are as under:

4 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors “1. The Ld. CIT(A) has erred in law and in facts in confirming the action of the Assessing Officer in reopening the assessment u/s. 147 of the Act which is invalid and bad in law. 2. The Ld. CIT(A) has erred in law and in facts in making enhancement of income without complying with the mandate of s. 251 of the Act:

(a) The Ld. CIT(A) has erred in considering the amount of share capital received from certain parties as alleged unexplained cash credits even though the same were not added by the Assessing Officer while passing the assessment order and making the addition u/s. 68 of the Act. (b) The Ld. CIT(A) has erred in not issuing show-cause notice/granting opportunity of hearing to the appellant before taking into account an amount of share capital received by the appellant for the purpose of adjudication u/s. 68 of the Act. (c) The Ld. CIT(A) has erred in carrying out enhancement of income by an amount of Rs.4,13,94,710/- (Rs.21,27,43,384 - Rs.17,13,48,674-)

Sr. Name of the entity Loan Amount Share Capital No. (Rs.) Rs.

TOTAL 15,57,16,753 7,82,20,400

5 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 3. In ground no.1, the assessee has challenged the order of ld CIT(A) upholding the re-opening of assessment u/s 147 of the Act by the AO which is invalid and bad in law on the ground that the AO wrongly re-opened the assessment by recording reasons on incorrect facts without any tangible materials and without application of mind etc.

6 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors by the assessment order, the assessee preferred an appeal before ld CIT(A).

8.1 I have noted that a search & seizure action u/s. 132 of the Act was conducted on 25.10.2016 on the JSK Group. It was a categorical finding of the search operation that the parties which have given unsecured loans to the Appellant Company are penny stock companies, which doesn't have any sound financials and further, they are owned by the Kolkata based operators. Further, the search operation have revealed that the lending companies doesn't have any substantial business operation and they also lack requisite creditworthiness to give hefty loans to the Appellant Company.

8.2 The search operation and the enquiries conducted by the Department also established that the entities providing loan existed only on paper. The address given by such companies is only for postal correspondence and the companies do not have any proper infrastructure or manpower to carry out any business activity. Further, the same address has been used by multiple companies for providing accommodation entries. A perusal and verification of the bank statement had also revealed that funds have been credited to the accounts of these entry providers from various Kolkata based shell companies and the same have been finally transferred to the Appellant Company.

8.3 The search operation had also revealed that all such dummy concerns are owned by one, Shri Paraj Mehta, who is running them for providing exit route to beneficiaries for obtaining Bogus LTCG and accommodation entries. Also, these companies are engaged in circular transactions, as is evident form their bank accounts.

8.4 Further, during the course of survey on 18.09.2014, Shri Anish Shah, Director of M/s. JSK Industries Ltd. had duly accepted that M/s. Prayagchand Ashok Kumar P Ltd, M/s. Eklavya Management Services P Ltd and M/s. Purak Trading Pvt Ltd had large funds in their books, when these were acquired by his family members. He was asked to furnish the source of funds existing in these three companies and he expressed his inability to furnish any supporting documents for the source of funds in these companies. Shri Anish D. Shah admitted that the source of funds in these three companies were

7 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors unexplained and thus, offered the total amount of funds invested by these companies in M/s JSK Industries P Ltd in the form of share capital and unsecured loans, as unaccounted income in the relevant assessment years.

8.5 To sum up, there was enough adverse material on record, including, confessional statements, which is to be treated as new material on record of the AO, as envisaged under the provisions of section 147 of the Act.

8.6 In the case of B. Kishore Kumar Vs CIT, 234 Taxman 771(SC), the Hon'ble Supreme Court has dismissed the SLP against High Court's order, wherein it was held that since assessee himself had stated in sworn statement during search and seizure about his undisclosed income, tax was to be levied on basis of admission without scrutinizing documents. Further, it was held that it is not the case of the assessee that the admission made by him was incorrect or there is a mistake. When there is a clear and categoric admission of the undisclosed income by the assessee himself, there is no necessity to scrutinize the documents.

8.7 In the case of Dayawanti through Smt Sunita Gupta & Anr Vs. CIT & Anr. (2016) 290 CTR 0361 (Del) : (2016) 143 DTR 0209 (Del) : (2017) 390 ITR 0496 (Delhi), the Hon'ble Delhi High Court had held that when statements were made under oath and were part of record and continued to be so, their probative value is undeniable; hence assessee's argument that they could not be acted upon or given any weight is insubstantial and meritless. The relevant portion of the said judgment is reproduced hereunder:-

"20. The lynchpin of the assessee's submissions on this aspect is also that the statements were not recorded during the search but later and that they cannot be considered of any value. This court is un-persuaded with the submission. The search was conducted on 22-03-2006. Various materials: documents, agreements, invoices and statements in the form of accounts and calculations were seized. On 18 April 2006 and 3 May 2006, the assessee's sons (including one of the appellants, Abhay Gupta) recorded statements under oath; the assessee too made her statement under oath, admitting that though returns were filed ostensibly on her behalf, she was not in control of the business. She and all other family members made short statements and endorsed the statements under oath, of those who elaborated the trading and business operations relating to clandestine income. These statements under oath were part of the record and continued to be so. They were never explained in any reasonable manner. Their probative value is undeniable; the occasion for making them arose because of the search and seizure that occurred and the seizure of various documents, etc. that pointed to undeclared income. In these circumstances, the assessee's argument that they could not be acted upon or given any weight is insubstantial and meritless. This court also notices that the decision in CIT Vs. Anil Bhatia 352 ITR 493 (Del) which held that such statements are relevant, though noticed, has not been doubted in any later decision, including Kabul Chawla, which is the mainstay of the assessee's case. Consequently the

8 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors first question of law is answered against the assessee and in the revenue's favour."

8.8 The Hon'ble Supreme Court in Basant Singh v. Janki Singh AIR 1967 SC 341, held that:

"An admission by a party in a plaint signed and verified by him in a prior suit is an admission within the meaning of section 17 of the Indian Evidence Act, 1872 and may be proved against him in other litigations... Section 17 of the Act makes no distinction between an admission made by a party in a pleading and other admissions."

8.9 Considering the evidentiary value of an admission and the fact that an admission shifts the onus in terms of section 31 of the Evidence Act, the Supreme Court in Kishori Lal v. ML Chaltibai AIR 1959 SC 504 held that:

". . . the admissions shifted the onus on to the respondent on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted, the fact admitted must be taken to be established...." (p. 511) 8.10 The admissions made under the Act bind the maker, when these are not rebutted or retracted. Some important judgments of the Hon'ble Supreme Court explain the concepts and relevance of admissions, as under:

(i) Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SQ: Their Lordships while observing that admission is an extremely important piece of evidence, held that, it cannot be said to be conclusive and the maker can show that it was incorrect. [Also refer S. Arjun Singh v. CWT [1989] 175 ITR 91/[1988] 41 Taxman 272 (Del.)].

(ii) Narayan Bhagwantrao Gosavi Balajiwale v. Gopal Vinayak Gosavi AIR 1960 SC 100: The Hon'ble Supreme Court held that an admission is the best evidence that an opposite party can rely upon and, though not conclusive, yet could be decisive of the matter unless successfully withdrawn or proved erroneous.

(iii) Satinder Kumar (HUF) v. CIT [1977] 106 ITR 64 (SC): It was held that it is true that an admission made by an assessee constitutes a relevant piece of evidence but if the assessee contends that in making the admission he had proceeded on a mistaken understanding or on misconception of facts or on untrue facts such an admission cannot be relied upon without first considering the aforesaid contention.

(iv) Avadh Kishore Das v. Ram Gopal AIR 1979 SC 861: It was held that evidentiary admissions are not conclusive proof of the facts admitted and may be explained or shown to be wrong, but they do raise an estoppel and shift the burden of proof on to the person making them. The Supreme Court further held that unless shown or explained to be wrong, they are an efficacious proof of the facts admitted.

9 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors

8.11 I have noted that the reopening notice was issued u/s. 148 of the Act by the AO, after duly recording the reasons for re-opening. The Appellant Company was provided with the copy of the reasons recorded for the reopening of the assessment. Further, the objections of the Appellant Company had been duly disposed of by the AO, vide a speaking order dated 25.10.2017. Hence, there is no legal or procedural infirmity in the reopening of the assessment by the AO u/s 147 of the Act. I have also gone through the reasons recorded and noted that they are quite elaborate and speaking in nature. Thus, there was a prima-facie case with the AO to re-open the assessment based on the new material placed on record, which have come to the light, as a result of the survey and search operations conducted on the Appellant Company by the Department.

8.12 The Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers.

8.13 At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction ITO v. Selected Dalurband Coal Co. (P.) Ltd. [1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236ITR 34 (SC).

8.14 The Hon'ble Apex Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) (291 ITR 500) has categorically stated that "reason to believe" does not mean that the reason for re-opening should have been factually ascertained by legal evidence or conclusion before the re-opening of an assessment. The relevant excerpts of the said judgment are reproduced hereunder:- "29. In Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316/291 ITR 500 (SC), relied upon by Mr. Putney, the SupremCourt held :—

'16 Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that

10 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the, Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147 (a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. P. Ltd. [1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR34(SC).'

8.15 Any fresh information received by the AO can entitle him to issue notice u/s. 148, if on the basis of such information he has prima facie reason to believe that income has escaped assessment. So much so that it was held by the Hon'ble Supreme Court in Claggett Brachi Co. Ltd. vs CIT 177 ITR 409 (SC) that an information obtained during assessment proceedings of a subsequent year can also validate the proceedings initiated u/s.147 for earlier year. Similarly, Hon'ble Bombay High Court in the case of Anusandhan Investments Ltd. vs. M.R .. Singh, DCIT, 287 ITR 482 held that a notice issued u/s.148 based on assessment of subsequent assessment year is valid even if the appeal is pending for such assessment.

8.16 Further, it is the duty of the assessee to disclose full and true materials to the A.O. but for which the A.O. could initiate the reassessment proceedings. It has been held by the Hon'ble Supreme Court in Shri Krishna P. Ltd. 221 ITR 538, 549 that every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. The Hon'ble Supreme Court held that a partial disclosure may very often be a misleading one. Therefore, what is required is a full and true disclosure of all material facts necessary for making assessment for that year.

8.17 The Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. VS. ITO 236ITR 34, 35 (SC) has held that for determining whether initiation of reassessment proceedings was valid, it has only to be seen whether there

11 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors was prima facie some material on the basis of which the department could reopen the case. It further held that the sufficiency or correctness of the material is not a thing to be considered at this stage. The relevant portion of the said judgment is reproduced hereunder:- "In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs." 8.18 The present case is not one of change of opinion as alleged by the appellant. Question of change of opinion arises when the AO forms an opinion and decides not to make an addition and holds that the appellant was correct in his stand.

8.19 The Supreme Court in Malegaon Electricity Co. (P) Ltd. vs. CIT (1970) 78 ITR 466 (SC) has observed, as under :

‘It is true that if the ITO had made some investigation, particularly if he had looked into the previous assessment records, he would have been able to find out what the written down value of the assets sold was and consequently he would have been able to find out the price in excess of their written down value realized by the assessee. It can be said that the ITO if he had been diligent could have got all the necessary information from his records. But that is not the same thing as saying that the assessee had placed before the ITO truly and fully all material facts necessary for the purpose of assessment. The law casts a duty on the assessee to 'disclose fully and truly all material facts necessary for his assessment for that year' ".

8.20 When there is no discussion on the issue in the Assessment order and no details were called for by the AO or filed by the assessee on the issue, no finding either positive or negative can be said to have been arrived at during the course of original assessment proceedings. Hence, there is no question of change of opinion as held in the following judgements:

12 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 8.21 In Writ Petition. No.9036 of 2007, Honda Siel Power Products Ltd. vs. Dy CIT &Anr. Decision dt. 14th Feb. 2011 (reported at (2011) 52 DTK (Del) 353 - Ed.) it was held:

"10 The term 'failure' on the part of the assessee is not restricted only to the IT return and the columns of the IT return or the tax audit report. This is the first stage. The said expression 'failure to fully and truly disclose material facts' also relate to the stage of the assessment proceeding, the second stage. There can be omission and failure on the part, of the assessee to disclose fully and truly material facts during- the course of the assessment proceedings. This can happen when the assessee does not disclose or furnish to the AO complete and correct information and details it is required and under an obligation to disclose. Burden is on the assessee to make full and the true disclosure".

8.22 Further, in the case of Piaggio Vehicles P. Ltd. YS. DCIT 290 ITR 377 (Bom), the Hon'ble Jurisdictional High Court held that in a case of reopening after 4 years subsequent to scrutiny assessments, contradiction was discovered between Tax Audit report and Return of income, it was a case of omission and/or failure on the part of the assessee to disclose fully and truly all facts for computation of its income. It is also held by Hon'ble Supreme Court in the following cases that facts which could have been found by the ITO by further probing are covered under failure to disclose fully and truly all material facts.

8.23 In the case of Coca Cola India Vs. ACIT & Ors. (2009) 221 CTR 0225 : (2009) 17 DTK 0066 : (2009) 309 ITR 0194 : (2009) 177 TAXMAN 0103, the Hon'ble Punjab & Haryana High Court has held that notice u/s 147 should be held as bad in law, only if extraneous or absurd reasons are recorded by the AO. It was further held by the Hon'ble Court that whether or not the material should be finally taken into account for reassessment is a separate matter, which has to be dealt with during the course of reassessment proceedings. The relevant portion of the judgment in this regard is reproduced as under: -

"Objection of counsel for petitioner is two fold :- (a) Reference to inapplicable provision of s. 92 as it stood prior to amendment w.e.f. 1st April, 2002 and (b) irrelevance of order of the TPO under Chapter X passed in respect of a subsequent assessment year. Applicability of s. 147 requires formation of opinion that income escaped assessment. The said provision is not in any manner controlled by s. 92 nor there is any limit to consideration of any material having nexus with the opinion on the issue of escapement of assessment of income. Interference with the notice for reassessment is called for only where extraneous or absurd reasons are made the basis for opinion proposing to reassess. Apart from the fact that the AO has given other reasons, it cannot be held that the material relied upon by the AO for proposing reassessment is irrelevant. Whether or not the said material should be finally taken into account for

13 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors reassessment is a matter which has to be left open to be decided by the AO after considering the explanation of the assessee. It can only be mentioned that having regard to relationship of the petitioner to its associate company, it cannot be claimed that the price mentioned by it must be accepted as final and may not be looked at by the AO. There is no infirmity in the notice proposing reassessment. The AO will be at liberty to pass an appropriate order of assessment, subject to the rights and remedies of the assessee. Order of TPO can certainly have nexus for reaching the conclusion that income has been incorrectly assessed or has escaped assessment. In the present case, the said material came to the notice of the AO subsequent to the assessment. There is no grievance that provisions of ss. 148 to 153--have not been followed. In such a situation, it cannot be held that the notice proposing reassessment is vitiated merely because one of the reasons referred to order of TPO.—Raymond Woollen Mills Ltd. vs. ITO &Ors. (1999) 152 CTR (SC) 418: (1999) 236ITR 34 (SC) and Phool Chand Bajrang Lal vs. ITO (1993) 113 CTR (SC) 436 : (1993) 203 ITR 456 (SC) : AIR 1993 SC 2390 relied on." (Paras 46, 47, 50 & 51) 8.24 It is not necessary that the AO must know or be certain that income has escaped assessment. The AO must have reason to believe it has. He may finally accept the assessee's case. That would make no difference to the validity of the invocation of sections 147 and 148. In ITO v. Purushottam Das Bangur [1997] 90 Taxman 541/224 ITR 362 (SC), the Hon'ble Supreme Court rejected the contention of the assessee that the information received from the Deputy Director, Directorate of Inspector (Investigation) was not a definite information and should not be acted upon by the Income Tax Officer for taking action under Section 147 of the Act. It was held that the information contained in the letter could form the basis for forming an opinion that there was reason to believe that income had escaped assessment without any further verification.

8.25 In AGR Investment Ltd. v. Addl. CIT [2011] 9 taxmann.com 62/197 Taxman 177/333 ITR 146 (Delhi), in a challenge to the initiation of proceedings under Section 147 of the Act, the Delhi High Court held that specific information received from the office of Director of Income Tax (Investigation) regarding transactions entered into by the assessee Company for accommodation entries is not a change of opinion and is material for the AO having reason to believe that income had escaped assessment.

8.26 In a challenge to initiation of proceedings, the Hon'ble Courts have to prima facie satisfy itself regarding existence of reasons to believe. It has been held in several judgments that it is not for the Hon'ble Courts to go into the sufficiency of the reasons. Even the final outcome of the proceedings is not relevant.

8.27 In Kantamani Venkata Narayana & Sons v. First Addl. ITO AIR 1976 SC 587, the Supreme Court held, as under:—

14 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors "The High Court has pointed out that no final decision about failure to disclose fully and truly all material facts bearing on the assessment of income and consequent escapement of income from assessment and tax could be recorded in the proceedings before them. It certainly was not within the province of the High Court to finally determine that question. The High Court was only concerned to decide whether the conditions which invested the Income Tax Officer with power to re-open the assessment did exist, and there is nothing in the Judgment of the High Court which indicates that they disagreed with the view of the Trial Court that the conditions did exist."

8.28 In Central Provinces Manganese Ore Co. Ltd. v. LT.O. [1991] 59 Taxman 17, the Supreme Court held as under :—-

"11. So far as the first condition is concerned, the Income-tax Officer, in his recorded reasons, has relied upon the fact as found by the Custom Authorities that the appellant under-invoiced the goods he exported. It is no doubt correct that the said finding may not be binding upon the Income- tax authorities but it can be a valid reason to believe that the chargeable income has been under-assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income-tax Officer believe that there has been underassessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income-tax Officer under Section 147 (a) of the Act was satisfied."

8.29 As regards the sanction under Section 151 of the Act is concerned the following observations of the Calcutta High Court in ITO v. Mahadeo Lal Tulsian [1977] 110ITR 7S6are well founded :—

"... He has contended that there had been no due compliance with the provisions of section 151 (2) of the said Act since the Commissioner of Income-tax had failed to arrive at a bona fide satisfaction or record the same. Here again, the issue has to be considered from the point of view of what the facts establish in substance. Mow, facts indicate that the proposal for reopening the assessment with reasons indicated hereinbefore was placed before the Commissioner of Income- tax Obviously he applied his mind as is indicated by his endorsement: "Yes, I am satisfied." If the Commissioner records his satisfaction in a positive manner, as aforesaid, and there being no other material before us to show that notwithstanding such a record the Commissioner never applied his mind but merely signed on a dotted line without application of his mind, we are unable to accept the contention that the Commissioner never arrived at a bona fide satisfaction in recording the same. This objection raised by Mr. Banarjee, therefore, must fail and is overruled."

15 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 8.30 In the case of Consolidated Photo & Finvest Ltd. Vs. Assistant Commissioner of Income-tax [2006] 151 Taxman 41 (Delhi), the Hon'ble Delhi High Court had held that action under section 147 is permissible even if the Assessing Officer gathered his reasons to believe from the very same record as had been the subject-matter of the completed assessment proceedings. The relevant excerpts of the said judgment are reproduced hereunder:-

"10. It is common ground that in the present case the Assessing Officer had not received any additional information from any outside source or quarter but the fact that there was no such information did not make any material difference. Action under section 147 was permissible even if the Assessing Officer gathered his reasons to believe from the very same record as had been the subject-matter of the completed assessment proceedings. What Mr. Vohra argued was that the Assessing Officer could not, on the basis of the very same material as was available to him at the time of assessment, initiate action under section 147 for doing so, would constitute action based entirely on a change in his opinion. The contention is that if the material was available to the Assessing Officer and if an assessment order based on that material is passed by him, a reassessment using the very same material or inferences available from that material should tantamount to a mere change of opinion, which cannot, according to the petitioner, constitute a valid ground for reassessment.

8.31 In Calcutta Discount Co. Ltd. v. ITO[1961] 41 ITR 191 , the Apex Court held that while it was the duty of the assessee to disclose all facts which had a bearing on the question, what inference should be drawn from the facts so disclosed was a matter to be examined by the Income-tax Officer. The Court further held that the Income-tax Officer could issue a notice for re-

16 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors opening the assessment if he had reasons to believe that the income, profits or gains had been under-assessed and that such under-assessment was due to nondisclosure of material facts by the assessee. The Court observed that whether the Income-tax Officer had prima facie reasonable grounds for believing that there has been a non-disclosure of primary fact that was by itself sufficient to give jurisdiction to him to issue a notice for re-opening the assessment. The adequacy or otherwise of the grounds of such belief was not open to investigation by the Court. The Court further held that if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been a non-disclosure as regards any fact which could have a material bearing on the question of under-assessment, it would be sufficient to give jurisdiction to the officer to issue a notice. Whether the grounds were adequate or not is not a matter for the Court to investigate. The sufficiency of the grounds, declared the Court, was not a justiciable issue.

8.32 In Kantamani Venkata Narayana & Sons v. First Addl ITO [1967] 63 ITR 638, the Apex Court held that in proceedings under article 226 of the Constitution of India challenging the jurisdiction of the Income-tax Officer to issue a notice for reopening the assessment, the High Court was only concerned with examining whether the conditions which invested the Income-tax Officer with the powers to reopen the assessment existed. It is not, observed that Court, within the province of the High Court to record a final decision about the failure to disclose fully and truly all material facts bearing on the assessment and consequent escapement of income from assessment and tax. The Court also held that from a mere production of the books of account, it could not be inferred that there had been full disclosure of the material facts necessary for the purposes of assessment. The terms of the explanation, declared the Court, were too plain to permit an argument that the duty of the assessee to disclose fully and truly all material facts would stand discharged when he produces the books of account or evidence which has a material bearing on the assessment. The Court observed:

". . . It is the duty of the assessee to bring to the notice of the Income-tax Officer particular items in the books of account or portions of documents which are relevant. Even if it be assumed that from the books produced, the Income-tax Officer, if he had been circumspect, could have found out the truth, the Income-tax Officer may not on that account be precluded from exercising the power to assess income which had escaped assessment." (p. 644)

8.33 In ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC), the Court held that grounds or reasons which lead to the formation of belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with the jurisdiction to issue a notice. Whether the grounds are adequate or not is not a matter for the Court to

17 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors investigate. The sufficiency of grounds which induced the Income-tax Officer is, therefore, not a justiciable issue. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or relevant for the purpose of the section. To that limited extent only, the action of the Income-tax Officer can be challenged in the Court. The following observations are, in this regard, apposite :

"As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income- tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessments. ..." (p. 448)

8.34 In Praful Chunilal Patel v. M.J. Makwana, Asstt. CIT[1999] 236 ITR 832, a Division Bench of the Gujarat High Court, incorporated the word 'reason' in the phrase 'reason to believe' in the following words :

"... The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. The words 'reason to believe' cannot mean that the Assessing Officer should have finally ascertained the facts by legal evidence. They only mean that he forms a belief from the examination he makes and if he likes from any information that he receives. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he had reason to believe that such income had escaped assessment. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings under section 147, may ultimately stand altered after the hearing and while reaching the final conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the Assessing Officer is not required to base his belief on any final adjudication of the matter...." (p. 840)

18 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors

8.35 To the same effect is the view expressed by the Hon'ble Gujarat High Court in Gruh Finance Ltd. v. Jt. CIT[2000] 243 ITR 482, where the Court held that if no conscious consideration of the material available on record is made and a mistake has been committed, it will not prevent the competent officer to exercise powers under section 147 of the Act. The Court observed :

"We have also, seriously, considered the entire case law from which aforesaid paragraphs are relied on. Insofar as the expressions 'reason to believe' and 'change of opinion' are concerned, we are of the view that though the material was available on record, at the time of first assessment, when no conscious consideration of the material is made and a mistake has been committed, it would not, in any case, create an embargo or a ban on the competent officer to exercise powers under the amended section 147 of the Income-tax Act, 1961, as, prima facie, there could not be 'change of opinion' in that factual scenario. It has also not been shown to us on behalf of an assessee. If conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making assessment and again a different or divergent view is sought, it would tantamount to 'change of opinion', whereas, in the case of existing material, no conscious attempt has been made, it would tantamount to mistake in not considering the relevant point or proposition and it would not be a 'change of opinion'. ..." (p. 486)

8.36 I am of the view that for re-opening of assessment, what is required under the law is that there should be some material on the basis of which the AO could form a belief that income chargeable to tax has escaped assessment. The material should be such that on the basis of which a reasonable person could form a prima facie belief that income chargeable to tax has escaped assessment. The reasons recorded should not conclusively prove that income has escaped assessment. Only prima facie belief is sufficient for reopening of assessment. In the facts and circumstances, the AO had bonafide material and reason for forming a prima facie belief that income chargeable to tax has escaped assessment.

8.37 In view of the above binding precedents of the Hon'ble Supreme Court, I am of the view that the AO had valid reasons to initiate reassessment proceedings, which were duly recorded and communicated to the appellant. Hence, it is held that reopening by the AO is valid and as per the provisions of the Act. Accordingly, the action of the AO in reopening the assessment u/s 147 of the Act is upheld and Ground No.1 to 3 of the present appeal are dismissed.”

19 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors consequent assessment framed is also invalid, incorrect and contrary to the provisions of law. The Ld.AR submitted that subsequent to the reopening of the assessment, the appellant assesse filed objections before the AO challenging the re-opening of assessment u/s 147 of the Act, however, said objections were disposed-off vide order dated 25.10.2017, in general manner without even taking into consideration the specific infirmities, anomalies and mistakes pointed out by the assesse. The Ld. AR also contended that Ld. CIT(A) was of the wrong view that the assessing officer had sufficient material on record to form a belief that the income has escaped assessment and accordingly he upheld the reopening of assessment, which is invalid, incorrect and bad in the eyes of law. The ld. AR, while referring to the reasons recorded for reopening of assessment u/s 148(2) of the Act filed at page no 2 to 11 of paper book, submitted that the Ld. A.O has reopened the assessment on the ground that the income had escaped assessment in respect of three issues namely (i) unsecured loans taken from group companies namely Eklavya Management Services Pvt. Ltd., Prayagchand Ashok kumar Pvt. Ltd. and Purak Trading Pvt. Ltd., (ii) unsecured loans taken from other companies, namely, Mridul Exports Pvt. Ltd., Tycoon Traders & Investments Ltd. and Waltz Tracom Pvt. Ltd. and (iii) wrong claim of deduction u/s. 80IB of the Act.

6.1. The ld AR submitted that the said reopening was merely made on the basis of the search conducted at the premises of the appellant on 25.10.2016, information

20 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors received from DIT, Kolkata and the statement of director of the appellant namely Mr. Anish Shah recorded during the course of survey action at the premises of the appellant on 18.09.2014. The ld. AR submitted that on the basis of the said reasons, additions of the following amounts were sought to be made on account of unexplained cash credits as per details below: Sr. Name of the entity Loan taken Interest No. during paid the year (Rs.) Rs. 1. Mridul Exports Pvt. Ltd (MEPL) 2,26,800 2,52,000 2. Tycoon Traders & Investments Ltd. (TTIL) 72,944 81,049 3. Waltz Tracom Pvt. Ltd. (WTPL) 4,98,694 5,54,104 4. Eklavya Management Services Pvt. Ltd. 3,09,04,071 22,60,523 (EMSPL) 5. Prayagchand Ashokkumar Pvt. Ltd. (PAPL) 4,71,41,675 4,57,417 6. Purak Trading Pvt. Ltd. (PTPL) 8,38,10,241 50,89,156 TOTAL 16,26,54,425 86,94,249

6.2. The ld. AR also submitted that the one of the reasons recorded stated that the appellant has incorrectly claimed deduction u/s 80-IB of the Act and hence the assessing officer has sought to disallow such deduction of Rs.4,68,67,102/-.

6.3. The ld AR submitted that reopening of assessment is incorrect and invalid for the reasons that re-opening of assessment without any escapement of income and based on incorrect facts is wrong and unjustified. The Ld. AR in order to prove his point filed a chart showing details of various additions made in earlier assessment proceedings as well as in the current proceedings as summarized below for the sake of better understanding:

21 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors Date of Date of Particulars Nature of addition/disallowances Notice u/s assessment 148 order N.A. 14.02.2013 Original Disallowance of deduction u/s 80-IB of the Act of assessment Rs. 4,68,67,102/- and treatment of intra-day share proceedings trading loss as speculative loss instead of business u/s 143(3) of loss amounting to Rs. 7,64,177/- the Act 1st 11.03.2016 31.12.2016 Addition on account of share capital and unsecured loans of Rs. 20,39,75,800/- from the reassessment following : proceeding u/s Name of Party Amount Prayagchand Ashokkumar 6,63,10,000 143(3) of the Pvt. Ltd. Act Eklavya Management 3,96,00,000 Services Pvt. Ltd. Purak Trading Pvt. Ltd 9,80,47,800 Total 20,39,75,800 2nd 31.03.2017 22.12.2017 Addition on account of unsecured loans of Rs. 17,13,48,680/- of the following : reassessment Particulars Amount Amount proceedings (1) Unsecured loans…..(A) Prayagchand Ashok kumar Pvt. 4,71,41,675 u/s 143(3) of Ltd. the Act Eklavya Management Services 3,09,04,071 Pvt. Ltd. (impugned Purak Trading Pvt. Ltd 8,38,10,241 proceedings) Mridul Exports Pvt. Ltd. 2,26,800 Tycoon Traders & Investments 72,944 Ltd. Waltz Tracom Pvt. Ltd 4,98,694 Total…A 16,26,54,425 (2) Interest on unsecured 86,94,249 loans…B Total…A+B 17,13,48,680

6.4. By referring to the chart above, the Ld. AR submitted that it is clear that the loans and share capital from group concerns like PAPL, EMSL and PTPL were examined during the course of 1st reassessment proceedings and additions amounting to Rs.20,39,75,800/- were made u/s. 68 of the Act in the hands of

22 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors the appellant assesse in the assessment framed u/s 147 r.w.s. 143(3) dated 31.12.2016 copies whereof along with notices and replies filed during the course of proceedings are filed at papge no. 38 to 69 of paper book. The ld AR submitted that as the additions w.r.t. unsecured loan from these 3 parties namely PAPL, EMSPL and PTPL were already made in the earlier proceedings and therefore there can not be any further escapement of income in respect of at least these very unsecured loans from them. Similarly as regards unsecured loans from other concerns like MEPL, TTIL and WTPL, the ld AR submitted that no loans were taken during the year and the amount of addition purported to be made by the AO on account of these loans from other parties taken during the year actually represented the amount of interest on opening balances of brought forward loans taken in earlier years. The ld AR submitted that the AO added interest paid twice, once in the guise of loans taken during the year and other by way of interest paid which is factually wrong and incorrect. In absence of any loans taken during the year from these parties, it cannot be said that income has escaped assessment. The ld. AR contended that thus the reopening of assessment on incorrect factual matrix cannot be held to be valid. The ld. AR in defense of arguments placed reliance on the following decisions: a. Sagar Enterprises vs. ACIT (2002) 257 ITR 335 (Guj) b. Ashwin S. Mehta v. DCIT [ITA No. 421/Mum/2016] dated 28.06.2019.

6.5. With respect to the disallowance on account of deduction u/s 80-IB of the Act, the ld AR submitted that the issue was discussed at length in original assessment proceedings and was

23 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors disallowed in the assessment framed u/s 143(3) of the Act dated 14.02.2013 a copy of which is filed at Pg. 70-76 of PB. This fact was also accepted by the AO in his impugned re- assessment proceedings and accordingly no addition was made in the assessment framed u/s 143(3) r.w.s.147 of the Act dated 22.12.2017. Summing up his arguments, the ld AR submitted that while (i)the loans from 3 parties, being group companies, proposed as unexplained in the reasons recorded for reopening were already added in the earlier assessment order dated 31.03.2016 whereas the loans from other 3 parties proposed as unexplained in the reasons for reopening were never taken during the year and in respect of the third reason recorded, the ld AR submitted that the deduction u/s. 80-IB of the Act as proposed in the reasons for reopening was also already added in the hands of the appellant in the assessment order dated 14.02.2013. The ld AR prayed that the AO has not been able to establish that any income has escaped assessment in the hands of the appellant for the instant year under appeal and thus in absence of any escapement of income, the reopening of assessment is invalid and bad in law.

6.6. The AR also submitted that the re-opening of assessment in absence of independent application of mind is incorrect and bad in law. The ld AR submitted that the manner in which the reopening of assessment was made showed that there is complete non-application of mind by the assessing officer while recording the reasons. In the 1st reassessment proceedings initiated on 11.03.2016, the reasons recorded for reopening of assessment categorically stated that the 3 parties namely PAPL, PTPL and EMSPL were not genuine and the additions were

24 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors required to be made in the hands of these 3 companies namely PAPL, PTPL and EMSPL, but to protect the interest of the revenue, the additions were also required to be made in the hands of the appellant also on protective basis. Copy of reasons recorded on 11.03.2016 in 1st reassessment proceedings is enclosed at Pg. 36-37 of PB. The ld. AR argued that the AO was of the view that the addition should be made on substantive basis in the hands of the 3 companies and on protective basis in the hands of the appellant, however in the impugned reassessment proceedings, the assessment was reopened on the ground that the funds of these companies belonged to the appellant. The ld. AR contended that there was no clarity in the mind of the assessing officer as to the person in whose hands; such income ought to be taxed. In any case, when the assessment order in these 1st re-assessment proceedings was passed, the addition was made in the hands of the appellant on substantive basis which is now pending in appeal before Ld. CIT(A). Further, as already explained above, the Assessing Officer has failed to appreciate that there is no escapement of income since the amounts which he seeks to add by re-opening the assessment u/s 147 of the Act on account of unsecured loans from parties as stated above were already added and assessed by in the earlier proceedings. Further, he has sought to assess the loans from some other parties without appreciating that no such loans were taken by the appellant from these parties during the year. In addition to the above, the disallowance of deduction u/s 80-IB of the Act was also made in original assessment proceedings and this reasons for re-opening are also factually wrong. Had the AO applied his mind on

25 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors these facts, he would have realized and known that the impugned reopening of assessment was leading to double addition which is not as per law. The ld. AR also contended that the re-opening of assessment u/s. 147 is also invalid and nullity since the reopening of assessment is made for the issues which were sub-judice in appeal before ld. CIT(A) as in terms of 3rd proviso to s. 147 of the Act, reopening of assessment could not have been made for such issues which are already pending in appeal. The ld AR argued that had the AO applied his mind on these facts, he would not have initiated proceedings u/s 147 of the Act. The ld AR corroborated his averments qua issues being sub-judice on the date of initiation of re-assessment proceedings by referring to the following chart: Particulars Issue in dispute Details of pendency of appeal Assessment Disallowance of deduction Issue pending before Hon’ble order u/s u/s 80-IB of the Act of Tribunal 143(3) of the Rs.4,68,67,102/-. Hon’ble CIT(A) allowed the appeal in Act dated favour of the assessee vide order 14.02.2013 dated 18.12.2014. Department had preferred appeal before Hon’ble Tribunal in respect of the issue of disallowance of deduction u/s 80-IB of the Act in ITA No. 2639/Mum/2014 and the same was pending as on 31.03.2017 being the date of issue of notice u/s 148 of the Act. The appeal is now decided by the Hon’ble Tribunal in favour of the appellant vide order dated 23.02.2018. Reassessment Disallowance of share Issue pending before Ld. CIT(A) order u/s 147 capital and unsecured The assessee has preferred appeal r.w.s. 143(3) loans of Rs. 20,39,75,800/- before Hon’ble CIT(A) and the same of the Act . is pending as on date. dated 31.12.2016

26 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 6.7. The ld AR stated that the addition on account of unsecured loans of Rs. 16,26,54,425/- stated in the reasons recorded is factually not correct as this amount also included the amount of interest on such loans as the amounts of interest were separately considered in the reasons recorded. The aforesaid aspects clearly showed that the reopening of assessment was made without application of mind by the AO in mechanical manner and based on incorrect facts and consequently invalid and bad in the eyes of law.

6.8 The ld. AR also argued that the reopening of assessment in absence of tangible material before the AO is incorrect and bad in law. The assessing officer has referred to information from DIT Investigation and statement recorded of Mr. Anish Shah at the time of survey proceedings on 18.09.2014 to allege that the unsecured loans were not genuine. However, the same facts were the basis even for the 1st reopening of assessment which was concluded on 31.12.2016. The ld AR stated that in a span of 3 months, there was no new material gathered by the assessing officer to form a view and belief that income has escaped assessment. Moreover, no new facts were transpired in search proceedings which could form basis for reopening of assessment. Hence, in absence of any fresh tangible material with the assessing officer, the reopening of assessment is invalid. The ld. AR also submitted that reopening of assessment beyond 4 years without failure of the assessee to disclose fully and truly all material facts necessary for assessment is also invalid and bad in law. The ld. AR submitted that in the present case, the notice u/s 148 of the Act for reopening of assessment was issued on 31.03.2017 apparently beyond 4 years from the end of the

27 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors relevant assessment year. The assessment u/s 143(3) of the Act was already concluded on 14.02.2013. The second reassessment proceedings were also initiated and concluded u/s 143(3) r.w.s 147 of the Act vide order dated 31.12.2016. In such scenario, in terms of first proviso to s. 147 of the Act, reopening of the assessment could only be made if there is a failure on part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment and not otherwise. The ld AR contended that no such satisfaction was recorded by the Assessing Officer in the reasons recorded as to the failure of the assesse to disclose material facts necessary for assessment. It is submitted by the ld AR that the all details and evidences in respect of the proposed disallowances were filed in the earlier proceedings and were already on record. The ld. AR prayed that the reopening so made beyond 4 years without any failure on part of assessee to disclose fully and truly all material facts is in contravention to fist proviso to 147 of the Act and therefore bad in law. The ld AR placed reliance on the decision of Hon’ble Bombay High Court in the case of German Remedies v. DCIT [287 ITR 494 (Bom)] wherein it has been held that reopening of assessment beyond 4 years without any failure on the part of the assesse to disclose material facts is incorrect.

28 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors opportunity was given to it during the assessment proceedings. On the issue of reasons being recorded qua the same additions which were made in the earlier assessments, the ld DR submitted that the AO has to form a prima facie belief on the basis of information before him which may or may not be correct as the same would be verified during the course of ensuing proceedings. The ld DR submitted that it was proved by the fact that escapements proposed in the reasons recorded were explained by the assessee, the AO did not make any addition in respect of the proposed addition which was fully explained. The ld DR also cited example by referring to the proposed escapement on account of claim of deduction u/s 80IB of the Act which was not made in the final order by accepting the contention of the assessee that the addition had already been made in the original assessment framed. The ld DR therefore prayed before the bench that the order of CIT(A) may be affirmed as the ld CIT(A) has passed the appellate order after considering all these contentions of the assesse.

29 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors i) unsecured loans taken from group companies namely Eklavya Management Services Pvt. Ltd., Prayagchand Ashok kumar Pvt. Ltd. and Purak Trading Pvt. Ltd., ii) unsecured loans taken from other companies, namely, Mridul Exports Pvt. Ltd., Tycoon Traders & Investments Ltd. and Waltz Tracom Pvt. Ltd. iii) wrong claim of deduction u/s. 80IB of the Act.

8.1. The unsecured loans as envisaged in (i) and (ii) above in respect of unsecured loans are summarised in the table extracted in para 6.1 above and (iii) reason was with respect to wrong claim of deduction u/s 80IB of the Act. As is apparent from the table extracted in para 6.3 above , we note that the unsecured loans from group concerns namely EMSPL, PAPL and PTPL as mentioned in the (i) above have already been added in assessment framed u/s 143(3) r.w.s. 147 of the Act dated 11.03.2016 which was the order framed in the 1st re-opening. The copy of the said assessment order along with copies of the notices and replies of the assesse are filed at page no. 38 to 69 of the paper book. We further note that the unsecured loans from other entities namely MEPL, TTIL and WTPL as referred to (ii) of the reasons above, the assesse has not raised any unsecured loans during the year and the AO has misconstrued the interest on loans paid during the year in respect of opening balance of unsecured loans taken in earlier years as unsecured loans taken during the year. Not only this, the AO again added the amount of interest thereby making double addition in respect of same amount of interest. Firstly by taking the amount of interest as unsecured loans raised during the year and

30 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors secondly by making the addition of amount of interest. On the last reasons recorded by the AO was in respect of wrong claim of deduction u/s 80IB of the Act amounting to Rs.4,68,67,102/-, we note that the claim was already rejected in the original assessment framed 143(3) of the Act dated 14.02.2013.Thus on all the three reasons recorded by the AO to re-open the assessment, the belief was on incorrect factual matrix and therefore can not be sustained as there is no escapement of income. The case of the assesse finds support from the decision of Hon’ble Gujrat High Court in the case of Sagar Enterprises vs ACIT (supra) wherein it has been held that

8.2. Secondly there no application of mind by the AO to the facts already available on records. We note that the assesse had filed all these information before the AO in the earlier scrutiny and 1st re-opening proceedings and had he even slightly applied his mind to the facts on records including the reasons recorded in the 1st re-opening proceedings initiated on 11.03.2016, the AO would not have resorted to second re-opening as all the additions proposed in the reasons recorded were already made either in the original assessment framed u/s 143(3) of the Act dated 14.02.2013 or in the reassessment order framed u/s 143(3) r.w.s. 147 of the Act dated 11.03.2016 in the first re- opening. Therefore on this count also of absence of independent application of mind, the re-opening can not be sustained.

8.3. We also find merit in the contention of the ld AR that assumption of jurisdiction u/s 147 of the Act on the basis of the issues which are sub-judice before the ld CIT(A) is also invalid as it is specifically provided in 3rd proviso to section 147 of the Act

31 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors that re-opening of assessment could not be made only on those issues which are pending in the appeal. We have examined the chart extracted in para no.6.6 supra that on the date of issue of notice u/s 147 of the Act on 31.03.2017 the issue of rejection of deduction u/s 80IB of the Act was pending before the tribunal in ITA No. 2639/Mum/2014 as on 31.3.2017 and was decided by the coordinate bench vide order dated 23.02.2018 in favour of the assesse. The second issue of addition on account of unsecured loans and share capital of Rs.20,39,75,800/- was pending before ld CIT(A).

8.4. On the plea of the ld AR that there was no tangible material before the AO on the date of re-opening, we observe that the AO has re-opened the assessment on the basis of information received from DIT(Inv) and on the basis of statement of Mr Anish Shah recorded at the time of survey action on the assesse on 18.09.2014 that unsecured loans were not genuine. However the said information was already in the in the possession of the AO as the 1st re-opening was also made on that basis only. Thus we note that apart from the above information, there was no new materials before the AO to form a belief that income has escaped assessment. In our opinion in absence of any fresh tangible materials the re-opening is bad in law. We also note that in the present case, the re-opening of assessment was made after a period of 4 years from the end of relevant assessment year which in order to be valid has to be in consonance with 1st Proviso to section 147 of the Act. The 1st proviso provides that if the re- opening is after a period 4 years as stated above, the escapement has to be because of failure on the part of the assesse to fully and truly disclose all information/material facts

32 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors necessary for assessment of income and not otherwise. In the present case we note that there is no such failure on the part of the assesse. All the information qua the reasons recorded for which alleged escapement has taken place were before the AO in the original as well as in the 1st re-opening proceedings. Therefore on this score also the re-opening of assessment can not be justified. The case of the assesse is squarely covered by the decision of the jurisdictional High Court in German Remedies Ltd Vs DCIT(Supra) wherein it has been held that re- opening beyond four years without any failure of the assesse to disclose materials facts is bad in law and can not be allowed.

8.5. In view of the above facts and observations by us in the light of various decisions we hold that the re-opening is invalid and is accordingly quashed. The ground no. 1 is allowed.

33 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors evidences to prove the identity, creditworthiness and the genuineness of the investments made by the 3 group concerns namely Eklavva Management Services Pvt. Ltd., Prayagchand Ashokkumar Pvt. Ltd, and Purak Trading Pvt. Ltd. Accordingly, he had made a disclosure for an aggregate amount of Rs, 20.39.75.800/- in the instant year in respect of the funds received from the aforesaid 3 group companies. The appellant assesse had also filed various documents comprising details of lenders like names, addresses and PAN of the parties, Ledger Account of the parties in the books of the assesse appellant, confirmations, ITRs. Financial statements, bank statements, ROC data of lenders besides Bank statement of the appellant and also source of funds given by the parties to the assessee. The AO however rejected the pleas and contentions of the assesse and added a sum of Rs.17,13,48,674/- to the income of the assesse under section 68 of the Act.

34 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors that assesse has filed various evidences before the authorities below as discussed above in order to prove the genuineness of the transactions with 3 group companies. We note that the both the authorities below have not pointed any defect in the evidences filed by the assesse. We note that assesse has even filed evidences proving the source of source in respect of the transactions with the group concerns. We also note that letters issued by A.O. u/s. 133(6) of the Act, in order to verify these transactions, to the lenders/investors were duly replied along with the evidences. We note that the AO relied on the statement of Mr. Anish Shah recorded during survey which has been retracted vide letter dated 21.12.2015. In the said statement Mr. Anish Shah stated that he is unable to substantiate the investments made by these 3 companies into the appellant company and thus accepted the investment made by the 3 companies as unexplained. In our opinion the statement recorded during survey has no evidentiary value unless corroborated by other evidences. The case of the assesse finds support from the decisions namely CIT v. S. Khader Khan Sons [254 CTR 2289(SC)] confirming the decision in the case of CIT v. S. Khader Khan Son [300 ITR 157] and Paul Mathews and Sons v. CIT [263 ITR 101 (Ker)].We also take note of the fact that these companies are part of the group companies of the appellant and therefore the creditworthiness as well as capacity of these companies cannot be examined independently and the capacity of the entire group as a whole has to be considered and not individually. We note that the appellant has filed the evidences in the form of bank statements, financial statements and the ITR acknowledgement of these companies to justify that the

35 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors transactions by the appellant company with them were genuine. Moreover, the perusal of the evidences filed by the appellant assesse justifies the capacity of these companies. We find that these companies have offered substantial interest income on the advances given to various parties and the income is regularly offered by them to tax beside the profit arising from the financing activity. In fact, one of the company has also shown share trading as its business activity and has earned a sizeable profits during the year. Moreover, the companies had sufficient reserves and the capital balances since past several years to make investments or advance funds as loans. Considering these facts and circumstances, the order of the CIT(A) appears to be incorrect in rejecting the evidences filed by the appellant and the explanation offered by them. In respect of the other loans taken from Mridul Exports Pvt. Ltd., Tycoon Traders & Investments Ltd. and Waltz Tracom Pvt. Ltd., even the said companies have shown substantial business activities during the year. These companies have shown income from interest, dividend from investments as well as substantial amount of capital gains from sale of investments. Some of these companies have also been found trading in shares. Further, we have also perused the statement of Mr. Paraj Mehta recorded at the time of survey u/s. 133A of the Act at his premises conducted on 25.10.2016. The various question and answers recorded in the statement clearly showed that he has confirmed the genuineness of the transactions undertaken by his companies with the appellant. Thus, even the independent investigation in case of these companies have proved that the transactions undertaken by them with the appellant were genuine. In spite of search and

36 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors seizure action carried out by the Department as well as reassessments undertaken by the Department in case of the appellant assessee, no documentary evidences could be found to support the case of the AO. Further, we also find that the addition has been made by the Ld. A.O. in the year under consideration without appreciating that no loans were taken from these companies during the year. The appellant has filed the confirmations as well as the Ledger accounts of Mridul Exports Pvt. Ltd., Tycoon Traders & Investments Ltd, and Waltz Tracom Pvt. Ltd., which showed that the addition made by the Ld. A.O. on account of the loans taken during the year are nothing but the amount of interest that has accrued on the opening balances. This is over and above the disallowance on account of the interest paid on these loans during the year. As a result of the above, there has been double addition of the interest amount, once by treating the same as loans and secondly by disallowing the interest claimed as expenditure. There is nothing on record which proved that these loans taken by the appellant in the past years have been treated as unexplained by the Department. In view of these facts, we are of the opinion that no addition could be made in the hands of the appellant assesse in respect of the interest payments without disputing the loans from these companies in the past. In light of the above, we are of the view that the loans and the share capital raised by the appellant are genuine and that the addition made by the Ld. A.O. and enhanced by the ld CIT(A) can not be sustained.

37 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors “On the facts and circumstances of the case, the ld Assessing Officer and ld CIT(A) ought to have appreciated that education cess on tax payable by the appellant should have been allowed as deduction while computing the income of the assesse.”

38 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors Bombay High Court. In view of the above, it is prayed that the claim of deduction of education cess payable on tax on total income be kindly allowed as expenditure to the appellant.

39 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors

“1. The Ld. CIT(A) has erred in law and in facts in confirming the action of the Ld. Assessing Officer treating the receipt of loans of Rs. 13,26,78,000/-and interest expense thereon of Rs. 2,28,39,838/- as unexplained without appreciating that no incriminating evidence has been found as a result of search in respect of the same.

40 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 20. In Ground no. 1, the appellant has challenged the order of ld CIT(A) upholding the order of AO in making addition in respect of unsecured loans being unexplained cash credits u/s. 68 of the Act amounting to Rs. 13,26,78,000/- and interest on these loans of Rs.2,28,39,838/- without any incriminating material found during search action carried out at the premises of the appellant on 25.10.2016.

41 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors ROC master data etc. of lenders. The AO also issued notices u/s 133(6) of the Act to all the lenders in order to verify these transactions. The details of the unsecured loans and interest thereon are extracted are as under for the sake of ready reference:

Sr. No. Name of the party Loan amount Interest (Rs.) (Rs.)

Total 13,26,78,000 2,28,39,83 8 Grand Total 15,55,17,838

42 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 22. The AO rejected the submissions of the assesse with regard to the creditworthiness of the lenders and genuineness of the loan transactions by treating the same as accommodation entries resulting into addition of the same to the income of the assesse along with interest thereon in the assessment framed u/s. 143(3) r.w.s. 153A of the Act vide order dated 19.12.2018. The similar additions were made in same manner in all the years from A.Y. 2012-13 to A.Y. 2016-17 on account of unsecured loans and interest paid thereon. Aggrieved assessee challenged the order of AO before the ld. CIT(A) on jurisdictional /legal issue as well as on merits.

Kindly refer to the above mentioned subject.

43 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 2. Remand Report is sought in the following cases of JSK Group which are tabulated as under:

Sr. No Name of the Appellant PAN A.Y.

1 M/s. JSK Industries Pvt. Ltd. AABCJ5937F 2011-12 to 2015-16

2 M/s. Excel Press Pvt. Ltd. AAACE2608K 2011-12 to 2015-16

3 M/s. Hiren Aluminium Pvt. AAACH4626A 2011-12,2012-13, 2014- Ltd. 15 & 2015-16

4 M/s. Pankaj Aluminium AAACP6731A 2014-15 & 2015-16 Industries Pvt. Ltd

(RAJESHWAR YADAV) Commissioner of Income Tax (Appeals)-50

Mumbai.

Encl: As above. Copy forwarded to:

Commissioner of Income Tax (Appeals)-50 Mumbai."

44 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors

13.2 It may be noted that the AO had been specifically directed togive his comments on the admissibility of the Additional Ground of Appeal. Further, the AO was given the mandate to make further inquiries as deemed fit after examining the concerned parties and giving sufficient opportunity to the Appellant Company. The AO was also asked to produce the copies of mcriminating material/documentary evidences/incriminating statements of concerned parties or third parties/confessional statement, as the case may be, relied upon, while making the additions/disallowances in the assessment order.

13.3 However, no Remand Report has been received by this office in the matter, till date. In view of these facts and circumstances, the Additional Ground of Appeal raised by the Appellant Company is disposed of on merits based on the material on record.

13.4 It is a trite law that it is necessary for the authorities to ensure that the assessment has been made on a correct income. It is necessary for the appellate authorities to correct all errors in the proceedings under appeal, so as to achieve a final objective of assessing the correct income. This proposition has been so held by the Hon'ble Supreme Court in KapurchandShrimal v. CIT [1981] 131 ITR 451/7 Taxman 6, wherein it was held as under:-

"It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden from doing so by statute."

13.5 The appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. As regards the question whether an additional ground of appeal can be raised before the Tribunal, which does not arise out of the order of the CIT(A), the law is by now well settled. The powers of the Tribunal are not confined to deal only with the issues arising out of the order of the Commissioner (Appeals) or, for that purpose, even the order passed by the Assessing Officer. Their Lordships of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383have observed as follows :

"The view that that the Tribunal is confined only to the issues arising out of the appeal before the CIT(A) takes too narrow a view of the powers of the Tribunal [vide e.g. CIT v. Anand Prakash [1981] 128 ITR 388 (Delhi), CIT v. Karamchand Premchand (P.) Ltd. [1969] 74 ITR 254 (Guj.) and CIT v. Celluose Products of India Ltd. [1985] 151 ITR 499 (Guj.) (FB). Undoubtedly, the Tribunal will have the discretion to allow or not to allow such ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are already on record, we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess tax liability of the assessee." [Emphasis supplied]

45 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 13.6 Explaining the reasoning of coming to this conclusion, their Lordships, earlier in the same order, observed as follows :-

"Under section 254 of the IT Act, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with the appeals is thus expressed in widest possible terms. The purpose of assessing authorities is to assess correctly the tax liability of an assessee in accordance with the law.If, for example, as a result of judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction declined, we do not see any reasons why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as relevant facts are on record in respect of that item. We do not see any reasons to restrict the powers of the Tribunal under section 254 only to decide those grounds which arise from the order of the CIT(A). Both the assessee, as well as the department, have a right to file an appeal/cross-objection before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings though not raised earlier."

13.7 In the case of Jute Corporation of India Ltd. v. CIT [1991] 187ITR 688 (SC), the Hon'ble Supreme Court, while dealing with the powers of the AAC, observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of the assessment passed by the ITO. The Hon'ble Court has further observed that there may be several factors justifying the raising of new plea in an appeal and each case is to be considered on its own facts. The AAC must be satisfied that the ground raised was bona -fide and the same could not have been raised earlier for good reasons. The AAC should exercise discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to the appeals before the Tribunal also.

13.8 In the case of Assistant Commissioner of Income-tax Vs. DHL Operations BV, [2007] 13 SOT 581 (MUM.)(SB), the Hon'ble ITAT, Mumbai Bench 'B', (Special Bench) has held as under:-

"23.Clearly, therefore, the powers of the Tribunal are not confined to deal with the issues arising out of the orders of the authorities below. As long an issue has relevance to the correct determination of taxes in respect of the year, and particularly when relevant facts can be ascertained from the material already on record, it is open to the appellant and the cross- objector, to raise that issue, provided the issue so raised is bona fide and the same could not have been raised earlier for good reasons. As held by the Hon'ble Madras High Court in the case of Wilson Industries v. CIT [2003]

46 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 259 ITR 318, it is open to the Tribunal to permit even the Assessing Officer to raise a new ground of appeal 'if no new facts are required to be ascertained'. We agree that the Tribunal does indeed have the powers of admitting an additional ground of appeal which may not arise out of the orders of the authorities below. There is no longer any dispute or controversy about the powers of the Tribunal to admit an additional ground of appeal, as has been laid down by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. (supra). However, whether, in a particular situation, the Tribunal should exercise such powers or not, would essentially depend on the facts of such a case, as there cannot be any, and there is no, straight jacket formula of universal application to decide the question of admission of additional grounds, or a criterion for admission thereof, which operates de hors the peculiarities of a fact situation. 24. The observations extracted above were made by Their Lordships in the context of the additional grounds raised by the taxpayer, even though these observations, being general in nature, have also been applied, with equal force, to the additional grounds raised by the Assessing Officer. A Division Bench of this Tribunal in the case of Jt. CIT v. Sakura Bank Ltd. [2006] 100 ITD 215 has observed that "As long an issue has relevance to the correct determination of taxes in respect of the year, and particularly when relevant facts can be found from the material already on record, it is open to the appellant and the cross-objector, whether assessee or the revenue, to raise that issue, provided the issue so raised is bona fide and the same could not have been raised earlier for good reasons". These views are in conformity with the views of Hon'ble Madras High Court, as expressed in the case of Wilson Industries (supra), holding that it is open to the Tribunal to permit even the Assessing Officer to raise a new ground of appeal 'if no new facts are required to be ascertained'. One limitation on the admission of the additional ground, therefore, is that no new facts are required to be investigated upon such admission of the additional grounds."

13.9 In the case of Gadore Tools (P.) Ltd. Vs. Commissioner of Income-tax [1999] 105 TAXMAN 3 (DELHI), the Hon'ble Delhi High Court has held as under:- 4. The first question whether the Tribunal was right in law in admitting the additional grounds of appeal filed before it on 25-5-1982 is now squarely covered by the decision of the Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383/ 97 Taxman 358, holding that the Tribunal has discretion to allow or not to allow new grounds to be raised. Even in a situation where the Tribunal is only required to consider the question of law arising from facts, which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Accordingly, this question is answered in the affirmative and against the revenue.

13.10 A similar view has been held in the case of Wilson Industries Vs. Commissioner of Income-tax [2003] 259 ITR 318 (MAD.), wherein the Hon'ble Madras High Court has held that it is open to the appellate forum to consider a fresh ground, if sought to be raised by the parties, if no new facts are required to be

47 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors ascertained. It was, therefore, open to the Tribunal to permit the Revenue to raise the additional ground before the Tribunal.

13.11 In the case of VMT Spinning Co. Ltd. Vs. Commissioner of Income-tax, Ludhiana [2016] 74 taxmann.com 33 (Punjab & Haryana), the Hon'ble Punjab & Haryana HC has held that in terms of section 254(1), Tribunal while exercising its appellate jurisdiction, has discretion to allow to be raised before it new or additional questions of law arising out of record after giving a reasonable opportunity of being heard to other party.

13.12 I have noted that the Additional Ground of Appeal had raised an important jurisdictional issue, which goes to the root of the matter. Further, the appellate authorities have the plenary power to admit the additional grounds, if no new facts are to be brought on record. Hence, the Additional Ground of Appeal is admitted and adjudicated upon on merits, in the foregoing paragraphs.

13.3 Now coming to the merits of the Additional Ground of Appeal, I have noted that a search & seizure action u/s. 132 of the Act was conducted on 25.10.2016 on the JSK Group. It was a categorical finding of the search operation that the parties which have given unsecured loans to the Appellant Company are penny stock companies, which doesn't have any sound financials and further, they are owned by the Kolkata based operators. Further, the search operation have revealed that the lending companies doesn't have any substantial business operation and requisite creditworthiness to provide hefty loans to the Appellant Company.

13.14 The search operation and the enquiries conducted by the Department also established that the entities providing unsecured loan exists only on paper. The address given by such companies is only for the postal correspondence and such companies does not have any proper infrastructure or manpower to carryout any business activity. Further, the same address has been used by/ multiple companies for providing accommodation entries. A perusal and verification of the bank statement had revealed that funds have been credited to the accounts of these entry providers from various Kolkata based shell companies and the same have beed finally transferred to the Appellant] Company.

13.15 The search operation had also revealed that all such dummy concerns are owned by one, Shri Paraj Mehta, who is running them for providing exit route to beneficiaries for obtaining Bogus LTCG and accommodation entries. Also, these companies are engaged in circular transactions, as is evident form their bank accounts.

13.16 Further, during the course of survey on 18.09.2014, Shri Anish Shah, Director of M/s. JSK Industries Ltd. had accepted that M/s. Prayagchand Ashok Kumar P Ltd, M/s. Eklavya Management Services P Ltd and M/s. Purak Trading Pvt Ltd had large funds in their books when these were acquired by his family members. He was asked to furnish the source of funds existing in these three companies and he expressed his inability to furnish any supporting documents for the source of funds in these companies. Shri Anish D Shah admitted that the source of funds in these three companies were unexplained and thus offered the total amount of funds

48 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors invested by these companies in M/s JSK Industries P Ltd in the form of share capital and unsecured loans, as unaccounted income in the relevant assessment years.

13.17 To sum up, there was enough adverse material on record, including confessional statements, which is to be treated as incriminating in nature, as envisaged in the provisions of section 153A of the Act.

13.18 In the case of Commissioner of Income-tax, Thichur Vs. ST. Francis Clay Decor Tiles [2016] 70 taxmann.com 234 (Kerala), the Hon'ble Kerala High court has held that neither under section 132 or under section 153A, phraseology 'incriminating' is used by Parliament, therefore, any material unearthed during search operations or any statement made during course of search by assessee is a valuable piece of evidence in order to invoke section 153Aof the Act.

13.19 In the case of B. Kishore Kumar Vs CIT, 234 Taxman 771(SC), the Hon'ble Supreme Court has dismissed the SLP against High Court's order, wherein it was held that since assessee himself had stated in sworn statement during search and seizure about his undisclosed income, tax was to be levied on basis of admission without scrutinizing documents. Further, it was held that it is not the case of the assessee that the admission made by him was incorrect or there is a mistake. When there is a clear and categoric admission of the undisclosed income by the assessee himself, there is no necessity to scrutinize the documents.

13.20 In the case of Dayawanti through Smt Sunita Gupta &Anr Vs. CIT &Anr. (2016) 290 CTR 0361 (Del) : (2016) 143 DTR 0209 (Del) : (2017) 390 ITR 0496 (Delhi), the Hon'ble Delhi High Court had held that when statements were made under oath and were part of record and continued to be so, their probative value is undeniable; hence assessee's argument that they could not be acted upon or given any weight is insubstantial and meritless. The relevant portion of the said judgment is reproduced hereunder:-

"20. The lynchpin of the assessee's submissions on this aspect is also that the statements were not recorded during the search but later and that SL they cannot be considered of any value. This court is un-persuaded with the submission. The search was conducted on 22-03-2006. Various materials: documents, agreements, invoices and statements in the form of accounts and calculations were seized. On 18 April 2006 and 3 May 2006, the assessee's sons (including one of the appellants, Abhay Gupta) recorded statements under oath; the assessee too made her statement under oath, admitting that though returns were filed ostensibly on her behalf, she was not in control of the business. She and all other family members made short statements and endorsed the statements under oath, of those who elaborated the trading and business operations relating to clandestine income. These statements under oath were part of the record and continued to be so. They were never explained in any reasonable manner. Their probative value is undeniable; the occasion for making them arose because of the search and seizure that occurred and the seizure of various documents, etc. that pointed to undeclared income. In these circumstances, the assessee's argument that they could not be acted upon or given any

49 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors weight is insubstantial and meritless. This court also notices that the decision in CIT Vs. Anil Bhatia 352 ITR 493 (Del) which held that such statements are relevant, though noticed, has not been doubted in any later decision, including Kabul Chawla, which is the mainstay of the assessee's case. Consequently the first question of law is answered against the assessee and in the revenue's favour."

13.21 The Hon'ble Supreme Court in Basant Singh v. Janki Singh AIR 1967 SC 341, held that:

"An admission by a party in a plaint signed and verified by him in a prior suit is an admission within the meaning of section 17 of the Indian Evidence Act, 1872 and may be proved against him in other litigations... Section 17 of the Act makes no distinction between an admission made by a party in a pleading and other admissions."

13.22 Considering the evidentiary value of an admission and the fact that an admission shifts the onus in terms of section 31 of the Evidence Act, the Supreme Court in Kishori Lal v. ML Chaltibai AIR 1959 SC 504 held that:

". . . the admissions shifted the onus on to the respondent on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted, the fact admitted must be taken to be established...." (p. 511)

13.23 The admissions made under the Act bind the maker, when these are not rebutted or retracted. Some important judgments of the Hon'ble Supreme Court explain the concepts and relevance of admissions, as under:

(i) Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SQ: Their Lordships while observing that admission is an extremely important piece of evidence, held that, it cannot be said to be conclusive and the maker can show that it was incorrect. [Also refer S. Arjun Singh v. CWT [1989] 175 ITR 91/11988] 41 Taxman 272 (Del.)].

(ii) Narayan BhagwantraoGosaviBalajiwale v. Gopal Vinayak Gosavi AIR 1960 SC 100: The Hon'ble Supreme Court held that an admission is the best evidence that an opposite party can rely upon and, though not conclusive, yet could be decisive of the matter unless successfully withdrawn or proved erroneous.

(iii) Satinder Kumar (HUF) v. CIT [1977] 106 ITR 64 (SC): It was held that it is true that an admission made by an assessee constitutes a relevant piece of evidence but if the assessee contends that in making the admission he had proceeded on a mistaken understanding or on misconception of facts or on untrue facts such an admission cannot be relied upon without first considering the aforesaid contention.

50 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors (iv) Avadh Kishore Das v. Ram Gopal AIR 1979 SC 861: It was held that evidentiary admissions are not conclusive proof of the facts admitted and may be explained or shown to be wrong, but they do raise an estoppel and shift the burden of proof on to the person making them. The Supreme Court further held that unless shown or explained to be wrong, they are an efficacious proof of the facts admitted.

13.24 Respectfully following the judicial authorities on the subject, it is held that there is incriminating material on record, which can be used by the AO for framing an assessment u/s 153A of the Act. The incriminating material had been further elaborated upon in details in the later part of this appellate order and is not reproduced here, for the sake of brevity. Accordingly, the Additional Ground of Appeal raised by the Appellant Company is dismissed on merits.”

51 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors search and not otherwise. The ld AR, while referring to the assessment framed by the AO, submitted that no incriminating material or evidences were found during search on the assesse. The ld AR submitted that AO has mentioned in the assessment order itself that it was found during the course of block assessment proceedings that the appellant had taken unsecured loans from certain parties and that during the course of search, the parties from whom loans were taken were found to be paper companies having no sound financials and also owned by the Kolkata based operators. The ld AR submitted that even the Ld. CIT(A), in his appellate order at para 13.13, page 20, noted that there were the categorical findings of the search team qua the lenders companies not having sound financials but without any reference to the seized incriminating evidences found during search and same was the position in the assessment order passed by the AO. The ld AR submitted that in para 13.14, the Ld. CIT(A) has referred to the financial statements of the parties to hold that the multiple companies were having same address and that the bank statements also revealed that funds were credited in the account of these companies from the Kolkata based shell companies which were finally transferred to the appellant assessee. The ld AR stated that identical findings have been given in each of the assessment years where loans were taken from different parties. The ld AR argued that these financial statements of the lenders cannot be said to be incriminating and found during search. The ld AR submitted that the search in the present case was carried on 25.10.2016. At the time of search, the re-assessment proceedings for A.Y. 2010-11 u/s. 147 of the Act were going on. The assessment was

52 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors then completed u/s. 143(3) r.w.s. 147 on 31.12.2016 (i.e. immediately after search was conducted on 25.10.2016 and before issue of notice u/s. 153A by making addition u/s. 68 of the Act on account of the unsecured loans taken by the appellant amounting to Rs. 20.39 Crores. As such, the information with respect to the various parties in relation to the unsecured loans taken by the appellant assesse was in possession of the AO even at the time when the search action was conducted on 25.10.2016 as well as at the time of issue of notice u/s. 153A of the Act. In the similar manner, the assessment for A.Y. 2013-14 was also completed u/s. 143(3) of the Act on 29.03.2016 thereby making addition u/s 68 of the Act. Thus, financial statements of these parties were available with the department much before the search and seizure action.

24.1. The ld AR contended that the Assessing Officer and Ld. CIT(A) could not have concluded that the incriminating evidences were found during search since the said information/evidences were always available with the AO even prior to the search action. Further, as a matter of fact, during the course of impugned assessment proceedings, the AO had made enquiries with the lender parties by issuing notices u/s. 133(6) of the Act and copies of the financial statements were called for. The ld AR submitted that from said financial statements, the AO came to conclusion that the parties did not have sound financials to give loans to the appellant assessee. The ld AR also referred to the copies of the replies given by the said lender parties in response to the notice u/s. 133(6) of the Act are enclosed in the paper book. The ld AR submitted that thus, the information was gathered from said enquiries from the

53 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors lending parties u/s. 133(6) of the Act and not during the course of search action which clearly substantiated that the basis for making the addition u/s. 68 of the Act was post search enquiries during assessment proceedings u/s 153A of the Act.

24.2. The ld AR submitted that no specific seized materials or documents or evidences, indicating that the loans taken by the appellant were non genuine, had been brought on record or relied in the assessment order by the AO. Moreover, neither the AO nor the Ld. CIT(A) had stated whether these financial statements were found at the time of search. If these financial statements were found at the time of search, there would have been reference to the name of the lenders whose financial statements were found, the financial year of such financials found etc however, both authorities have remained silent over the same. The AR stated that these financial statements were available much before search action with the AO and later obtained during the course of impugned assessment proceedings. The ld AR submitted that undisputedly these evidences were not found at the time of search action.

24.3. The ld AR contended that in support of the said fact, it may be pertinent to mention that the Ld. CIT(A) has observed and relied upon the statement of Mr. Anish Shah recorded two years ago on 18.09.2014, that too during the course of Survey action u/s. 133A of the Act at the premises of the appellant based on which the assessment was completed for A.Y. 2010-11 on 31.12.2016 as referred to above. The ld AR submitted that the reliance on these statements proved that no incriminating materials/evidences were found as a result of search and that

54 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors these statements were already available even prior to the date of search. In other words, the ld AR stated that no search action was in fact required in order to addition u/s. 68 of the Act in the impugned year.

24.4. The ld AR submitted that in view of the above, it was proved unequivocally that the evidences in form of financial statements were not found as a result of search and hence could not be said to be incriminating evidences for making addition in the present case. Without prejudice, it was submitted that the financial statements relied upon by A.O. and Ld. CIT(A) could not be regarded as the incriminating evidences and hence the same cannot be considered to be the basis on which the addition could be made. The ld AR stated that the financial statements merely demonstrated the financial position of the lender companies and by no stretch of imagination, it could be said that the financial position on the face of it would be incriminating information to make addition. The ld AR reiterated that no additions could be made in an unabated assessment on the date of search in absence of any incriminating materials found during impugned search. In defense of his arguments the ld AR relied on the following decisions: i)CIT v. Continental Warehousing Corporation (Nhava Shava) Ltd. [SLP (Civil) No. 18446/2018] dated 09.07.2018 ii)CIT v. Continental Warehousing Corporation (Nhava Shava) Ltd. & Other [374 ITR 645 (Bom)] iii)PCIT v. Meeta Gutgutia [96 taxmann.com 468 SC] iv)PCIT v. Meeta Gutgutia [395 ITR 526 (Del)]

24.5. Further the ld AR submitted that the Assessing Officer has also relied upon the statement of Mr. Paraj Mehta recorded at

55 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors the time of search and observed that most of the companies from whom loans were taken by appellant were owned by Mr. Paraj Mehta however even the said statement of Mr. Paraj Mehta did not support the case of the AO. The ld AR referred to the said statement of Mr. Paraj Mehta recorded u/s. 131 of the Act during the course of survey action u/s. 133A of the Act a copy of which is filed at the paper book. The perusal of the said statement and the answers to the questions raised by the survey party revealed that at no point of time, it had been accepted by Mr. Paraj Mehta that the loans given by the various companies to the appellant and group concerns were not genuine. The ld AR while referring to the answers to question no.3 to question no 33 of the said statement submitted that Mr. Paraj Mehta had categorically stated that all the loans to the appellant and group concerns were genuine and were duly supported by necessary evidences as he has repeatedly stated that all the transactions were genuine and duly confirmed. The ld AR submitted that no incriminating evidences were also found from the premises of Mr. Paraj Mehta which could even remotely establish the loan transactions to be bogus. The ld AR argued that it is settled position in law that the statements recorded during search by itself cannot be said to be incriminating evidence found as a result of search, even if such statements admitted any adverse scenario. This is because the statements are not the evidences found as a result of search but are recorded to record the facts/materials found during the search action and as such not found during the search action. In this regard, the ld AR placed reliance on the following decisions wherein it has been held that the statement per se cannot be considered to be an

56 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors incriminating evidences found as a result of search: 1. PCIT v. Best Infrastructure (India) Pvt. Ltd. & Ors. [397 ITR 82 (Del)] 2. CIT v. Harjeev Aggarwal [290 CTR 263 (Del)] PKSS Infrastructure Pvt. Ltd. v. DCIT and vice-versa (Mum ITAT) [ITA No. 5680-5681/Mum/2018 and 5802- 5803/Mum/2018] dated 29.11.2019 3. DCIT v. Shivali Mahajan and vice-versa and others (Del ITAT) [ITA No. 5585-5590/Del/2015 and CO No. 447-452/Del/2015] dated 19.03.2019 4. Geetanjali Space Pvt. Ltd. v. DCIT [ITA No. 782/Mum/2019] dated 31.05.2019

24.6. The ld AR submitted that in light of the above submissions and contentions, that the addition made by the Assessing Officer is without jurisdiction and contrary to the provisions of the Act and may kindly be deleted.

57 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors that assessee has taken huge bogus loans from Kolkata based shell companies by routing its own money resulting into income escaping the assessment otherwise the purpose of search action would be defeated. The DR contended that the search was conducted only after the concrete information that the assessee has indulged in taking accommodation entries on mass scale from shell companies having no financial strength and no creditworthiness leading to the definitive conclusion that these transactions were sham and not genuine. The DR relied heavily on the order of ld CIT(A) and prayed that the same may kindly be upheld as the ld CIT(A) has passed a very reasoned order justifying the addition even in case of unabated years and may kindly be affirmed.

58 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors remand report was furnished by the AO before the ld CIT(A). So the ld CIT(A) decided the issue on the basis of material before him. The ld, CIT(A) observed that the incriminating materials were there in the form of confessional statements and categorical findings that the huge unsecured loans were advanced by Kolkata based shell /penny stock companies to the assessee and related entities without having any financial strength, creditworthiness and business activities. Ld CIT(A) also noted that the funds were credited in the bank accounts of these entry providers from various Kolkatta based shell/penny stock companies which were owned and managed by Shri Paraj Mehta. The ld CIT(A) also observed that Mr Anish Shah Director of the appellant had accepted that when three entities namely M/S Pragyachand Ashok Kumar Pvt. Ltd, M/S Eklavya Management Services Pvt Ltd and Purak trading Pvt Ltd were acquired by his family there were huge funds in these entities which could not be explained by Mr Anish Shah. Finally the ld CIT(A) concluded that the incriminating materials were in the form of confessional statements and findings of the search team that the assesse alongwith group entities has taken huge unsecured loans from shell/penny stocks companies. Upon perusal of the appellate as well as assessment order, we find that during the course of search no such incriminating materials/evidences were found by the search team except the confessional statements statement of various key persons in the assessee’s group recorded under section 132(4) of the Act during search and material gathered in post search proceedings such as findings of the search team as to the loans taken by the assessee. Now the issue before us whether or not statements

59 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors recorded during search u/s 132(4) of the Act or findings of the search team constitute incriminating materials found during search or not. We have perused the facts on records and after analyzing them in the light of various decisions of tribunal and Hon’ble High Courts we opine that such materials/evidences can not be said to be found during the course of search. We further find merits in the contentions of the assessee that materials/evidences have to be found during search beside being incriminating which was not the case before us. So much so that when the ld CIT(A) called remand report from the AO on the incriminating seized materials, the AO has not bothered to file even a report on the incriminating material before the ld CIT(A) and the ld CIT(A) decided the appeal on the basis of available materials on records before him and thus dismissed the appeal of the assesse on legal issue on the ground that the confessional statements and findings during post search proceedings constituted incriminating materials which in our opinion is not the correct position of law. Therefore, we are not in agreement with the conclusion drawn by the Ld. CIT(A) on this issue. Further , the findings of the search team qua the loans taken by the appellant can not be said to have been found during search and hence same can not be construed or considered as incriminating evidences found during the course of search in order to make the addition in an unabated assessment year. It is undisputed that during the course of search proceedings on the assesse, no incriminating materials were found indicating that the appellant is a beneficiary of hawala loans from Kolkata based bogus/shell companies. The assessee has also categorically denied in the statement recorded

60 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors under section 132(4) of the Act that the loans taken from these companies were bogus. In the instant case, the assessee filed the return of income under section 139(1) of the Act on 29.09.2011 whereas the search was conducted under section 132(1) of the Act on 25.10.2016 and the assessment u/s 143(3) was already framed even prior to the date of search . Therefore the present assessment year has not abated on the date of search. It is also a settled position of law that any addition in a non abated assessment year can only be made on the basis of incriminating material found during the course of search and not otherwise. In view of these facts and circumstances, we are of the opinion that during the course of search no such incriminating material/evidences were found by the search team. Now the issue before us whether the statement recorded during search u/s 132(4) of the Act or material gathered during post search proceedings constitute incriminating materials found during search or not. We have perused the facts on records and after analyzing them in the light of various decisions of tribunal and Hon’ble High Courts, we opine that such materials/evidences can not be said to be found during the course of search. We further find merits in the contentions of the assessee that materials/evidences have to be found during search and have to be incriminating which was not the case before us. Therefore, we are not in agreement with the conclusion drawn by the Ld. CIT(A) on this issue. We note that information was available with the revenue authorities qua the bogus loans even before the date of search and search was, in fact, carried out on the basis of said the said information and therefore same can not be construed or considered as

61 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors incriminating evidences found during the course of search in order to make the addition in an unabated assessment year.

26.1. We also note that Ld. CIT(A) has held that the statement recorded of the assessee under section 132(4) of the Act during the search on 25.10.2016 constituted the incriminating material. In our considered opinion, the findings of the ld CIT(A) that statement recorded during search constituted incriminating material appears to be not correct as the same can not be said to be found during the course of search but is recorded to elicit more information/explanation of the searched person on the incriminating documents/gold/jewellery found during search. Thus after perusing the material on record and considering rival contentions and also the decisions cited before us, we are of the considered view that a statement recorded during the course of search can not be considered an incriminating material in order to make addition in an unabated assessment year. The case of the assessee is supported by the decisions of the co-ordinate bench of the Tribunal which are dealt with as follows: a)In the case of DCIT vs. Shivali Mahajan & others (supra). The relevant paras are reproduced below: “3……. During the course of search, statement of Shri Lalit Mahajan i.e., the assessee in appeal No.5590/Del/2015 was recorded, in which, he admitted of cash investment by him and other family members in respect of booking of space in Indirapuram Habitat Centre…… 4. …….. 7. Learned DR, on the other hand, stated that during the course of search of Aerens Group who is the builder and developer of Indirapuram Habitat Centre……………..….. That the statement under Section 132(4) has a legal sanctity and that by itself constitutes an evidence and addition can be made on the basis of assessee’s statement………… 8. …….. 9. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the facts of the case and the rival submissions, we find that in these appeals, following two questions arise for our consideration :

62 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors (i) Whether any material found in the search of any other person than the assessee in appeal can be considered in the assessment under Section 153A of the assessee. (ii) Whether the addition can be made only on the basis of statement given by the assessee during the course of search. ……………. 16 Now, coming to question No.2, we find that this issue is also covered by the decision of Hon'ble Jurisdictional High Court in the case of Harjeev Aggarwal (supra) and Best Infrastructure (India) (P.) Ltd. (supra). In the case of Harjeev Aggarwal (supra), Hon'ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 & 24, which are reproduced below for ready reference :-………..

b) Similar ratio has been laid down in the cases of PCIT vs Best Infrastructure (India) Pvt. Ltd. & Ors. (supra)(Del) ,CIT v. Harjeev Aggarwal (Del)(Supra), PKSS Infrastructure Pvt. Ltd. v. DCIT and vice-versa (Mum ITAT) (supra), Geetanjali Space Pvt. Ltd. v. DCIT (supra)

26.2. Therefore, on this count also, we are not in agreement with the conclusion drawn by the Ld. CIT(A). In our considered view, the statement recorded under section 132(4) of the Act can not

63 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors be considered as incriminating material found in the course of search. This is an undisputed position of law that in case of unabated assessment year, no addition can be made in absence of any incriminating materials found during the course of search. The case of the assessee is squarely covered by series of decisions which are dealt with as under: a) In CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), the Honble Bombay high Court has held that no addition can be made in respect of assessments which have become final on the date of search if no incriminating material is found during search and the SLP filed by the revenue against the order of Bombay high in SLP (Civil) Diary Nos.18446/2018 has also been dismissed vide order dated 09.07.2018. b) The case of the assessee is supported by the decision of the Apex Court in the case of PCIT vs. Meeta Gutgutia (supra) wherein the Hon’ble Supreme Court has held that invocation of section 153A of the Act to reopen the concluded assessment was not justified in absence of any incriminating material found during the course of search and thus dismissed the SLP filed by the Revenue against the decision of Hon’ble Delhi High Court as reported in PCIT vs. Meeta Gutgutia (2017) 82 taxmann.com 287 (Delhi).

26.3. In view of the above facts and circumstances and various decisions as discussed above , we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition. The ground No.1 is allowed.

64 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 27. The issues raised in the other ground no. 2 & 3 on merits are similar to ones as decided by us in ground no. 3 to 5 in ITA No. 5891/M/2019 AY 2010-11. Therefore our finding on merits in in ground no. 3 to 5 in ITA No. 5891/M/2019 AY 2010-11 would ,mutatis mutandis, apply to ground no. 2 & 3 of this appeal as well. Consequently the ground no.2 and 3 are allowed.

ITA No.6311/M/2019 30. Since we have allowed the appeal of the assesse on jurisdictional issue as well as on merits, therefore the cross appeal by the Revenue in ITA No. 6311/Mum/2019 would become infructuous and is accordingly dismissed.

(Assessee’s appeals) : - ITA Nos.5893, 5894, 5895, 5896 & 5897/M/2019 Assessment Years: 2012-13, 2013-14, 2014-15, 2015-16 & 2016-17; ITA Nos.5975, 5976 & 5977/M/2019; Assessment Years: 2014-15, 2015-16 & 2016-17;

65 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors ITA Nos.6001, 5934, 5935, 5936, 5937, 5938 & 5939/M/2019; Assessment Years: 2010-11, 2011-12, 2012- 13, 2013-14, 2014-15, 2015-16 & 2016-17; ITA Nos.5953, 5954, 5955, 5956 & 5957/M/2019; Assessment Years: 2011-12, 2012-13, 2014-15, 2015-16 & 2016-17

(Revenue’s appeals) : - ITA Nos.6312, 6313, 6314, 6315 & 6316/M/2019; Assessment Years: 2012-13, 2013-14, 2014-15, 2015-16 & 2016-17; ITA Nos.6250 & 6247/M/2019; Assessment Years: 2014-15 & 2015-16;

ITA Nos.6248, 6323 & 6324/M/2019; Assessment Years: 2010-11, 2011-12 & 2012-13; ITA Nos.6296, 6383 & 6384/M/2019; Assessment Years: 2014-15, 2015-16 & 2016-17

66 ITA Nos.5891, 5892, 5893, 5894, 5895, 5896 & 5897/M/2019 & ors M/s. JSK Industries Pvt. Ltd. & ors 33. In the result the appeals of the assesse are allowed for statistical purpose and appeals of the revenue are dismissed.

Order pronounced in the open court on 28.10.2021.

Sd/- Sd/- (Amarjit Singh) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated: 28.10.2021. * Kishore, Sr. P.S.

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [ By Order

Dy/Asstt. Registrar, ITAT, Mumbai.