B & M BUILDCON ,MUMBAI vs. DCIT , CC- 1 (1), MUMBAI

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 आयकर अपीलीय अधिकरण “बी” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI माननीय श्री महावीर स िंह, उपाध्यक्ष एवुं माननीय श्री मनोज कुमार अग्रवाल ,लेखा दस्य के मक्ष। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील िं./ I.T.A. No.6673/Mum/2019 (धििाारण वर्ा / Assessment Year: 2013-14) & आयकरअपील िं./ I.T.A. No.6674/Mum/2019 (धििाारण वर्ा / Assessment Year: 2014-15) M/s. B & M Buildcon DCIT-Central Circle-1(1) V-Time Square, Level 13 Room No.903, 9th Floor बिाम/ Plot No.3, Sector-15 Pratishtha Bhavan Vs. Palm Beach Road, CBD Belapur Old CGO Bdg. (Annexe) Navi Mumbai- 400 614. M.K. Road, Mumbai- 400 020. स्थायीलेखा िं./जीआइआर िं./PAN/GIR No. AALFB-6551-C (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : & आयकरअपील िं./ I.T.A. No.7472/Mum/2019 (धििाारण वर्ा / Assessment Year: 2013-14) ACIT-Central Circle-1(1) M/s. B & M Buildcon Room No.903, 9th Floor V-Time Square, Level 13 बिाम/ Pratishtha Bhavan Plot No.3, Sector-15 Vs. Old CGO Bdg. (Annexe) Palm Beach Road, CBD Belapur M.K. Road, Mumbai- 400 020. Navi Mumbai- 400 614. स्थायीलेखा िं./जीआइआर िं./PAN/GIR No. AALFB-6551-C (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : Assessee by : Shri Vijay Mehta-Ld.AR Revenue by : Shri Rahul Raman-Ld. CIT- DR ुनवाई की तारीख/ : 20/02/2020 Date of Hearing घोषणा की तारीख / : 20/03/2020 Date of Pronouncement

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1.1 The captioned appeals by assessee for Assessment Years [in short referred to as ‘AY’] 2013-14 & 2014-15 and appeal by revenue for AY 2013-14 arises out of common order of Ld. Commissioner of Income-Tax (Appeals)-47, Mumbai, [in short referred to as ‘CIT(A)’], Appeal Nos. CIT(A)-47/12766/2016-17 & CIT(A)-47/12778/2016-17 dated 20/09/2019. First, we take up cross-appeals for AY 2013-14. Cross Appeals for AY 2013-14 1.2 The grounds raised by the assessee read as under: - 1. On the facts & circumstances of the case the appellant prays that the order passed U/s 143(3) r.w.s. 153A of Income Tax Act,1961 (hereafter "the Act") by Deputy Commissioner of Income Tax, Central Circle 1(1), Mumbai being Learned Assessing Officer, ("hereafter Learned AO") and confirmed by Learned Commissioner of Income Tax (Appeals) -47, Mumbai (" hereafter Learned CIT-A") is bad in law as the provisions of Section 153A are not applicable for A.Y. 2013-14. In view of this the appellant prays that the order passed by Learned CIT-A by invoking the provisions of Section 153A and making total addition of Rs.7,54,61,917/- in respect of nine parties being principal loan amounting to Rs.6,87,00,000/- and interest on loan amounting to Rs.67,61,917/- may be cancelled. 2. On the facts & circumstances of the case the appellant prays that, during the course of search no incrementing material is found or seized in connection with the loans taken by the appellant from various parties. The assessment for A.Y. 2013-14 was completed and no proceedings were pending as on date of search. Based on these facts the appellant prays that the order passed by Learned CIT-A by invoking the provisions of Section 153A and making total addition of Rs.7,54,61,9177- in respect of nine parties being principal loan amounting to Rs.6,87,00,000/- and interest on loan amounting to Rs. 67,61,917/- may be cancelled. 3. On the facts & circumstances of the case the appellant prays that in the order passed by the Learned AO and confirmed by Learned CIT-A there is no reference to any material found or seized during the course of search. In view of this the appellant prays that the order passed by Learned CIT-A by invoking the provisions of Section 153A and making total addition of Rs.7,54,61,917/- in respect of nine parties being principal loan amounting to Rs.6,87,00,000/- and interest on loan amounting to Rs. 67,61,917/- may be cancelled. Without prejudice to grounds 1 to 3: -

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 4. On the facts & circumstances of the case the Learned CIT-A has erred in concluding that the statement recorded of Mr. Navneet Singhania be treated as incriminating material found during the course of search. The conclusion reached by CIT-A is erroneous. The appellant prays that the statement of Mr. Navneet Singhania cannot be construed as incriminating material found during the course of search. Appellant submit that the content of the statement of Mr. Navneet Singhania are contrary to the proof produced by the appellant during the course of assessment proceeding and appellate proceeding. There is nothing in the statement of Mr. Navneet Singhania which contrary to the evidences proof and submitted before authority. 5. On the facts & circumstances of the case the appellant prays that no opportunity of cross examination given to the appellant. The appellant prays that the order passed by the Learned AO and confirm by Learned CIT-A is against the principles of natural justice and ignoring the judicial process. The appellant prays that the order passed by the Learned AO and confirmed by Learned CIT-A may be cancelled. Without prejudice to ground no.l and 5: 6. On the facts & circumstances of the case the appellant prays that the addition made by the Learned CIT-A U/s 68 of Income tax act, 1961 amounting to Rs.6,87,00,000 ignoring the evidences, proof and material produced, is not justified and be deleted. 7. On the facts & circumstances of the case the appellant prays that no addition can be made in the hands of the appellant firm in AY 2013-14 as the appellant had not started any activity during the period April 2012 to September 2012 which would yield income to the extent of Rs.6,87,00,000/- being the amount taxed by the Learned AO and confirmed by Learned CIT-A U/s 68 of Income Tax Act, 1961. The appellant prays that the addition confirmed by Learned CIT-A amounting to Rs.6,87,00,0007- is not justified be deleted. 8. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from Carelink Vyapar Private Limited amounting to Rs.33,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 9. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from Chetna Suppliers Private Limited amounting to Rs.80,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 10. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from Galore Suppliers Private Limited amounting to Rs.1,50,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 11. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from Sumangal Investment Consultants Private Limited amounting to Rs.30,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 12. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from S.K. Stock Dealers Private Limited amounting to Rs.103,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 13. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from Elegance Trade & Holdings Private Limited amounting to Rs.1,13,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 14. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from Elgin Sales Promotion Limited amounting to Rs.10,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 15. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from Tristar Agencies Private Limited amounting to Rs. 87,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 16. On the facts & circumstances of the case the Learned CIT-A erred in confirming the provisions of section 68 of the Act in respect of loans taken from Welon Advisory Services Private Limited amounting to Rs.81,00,000/-. The Learned CIT-A has ignored the evidences and the proof submitted before him in respect of the said loan. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 17. On the facts & circumstances of the case the appellant prays that the Learned CIT-A has erred in confirming the provisions of Section 69C of the Act in respect of gross interest payment of Rs.67,61,917/-. The appellant prays that the addition confirmed by the Learned CIT-A is not justified be deleted. 18. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to Carelink Vyapar Private Limited amounting to Rs.3,49,348/- by invoking the provisions of Section 69C of the Act. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 19. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to Chetna Suppliers Private Limited amounting to Rs.5,94,082/- by invoking the provisions of Section 69C of the Act.The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 20. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to Galore Suppliers Private Limited amounting to Rs.15,71,836/- by invoking the provisions of Section 69C of M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 the Act. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 21. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to Sumangal Investment Consultants Private Limited amounting to Rs.1,48,767/- by invoking the provisions of Section 69C of the Act. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 22. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to S.K. Stock Dealers Private Limited amounting to Rs.9,78,937/- by invoking the provisions of Section 69C of the Act. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 23. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to Elegance Trade & Holdings Private Limited amounting to Rs.12,81,533/- by invoking the provisions of Section 69C of the Act. The appellant prays that the said addition confirmed by Learned CIT- A is not justified and be deleted. 24. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to Elgin Sales Promotion Limited amounting to Rs.69,699/- by invoking the provisions of Section 69C of the Act. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 25. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to Tristar Agencies Private Limited amounting to Rs.8,88,789/- by invoking the provisions of Section 69C of the Act. The appellant prays that the said addition confirmed by Learned CIT-A is not justified and be deleted. 26. On the facts & circumstances of the case the Learned CIT-A has erred in confirming the disallowance in respect of interest paid to Welon Advisory Services Private Limited amounting to Rs.8,78,926/- by invoking the provisions of Section 69C of the Act. The appellant prays that the said addition confirmed by Learned CIT- A is not justified and be deleted. 27. The Learned CIT-A has erred in confirming the levy of interest U/s 234B at INR. 1,12,38,734/-. The appellant denies the liability of payment of interest U/s 234B. On the facts & circumstances of the case the appellant submits that levy of interest U/s 234B at INR. 1,12,38,734/- is not justified and be deleted. 28. Without prejudice to ground number 27, appellant prays that interest U/s 234B may be calculated after considering the tax liability based on decision of appellate authority.

Although the assessee has raised multiple grounds of appeal, but in sum and substance, the assessee is aggrieved by addition u/s 68 for Rs.687 Lacs and disallowance of consequential interest for Rs.67.61 Lacs.

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 1.3 The grounds raised by the revenue read as under: - 1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was right in allowing the appeal filed by the assessee by relying on the decision of the Hon'ble Bombay High Court ignoring the fact that issue same of this appeal is pending before the Hon'ble Supreme Court of India in various other appeals. 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in narrowing down the scope of assessment u/s. 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during the search could be brought to tax. 3. Whether on the facts and circumstances of the case and in law, the Ld.CIT (A) was correct in holding that the scope of section 153A is limited to assessing only search related income, thereby denying Revenue, the opportunity of taxing other escaped income that comes to the notice of the Assessing Officer. 4. Whether on the facts and circumstances of the case and in law, Ld.CIT(A) was correct in holding that information available with the Revenue department as well the information yielded during the post search proceedings and connected to the search and seizure proceedings regarding unsecured loans, in the form of statement recorded on oath is not incriminating material? 5. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in partly allowing the appeal filed by the assessee and deleting the addition of Rs.4,20,00,000/- being the addition made u/s 68 of the IT. Act 1961 though the creditworthiness of the parties from whom the share application money was received and genuineness of the said transaction were not proved. 6. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in partly allowing the appeal filed by the assessee and deleting the addition of Rs.37,34,049/- being the addition made u/s. 69C of the I.T. Act, 1961 of interest expenses on unproven unsecured loans in consequence of deleting the additions made u/s. 68 of the I.T. Act, 1961 as above.”

2.1 Facts on record would reveal that the assessee being resident firm stated to be engaged in construction activities was subjected to an assessment u/s 143(3) r.w.s. 153A on 29/12/2016 wherein the income of the assessee was determined at Rs.1212.96 Lacs after certain addition u/s 68 for Rs.1107 Lacs & disallowance of interest for Rs.104.95 Lacs as against returned income of Rs.1 Lac e-filed by the assessee on 20/09/2013. 2.2 Pursuant to search operations conducted by DDIT(Inv.), Unit-IV(2), Thane on Balaji group of cases on 28/01/2015, the premises of the assessee situated at V-Time Square, Level-13, Plot No.3, Sector-15,

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 Palm Beach Road, CBD Belapur, Navi Mumbai was also covered. Accordingly notice u/s. 153A was issued on 18/05/2016. In response, the assessee filed return of income on 13/06/2016 declaring total income of Rs.1 Lacs which was similar to regular return filed by the assessee on 20/09/2013. The notices u/s 142(1) were issued in due course calling for requisite details and information. 2.3 During the course of search and seizure action, it was observed that assessee obtained unsecured loans from various corporate entities from as many as 18 entities. The statement of one Shri Nitin Gajipara, who was having a major share in the assessee firm, was recorded wherein he was asked to name the persons who had arranged loans from outstation entities. He was also asked to name the directors / promoters of such entities. But he could not reply to such queries. 2.4 In post-search inquiries, commission u/s 131(1)(d) were issued to DDIT(Inv.), Kolkata and based on outcome thereof, the assessee was issued a show cause notice on 24/11/2016. The attention was drawn to the investigation carried out by DDIT (inv.), Kolkata to ascertain the genuineness of the transactions. The DDIT (Inv.), Kolkata had issued summons to all the 18 entities. It appeared from their database that all the stated entities appeared to be paper companies without doing any actual business. Four of such entities were stated to be operated by one Shri Praveen Agarwal whereas nine entities were stated to be operated by another entry operator Shri Navneet Singhania. The assessee was stated to have received loans of Rs.687 Lacs from 9 entities of Shri Navneet Singhania. The statement of Shri Navneet Singhania was recorded wherein he admitted to providing accommodation entry for M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 unsecured loans to the assessee. The statement of Shri Praveen Agarwal was recorded during the proceedings in some other cases wherein he admitted to be in indulging in providing accommodation entries. Similar commission u/s 131(1)(d) were issued to DDIT (Inv.) Surat to inquire about the genuineness of other 3 entities. However, the summon in those 3 cases could not be served. All these facts were confronted to the assessee vide show-cause notice dated 24/11/2016 and the loans received by the assessee were proposed to be added to the income of the assessee as unexplained cash credit u/s 68. 2.5 In defense, the assessee vehemently opposed the action of Ld. AO vide submissions dated 07/12/2016, the contents of which have already been extracted in para 3.3. of the quantum assessment order. We have perused the assessee’s submissions before Ld. AO during the course of assessment proceedings. 2.6 In the said submissions, the assessee, inter-alia, submitted the confirmation from lenders, their respective Income Tax Returns, audited financial statements, bank statements of lenders along-with affidavit from the directors of all the 18 entities stating that their respective entities had advanced loan to the assessee which was duly repaid by the assessee well before the date of search i.e. 28/01/2015. A chart giving complete details of 18 entities and documents submitted in support of the stated loans aggregating to Rs.1107 Lacs was also placed on record It was submitted that all the entities had sufficient net worth to advance the loans to the assessee. The payments were though banking channels. The transactions were duly reflected in their respective audited financial statements. There was no immediate cash deposit in the bank accounts.

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 The loans were already repaid by the assessee well before the date of search. On the strength of these documents and submissions, the assessee submitted that it had demonstrated the fulfilment of primary ingredients of Sec.68 and therefore, the proposed additions were not justified. 2.7 The assessee also submitted that the only evidence being relied upon by Ld. AO to make impugned additions in the hands of the assessee was the statement of Shri Nitin Singhania and apart from the said statement, there was no evidence on record to prove that the transactions were not genuine. Even if the statement was relied upon, there was no direct evidence of the allegation that the cheques were received in lieu of cash. The attention was also drawn to the fact that no opportunity of cross-examination of Shri Nitin Singhania was ever provided to the assessee. 2.8 The assessee also controverted the statement of Shri Praveen Agarwal by drawing attention to the fact that there was no reference of loan given to the assessee and the statement was recorded under different context and therefore, the same would have no relevance and could not be relied upon. 2.9 Another fact brought to the notice was that the assessee had paid interest to all the 18 entities by account payee cheque after deduction of tax at source. All the parties had claimed TDS credit in their respective returns of income which would prove that the transactions were genuine. The same was fortified by the fact that assessment of 5 entities was completed in scrutiny assessment u/s 143(3) wherein the books results were substantially accepted by the department.

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 2.10 The assessee also opposed the extraction of confessional statement without any credible evidence which was contrary to the CBDT instructions No. F.NO.286/2/2003-IT (Inv.II) dated 10/03/2003. It was submitted that no additions could be made merely on the basis of statement recorded during search proceedings without bringing on record any independence evidences. 2.11 The attention was further drawn to the fact that assessee firm came into existence only during February,2012 whereas the loans were obtained during the period April, 12 to September, 2012. Therefore, there was no possibility for the firm to earn the cash income of more than Rs.11 Crores during this period and therefore treating the same as undisclosed income of the firm would be merely on the basis of assumptions and presumption. 2.12 Lastly, it was submitted that time limit for issuance of notice u/s 143(2) had already expired on 30/09/2014. Since no notice was issued to the assessee by that date, it was not the case of abated assessment. Therefore, in terms of Sec. 153A, Ld. AO could assessee such income only with respect to incriminating material found during the course of search operations. In the case of the assessee, no single piece of paper, evidence, proof, document etc. was found which would establish that the loan was not genuine. Therefore, the decision of Hon’ble Bombay High Court in All Cargo Global Logistics Ltd. 364 ITR 645 was applicable to the factual matrix and the additions were unsustainable. 2.13 However, these arguments could not convince Ld.AO, who going by the investigation carried out by DDIT (Inv.) added the amount of Rs.1107 Lacs in the hands of the assessee as unexplained cash credit

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 u/s 68. The returned income and quantum of share premium held by all these entities have been extracted in para 3.5 & 3.10.2 of the quantum assessment order. Consequently, the interest of Rs.104.95 Lacs paid by the assessee against aforesaid loans was also disallowed. 3.1 Aggrieved, the assessee contested the action of Ld. AO on legal grounds as well as on merits. On legal grounds, the assessee submitted that since no incriminating material was found and the assessment had not abated and therefore, the impugned additions were unsustainable. The assessee’s submissions have been extracted on page nos. 22 to 37 at para 8.0 of the impugned order. Upon perusal, we find that the assessee’s submission, in sum and substance, were the same as submitted before Ld.AO. The assessee, inter-alia, submitted paper books containing 843 pages and assailed the addition by reiterating that in the absence of any incriminating material, no addition could be made u/s 153A in terms of binding decision of Hon’ble Bombay High Court rendered in All Cargo Global Logistics Ltd. 364 ITR 645. On merits, the assessee submitted that it demonstrated the fulfilment of primary ingredients of Sec.68 and therefore, the additions were not justified. 3.2 The Ld. CIT(A), at para 11.0, agreed with assessee’s submissions that it was a case of unabated assessment since no notice u/s 143(2) was issued to the assessee within the prescribed mandatory time limit of 6 months from the end of financial year in which the return was filed. That relevant date, for year under consideration, was 30/09/2014. The search was conducted on the assessee on 28/01/2015. Therefore, Ld. AO could make additions only on the basis of incriminating material

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 found during the course of search operations in terms of binding decision of Hon’ble Bombay High Court. 3.3 Proceeding further, it was noted that Shri Navneet Singhania admitted to have provided accommodation entries in lieu of cash to the assessee. The said statement was held to be incriminating in nature for the purpose of Sec.153A in relation of loan transactions taken by the assessee from entities operated by Shri Navneet Singhania. Therefore, it was held that Ld.AO was empowered to make assessment on the basis of confessional statement of Shri Navneet Singhania. Consequently, the additions of Rs.687 Lacs, being loan obtained from the entities of Shri Navneet Singhania, was confirmed. As a natural corollary, the disallowance of interest of Rs.67.61 Lacs relating to above loans was also confirmed. 3.4 The plea that no opportunity of cross-examination was provided to the assessee was disregarded in the light of confessional statement of Shri Navneet Singhania. 3.5 With respect to balance loans, it was noted that there was not even an iota of adverse inference on record and therefore, the additions could not be sustained as held by Ld. CIT(A) in the case of Shri Nitin B. Gajipara for AYs 2012-13 to 2015-16. The decision rendered in the case of Shri Nitin B. Gajipara has been extracted on page nos. 48 to 117 of the impugned order. Following the same, the balance additions as well consequential interest disallowance was deleted. The adjudication by Ld. CIT(A) has given rise to the cross-appeal before us. The assessee is aggrieved by additions as sustained by Ld. CIT(A) u/s 68 as well as consequential interest disallowance. The revenue is M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 similarly aggrieved by deletion of part additions u/s 68 as well as deletion of consequential interest disallowance. 4. The Ld. Authorized Representative, at the outset, submitted that it is an admitted fact the no incriminating material was found during the course of search proceedings on assessee on 28/01/2015. The assessment for year under consideration was not pending on the date of search and the time limit for issue of scrutiny notice u/s 143(2) had already expired on 30/09/2014. Therefore, the binding case law of Hon’ble Bombay High Court rendered in CIT Vs. Continental Warehousing Corporation [2015 374 ITR 645] was squarely applicable to the fact of the case and therefore, no addition could be made in the hands of the assessee. For the submission that third-party statement post search proceedings could not be termed as incriminating material for the purpose of Sec.153A, reliance was placed on the decision of this Tribunal rendered in cross-appeals for AYs 2009-10 & 2010-11 in the case of PKSS Infrastructure Pvt. Ltd., ITA Nos.5680/Mum/2018 & ors., common order dated 29/11/2019. A copy of the same has been placed on record. The Ld.AR, drawing our attention to the documentary evidences, assailed the quantum additions on merits also. 5.1 Au Contraire, Ld. CIT-DR, relied upon the conclusion of Ld. CIT(A) that the statement of Shri Navneet Singhania would constitute incriminating material. The Ld. CIT-DR, placed on record, paper-book containing 192 pages which include copy of panchnama, copy of statement of Shri Nitin B. Patel, copy of list of account books seized, copy of order u/r 112(6) of IT Rule, 1962 r.w.s 132 of the Act, Copy of Spring file 1 & 2 seized, copy of seized papers found in cupboard of Shri

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 Nitin B. Patel, copy of analysis of seized incriminating entries in the books of accounts. However, nothing could be pointed out in the documents which could be said to be an incriminating material in relation to unsecured loans obtained by the assessee during the year under consideration. 5.2 The Ld.CIT-DR, vide written submissions dated 03/03/2020, filed a note on applicability of decision of Hon’ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation [supra]. It has been submitted that a distinction has been made between the assessment proceedings which are abated and the assessment / reassessment proceedings which have attained finality. It is pertinent to note the Hon’ble court has referred only to assessment / reassessments finalized before the date of search and seizure and has held that such finalized assessment / reassessment could not be disturbed if no material was unearthed during the course of search and seizure action. It has been submitted that an intimation u/s 143(1) could not be considered to be an assessment in the background of decision of Hon’ble Apex Court rendered in ACIT V/s Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500 23/05/2017) wherein it was observed that: - It is significant that the acknowledgement is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any "assessment" is done by them? The reply is an emphatic "no". The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assess- ment under section 143(1)(a), the question of change of opinion, as contended, does not arise.

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 Therefore, Ld.CIT-DR submitted that full additions were to be sustained in the hands of the assessee. 6. We have carefully heard the arguments advanced by both the representatives. We have also perused relevant material on record including documents placed in the paper-book. We have deliberated on various judicial pronouncements as cited before us during the course of hearing. The report of Ld.AO qua material found during the course of search proceedings has been gone through and considered. Our adjudication to the subject matter of cross-appeal would be as given in succeeding paragraphs. 7. Upon perusal of impugned order, we find that Ld. CIT(A) has confirmed the additions by treating the third-party statement of Shri Navneet Singhania to be incriminating in nature and in the process, relied upon certain judicial pronouncements as enumerated in para 12.3 to 12.5 of the impugned order. These case laws are the decision of Hon’ble Apex Court in B.Kishore Kumar V/s CIT (234 Taxman 771), the decision of Hon’ble Kerala High Court in CIT V/s St.Francis Clay Décor Tiles (70 Taxmann.com 234) & the decision of Hon’ble Delhi High Court in Dayawanti & Ors. V/s CIT (390 ITR 496). However, upon perusal of contents thereof as extracted in the impugned order, we find that reliance on all these decisions is misplaced since it is evident that in all those cases, the sworn statements were made by the assessee himself during the course of search proceedings and it was held that the same would constitute valuable piece of evidence and additions could be made in case of clear and categorical admission by assessee himself. However, the facts are clearly not the same in the present case since the M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 Ld. AO has relied upon third-party statement of Shri Navneet Singhania post-search proceedings which has never been confronted to the assessee. This being the case, the decisions as relied upon by Ld.CIT(A) are distinguishable and non-applicable. Rather the decision of co-ordinate bench of this Tribunal rendered in PKSS Infrastructure Pvt. Ltd., ITA Nos.5680/Mum/2018 & ors., common order dated 29/11/2019 (which has been authored by one of us), would be applicable to the facts of the case. The bench, in its decision held that statement on standalone basis could not be considered as incriminating material for the purpose of Sec.153A and chose to apply the decision of Hon’ble Bombay High Court rendered in CIT Vs. Continental Warehousing Corporation [2015 374 ITR 645] by observing as under: - 8. We have heard the rival contentions and gone through the facts and circumstances of the case. Admittedly, a search under section 132 of the Act was carried out on the premises of the assessee on 27.02.2014. The assessee filed its return of income originally on 27.09.2009 for AY 2009-10 and assessment was completed under section 143(3) of the Act dated 30.11.2011 during which the assessee filed complete details in regard to share application money received from various parties during the financial year 2008-09 relevant to this AY 2009-10. On the date of the search on 27.02.2014, this assessment was unabated because no action was pending against this assessment. It is also a fact that during the course of search the shares certificates relating to these parties were not seized rather these are submitted by assessee before the investigation wing during inquiry proceedings carried out in lieu of search under section 132 of the Act vide letter dated 15.05.2014. These shares certificates were lying with the Secretary’s Office for Demat. Now, the question arises the statement recorded under section 132 of the Act of Shri Pravin Kumar Aggarwal and Ram Pal Soni during the course of search, which were later on retracted by the respective persons, can be considered as incriminating material for the purpose of framing under section 153A of the Act. This has been answered by coordinate Bench of this Tribunal in the above cited two case laws namely; Agson Global Pvt. Ltd. Vs. ACIT in ITA No. 3741 to 3746/Del/2019 & Ors. dated 31.10.2019 & DCIT vs. Smt. Shivali Mahajan & Ors. in ITA No. 5585/Del/2015 vide order dated 19.03.2019. In both the judgments, the issues raised by the lower authorities that share certificates and the statement recorded during the course of search can be considered as incriminating material, has been answered and answered in favour of assessee that these two cannot be considered as incriminating material on standalone basis. Once, the assessment was completed and has not abated for relevant AY and there is no incriminating material

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 found during the course of search, no assessment can be framed under section 153A of the Act in the absence of incriminating material and hence this issue is squarely covered by the decision of the Hon’ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom). 9. We find that this issue now stands covered in favour of assessee and against the Revenue by the decision of Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), wherein considering the judgment of the Special Bench of the Mumbai Tribunal in the case of All Cargo Global Logistics 137 ITD 287(SB) (Mum), considered this issue that, whether there is scope of assessment u/s. 153A of the Act in respect to completed assessment which is limited only to undisclosed income and undisclosed assets found during the course of search or not? Hon'ble High Court held that on a plain reading of section 153 of the Act it becomes clear that on initiation of the proceedings u/s. 153A of the Act, it is only the assessment/reassessment proceedings that are pending on the date of search u/s. 132 of the Act stand abated and not the assessments/reassessments already final for those assessment years which are covered u/s. 153A of the Act. Hon'ble High Court discussed the CBDT Circular No. 8 of 2003 dated 18.09.2003 reported in 263 ITR (st.) 61 at page 107 wherein CBDT has clarified that on initiation of proceedings u/s. 153A of the Act the proceedings pending in appeal, revision or rectification proceedings against final assessment shall not abate. It is only because the final assessments do not abate the appeal, revision or rectification pending against final assessments would not abate. Therefore, Hon'ble High Court rejected the arguments of the Revenue that on initiation of proceedings u/s. 153A of the Act, the reassessment final for assessment years covered u/s. 153A of the Act stands abated. Only the pending assessments get revived u/s. 153A of the Act. Hon'ble High Court further held that once assessment has attained finality, then the AO while passing independent assessment order u/s. 153A/143(3) of the Act could not disturb the assessment order which has attained finality unless the material gathered in the course of search u/s. 132/153A of the Act established that the finality attained in the assessment were contrary to the facts unearthed during the course of search. The relevant portion of the judgment reads as under: - “31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under:- “The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess the total income of these six years. It is obligatory on the part of the AO to assess or reassess total income of the six years as provided in section 153A(1)(b) and reiterated in the 1st proviso to this section. The second proviso states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate. We find that there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate. This means that an assessment or reassessment pending on the date of M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the assessee is that necessary corollary to this provision is that completed assessment shall not abate. These assessments become final except in so far and to the extent as undisclosed income is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six years. It may cause hardship to some assesses where one or more of such assessments has or have been completed before the date of initiation of search. This is hardly of any relevance in view of clear and unambiguous words used by the legislature. This interpretation does not cause any absurd etc. results. There is no casus omissus and supplying any would be against the legislative intent and against the very rule in this behalf that it should be supplied for the purpose of achieving legislative intent. The submissions of the Ld. Counsels are manifold, the foremost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. Before proceeding further, we may now examine the provision contained in subsection (2) of section 153, which has been dealt with by Ld. Counsel. It provides that if any assessment made under subsection (1) is annulled in appeal etc., then the abated assessment revives. However, if such annulment is further nullified, the assessment again abates. The case of the Ld. Counsel is that this provision further shows that completed assessments stand on a different footing from the pending assessments because appeals etc. proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the Ld. Counsel, though not specifically stated, would be that on annulment of the assessment made u/s 153(1), the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search. The provision contained in section 132 (1) empowers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i.e. - a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, b) summons or notice has been or might be issued, he will not produce the books of account

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 or other documents mentioned therein, or c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word "incriminating document". Clauses (a) and (b) of section 132(1) employ the words "books of account or other documents". For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year of search. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under subsection (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results: - a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one

M/s B & M Buildcon Assessment Years: 2013-14 & 2014-15 assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search.” 10. Accordingly, in view of the given facts and circumstances, we are of the view that this issue is squarely covered in favour of assessee and against the Revenue and hence, we allow this jurisdictional issue in favour of assessee and reverse the order of CIT(A) on this issue. Accordingly, assessment framed under section 153A of the Act is quashed.

उप/सहायक पुंजीकार (Dy./Asstt.