RMS DIVERSIFIED PVT.LTD.,NEW DELHI vs. DCIT, CENTRAL CIRCLE-1, NOIDA
Income Tax Appellate Tribunal, “C” BENCH, DELHI
Before: SHRI ANUBHAV SHARMA & SHRI KRINWANT SAHAY
PER ANUBHAV SHARMA, JM:
These are appeals preferred by the Assessee as well as the Revenue against the orders of the Ld. Commissioner of Income-tax (Appeals)
(hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeals filed before him against the orders of the ld. Assessing
Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 153A r.w.s u/s 143(3) of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under:-
ITA No. &
AY
Ld. FAA who passed the appellate order
Appeal No. & Date of order of the Ld. FAA
AO who passed the assessment order &
Date of order
1527/D/23
2015-16
CIT(A)-4, Kanpur
CIT(A)-
IV/KNP/10156/2014-15,
28.03.2023
DCIT, CC-1, Noida, dated 30.09.2021
1528/Del/20
23
2017-18
CIT(A)-4, Kanpur
CIT(A)-
IV/KNP/11917/2016-17,
28.03.2023
ACIT/DCIT, CC,
Noida dated
30.09.2021
1529/Del/20
23
2018-19
CIT(A)-4, Kanpur
CIT(A)-
IV/KNP/11033/2017-18,
28.03.2023-
ACIT/DCIT, CC,
Noida dated
30.09.2021
1530/Del/20
23
CIT(A)-4, Kanpur
CIT(A)-
IV/KNP/11250/2018-19,
ACIT/DCIT, CC,
Noida dated
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ITA Nos.1527 to 1530, 1643 & 1714/Del/2023
RMS Diversified Pvt. Ltd. (AY:2014-15 to 2019-20)
2019-20
20.03.2023
30.09.2021
1643/Del/20
23
2015-16
CIT(A)-4, Kanpur
CIT(A)-
IV/KNP/10156/2014-15,
28.03.2023
ACIT/DCIT, CC,
Noida dated
30.09.2021
1714/Del/20
23
2014-15
CIT(A)-4, Kanpur
CIT(A)-
IV/KNP/10175,10139/2013-
14
DCIT, CC-1, Noida dated 30.09.2021
The appeals were heard together and are adjudicated together as the same involve common set of facts and legal proposition with connected issues. The background to the appeals are that search and seizure operation under Section 132 of the Act was conducted on 11.10.2018 on M/s PMC Group of cases. During the course of search operation allegedly various incriminating documents/information belonging to the assessee were found and seized. The cases were centralized and assessment was initiated by issuance of notice u/s 153A of the Act. The assessment was completed with following additions: (i) In AY: 2014-15 addition of Rs.17,94,00,000/- was made on account of transaction of unsecured loan from three companies doubted. Further disallowance of Rs.3,33,50,200/- was made on account of doubtful share application money received from two parties and an addition of Rs.61,644/- was made on account of disallowance made u/s 14A of the Act.
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ITA Nos.1527 to 1530, 1643 & 1714/Del/2023
RMS Diversified Pvt. Ltd. (AY:2014-15 to 2019-20)
(ii)
In AY: 2015-16 AO made addition of Rs.12,24,05,000/- u/s 68 of the Act on account of unsecured loans taken from Ten companies and Rs.1,43,33,350/- u/s 68 of the Act on account of share application money received from 14 parties.
(iii) In AY: 2017-18 addition was made of Rs.1,00,00,000/- on account of loan received from M/s SW Consultants Pvt. Ltd. alleging that it is an accommodation entry provider company u/s 68 of the Act and 4% of the commission of the same was added at Rs.4,00,000/- u/s 69C and Rs.3,03,781/- interest debited on that account for AY: 2017-18 was found to be not genuine and disallowed. Further a disallowance u/s 14A of Rs.56,515/- was made.
(iv) In AY: 2018-19 the disallowance of Rs.30,53,044/-was made on account of interest payment to M/s Amrendra Financials Pvt. Ltd. &
Others as they were found to be given to on account of loan which was not genuine in AY: 2017-18. Similarly, interest debited to Rs.3,03,781/- to M/s SW Consultants Pvt. Ltd. on account disallowed
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ITA Nos.1527 to 1530, 1643 & 1714/Del/2023
RMS Diversified Pvt. Ltd. (AY:2014-15 to 2019-20) loan in AY 2017-18 was disallowed. A disallowance of Rs.30,14,927/- was made on account of interest debited as a payment to M/s Lenient
Consultants Pvt. Ltd. on account of loan which was also found to be not genuine in AY: 2017-18. Further an addition u/s 14Aof
Rs.2,00,000/- was made.
(v) In AY: 2019-20 also the interest payment of Rs.8,21,714/- to M/s
SW Consultants Pvt. Ltd. were disallowed and disallowance of Rs.41,667/- u/s 14A of the Act was also made.
As the assessee went in appeal it succeeded partly and therefore, now both the revenue and the assessee are in appeal here before us. In regard to these assessment years involved what was contended at the threshold by the ld. Counsel for assessee was that the years before this Tribunal involve both unabated Assessment Years from AY 2014-15 to 2018-19 and abated Assessment Year 2019-20. It was contended that in regard to unabated assessment years the thumb rule to be followed was that assessment could have been completed u/s 153A of the Act only on the basis of incriminating material found during the search and it was contended that no incriminating
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ITA Nos.1527 to 1530, 1643 & 1714/Del/2023
RMS Diversified Pvt. Ltd. (AY:2014-15 to 2019-20) material has been referred in the assessment orders. The ld. Counsel primarily relied the findings of AO to contend that not a single incriminating material is referred in the assessment. The decision of Hon’ble Supreme Court in the case of PCIT Vs. Abhishar Buildwell, 454 ITR 212 (SC) was relied to contend that the findings of Ld. CIT(A) relying the decision in various case laws to hold that provision of Section 153A of the Act laid down no restriction that the additions/disallowance can be made only on those issues which emanate from the seized materials or documents is not sustainable. As for abated AY involved it was contended additions are consequential to earlier years.
1 The ld. DR however relied upon the assessment orders and contended that suspicious circumstances are as good as incriminating material.
We have carefully gone through the material on record. As with regard to AY 2014-15 assessee is not in appeal and the department is in appeal and the assessee has filed an application under Rule 27 contending that the impugned order has been passed by Ld. CIT(A) on incorrect notion that assessment u/s 153A of the Act can be made dehors of any incriminating
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ITA Nos.1527 to 1530, 1643 & 1714/Del/2023
RMS Diversified Pvt. Ltd. (AY:2014-15 to 2019-20) material found during the search action conducted on the appellant. This year ld. CIT(A) has deleted the addition of Rs.17,94,00,000/-on the basis of evidence filed by the assessee similarly addition of Rs.3,33,50,200/- on account of share application money was found to be well explained.
Otherwise after going through the assessment order it comes up that no incriminating evidence/material has been relied upon and the genuineness of the transaction has been examined for the purpose of Section 68 of the Act.
Again addition u/s 14A cannot be considered to be emanating from the seized material. Here itself it is pertinent to observe that the addition u/s 14A of the Act, certainly cannot arise out of information unearthed in the search.
In regard to AY 2015-16 we find that unsecured loans from 10 parties were found to be suspicious, however what was relied was not any of the incriminating material/information and AO made the addition questioning the identity, creditworthiness and genuineness of the lenders. The assessment order recorded that assessee has submitted mere old confirmations, balance sheet and profit and loss account and the ITR etc. of the lenders were not filed to prove the creditworthiness of the lenders. Certainly the addition is dehors of any incriminating material or information.
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ITA Nos.1527 to 1530, 1643 & 1714/Del/2023
RMS Diversified Pvt. Ltd. (AY:2014-15 to 2019-20)
Similarly in AY 2017-18 the additions are on account of unsecured loans taking from 3 parties. The ld. AO had relied the assessment of M/s SW Consultants Pvt. Ltd. to draw inferences holding that it is an entry providing company. However, the discussion of the AO has been not to examine the issue of unsecured loan but the issue has been examined in context to penny stock transactions though the allegation was that assessee has taken loan from companies operated by Raj Kumar Modi and Raj Kumar Modi is key person of M/s PMC Fincorp Ltd. which is engaged in accommodation entry providing in the form of LTCG/STCG/unsecured loan. In para 4.2 AO has examined the issue completely in context to penny stock companies. Thus, ld. DR could not dispute the fact that the conclusion to doubt the loan from M/s SW Consultants Pvt. Ltd. is not on the basis of any incriminating material/information found during the search.
Then in the assessment for AY 2018-19 and 2019-20 the additions are as a consequence to the additions made in previous years which we have found to be not on the basis of incriminating material/information.
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ITA Nos.1527 to 1530, 1643 & 1714/Del/2023
RMS Diversified Pvt. Ltd. (AY:2014-15 to 2019-20)
Ld. Tax authorities seems to have completed the assessments on the premises that there is no difference in abated and unabated years assessment so far the search assessments are concerned but the law as now stands settled by decision of Hon’ble Supreme Court in Abhishar Buildwell, (supra), that in case of unabated year assessments the additions can be only on the basis of incriminating material found and seized in the search, makes us sustain the contention of ld. Counsel that bereft of incriminating material/information found in search the additions and disallowance were made in AY 2014-15, 2015-16 and 2017-18. The additions in AY 2018-19 and 2019-20 are only consequential to earlier years and loose their substratum. Corresponding grounds raised by the assessee are thus sustained. Resultantly, appeals of the assessee are allowed and of the Revenue stands dismissed.
Order pronounced in the open court on 17.12.2025 (Krinwant Sahay) (Anubhav Sharma)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated 17.12.2025
Rohit, Sr. PS
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ITA Nos.1527 to 1530, 1643 & 1714/Del/2023
RMS Diversified Pvt. Ltd. (AY:2014-15 to 2019-20)