Addition merely based on retracted statement without any incriminating material unsustainable: ITAT Ahmedabad

Saketkumar Rugnath Tanna Vs DCIT (ITAT Ahmedabad)

ITAT Ahmedabad held that addition merely on the basis of retracted statement without any incriminating material seized from assessee’s premises is unsustainable in law and liable to be quashed.

Facts- Assessee is an individual and Proprietor of M/s. Saketkumar Rugnath engaged in the business of Commission Agent of agricultural commodities at Agricultural Produce Market Committee (APMC), Vasna, Ahmedabad. There was a survey action u/s. 133A of the Act at the business premises on 15/10/2013 as well as a search action u/s. 132 of the Act at the residential premises of the assessee. Following the search action notice u/s. 153A of the Act was issued on 26.08.2014 and the assessee filed his Return of Income for the Asst. Years 2008-09 to 2012-13.

During the course of assessment proceedings, there were NO incriminating materials were found or seized. The assessee filed his original Returns of Income u/s. 139(1) of the Act as well as in response to the notice u/s. 153A of the Act. AO after making various hearings made some disallowances.

CIT(A) partly allowed the appeal. Being aggrieved, the present appeal is filed by the assessee.

Conclusion- It is well settled Principle of law by various judgments rendered by the Hon’ble Apex Court and Jurisdictional Gujarat High Court, when an assessment has to be made in relation to the search or requisition u/s.153A of the Act, namely, in relation to material disclosed during the course of search or requisition, if in relation to any particular assessment year, at the same time when there is no incriminating material found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. This legal preposition is now settled by the Hon’ble Supreme Court by judgments dated 24­04-2023 in the batch of cases namely PCIT -Vs- Abhisar Buildwell Pvt. Ltd. holding that in respect of completed assessments/ unabated assessments, no addition can be made by Assessing Officer in the absence of any incriminating material found during the course of search.

Held that in the absence of any incriminating material seized from the assessee’s premises, the assessment orders passed by the Ld AO are without jurisdiction and liable to be quashed.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

These Appeals are filed by three Assessees as against separate appellate orders passed by the Commissioner of Income
Tax(Appeals)-7, Ahmedabad arising out of the assessment orders passed under section 143[3] r.w.s. 153A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2007-08 to 2012-13. Since the issues involved in these appeals are unabated/completed assessments and additions made thereon are identical in nature and the Assessees herein are same family members of Son, Mother and Wife, the same are disposed of by this common order, for the sake of convenience.

2. IT(SS)A No. 338/Ahd/2019 relating to Asst. Year 2008-09 in the case of Shri Saketkumar Rugnath Tanna is taken as the lead case. The brief facts of the case is that the assessee is an individual and Proprietor of M/s. Saketkumar Rugnath engaged in the business of Commission Agent of agricultural commodities at Agricultural Produce Market Committee (for short ‘APMC’), Vasna, Ahmedabad. There was a survey action u/s. 133A of the Act at the business premises on 15/10/2013 as well as a search action u/s. 132 of the Act at the residential premises of the assessee. Following the search action notice u/s. 153A of the Act was issued on 26.08.2014 and the assessee filed his Return of Income for the Asst. Years 2008-09 to 2012-13.

3. During the course of assessment proceedings, there were NO incriminating materials were found or seized. The assessee filed his original Returns of Income u/s. 139(1) of the Act as well as in response to the notice u/s. 153A of the Act. The assessing officer after making various hearings made the following disallowances:

3.1. CASH DEPOSITS IN BANK ACCOUNT: The AO has observed that the assessee made cash deposits of Rs 16,09,54,498 in his current account no. 409 with Mahila Vikas Co-Operative Bank (hereinafter referred as MVCB) from FY 2007-08 to 2013-14 till date of search and during the year under consideration, there was cash deposit of Rs.1,56,42,500 in above bank account. The assessee in his statement recorded during the course of search/ survey on 15/10/2013 and in reply to question no 19 and question 42 of statement recorded on 16/10/2013 has stated that cash deposited in above account is out of total cash collected from three concerns of the assessee namely M/s. Saketkumar Rugnath, M/s. Bhavchand Jairam and Ms. Raghunath Bhavchand. Thus, AO in his notice asked assessee to give bifurcated amount of cash deposited in the three concerns. The AO has also referred to question nos. 37 & 48 of statement recorded on 17/10/2013, wherein the assessee has stated that he has taken cash from five parties/sharoffs and such cash loans are not reflected in the balance sheet as loans were taken for only 2 to 3 days and thereafter it was squared up, hence AO asked the assessee to submit copies of accounts in respect of cash loan taken from Shroff’s to establish genuineness and creditworthiness of the Shroffs. The AO has also referred to post search statement recorded on 04/04/2014, wherein in reply to question no 3, the assessee has stated that he has taken cash from Shroffs to pay the farmers, in reply to question No. 5, it was submitted that payment received from customers as well as Shroffs were entered into cash book and cash deposits are used for payment of business expenses incurred. The assessee in his statement has stated that he has not done any cheque discounting business, whereas cash book submitted by the assessee show sufficient cash balance on each day and such cash balances were sufficient for making payment to the farmers, which goes to prove that cash taken from Shroff are not used for making payment to farmers, hence the Ld. A.O. asked the assessee to provide explanation regarding cash deposited in bank account with MVCB.

3.2. The assessee stated that cash was taken from Shroffs after giving post dated cheques and cash received is paid to farmers and agricultural produces so acquired are delivered to Traders from whom cash received was deposited in his bank accounts. Thereafter, post dated cheques given to the Shroffs were honoured, thus the assessee explained that sources of cash deposits are cash receipts from business. It was also contended by the assessee that, as all the three firms have discounted their cheques with the Shroffs and got the cash against the cheques, therefore such amounts are not loans or deposits for which provisions of section 269SS are not attracted. However in this reply the assessee has not bifurcated cash deposits in MVCB in the Three concerns. The assessee has stated that Rs.1,55,39,500/- pertain to his Firm assessee. The assessee further stated that amount pertaining to M/s. Rugnath Bhavchand Prop. Smt. Indumatiben R. Tanna is Rs.8,45,000 which pertains to bank account no 182 and Rs.2,29,500 pertain to Bhavchand Jairam Prop Ritaben which pertains to bank account no 183 and these two deposits do not pertain account no.409. Hence entire cash deposited in bank account no 409 is considered in his hands.

3.3. Thereafter, AO has provided assessee bifurcation of cash deposits, cheque deposits and interest amount of all the bank accounts held in the name of the assessee and asked him to explain source of such deposits. The assessee has reiterated the contention regarding cash deposits and explained that sources of credit in the bank account is the cheque discounted from Shroffs and cheques received from Traders to whom agricultural produces were sold. It was also stated that due to uncertainty of business, he has to keep cash on hand with him and carry out cash discounting, which is commercial expediency. The above explanation was not accepted by AO on the ground that assessee is working as Commission Agent only, which is evident from audit report hence such Agent is not required to make payment to farmers directly but actual buyer/trader is required to pay such farmers directly. The AO has also referred to reply dated 05/08/2015 filed by the assessee, wherein he has stated that there was no trading business of onion and potatoes during the year. The AO has also referred to impounded cash book and accounts maintained in Kisan Software wherein it is found that most of cash deposited in the MVCB pertained to cash taken from Shroffs and not for realisation of sale proceeds which makes entire theory of assessee incorrect. The AO has referred to various statement of Shroffs taken during the post search inquiry from which it is found that none of the Shroffs produced the sources of cash given to the assessee or unable to produce the name of persons from whom cash was received by them and thereafter cash was transferred to the assessee. Thus the Ld AO brought on record that statement of Shroffs and assessee are contradictory, there was various discrepancy in balance shown in assessee’s account and Shroffs account, hence AO concluded that assessee failed to prove sources of cash deposit in his bank account. Further the assessee could not offer explanation of keeping huge cash balance and taking cash loans from Shroffs and also could not provide any explanation regarding cash deposited with other bank accounts. Therefore the Ld AO in assessment order made addition of Rs.2,98,11,679 being cash as well as cheque deposits in various bank account .

4. NON DEDUCTION OF TDS: The AO has observed that assessee has not deducted TDS on interest expenditure paid to NBFC Companies hence he has made disallowance under section 40A(ia) of the Act. The assessee has merely relied on written submission filed before AO but has not proved that how is not liable for not deducting TDS.

5. INFLATING THE EXPENDITURE: The AO has referred to page No. 216 of Annexure A/41 of impounded material which reflects Profit & Loss Account for AY 2013-14 which shows that income of assessee is Rs.21.90 lacs on total income of Rs.38.18 lacs whereas page No. 205 of Annexure A/41 shows net profit of Rs.3,81,009/-after debiting expenditure of Rs.33,95,816 in Kisan Software. On this basis AO has arrived at conclusion that assessee is inflating the expenditure.

6. Disallowance of Depreciation: Similarly, the assessing officer made disallowance on claim of depreciation on the ground that the assessee failed to provide the bills of the assets purchased during the year. The AO also made disallowance on under Chapter VIA.

6.1. The total disallowances made by the Assessing Officer are as Summarized as below:

7. Aggrieved against the assessment orders, the assessee filed appeals before Commissioner of Income Tax (Appeals)-7, Ahmedabad. The Ld. CIT(A) called for Remand Report from the assessing officer on various issues and partly allowed the assessee appeal and partly confirmed the additions made by the assessing officer.

8. Aggrieved against the appellate orders, the assessee is in appeal before us raising the following Grounds of Appeal:

1. The learned Commissioner of Income Tax (Appeals) -7, Ahmedabad [“CIT(A)” erred in fact and in law in confirming the action of the learned Deputy Commissioner of Income Tax. Central Circle-2(2), Ahmedabad [“the AO” in making the additions to the returned income u/s. 153A of the Income Tax Act, 1961 (“the Act”) despite the fact that no incriminating material was found during the course of search.

2. The learned CIT(A) erred in fact and in law in confirming the action of the Ld. AO in making additions on the matters which were duly disclosed and were part of the original return of income and had become final.

Unexplained Investment u/s 69 of Rs. 2,98,11,679:

3. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in making addition of Rs. 2,98,11,679 – in respect of cash deposited in bank account maintained with Mahila Vikas Co­operative Bank Ltd. by invoking provisions of Section 69 of the Act.

4. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in invoking section 69 of the Act despite the fact that cash deposit was recorded in the books of account of the Appellant and hence provisions of section 69 were not attracted in the case of the Appellant.

5. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in making the addition u’s 69 despite the fact that the Appellant had explained the source of cash deposited in the bank account.

6. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in making the addition u/s 69 without appreciating the facts in proper perspective.

7. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in holding that no payment could have been made by the Appellant to farmers without appreciating the provisions of The Gujarat Agricultural Market Produce Act, 1963 (“GAMPA”)

8. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in making addition u/s 69 on the basis of assumptions, surmises and conjectures.

Other Grounds:

9. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in making disallowance of Rs. 2,40,920/-u/s. 40(a)(ia) of the Act.

10 .The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in making disallowance of Rs. 1,28,412/-u/s, 36(1)(iii) of the Act.

11. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in making a disallowance of business expenditure amounting to Rs. 2,66,128/-

12. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in making a disallowance of deductions of Rs. 28,334/-claimed by the Appellant under Chapter VI-A of the Act.

13. The learned CIT(A) erred in fact and in law in confirming the action of the Id. AO in making an addition of Rs 35,953/- as unexplained investment in shares.

14. The learned CIT(A) erred in fact and in law in confirming the action of the Id. AO in making an addition of Rs. 86,367/- as unaccounted income from sale of the shares.

15. The learned CIT(A) erred in fact and in law in confirming the action of the AO in initiating penalty proceedings u/s. 271(1)(c) of the Act.

16. Your Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal.

12. We have heard the submissions of the Ld Counsel for the the assessee Sri. M.K. Patel and perused the materials available on record including the Paper Books filed by the assessee. Since search action was conducted on 15.10.2013, therefore time limit for issuance of notice u/s. 143[2] and proceed with assessment were already concluded for these asst. years 2008-09 to 2012-13, thus they are unabated/completed assessment years. It is undisputed fact that the assessee filed his original Return of Income regularly u/s.139[1] and no scrutiny assessment taken place against the returns. The details of Returns filed by the assessee are as follows:

12.1. Further perusal of the Assessment orders makes it clear that the Ld AO mainly relied on the Statements recorded u/s.132[4] of the assessee on the cash deposits made in Mahila Vikash Co.Op. Bank of Rs.4,04,32,500/- and post search enquiries and the Statement of shroffs recorded u/s.131[1A] (highlighted in Bold letters in Paragraph 3.1 of this order) namely Shri Vinoddhara Motilal Shah, Shri Arunkumar C. Thakkar, Shri Dayaram I. Thakkar, Shri Jignesh K. Patel of M/s. J.K. Corporation who produced during the assessment proceedings copy of the Ledger account of the assessee in their books and Smt. Jyotsanaben V. Shah who gave post dated cheques. There is no reference about any incriminating materials seized by the department neither during the Survey proceedings nor under search action. Whereas the addition is made in respect of cash deposited and cheque clearing and transfer entries in bank account, which are already disclosed by the assessee and forming part of the audited accounts. Hence there is no incriminating material found relating to cash deposit in bank account, during the course of Search and Survey action no addition can be made under section 153A of the Act. Similarly additions made on account of non-deduction of TDS, disallowance of business expenses, disallowance made u/s. Chapter VIA, depreciation, commission income, etc. are without any seized material.

12.2. It is settled Principle of Law that the disclosure or admission made under section 132(4) of the Act during the search proceeding is admissible evidence, but not a conclusive one. Jurisdictional High Court in the case of DCIT -Vs- Narendra Garg & Ashok Garg (AOP) reported in [2016] 72 taxmann.com 355 (Guj) held that where assessee retracted from disclosure made in statement under section 132(4) which was not accepted by Revenue, and if no undisclosed income was found during search, Revenue could not make addition on bare suspicion and presumption by observing as follows:

“Section 69C, read with section 132, of the Income-tax Act, 1961 – Unexplained expenditure (Addition on basis of retracted statement) – Assessment years 1990-91 to 1999-2000 – A search operation was carried out at premises of assessee – Assessee retracted from disclosure made in statement under section 132(4) – Retraction was not accepted by Revenue – Assessing Officer made additions of undisclosed income – In fact, there was no reference to any undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income during search – Whether Assessing Officer could not proceed on presumption under section 132(4) and there must be something more than bare suspicion to support assessment or addition – Held, yes – Whether Tribunal had rightly reduced additions made by Assessing Officer – Held, yes [Paras 5 and 6][In favour of assessee]

12.3. Respectfully following the above judicial precedents, the asst. years 2008-09 to 2012-13 being unabated/completed assessments and in the absence of any incriminating material seized from the assessee’s premises but based only on the Statements recorded of the assessee u/s.132[4] and that of the Shroffs u/s. 131(1A) of the Act, the assessment orders are without jurisdiction and bad-in-law, the same are liable to be quashed.

13. Further it is well settled Principle of law by various judgments rendered by the Hon’ble Apex Court and Jurisdictional Gujarat High Court, when an assessment has to be made in relation to the search or requisition u/s.153A of the Act, namely, in relation to material disclosed during the course of search or requisition, if in relation to any particular assessment year, at the same time when there is no incriminating material found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. This legal preposition is now settled by the Hon’ble Supreme Court by judgments dated 24­04-2023 in the batch of cases namely PCIT -Vs- Abhisar Buildwell Pvt. Ltd. holding that in respect of completed assessments/ unabated assessments, no addition can be made by Assessing Officer in the absence of any incriminating material found during the course of search under section 132 or requisition made under section 132A of the Act by observing as follows:

“Section 153A, read with sections 132 and 143, of the Income-tax Act, 1961 – Search and seizure – Assessment in case of (Conditions precedent) – Whether object of section 153A is to bring under tax undisclosed income which is found during course of search or pursuant to search or requisition; therefore, only in a case where undisclosed income is found on basis of incriminating material, Assessing Officer would assume the jurisdiction to assess or reassess total income for entire six years block assessment period even in case of completed/unabated assessment- Held, yes – Whether in case of search under section 132 or requisition under section 132A, Assessing Officer assumes jurisdiction for block assessment under section 153A and that all pending assessments/reassessments shall stand abated – Held, yes – Whether in respect of completed assessments/unabated assessments no addition can be made by Assessing Officer in absence of any incriminating material found during course of search under section 132 or requisition under section 132A – Held, yes – Whether, however, completed/unabated assessments can be reopened by Assessing Officer in exercise of powers under section 147/148 subject to fulfilment of conditions as envisaged/mentioned under section 147/148 and those powers are saved – Held, yes

13.1. The Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. considered Judgments of various High Courts and concurred with one of the Judgment of the Gujarat High Court in the case of Saumya Construction and laid down the following points in a nutshell :

“… … 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material.

14. In view of the above and for the reasons stated above, it is concluded as under:

(i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A;

(ii) all pending assessments/reassessments shall stand abated;

(iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and

(iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re­opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/ mentioned under sections 147/148 of the Act and those powers are saved.

13.2. Respectfully following the above judicial precedents, the asst. years 2010-11 and 2011-12 being unabated assessments and in the absence of any incriminating material seized from the assessee’s premises, the assessment orders passed by the Ld AO are without jurisdiction and liable to be quashed. In the result the Ground No. 1 & 2 challenging the Jurisdiction of assessment is hereby allowed and the assessment orders passed for the asst. years 2010-11 to 2011-12 are hereby quashed. ITA Nos.340 & 341/Ahd/2019 are allowed in favour of the assessee.

14. For the remaining unabated assessment years namely 2008­09, 2009-10 and 2012-13 in the case of Saketkumar R Tanna, the Ld AO made addition of Rs.35,953/=, Rs.17,714/= and Rs.2,66,381/= on unexplained investment in shares based on loose papers found during the course of Search. Similarly entry was found Income from Shares [capital gain] of Rs.86,367 relating to the asst. year 2008-09. Though the Ld Counsel contended that the scribbling in the loose sheet does not containing any name, date or signature of the assessee, thus to be treated as dumb document only, since corresponding shares, demate account were not found and seized.

14.1. Per Contra Ld CIT DR appearing for the Revenue submitted that the assessee has not given any details relating to the investments in shares and income on shares neither before the lower authorities nor before this Forum. Therefore the additions made on this count are sustainable in law.

15. We have given our thoughtful consideration and perused the materials on record. Based on the loose sheet seized during the course of Search, the Ld AO given opportunity to explain the purchase and sales of shares namely;

1. Purchase of Nag. Ferti 250 shares @59.40 for 14880 on 29-02-08

2. Purchase of R Power 50 shares @420 for 21073 on 03-03-08

3. Sale of R Power 100 shares for Rs.41703 on 25-02-08 and

4. Sale of R Power 100 shares for Rs.44664 on 27-02-08

15.1. However the assessee failed to furnish any information or details before any of the Authorities and hence the additions made on these counts are to be sustained since the same are based on seized material. Thus the Ground Nos. 6 & 7 filed by the assessee are devoid of merits and liable to be dismissed.

16. We make it clear that the other additions made by the Ld AO are liable to be deleted, since there is no reference in the assessment order about any seized material against the additions made on account of [a] cash and cheque deposits in bank accounts, [b] Non deduction of TDS, [c] disallowances made u/s.36[1][iii] and business expenses, [d] disallowance of Chapter VIA deduction, depreciation and commission income. In the result the Ground No. 1 & 2 challenging the Jurisdiction of assessment is hereby partly allowed and the assessment orders passed for the asst. years 2008­09, 2009-10 and 2012-13 are partly confirmed as described in paragraph 15 and 15.1 above. Thus ITA Nos.338, 339 & 342/Ahd/2019 are partly allowed in favour of the assessee.

IT(SS)A Nos.332 to 336/Ahd/2019 relating to the Asst. Years 2008-09 to 2012-13 in the case of late Smt. Indumati Rugnath Tanna, rep by her legal heir Saket kumar R Tanna.

17. She is the mother of Saketkumar R Tanna and was the Propritrix of M/s. Rugnath Bhavchand engaged in the business of Commission Agent of agricultural commodities at Agricultural Produce Market Committee (for short ‘APMC’), Vasna, Ahmedabad. There was a survey action u/s. 133A of the Act at the business premises on 15/10/2013 as well as a search action u/s. 132 of the Act at the residential premises of the assessee. Following the search action notice u/s. 153A of the Act was issued on 26.08.2014 and the assessee filed her Returns of Income for the Asst. Years 2008-09 to 2012-13.

18. During the course of assessment proceedings, there were NO incriminating materials found or seized. The assessee filed her original Return of Income u/s. 139(1) of the Act as well as in response to the notice u/s. 153A of the Act. The assessing officer after making various hearings made the following disallowances:

18.1. The facts and nature of business are identical in nature and findings given in the case of Sri. Saketkumar R Tanna will be squarely applicable to the facts of the present case except change in figures. The additions made by the Ld AO are liable to be deleted, since there is no reference in the assessment order about any seized material against the additions made on account of [a] cash and cheque deposits in bank accounts, [b] disallowances of business expenses, [c] disallowance of commission income, bad debts and [d] Disallowance made u/s.43B of the Act. In the result the Ground No. 1 & 2 challenging the Jurisdiction of assessment is hereby allowed and the assessment orders passed for the asst. years 2011-12 & 2012-13 being unabated assessment and in the absence of any incriminating material seized from the assessee’s premises, the assessment orders passed by the Ld AO are without jurisdiction and liable to be quashed. In the result the Ground No. 1 & 2 challenging the Jurisdiction of assessment is hereby allowed and the assessment orders passed for the asst. years 2011-12 & 2012-13 is hereby quashed. ITA Nos.335 & 336/Ahd/2019 are allowed in favour of the assessee.

19. However based on the loose sheet seized during the course of Search on the investments made in Shares and Capital Gain on sale of share, the Ld AO given opportunity to explain the purchase and sales of shares. However, the assessee failed to furnish any information or details before any of the Authorities and hence the additions made on these counts are to be sustained, since the same are based on seized material. Thus the Ground Nos. 4 & 8 filed by the assessee are devoid of merits and liable to be dismissed. Therefore the assessment orders passed for the asst. years 2008-09, 2009-10 and 2010-11 are partly confirmed as described in paragraph 15 and 15.1 above. Thus ITA Nos.332, 333 & 334/ Ahd/2019 are partly allowed in favour of the assessee.

IT(SS)A Nos.326 to 330/Ahd/2019 relating to the Asst. Years 2008-09 to 2012-13 in the case of Smt. Ritaben Saketkumar Tanna.

19.She is the wife of Saketkumar R Tanna and was the Propritrix of M/s. Bhavchand Jairam engaged in the business of Commission Agent of agricultural commodities at Agricultural Produce Market Committee (for short ‘APMC’), Vasna, Ahmedabad. There was a survey action u/s. 133A of the Act at the business premises on 15/10/2013 as well as a search action u/s. 132 of the Act at the residential premises of the assessee. Following the search action notice u/s. 153A of the Act was issued on 26.08.2014 and the assessee filed her Returns of Income for the Asst. Years 2008-09 to 2012-13.

20. During the course of assessment proceedings, there were NO incriminating materials were found or seized. The assessee filed her original Return of Income u/s. 139(1) of the Act as well as in response to the notice u/s. 153A of the Act. The assessing officer after making various hearings made the following disallowances:

20.1. The facts and nature of business are identical in nature and findings given in the case of Sri. Saketkumar R Tanna (assessee’s husband) will be squarely applicable to facts of the present case except change in figures. The additions made by the Ld AO are liable to be deleted, since there is no reference in the assessment order about any seized material against the additions made on account of [a] cash and cheque deposits in bank accounts, [b] disallowances of business expenses, [c] disallowance of commission income and advance given for purchase of property [d] Disallowance made u/s.40a[ia] and 36[1][iii]. In the result the Ground No. 1 & 2 challenging the Jurisdiction of assessment is hereby allowed and the assessment order passed for the asst. year 2011-12 being unabated assessment and in the absence of any incriminating material seized from the assessee’s premises, the assessment order passed by the Ld AO are without jurisdiction and liable to be quashed. In the result the Ground No. 1 & 2 challenging the Jurisdiction of assessment is hereby allowed and the assessment order passed for the asst. year 2011-12 is hereby quashed. ITA Nos.329/Ahd/2019 is allowed in favour of the assessee.

21. However based on the loose sheet seized during the course of Search on the investments made in Shares and Capital Gain on sale of share, the Ld AO given opportunity to explain the purchase and sales of shares. However, the assessee failed to furnish any information or details before any of the Authorities and hence the additions made on these counts are liable to be sustained since the same are based on seized material. Thus the Ground Nos. 7 & 10 filed by the assessee are devoid of merits and liable to be dismissed. Therefore the assessment orders passed for the asst. years 2008-09, 2009-10, 2010-11 and 2012-13 are partly confirmed as described in paragraph 15 and 15.1 above. Thus ITA Nos.326, 327, 328 & 330/ Ahd/2019 are partly allowed in favour of the assessee.

Order pronounced in the open court on 30 .07.2024