INCOME TAX ACT, 1961

Section 153A Section 68 Section 132(4)

Search and seizure - Assessment under section 153A - Computation of undisclosed income - Addition under section 68--Statement recorded under section 132(4), whether incriminating material

Assessee, a partnership firm, was engaged in the business of manufacturing and trading of gold and silver ornaments, precious/semi-precious and coloured stones. etc. During the course of search statement of assessee was recorded on three days. Even during the post search investigation, the statement of assessee was again recorded. Consequently, AO issued notice under section 153A and completed the reassessment by making the addition on account of loan taken by the assessee from 12 parties, under section 68. CIT(A) deleted the addition made by the AO on two aspects, viz. (i) there was no incriminating material either found or seized during the search and seizure action and further the assessee had established the claim of genuineness of the transactions, creditworthiness and identity of the creditors by producing the evidence. DR had submitted before Tribunal that admission of assessee in the statement recorded under section 132(4) is an admissible evidence for establishing the fact that the alleged loans were taken by the assessee as accommodation entries.Held: The relevant statement if read together, then it would not amount to admission of any bogus transaction. Further, the transactions were duly recorded in the books of account at the time of taking the loans in the financial year 2009-10 and again at the time of repayment of these loans in the financial year 2011-12, which was not disturbed by the AO. Even the interest paid by the assessee after deducting TDS was not disturbed by the AO. The assessee had produced documentary evidence in support of claim and to discharge the onus of proving the identity and creditworthiness of the creditor as well as the genuineness of the transaction. Thus, once the assessee had established transaction by producing the documentary evidence, then in absence of any contrary material or record, this addition made by the AO was not sustainable. The statement recorded under section 132(4) could not be considered as an incriminating material found and seized during the search. The documentary evidence produced by the assessee established the fact of transactions of loan taken by the assessee, their identity, capacity and genuineness being routed through the banking channel at the time of receipt as well as repayment of the loan along with payment of interest which was subjected to TDS.

Relied:Soumya Construction PL v. CIT, (2016) 387 ITR 529 (Guj) : 2016 TaxPub(DT) 3466 (Guj-HC), Continental Warehousing Corporation (2015) 374 ITR 645 (Bom) : 2015 TaxPub(DT) 2182 (Bom-HC), Pr. CIT v. Meeta Gutgutia (2017) 152 DTR 153 (Del) : 2017 TaxPub(DT) 1767 (Del-HC), Vijay Kumar D. Agarwal v. Dy. CIT IT(SS)A Nos. 153, 154, 155 & 156/Ahd/2012, Ratan Kumar Sharma v. DCIT, ITA Nos. 797 & 798/Jaipur/2014, Vikram Goyal v. DCIT, ITA No. 174/Jaipur/2017 etc., Jadau Jewellers & Manufacturer PL v. ACIT, ITA No. 686/Jaipur/2014 : 2016 TaxPub(DT) 0633 (Jp-Trib) and Prateek Kothari v. ACIT, ITA No. 312/Jaipur/2015 : 2016 TaxPub(DT) 3195 (Jp-Trib).

REFERRED : Pr. CIT v. Best Infrastructure (India) Pvt. Ltd. (2017) 397 ITR 82 (Del) : 2017 TaxPub(DT) 3839 (Del-HC), Pr. CIT v. Meeta Gutgutia (2017) 395 ITR 526 (Del) : 2017 TaxPub(DT) 1767 (Del-HC),CIT v. Kabul Chawla (2016) 380 ITR 573 (Del) : 2015 TaxPub(DT) 3486 (Del-HC), Jai Steel (India) v. ACIT (2013) 259 CTR 281 (Raj) : 2013 TaxPub(DT) 1647 (Raj-HC), CIT v. Deepak Kumar Agarwal (2017) 398 ITR 586 (Bom) : 2017 TaxPub(DT) 4400 (Bom-HC) and ITO v. Shlok Fashions Pvt. Ltd. Order, dated 7-12-2018 ITA No. 695/Kol/2017 : 2018 TaxPub(DT) 7921 (Kol-Trib).

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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