TaxTMI 
TaxTMI 
2014 (6) TMI 736
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....on account of unexplained share application money received by the assessee company without appreciating the fact that the creditworthiness of investors and genuineness of transaction could not be proved by assessee. 3. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal." The grounds taken in all the cross objections are same and the grounds taken in CO No.236/Del/2013 read as under :- "1. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A against the appellant are in violation of the statutory conditions and the procedure prescribed under the law and as such the same is bad in law and likely to be quashed. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in rejecting the contention of the assessee that the notice issued under Section 153A by the AO is bad both in the eye of law and facts as no search was carried on in assessee's case, as such the assessment framed in consequence thereof is a....
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.... the background of similar facts, the ITAT has held that since no search was conducted on the premises of the assessee and the search conducted on the premises not owned by the assessee, the proceedings u/s 153A of the Act are invalid and bad in law. He also relied on the decision of ITAT, Mumbai in the case of J.M. Trading Corpn. Vs. ACIT reported in (2008) 20 SOT 489 (Mum.) which has been upheld by Hon'ble Bombay High Court in its judgment dated 29.06.2009 in ITA No.276/2009 and further, the Hon'ble Supreme Court has dismissed the SLP filed by the revenue on 06.09.2010 while deciding CC No.13456/2010 against the judgment of Hon'ble Bombay High Court. In that case, the ITAT held that in case, no search is conducted against a person, the period of operation to which the provisions of section 153A would apply, cannot be determined and the invoking of provisions of section 153A is baseless. It was also held that provisions of section 153A are only applicable in case valid search is conducted against the assessee u/s 132 of the Act and ITAT held that proceedings u/s 143(3) read with section 153A of the Act were null and void and the same were cancelled. Ld. AR also relied on the decis....
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....s 153A will be made on the basis of incriminating material which in the context of relevant provisions means (i) books of accounts and other documents found in the course of search, but not produced in the course of original assessment, and (ii) undisclosed income or property discovered during the course of search. In such a background, the ITAT has allowed the relief. He also relied on the following case laws :- (i) CIT vs. Lachman Dass Bhatia - 77 DTR 17 9Del.) dt. 7.5.2012; (ii) Gurinder Singh Bawa vs. DCIT - ITA No.2075/Mum/2010 dt. 16.11.2012; (iii) MGF Automobiles Ltd. vs. ACIT - ITA No.4212/Del/2011 dt. 28.06.2013; (iv) ACIT vs. Pratibha Industries Ltd. - 141 ITD 151 dt. 19.12.2012; (v) ACIT vs. PACL India Ltd. - ITA No.2637/Del/2010 dt. 20.06.2013; (vi) SSP Aviation Ltd. vs. DCIT - 346 ITR 177 (Del.) dt. 29.03.2012; (vii) M/s. Marigodl Merchandise (P) Ltd. vs. DCIT, Cen. Circle, Faridabad; and (viii) Mr. Vinay Chhadwa vs. ACIT. He also pleaded that the AO has sought clarification regarding the facts mentioned in the appraisal report vide his letter dated 10.08.2010 addressed to the ADIT (Inv.), Unit III (3), New Delhi. In this letter, Assessing Of....
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....warrant of authorization at an address different from the address recorded as registered office of the assessee company is also not very material as many group concerns are operating from the same premises and it is not possible for the investigating officers to precisely verify each and every premises which may result in compromising the confidentiality / secrecy of the investigations. He also submitted that even when search and seizure was in contravention of section 132 of the Act, material seized would liable to be used against the person in whose custody it was seized, as held by Hon'ble Supreme Court in the case of Pooran Mal vs. Director of Inspection reported in 93 ITR 505. He submitted that whether an error committed by officer in seizing documents which may ultimately be found not to be useful for or relevant to proceedings under the Act will not by itself vitiate search, nor will it entitle aggrieved person to an omnibus order releasing all documents seized. Such issue was also decided in favour of the revenue by the Apex Court in the case of ITO vs. Seth Brothers reported in 74 ITR 836. He submitted that in view of these factual matrix and legal position, cross objectio....
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....is proved beyond any doubt, confirmations were filed before Assessing Officer either directly by the investor or by assessee and the share applications were also submitted, the payments were made through banking channel, in such a situation, when assessee has furnished even income-tax particulars of the share subscribers then the Assessing Officer was duty bound to investigate the creditworthiness of the subscribers and in absence of the same, the deletion of the addition by the CIT (A) was held justified . He also relied on the decision of RPS Infrastructure Ltd. in ITA No.3200 to 3202/Del/2010 dated 01.09.2013. He also submitted that this issue is squarely covered by the following judgments :- (i) CIT vs Sophia Finance Ltd 205 ITR 98(Del) (ii) CIT vs Achal Investment Ltd 268 ITR 211 (Del) (iii) CIT vs Stellar Investments Ltd 192 ITR 298(Del) (iv) CIT vs Stellar Investments Ltd 251 ITR 263 (SC) (v) CIT vs Divine Leasing & Finance Ltd 299 ITR 268(Del) (vi) CIT vs Value Capital Services P Ltd 307 ITR 334 (Del) (vii) CIT vs Lovely Exports P Ltd 319 ITR 5 (SC) (viii) CIT vs Oasis Hospitalities P Ltd 333 ITR 119 (Del) (ix) CIT vs Kamdhenu Steels and Alloy Ltd....
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....elhi and the same has been executed at these premises. Thus, there was a warrant of authorization in the name of the assessee and it has been duly executed. The assessee's claim that warrant of authorization has not been executed at the assessee's premises - A-2/96, Ashirwad Apartments, Pashchim Vihar, New Delhi is also not having any merits. The assessee is a group company of Swastik Pipes Group. While conducting a search on a group, the warrants are issued to the premises which are mainly used by the group for conducting business of the company and warrants are issued in respect of such premises. There are possibilities that documents and other unaccounted wealth could have been found at any of such premises occupied by the various group companies. In view of these facts, we find no merits in assessee's pleadings and the case laws relied upon are having different facts. In the case of J.M. Trading Corporation, the premises were occupied by tenants. In other case, the warrant was not executed. In assessee's case, warrant was issued and executed. If the assessee's contention is accepted with regard to premises as mentioned by assessee for correspondence or registered office then va....
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....he search, showing non-genuineness of gifts was beyond jurisdiction, hence addition so made at Rs.20,00,000/- on account of non-genuineness of the gift which was not made in the original assessment u/s 143(3) of the Act, was rightly deleted by the Ld. CIT(A) without commenting on merits of it. The same is upheld. The round is accordingly rejected." In the case of ACIT vs. Asha Kataria, cited supra, the ITAT held as under :- "11. We further note that this is a case of search and assessment order was passed u/s. 153A of the I. T. Act. It is noted that no incriminating material or evidence was found or seized at the time of search and there is no reference to the same in the Assessing Officer's order. In this regard, we further placed reliance the Order of the Special Bench of the ITA T in the case of All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287. In this case with reference to the assessment u/s. 153A of the I. T. Act, it was held that any assessment that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him u/s. 153A for which assessment shall be made for each assessment year separately. In other cases in additi....
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.... the search carried out simultaneously. Therefore the CIT (Appeals) and the Tribunal have rightly held that there was nothing to connect the assessee with those sale bills. In the light of this position, their finding that no addition can be made to the gross profit by substituting the sale price mentioned in the seized sale bills cannot be said to be vitiated as unreasonable. In such circumstances, we are unable to hold that the Tribunal was not right in deleting the additions made to the gross profit declared by the assessee. Accordingly, we answer the question No.2 in ITA Nos. 1731/10 & 1733/10 and Question No.1 in ITA No.1734/2010 in the affirmative, in favour of the assessee and against the Revenue." In the case of Gurinder Singh Bawa vs. DCIT - ITA No.2075/Mum/2010 dated 16.11.2012, the ITAT, Mumbai Bench held as under :- "6.1 The Special bench in the case of Alcargo Global Logistics Ltd. (supra), has held that provisions of section 153A come into operation if a search or requisition is initiated after 31.5.2003 and on satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income for six years immedia....
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....rders passed u/s 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. But when we come to third circumstance i.e. circumstance (c), we find that this has been left unanswered. Para 23 of the judgment, the Hon'ble Delhi High Court mentions that the issue is left open." In the case of ACIT vs. Pratibha Industries Ltd. - 141 ITD 151 dt. 19.12.2012, the ITAT, Bench 'C', Mumbai has held as under :- "41. On going through the provisions of section 153A, clause (b) of section 153A, 2nd Proviso an the various decisions cited before us, three possible circumstances emerge on the date of initiation of search under section 132(1) of the Income Tax Act, (a) proceedings are pending; (b) proceedings are not pending but some incriminating material found in the course of search, indicating some income and/or assets not disclosed in the return and (c) proceedings are not pending and no incriminating material has been found. 42. When we tread to trace the correct and logical answers to the above circumstances, circumst....
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....caped assessment (situation 2A in the graphic). In the circumstance, what we are dealing in instantly, there are finalized assessment proceedings and no incriminating material indicating any escaped income (situation 2B in the graphic). Taking a cue from the decision of Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra) we can tread on the same premise and hold that on clubbing, what remains is the income originally determined or assessed (i.e. income originally determined + Zero = income originally determined -as there was no incriminating material)." In the case of ACIT vs. PACL India Ltd. - ITA No.2637/Del/2010 dated 20.06.2013, the ITAT, New Delhi has held as under :- "The issues arises from those processed return can be raised only when some materials found against the assessee. The Hon'ble Delhi High Court in the case of Anil Kr. Bhatia sited it supra held that assessment u/s 153(A) would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that has escaped assessment are clubbed together and assessed as the total income. The expiry of time for issuing notice u/s 143....
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....g these reassessment proceedings. Particularly, when there is no incriminating material found and seized during the course of search u/s 132(1) of the Act and nothing is available in record to reassess the income of assessee. In view of the above, this is not a fit case for making the addition in the year under consideration, the same are deleted." In the case of SSP Aviation Ltd. vs. DCIT - 346 ITR 177 (Del.) dt. 29.03.2012, Hon'ble Delhi High Court has held as under :- "17. The judgment of this court in Saraya Industries Ltd. (supra) was relied upon by Mr. Bajpai, in support of his contention that the seizure of the document must be of such nature that even closed assessments for six years could be reopened and this requirement postulates that the provisions of Section 153C can be set in motion only if there is a finding that the seized document or books of account or valuable article represents the undisclosed income of the other person. The said decision does not assist the petitioner. The section merely enables the revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be as....
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....tions filed by the assessee and not on any incriminating material found as a result of search. Besides, Id. DR has not been able to point out any incriminating material found as a result of search or the reliance of the lower authorities thereon. Ld. DR has endeavored to distinguish the Hon'ble Rajasthan High Court judgment in the case of Jai Steel India (supra) from assessee's case which the Id. Counsel for the assessee has effectively countered by citing paras 25-26 of this judgment, as under: "25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under section 153A of the act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139(return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first provisi....
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....eof, on this issue we hold that the assessing officer could not have made these additions in the impugned assessee u/s 153A, there being no incriminating material indicating any undisclosed income found as a result of search. This ground of the assessee is accordingly allowed." In the case of Mr. Vinay Chhadwa vs. ACIT in ITA No.8578/Mum./2010 dated 11.12.2013, the ITAT, Mumbai has held as under :- "6. Now coming to the decisions as relied upon by the learned Departmental Representative. From the issues and ratio discussed in these judgments, it is seen that the Hon'ble Delhi High Court has held that once there is a search, the Assessing Officer is required to call upon the assessee to file return of income for earlier six years, in response to the notice under section 153A and the assessment has to be completed for these six years. In the present case, the issue is entirely different as there is no dispute that notice under section 153A cannot be issued or no assessment can be made. The main issue involved is, whether the addition can De made in the order passed under section 153A once the subject matter of addition has already been discussed and income has been assessed....