TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 647
X X X X Extracts X X X X
X X X X Extracts X X X X
....oss objection. 1. On the facts and circumstances of the case and in law, ld. CIT(A) Central (''herein referred to as CIT (A)'') was not correct in confirming the additions made by the AO in respect of share application money deposited with the appellant company by M/s. A.K. Fabric (P) Ltd. , M/s. B.P. Buildtech (P) Ltd. and M/s. B.P. Infotech (P) Ltd. (hereinafter referred to as 'Share Applicant Companies'. 2. on the facts and circumstances of the case and in law' ld. CIT(A) was not correct in confirming the additions made by the A.Os' in respect of share application money deposited with the appellant Company by the share applicant companies' merely on the ground that Permanent Account Numbers (PANs) of these share applicants were not available with the appellant Company at the time of assessment proceedings. 3. on the facts and circumstances of the case and' in law ld. CIT(A) was not correct in confirming the additions made by the A.Os' in respect of share application money deposited with the appellant Company by the share applicant companies , merely on the ground that the paid up share capital of these share applicant companies did not prove their adequate....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs. 1,22,320/-, according to the AO, the assesses response to notices was general in nature and some very specific and crucial queries were not replied. Since the proper details were not filed by the assessee and reply to various queries remained materially un-complied with, the assessment was framed u/s 144 read with Section 153A of the Act i.e. best judgment assessment. The AO framed the assessment at Rs. 3,62,00,330/- which includes the amounts received by assesse towards share applications and are agitated before us. 5.2 The assessee preferred first appeal where the assessee raised following issues. (i) Validity of Section 144 r.w.s. 153A assessment. (ii) Additions made being not based on incriminating material or evidence found during the course of search. (iii) Denial of adjournments and consequent framing of assessment u/s 144 Act. (iv) Merits of the additions. 5.3 In first appeal, since the assessment was framed u/s 144, the assessee filed additional evidence; since on the similar facts and circumstances as in assessment year 2006-07 the additional evidence was admitted, it was admitted in this year also. The same was forwarded to the AO for remand report which was d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al on record. It is seen that the then AO has not even mentioned in the assessment order as to which were the seven entries and thereafter which were the five entries which have already been deal in para 3.7 of the assessment order by the AO. Moreover, no any further details / supporting have been mentioned in the order before drawing adverse inference. On the other hand, A.R. has stated that any entry in respect of Smt. Shakuntala Devi is not anywhere finding place in the bank account of the appellant company. The present AO in the remand report has not commented adversely on the submission of A.R. Accordingly, addition of Rs. 5,0,850/- so made, treating the amount received from Smt.Shakuntala Devi as unexplained is hereby deleted. As regareds addition in respect of share application money of Rs. 9 lakhs (transaction shown as of Rs. 9,00,915/- including DD charges) of M/s. Nikhil Builders and Promoters (P) Ltd. is concerned, as the appellant has filed confirmation, complete details of the company including CIN, date of incorporation (3.6,1987) indicating the company being in existence for about 22 years etc. and company is having paid up capital of Rs. 25 lakhs and non-furnishing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....equent upon search, the AO has plenary powers to reassess the entire assessment made in the case of the assessee whether incriminating material was found or not. From the plain language of Section 153A itself, as well as from the memorandum to Finance Act 2003, it is clear that the AO needs to issue notices u/s 153A of six years mandatorily once the search is conducted, as the word used everywhere is "shall". Subsequently, scope of an exception has been brought. The Finance Act 2012, has inserted third proviso to Section 153A (1) of the Act, empowering the Central Government to make rule in respect of the Assessment Year except in case where any assessment or reassessment has abated, specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to previous year in which search is conducted or requisition is made. If no incriminating material is gathered during the search, and the AO is barred to consider issues/ material not related to search, issuing notices u/s 153A of the I.T. Act would not serve any useful purpose....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Court makes it very clear that in the assessment proceedings u/s 153A of the I.T. Act entire material can be considered. Regarding the issue whether notice u/s 1534 of the I.T. Act could have been issued in the absence of any incriminating material, not decided by the Hon'ble Delhi High Court . the clear cut language of the Act, the language of memorandum to Finance Act 2003 and position reiterated in memorandum explaining the 3rd proviso by way of Finance Act2012, made it very clear that issue of notice u/s 153A is mandatory, irrespective of any incriminating material gathered during the course of search once the search has been conducted in a case. 5.8 Ld DR thus pleads that:- a) Once search is conducted in a case, the proceedings u/s 153A for all six assessment years are automatic and mandatory, irrespective of whether any incriminating material is gathered or not. b) The scope of assessment/reassessment u/s 153A is wide enough to cover entire relevant material and not the material gathered during the course of search only.' Further reliance is placed on the Karnataka High Court judgment in the case of Canara Housing Development Company vs. DCIT, (ITA No. 38/2014) dated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shes that initial onus as cast by sec. 68 on the assesse is duly discharged. Ld. CIT(A) while holding so has relied on various judicial precedents including: (i) CIT v Ujala Dyeing and Printing Mills 328 ITR 437 (Guj.) (ii) CIT vs. Dwarkadhish Investment (P) Ltd., 194 Taxman 43 (Del.) (iii) CIT vs. Lovely Exports (P) Ltd. 216 CTR 195 (SC) (iv) Barkha Synthetics Ltd. vs. ACIT, 197 CTR 432 (Raj.) (v) CIT vs. SMC Global Share Borkers 288 ITR 345 (Del.) It is pleaded that all the details of each and every share applicants are listed by the ld. CIT(A) in his detailed order as well as placed on the paper book. Section 68 of the Act, casts initial onus on the assessee to prove the identity and genuineness of the transactions coupled with creditworthiness. All the share applicants are the companies duly incorporated and found to be alive in the ROC record. The amounts were received through banking channels supported by valid contemporaneous confirmations and the allotment of shares are duly corroborated by applications. Therefore, there is no merit in the findings of the ld. AO that the assessee has failed to discharge the initial onus. The additions are not based on proper analysis ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., low paid up share capital does not militate on the issue of discharge of burden. Besides assesse cannot ask the prospective share applicant about their paid up share capital. 7.2 We have heard the rival contentions and perused the materials available on record. The assesse claims to have discharged its onus in terms of sec. 68 by filing: i. Contemporaneous confirmations from share applicants. ii. Share applicants IT record. iii. Application amounts are received by way of a/c payee cheques. iv. Company record about share applications and allotments. v. ROC record showing that companies are live. This entire evidence has been discarded by ld. AO on the reasons that assesse could not produce new confirmations and the postal notices returned un served, this according to ld. AO amounted to conclusive proof that share applicants were not genuine. In our considered view the issues of initial discharge of assesses burden cannot be decided in such a clock and dagger manner with narrow perception. A quasi-judicial authority has to weigh the entire evidence available on record. The copious evidence cannot be summarily discarded merely because assesse could not fulfill the seemingly d....