TaxTMI 
TaxTMI 
2015 (7) TMI 647
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...., the assessment order dated December 30, 2011 u/s. 143(3)/153A is without and/or in excess of jurisdiction and bad in law and on facts. 2. For that on the facts and in the circumstances of the case, action u/s. 132(1) of the Income Tax Act taken against the appellant and seizure of its entire bank balance was unwarranted, without and/or in excess of jurisdiction and bad in law and on facts. 3. For that further and in any event and without prejudice to the aforesaid, on the facts and in the circumstances of the case, no addition of share capital or share premium received by the appellant can be made in its hands. 5. For that the appellant denies liability to pay the tax assessed and the interest charged u/s. 234B and 234D of the Income-Tax Act." Ground no. 4 in all the appeal s read as under:- ITA No. 1538/Kol/2012(A.Y. 2004-05) 4. For that further and in any event and without prejudice to the aforesaid, on the facts and in the circumstances of the case, the Assessing Officer erred in adding the share capital of Rs. 4,00,000/- and share premium of Rs. 36,00,000/-, aggregating to Rs. 40,00,000/- and his purported findings in that behalf have been arrived at in gros....
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....(A) erred in upholding the legality of proceedings u/s. 132(1) and seizure of bank accounts without there being any search warrant and / or panchnama in the name of the appellant company and such action of the CIT(A) is completely bad in law and in view of the facts and in the circumstances it may kindly be held accordingly. 3. For that your petitioner craves the right to put additional grounds and/or to alter/amend/modify the present grounds at the time of hearing. 4. Similarly in the case of Budhiya Marketing Pvt. Ltd. in ITA Nos. 1545 & 1546/Kol/2012, the Revenue has taken the following common grounds of appeal as stated above except ground no. 4 which read as under:- ITA No. 1545/Kol/2012 (A.Y. 2005-06) 4. For that further and in any event and without prejudice to the aforesaid, on the facts and in the circumstances of the case, the Assessing Officer erred in adding the share capital of Rs. 51,10,000/- and share premium of Rs. 9,70,90,000/-, aggregating to Rs. 10,22,00,000/- and his purported findings in that behalf have been arrived at in gross violation of the principles of natural justice, without providing copies of the statements relied upon or affording opport....
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.... beneficiaries and such entry operators charged commission for providing such accommodation entries to real beneficiaries. In consequence to the search in the case of Shri Santosh Kumar Shah, prohibitory orders under sect ion 132(3) were passed in the case of both the assesses addressing to their Banker not to allow any operation to the assessee either in the premises or in the Bank locker. Subsequently survey under section 133A was conducted on 09.02.2010. During the course of the survey in the case of Edward Supply Pvt. Limited, following document s were impounded:- Inventory of books of account found in the premise of 32, Ezra St., Room No. 264, 2n d Floor on 09.02.2010 during the course of surv ey u/s. 133A:- Sr.No. Description No. of written pages ID Mark 1. One CPU 2. One register of share application deals 82 PIL/1 3. One file with Misc. documents 72 PIL/2 4. A Bunch of loose sheets 34 PIL/3 The above documents bear ID mark PIL/CPU/1, PIL/1, PIL/2 & PIL/3 are being impounded. Subsequently vide order dated 11.02.2010 the revenue passed the revocation order in respect of the pr....
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....e A.O. and the same were also perused. The A.O., leaning only upon the above e xtracted portions of the statements of Sri Santosh Kumar Shah, Sri Vinod Kurnar Shah and Sri Barun Nath Roy, wherein they had stated that the assessee company was only a paper company used by Sri Santosh Kumar Shah in his business of providing accommodation entries, concluded that assessee's share capital/share application money was bogus. During the appellate proceedings the assessee stated that it had submitted all the details of its shareholders, along with copies of share applications received from the shareholders, copies of relevant bank accounts of share applicants, copies of Income Tax Returns of share applicants, relevant balance sheets of share applicants, copies of Board resolutions passed by the share applicants and share allotment letters showing genuineness of the share application. It further stated that during the assessment proceedings the A.O. conducted verification of assessee's share capital/share application money by issue of notices u/s.133(6) of the Act and he has not found anything adverse, as is evident from the assessment order. To examine the correctness of assess....
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....39;s share capital were persons of no means or were of inadequate means, i.e., subscribers to the share capital were not creditworthy. In CWT vs. Value Capital Services (307 ITR 334) Delhi High Court has held that in a case 'where it is alleged that persons contributing share application moneys are bogus, it is quite obvious that is very difficult for the assessee-company to show the creditworthiness of strangers. If the Revenue has any doubt with regard to their ability to make the investment, their returns may be re opened by the department and that there is an additional burden on the Revenue that it must show that e ven if the applicant does not have the means to make the investment, the investment made by the applicant actually emanated from the coffers of the assessee-company so as to enable it to be treated as the undisclosed income of the assessee-company. ITAT, Kol. Bench in the case of DCIT vs. Shaw Aromatics (P) Ltd. on Page 10 of the order has referred to the following observations of the Ape x Court in the cas e of CIT vs. Lovely Exports (P) Ltd. (216 CTR J95)(SC): "Can the amount of share money he regarded as undisclosed income under S.68 of I.T Act. 1961....
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....share capital. Despite of verification carried out by the A.O. and despite nothing adverse or doubtful emerging from such verification, the A.O. treated the share capital to be bogus stating only that Sri Santosh Kumar Shah and his two associates had admitted that the assessee company was a paper company used by Sri Santosh Kumar Shah for his business of entry operation. Even if the assessee company was being used for providing entries to different persons by Sri Santosh Kumar Shah, it is incomprehensible how that fact alone lends share capital of the assessee company to be bogus. The A.O. has not brought anything on record to show that it is assessee's own income from entry operation business or otherwise that travelled to its share capital. In the absence of any such link established or any adverse or doubtful finding emerging from verification from share capital carried out by the A.O., the A.O.'s conclusion that share capital of the assessee company was bogus referring only to admission of Sri Santosh Kumar Shah to using the assessee company for his entry operation business is far-drawn, baseless and apparently based only on suspicion, therefore, devoid of any merit.....
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....ar ID mark PIL/CPU/1, PIL/1, PIL/2 & PIL/3 are being impounded". The search has to be on the person or on the premises of the person not at the Bank account of the person. A search warrant was issued on 10.02.2010 which was executed at the banker premises in respect of the account of the assessee maintained by Axis Bank Limited. This fact is apparent from the copy of the Panchnama. The search warrant has to be in the name of the assessee. The search warrant relates to the bank account of the assessee to which the Revenue was already aware of as the order in respect of the Bank account was passed under section 132(3) on 15.12.2009. It is not a case where the revenue was not aware of about the bank account of the assessee. The bank account of the assessee was duly disclosed in the return filed by the assessee and for this our attention was drawn towards the copy of the return for the assessment year 2009- 10 which was filed on 26.09.2009 which we verified. It was not a case where the bank account was not disclosed. Once the revenue was aware of about the bank account of the assessee, there was no reason to issue the search warrant in respect of the bank account. The conditions as ....
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....rs and contended that the case of the assessee is duly covered by the said order. The order of the coordinate bench is binding on this tribunal. 12. We have heard the rival submissions and carefully considered same along with the orders of the authorities below and also perused the material available on record as well as referred to us during the course of hearing. We have also gone through the various case laws cited before us. 13. First we would like to deal with the submissions of the ld. Senior counsel whether the search is valid or not. We noted that in the case of the assessee, copy of the panchanama in column (A) read as under 'Warrant in the case of a/c no.6477 with Axis Bank lake town branch Kolkata of M/s Edward Supply Pvt Ltd. '. This description gives an impression that search has taken place not on the assessee but in respect of the bank account of the assessee, on the banker in respect of these bank account on 11.2.10 as contended by the Ld. AR on the basis of the panchnama. For the said bank account a prohibitory order was al ready issued to the banker 15.2.2009 u/s 132(3) and subsequently vide letter dated 11.2.2010 the prohibitory order was revoked. The asses....
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.... respect of the bank account of the assessee, this tribunal when called for the copy of search warrant, noted that the search warrant was in the name of the assessee but in the panchanama similar language was used as in the impugned case. In view of this fact we directed the ld. DR to produce search warrant i.e. Form No. 45 as prescribed under Rule 112. The ld. D.R. produced the copy of the Form 45 and from the said form we noted that the warrant of authorisation is in the name of M/s. Edward Supply Pvt. Ltd. In view of this fact, we hold that this submission of the ld. AR does not have any leg to stand. 15. We have gone through the cases relied on by the Sr. Counsel in this regard. We noted that Hon'ble Supreme Court in the case of CIT, Haryana, Himachal Pradesh and Delhi & Others reported in 161 ITR 505 held as under:- "An amount of Rs. 93,500/- which was, inter alia, seized from the respondent by the Customs authorities and lay in their custody, had to be returned to him pursuant to an order of the High Court in a wri t petition. Before the amount was returned, the Income tax Officer served a warrant of authorisation dated May 10, 1972, issued under section 132 of the Inco....
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....uld not be said that one Government department could search any other Government department and seize documents, money, etc.". This decision relates to when the amount has already been in the possession of another Government Department i.e. with the Customs Authority and revenue wants to seize the said amount. The Hon'ble Supreme Court under these facts took the view that one Government Department could not search any other Government Department and seized the document s and money belonging to the assessee. In the instant case, the Bank account was with the banker which is not a Government Department. 16. Hon'ble Supreme Court in the case of K.C.C. Software Limited & Others -vs.- Director of Income Tax (investigation) and Others reported in [2008] 298 ITR 1 (SC) held as under:- "When moneys are deposited in a Bank, the relationship between the banker and the customer is one of debtor and creditor and not trustee and beneficiary. The banker is entitled to use the monies without being called upon to account for such user, his only liability being to return the amount in accordance with the terms agreed between him and the customer. And it makes no difference in the jural rel....
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.... in this decision vide order dated 12th day of September, 2014, the Tribunal has dealt with the plea of the assessee that the panchnama is in the name of the account of the assessee and Tribunal ultimately took the view under para 20 that the search had validly been conducted on the assessee. 18. Now, coming to the issue whether any addition can be made on account of share capital and share premium by the assessee, which has already been shown in the regular return filed by the assessee and for which the regular assessment has al ready been completed, let us look into the provisions of the section 153A under Chapter 14 under the title 'Assessment in case of search or requisition'. The provisions of section 153A, 153B & 153C were inserted by the Finance Act, 2003 w.e.f 1.6.2003. Originally section 153A of the Act did not have any sub section. However, sub-section (2) to Section 153A was inserted by the Finance Act, 2008 w.e.f from 1.6.2003. Section 153A provides for an assessment in case of a person in whose case search is initiated u/s.132 of the Act or books of account, other document s or any assets are requisitioned under section 132A after the 31s t day of May, 2003.....
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....ated under the second proviso to sub-section (1), shall stand reviv ed with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation -For the removal of doubts, it is hereby declared that. (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year". 20. From the reading of the provisions of sect ion 153A, it is apparent that this section mandates that where in the case of a person, a search is initiated under section 132 on books of account, other document s or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall issue notice to such person requiring him to furnish within such period as may be specified in the notice, the return of income in respect of each assessment year falling within....
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....e for each of the six assessment years separately. b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means -(i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and; (ii) undisclosed income or property discovered in the course of search". 22. In view of the decision of Special Bench in the case of All Cargo Global Logistic s Ltd. ( supra), no doubt the addition in the case of the assessee can be made by the Assessing Officer only on the basis of incriminating material found during the course of search under section 153A as in the case of the assessee the assessment was not abated for the impugned assessment years in respect of which proceedings were taken under section 153A. 23. We noted that Hon'ble Delhi High Court in the case of Chetandas Laxmandas, 254 CTR (Del) 392 has taken similar view. In para 11 of this judgement, the Hon'ble High Court held that "obviously an assessment has to be made under this section only on the basis of the seized mater....
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....leted on the date of search by restricting additions only to those which flow from incriminating material found during the course of search. If no incriminating material is found in respect of such completed assessment, then the total income in the proceedings u/s 153A shall be computed by considering the originally determined income. If some incriminating material is found in respect of such assessment years for which the assessment is not pending, then the 'total income' would be determined by considering the originally determined income plus income emanating from the incriminating material found during the course of search. In respect of assessment pending on the date of search which got abated in terms of second proviso to section 153A(1), the total income shall be computed afresh uninfluenced by the fact whether or not there is any incriminating material. 25. We noted that in the case of the assessee, the addition has been made in each of the assessment years on account of the share capital and the share premium as well as the disallowance of the expenses. During the course of the search taken place in the case of the assessee, we noted that no incriminating materia....
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...., Chapter XlII within which the powers of search and seizure and powers to requisition books of account are spelt out enable the revenue to take care of cases where it effects a search and seizure. That search and seizure is effected and after the same is effected, books of account, other documents, money, bullion, jewellery or other valuable article or thing is found as a result thereof that notwithstanding anything and within the meaning of the above provisions having been concluded, it is open for the revenue to make an assessment. It is also open to the revenue to make a reassessment in cases where it exercises the powers to requisition books of account etc. This is because it is of the view that the books of account are required to be summoned or taken into custody. It, therefore, issues a summons in that regard. It may also requisition the books of account or other documents for that might be useful and or any assets representing withholding or part income or property which has not been or would not have been disclosed for the purpose of the Indian Income-tax Act 1922 or the Income-tax Act of 1961 by any person from whose possession or control they have been taken into custod....
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....oceedings which stood abated as per section 153A(l). Once it is held that the assessment has attained finality, then the Assessing Officer while passing the independent assessment order under section 153A read with section 143 (3) could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order [Para 28] The stand of revenue that these observations are made in passing or that the y are not binding on instant Court is not agreeable because the essential controversy before the Bench was somewhat different. Revenue urged that was only in relation to the legality and validity of the order of the Commissioner under section 263. Had that been the case, the Division Bench was not require....
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....a). These are the conclusions which can be reached and upon reading of the legal provisions in question [Para 30] Therefore, the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. [Para 31] Further, revenue would submit that the above observations and conclusions of the Special Bench are specifically disapproved in ClT v. Anil Kumar Bhatia [2012] 24 taxmann.com 98/211 Taxman 453 (Delhi). However, this argument is not found to be accurate. Upon reading of the observations of the Delhi High Cowl as a whole and in entirety, it is not possible to agree with revenue that the High Court of Delhi reached a conclusion different than the view taken by the Division Bench [Para 35]. 27. Similar view has been taken by the Hon'ble ITAT, Panaji Bench, Panaji in ITA No. 112/PNJ/2014 in the case of Sunita [54 taxmann.com 250; 68 SOT 98. We have gone through the decision of 'B' Bench of this Tribunal in ITA Nos. 1533 to 1537/Kol./2012 in the case of Patangi Trade & Holdings Pvt. Ltd. dated 12.09.2014. We noted that in this decision, even though the ld. A.R. has relied on the decisions of the ....