AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 179
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....e appeal is less than Rs. 4 lakhs, therefore, no appeals should have been filed by the revenue in view of Instruction No.3/2011 as well as Instruction No.5/2014 dated 10.7.2014. 4. Ld D.R. on the other hand, contended that since all these appeals filed by the revenue although relate to one issue but has been disposed of by a composite order, therefore, these appeals should not be dismissed separately in limine determining the tax effect in respect of each assessment year for the grounds of appeal taken by the revenue. 5. In the rejoinder Ld A.R. drawn our attention towards Board Instruction No.5/2014 dated 10.7.2014 and contended that even if the total tax effect in all these appeals by the revenue are taken into account, the tax effect will be less than s.4 lakhs. He also contended that instruction will apply to all the pending assessment years and for this proposition, reliance was placed on the decision of Hon'ble Gujarat High Court in the case of Sureshchandra Durgaprasad Khatod (HUF (2012) 253 CTR 492 (Guj) as well as the decision of Hon'ble Delhi High Court in the case of CIT Vs M/s. P. S. Jain & Co. in ITA No.179/1991 dated 02.08.2010. 5. We have heard rival contentions a....
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....e issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against. 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shal....
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....g issues should be contested on merits notwithstanding that the tax effect entailed is less than the monetary limits specified in para 3 above or there is no tax effect. (a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or (c) Where Revenue Audit objection in the case has been accepted by the Department. 9. The proposal for filing Special Leave Petition under Article 136 of the Constitution before the Supreme Court should, in all cases, be sent to the Directorate of Income-tax (Legal & Research), New Delhi and the decision to file Special Leave Petition shall be in consultation with the Ministry of Law and Justice. 10. The monetary limits specified in para 3 above shall not apply to writ matters and direct tax matters other than Income tax. Filing of appeals in other Direct tax matters shall continue to be governed by the relevant provisions of statute & rules. Further filing of appeal in cases of Income Tax, where the tax effect is not quantifiable or not involved, such as the case of registration of trusts or institutions ....
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.... of the Courts on Instructions, relying on the decision in Commissioner of Income Tax vs. Madhukar K. Inamdar (HUF) reported in (2010) 229 CTR (Bom) 77, has held in paragraphs 9, 10, 11, 14 and 17 as under: "9. As stated earlier, the Income Tax Act was amended and Section 268A has been introduced on the Statute book with retrospective effect. Section 268A carves out an exception for filing of appeals and References under Section 260 A of the Act. The legislature has prescribed that the CBDT is empowered to issue circulars and instructions from time to time, with regard to filing of appeals depending on the tax effect involved. Thereafter, in 2008, CBDT Instruction No. 5 of 2008 dated 15th May, 2008 was issued. This Court in the case of "Commissioner of Income Tax V/s Madhukar K. Inamdar (HUF) reported in "(2010) 229 CTR (Bom) 77, interpreted the aforesaid Circular. The Circular was issued in supersession of all earlier instructions issued by the Board. The monetary limit was increased and appeals were to be filed under Section 260A, thereafter, only in cases where the tax effect exceeded Rs. 4 Lacs. Paragraph 11 of that instruction stipulated that it was applicable to appeals f....
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....limit for the tax effect would hold good even for pending cases. Accordingly, the Court dismissed all the appeals having a tax effect of less than Rs. 4 Lacs. 10. The new CBDT instructions have been issued on 9th February, 2011, being Instruction no. 3 of 2011. The monetary limit has been raised again and clause 3 of the instructions provides that appeals shall not be filed in cases where the tax effect does not exceed the monetary limits prescribed, henceforth. The monetary limits prescribed for filing an appeal under Section 260A before the High Court has been raised to Rs. 10 Lacs. This instruction is identical to the CBDT Instruction no. 5 of 2008. Clause 10 of this circular indicates that monetary limits would not apply to writ matters and direct tax matters other than income tax. It further provides that where the tax effect is not quantifiable, the Department should take a decision to file appeals on merits of each case. Clause 11, again provides that the instruction would apply to appeals filed on or after ....2011 and appeals filed before ...... 2011 would be governed by the instructions on this subject, operative at the time when such appeals were filed. 11. In our opin....
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....nstructions were applied to the appeals filed retrospectively. Hon'ble Gujarat High Court has discussed that almost all High Courts are of the unanimous view, considering the main objective of such instructions that to reduce the pending litigation, where the tax effect is considerable low or small, the appeal is not maintainable. 8. On query from the Bench, the Ld. DR could not point out any of the exceptions as provided in the Circular as under: (a) that this is a loss case having tax effect more than the prescribed limit, which should be taken into account, (b) that this is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions, (c) that this is a case, where, in the case of revenue, where constitutional validity of the provision of the Act or I.T. Rules 1962 are under challenge, (d) that Board's order, Notification, Instruction or Circular has been held to be illegal or ultra vires, (e) that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge. The Ld. DR could not point out any of the exceptions as provided above. Accordingly, this being a ....
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....place of Rs. 20,00,000/-" 16. The brief facts of the case are that the assessee is a private limited company incorporated on 11.12.2002. Regular books of account, as required under the different statute, are maintained, audited and annual returns, as required under the Companies Act, were regularly filed alongwith audited balance sheet, profit and loss account and audit report for all these assessment years under section 139(1) of the Act as detailed below: Asst. year Date of filing of return Taxable income 2003-04 24.10.2003 Rs. 1,84,785 2004-05 27.10.2004 Rs. 1,65,407 2005-06 2.9.2005 (-) Rs. 4,60,449 2006-07 31.7.2006 (-) Rs. 15,66,696 17. During each of the assessment years, assessee has received following share capital by way of share application money: Asst. year Amount 2003-04 Rs. 23,99,000 2004-05 Rs. 35,00,000 2005-06 Rs. 55,00,000 2006-07 Rs. 1,05,00,000 18. The details of the share capital issued as well as share premium were available in the audited balance sheet. Intimation under section 143(1) dated 7.1.2004 for assessment year 2003-04 was duly received by the assessee. Smt. Shashi Sharma and Shri Gaurav Sharma are the direc....
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.... these documents, jurisdiction to issue notice u/s.153C has been assumed in the case of the assessee and notice under section 153C has been issued to the assessee on 10.4.2008 for each of the assessment years. The documents seized would indicate that no document is in the nature of incriminating material to show that there is undisclosed income assessable at the hands of the assessee. The documents seized are recorded documents verifiable with reference to returns submitted by the assessee in the course of regular assessment proceedings. In the absence of documents being of incriminating nature, no valid assumption of jurisdiction under section 153C of the Income tax Act, 1961 can be assumed by the Assessing Officer. In this regard, reliance was placed on the following decisions: "1) ITAT order in ITA No.4514 & 45l5/Del/2012 in the case of Therapeutic India (P) Ltd. vide order dated 31/5/2013. 2) ITAT order in ITA No.5460 to 5465/Del/2012 in the case of V.K. Fiscal Services Pvt. Ltd. vide order dated November 2013. 3) ITAT order in ITA No.1344/Del/2012 in the case of M/s. DSL Properties (P) Ltd. vide order dated 22/3/2013. 4) ITAT order in ITA No.917 to 922/PN/2010 in the case ....
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....f issue of notice U/s 153C of Income Tax Act 1961 in respect of assessment years 2003-04 to 2005-06. The assessment so framed deserves to be cancelled. For this proposition of law, reliance was on the following decisions: "1. Bharati Vidapeeth , (ITA No.917 to 922/PN/2010) 2. Sinhgad Technical Education Society (ITA No.114 to 117/PN/2010) 23. On the other hand, ld Departmental Representative, relied on order of ld CIT(A) and vehemently contended that as per provisions of section 153C(1) of the Act that if the documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person in whose case search has been conducted, and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. Therefore, he vehemently contended that section 153(1) give jurisdiction to the Assessing Officer to issue notice u/s.153C over the assessee. Ld D.R. submi....
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....isions of section 153A. The provisions of section 153A, 153B & 153C were inserted by the Finance Act, 2003 w.r.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 documents or any assets are requisitioned under section 132A after the 31st day of May, 2003. Section 153B provides for time limit for completion of assessment under section 153A and Section 153C of the Act . Section 153C provides for assessment of income of person or other than person in respect of whom warrant or authorisation is issued u/s.132 of the Act. 27. Section 153A and Section 153C are extracted below: "153A. Assessment in case of search or requisition.- (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day....
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....e the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A : Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having juri....
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....f account, but it cannot be said that these transaction did not belong to the assessee. 29. It is apparent from the language of section that the section does not require that the documents belonging to the assessee must be incriminating documents. Section 153C gives the jurisdiction to the Assessing Officer once the documents belonging to the assessee are found in the case of the assessee in whose case the search had taken place. 30. We have gone through the various decisions, as has been relied upon by ld A.R. In this regard, we noted that in the case of ACIT vs. Therapeutic India (P) Ltd., (ITA No.4514 & 4515/Del/2012), Delhi ‗H' Bench vide its order dated 31.5.2013 has, inter alia, held as under: "Thus there is nothing incriminating in these documents which can lead to forming of the satisfaction on part of the AO to initiate proceedings u/s 153C of the Act. In the spirit of enactment of section 153C, it would be implicit and inherent requirement that there must be existence of prima facie unrecorded unaccounted transaction recorded in the documents belonging to the assessee before the said provision can be invoked in case of a third party, who has not been subjected to....
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....ropped the proceedings initiated under section 153C of the Act. The Tribunal did not took the view that the proceedings initiated u/s.153C was without jurisdiction. Thus, this decision will not also assist the assessee. 33. We have gone through the decision of ITAT Delhi ‗B' Bench in the case of M/s. DSL Properties (P Ltd vs DCIT (supra), wherein, the Tribunal at para 17 held as under: "At the time of hearing before us, the learned counsel for the assesee has vehemently contended that the photocopy of the audited profit & loss account and balance sheet was belonging to the shareholder/director from whom the same was found and not to the assessee. We agree with this contention of the learned counsel. When a company supplies photocopy of its profit & loss account and balance sheet to its shareholders/directors, such photocopy of the profit & loss account and balance sheet belong to such shareholder/director and not to the assesse company. If the argument of the Revenue is accepted then, if during the course of search of any person the photocopy of the profit and loss account/balance sheet of any listed company, say, Reliance Industries, Tata Motors or Bajaj Auto is found, the....
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....pecial Bench was constituted in the case of All Cargo Global Logistics Ltd vs. DCIT, (2012) 137 ITD 287 (SB)(Mum) on the following question: "Whether, on the facts and in law, the scope of assessment u/s 153A encompasses additions, not based on any incriminating material found during the course of search? Before the Special Bench, Ld Sr. Counsel relied on the decision of LMG International Ltd (supra) as is apparent from para 16 of that order. We noted that in the said judgment in para 52 of its order, the Tribunal has held that section 153A comes into operation if a search or requisition is initiated after 31.5.2003. On the satisfaction of this condition, the AO is under obligation to issue notice to the persons requiring him to furnish the return of income of six years immediately preceeding the year of search. This finding implied that the proceedings u/s.153A is not to be restricted to the years for which incriminating material is found during the search. Ultimately, in respect of question referred to the Special Bench, the Special Bench in para 58 of its order held as under: "8. Thus, question No.1 before us is answered as under : a) In assessments that are abated , the AO ....
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.... than the searched person. The last line states that there is no requirement in section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income. The facts of this case are that there had been a survey in P group of companies. In the course of search, certain documents were found showing that the assessee acquired certain development rights from P group of companies. A satisfaction was recorded by the Assessing Officer in the case of the assessee u/s 153C. Thereafter, the proceedings were initiated against the assessee u/s 153A and the assessee was directed to file returns for the six assessment years. Assessments were completed u/s 143(3) read with section 153C. As the appeals were pending before the CIT(A), the assessee filed Writ petition before the Hon'ble High Court contending that the AO had illegally assumed jurisdiction u/s 153C read with section 153A and that there was no undisclosed income to be assessed in the assessee's hands. Dismissing the petition, the Hon'ble High Court held that the satisfacti....
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....Wing. The findings of the AO are specific, sufficient to prove the existence of accommodation of entry providers namely Shri Sunil and Jain and Shri Rajesh Jain and accommodation entries provided by them for appellant M/s. Gajanan Developers and Distributors Pvt. Ltd. in exchange of commission they charged from the company for providing such services. The incriminating paper in LPS-5 is evidence of accommodation entries given through the bank account of Spectrum Chemicals Pvt. Ltd. and Optimate Textile Limited also working out of commission on the basis of amount, month and dates. M/s. Dazzal Confindive Limited is controlled by Shri Sunil Agrawal. The huge cash deposits found in the bank account of the company is utilized for providing accommodation entries, though Shri Agrawal failed to furnish the name of the beneficiaries who deposited cash in the bank account. On observing the trail, it is found that Shri Sunil Agrawal used to receive cash through Shri Vinay Gandhi from Shri Gaurav Sharma which were deposited in the bank accounts of his employees and acquaintance and their concerns namely Ashmit Sagar, Rakesh Sharma, Ribeka Garg, Satyam Kanungo, Vinisha Garg, etc.. The page No.....
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.... any substantial business activity and that's too at a huge premium. No books of account, bank details, nature of business activities of the above companies and even their confirmation were produced for verification before the AO. It was noticed from the return of income of M/s. Jubilant that it had filed returns of negligible income compared to huge asset holdings (i.e., investments) which shows that the main business of the company was earning from investment but the company was not even earning income at the rate of bank interest of 5% on its investments. No genuine business concern would operate in such a manner over several years. A perusal of the balance sheet of appellant M/s. Gajanan Distributors & Developers Pvt. Ltd. in the relevant assessment years shows that the company had invested in purchase of agricultural land of substantial which had no connection with any business activity of the company or as loans to the Directors, which makes it clear that the company has just been used to create a veil for investment in various assets out of undisclosed income. Since real estate has been purchased by the company, the amount appearing as share application must have originated....
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..... Ltd. The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income-tax file numbers, their creditworthiness, share application forms and share holders register, share transfer register, etc., are furnished to the AO and the AO has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under section 68 and the remedy open to the Revenue is to go after the share applicants in accordance with law. I am afraid that I cannot apply the ratio to a case such as the present one, where the AO is in possession of material that dis-credits and impeaches the particulars furnished by the assessee company and also establishes the link between self-confessed "accommodation entry providers", whose business it is to help assessees bring into their books of account, their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inapplicable to a ca....
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....ed above, Shri Gaurav Sharma has no such business activities known to the Department. He has no activities to earn unaccounted monies and it is for this reason the AO has ruled out any suspicion which would have warranted protective assessments of the alleged bogus share capital in his hands. On the other hand, it is seen that Dr. Yogiraj Sharma has unaccounted income which can be traced back to early years preceding the Asstt. Yr. 2007-08 and 2008-09. There are ample evidence of close connection of Dr. Yogiraj Sharma with the suppliers namely Shri Ashok Nanda and Shri Yogesh Patariya. There are various business concerns of Shri Ashok Nanda including Netam Industries and Shri Umesh Kajve whose name is landed in the case of Netam Industries was the Director of the Dimple Multitrade Pvt. Ltd.. Shri Nanda is the share holder of the companies of Shri Gaurav Sharma and also Managing Director. Shri Yogesh Patariya is a close family friend of the Dr. Yogiraj Sharma. He is proprietor of Radiation Image Communication, Global Enterprises and others. Both of them get huge supply orders from the Department of Health. The loose papers in page No. 81-84 of LPS-2/30 seized from A-70, Shakti Nagar....
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....hendra Suryavanshi, Shri Manish, Shri Mahesh Sharma, Smt. Shashi Sharma are the share holders other than the alleged paper companies wherein Smt. Shashi Sharma and Shri Gaurav Sharma are the directors with certain share holdings. (vi) The subscribing companies are found to be fictitious or non-existent, therefore, one fact is oozing out that M/s. Gajanan Distributors and Developers Pvt. Ltd. and M/s. Shree Vighnesh Warehouse and Distributors Pvt. Ltd., have to discharge the onus to establish the credits of amounts received from the alleged subscribing companies in their books of account to obviate the mischief of section 68 of Income Tax Act. The law is well settled that onus to prove the source of money found to have been received by an assessee is on him where the nature and source of a receipt whether it be of money or other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that the income is from any particular source for which I am supported by the decision of Hon'ble Apex Court Rashan Di Hatti v/s CIT reported in 107 ITR 938 and Kela Khan Mohd....
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....ar. The substantive assessment of the sum in the hands of Dr. Yogiraj Sharma is vacated." 42. Ld A.R. before us contended that the assessee has received share application during the year but all the share application money was not treated by the AO to be of undisclosed nature and taxed substantively in the hands of Dr. Yogiraj Sharma. It is only the share application money received from the following persons/concerns which were taken to be of undisclosed nature as detailed below: A.Y. 2003-04: Name of the shareholder Address Date of allotment No. of shares Face value Share application Total amount Jubilant Multitrade (P) Ltd. SAFEX Ghat Kopar Andheri Link Road Asalpha Sak Inoka, Andheri East, Mumbai 31-12-2002 10,00,000 10,00,000 Dimple Multitrade (P) Ltd. Room No. 5, 3rd Floor Hanuman Building 2 Picket Road, Mumbai 31-01-2003 10,00,000 10,00,000 A.Y. 2004-05: Name of the shareholder Address Date of allotment No. of shares Face value Share application Total amount Jubilant Multltrade (P) Ltd. SAFEX Ghat Kopar Andheri Link Road Asalpha Sak Inoka. Andheri East, Mumbai 06-09-2003 10,0....
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....companies subscribing to share capital in the case of Assessee Company are same as that in the case of M/s. Flexi Tuff International Ltd., wherein, such share-holders have been held to be bogus. The A.O. has observed that the assessment order in the case of said company has been passed on 31/03/2006. The assessment order in the case of Assessee Company has been passed by the A.O. on 31/12/2009. It was submitted that the assessment made in the case of M/s. Flexi Tuff International Ltd. on 31/03/2006 was duly considered by the Hon'ble ITAT, Indore Bench, Indore in ITA No. 530/lnd/2006. When the matter travelled to the Tribunal in the case of Flexi Tuff International ltd (supra), the Tribunal has disposed off that matter vide its order dated 22/12/2006. The AO while relying on the decision of ITAT Indore Bench in the case of Flexi Tuff International Ltd (supra) has ignored the decision of ITAT even though that order was available at the time of passing the assessment order for reasons best known to her. The ITAT in that case after considering the entire facts has concluded that the various shareholders in the case of aforesaid company are person whose identity has been established and....
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.... in assessment year 2003-04 and 2004-05. Similarly, DMPL has made capital contribution in the assessee company for a sum of Rs. 10,00,000/- for assessment year 2003-04. Our attention was drawn towards assessment order as well as the order of ld CIT(A) and specifically pointed out that none of the persons relating to various companies who have contributed the share capital denied that they have not given cheques for capital contribution to the assessee company. No doubt they have stated in the statement that they have taken the cash from Shri Gaurav Sharma but all the statements have been recorded at the back of the assessee. The assessee has not been given the copy of the statement for its rebuttal. Even no opportunity was given to the assessee for cross examination of these persons. The statement recorded at the back of the assessee cannot be relied. In this regard, reliance was placed on the decision of Hon'ble Supreme Court in the case of Kishinchand Chellaram, 125 ITR 713 (SC) and that of Daulat Ram Rawatmal (1973) 87 ITR 349 (SC). All these statement recorded at the back of the assessee have been utilised by the AO adversely just for the purpose of making the addition. Attenti....
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....he details of balance of the amount present in the different bank accounts on 24.7.2007 and 1.9.2007. The list indicate that Sunil Agarwal was monitoring the balance of amount in various accounts which he was using for providing share capital/capital gain accommodation entries. The lose papers cannot be regarded to be incriminating documents found during the course of search. Our attention was drawn towards page 27 of ld CIT(A) order sub-para 2 in which in the last line, he has observed that the AO has given finding that the assessee has earned income from interest and bus running and could not have generated the unaccounted funds. On the face of such findings of the AO, there is no justification to make the addition in respect of any corporate shareholders at the hands of the assessee. Attention was drawn to page 30 of ld CIT(A) order, in which he has discussed lose papers pages 81 to 84 of LPS-2 /30 seized from A-70, Shakti Nagar, Bhopal. Referring to these pages, it was pointed out that it contains all the details dated 28.3.2007, which are relevant for the assessment year 2007-08 and is not related to any of the impugned assessment years, in which share capital contribution has....
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....strates that the money has flown from the accounts of corporate shareholders to assessee. The deposit in bank account of corporate shareholder is the responsibility of shareholder to explain the same to revenue authorities. Assessee cannot be saddled with liability on A.O. doubting the deposit of corporate shareholders. There is no adverse evidence except for the statement of few persons which were not cross examined by assessee and whose statement have been recorded at the back of the assessee. The assessee has no transaction with such person but they are having transactions with person who had made share application with assessee company. Even if any adverse view is required to be taken in respect to statement the same can be taken only in the case of companies subscribing share capital and not in the case of assessee in view of the decision of Hon'ble Supreme Court in the case of Lovely Exports(supra). 46. Lastly, it was submitted that in the course of search no incriminating evidence has been found to doubt the genuineness of share capital contribution. The share capital contribution was disclosed by the assessee company in its regular return of income. In the absence of incri....
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....t, Mumbai 21-02-2006 20,000 10/90 2,00,000 18,00,000 20,00,000 Rapid Commercial & Finlease (P) Ltd. 20, Dawa Zazar 4th Floor, 1314 RNT Marg, Indore 31-03-2006 10,000 10 1,00,000 9,00,000 10,00,000 80,00,000 49. The assessee has received share capital during the impugned assessment years, which were added in the hands of the assessee u/s.68 as detailed in the preceeding paragraph protectively but substantially in the assessment of Dr. Yogiraj Sharma. When the matter went before the CIT(A), the CIT(A) directed the AO to make the addition substantially in the hands of the assessee. 50. We also noted that notice under section 143(2) in each of the assessment years in respect of returns filed by the assessee u/s.139(1) could have been issued as per the proviso to section 143(2)(1) before the expiry of 12 months from the end of the month in which the return is furnished by the assessee as per the provision prevailing during the impugned assessment years. The returns for assessment years 2003-04, 2004-05, 2005-06 & 2006-07, respectively were filed in the month of October, 2003, October, 2004. September....
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....ed on him u/s 153A for which assessments shall be made for each of t he 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 cont ext of relevant provisions means - (i) books of account, other documents, found in t he course of search but not produced in the course of original assessment, and; (ii) undisclosed income or property discovered in the course of search". 52. Similar view has been taken in the following cases: 53. 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 material". Even we noted that the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia, 352 ITR 493 (Del), under para 20, it has been observed as under: "even if assessment order had already been passed in respect of one or any of the six relevant assessment years either u/s143(1)(a) or 143(3)prior to the initiationof search, still the AO is ....
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.... 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 abate 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. This position of law which is pronounced, in our opinion, will apply in all these decisions. 55. We have already observed that no incriminating material has been found relating to the year in which the assessee company has received share capital. Therefore, in our opinion, no addition on account of the share capital can be sustained. Accordingly, on this basis itself, we delete the addition on account of share capital in each of the assessment years. 56. Even on merit, we note that the case of the assessee is duly covered by the decision of ITAT Indore Bench in the case of ACIT vs. Kalan Industries Ltd (supra) & M/s. Flexi Tuff International Ltd (supra). We noted from page 172 of t....
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....kindly grant such opportunity during the appellate proceedings or if deemed fit, direct the undersigned to provide such opportunity to the assessee." 57. This is settled law in view of the decision of Hon'ble Supreme Court in the case of Kishinchand Chellaram (supra), that no addition can be made on the basis of the statement of the third party recorded at the back of the assessee on which the assessee has relied. Similarly, on the basis of the law pronounced by the Hon'ble Supreme Court in the case of Rawatmal Daulatram, the burden of proof was on the department to prove that the amount belonged to the assessee as the revenue has alleges that the share capital brought in by the shareholder is not genuine. Letters of manager, in the absence of same being supplied to the assessee, could not be used against the assessee. In this case, we noted that there was search & seizure action in the case of Dr. Yogiraj Sharma but no material was found during the course of search, which may prove that Dr. Yogiraj Sharma, assessee or Gaurav Sharma has given cash or the funds in lieu of cheques for the purpose of contributing in the capital of the assessee. Merely, a third party has stated in the....
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....d w.e.f.1.4.2013 and therefore, the onus to prove the nature and source of such sum so credited shall be on the assessee only from assessment year 2013-14 not prior to that. Hon'ble Jurisdictional High Court in the case of CIT vs. Metachem Industries, 245 ITR 160(MP) has also taken the similar view. Even the Hon'ble Gujarat High Court in the case of Deputy Commissioner of Income Tax vs Rohini Builder, 256 ITR 360 (Guj) has also taken the view that the assessee is not required to prove the source of source. On this basis also, following the decision of Hon'ble Supreme Court in the case of Lovely Exports (supra), the additions made are to be deleted. The AO is directed to take action in the hands of the companies/persons, who has contributed towards share capital in the case of the assessee in accordance with law in respect of which the addition has been made. 59. We may also observe that from the assessment order, we noted that the AO observed that Mr Vinay Gandhi, who was a Chartered Accountant, in his statement dated 14.2.2009 stated that his source of income is C.A. practice and he has arranged entries for the assessee company by introducing him to Sunil Agarwal. Even in the sta....