TaxTMI 
TaxTMI 
2016 (7) TMI 373
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....s, instrument clusters etc. and supplying them to major automobile manufacturers like Maruti Udyog Ltd. These components were also sold in the open market as replacement products. On 19.03.2001, a search operation u/s 132(1) of Income Tax Act, 1961 (in brief-'the Act') was conducted on this group at their business as well as residential premises, including assessee's residence at A-9, Ashok Vihar, Phase-1, New Delhi which was jointly occupied by the assessee along with the families of his father Shri J.P. Minda and brother Shri Anil Minda. 2.1 As per the AO, to conduct the entire business, the group was having thirteen companies. Some of them were under the direct control of the Minda family as they were the major shareholder in these companies. The remaining companies were controlled by some alleged benamidar shareholders. The companies which were controlled by the Minda group were as under: a) M/s Jay Yuhshin Ltd. b) M/s Anu Auto Industries P. Ltd. c) M/s Mew Tools P. Ltd. d ) M/s JPM Auto Mobile P. Ltd. e) M/s J.A. Builders P. Ltd. f) M/s JPM Auto Industries P. Ltd. g) M/s JNS Instruments P. Ltd. h) M/s J....
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....sive evidences were found to establish that the real ownership of these companies was with the Minda Family. It is also alleged that on the date of search Sh. J.P. Minda admitted that these companies belonged to his group. However, in post search inquiry he retracted from his earlier statement. Following companies are allegedly the nine benami concerns of the Minda group: 1. M/s Mew Tools P. Ltd. 2. M/s JPM Auto Mobile P. Ltd. 3. M/s J.A. Builders P. Ltd. 4. M/s JPM Auto Industries P. Ltd. 5. M/s Shree Vinayak Trading Company P. Ltd. 6. M/s Dwarka Electro P. Ltd. 7. M/s Brilliant Jewellers P. Ltd. 8. M/s S.N. Kohli & Company P. Ltd. 9. M/s Shirdi Agrofin P. Ltd. 3. The assessment u/s 158BC of the Act for the block period 01.04.1990 to 19.03.2001 was finalized at Rs. 3,48,85,259/- after making the following adjustments/additions: 1. Unexplained cash 3,00,000/- 2. Bogus sale of jewellery/conversion charges 58,43,707/- 3. Undisclosed Investment in purchase of farm land 30,28,697/- 4. Benami Share Capital 1,21,15,114/- 5. Income from Bogus Job Work through M/s MEW Tools (P) Lt....
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....enami investment in Share Capital of different companies on the ground that substantive addition in the hands of these companies has been made whereas in essence the AO has made by implication additions on protective basis in the hands of these companies and has added the total amount on substantive basis in the assessee's case. 3. On the facts and in the circumstances of the case the ld. CIT (A) erred in deleting the addition of Rs. 1,35,97,741/- made on account of bogus job works through MEW Tools Pvt. Ltd. after ignoring the fact that the parties involved in bogus work billing have admitted that they are paying cash against the cheque received against the billed amount to Sh. J.P. Minda and his sons." 6. The ld. AR submitted that as far as ground no. 1 of assessee's appeal is concerned, the same is not being pressed. Hence, the same is dismissed as not pressed. On the issue of levy of surcharge, the ld. AR placed reliance on the judgment of the Hon'ble Apex Court in the case of CIT vs. Vatika Township (P) Ltd. 367 ITR 466 (SC) for the preposition that the levy of surcharge was not to apply to block assessments pertaining to period prior to 1.6.2002 and that the inten....
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.... persons who had actually contributed the money. It was submitted that in view of these facts, the finding of the Ld. CIT(A) ought to be reversed. 8. On ground no. 2 of the Department's appeal, the Ld. DR submitted that the Ld. CIT(A) has erred in deleting the addition of Rs. 1,21,15,114/- made on account of benami investment in share capital of different companies on the ground that substantive addition in the hands of these companies has been made whereas in essence the AO has made addition by implication on protective basis in the hands of these companies and has added the total amount on substantive basis in the hands of the assessee. It was submitted that the statement of Sh.Rajender Agrawal discussed at page 71 to 78 of paper book and of diary annexure A/23 seized from the residence of Rajendra Agrawal on 19.3.2009 give details of cash received and cheque issued from the Rajender Agrawal Group of Co. to the Minda group. Photocopies of all the statements recorded were made available to the AR of the assessee on 8.10.2001 by the DDIT, Faridabad and also opportunity of cross examine was given to the assessee on at 11:00 A.M. However, the assessee did not avail this opportunit....
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....they did not have to pay any taxes. The Ld. DR further submitted that the modus operandi had been explained by Sh.Bharat Bhushan Mathur, Director Mew Tools Ltd. during search at his residence on 19.03.2001. It was submitted that Sh.Mathur stated that Mew Tools Ltd. was a Minda group company. The Ld. DR submitted that M/s.Mew Tools had shown payment to following concerns to take job work adjustment entries: Durga Industries, Universal Industries, Kaushal Industries, Metal Devices, Perfect Spares. Sh.Mathur stated that he used to hand over blank cheques to Sh.Ashwin Minda. The inquiries conducted about the bogus job work by the DDIT, Faridabad, are discussed from page 130 to 145 of the P.B. which proves that these companies were used for taking bogus bills. The owners of these companies have stated that they have not done any job work for the Minda group of companies and that they have issued only bogus bills for the job work. They used to receive cheque against bills, deposit them in their bank account and return the cash to Sh.Ashwin Minda or a person of the Minda Group. The Ld. DR stated that Q.No.10 of the statement of Sh.B.B.Mathur clearly shows that Sh.Ashwani Minda used to tak....
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.... the said company belonged to Mr. J.P.Minda and other family members, there was no basis to assume that assessee must have paid one third of the difference. 6) Double addition cannot be made- one in the hands of the said company and other in the hand of the assessee, more so when there could be no motive as company and individual both were to pay 60% as tax. Rather in the case of company, surcharge was more. 7) Income declared in the return of the said company was Undisclosed Income which means that the entity concerned viz. the said company had this much of income from undisclosed source. 10. The Ld. AR further submitted that ground no 2 relates to the addition of Rs. 1,21,15,114/- on account of alleged Benami investment in share capital of different companies by presuming one third to have been invested by the assessee. The Ld. AR submitted that the Assessment order of the assessee would show that there was no independent discussion and vague observations have been made by the AO. The AO has not even referred as to which were the evidences for the impugned addition and as to whether the assessee was ever confronted with these evidences. He further submitted t....
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....d. As far as the assessee's appeal is concerned, Ground No. 2 pertaining to levy of surcharge is squarely covered by the judgment of the Hon'ble Apex Court in the case of Vatika Township (P) Ltd.(supra), wherein the Hon'ble Apex Court has held that though the provision for surcharge under the Finance Acts has been in existence since 1995, the charge of surcharge with respect to block assessments, having been created for the first time by the insertion of the proviso to section 113 of the Income Tax Act, 1961, by the Finance Act, 2002, is clearly a substantive provision and is to be construed as prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended so by Parliament. The Hon'ble Apex Court held that Chapter XIV-B of the Act which deals with block assessment in search cases is a complete code in itself providing for self-contained machinery for assessment of undisclosed income for the block period of 10 years or 6 years, as the case may be. Chapter XIV-B comprehensively takes care of all the aspects relating to the block assessment relating to undisclosed income. Not only does Chapter XIV-B define ....
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....nt orders. Chief Commissioners accepted the position, in no uncertain terms, that as per the language of section 113, as it existed prior to the introduction of the proviso, it was difficult to justify levy of surcharge. In the absence of a specified date, it was not possible to levy surcharge and there could not have been an assessment without a particular rate of surcharge. (b) Notwithstanding that the Chief Commissioners recommended retrospective amendment to section 113, the Notes on Clauses appended to the Finance Bill, 2002, while proposing insertion of the proviso categorically stated that the amendment would take effect from June 1, 2002. It was a conscious decision of the Legislature, even when the Legislature knew the implication thereof and took note of the reasons which led to the insertion of the proviso, that the amendment was to operate prospectively. The Apex Court also observed that the CBDT itself in Circular No. 8 of 2002, dated August 27, 2002, states that the amendment to section 113 of the Act, along with the amendments in section 158BE, would be prospective, i.e., take effect from June 1, 2002. The Finance Act, 2003, by addition of a further proviso,....
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....tituted of only two Directors namely the appellant and his wife, whereas according to the AO, the impugned investment has been made by the appellant, his father Sh. J.P. Minda and his brother Sh. Anil Minda. The AO has misread the facts and, therefore, reached the erroneous conclusion. It was further pointed out that M/s JPM Farms P. Ltd. has admittedly offered this undisclosed investment as its undisclosed income in the block return filed u/s 158BA, consequent to the search u/s 132. This declaration stands accepted by the AO himself and that too on substantive basis. He further argued that no material was found during the course of search operation or thereafter to justify this addition. Hence, the addition of Rs. 30,28,697/- made in the hands of the appellant is wholly unjustified. 14.3 I have gone through the arguments by the appellant and also perused the relevant assessment order. In my opinion, the addition could not be made in the hands of the appellant when there is no denying fact that the land in question stands purchased by M/s JPM Farms P. Ltd. where the appellant is not a director. The said company has separately offered undisclosed income on account of invest....