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2016 (9) TMI 1043
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.....CIT(A)-XI/422-424/JCIT(OSD)/10-11 & 11-12, respectively, passed against separate orders u/s 143(3) r.w.s. 254 of the Act framed on 27.12.2011by Jt. CIT (OSD), Circle-5, Ahmedabad. 3. Revenue's appeal in ITA No.1601/Ahd/2013 and Cross Objection of assessee are filed against order of ld. CIT(A)-XI, Ahmedabad, dated 15.03.2013 in appeal no.CIT(A)-XI/425/JCIT, Cir- 5/11-12 passed against order u/s 143(3) r.w.s. 254 of the Act framed on 27.12.2011 by Jt. CIT, Circle-5, Ahmedabad. 4. Since the assessee in all these appeals and Cross Objection is the same and issues are similar these were heard together and are being disposed of by this common order for the sake of convenience. 5. First we take up appeal in IT(SS)A No.15/Ahd/2012 wherein the grounds raised are as under :- 1. The present assessment order under section 143(3) r.w.s. 254, r.w.s. 158BD dated 27/12/2011 is bad in law as the same has been passed without prior approval of the C.I.T. and thus required to be quashed. 2. The impugned order of assessment is also bad in law, as there being no satisfaction recorded as required under section 158BD, the present assessment proceedings are bad in law and thus e....
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....ew of explanation furnished, there being no undisclosed deposits, addition of Rs. 24,45,500/- requires to be deleted. 12. The Id. A.O. has also erred in considering an amount of Rs. 9,48,000/- deposit in bank as undisclosed. In view of the facts and details, the addition of Rs. 9,48,000/-is required to be deleted. 13. The Id. A.O. has also erred in considering Rs. 5,30,728/- deposits in bank as undisclosed. In view of explanation and details furnished, the addition of Rs. 5,30,728/- is required to be deleted. 14. The A.O. has also erred in considering an amount of Rs. 23,22,0007- deposits in bank as unexplained. In view of the facts and details furnished, the addition of Rs. 23,22,000/- is bad in law and required to be deleted. 15. The Id. A.O. has also erred in considering an amount of Rs. 25,00,000/- being amount withdrawn from Renco Finance Ltd. as unexplained. In view of the facts and details furnished, the addition of Rs. 25,00,000/- is bad in law and thus required to be deleted 16. The Id. AO. has erred in considering Rs. 6,20,000/- for the purpose of addition without explaining the nature of transaction and without providing the c....
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.... are as under :- 1. The present assessment order under section 143(3) r.w.s. 254, r.w.s. 158BD dated 27/12/2011 is bad in law as the same has been passed without prior approval of the C.I.T. and thus required to be quashed. 2. The impugned order of assessment is also bad in law, as there being no satisfaction recorded as required under section 158BD, the present assessment proceedings are bad in law and thus entire assessment required to be quashed. 9. Ld. AR submitted that the order passed under section 143(3) r.w.s. 254 r.w.s. 158BD/158BG of the Act on 27/12/2011 is bad in law as it has been passed without prior approval of the Commissioner of Income Tax (CIT). Ld. AR further submitted that ex parte order u/s 158BD/158BG r.w.s. 144 was passed wherein there is a mention that the assessment order is passed with prior approval of CIT-1, Ahmedabad, whereas in the impugned assessment order u/s 143(3) r.w.s 254 r.w.s.158BD/158BG of the Act there is no such mention about the prior approval of the CIT which itself makes the proceedings null and void. Further ld. AR submitted that during the course of assessment proceedings request was made by assessee to provide him ....
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....t aside by higher appellate authority, the original order gets wiped off and all the provisions of the Act which are needed to frame such assessment order needs to be complied with. Ld. AR submitted that - i) As per decision of Hon'ble ITAT, Bangalore Bench in the case of ACIT vs. Smt. Kamakshidevi Avaru (1993) 46 ITD 49 (Bang.) "If the original assessments were of the nature of regular-assessments and the assessments in their entirety, were set aside by the appellate authority for some reason or other with a direction to the Assessing Officer to redo them, the reassessments done accordingly would simply take place of the original assessments and should, therefore, possess all the characteristics of the original assessments. In such cases, therefore, there should be no reason why these reassessments should also not be considered as regular assessments, especially when these reassessments are required to be done essentially in accordance with the provisions of Section 143(3) or 144. Here, the assessments are not being done afresh in accordance with the provisions of Section 250, but the original assessments are merely set aside by the appellate authority in accordance w....
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....new before the Tribunal. When the question was proposed about furnishing of approval of CIT before proceedings u/s 143(3) r.w.s. 254 r.w.s. 158BD/158BG of the Act, ld. DR denied to have any such proof of approval being granted by the CIT and similarly could not throw any light on the issue for supplying the satisfaction note. 12. We have heard the rival contentions and perused the material on record and judgments and decision referred by the ld. AR. In these two grounds raised by the assessee it is contemplated that the block assessment order u/s 143(3) r.w.s. 254 r.w.s. 158BD/158BG of the Act on 27/12/2011 is bad in law as the same has been passed without prior approval of Commissioner and also no satisfaction was recorded as required u/s 158BG/158BD of the Act respectively. We observe that search in the case of Renco Finance Ltd. was conducted on 23.11.1995. During the course of search certain documents/assets relating to the director of the company i.e. assessee Shri Gautam A. Parmar were also seized and the same were handed over to the Assessing Officer having jurisdiction over the assessee on 4.7.1997. During the course of assessment proceedings assessee requested for a cop....
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....58BC in respect of any other person, the conditions precedent wherefor are : (i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act ; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person ; and (iii) the Assessing Officer has proceeded under section 158BC against such other person. The conditions precedent for invoking the provisions of section 158BD, thus, are required to be satisfied before the provisions of the said Chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under section 132A of the Act. 10. That the Special Bench of the ITAT in the case of Manoj Aggarwal (supra) has considered the above decision of the Hon'ble Apex Court and also other decisions of various Courts and examined in detail the conditions which are to be satisfied before the issue of notice under Section 158BD. The Special Bench h....
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....ng as the satisfaction has to be recorded only by the Assessing Officer making the block assessment in the case of the person searched which in turn means the section 158BC proceedings such satisfaction cannot be recorded beyond the date of the block assessment in the section 158BC proceeding and the date of the block assessment is the outer limit for recording such satisfaction. This is for the reason that the satisfaction has to be recorded by the Assessing Officer examining the material in the case of the person searched and he will have to find out whether there is any undisclosed income at all unearthed which again can only be in the course of such proceeding. After finding that there is undisclosed income, he will have to give a finding as to whether such income belongs to the person searched and this too has to be in the course of the said proceeding only. If he finds that any or all of such income belongs to a person not searched, then he has to record such finding in this behalf and takes follow-up action as envisaged in section 158BD which again has to be only in the course of section 158BC proceeding and, hence, if no such satisfaction is recorded in course of section 15....
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....Patel & Shri Champak M. Patel. iii) In the first line of the satisfaction note, the AO has menioned the "Search and seizure action in the Jayraj group of cases was carried out under Section 132(1) on 19-12-2001". If the satisfaction note was recorded by the AO of Jayraj group of cases, he would have mentioned "a search and seizure action has taken place in the case of the assessee." iv) At the end of the notice, the AO has mentioned "since this fact could be discovered from the various MOUs seized during the course of search in Jayraj Group, the notices u/s.158BD are issued to the assessees". This noting clearly proves that the reason was recorded by the AO of Shri Lalit M. Patel and not of the AO of Jayraj group. If the satisfaction has been recorded by the AO of Jayraj Group cases, he would have mentioned that "during the course of search in the case of the assessee, various MOUs belonged to Shri Upendra N. Patel, Shri Lalit M. Patel & Shri Champak M. Patel were found. The same are being forwarded to their AO for taking action under Section 158BD in their cases. In view of the above, we are of the opinion that the satisfaction was recorded by the AO of ....
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....03.2008 in case of M/s. Kunvarji Commodities Brokers Pvt. Ltd. There is further no issue that the DCIT Central Circle 1(1) is the common assessing authority in case of both the assessees. The legal position envisaged under section 153C of the Act is very clear that the Assessing Officer of the searched assessee has to satisfy himself that any money, bullion, jewellery or other valuable articles etc. belongs to some other persons and not the searched assessee. This has to be followed by another exercise in case of such other assessee that the same is caused escapement of any income. It is at this stage that both parties have cropped up the instant issue. The assessee's case is that there is no satisfaction at first level in case of the searched entity opposed by the Revenue by saying that the Assessing Officer is the same who has expressed satisfaction in assessee's case. The law about entering of such a satisfaction is very well settled now. Hon'ble apex court in the case of Manish Maheshwari vs. ACIT (2007) 289 ITR 341 (SC) holds that such a satisfaction is indeed mandatory. We deem it appropriate to observe that this case dealt with block assessment scheme under section 158BD of ....
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....e is that once the Assessing Officer does not specifically record satisfaction in searched entity's case that the money, bullion, jewellery etc. in question belongs to a third person, places the same in it's file followed by an opinion of the above stated material having caused escapement of any income. It is accordingly argued that the impugned satisfaction does not adhere to above stated settled law. The Revenue on the other hand makes out a case that the Assessing Officer's satisfaction has come only after careful examination of the above stated incriminating material being examined together in the cases of M/s. Kunvarji as well as the assessee. We find no reason to agree with this contention. As observed by the learned coordinate bench in Lalit Kumar M. Patel's case, the Assessing Officer in the impugned satisfaction mentions only assessee's name on top of the satisfaction note and not that of the searched entity. There is no material placed on record before us that the Assessing Officer had kept the case files of the searched party and that of the assessee together before drawing the impugned satisfaction note. It is made clear that the Revenue's contention based on Kolkata be....
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....nder section 143(3),r.w.s. 254 r.w.s. 158BD of the Act needs to be quashed in the given facts and circumstances of the case wherein no satisfaction has been recorded as per the provisions of section 158BD of the Act before framing the block assessment. We quash the block assessment order. Accordingly, ground no. 2 of assessee's appeal is allowed. 16. As far as ground no.1 is concerned through which assessee has pleaded that assessment u/s 143(3) r.w.s. 254 r.w.s. 158BD of the Act needs to be quashed as it has been passed without prior approval of the Commissioner of Income-tax. Ld. AR pleaded that in the first round of assessment necessary approval was taken from the Commissioner of Income-tax for framing the assessment under section 158BD of the Act. However, in the second round of assessment post the decision of Co-ordinate Bench in assessee's case for framing de novo assessment order, necessary approval as required u/s 158BG was not taken. As we have already quashed the block assessment proceedings passed u/s 143(3) r.w.s. 254 r.w.s. 158BD of the Act while adjudicating ground no. of assessee's appeal it will be academic to adjudicate ground no.1 raised at the behest of assess....
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....f making addition u/s 68 on account of unexplained cash credit observed as below :- 2.2 The submissions made by the assessee have been carefully considered and not acceptable as the onus of proving the cash credits is on the assessee. The assessee has stated that the credit balances were shown in the names of nonexistent persons to balance the effect of inflation in purchases, stock, sales and machinery which were not genuine. The submission that the original accounts were falsified and the accounts that are submitted now is the corrected and actual version is not acceptable as the assessee has not produced the books of accounts in original during the course of this assessment proceeding. In the absence of any evidences/supporting documents, the audited accounts filed now cannot be considered as presenting the true and correct accounts of the assessee. The assessee, even at the time of the original assessment proceedings failed to produce the books of accounts. The assessee's submission that the cash credits were actually not received but was only created to balance the bogus purchase of machinery is not acceptable. Once the credits are found not genuine and has been a....
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....ring Works. At the time of filing of return of income audited financial statements including Tax Audit Reports framed as per books of accounts contained cash credits taken during the year at Rs. 46,62,471/-. During the assessment proceedings Assessing Officer required the assessee to file documentary evidences to prove the identity of the creditors, genuineness of the transactions and creditworthiness. Assessee submitted that these loans have never been received by it and the loans declared in the balance sheet are fictitious. Thereafter assessee placed on record new audited balance sheet which did not have the amount of unsecured loans and cash credits. 25 We further observe that ld. CIT(A) dismissed the appeal by observing as under :- 3.4 I have carefully considered the rival submissions. I have also perused the submissions made by the appellant during the appellate proceedings and various case laws relied upon by the appellant. It is a matter of fact that the appellant has annexed along with the return of income dated 31/3/92 duly verified form no.3CD. This clearly proves that the appellant has furnished copies of audit report duly verified by the auditor along with ....
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....y collected a sum of Rs. 5,25,00,000/- from public at the time of first public issue. It is also a matter of fact that the highest price of Renco Gears Ltd. share had touched Rs. 270/- per share. This indicate that the appellant has undertaken lot of inside trading in these shares and might have made substantial money out of inside trading. The appellant has also collected substantial amounts from public in the year 1995 at the time of .second public offer. These facts clearly indicate that the appellant had enjoyed gainfully fraudulently collected money from public and used the same for his personal benefits. The public money was collected by showing a rosy picture on the basis of alleged falsification of the accounts. However, when the tax dues are raised on the basis of so called falsified accounts the appellants contention is that these accounts are fictitious and should not be considered for the tax purposes. In my considered view, the appellant cannot be allowed to present the different facts on different occasions. The appellant is presenting different facts which benefit it at different point of time. In the instant case the appellant has filed duly verified balance sheet w....
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.... sheet was duly verified by the statutory auditor and the appellant. The appellant had placed reliance on various case laws in his written submissions. I have gone through these case laws and in none of these cases the duly verified Balance Sheet and Profit & Loss Account filed along with the income-tax return has been disowned. All these case laws can be distinguished on this single fact. Accordingly the ratio of these case laws cannot be applied in the case of appellant. In view of these facts, I hold that the appellant has clearly failed to discharge onus cast upon him by the provisions of sec.68 of the IT. Act and accordingly, addition of Rs. 46,62,471/- is confirmed. This ground of appeal is dismissed. 3.9 During the appellate proceedings the appellant further contended that against the addition made u7s.68 of the IT.Act, benefit of inflated fixed assets should be allowed. It was further contended that such benefits has been allowed by the CIT(A) in first round of appeal. (Appea! No. CIT(A)XIII7254/98-99 dated 31/12/2002). In my considered view, this is not subject matter of dispute now. Even the appellant has not raised this issue in grounds of appeal. Accordingly, t....
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....esult, all the three appeals of the assessee in ITA No.1811, 1812 & 1813/Ahd/2012 are dismissed. 34. Now we take up Revenue's appeal in ITA No.1601/Ahd/2013 and assessee's Cross Objection No.203/Ahd/2013 for Asst. Year 1994-95. 35. Briefly stated facts are that for Asst. Year 1994-95 return of income was filed on 30.12.1994 declaring total income at Rs. 46,67,787/-. Assessment u/s 143(3) r.w.s. 144 of the Act was completed on 25/3/1997 and the same was set aside by the Tribunal vide its order in ITA No.912/Ahd/2003 & 1034/Ahd/2003 dated 31/01/2011 and the issue was restored back to the file of Assessing Officer. Accordingly notice u/s 143(2) of the Act dated 20/07/2011 was issued. After making various additions income was assessed at Rs. 4,36,92,671/- on 27/12/2011. Assessee got part relief from ld. CIT(A). 36. Aggrieved, Revenue is now in appeal before us and the assessee has filed Cross Objection. 37. We take Revenue's appeal in ITA No.1601/Ahd/2013 for Asst. Year 1994-95. Ground No. (i) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 30,80,000/- on account of unaccounted investment in shares of Renco Gears Ltd. 38. During the c....
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.... evidence on record to prove that the investment of Rs. 30,87,000/- was made by the appellant. In view of above, I hold that addition of Rs. 30,87,000/- in the hands of the appellant is untenable and the same is ordered to be deleted. This ground of appeal is allowed. 42. We further observe that the impugned addition of Rs. 30,80,000/- has been made in the block assessment of the assessee as well as on protective basis in the case of Renco Gears Ltd. Further Assessee has failed to substantiate with any material evidence which could prove that investment did not flow through the funds of assessee. Further we have already quashed the block assessment proceedings in our decision vide IT(SS)A No.15/Ahd/2012 for block period 1.4.1985 to 23.11.1995. In these circumstances, we are of the view that addition of Rs. 30,80,000/- is Justified. This ground of the appeal of Revenue is dismissed. Ground No.(ii) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,87,68,750/- on account of unaccounted investment in shares of Rehco Gears Ltd. 43. So far as ground no.(ii) is concerned, during the course of examination of examination of Annexure -A/5 containing....
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....extent of Rs. 1,87,68,750/- stand explained, accordingly, addition to the extent of Rs. 1(87,68,750/- is ordered to be deleted. The appellant will get relief to this extent. 3.3 As far as investment in 8000 shares of Renco Gears Ltd. of Rs. 14,00,000/-, from the address 4, Sushilanagar Society, Memnagar, Ahmedabad and inveslment in 41000 shares of Renco Gears Ltd. of Rs. 7,17,500/- from the address 9, Parvati Apartments, Ankur Road, Naranpura, Ahmedabad is concerned, the appellant has failed to file cogent evidences to prove the identity and existence of the alleged share holders by giving their PA Nos. The appellant had also not filed any evidences to prove the source of these investments. Since the appellant has failed to discharge its onus cast upon him by the provisions of sec.69 of the I.T. Act, 1961, accordingly, addition of Rs. 7,17,500/- and Rs. 14,00,000/-is confirmed. 3.4 As a result, addition of Rs. 1,87,86,750/- is deleted. Addition to the extent of Rs. 21,17,500/- is confirmed. This ground of appeal is partly allowed. 46. From going through the facts discussed by ld. CIT(A) in his order, we find that investment in shares of Renco Gears Ltd. at Rs. ....
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....ace anything new to prove contrary to the view taken by ld. Assessing Officer. Therefore, we are of the view that source of share application money is not explained and there is no iota of evidence which can prove that investment has not been made by the assessee. We are inclined to disagree with the view taken by ld. CIT(A). We hereby confirm the addition of Rs. 40,25,000/-. This ground of Revenue is allowed.. Ground No.(iv) The ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 25,00,000/- on account of investment in machinery. 50. As regards ground no.(iv) in deleting the addition of Rs. 25,00,000/- on account of investment in machinery, the ld. Assessing Officer the addition as he was not convinced by the explanation given by the assessee. Ld. CIT(A) has deleted the impugned addition of Rs. 25,00,000/- by observing as under :- "9.2 / have considered the submissions of the appellant carefully and have gone through the impugned order in appeal. On perusal of the facts and details furnished by the appellant and the agreement dated 30.1.1995 referred to by the AO,, it is seen that the machineries in question are in fact recorded in the ....
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....the ratio of appeal No.ClT(A)-XIII/256/97- 98 dated 31.12.2002, I am inclined to agree with the contentions of Ld. A.R. Accordingly, addition of Rs. 25,00,000/- is ordered to be deleted. This ground of appeal is allowed. 51. We observe that ld. Assessing Officer has completely ignored the facts so much so that all necessary details including purchase bills containing invoice no., date and amount, details of payment, which were made in the Financial Year 1993-94 itself and the sale consideration was received against the sale of these machines only. Therefore, when the source of investment in machines is proved, there cannot be any question mark on the sale consideration received against sale of machinery. Ld. CIT(A) has rightly deleted the addition of Rs. 25,00,000/-. We uphold the same. This ground is also dismissed. 52. Ground nos. (v) & (vi) are of general nature, which need no adjudication. Revenue's appeal in ITA No.1601/Ahd/2013 is partly allowed. 53. Now we take up assessee's Cross Objection No.203/Ahd/2013 for Asst. Year 1994-95 :- 1. The ld. CTT(A) has erred in partly confirming the addition of Rs. 21,17,500/- out of total addition of Rs. 2,08,86,250/- mad....
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....ition of Rs. 1,87,68,750/-. For the remaining amount of Rs. 21,17,500/- assessee has raised this ground. We observe that this amount relates to Renco Gears Ltd. at Rs. 14 lacs for 8000 shares and Rs. 71,75,000/- for 41000 shares of Renco Gears Ltd. 55. We observe that assessee has completely failed to place on record to explain the investment of Rs. 21,71,500/- as no cogent evidence regarding addresses where the share holders are available. As the assessee has completely failed to discharge its onus cast upon him as per provisions of section 69, no relief can be granted. Addition of Rs. 27,71,500/- is confirmed. This ground of cross objection is dismissed. 56. Ground no.2 of cross objection against confirmation of the addition of Rs. 7,91,000/- made by the AO as unaccounted investment in Renco Gears Ltd. shares. Addition of Rs. 7,91,000/- was made for investment in shares of Renco Gears Ltd. and the source of investment is shown at pages 41 & 42, of Annexure mark-A/5 giving details of 90 applications for 45200 shares. Assessee was unable to prove the identity, existence of share holders and the source of investment before both the lower authorities. In this situation, we find....