TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 498
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....iminating material found during the course of search to that effect. 3. The brief facts of this issue is that there was a search and seizure operation conducted u/s 132 of the Act on 22.9.2011 in the residential and office premises of the Rahee Group. The group is primarily engaged in the business of railway infrastructure, railway track product manufacturer (track installation and bridge) . The flagship company of the group is Rahee Indsutries Ltd now renamed as Rahee Infratech Ltd. Consequent to the search, notice u/s 153A of the Act was issued on 24.12.2012 for Asst Years 2006-07 to 2011-12 and notice u/s 142(1) of the Act for Asst Year 2012-13. In response thereto, the assessee filed its returns on 9.5.2013 disclosing total loss of Rs. 23,830/- for the Asst Year 2008-09 and total income of Rs. 10,94,660/- for the Asst Year 2009-10. The ld AO observed in his order that the group, primafacie, was found to be generating unaccounted income by suppressing its income by claiming inflated expenses in its flagship concern Rahee Industries Ltd. In the A.Y. 2010-11 Rahee Industries Ltd. had debited a bogus sub-contract expense to M/s. Safeco Projects Pvt. Ltd. M/s. Safeco Projects Pvt. ....
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....on 153A assessment. Similarly for Asst Year 2009-10, it was pleaded that the assessment was originally framed u/s 143(1) of the Act and the time limit for issuance of notice u/s 143(2) of the Act had expired and accordingly it could reasonably be concluded that the said assessment proceeding also had got concluded on the date of search i.e on 22.9.2011. It was pleaded that without having any incriminating material found in the course of search relatable to Asst Year 2009-10, the income determined thereon u/s 143(1) of the Act cannot be disturbed in section 153A assessment. The ld CITA dismissed the plea of the assessee with regard to the absence of incriminating materials found in the course of search , by observing as under :- I am not inclined to agree with the submission of the appellant company because it might be possible that no direct evidence in this regard was found in the course of search but the fact remains that evidences were found that the group was indulged in generating the unaccounted income and was also indulged in taking and giving accommodation entries. Thus, at least, there were indirect evidences which were gathered in the course of search. 5. The assessee....
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.... out that the group is generating unaccounted income by way of bogus expenses and the said money has been introduced as a share capital in the group companies. Hence the Ao may examine all share capital which was introduced in the group companies during the last years. On Merits Against the above contention of the assessee as regard merit it is being submitted that in the notice u/s 142(1) details of share applicant were called for vide q.no. 15, 16 and 30 which are being reproduced as under:- Therefore the allegation that the conclusion was drawn behind the back of the assessee is not correct because in the initial notice as reproduced above the details of share applicant were called for which was complied to after exhausting some opportunities in the first instance and in the second having repeatedly appeared it was the onus of the assessee to come with full details of the share applicant. The same was not discharged. In various cases for proving the genuineness of any transaction it has been held that the onus is on the assessee to prove the following: a) Genuineness of the identity of the subscribers ii) Creditworthiness of the subscribers iii) Genuineness ....
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.... of his contentions:- 1. CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC) 2. Decision of this tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 3. CIT vs Kabul Chawla reported in (2016) 380 ITR 573 ( Delhi HC) 4. CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd and All Cargo Global Logistics Ltd reported in (2015) 374 ITR 645 ( Bom) He argued that the ld AO had categorically admitted in his remand order that there were no incriminating materials found during the course of search for making share capital addition. 8.1. With regard to merits of the addition, he argued that the entire details of share subscribers were duly examined by the ld CITA and reflected in his order. The ld CITA erroneously came to the conclusion that the said entities are mere paper companies based on the lower income declared by them in the profit and loss account. But what is relevant to be seen for the purpose of explaining the source for making the investments in assessee company is only the availability of cash flow with the said companies which had admittedly been their own funds in the form of share ....
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....assets represents either wholly or partly income or property which has not been , or would not be, disclosed for the purposes of the Act (hereinafter referred to as the undisclosed income or property) ; then the officer , so authorized could conduct a search and proceed as per the requirements laid down in the said section. He argued that the aforesaid three primary conditions for invoking search proceedings cannot be given a go by while framing section 153A assessments and the instant case falls under section 132(1)(c ) of the Act. The provisions of section 153A of the Act use the expression 'assess or reassess total income' and hence the search assessment could be framed u/s 153A of the Act irrespective of any incriminating materials. In support of his proposition that section 143(1) is not an assessment, he placed reliance on the following decisions :- Tata Metaliks Ltd vs CIT in ITA No. 301 of 2005 dated 22.9.2014 (Cal HC) DCIT vs Zuari Estate Development & Investment Co. Ltd in Civil Appeal No. 6758 of 2004 dated 17.4.2015 (SC) With regard to the addition made on merits, he heavily relied on the order of the ld CITA. 10. We have heard the rival submissions and gone thr....
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....Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:" 10.1. We find that the Co-ordinate Bench of this tribunal in the case of DCIT vs Aggarwal Entertainment (P) Ltd reported in (2016) 72 taxmann.com 340 (Del Trib) dated 29.6.2016 had addressed this aspect. The relevant head notes is reproduced below:- "Section 153A, read with section 143, of the Income-tax Act, 1961-Search and seizure - Assessment in case of (in case of section 143(1) assessment)-Assessment year 2004-05- Whether assessment in respect of which return has been processed under section 143(1), cannot be regarded as pending for purpose of section 153A as Assessing Officer is not required to do anything further about such a return and, thus, said assessment cannot be reopened in exercise of power o....
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....f search with respect to relevant assessment years ; 'reassess' means assessments to be framed in respect of concluded assessment years where incriminating materials were found during the course of search in respect of the relevant assessment year." 10.2. We also find that recently the Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) held as under:- "37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i) Once a search takes place under section 132 of the act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the Ay in which the search takes place. ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes pla....
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....ld as under:- "24. We are not concerned with a case where no incriminating material was found during the search conducted under section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open." 10.4. We find that the decision of Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) had duly considered the decisions of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) ; CIT vs Chetan Das Lachman Das reported in (2012) 211 Taxman 61 (Del HC) ; Madugula Venu vs DIT reported in (2013) 215 Taxman 298 (Del HC) ; Canara Housing Development Co. vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) ; Filatex India Ltd vs CIT reported in (2014) 229 Taxman 555 (Del HC) ; Jai Steel (India) vs ACIT reported in (2013) 219 Taxman 223 (Del HC) ; CIT vs Murli Agro Products Ltd reported in (2014) 49 taxmann.com 172 (Bom HC) ; CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in (2015) 374 ITR 645 (Bom HC) and All Cargo Global Logistics Ltd vs DCIT reported in (2012) 137 ITD 287 (Mum ITAT) (SB). Hence it could be safely concl....