TaxTMI 
TaxTMI 
2016 (11) TMI 323
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....eleting the addition of Rs. 4,78,21,800/- made by the AO by treating the bogus share application money and share premium as unexplained cash credit. 2. (a) The order of the CIT (A) is erroneous and not tenable in law and on facts. (b) The appellants craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." "AY 2008-09 1. The Commissioner of Income Tax (Appeals) erred in law and on facts in deleting the addition of Rs. 7,75,00,000/- made by the AO by treating the bogus share application money and share premium as unexplained cash credit. 2. (a) The order of the CIT (A) is erroneous and not tenable in law and on facts. (b) The appellants craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." "AY 2009-10 1. The Commissioner of Income Tax (Appeals) erred in law and on facts in deleting the addition of Rs. 9,73,37,500/- made by the AO by treating the bogus share application money and share premium as unexplained cash credit. 2. (a) The order of the CIT (A) is erroneous and not tenable in law and on facts. (b) The app....
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....5,97,500/- from 26 investors; assessee company filed necessary documents which the AO has not found to be genuine; AO also came to the conclusion that these documents do not prove the capacity of the investors to provide share capital/share premium allegedly invested by them and companies are appearing not into any business and having income to make such an investment. 5. AO also noticed that all the purchases of the shares of M/s. Jagat Group are connected and controlled by owner of M/s. Jagat Group, Shri Satish Kumar Pawa and Shri Sant Lal Agrawal and it has come on record that shares of assessee company were sold by M/s. Jagat Group at the price of Rs. 3.5 per share against the face value of Rs. 10 and book value of Rs. 90.25 per share which shows that the assessee company is a main company to introduce undisclosed income of M/s. Jagat Group under the garb of share capital and share premium routed through various companies mentioned in the detailed assessment order. AO also noticed that sale of share @ Rs. 3.50 per share as against the book value of the share of the assessee company at Rs. 90.25 per share makes the entire transaction doubtful. Therefore, how M/s. Jagat Group ....
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....e operation was conducted at the business and residential premises of M/s. Jagat Group on 14.09.2010 and numerous documents were seized; that balance sheet and trail balance of M/s. Vidhya Shankar Investments Pt. Ltd., the assessee company, pertaining to the period 01.04.2010 to 04.09.2010 were seized; that the assessee had filed return u/s 139 (1) declaring income at Rs. 17,466/- on 04.09.2007 qua AY 2007-08; at Rs. 14,410/- on 23.03.2009 qua AY 2008-09; and at Rs. 16,120/- on 10.10.2009 qua AY 2009-10. 11. In the backdrop of the aforesaid undisputed facts and circumstances of the case, the first question arises for determination in this case is :- "as to whether AO who has recorded the satisfaction that the documents relate to the assessee company, that is other than the searched person, had the jurisdiction to pass the assessment order in question?" 12. Identical issue has come up before the Hon'ble jurisdictional High Court in case entitled as SSP Aviation Ltd. vs. DCIT - (2012) 346 ITR 177 (Delhi). The ratio of the judgment in SSP Aviation Ltd. (supra) is that the AO who has recorded satisfaction qua the documents seized during search and seizure operation pertaining ....
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.... than the searched person. The starting point of the enquiry is the seizure of the valuable article or books of account or document, which according to the satisfaction reached by the Assessing Officer, belongs to a person other than the searched person. At the time when the Assessing Officer having jurisdiction over the searched person reaches the satisfaction that the document belongs to a person other than the searched person, it is not necessary for him to also reach a firm conclusion/opinion that the document shows undisclosed income belonging to such other person. This is a matter for enquiry, which is to be conducted in the manner prescribed by section 153C. The fact that the procedure envisaged by section 153C is somewhat cumbersome and that the person other than the searched person is put to some inconvenience cannot be an argument to hold that the entire proceedings are bad in law. There can be some inconveniences in a case where the income had already been disclosed by the other person who has not been searched. However, there is no cause for any apprehension that the income-tax authorities will exploit the situation to harass assessee where there is evidence adduced by ....
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....been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgment. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BDI153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court." 15. Bare perusal of the circular (supra) goes to prove that in the cases at hand, satisfaction u/s 153C has been recorded during the search and seizure operation by the AO having no jurisdiction over the assessee company whereas it was required to be recorded by the AO, having the jurisdiction which is missing in this case as such the assessment u/s 143 (3) read with section 153C is not sustainable as has been rightly held by the ld. CIT (A). Moreover, no document belonging to the assessee company was found from the premises of M/s. Jagat Group. 16. When undisputedly satisfaction note pertaining to the documents available at pages 85 to 87 of A-2 found and seized from the residential premises of Shri Satish Kumar Pawa has not been recorded, the assessment order is not sustaina....