AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 916
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.... was found and seized. On the basis of this document, proceedings u/s. 153C were initiated against the assessee by issuing the notice on 04.07.2011 to file the return of income. In response, the assessee filed the return of income declaring the income of Rs. 2,75,247/- stating that there was no business by the assessee in the year under consideration. Thereafter statutory notices u/s. 142(1) and 143(2) along with detailed questionnaire based on the seized documents were issued on 22.09.2011 fixing the date for 28.09.2011, but the same remained unresponded. Subsequently, a show cause notice was issued on 13.12.2011 fixing the date for 16.12.11 which also was not responded to. For this noncompliance, a penalty u/s. 271(1)(b) of the Act was also levied by the AO. The Assessing Officer noticed from the balance sheet and profit and loss account of the assessee that the assessee company had raised the share application of Rs. 9,50,000/- and unsecured loan of Rs. 1,50,00,000/-, but for want of any supportive evidence, the AO added these sums to the income of the assessee as unexplained. He also added a sum of Rs. 29,063/- as unexplained administrative and financial expenses claimed by ass....
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....olding that the AO has passed the order u/s 144 correctly. 6) Confirming the addition of Rs. 9, 50,000 and Rs. 1.50 Crores and also Rs. 29,063 without examining the additional evidences filed during the appeal proceedings. 7) Confirming the addition of the amount mentioned in point (6) above even without having the comments of the Assessing Officer on the additional evidences filed during the appeal proceedings. 8) Without considering the submissions made during the appeal proceedings. 9) Confirming the additions mentioned at point (6) above without examining and also without contradicting the submissions made. 10) Dismissing the appeal without considering the additional evidences filed under rule 46A during appeal proceedings." From the above grounds of appeal, following two issues emerge out for adjudication in this appeal: (i). Whether the order of the AO is legally valid, having been passed without jurisdiction conferred u/s. 153C of the Act; and (ii). Whether the ld. CIT(A) was justified in sustaining the additions of Rs. 9,50,000/- and Rs. 1.50 crores without admitting and examining the additional evidences filed u/r 46A before her. 4. With respect to fi....
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....on of additions confirmed by the ld. CIT(A). 6. Repudiating the submissions of the ld. AR, the learned DR relied on the order of the Assessing Officer and submitted by way of written submissions that the Assessing Officer of both, i.e., the person searched and the assessee, was common and the satisfaction note considered by ITAT in assessee's own case for A.Y. 2008-09 has, in fact, been recorded by the Assessing Officer in the capacity of the Assessing Officer of the searched person and such contention made by the ld. DR in that case by way of written submission (copy placed on record) was not considered by the Tribunal in right perspective. Based on the satisfaction note recorded, the ld. DR elucidated his contentions stating as under : "i). The Satisfaction Note says, "........During the pendency of assessment proceedings in the case of Shri Mukesh Gupta for AY 2004-05 to 2010-11( u/s 153A/143(3)), the material seized from the premises of the assessee has been examined....". ii) Undisputedly, a) seized documents are in the possession of the AO of 'searched person', and b) seized material has been examined in the assessment proceedings of the searched person. Undispu....
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....ce, the assessee failed to satisfy any of the exceptions enumerated in rule 46A for admission of additional evidences. The assessee even did not attend the proceedings in compliance to several notices issued. 8. Regarding cancellation of penalty u/s. 271(1)(b) by the Tribunal accepting the illness of Sh. Nitin Rekhan (who looked after the tax affairs of assessee) as reasonable cause, it was submitted that the penalty was levied for non-attendance of assessee on 28.09.2011 and as per medical papers, Shri Nitin Rekhan was hospitalized and discharged on10.11.2011 and 16.11.2011 respectively and the show cause notice was issued to the assessee in the present proceedings fixing the date of hearing on 16.12.2011. It was also submitted by the ld. DR that the contention of the assessee that Shri Nitin Rekhan, who fell ill, was the only person looking after the tax matters of assessee, is also not tenable for the reason that letter dated 17.08.11 filed before the AO submitting copies of Returns of income in response to notice u/s. 153C for AY. 2009-10 and 2010-11, was signed by counsel Sh. B.L. Gupta, Form No. 35 by Sh. Ankit Rekhan, submissions dated 19.12.13 before CIT(A) by Sh. B.L. Gup....
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....f the I.T. Act, 1961. Hence proceedings u/s 153C are being initiated for AY 2004-05 to 2009-10." The contention of the assessee has been that this satisfaction note was not recorded in the case of person searched, but in the case of assessee, whereas the contention of the ld. DR is that it was recorded in the case of searched person Shri Mukesh Kumar Gupta. A deep delve into the above satisfaction note reveals that the language used by the AO in para 1 of the above note indicates as if it has been recorded in the case of person searched whereas the language used in last para of the said note shows as if it has been recorded in the case of assessee. The assessment records of the searched person and that of the assessee are not available before us for examination. Though this issue has been decided by coordinate Bench of ITAT(supra) in favour of assessee, but the contention of the learned DR made before us based on the same satisfaction note, in our opinion, cannot be left unaddressed in the interest of justice. In this context, the decision of Hon'ble jurisdictional High Court in the case of CIT vs. M/s. Super Malls Pvt Ltd. (supra) relied by the ld. DR, having identical facts, is....
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....uliar facts and circumstances of the present case, the impugned order u/s. 153C of the Act cannot be said to be legally invalid or without jurisdiction. Hence, this issue is decided against the assessee. 13. As regards the second issue, we find that the addition in the instant case has been made for unexplained share application money and unsecured loans. The assessee furnished confirmations of all the share applicants and creditors as additional evidences before the ld. CIT(A). It is no doubt true that the assessee could not file any evidence before the AO to substantiate its claim for which he has taken a plea of ailment of one of the directors Shri Nitin Rekhan, which was taken as a reasonable cause by the ITAT while deleting the penalty imposed u/s. 271(1)(b) of the Act. The assessment has been completed as per section 144 of the Act. These evidences, in fact, are the primary evidences and go to the root of the issue to examine the claim or to make further enquiry from the share applicants or from the creditors. The contention of the assessee has been that all the above creditors were PAN holders and incometax assessees in various wards. In the remand proceedings, the AO has m....