TaxTMI 
TaxTMI 
2017 (9) TMI 463
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.... grounds of appeal in ITA No.4026/D/2014 are as under:- "1. On the facts and in the circumstances of the case, the CIT (A) has erred in deleting the addition of Rs. 1,51,78,387/- made by AO on account of derived benefit in terms of section 2(24)(iv) of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the CIT (A) has erred in deleting the addition of Rs. 3,28,86,898/- made by AO being income of minor on account of derived benefit in terms of section 2(24)(iv) of the Income Tax Act, 1961. 3. The order of the CIT (A) is erroneous and is not tenable on facts and in law. 4. The appellant 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." 3.1 Grounds in Cross Objection No. 92/Del/2017 are as under:- (i) That on facts and circumstances of the case, the Ld. CIT(A) was not justified in upholding the validity of notice u/s 153A even though the same is based on search in the case of third party and not in the case of assessee as no incriminating material was found in the case of assessee. (ii) That in absence of any incriminating material, the notice u/s 153 A and consequen....
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....td, the benefit obtained by the assessee was in the nature of income as defined under section 2(24)(iv) of the Income Tax Act. Therefore, the assessee was issued a show cause notice to explain why the benefits obtained by the assessee from M/s Dharampal Satyapal Ltd. and M/s Baba Global Ltd. not be treated as income u/s 2(24) of the Act. 6.1 It was the contention of the assessee that there was no benefit or perquisite obtained by the assessee or his family members either from M/s Dharampal Satyapal Ltd. or from M/s Baba Global Ltd. It was submitted by the assessee that the shares which were initially held in M/s D.S. Foods Ltd. should not be treated as income u/s 2(24) of the Act. It was submitted by the assessee that the shares were initially held in M/s D.S. Foods Ltd. which got merged with M/s Dharampal Satyapal Ltd. as per the merger scheme of M/s D.S. Foods Ltd. approved by the Hon'ble Delhi High Court. It was further submitted that the shares held in M/s D.S. Foods Ltd. were also the shares in a closely held company. Similarly, the shares in M/s Dharampal Satyapal Ltd. were also shares in a closely held company. It was also submitted before the Assessing Officer that these s....
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...., the Assessing Officer has not made reference to any incriminating material found during the search regarding transfer of shares. It was also submitted that the Assessing Officer has not made any reference to the Panchnama while completing the assessment u/s 153A of the Act and accordingly, as per the settled law, no addition u/s 153A could have been made in such a circumstance. It was also submitted that the returns of income had already been filed prior to the date of search in all the cases and they were processed u/s 143(1) of the Act. It was further submitted that in the relevant assessment year, the shares were only acquired and were not sold and therefore on this count also, no benefit could be said to have been accrued to the assessees. Ld. AR also emphasised the fact that the share transfers were pursuant to a restructuring of the family business in terms of a scheme approved by the Hon'ble Delhi High Court. Our attention was drawn to the order of the Hon'ble Delhi High Court approving the merger (placed at pages 77-92 of the paper book) in support of his contention. Ld. AR also referred to pages 93-95 of the paper book containing the Memorandum of Understanding r....
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.... members of the family held companies and no shares were sold to the outsiders. It is also undisputed that the buyers/assessees are not at liberty to transfer the shares so acquired to third parties outside the family concern and in case these shares are required to be transferred, the sellers would have a pre-emptive right to buy back the said shares. It is also undisputed that the Memorandum of Understanding as well as the sanction of scheme of merger relates back to the FY 2003-04. 10.1 Further, a perusal of the assessment orders reveal that while making the impugned additions, the Assessing Officer has only mentioned the date of search but has not referred to any incriminating material found during the course of search which could be the foundation of these additions. There is not even a whisper of any incriminating material having been found and relied upon by the department relating to these additions on account of perceived benefits u/s 2(24)(iv) of the Act. There are a plethora of decisions in which the Hon'ble High Courts have held that there can be no valid assessment u/s 153A/153C of the Act in absence of any incriminating material. We find that the reliance of the ....