TaxTMI 
TaxTMI 
2017 (2) TMI 1252
X X X X Extracts X X X X
X X X X Extracts X X X X
....he course of the search and the ld.AO has further erred in making the assessment in view of the fact that the assessment was not pending as on the date of the search, which is incorrect, unjustified, bad in law and void-ab-initio. 2. The ld.AO has erred both on facts and in law in making the addition of Rs. 2,46,00,000/- u/s 68 on account of share capital issued by the assessee company and held the same to be undisclosed income of the assessee company, which is arbitrary, contrary to the facts and bad in law. 3. The ld.AO has erred in law & facts of the case in adding Rs. 5,53,500/- u/s 69C on account of alleged payment of commission for obtaining accommodation entries, which is highly arbitrary, unjustified, bad in law, uncalled for and merely on presumption of the ld.AO. 4. The assessee craves the right to add, amend or modify any ground of appeal." 3. At the time of hearing before us, it is stated by the learned counsel that this is the second round of assessment u/s 153A of the Income-tax Act, 1961. He pointed out the search and seizure action took place at the assessee's premises second time on 28th March, 2011. A notice u/s 153A was issued on 12th March, 2012, in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....annot be said to be incriminating document. Moreover, by virtue of such document, no financial transaction by the assessee company is indicated and the said document pertains to financial year 2010-11 and not to the year under consideration. In view of the above, he stated that the decisions of Kabul Chawla (supra) and RRJ Securities Ltd. (supra) would be squarely applicable. He, therefore, requested that the addition for unexplained share capital as well as alleged commission on the above share capital should be deleted. 5. Learned CIT-DR, on the other hand, relied upon the orders of authorities below and he stated that this document indicated that the shares have ultimately been transferred to the company of same group and, therefore, learned CIT(A) as well as Assessing Officer has rightly taken the view that the document found and seized during the course of search was incriminating document and Section 153A was applicable. During the assessment proceedings, the assessee could not satisfactorily discharge the onus of proving the share capital and therefore, the addition for the same has been rightly made and sustained by the learned CIT(A). 6. We have carefully considered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsfer of shares during the financial year 2010-11. The assessee has filed before us the copy of annual return furnished by it before the Registrar of Companies on 10th March, 2011. In Part VI of the annual return, the assessee is required to furnish the details of shares/debentures transfers since the date of last AGM. In the return, the assessee mentioned "As per list attached". Then, in the list, the assessee has given the required details. The copy of the said list is annexed herewith as Annexure-A to this order. From this list, we find that it gives the details of date of share transfer, type of transfer, number of shares transferred, amount per share, ledger folio of transfer, transferor's name and transferee's name. At the outset, we find that this list pertains to shares transferred between financial year 2010-11. Therefore, this document is relevant to financial year 2010- 11 i.e., assessment year 2011-12. Admittedly, the appeals before us are of assessment years 2005-06 to 2008-09 and therefore, this document does not pertain to the year under appeal. On this ground alone, it can be said that no incriminating documents relevant to assessment year under consideration were f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appeals of the assessee. ITA No.2743/Del/2014 & 2744/Del/2014 - Best City Developers India Pvt.Ltd. - AY 2007-08 & 2008-09 :- 13. In both these appeals also, a similar ground has been raised challenging the following additions in the assessment framed u/s 153C on the ground that no incriminating material was found :- ITA No. AY Addition for unexplained share capital Addition for alleged expenditure on commission 2743/Del/2014 2007-08 83,00,000/- 1,86,750/- 2744/Del/2014 2008-09 7,17,00,000/- 16,13,250/- 14. At the time of hearing before us, the learned counsel for the assessee has pointed out that learned CIT(A) in his common order for both the years has discussed the material found and seized from pages 6, 7 & 8 of his order and has come to the conclusion that none of the above papers is incriminating material, but, if they are read with pages 70 to 74 of Annexure A-1 found in the case of M/s Best Infrastructure (India) Pvt.Ltd., then only the documents considered in the case of the assessee i.e., M/s Best City Developers (India) Pvt.Ltd., would be incriminating documents. Both the parties therefore agreed that, in eff....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Diksha Sales private limited for the period 01/04/2006 to 09/11/2010 in the books of the appellant company which contains the transaction of value Rs. 10 lacs towards share application and its allotment. b. Page 73 - this is an undated letter of Diksha Sales Private Limited addressed to ACIT, Room No.318, Income Tax Office, Jhandewalan Extension, written in response to notice u/s 133(6) for A.Y. 2007-08 confirming that they have invested Rs. 10 lakh in the share capital of the appellant company. 4.2.3 From the above seized documents it is seen that the documents available in Annexure A-4 are relating to the share capital introduced by Diksha Sales Pvt.Ltd. These are the documents which have connection with the share capital of the appellant. They have to be read with another important document at pages 70-74 of seized Annexure A- 1 (based on which proceedings u/s 153A in the case of Best Infrastructure (India) Pvt.Ltd. are being upheld). Only then the documents in Annexure-4 become incriminating documents." 16. From the above, it is evident that pages 60 and 61 of Annexure A-1 considered in the case of the assessee is the challan for payment of the fees paid by the asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e additions of Rs. 83,00,000/- on account of unexplained share capital and Rs. 1,86,750/- for expenditure on commission made in assessment year 2007-08 and of Rs. 7,17,00,000/- on account of unexplained share capital and Rs. 16,13,250/- for expenditure on commission made in assessment year 2008-09 be deleted. 18. In the result, all the appeals of the assessees are allowed. Decision pronounced in the open Court on 08.02.2017. ============= Document 1 16 ANNEXURE-A (5 Pages). BEST INFRASTRUCTURE (INDIA) PVT. LTD. LIST OF SHARETRANSFERS SINCE LAST AGM DATE OF SHARETRANSFERS TYPE OF TRANSFER NUMBER OF SHARETRANSFERS AMOUNT PER SHARES LEDGER FOLIO OF TRANSFEROR TRANSFEROR NAME LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME DATE OF SHARETRANSFERS 2. TYPE OF TRANSFER NUMBER OF SHARETRANSFERS AMOUNT PER SHARES LEDGER FOLIO OF TRANSFEROR TRANSFEROR NAME LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME 28/05/2010 EQUITY 80000 1/- 09 GAURI SHANKER PAINTS & CHEMICALS PVT. LTD. 32 BEST REALTORS (INDIA) PVT. LTD. 28/05/2010 EQUITY 50000 1/- 51 KESARI LAB ELECTRONICS PVT. LTD. 32 BES....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... LTD. 28/05/2010 EQUITY NUMBER OF SHARETRANSFERS AMOUNT PER SHARES LEDGER FOLIO OF TRANSFEROR TRANSFEROR NAME LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME II. DATE OF SHARETRANSFERS TYPE OF TRANSFER NUMBER OF SHARETRANSFERS AMOUNT PER SHARES 75000 1/- 76 CORE CAPITAL SERVICES PVT. LTD. 32 BEST REALTORS (INDIA) PVT. LTD. 28/05/2010 EQUITY 150000 1- LEDGER FOLIO OF TRANSFEROR TRANSFEROR NAME LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME 12. DATE OF SHARETRANSFERS TYPE OF TRANSFER NUMBER OF SHARETRANSFERS AMOUNT PER SHARES LEDGER FOLIO OF TRANSFEROR TRANSFEROR NAME 82 HAKMANS FINANCIAL SERVICES & SECURITIES PVT. LTD. 32 BEST REALTORS (INDIA) PVT. LTD. 28/05/2010 EQUITY 140000 1/- 83 HARMILAP AUTOMOTIVE PVT. LTD. Certified True Copy For Best Infrastructure (Nutc Aggarwal Director Document 3 LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME DATE OF SHARETRANSFERS 13. TYPE OF TRANSFER NUMBER OF SHARETRANSFERS AMOUNT PER SHARES LEDGER FOLIO OF TRANSFEROR TRANSFEROR NAME LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME 14. DA....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME DATE OF SHARETRANSFERS TYPE OF TRANSFER NUMBER OF SHARETRANSFERS AMOUNT PER SHARES LEDGER FOLIO OF TRANSFEROR TRANSFEROR NAME LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME 23. DATE OF SHARETRANSFERS TYPE OF TRANSFER NUMBER OF SHARETRANSFERS AMOUNT PER SHARES 28/05/2010 EQUITY 100000 1/- 101 TUTICORIN TRAEXIMPVT. LTD. 32 BEST REALTORS (INDIA) PVT. LTD. 28/05/2010 EQUITY 90000 1/- 103 AKG BUILDCON PVT. LTD. 32 BEST REALTORS (INDIA) PVT. LTD. 28/05/2010 EQUITY 90000 1/- 104 BHAGYALAXMI FRUITS PVT. LTD. 32 BEST REALTORS (INDIA) PVT. LTD. 28/05/2010 EQUITY 150000 1/- 105 BIC CONSULTANTS PVT. LTD. 32 BEST REALTORS (INDIA) PVT. LTD. 28/05/2010 EQUITY 90000 1/- LEDGER FOLIO OF TRANSFEROR TRANSFEROR NAME 106 COGNATE CONSTRUCTION PVT. LTD. 32 BEST REALTORS (INDIA) PVT. LTD. 28/05/2010 EQUITY LEDGER FOLIO OF TRANSFEREE TRANSFERRE NAME 24. DATE OF SHARETRANSFERS TYPE OF TRANSFER NUMBER OF SHARETRANSFERS 50000 AMOUNT PER SHARES 1/- LEDGER FOLIO OF TRA....