TaxTMI 
TaxTMI 
2017 (12) TMI 44
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.... the case, the orders passed by the Assessing Officer, and the CIT (A), are bad in law and void abinitio on account of violation of principles of natural justice and denial of proper and adequate opportunity of being heard. 3. That on the facts and circumstances of the case, the assessment made is bad in law for the reason that material seized u/s 132 of the IT Act from third parties (i.e. Sh. S.K. Jain and Sh. V.K. Jain) has been utilized in the assessment of the assessee without complying with the mandatory provisions of law as engrafted under the IT Act. 4. That on the facts and circumstances of the case and in law the CIT (A) erred in confirming the addition of Rs. 120,00,00,000/- as income u/s 68 of the IT Act, 1961. 5. That on the facts and circumstances of the case and in law, the CIT (A) erred in confirming the addition of Rs. 120,00,00,000/- relying on the material seized u/s 132 of the IT Act 1961 from third parties (i.e. Sh. S.K. Jain and Sh. V.K. Jain) and collected during post-search investigations made, including statements recorded behind the back of the assessee and other details, forming part of Annexures 1 to 6 attached to the assessment....
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....sumption of jurisdiction. 2. That vide paper book filed on 08.06.2017, in remarks portion it is humbly submitted that on short legal issue of assessment being wrongly framed u/s 143(3) (confusing phrases are used in assessment order at different places), whereas assessment should have been framed u/s 153C, entire proceedings are vitiated by non-application of mind. 3. That vide synopsis filed on 04.07.2017, it is narrated in length that not only grave prejudice is caused to appellant/assessee by invalid jurisdiction being assumed, ultra vires to section 153C, & which deserves to be quashed. 4. In continuation of above to make our ground more explicit we humbly submit under mentioned ground vide Rule 11 of ITAT rules (Reference can be made to Hon'ble Punjab & Haryana High Court decision in case of VMT Spinning Co. Ltd., order dated 16.09.2016 (ITA No.445/2015) (389 ITR 326), Hon'ble Delhi High Court decision in case of Fast Booking (I) Pvt. Ltd., order dated 02.09.2015 (ITA No. 334/2015) (378 ITR 693), Hon'ble Delhi high Court decision in case of Silver Line, order dated 04.11.2015 (ITA No. 578/2015) (383 ITR 455). "That assessment....
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....cts and circumstances of the case and in law the C1T(A) erred in confirming the addition of Rs. 105,00,00,000/- as income u/s 68 of the IT Act, 1961. 5. That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 105,00,00,000/- relying on the material seized u/s 132 of the IT Act, 1961 from third parties (i.e. Sh. S.K. Jain and Sh. V.K. Jain) and collected during post search investigations made, including statements recorded behind the back of the assessee and other details, forming part of Annexures 1 to 6 attached to the assessment order, running into 351 pages, without even furnishing the copies thereof (except few pages) in the course of assessment proceedings, thereby violating the principles of natural justice and denying the right of cross examination, wherever necessary. 6. That on the facts and circumstances of the case and in law the CIT (A) erred in confirming the addition of Rs. 105,00,00,000/- u/s 68 of the IT Act, 1961 , despite the fact that the aforesaid sum, having undisputedly been received by way of advance for purchase of land, and through normal banking channel, could not be subjected to the ....
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.... 4. In continuation of above to make our ground more explicit we humbly submit under mentioned ground vide Rule 11 of ITAT rules (reference can be made to Hon'ble Punjab & Haryana High Court decision in case of VMT Spinning Co. Ltd., order dated 16.09.2016 (ITA No.445/2015) (389 ITR 326), Hon'ble Delhi High Court decision in case of Fast Booking (I) Pvt. Ltd., order dated 02.09.2015 (ITA No. 334/2015) (378 ITR 693), Hon'ble Delhi high Court decision in case of Silver Line, order dated 04.11.2015 (ITA No. 578/2015) (383 ITR 455). "That assessment framed u/s 143(3) for the period under consideration (AY 2011-12) which falls in Six years block prescribed u/s 153C, is invalid, void-ab-initio and lacks jurisdiction as it should have been framed u/s 153C, accordingly the orders passed by AO and First Appellate Authority deserves to be quashed. " "That assessment framed u/s 143(3) for the period under consideration is ultra vires to section 153C, in as much as the documents referred in satisfaction note (copies placed on records), do not give rise to any undisclosed income and they are admittedly non -incriminating in nature as also none of the document i....
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....e facts and circumstances of the case and in law the CIT(A) erred in confirming the addition of Rs. 1,16,00,00,000/- u/s 68 of the IT Act, 1961 , despite the fact that the aforesaid sum, having undisputedly been received by way of advance for purchase of land, and through normal banking channel, could not be subjected to the provisions of section 68 of the IT Act. 6. That on the facts and circumstances of the case and in law, the CIT(A) erred in not accepting the genuineness and authenticity of the tripartite agreement/MoU dated 29.05.2010 effected amongst M/s Aquiss Pvt. Ltd, M/s Attractive Finlease Pvt. Ltd and M/s Aasheesh Capital Services Pvt. Ltd as first party and M/s Design Infracon Pvt. Ltd, M/s Delicate Realtors Pvt. Ltd and M/s Pavitra Realcon Pvt. Ltd as second party and Sh. Kabul Chawla as the confirming party, and the factum of the forfeiture of the amount as per the said agreement/MoU. 7. That on the facts and circumstances of the case and in law the CIT(A) erred in holding that the sum of Rs. 1,16,00,00,000/- was surrendered as income in the hands of the assessee, without dealing with specific objections raised/taken before him against the alleged s....
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.... three companies namely M/s Attractive Finlease Pvt. Ltd, M/s Aasheesh Capital Services Pvt. Ltd., M/s Aquiss Pvt. Ltd. On the basis of the information in the possession of the department, Directors of these three companies were confronted with the fact that the above three companies were accommodation entry providing companies and have given the above amount by converting unaccounted cash after routing them through a series of transactions. Directors of the three companies M/s Designing Infracon Pvt. Ltd, M/s Delicate Realtors Pvt. Ltd & M/s Pavitra Realcon Pvt Ltd., namely Shri Sanjiv Kumar, Sh. N. K. Jain and Sandeep Sehgal respectively in the statements recorded on oath u/s 132 (4) accepted that they were not in a position to explain the receipts of above amount and hence came out with a voluntary disclosure of Rs. 325.23 to be their unaccounted income for the Financial Year 2010-11 (Assessment Year 2011-12). As per the statement dated 08.04.2010 of Shri Sanjiv Kumar, who was a Director in all the above three companies, he accepted that the above income was received by cheques from the above three companies for collaboration of future projects. Since, they were not able to expl....
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....others revealed that Shri Surendra Kumar Jain and Shri Virendra Jain had provided accommodation entries amounting to Rs. 341 crores to M/s Design Infracon Pvt. Ltd., M/s Delicate Realtors Pvt. Ltd. and M/s Pavitra Realcon Pvt Ltd. for Financial Year 2010-11 from following Jain Group of Companies, during the period mentioned as under:- From To Total Amount Period Aasheesh Capital Services Pvt. Ltd. M/s Pavitra Realcon Pvt Ltd. Rs. 120 crores 07/07/2010 to 03/08/2010 Attractive Finlease Pvt. Ltd. M/s Delicate Realtors Pvt. Ltd. Rs. 105 crores 18/06/2010 to 07/07/2010 Aquiss Pvt. Ltd. M/s Design Infracon Pvt. Ltd., Rs. 116 crores 29/05/2010 to 05/08/2010 3.2 Rejecting the various explanations given by the assessee, the Assessing Officer made an addition of Rs. 120,00,00,000/- u/s 68 of the Income-tax Act, 1961. Similar addition of Rs. 105 crore has been made u/s 68 of the I.T. Act, 1961 in the case of M/s Delicate Realtors Pvt. Ltd. and amount of Rs. 1,16,00,00,000/- in the case of M/s Design Infracon (P) Ltd.. 3.3 Before the CIT(A), the assessee made elaborate submission which the ld. CIT(A) summarized at pages 67 and 68 of his or....
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....ation petition before retired High Court Judge Sh. S.K. Mahajan. As the matter is before arbitration, the said forfeited amount has not been declared as income. Under these Circumstances, Section 68 does not apply. Ld AR argued that MoU document filed cannot be brushed aside as the said MOU is before arbitration proceedings, headed by retired Judge of High Court. Further Ld. AR argued that the Assessing Officer cannot ignore the evidentiary value of the document supporting the Judgment of hon'ble Supreme Court unless the Assessing Officer proves that such device is counterable is nature & is illegal/illegitimate. (iii) On the evidentiary value of statement recorded u/s 132(4), main arguments of ld. AR is that the person who makes the statement u/s 132(4) has right to retract the same if he proves his bona fide. In present case, the statement recorded u/s 132(4) disclosing such huge income is in four lines without specifying the manner in which such income is earned. None of the persons namely Sh. N.K. Jain, Sh. Sandeep Sehgal and Sh. Sanjeev Kumar has accepted the cash payment by Sh. Ramprasad as per seized material A-10 found from the premises of Jain Brothers. F....
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....ne of the Director of all the above three companies and 50% shareholder it, 1st and 2nd company. Other directors in first and second companies is Sh. Sandeep Sehgal and in third company Sh. N. K. Jain. Q7. Do you know one Sh. Ram Prasad? Do your companies have got any financial dealings with Sh. Ram Prasad? Ans: I know one Mr. Ram Prasad, who is an employee of M/s. BPTP Ltd.. none of our above three companies have got any financial dealings with Sh. Ram Prasad. Q8. I am showing you Xerox copies of annexure, A-10, seized from the premises of Sh. S.K. Jain which reflects a set of documents in the shape of cash book, written in the hand writing of Sh. S.K. Jain and his brothers Sh. Virendra Jain himself, reflect that one Sh. Ram Prasad in this regard? Ans: We deny to have any cash transactions as above stated by you. We accept the above incoming of money by cheque from the above three companies for collaboration of future projects. Since we are not able to explain and support the receipts, we accept the same to be our income, earned during the year, on our own not yet provided for in the books of A/c in the current financial year. We are accepting t....
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.... M/s. Design Infracon (P) Ltd. Rs.106.60 crores You please go through the statement of Sh. Sanjeev kumar and kindly comment on the same. Ans. I am director in M/s. Pavitra Realcon Pvt. Ltd. and M/s. Delicate Realtors Pvt. Ltd. am not Director in M/s. Design lnfracon Pvt. Ltd. I hereby affirm the statement of Sh. Sanjeev kumar in M/s. Pavitra Realcon Pvt. Ltd. and M/s. Delicate Realtor Pvt. Ltd. and stand by the statement given him in respect of abovesaid 11'1'0 companies where I am a director with him. As I do not have any position in M/s. Design lnfracon Pvt. Ltd. I am unable to offer any comment. A perusal of these statement reveals that the disclosure in the name of these companies of BPTP group namely M/s. Design Infracon Pvt. Ltd. M/s. Delicate Realtors Pvt. Ltd. & M/s Pavitra Realcon Pvt. Ltd. was made when the Seized document in form of Cash book Seized from Jain Brothers were shown to them, though cash transaction were denied. It means that the disclosures of income in the hands of these three companies are related to cash book shown. Details of the findings on the content of annexure A-10 & its relevance would be given subsequently. Therefor....
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....ome, there is no correspondence specifically mentioning that there are retraction from statement of disclosure of income. During the assessment proceedings, the appellant has relied on the reply filed before investigation on 06/06/2011 stating that the said money received by these companies was advance by way of collaboration/agreement/MoU dt 29.05.2010 & the amount was received from the banking channels and the source is explainable. Therefore, the statement u/s 132(4) should be read with the reply filed before the investigation Director. I do not agree with this argument as retraction has to be filed by the person making such statement. Further, as discussed earlier the disclosure of undisclosed income was made apparently pursuant in subsequent question of cash transaction shown in seized annexure A- I0 found from the premises of Jain Brothers. Under these circumstances, I do not agree that retraction of statement was made by the person who has made such statement explaining the circumstances in which such statement was made. In fact, in the statement of Sh. Sanjeev Kumar has stated that we are not able to explain and support the receipt, we accept the same to be income ....
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....he source of cheques given to three companies of BPTP group, as apparently the date of receipt of cash from Ram Prasad tallies with the cheque given by the three companies of Jain brother namely M/s Aquiss Pvt. Ltd., M/s Aashish Capital Pvt. Ltd. & M/s. Attractive Finlease Pvt. Ltd to 3 corresponding companies of BPTP groups after rotating through various layers of bank transactions. The Assessing Officer has correlated Sh. Ramprasad mentioned in seized material as an employee of BPTP Ltd. on the basis of two evidences. First evidence is a seized document found from the premises of BPTP group inform of a letter issued by BPTP stating that Sh. Ramprasad is an employee of M/s. BPTP Ltd. and has been given accommodation at 7, Barakhamba Road. Secondly, mobile No. of Sh. Ramprasad was obtained during the search at the premises of BPTP as '9871262713' and call details were obtained in respect of mobile No. 98917-09895 belonging to Sh. Surendra Kumar Jain which shows that there is frequent conversation between Sh. Surendra Kumar Jain and Sh. Ramprasad on the date of receipt of cash from Sh. Ramprasad. The very fact that Surendra Kumar Jain was calling Sh. Ramprasad, employee of ....
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.... cash and RTGS clearing of huge fund. * Cash books were found and seized from the premises of Jain Brothers contained date wise cash received from the mediator running in thousands of crores and ultimately the cheque is given to beneficiary with the name of mediator (Annexure A-10, A-II, A-12, A-158) * Addresses of all concerns/paper companies are belonging/owned by Jain Brothers and are small places with no infrastructure accept receiving tapale. * Directors/proprietors of these concerns were employees of Jain Brother or getting commission for such entries in their bank accounts. * Telephone numbers of Sh. S.K. Jain and Sh. Virendra Jain was given for e- transaction in the bank accounts of these dummy concerns. * Letter of authority in respect of all these concerns are in favour of Sh. Surendra Kumar Jain to be appear before Income Tax Authority & found in the computer of Jain Brothers. Considering the entire facts and circumstances of the case Sh. Surendra Kumar Jain and Sh. Virendra Jain was assessed u/s 153A/143(3) as entry operators where commission income was assessed for seven assessment year from 2005- 06 to 2011-12. I h....
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....be utilized for assessment of income. (iv) The Assessing Officer has not brought any corroborative evidence while relying on statement u/s 132(4) for making addition. I do not agree with this argument of ld. AR. The Assessing Officer has relied on various evidences gathered during search and post-search, proceedings to establish the addition that the cheques/pay orders received from three companies of Jain group are nothing but by way of giving cash. It may be mentioned that the evidences gathered during search/post-search enquiry has to be utilized by the Assessing Officer. Once the evidences gathered during search & Post-search proceeding as so conclusive, the Assessing Officer need not conduct further enquiry. (v) The Assessing Officer has not examined Sh. Ramprasad and no cross-examination was offered to the appellant. In my view where documentary evidences in support of cash received from Sh. Ram Prasad was seized and corroborative evidence was found that Sh. Ram Prasad is an employee of BPTP group and BPTP group has received cheque/P.O. of equivalent amount from Jain Brothers, examination of sh. Ram Prasad was not required as enough evidences are there to pr....
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....of S.K. Jain & Virendra Jain) in lieu of cash is further strengthened by the enquiry during post-search enquiry in BPTP group of cases in form of fund flow from cash deposit in fictitious concerns, statement of the alleged proprietor of such fictitious concern that the respective bank accounts were opened & operated at the instance of Sh. S.K. Jain & Virendra Jain, enquiry on the registered address of these three companies namely Aquiss, Aashish & Attractive as these address as were owned & possessed by Jain brothers, convergence of all fund at the bank account of M/s Jai Shree Financial Services Pvt. Ltd from fictitious concern & then transferring the fund from M/s Jai Shree Financial Services Pvt. Ltd to M/s Aquiss, Aashish & Attractive. These enquiries have been dealt in details in earlier parts of the order. (d) Now, I would discuss the claim of MoU dt.21.5.2010 that the amount receive by 3 companies of BPTP group, namely, Design, Delicate & Pavitra (name in short) from three companies of Jain Brothers namely, Ashish, Aquiss & Attractive was on account of execution of said MoU signed by these six companies with confirming party as Kabul Chawla for the transfer of land ....
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....e to forfeiture of advances, then they could not have said that receipts are not explainable. Further, it is the fact that the land in question was not owned by Design, Delicate & Pavitra. Without owning the land, how a sum of more than Rs. 300 crores could be given. I have perused even the statement of Sh. Kabul Chawla u/s 133A on 30.05.2011, after almost Six months from the date of search. Even Sh. Kabul Chawla has not stated exactly entering of MoU. Considering all the facts and circumstances of the case. Therefore, I am convinced that the fund received by M/s. Design, Delicate & Pavitra from Aquiss, Aashish & Attractive is on account of cash paid to Jain brothers and not by virtue of the alleged MoU signed. This cash paid to Jain Brothers are the income of BPTP group and has to be taxed at the first layer of BPTP group of companies as income in form of cash which can reasonably be assumed belonging to these companies. In present case, first layer of companies of BPTP group are M/s. Design, Delicate and Pavitra who have received money from Jain group of companies which are fictitious/paper and used only to provide entries. It may be mentioned here that once, the amount ....
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.... Therefore, even if the source of cheques are by way of cash payment to Jain brothers, these cash belongs to Gurinderjit Singh Group and these companies now belong to separate group and is no longer paper companies. I have considered these arguments. M/s Aquiss, Attractive & Aashish are the companies which were operated undisputedly by Jain brothers namely Sh. S.K. Jain & Virendra Jain. Point of arbitration is on account of forfeiture of money as per the terms of memorandum & not on the nature money involved. In any case, arbitration process is subsequent phenomenon which will not change the character of transaction. Therefore, this argument does not change my finding based on evidences discussed earlier. The argument of ld. AR that the mere filing of arbitration by M/s Aquiss, Aashish & Attractive proves that the fund belongs to them. I have examined this argument. If it is proved that these three companies namely Aashish, Aquiss & Attractive are controlled effectively by Gurinderjit Singh Group and the award becomes final that M/s Design, Delicate & Pavitra have to return the money received & the award is finally implemented. In that case it would be taxabl....
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....C caused grave prejudice to the assessee. For this reliance is placed on the decision of the Hon'ble Allahabad High Court in case of CIT v. Sri Raj Kumar Jaiswal, order dated 28.02.2017 (ITA No. 25/2010) (relevant Para 16). The ld. AR further submits that there is huge difference in framing assessment u/s 153C of the Act and framing assessment u/s 143(3) of the Act, because jurisdictional conditions for both the provisions are altogether different. It has been held by Jurisdictional High Court in various rulings that invocation of section 153C of the Act requires not only recording of satisfaction note but same must be based on incriminating material giving rise to undisclosed income for the period under consideration. The ld. AR further submits that in present case, it is undisputed fact that no addition whatsoever was made on basis of material referred to in satisfaction note. In other words, once satisfaction note itself does not give rise to any incriminating material containing any undisclosed income, invocation of section 153C for the period under consideration could not have been made. The Ld. AR further submits that once it is accepted fact that no assessment was carried ou....
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...., the ld. AR submits that all the three appeals be allowed and order of the CIT (A) be set aside. 7. The Ld. AR submits that statement given by Mr. Sanjeev Kumar cannot be relied upon in case of Design Infracon Pvt. Ltd. as he was not director in case of Design Infracon Pvt. Ltd. There was no statement of Mr. Digvijay Yadav who was another director. There was no statement of Mr. Sandeep Sehgal u/s 132(4) of the Act. His statement was recorded u/s 131(1) which cannot be construed with statement given u/s 132(4). Show-cause notice given by AO was duly replied on 7.2.2013 and 22.2.2013 to AO. The ld. AR further submits that the Assessee, during the course of survey on 30.5.2011 duly explained the reasons to DDIT who conducted search also about disclosure of income during search and latest position of disclosure. The ld. AR further submitted that the receipt of amount against proposed transaction of sale cannot be taxed u/s 68 of Income Tax Act. The ld. AR further submitted that provisions of Section 68 of Income Tax Act are not applicable in the present case as identity of entity (Aquiss) who paid the money to assessee was beyond doubt since the entity was assessed to tax with same....
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..... 75. The copies of Annual Returns of Aquiss duly supported the fact that ownership of Aquiss was acquired by Gurinderjeet Singh Group prior to transaction with assessee. There was no adverse statement given against the assessee by any party whether S.K. Jain, Virender Jain, Ram Prashad, N.K. Jain or any other party. No opportunity of any cross-examination was provided to assessee. The ld. AR relied upon the decision of Supreme Court in case of Andaman Timber Indsustries. v. CCE [2015] 62 taxmann.com 3. The ld. AR further submits that there was no corroboration of seized records found during the course of search which was used against the assessee. The ld. AR relied upon certain decisions. The ld. AR further submits that the seized records if any found during the course of search on S.K. Jain and Virender Jain cannot be used against the assessee as no procedure as explained u/s 153-C was followed by the AO. The ld. AR relied on the decision of Hon'ble Jurisdictional Delhi High court in case of Pepsi Foods (P.) Ltd. v. Asstt. CIT [2014] 52 taxmann.com 220, Pepsico India Holding (P.) Ltd. v. Asstt. CIT [2015] 370 ITR and Hon'ble Allahabad High court decision in case of CIT v. G....
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.... issuing notice u/s 143(2) i.e. on 13.09.2012. The ld. DR further submitted that the AR tried to draw support from the above stated satisfaction notes (dated 27.07.2012) by pointing out that AY 2011-12 is not mentioned therein. Here again, the AR is making a (wrong) assumption. The satisfaction note has to be of the AO of the searched person for conclusion that the material seized belongs to the other person and then he (the AO of searched person) is supposed to hand over the 'seized material belonging to the other person' to the AO of such other person. It has been held by numerous court pronouncements that after receiving such material issuing of the Notice u/s 153A r.w.s 153C is automatic and no satisfaction is required for the same). The reliance is placed on the ratio of judgment of Hon'ble jurisdictional High Court in case of CIT v. Anil Kumar Bhatia [2013] 352 ITR 493 (Delhi). The ld. DR drew the attention of the Bench to the relevant portion of the judgment which reads as under- "A perusal of Section 153A shows that it starts with a non-obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of....
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.... AR was on 27.07.2012. The Returns of Income were filed on 30.09.2011. Therefore, none of the condition stipulated in section 153C(2) are met and hence there cannot be assessment u/s 153C for AY 2011-12 and hence normal assessment proceedings {u/s 143(3)} by issuing notice u/s 142(2) are perfectly in order. The Assessee's stand is shifting and contradictory. The stand of the assessee earlier was that the basic requirement of section 153C was not fulfilled. In that case, how can normal assessment be objected to. The stand of the assessee is different (rather contrary) than the one taken at appellate stage. Therefore, such (new) ground cannot be allowed to be raised but for asking for exercise of discretion of the ITAT. However, there is no such request/application. Even if such request/application was made, the same is liable to be rejected as (i) there is no good reason for the delay, and (ii) the law on this point has been settled by Hon'ble SC that if the relevant facts are not before the Appellate Authority, the law point cannot be raised. In this case relevant facts would come out only after detailed scrutiny of Assessment/search records. The reliance in placed upon ratio of ju....
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....t to be a tyrant but a servant, not an obstruction but an aid to justice. Therefore, where there is a matter of mere technicalities, the revenue cannot be put to disadvantage and prejudice. Reliance is placed on the ratio of judgment delivered on 20.11.2008 by the Hon'ble Supreme Court in case of Sambhaji v. Gangabai [Civil Appeal No. 6731 of 2008, dated 20-11-2008]. The Hon'ble SC has laid down that such defects are capable of cure by setting aside the orders for re-doing it. 9. As regards the merit of the case is concerned, the ld. DR submits that during search and post-search enquiries, in case of BPTP group, there was no warrant u/s 132 against these companies, these were companies running from addresses belonging to BPTP group and employees of BPTP group are directors. The ld. DR further submits that in case of BPTP, overwhelming incriminating material was seized/gathered which indicated unaccounted cash transactions. In various assesees belonging to the BPTP group, various additions have been confirmed upto ITAT stage. Special mention is to the modus operandi of issuing of post-dated cheques (PDCs) against purchase of Land and extension of validity of these PDCs payment of....
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....t time, could make a reference to so-called agreement, default in payment, forfeiture of amount and arbitration in spite of fact that this being activity of astronomical figures (and only significant activity in the histories of these companies) and also there was no significant time gap between these events and date of recording of the statements of the Directors. 11. As relates to legal issues, the ld. DR submits that in view of the overwhelming evidences showing that there was no genuine activities carried out by these assessee companies and colour has been provided by creating evidences on paper in form of recording of accounting entries there is very heavy onus upon assessee to show identity and capacity of the persons providing this money and genuineness of these transactions. The Ld. DR relied upon the judgment of the Hon'ble Supreme Court in case of CIT v. Durga Prasad More [1971] 82 ITR 540 (SC). The ld. DR also relied upon the order of the Hon'ble Delhi HC in case of CIT v. Nova Promoters & Finlease (P.) Ltd. 342 ITR 169 (Delhi). The ld. DR submits that Directors of these companies could not explain these transactions and logically admitted this to be undisclosed incom....
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....iod'. Under new scheme (u/s 153A/153C) these concepts have been done away with. In relation to 158BC, there were concepts of 'undisclosed income' and 'Block period'. Under new scheme (u/s 153A/153C) these concepts have been done away with. Under new scheme, there is concept of 'single assessment'. That is why Hon'ble Delhi High Court in case of Ashok Chandha v. ITO [2011] 337 ITR 399 ruled that Issuance of notice u/s 143(2) is not required under new scheme. So many judgments are in relation to 158BC. These judgments are not applicable simply because new and old schemes are way apart in concept. For example, the judgment of the Hon'ble Delhi HC in case of Harjeev Aggrawal. In any case this judgment is in peculiar facts of that case where issue was whether the statement in that particular case there were other contradictory evidences) would triggers Block assessment. After Hon'ble Delhi HC confirming additions u/s 153A based upon statement in case of Smt. Dayawanti v. CIT 390 ITR 496 (Delhi), the order dated 31.05.2016 of ITAT in case of Best Infrastructure (India) (P.) Ltd. v. Asstt. CIT ITA No. 1698-1701/Del/2014 cannot help the case of the assessee. Since, there is no bar to the A....
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.... 1992 passed by Hon'ble Customs, Excise and Gold Tribunal - Tamil Nadu in case of G. Sridhar v. Collector of Customs {1992 (43) ECR 95 Tri Chennai }which has held as under:- ".......... The Courts have observed that whether in a particular case a particular party should have the right of cross-examination or not depends upon the facts and circumstances of each, case and it very largely depends upon the adjudicating authority who is not guided by the rules of evidence as such. In this background therefore, it cannot be said at this stage and on prima facie considerations that the lower authority's order is bad prima facie for the reason of denial of cross-examination. Detailed arguments will have to be heard in this context whether in the facts of this case denial of cross- examination was called for taking into consideration the totality of the evidence on record...." Principle of natural justice is a flexible concept. The idea is that assessee to be confronted with adverse material. Ref. is invited to para 6.4 of the order dated 31.12.2010 passed by ITAT in case of Hersh W. Chadha v. Dy. CIT [2011] 43 SOT 544 (Delhi) - relevant portion is reproduced as under: ....
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....ot by AO in particular). In present cases there is overwhelming material with the revenue. The reliance of AR on the definition of 'undisclosed Income' prescribed by way of explanation to section 271AAA is misplaced. The Ratio of Raza Textiles Ltd. v. ITO [1973] 87 ITR 539 (SC) is not relevant to the present case because it that case issue was whether decision of ITO to decide that payee is not non-resident was open to writ jurisdiction or not. AR made reference to Article 365 of constitution. There is no quarrel that tax would be levied by authority of tax. The stand of revenue is that what AO did was under authority of Law, only. It is correct law position that if provisions of normal scrutiny are otherwise applicable, these would be disabled only in cases of abatement of these proceedings as provided under section 153A/153C. The case of assessee is not of abatement. In any case if the proceedings are abated, scope of 153A/153C would be unrestricted (and wider than in case of applicability of normal provisions). In other words because of search or passing of seized material belonging to the AO of 'other person', the scope of scrutiny under normal provisions can only be widened, i....
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....d the following satisfaction note in the case of M/s Delicate Realtors Pvt. Ltd. :- condition to initiate proceedings u/s 153C of the Income-Tax Act, 1961, is fulfilled. Therefore, I am satisfied that case of M/s Delicate Realtors Pvt. Ltd. is a fit case for initiation of proceedings u/s 153C of the Income Tax Act, 1961. Accordingly, notices u/s 153C r/w 153A of the Income Tax Act, 1961 are issued for AY 2005-06 to 2010- 11, in the case of M/s Delicate Realtors Pvt. Ltd. i.e. the assessee company. Sd/- (Dr. Anjula Jain) 27.07.2012 Dy. Commissioner of Income Tax Central Circle-23, New Delhi 15.2 Similarly, we find in the case of Pavitra Realcon Pvt. Ltd. the Assessing Officer has recorded the following satisfaction note :- In view of above, it is established beyond doubt that many books of account or documents seized during the course of search and seizure action on BBTP group of cases belong to M/s Pavitra Realcon Pvt. Ltd. i.e. the assessee company and hence prerequisite condition to initiate proceedings u/s 153C of the Income-tax Act, 1961, is fulfilled. Therefore, I am satisfied that case of M/s Pavitra Realcon Pvt. Ltd....
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....53C are not only governing the procedure to be followed by the Assessing Officer but there is an obligation upon the Assessing Officer to properly fulfill the provisions of the Income-tax Act. Section 143(2) notice is given when the returns are furnished u/s 139 or in response to notice under sub section 1 of Section 142 when the assessee has not stated the income properly. Section 153C begins with non obstante clause that notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 & Section 153, the Assessing Officer will issue notice as per provisions of 153A. The intention of the parliament for separate Sections for issuing notice u/s 143(2) and Section 153A is specifically different and falls in particular circumstances mentioned in those particular Sections. It cannot be interlocated or inter related. Clearly, here the Assessing Officer was prima facie of the opinion that there was a search in the premises of BPTP Group. But instead of the searched material whether belong to the assessee or not which is in doubt cannot be simply taken in proceedings u/s 143(2) by the Assessing Officer. The Assessing Officer cannot take the benefit of b....
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....he jurisdiction on the Assessing Officer where none exists. The said section, in our opinion, only protects return of income, assessment, notice, summons or other proceedings from any mistake in such return of income, assessment notices, summons or other proceedings provided the same are in-substance and in-effect are in conformity with the intent or purposes of the Act, i.e., 292B cannot save an order not passed in accordance with the provisions of the Act. We have also gone through the order-sheet entries, copies of which were filed during the course of hearing and find that no notice u/s 153C has been issued for the period under consideration. Since the assessment order has not been passed in conformity with the provisions of the law, the same is liable to be quashed since such assessment is palpably and patently illegal. 18. Now coming to the nature of addition is concerned, we find that in the case of M/s Delicate Real Estate Pvt. Ltd. and M/s Pavitra Realcon Pvt. Ltd., no addition has been made on the basis of any incriminating material found/seized during the course of search. We find the Hon'ble Delhi High Court in the case of RRJ Securities Ltd. (supra) has held as unde....
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....the Act the assessment or reassessment of income of a person other than a searched person would proceed in accordance with the provisions of Section 153A of the Act. The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized." 19. We find the Hon'ble Allahabad High Court in the case of Shri Raj Kumar Jaiswal (supra) and has observed as under :- "16. However the above proposition has no application for the reason, when a power is exercised under a particular provision and in the manner,it is so contemplated in such substantive provision, then this defence is not open that it may be treated as a mere mistake of wrong provision of the statute. Notice was specifically served under Section 153A. Assessment order clearly says that it is being passed under Section 153A. Moreover, jurisdiction for making assessment under Section 153A read with Section 153C apparently is quite different than requirement of notice under Section 143(2) of Act, 1961 and assessment made under Section 143(3). 17. We find that this aspect has also been discussed by Tribunal and it has observed a....
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....e under section 153A of the Act. 18. In view of the above discussion and the reasons stated by the CIT (A), we are of the opinion that the CIT (A) was quite justified in holding that for the assessment year under consideration, the AO had no jurisdiction to pass an order under section 153A of the Act. The order of the CIT (A) is, therefore, upheld." 18. We find ourselves in agreement with the view taken by Tribunal on this aspect, in absence of any otherwise sustainable argument advanced on behalf of appellant or binding authority taking otherwise view." 20. The Hon'ble Delhi High Court in a series of decisions relied on by ld. counsel for the assessee has held that additions cannot be made in proceedings u/s 153C in absence of any incriminating material. Reference may be made to the decision in the case of Pr. CIT v. Meeta Gutgutia [2017] 395 ITR 526 (Delhi). 21. Further, while writing the order it has come to our notice that the Hon'ble Apex Court in the case of CIT v. Sinhagad Technical Education Society [2017] 84 taxmann.com 290 has held that section 153C can be invoked only when incriminating materials assessment year-wise are recorded in satisfaction n....
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....n in the case of Mr. S.K. Jain where some alleged incriminating material was found doubting the assessee's transactions coupled with the recording of satisfaction of Directors of the assessee company u/s 132(4). However, so far as the seized materials are concerned, we find the same were not found during the assessee's own search action and were found from Mr. S.K. Jain's independent search. The procedure prescribed u/s 153C has not been followed in the present case. We find from a perusal of the record that on such search documents found from the premises of Mr. S.K. Jain neither the statement of Mr. Jain was brought on record nor the said documents are independently corroborated. This is more so when assessee's extensive search operation has not yielded any incriminating material. The provisions of section 292C creates presumption only to the person from whose possession the said documents are found and therefore, the same will not be applicable qua the assessee. 25. As far as the statements u/s 132(4) are concerned, which are heavily relied on by the ld. DR, we find the same are bereft of any admission of any undisclosed income on the basis of any incriminating material found....
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....bsequently retracted. Therefore, it is 12 others necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 12. Thus, Hon'ble Jurisdictional High Court has held "The words" evidence found as a result of 'search "would not take within its sweep statements recorded during search and seizure operations". There Lordships further observed' However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. In paragraph 24, their Lordships have mentioned about the prevailing practice of extracting statement by exerting undue influence or coercion by the search party. Though the above decision in the case of Harjeev Aggarwal is with reference to the meaning of undisclosed income u/s 158BB of the Income-tax Act, However, in our opinion, the above observation of Hon'ble Jurisdictional High Court would be squarely applicable while considering the evidentiary value of the statement while making the....
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....its of duty free import to the assessee even without any imports having been made; and the probability of improbability of realisation of the benefits by the assessee considered from a realistic and practical point of view (the assessee may not have made imports), it is quite clear that in fact no real income but only hypothetical income had accrued to the assessee and section 28(iv) of the Act would be inapplicable to the facts and circumstances of the case. Essentially, the Assessing Officer is required to be pragmatic and not pedantic." 29. We find the Hon'ble Supreme Court in the case of Dhirajlal Ghirdharilal v. CIT [1954] 26 ITR 736 has observed as under :- "The question whether a Hindu undivided family is doing business in shares is a question of fact : but if the court of fact whose decision on a question of fact is final, arrives at the decision by considering material which is irrelevant to the inquiry, or by considering material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicions, and partly on evidence, then in such a situation clearly an issue of law arises. When a court of fact acts ....
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.... result, all the three appeals filed by the respective assessees are allowed. Order pronounced in the Open Court on 04th October, 2017. ============= Document 1 Stage - Stage -1 Around 30-35 proprietorship concerns Stage - 2 Stage - 3 Stage - 4 5 Main concerns viz. Jai Shree Attractive Delicate i) Chhaganlal Financial Finlease Pvt. Ltd. Realtors Put. Mukesh Kumar Services Pvt. Aashish Capita Ltd, ii) Shiv Shankar Ltd. Put. Ltd. and Pavitra Rea/con Trading Co. Acquiss Pvt. Ltd Pvt. Ltd and iii) JM Clothing Design Infracon Pvt. Ltd to non- Cash deposit in stage -1 concerns numbering around 35 entities Transferred corporate concerns managed by Shri S.K. to the company managed by Shri S.K. Jain companies managed by Shri S.K. Transferr to three companie of BPTP group companie Transferred Transferred three Document 2 M/s Delicate Realtors Pvt Ltd (PAN- AADCD4455E) A search and seizure operation was carried at the business premises as well as the residential premises of BPTP group of ....
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....articulars of appointment of Managing Directors, Director, Manager and Secretary and the change among them or consent of candidate to act as a Managing Director or director or manager or secretary of a company and/or undertaking to take and pay for qualification shares of M/s Delicate Realtors Pvt Ltd submitted by Shri Sanjeev Kumar. Form No. 18 Notice of situation or change of situation of registered office of M/s Delicate Realtors Pvt. Ltd along with receipt of fees filed with ROC. Form No 1- Application and declaration for incorporation of a company of M/s Delicate Realtors Pvt. Ltd along with receipts of fees filed with ROC. Copy of the resolutions passed in the board meeting of directors of M/s Delicate Realtors Pvt. Ltd dated 24/5/2010. One of these is duly signed by both the directors of the company namely Sanjeev Kumar and Sandeep Sehgal and other is duly signed by the director of the company namely Sanjeev Kumar PARTY-0-27 ANNEXURE A-5: Page No. Description 162-164 Copy of shares certificates of M/s Delicate Realtors Pvt. Ltd issued in the names of Sandeep Sehgal and Sanjeev Kumar. In view of above, it is established....