TaxTMI 
TaxTMI 
2017 (12) TMI 346
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....ave been so existing and the assessment made on him under section 153A of the Income-tax Act, 1961 is wholly without jurisdiction.' 1.2 BECAUSE the Ld. CIT(A)-XXXIII, New Delhi, erred in law in not adjudicating the Ground No. 1.2 of the appeal being 'BECAUSE the learned Assessing Officer, at all the stages of the proceedings before him, had all the authority and jurisdiction to look into the validity of search operation and it was his legal obligation to look into and adjudicate upon the same.' 1.3 BECAUSE the Ld. CIT(A)-XXXIII, New Delhi, erred in law in not adjudicating the Ground No. 1.3 of the appeal being 'BECAUSE valid search operation is the foundation for invoking the provisions of section 153A and the assessment order passed without looking into and adjudicating upon this basic issue is liable to be declared as void ab-initio.' 1.4 BECAUSE the Ld. CIT(A)-XXXIII, New Delhi, erred in law in not adjudicating the Ground No. 1.4 of the appeal being 'BECAUSE there existed no search warrant in the name of appellant as is evident from the fact that no 'Punchnama' has been drawn in the name of the appellant 'individually' speaking.&#....
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.... the case, appreciation of submissions made by the appellant at all stages of the assessment proceedings, the learned Assessing Officer should have accepted the appellant's return and no further tax/interest should have been levied on him in the impugned assessment.' 3.3 BECAUSE the Ld. CIT(A)-XXXIII, New Delhi, erred in law in not adjudicating the Ground No. 3.3 of the appeal being 'BECAUSE on a due consideration of attendant facts and circumstances of the case, receipts on account of share capital / share application stood duly disclosed in the return filed and assessed as per Order dated 28.12.2007 under section 153A and the same could not have been adversely viewed in the assessment proceedings under section 153A, more so when no adverse material whatsoever was found during the global search carried out on the group as a whole.' 3.4 BECAUSE the Ld. CIT(A)-XXXIII, New Delhi, erred in law in not adjudicating the Ground No. 3.4 of the appeal being 'BECAUSE under the facts and circumstances of the case addition made to the returned loss are beyond the scope of provisions of section 153A of the Act.' 4.1 BECAUSE the Ld. CIT(A)-XXXIII, New Delhi erred in law i....
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.... share capital was found during the course of global search.' 5.6 BECAUSE the Ld. CIT(A)-XXXIII, New Delhi erred in law in dismissing the appeal and holding 'validity of jurisdiction for this assessment year on the basis of search material relating to stock for other assessment years.' 6. BECAUSE the Ld. CIT(A)-XXXIII, New Delhi, erred in law in not adjudicating the Ground No. 6 of the appeal being 'BECAUSE interest under various sections could not have been included in the computation of tax demand.' 7. BECAUSE the order appealed against is contrary to fact, law and principles of natural justice." 4. From the aforesaid grounds, it is gathered that the main grievance of the assessee in this appeal relates to the sustenance of addition made by the AO u/s 153A of the Income Tax Act, 1961 (hereinafter referred to as the Act) in the absence of incriminating material found during the course of search. 5. Facts of the case in brief are that the assessee filed its original return of income on 31.10.2005 declaring a loss of Rs. 4,17,123, which was processed u/s 143(1) of the Act. In the present case, a global search u/s 132 of the Act was carried out on 01.09....
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....of. Acknowledgement of Ereturn of Company, Director's Report, Auditor's Report, Balance Sheet, Profit and Loss Account with Annexure 7. M/s. Gauraj International Private Limited Rs. 20,00,000 Copy of Acknowledgement of Ereturn of Company, Director's Report, Auditor's Report, Balance Sheet, Profit and Loss Account with Annexure Total Rs. 1,05,00,000 The assessee submitted that the issue relating to share capital had already been adjudicated vide assessment order dated 28.12.2007 passed u/s 153A of the Act. The reliance was also placed on the judgment of the Hon'ble Supreme Court in the case of CIT Vs Lovely Export Pvt. Ltd. 6. The AO asked the assessee to produce the Directors of the share applicant companies for personal deposition. In compliance, the assessee attended the proceedings and furnished a letter dated 25.12.2010. The AO did not find merit in the submission of the assessee and observed that the letter dated 25.12.2010 was nothing but the repetition of facts given in the earlier letter dated 06.12.2010. He also observed that the assessee had shown its inability to produce the parties on the pretext that those companies were not t....
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.... has been duly disclosed in the Schedule - 3 of Investment to the Balance Sheet. There are investments of the Company to the tune of Rs. 2,68,85,000/- which includes share application money paid to us. The Company is of substantial worth. We further enclosed therewith the Extract from the record of MCA of Government of India Portal to evidence the change of address. * M/S. WELLFIT TRADERS PRIVATE LIMITED OLD ADDRESS- 7, GRANT LANE, ROOM NO. 217, KOLKATA-700012. NEW ADDRESS-B-4, KESHAR APARTMENT, JHOWTALA ROAD, KOLKATA , WEST BENGAL-700059. PAN- AAACW4232D Presently assessed Under - Area Code WBG, Jurisdiction ITO-WD-(2), Kolkata Building - Aayakar Bhavan, Kolkata. We enclosed therewith copy of Acknowledgement of IT Return for A. Y. 2005-06, Share Application Form, Copy of Bank Statement of IDBI Bank, Director's Report, Auditors Report, Balance Sheet, Profit & Loss Account with Annexures F. Y. 2004-05. From this Company we have received Share Application Money of Rs. 20,00,000/- vide Cheque No. 041211 dated 21.6.2004 drawn on IDBI Bank, Park Street, Calcutta. This has been duly disclosed in the Schedule - 3 of Investment to the Balance Sheet. There are inves....
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....to evidence the change of name from Madan Lal Real Estate Private Limited to Maa Gayatri Agencies Private Limited and also Certificate of ROC dated 02.06.2006. * JEEVANDHARA WA TERS PR1VA TE LIMITED NEW NAME - NARAYANI POLYTUBE PRIVATE LIMITED 4, BALLAY DAS STREET,4TH FLOOR, KOLKATA - 700007 CIN-88801 PAN-AABCJ3665Q Presently assessed under -Area Code WBG, Jurisdiction ITO-WD-9(3), Kolkata Building - Aayakar Bharan, Kolkata. We enclosed therewith copy of Acknowledgement of IT Return for A.Y. 2005-06, Director's Report, Auditors Report, Balance Sheet, Profit & Loss Account with Annexures F. Y. 2004-05. From this Company we have received Share Application Money of Rs. 10,00,000/-vide Cheque No. 038546 dated 20.7.2004 drawn on ABN Amro Bank Br. Road, Kolkata. This has been duly disclosed in the Schedule - C of Investment to the Balance Sheet. There are investments of the Company to the tune of Rs. 5,18,44,000/- which includes share application money paid to us. The Company is of substantial worth. We further enclosed therewith the Extract from the record of MCA of Government of India Portal to evidence the change of name from Jeevandhara Waters Private Limited....
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....ng in the Portal of Ministry of Corporate Affairs. The shares against share application money has been allotted vide resolution of board of directors and due form has been submitted to the Registrar of Companies, through MCA portal. (iii) The assessing officer in original assessment has accepted the submission of the appellant company and no addition was made while passing the original assessment order dated 31-12-2008 which was filed before the assessing officer in current assessment proceedings also. (iv) 'Assessment' and 'Reassessment' are same whether it is under Section 143(3), 147 or 153A of IT. Act, He argued that u/s 147 there are Judicial pronouncement that Section 147 does not confer power of review to the assessing officer. (v) Ld. AR argued that assessment under Section 153A has to be restricted to the evidence found as a result of search u/s 132. He relied upon the decision of Hon'ble H.C. of Allahabad in the case CIT(c) Vs. Kanpur Vs. Suit Shaila Aggarwal (2011) 16 Taxmann .com 232 (All.), Meghmani Organics Ltd. Vs. DCIT, Ahmedabad (2010) 6 ITR (Trib) 360 (Ahm.), LMJ International Ltd. (2008) 119 TTJ 214 (Calcutta)." 8. The ld. CIT(A) ....
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....share appellant in person nor rebutted the enquiry either before A.O. or before the undersigned. Ld. AR's other argument is that on same facts, A.O. has not made addition in first round of assessment therefore on same facts, if addition is made, it amounts to review. I do not agree with this argument. In second round, on changed circumstances the assessing officer has conducted enquiry by issuing summons which remains uncomplied. Hence, the present addition is just not on same facts. In view of the above, & considering facts & circumstances of the case, I confirm the addition made by A.O. u/s 68 & dismiss the ground of appeal." 9. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the issue relating to receipt of share application money was duly examined while passing the order dated 28.12.2007 u/s 153A r.w.s. 143(3) of the Act and thereafter search and seizure operation u/s 132 of the Act was again carried out on the assessee on 19.01.2009 but no incriminating material was found during the course of search, so as to impinge upon the receipt of share capital, still the AO based....
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....er passed by the ld. CIT(A). It was further submitted that as a result of search and seizure documents were seized on the basis of which additions had been made on account of unaccounted stock for other assessment years i.e. assessment years 2007-08 and 2008-09 u/s 153A of the Act. Therefore, the seized material can be relied upon to draw the inference that there can be similar transactions throughout the period of six years covered u/s 153A of the Act. It was further stated that incriminating material need not be actual physical document and that any piece of information capable of influencing mind of the AO to the extent of the initiation of action under provisions of Income Tax Act becomes necessary, would be incriminating material. It was also stated that it is altogether different thing that finally, it may or may not culminate into pecuniary liability imposed upon the assessee. Such piece of information could be in the form of statement recorded or inventory made or noticing of circumstances or in any other form. It was further stated that a single piece of information may not be incriminating individually but when put in juxtaposition of other informations or circumstances, ....
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.... verbatim as under: "1.1 On perusal of the balance sheet as at 31.3.2005 it has been noticed that the paid share capital of the assessee company has been increased from Rs. 102,000/- to Rs. 10,602,000/- i.e. there is an increase of Rs. 10,500,000/- in the paid up share capital. During the course of assessment proceedings the assessee was asked to furnish the confirmations from all those persons to whom shares were allotted during the year along with copies of their bank statements, audited accounts for the year under consideration and ITR's for the year under consideration. In response to that the assessee has furnished the same. On perusal of the details furnished in respect of paid-up share capital, it has been noticed that during the year under consideration the assessee company has allotted 100,000 shares of Rs. 10/- each to Jeewandhara Waters (P) Ltd. 1.2 On perusal of the audited accounts of Jeewandhara Waters (P) Ltd. for the A.Y. 2005-06, it has been noticed that the said company has shown Investments as on 31.3.2005 at Rs. 51,844,000/-. On perusal of the Schedule of Investments, it has been noticed that the name of the assessee company did not appear in that schedule.....
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....k place on 19.01.2009. It is also noticed that the ld. CIT(A) in the impugned order at page no. 17 noted as under: "In appellant's case, a result of search & seizure, documents were seized on the basis of which addition has been made on unaccounted stock for other Assessment years u/s 153A for A.Y. 07-08 & 08-09. Therefore, there are seized materials pertaining to other Assessment years within the period of six years u/s 153A. Hence, the above decision is squarely applicable. Accordingly, the assessing officer has the Jurisdiction to assess total Income including addition u/s 68 of I.T. Act for share capital or share application money etc. even though no addition was made in original assessment proceedings." 14. From the aforesaid notings also, it is clear that no incriminating material was found during the course of search for the assessment years 2005-06 and 2006-07 which are under consideration. The ld. CIT(A) stated in the impugned order that the addition had been made on account of unaccounted stock for the assessment years 2007-08 and 2008-09. Therefore, it is an admitted fact that there was no incriminating material as regards to unaccounted stock, if any, for the years u....
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.... this section only on the basis of the seized material (v) In the 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) In so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer, (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." It has further been held as under: "On the date of the s....