TaxTMI 
TaxTMI 
2018 (1) TMI 88
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....,000/- is without jurisdiction since it is not based on any material found as a result of search on the appellant, as has been also held by the judgment of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in 380 ITR 573. 2 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining an addition made by learned Deputy Commissioner of Income of Rs. 55,00,000/- (Rs. 5,50,000/- + Rs. 49,50,000/-) on account of following sums received from the shareholders as share capital and share premium and erroneously held as unexplained cash credits under section 68 of the Act particularly when no incriminating material either in the shape of unexplained cash or investment or document had been detected as a result of search on the appellant company or even gathered in the instant assessment proceedings: Sr. No. Name of the Company No of Shares Nominal Value of Share (Rs) Premium Paid (Rs) Amount (Rs) i) Edward Supply Pvt. Ltd. 10,000 1,00,000 9,00,000 10,00,000 ii) Jaishree Propertied and Exports Pvt. Ltd. 10,000 1,00,000 9,00,000 10,00,000 iii) Kathleen Vyapar Pvt. Ltd. 25,000 2,50,000 22,50....
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....mpany and therefore the same are contrary to principle of natural justice and hence vitiated. 4 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest under section 234A, u/s 234B, u/s 234C and u/s 234D of the Act which are not leviable on the facts and circumstances of the case of the appellant company. It is therefore, prayed that, it be held that assessment made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) be quashed and, further additions so upheld by the learned Commissioner of Income Tax (Appeals) alongwith interest levied be deleted and appeal of the appellant company be allowed. 2. Briefly stated facts of the case are that for the year under consideration, the assessee filed return of income on 09/10/2007 declaring Nil income. The case was selected for scrutiny and assessment under section 143(3) of the Income-tax Act, 1961 (in short 'the Act') was completed on 24/11/2009 at total income of Rs. 1,87,890/-. The Assessing Officer in the impugned assessment order, however, has not recorded the fact that assessment was completed under section 143(3) of....
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....e Ld. CIT-(A) and challenged the proceeding under section 153A of the Act, both on the ground of validity of reassessment proceedings as well as on the merit of the addition. The Ld. CIT-(A) rejected the contention of the assessee both on the legal ground as well as on the ground of merit. According to the Ld. CIT-(A), during the search and seizure action carried out on the 'Brahmaputra Group' of cases including the assessee on 28/09/2010, various books of accounts and documents belonging to the assessee were detected as incriminating material and seized and thereafter notice under section with 153A of the Act has been issued rightly. 3. In the grounds raised before us, the assessee challenged the order of the Ld. CIT-(A) both on legal ground as well as merit. We first take up the ground of the assessee challenging the validity of additions made under section 153A of the Act. 4. In the ground Nos. 1 and 1.1 the assessee has challenged jurisdiction in making the addition without any incriminating material. 4.1 Before us, the Ld. counsel filed a paper book alongwith additional paper-book running into pages 1 to 450. He referred various pages of the paper book and submitted that in....
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....sequently but Sh. Sampat Sharma nowhere admitted that the share capital invested in the company was in the nature of undisclosed income. There was no reference of any incriminating material in the statement recorded under section 132(4) of the Act and thus the statement could not have been made basis for making addition in assessment under section 153A of the Act. (b)The statement was recorded at the residential premises of Sh. Sampat Sharma, and not at the premises of the assessee company and therefore, it cannot be termed as material found during the course of search on the assessee. (c)The statements recorded under section 132(4) of the Act do not themselves constitute any incriminating material. In support of the proposition, the Ld. counsel relied on the decisions of the Hon'ble Delhi High Court in the case of Principal CIT versus Best Infrastructure (India) Private Limited in ITA No. 13 of 2017 and Commissioner of Income Tax versus Harjeev Aggarwal, (2016) 290 CTR 263 (Delhi). 4.4.2 In view of the arguments, the Ld. counsel submitted that since for the year under consideration assessment under section 143(3) of the Act was already completed, no addition could be made for....
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.... in the case of Video Master Vs. JCIT, (2015) 66 taxmann.com 361 (SC). 4.5.3 According to the Ld. CIT(DR), case of the assessee is not covered by the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra). She also filed written submissions in support of the addition on merit and submitted that addition might be sustained. 4.6 In rejoinder, the Ld. counsel submitted that in the case of Video Master (supra) statements were corroborated by various loose sheets found at the premises of the assessee. He submitted that in the case in hand, the Director in his statement has not mentioned anything which could be termed as incriminating and no material qua the addition much less the corroborating material was found, and thus the ratio of the decision of the Video Master (supra) could not be imported in the facts of the instant case . 4.7 We have heard the rival submission and perused the relevant material on record. Main issue in dispute in the grounds raised before us is whether any addition could have been made under section 153A of the Act in the case of the assessee. In the case of Kabul Chawla (supra) relied upon by the Ld. counsel of the assessee, the....
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....ii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A 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." (emphasis supplied externally) 4.7.1 In view of the legal position summarized above, the Hon'ble High Court in para-38 of the decision held that in the case, on the date of search, if the assessment already stood completed, theb in absence of incriminating material, no addition could have been made. The relevant paragraph of the decision is reproduced as under: "Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." 4.7.2 In view of above decision, we are required to examine the two conditions. The First condition is whether for the year under consideration, the as....
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....rial qua the addition was found during the course of the search action under section 132 of the Act. 4.10 Another argument, made by the Ld. CIT(DR) in support of her claim of incriminating material was that the Item No.(i) mentioned on page 6 of the assessment order, was incriminating in nature as it contained detail of accommodation entry. For having clarity on the issue raised by the Ld. CIT(DR), we may like to reproduce the relevant part of the assessment order as under: "Apart from, during the course of search operation in Brahmaputra Group of cases, carried out at premises A-7, Mahipalpur, New Delhi, the following incriminating documents were inter alia seized by party BA-5 i. Page No. 23 of Annexure A-6 (a diary relating to F.Y. 2009- 10)- on the back side\ of this page recording is made in the name of "Shri Shyam Trexim & Fincom P. Ltd." against which Rs. 50 lakhs is written. ii. Page No. 1 of Annexure A-7 - on this page a recording of funds mentioning debit as well as credit of Rs. 25 lakhs in the name of Murari Lai Aggarwal dated 31.05.2008 and further comments of the payment of same amount by cash to Murari Lal Aggarwal (MLA) is made iii. The back side of the ....
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.... claim either by the impugned assessment order or through any other documentary evidence. In the assessment order, there is no mention that any incriminating material is found in hard disk etc. Thus, this contention of Ld. CIT(A) is also rejected. 4.12 The next argument of the Ld. CIT(DR) is that the statement recorded under section 132(4) of the Act of Sri Sampat Shrama is incriminating material found during the course of search. We have observed that said statement of Sh. Sampat Sharma was recorded at his residential premises during search proceeding carried out separately. In our opinion, the statement of Sh. Sampat Sharma was not recorded in search proceeding of the assessee and thus, it cannot be considered as incriminating material found during the course of the search of the assessee. 4.13 Without prejudice to our observation, we do not find any mention of any incriminating material in the statement of Sh. Sampat Shrama recorded under section 132(4) of the Act. The Ld. counsel drawn our attention to copy of the statement available on page 427 to 450 of the paper book and english translation of the same available on pages 420 to 426 of the paper book. In response to questio....
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....the present case are different from the facts in Smt. Dayawanti Gupta Vs. CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintained accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the assessee were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission. 39. For all the aforementioned reasons, the Court is of the view that the ITAT was fully justified in concluding that the assumption of jurisdiction under Section 153A of the Act qua the Assessee herein was not justified in law." 4.16 In the case of Harjeev Aggarwal (supra), the Hon'ble High Court observed as under: "19 In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statemen....
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....he Tribunal framed three issues, two of which were unnecessary for the reason that the statement recorded on August 25, 1995, was said to be relevant but not conclusive. Therefore, whether the statement was made under duress and whether it was retracted lawfully would have no relevance at this stage. However, the Tribunal went into these issues as well and ultimately, found that the statement could be used as evidence. Further, it examined other corroborative evidence referred to in the assessment order and arrived at a finding that the added income would be income which can be added under section 158BC for the block assessment period in question. In an appeal filed under section 260A to the Bombay High Court, the High Court found, after narrating the facts, that no substantial question of law arises. 4. We are of the view, in accordance with the view of the High Court, that no substantial question of law arises. Further, though it was vehemently argued by Shri Devansh A. Mohta, learned counsel appearing for the assessee, that this was a case both of perversity and of there being no evidence at all. We find that not only are the findings of fact recorded in some detail but that ....