TaxTMI 
TaxTMI 
2018 (1) TMI 88
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....1 That addition made and upheld of Rs. 55,00,000/- 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....
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....below have framed the impugned order without granting sufficient proper opportunity to the appellant company 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 ....
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....lab Saha Lane, Howarh - 711101 10,000 1,00,000 (Rs. 10 per share) 9,00,000 (Rs. 90 per share) 31.03.2007 2.1 Aggrieved, the assessee filed appeal before the 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. ....
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....could be manifested from the statement of Sh. Sampat Sharma that he provided all the information to the extent it was within his knowledge and stated of providing the specific information subsequently 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 (D....
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....e of incriminating material and, therefore, the Assessing Officer was justified in making addition under section 153A of the Act. In support of her contention, she relied on the decision of the Hon'ble Supreme Court 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....
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....risdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. 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 stoo....
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....f the another assessee. Further, the Assessing Officer in the impugned order has not brought on record what was incriminating in the said material impounded from the premises of Sh. M.L. Agrawal. In view of our discussion, we reject the above contentions of the Ld. CIT(DR) that any incriminating material 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 ....
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....qua the addition made is found during the course of search from the premises of the assessee. Accordingly, above contention of Ld. CIT(DR) are rejected. She also submitted that during the course of search, hard disks of computers and others material were also seized which contained incriminating material. The Ld. CIT(A) failed to substantiate the 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, ....
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....ent under section 132(4) of the Act constitute incriminating material, held as under: "38. Fifthly, statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax Vs. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in 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 Assess....
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....uced as under: "3. In the second round, the assessment order dated March 29, 2000, gave detailed reasons for arriving at the conclusion that the figures stated in the statement recorded were corroborated, in particular, by various loose sheets found at the premises of the assessee as well as vouchers, some of which related to the two films in question. In an appeal filed to the Tribunal, the 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 o....