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2018 (4) TMI 1559
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....s common order for the sake of convenience. These appeals will be disposed of hereunder in seriatum. Assessee's appeal in ITA No.911/Bang/2016 for A.Y. 2005-06. 2. Briefly stated, the facts of the case are as under :- 2.1 A search and seizure action under Section 132 of the Income Tax Act, 1961 (in short 'the Act') was conducted in the case of this assessee on 19-7-2010. Subsequently a notice under Section 153A of the Act dt.21-9-2010 was issued to the assessee and in response thereto, return of income was filed on 31-1-2012. The assessment was completed under Section 153A r.w.s. 143(3) of the Act vide order dt.28-3-2013, wherein the income of the assessee was determined at Rs. 7,49,56,900 in view of an addition of Rs. 1,83,50,000 as unexplained cash credit under Section 68 of the Act. The assessee's appeal was dismissed by the learned CIT (Appeals) vide the impugned order dt.14-3-2016. 3.1 Aggrieved by the order of the CIT (Appeals) - 11, Bangalore dt.14-3-2016 for Assessment Year 2005-06, the assessee has filed this appeal before the Tribunal, wherein it has raised the following grounds :- 1. " That the order of the authorities below in so far....
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....see is a Public Limited Company. For the above assessment year, the assessee filed its return of income on 19-09-2005 declaring total income of Rs. 5,66,06,899/- (PB page 1). The search and seizure operation purportedly u/s 132 of the Income Tax Act, 1961, was carried on in pursuance of warrant of authorization dt. 16-07-2010 in the case of M/s BMM Ispat Limited at No. 114, Danapur, Mariyammanahalli, Hospet. The search was conducted on 19-07-2010, 20-07-2010, 21-07-2010, 22-07-2010, 13-09-2010 and on 14-09-2010. During the course of search, documents listed in A/BMMIL/01, A1/BMMIL/01, A2/BMMIL/1, A3/BMMIL/01 were seized (panchanamas are found in PB pages 176 to 205). It may be noted that none of the documents so seized are incriminating in nature. All the documents are maintained during the regular course of business. As such, the search and subsequent proceedings are all not as per the law. Further, notice u/s 153A was issued on 21-09-2010 calling for filing the return of income. Assessee filed the return of income on 'without prejudice' basis on 31-01-2012 declaring total income of Rs. 5,66,06,899/- (PB page 3). The assessment u/s 143(3) r.w.s 153A was completed ....
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....r. The genuineness or otherwise the source of investment etc and resultant addition if any should be made only in the hands of the shareholder and not the recipient company as held by the Supreme Court in Lovely Exports. Hence even on merits there is no case for the department. Since the material sought by the assessee in the possession of the department inspite of request, the order suffers for non-adherence to principles of natural justice. Even on this basis the addition requires to be vacated. The assessee's written submissions before CIT-A are found in pages 17 to 31 and rely on the same. On the issue of approval granted u/s 153D, it is the contention of the assessee that the approval has been granted without application of mind and in a mechanical manner. In support of its contention, the following case laws are relied on: (1) Chhugamal Rajpal v. S.P. Chaliha & Ors - 79 ITR 603 - SC. (2) CIT v. Akil Gulamali Somji - 84 CCH 53 - Mum HC. (3) SmtShreelekha Damani v. DCIT - 173 TTJ 332 - Bombay ITAT. (4) AAA Paper Marketing Ltd. v ACIT - ITA 167/Lkw/2016 - Lucknow ITAT. The grounds on interest u/s 234A/B/....
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....As the above order and has not been discharged by the assessee, reliance on the judgement of the Supreme Court in the case of Lovely Exports is misplaced. iii. Further contention of the assessee that in view of the time-limit for issue of notice under section 143 (2) of the Act being expired on the date of search, no assessments can be made without the aid of incriminating material seized from the assessee and relates to the impugned year is incorrect. On plain reading of section 153A of the Act, section does not contemplate either incriminating material found in the course of search or undisclosed income being unearthed in the course of search. As per the law laid down by the Supreme Court in the case of Calcutta Knitwear (2014) 362 ITR 673 (SC), section has to be read in plain and reading new words into the section is not permissible. If the contention of the assessee is to be accepted regarding incriminating material, the same would amount to rewriting of the section 153A of the Act. iv. The above position has also been clearly held by the jurisdictional High Court in the case of Canara Housing (2015) 274 CTR 122 and further being held by the High Court in the ....
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....en made. Therefore, the addition of Rs. 1.83,50,000 under Section 68 of the Act as unexplained cash credit is clearly not based on any incriminating material seized from the assessee. 3.4.3 In this context, the jurisdictional High Court of Karnataka in the case of CIT Vs. Lancy Constructions in ITA No.528 to 531/2014 has held as under :- '4.2.2 In this regard, the Hon'ble Karnataka High Court in the case of CIT v. Lancy Constructions in its order in ITA Nos.528 to 531 has held as under : "In our view, if assessment is allowed to be reopened on the basis of search, in which no incriminating material is found, and merely on the basis of further investigating the books of accounts which have been already submitted by the assessee and accepted by the Assessing Officer at the time of regular assessment, the same would amount to the Revenue getting a second opportunity to reopen the concluded assessment, which is not permissible under the law. Merely because a search is conducted in the premises of the assessee, would not entitle the revenue to initiate the process of reassessment, for which there is a separate procedure prescribed in the statute. It is only ....
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....ess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. However, assessment or re- assessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. The explanation states, save as otherwise provided in Sections 153A, 153B and 153C, all other provisions of the Act shall apply to the assessment made under Section 153A. Section 153B speaks about time-limit for completion of assessment under Section 153A. 46. 153C is relevant for the purposes of this case. Sub-section (1) of Section 153C begins with a non obstante clause and it states that notwithstanding anything contained in Sections 139, 147, 148, 149, 151 and 153, where the Assessing Officer is satisfied that any valuable assets, seized or requisitioned, belongs to, or any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained ther....
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....es 'undisclosed income' to include any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property, which has not been or would not have been disclosed for the purposes of this Act or any expense, deduction or allowance claimed under this Act which is found to be false. Section 158BA deals with assessment of undisclosed income as a result of search, while Section 158BB deals with computation of undisclosed income of the block period. Block period is defined in Section 158B(a) to mean the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted under Section 132 or any requisition was made under Section 132A and also includes the period up to the date of commencement of such search or date of such requisition in the previous year in which the said search was conducted or requisition was made. The proviso is not relevant for the purpose of this....
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....to the assessee i.e., the person searched for the purpose of assessment or re-assessment of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. Section 153C as already noted, deals with assessment of income of any other person, when the Assessing Officer is satisfied that the books of account or documents or valuable assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to under sub-section(l) of Section 153A of the Act. In such a case, the Assessing Officer has to issue notice to assess or re-assess income of other person under Section 153A of the Act. Thus, the fact that search has been conducted would not justify issuance of notice under Section 153A. If it is only during a valid search when certain incriminating materials are detected, notice could be issued." 3.4.5 In the case on hand, the assessment for Assessment Year 2005-06 has been completed as the time limit for issue of notice had expired on 30-9-2006; before the date of search on 28-9-2010. Therefore, since no assessme....
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....l seized in the course of search in case of M/s. Bharath Mines and Minerals and M/s. BMM Ispat Ltd. belong to the company. In view of this, the action taken u/s.153C of the Act is not as per law and requires to be dropped. ; However we are filing the returns 'under protest' as you have threatened to initiate proceedings u/s.276CC of the Act. Kindly note that, in the absence of valid notice, your jurisdiction to assess the income under Section 153C is nonexistent. It may further be noted that the company is no longer in existence and no notice can be issued on a non-existing company as held by the Hon'ble Supreme Court in the case of Marshall Sons & Co. (India) Ltd. v. Income Tax Officer in 233 ITR 809. There is neither undisclosed income nor income escaping assessment so as to warrant notice under Section 153C. Accordingly the proceedings be dropped in the interest of justice and render justice." 7.1.2 The assessment was completed under Section 153C r.w.s. 143(3) of the Act vide order dt.28-3-2013 for Assessment Year 2007-08, wherein the assessee's income was determined at NIL in view of the addition of Rs. 45,46,226 as per the original assessment order ....
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....hich are extracted hereunder :- Assessee's Submissions 'In this case a notice u/s 153C of the Act dt.22-11-2012 was issued addressed as hereunder: "To M/s. HKT Mining Pvt. Ltd" The said notice was served on BMM Ispat Limited. The assessee in its reply dt.05-02-2013 (PB page 2) replied stating that the said HKT Mining Pvt. ltd stood merged with BMM Ispat Limited and issue of notice in the name of HKT Mining Pvt. Ltd is not as per law in as much HKT Mining Pvt Ltd is non- existent company on the date of issue of notice and no assessment proceeding can be held in the hands of non - existent company. Ignoring the reply filed by the assessee, the AO went on and completed the assessment in the name of HKT Mining Pvt. Ltd vide order dt.28-03-2013. The AO while took notice of the assessee's objections in para 2.2 page 2 of the assessment order rejected the contention of the assessee and framed the assessment in the name of HKT Mining Pvt Ltd, a non-existent company. The Ld.CIT-A who noted the arguments of the assessee in para 8.1 rejected and reiterated the stand of the AO. [PAN OF HKT MINING PVT LTD- AABCH3700J, PAN OF BMM ....
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.... C of the Act.'' Accordingly it is prayed that the assessment be vacated as invalid. On merits the AO has made an addition of Rs. 1,93,47,798/-, Rs. 55,22,060/- and Rs. 2,28,73,865/- as unaccounted production of Sponge Iron, MS Billets and TMT Bars respectively. This addition has been made as alleged removal of goods and unaccounted income arising from the same. The AO's action is not as per law and the assessee is not aware as to how the said conclusion was arrived at. There is no discussion about the Settlement Commission Order or any other nature. The issue has never been raised for the assessee's clarification. There is no such clandestine removal of goods as is alleged by the AO in the assessment order. Consequently the order suffers from non adherence to the principles of natural justice and hence the addition be deleted. Hence, the assessment u/s 153C of the Act is bad in law and unsustainable and requires to be quashed.' 9.21 Revenue's submissions. 1. " Search under section 132 of the Act was conducted in the case of the Bharat mines and minerals on 19/7/2010. Certain documents belonging to the assessee were found and seized. Pro....
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.... raised in this appeal by the assessee is that M/s. HKT Mining Pvt. Ltd. was amalgamated with M/s. BMM Ispat Limited w.e.f 1-4-2007 vide order of the Hon'ble Karnataka High Court dt.9-1-2009. In this assessment year, the notices under Section 153C and 143(2) of the Act, dt.22-11-2012 were issued in the name of M/s. HKT Mining Pvt. Ltd. and the order of assessment passed under Section 153C r.w.s. 143(3) of the Act dt.28-3-2013 was also passed in the name of HKT Mining Pvt. Ltd. All the above notices and orders, are issued in the name of M/s. HKT Mining Pvt. Ltd. under its PAN AABCH3700J which is a non-existent entity on the date of the order of assessment i.e. 28-3-2013 as all these events have occurred subsequent to the appointed date of merger 1-4-2007 as approved by the Hon'ble Karnataka High Court vide order dt.9-1-2009. Evidently, the Assessing Officer was aware of the merger / amalgamation as is clear from the details recorded by him at para 2.2 of the order of assessment, and inspite of this he proceeded to issue notices and frame the order of assessment in the name of M/s. HKT Mining Pvt. Ltd. under PAN - AABCH3700J; which entity had already ceased to exist consequen....
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...., the assessee filed returns of income for these assessment years on 30-1-2012. The assessments for these Assessment Years 2008-09 to 2010-11 were completed under Section 153A r.w.s. 143(3) of the Act vide orders dt.28-3-2013. The assessee's appeals for these years were dismissed vide the combined order of the CIT (Appeals) - 11, Bangalore dt.27-2-2015. 15.1 Aggrieved by the orders of the CIT (Appeals) - 11, Bangalore dt.27-2-2015 for Assessment Years 2008-09 to 2010-11, the assessee has filed these appeals in which it has raised the following grounds :- For Asst. Year 2008-09 1. " That the order of the authorities below in so far as it is against the appellant is against the law, facts, circumstances, natural justice, without jurisdiction, bad in law and all other known principles of law. 2. That the total income computed and total tax computed is hereby disputed. 3. The proceedings of search and all other subsequent proceedings are bad in law, without jurisdiction and invalid. 4. The notice u/s 153A and subsequent proceedings are without jurisdiction and bad in law. 5. The order u/s 143(3) r.w.s 153A is bad in law, invalid, t....
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....st the appellant is against the law, facts, circumstances, natural justice, without jurisdiction, bad in law and all other known principles of law. 2. That the total income computed and total tax computed is hereby disputed. 3. The proceedings of search and all other subsequent proceedings are bad in law, without jurisdiction and invalid. 4. The notice u/s 153A and subsequent proceedings are without jurisdiction and bad in law. 5. The order u/s 143(3) r.w.s 153A is bad in law, invalid, time barred and infructuous. 6. The authorities below erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled. 7. The CIT-Appeals erred in dismissing the ground on validity of search. 8. The AO erred in initiating proceedings u/s 153A and thereafter passing an order in the absence of any abatement as is envisaged in the law. 9. The CIT-Appeals erred in refusing to rely on the decision of the Special Bench in All Cargo Global Logistics Limited on the issue of abatement of assessment. 10.....
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....The CIT-Appeals erred in refusing to rely on the decision of the Special Bench in All Cargo Global Logistics Limited on the issue of abatement of assessment. 10. The authorities below erred in making addition of Rs. 15,27,27,045/- as unaccounted cash payments made to Mrs. Ambika Ghorpade and M/s KMIORE. 11. Without prejudice, the authorities below failed to telescope and offer relief to the assessee as is required in law. 12. The authorities below erred in relying on material and statements without furnishing the same to the assessee before passing the assessment order. 13. The authorities below erred in relying on statements without providing opportunity to cross examine. 14. The approval granted u/s 153D of the Act is not as per law. 15. The appellant denies the liabilities of interest u/s 234A, 234B and 234C of the Act. Further prays that the interest if any should be levied only on returned income. 16. No opportunity has been given before levy of interest u/s 234A, 234B and 234C of the Act. 17. Without prejudice to the appellant's right of seeking waiver before appropriate authority, the appellant begs ....
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....as been given to the assessee before making the said addition. In para 2.28 of the assessment order, it is said that notice dt. 07-01-2013 was served on the assessee on 11-01-2013. It is also said that the assessee had filed a reply on 28-02-2013. Neither any notice was served on the assessee nor is any reply filed by the assessee. There appears to be a mistake on part of the AO in mentioning that the above notice has been issued. Further, none of the material in the assessment order has been made available to the assessee. This addition is based on surmise and not on the basis of fact. There is no such purchase as is alleged in the order is made by the assessee for which any expenditure has been claimed. The allegation of permit and without permit is all fanciful and lacks substance. Without prejudice, the AO ought to have issued a notice u/s 153C if he was of the view that the material seized from Mr. Bharath S Ghorpade belongs to the assessee. In the absence of valid notice u/s 153C, such an addition could not be made and also the annexure to the assessment order consisting of Page 1 to 13 cannot be relied on. It may be seen that even the so called material is not complete and i....
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....HC. Secondly, the AO made an addition of Rs. 16,71,82,094 based on certain material seized from Bharat S Ghorpade and Dinesh Kumar Singhi mentioned A/BSG/01 , A/BSG/02 and A/DKS-1. These materials does not belong to the assessee and no proceeding u/s 153C has been held before use of the aforesaid material against the assessee. It has been held in the following case laws that unless 153C proceeding is done no assessment can be made based on seized material seized from third parties. (1) Vijaybhai N. Chandrani v. ACIT - 333 ITR 436 - Guj. HC (2) Hon'ble Bangalore ITAT in Senate v. DCIT - 181 TTJ 562 (3) P. Srinivas Naik v. ACIT - 114 TTJ 856 - ITAT Bangalore (4) PCIT v. Vinita Chaurasia - 394 ITR 758 - DEL HC There has been reference to statements on oath from Bharat S Ghorpade, Karthikeya M Ghorpade, Ambika Ghorpade and others. However no copies have been given to the assessee in the absence of furnishing of copies and offering for cross examination. Said statements cannot be held against the assessee. In this case no explanation has been called from the assessee by giving any notice during the assessment proceedings. The AO in para 2.28....
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....ing book profit of Rs. 2,82,23,130/- (PB page 66). The assessee has submitted all the details sought for and clarified on the issues raised in the notices. Strangely, the AO has completed the assessment by computing the total loss of Rs. 14,08,09,180/- after making additions of Rs. 19,06,35,900/-. However book profit of Rs. 2,82,23,130/- is considered to arrive at the tax liability since book profit was in excess of income declared under the normal provision of the Act. The assessee is dismayed by the additions especially when requisite opportunity was not given. The brief facts on the additions are hereunder:- (1) Addition of Rs. 19,06,35,900/- as unaccounted cash payments The AO has said that for the reason stated in the assessment order for AY 2008-09 in the assessee's own case, sum of Rs. 19,06,35,900/- has been added. The arguments mentioned supra for AY 2008-09 in ITA 779/B/15 relating to issues on opportunity, 153C and on merits holds good for the impugned year as well and the asseessee relies on the same. On the issue of approval u/s 153D the assessee relies on the submissions given supra for AY 2005-06. The grounds on interest u/s....
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....sessment Year 2008-09 (ITA No.779/Bang/2015) i. During the course of search it was found that Mrs Snehalatha Singhi entered into raising and processing contracts with mine owners M/s. Karthikeyas Manganese and Iron Ores Pvt Ltd (KMIORE) and Mrs. Ambika Ghorpade (AKG). The processed ore was handed over by Mrs Snehalatha Singhi to the mine owners and the mine owners in turn sell the ore to the entities owned by Mr. DineshKumar Singhi i.e Bharat Mines and Minerals and BMM Ispat. The mines KMIORE belongs to Mr.Karthik M Ghorpade and and his wife Mrs Ambika Ghorpade. The mines have been termed as new mines (NM) and old mines (OM) as per the timing of start of the mining lease of two mines. The profit has been shared between the mine owners and the assessee in the ratio of 70: 30. ii. The seized document reflected sale of iron ore from the above two mines "with" and "without" permits to BMM group. The seized material reflected payment of sale consideration to the mine owners both in cheque and cash from BMM group. The cheque component has been accounted by the mine owners and cash component has not been offered for taxation. The seized document has been scanned and plac....
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....f the Act being expired on the date of search, no assessments can be made without the aid of incriminating material seized from the assessee and relates to the impugned year is incorrect. On plain reading of section 153A of the Act, section does not contemplate either incriminating material found in the course of search or undisclosed income being unearthed in the course of search. As per the law laid down by the Supreme Court in the case of Calcutta Knitwear (2014) 362 ITR 673 (SC), section has to be read in plain and reading new words into the section is not permissible. If the contention of the assessee is to be accepted regarding incriminating material, the same would amount to rewriting of the section 153A of the Act. iii. The above position has also been clearly held by the jurisdictional High Court in the case of Canara Housing (2015) 274 CTR 122 and further being held by the High Court in the case of IBC knowledge Park (2016) 385 ITR 346. The same principle has been reiterated by Delhi High Court in the case of Anilkumar Bhatia (2013) 352 ITR 493. The same principle has been reiterated by various high courts including Kerala High Court in ST. Francis Clay Dé....
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....eme of the chapter dealing with search assessments. 3. LEGALITY OF THE EXPENDITURE ON PURCHASE OF IRON ORE "WITH" AND "WITHOUT"PERMITS i. The Assessing Officer rightly arrived at a conclusion that the payments made for purchase of iron ore without permit is not an allowable expenditure as the same was in violation of the law governing the mining activity and transport of iron ore. It is further found that the consideration received towards sale of iron ore without permit has been inflated against the ore sold with permit and the same is reflected from the seized material placed at page 28, 33 and who4 of the order of assessment. The Explanation to Section 37(1) of the Act is applicable and the same has been rightly disallowed by the Assessing Officer. ii. This Hon'ble Court in the case of M/s. ILC Industries Ltd has clearly held that mining activity carried out without having permissions required under the Mines and Minerals (Development and Regulation)Act (MMDR Act) would amount to illegal activity and the expenditure is not allowable in view of Explanation to section 37(1) of the Act. Attention of this Hon'ble Tribunal is invited to para 35 of the ord....
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.... for Assessment Year 2008-09 does not abate as per the provisions of Sec. 153A of the Act and therefore no reassessment can be made; as has been done in the case on hand. 17.2.1 We have perused the order of assessment for Assessment Year 2008-09 dt.28-3-2013; copy of the material seized as per copy of panchanama (placed at Paper Book pages 176 to 205); containing Annexures of the seized material, at files A/BMMIL/01, A1/BMMIL/01, A2/BMMIL/01 and A3/BMMIL/01 and the copy of the reasons recorded for issue of notice u/ 153A of the Act. From a perusal of the reasons recorded for issue of notice under Section 153A of the Act and the order of assessment for Assessment Year 2008-09, we find that the material utilized for completing the assessment under Section 153A r.w.s. 143(3) of the Act is not based on material seized in the case of the assessee but is on the basis of material seized in the case of other assessees which are (i) A/BSG/01 & A/BSG/02 seized from Bharat S Ghorpade and (ii) A/DKS-1 seized from Dinesh Kumar Singhi. There is no mention of any incriminating material seized from the assessee. In the case on hand the time limit for issue of notice under Section 143(2) of the ....
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....tions 153A, 153B and 153C were inserted by the Finance Act, 2003, with effect from 1/6/2003. They have replaced the post-search block assessment scheme in respect of any search or requisition made after 31/5/2003. Sub-section (i) of Section 153A inter alia deals with assessment in case of search or requisition. It begins with a non obstante clause and states that notwithstanding anything contained in Sections 139, 147, 148, 149, 151 and 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any valuable assets are requisitioned under Section 132A, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, return of income in respect of each assessment year falling within six assessment years referred to in clause (b) of Section 153(1) in the prescribed form and verified in the prescribed manner arid setting forth such other particulars as may be prescribed and the provisions of the Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139. The Assessing Officer can assess or re-assess....
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....ssessment year - (a) no return of income has been furnished by such other person and no notice under sub section (1) of Section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub- section (2) of Section 143 has been served and limitation of serving the notice under sub-section (2) of Section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or valuable assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue notice and assess or reassess total income of such other person of such assessment year in the manner provided in Section 153A. 47. Chapter XIV-B consists of Section 158B to 158BH, inserted with effect from 01/07/1995, deals with special procedure for assessment in search cases. The Finance Act, 1995 inserted Chapter XIV-B In the Act, incorporating a new scheme of block assessment in cases relating to search conducted under Section 132 of the Act or requisitions made under Section 132A after 30/06/1995. Section 158B(b) defines 'undisclo....
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....their undisclosed income found during the search or requisition under Section 132/132A leading to a prima facie tax liability. A special procedure is contemplated in such cases. Such books of accounts, documents or valuable assets are required to be handed over by the Assessing Officer having jurisdiction over the persons searched requisitioned to the assessing officer of a third party on his satisfaction that they belong to a third party before handing over. 49. On a conjoint reading of the aforesaid provisions, it becomes clear that a search can take place only when a concerned officer has information and reason to believe that any person is in possession of any valuable assets, which has not been or would not be disclosed under the Act. In such a case, a search can take place. Following the search, if any books of account, other documents, any valuable assets is or are found in the possession or control of any person in the course of a search, then the books of account or other documents or valuable assets could be seized. Under Section I53A, the satisfaction regarding an inference of liability must be recorded. The Assessing Officer has to issue notice to the assessee ....
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....r grounds 10 to 20 raised on merits, by the assessee. 19. In the result, the assessee's appeal for Assessment Year 2008-09 is partly allowed. Assessee's appeals in ITA Nos.780 & 781/Bang/2015 for A.Ys 2009-10 and 2010-11. 20. Grounds 1 to 6, 8, 9 & 14. 20.1 In these grounds (supra), the assessee has challenged the validity of search (Ground No.7) which we have dismissed (supra) and consequently contended that all subsequent proceedings such as issue of notices under Section 153A of the Act, orders of assessment passed under Section 153A r.w.s. 143(3) of the Act for these assessment years are all bad in law. However, except for raising these grounds, the assessee has not urged these contentions before us in the course of hearings of these appeals. Be that as it may, from a perusal of the record before us and the assessee's own written submissions for Assessment Years 2009-10 and 2010-11 (extracted supra), we find that the notices under Section 153A of the Act issued on 21-9-2010 (copy at page 65 of Paper Book) for Assessment Year 2009-10 and (copy at page 92 of Paper Book) for Assessment Year 2010-11 have been issued well in time. Therefore the assessments....
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....filed its return of income for Assessment Year 2011-12 on 31-1-2012 declaring total income of Rs. 45,63,86,880. The assessment was concluded under Section 153A r.w.s. 143(3) of the Act vide order dt.28-3-2013, wherein the assessee's income was determined at Rs. 130,24,08,180 in view of the following additions / disallowances :- (i) Cash credits : u/s.68 : Rs. 56,40,00,000. (ii) Unaccounted payment / expenditure : Rs. 12,95,46,334. 25.2 Aggrieved by the order of assessment dt.28-3-2013 for Assessment Year 2011-12, the assessee filed an appeal before the CIT (Appeals) - 11, Bangalore. The learned CIT (Appeals) vide the impugned order dt.22-5-2015, allowed the assessee partial relief by - (i) deleting the addition of Rs. 56.40 Crores on account of cash credits u/s.68 of the Act and (ii) upholding the Assessing Officer's disallowance of unaccounted expenditure / payments amounting to Rs. 12,95,46,334. 26. Both, Revenue and the assessee, being aggrieved by the order of the CIT (Appeals) - 11, Bangalore dt.22-5-2015 for Assessment Year 2011-12, have filed cross appeals. Assessee's appeal. 26.1 In the assessee's appeal, t....
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....the grounds raised are as under :- "(i) The learned CIT (Appeals) has erred in deleting the addition made protectively towards unexplained cash credits / unaccounted payments. (ii) For the above and other grounds that may be agitated during the course of appeal, the order of the learned CIT (Appeals) may be set aside and that of the Assessing Officer restored." 27. Before us, apart from putting forth oral arguments, both the assessee and revenue have filed written submissions which are extracted hereunder :- 27.1 Assessee's Submissions (ITA No.1106/Bang/2015 - A.Y. 2011-12) " The assessee for the above assessment year filed its return of income on 28-09-2011 declaring total income of Rs. 45,86,01,060/-. Further, assessee filed the return of income on 'without prejudice' basis on 31-01-2012 declaring total income of Rs. 45,60,86,880/-. The assessee submitted all the details sought for and clarified on the issues raised in the notices. Strangely, the AO has completed the assessment by computing the total income of Rs. 1,30,24,08,180/- after making additions of Rs. 69,35,46,334/-. The assessee is dismayed by the additions especiall....
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....MIORE) and Mrs. Ambika Ghorpade (AKG). The processed ore was handed over by Mrs Snehalatha Singhi to the mine owners and the mine owners in turn sell the ore to the entities owned by Mr. DineshKumar Singhi i.e Bharat Mines and Minerals and BMM Ispat. The mines KMIORE belongs to Mr. Karthik M Ghorpade and his wife Mrs Ambika Ghorpade. The mines have been termed as new mines (NM) and old mines (OM) as per the timing of start of the mining lease of two mines. The profit has been shared between the mine owners and the assessee in the ratio of 70: 30. ii. The seized document reflected sale of iron ore from the above two mines "with" and "without" permits to BMM group. The seized material reflected payment of sale consideration to the mine owners both in cheque and cash from BMM group. The cheque component has been accounted by the mine owners and cash component has not been offered for taxation. The seized document has been scanned and placed at page 5 and 6 of the order of assessment in the case of assessee who for Assessment Year 2008-09. Statements of the Shri Dinesh Kumar Singhi, Mrs Ambika Ghorpade, Sri Kartikeya Ghorpade, Sri Bharat Ghorpade were recorded and the material....
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....ction does not contemplate either incriminating material found in the course of search or undisclosed income being unearthed in the course of search. As per the law laid down by the Supreme Court in the case of Calcutta Knitwear (2014) 362 ITR 673 (SC), section has to be read in plain and reading new words into the section is not permissible. If the contention of the assessee is to be accepted regarding incriminating material, the same would amount to rewriting of the section 153A of the Act. iii. The above position has also been clearly held by the jurisdictional High Court in the case of Canara Housing (2015) 274 CTR 122 and further being held by the High Court in the case of IBC knowledge Park (2016) 385 ITR 346. The same principle has been reiterated by Delhi High Court in the case of Anilkumar Bhatia (2013) 352 ITR 493. The same principle has been reiterated by various high courts including Kerala High Court in ST.Francis Clay Décor Tiles 385 ITR 624 and (2016) 73 Taxman.com 173 (Kerala) in the case of Dr. P. Sasikumar. iv. In view of the judgement of the High Court in the case of Canara Housing, proceedings under section 153A of the Act is not confine....
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....case of the assessee. The submissions for Assessment Year 2008-09 in the case of the assessee is relied on and stated below for convenience. a. The Assessing Officer rightly arrived at a conclusion that the payments made for purchase of iron ore without permit is not an allowable expenditure as the same was in violation of the law governing the mining activity and transport of iron ore. It is further found that the consideration received towards sale of iron ore without permit has been inflated against the ore sold with permit and the same is reflected from the seized material placed at page 28, 33 and who4 of the order of assessment. The Explanation to Section 37(1) of the Act is applicable and the same has been rightly disallowed by the Assessing Officer. b. This Hon'ble Court in the case of M/s.ILC Industries Ltd has clearly held that mining activity carried out without having permissions required under the Mines and Minerals (Development and Regulation)Act (MMDR Act) would amount to illegal activity and the expenditure is not allowable in view of Explanation to section 37(1) of the Act. Attention of this Hon'ble Tribunal is invited to para 35 of the or....
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....ictional High Court in the case of IBC Knowledge Park (P.) Ltd. (supra). This principle equally applies to these assessment years as well since no incriminating material was found and seized. Consequently, in the light of the record before us, we find that aforesaid addition / disallowance of Rs. 12,95,46,334 for this assessment year factually unsustainable and therefore delete the same. Consequently, Ground Nos.10 to 13 for Assessment Year 2011-12 is allowed. 30. Ground No.9 - Set off of Brought Forward Business Loss - Rs. 15,27,79,968. 30.1 In this ground, the assessee assails the action of the authorities below for denying the assessee's claim for set off of brought forward losses of earlier years amounting to Rs. 15,27,74,965. 30.2 We have heard both parties and perused and carefully considered the material on record. On an appraisal of the orders of the authorities below, we find that they have denied the assessee's claim stating that since no loss has been determined in the order of assessment for the earlier year under Section 153A dt. .03.13, the assessee's claim cannot be allowed. However, in our view how and on what basis the Assessing Officer has arr....
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....addition of Rs. 56.40 Crores as unexplained cash credits of the assessee under Section 68 of the Act on protective basis, since he had made the same addition of Rs. 54.60 Crores in the hands of Sri Dinesh Kumar Singhi and Smt. Snehalatha Singhi on substantive basis. On appeal, the learned CIT (Appeals) deleted the aforesaid protective addition of Rs. 56.40 Crores in the assessee's hands; holding as under at para 8 on pages 9 and 10 of the impugned order :- ** ** ** After going through the facts of the case and as held by me in my order of even date in the case of Sri Dinesh Kumar Singhi, vide ITA Nos.ll4/115/DCIT,CC 1(2)/CIT(A)-VI/BNG/2013-2014 and in the case of Smt Snehalatha Singhi, vide ITA Nos.l06/107/DCIT,CC 1(2)/CIT(A)-VI/BNG/2013-2014 for A.Ys 2010-11 and 2011-12, where I have upheld the stand of the Assessing Officer that the said amounts are clearly investments by Smt Snehalatha Singhi and her husband, Sri Dinesh Kumar Singhi, I uphold the stand of the As....
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....e above issued and subscribed share capital. The shares were purchased from various parties by the assessee as listed in page 2 to 4 of the assessment order. The assessee in total has acquired 60% of the total shares issued and subscribed. In view of the acquisition of 100% of the issued and subscribed share capital of the above company, took over reserves and surplus of the above company at Rs. 125,40,64,500/- as on 31/3/2010. ii. Similarly another company by name M/s.Panchamukhi Properties Private Limited (PPPL) Kolkatta issued and subscribed shares of Rs. 10 per share aggregating to Rs. 2,22,91,950/-. The assessee purchased 60% of the shares and his wife purchased remaining 40% of the issued and subscribed shares. The details are tabulated in page 5 and 6 of the assessment order. In view of the acquisition of 100% of the issued and subscribed share capital of the above company, took over reserves and surplus of the above company at Rs. 101,39,38,050/- as on 31/3/2010. iii. The close relatives of the assessee acquired 50 shares out of 22,29,195 shares. iv. The assessee and his wife by acquiring hundred percent of shares by paying a sum of Rs. 1,99,98,70....
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....ssee did not cooperate in providing details of the directors of the above said to companies, the Department obtained the same from the ROC and it was found that Ms.Soma Dutta, Mr.Ranjeet Singh Kothari and Nemichand Jain are directors of the PPPL and Mr.Radhakant Tiwari and Ms.Soma Dutt are directors of BPO. The assessee and his wife were also directors in both the companies during the Assessment Year 2010-11. The enquiries revealed that some of the directors or employees of Mr.Sagarmal Nahata was arranging funds at Kolkatta. One of the director was found to be watchmen. The directors were not residing at the addresses provided. The signed blank cheques of the companies were found in the possession of Mr.Sagarmal Nahata. x. In view of the disproportionate investment of acquiring to companies worth Rs. 226 crores by paying a sum of Rs. 4.02 crores the circumstantial evidence was considered by the Assessing Officer. At the time of search a document containing notings regarding payments made to various parties including Kolkatta a/c was seized from the residence of the assessee. The details reflected at page 18 of the assessment order. In total sum of Rs. 5,02,00,000/- has bee....
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....n or during the assessment proceedings would further justify the devise adopted by the assessee for investing his own unaccounted money into the subsidiaries. A. REPLY TO ASSESSEE CONTENTIONS i. The contention of the assessee that the existence of BPO and PPPL cannot be doubted in view of the long existence before the assessee acquired the shares and the bank accounts maintained by the said companies. The failure on the part of the assessee being holder of 60% of the shares and 40% of shares by his wife to identify the genuiness of the company and also the directors of the company would demonstrate the object of the said two companies owned by the assessee and his wife. The Hon'ble Supreme Court in the case of Vodafone has clearly held that the companies without any business being carried out, being used as a conduit for device for avoidance of tax to be treated as shell companies and direct nexus to be created. ii. In view of the seized material reflecting payments towards Kolkatta account and the same amounts being reflected in BMM Ispat private limited and the same amounts being reflected as investment by the BPO and PPPL in the group companies of ....
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....s Panchmukhi Properties Pvt. Ltd., Kolkata, totaling to Rs. 56.40 croers routed through normal banking channels. Investigations by the Departments authorities below reveal that Shri Dinesh Kumar Singhi and Snehalatha Singhi are owners and 100% share holders of the aforesaid two companies who introduced the share application money in the assessee company and it was in this context that the investments in the assessee company and its 4 group companies i.e M/s BMM Ltd., M/s BMM Cements Ltd., M/s Ranjitpura Infrastructure Pvt. Ltd., and M/s Singhi Holdings Pvt. Ltd., was brought to tax in the hands of Smt. Snehalatha Singhi and Shri Dinesh Kumar Singhi in the ratio of their share holding in the two aforesaid companies M/s BPO Finance & Investments Pvt. Ltd., and M/s Panchmukhi Properties Pvt. Ltd., on substantive basis u/s 69 of the Act. It is in this factual matrix of the case that the ld CIT(A) deleted the protective additions made u/s 68 in the case on hand. 33.5.2 With regard to the issue of share application money while dismissing the SLP filed by the Revenue, the Hon'ble Apex Court in the case of CIT v. Lovely Exports (P.) Ltd. [2018] 216 CTR 195 has observed that:- ....