TaxTMI 
TaxTMI 
2018 (3) TMI 1618
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame in all the appeals. Therefore, for the purpose of disposal of all the Departmental Appeals, the facts are taken from A.Y. 2005-2006 in ITA.No.6589/Del./2013. ITA.No.6589/Del./2013 - A.Y. 2005-2006 : 3. Briefly, the facts of the case are that search and seizure operation under section 132 of the I.T. Act, was conducted by Directorate of Intelligence on 26th March, 2010 in Aseem Gupta Group of Cases at various premises of Aseem Kumar Gupta, C.A, who was, allegedly, provided accommodation entries to several beneficiaries. Search and survey covered the premises of several beneficiaries including that of the assessee. The A.O. issued notice under section 153A of the I.T. Act. In response thereto, assessee filed return for the assessment year under appeal, declaring income of Rs. 3,929/- The assessee had earlier filed return under section 139 of the I.T. Act declaring income of Rs. 3,929/- which was processed under section 143(1) of the I.T. Act. The A.O. noted that assessee has shown receipt of sum of Rs. 10,13,900/- as share capital and Rs. 1,41,94,600/- as share premium. The assessee was asked to file evidences to establish the identity and capacity of the persons who had gi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....copy of the Board Resolution, Copy of Form No.2, Copy of company master data of all the investors, copy of PAN, ITR, Certificate of Incorporation, Bank Statements, Share Application Form with resolution of all the Investors. The assessee relied upon several decisions in support of the contention that additional evidence may be admitted. 4.1. The Ld. CIT(A) sent these additional evidences to the A.O. for his examination and to offer his comments. The A.O. filed his remand report which is reproduced in the impugned appellate order, in which he has briefly explained that assessee attended before him in the remand proceedings with all the supporting documents on which assessee relied upon. The assessee produced the books of account and supporting evidences. It was explained that earlier notices were also issued, which were not complied with by the assessee. The assessee was provided copy of seized material seized from the O/o. Shri Aseem Kumar Gupta. The assessee's letter dated 15th December, 2011, seeking adjournment is available on record. The A.O, therefore, objected to the filing of the additional evidences. Reply of assessee sent through speed post on 23.12.2011 has been receiv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his contention. The Ld. CIT(A) however, noted that search was conducted in the case of the assessee and its Directors. Therefore, Section 153A is applicable to frame the assessment against the searched person under section 153A of the I.T. Act. The Ld. CIT(A) following the decision of the Delhi High Court in the case of Anil Kumar Bhatia, rejected the contention of assessee. The Ld. CIT(A) also noted that after search and seizure operation, it is mandatory to initiate proceedings under section 153A of the I.T. Act. This ground of appeal of assessee was dismissed by the Ld. CIT(A). 5. As regards addition of Rs. 1,52,86,500 made under section 68 of the I.T. Act, the assessee filed detailed written submissions, supported by evidence and case law to explain that addition on merit is wholly unjustified. The written submissions of the assessee were reproduced in the appellate order, which reads as under : 15. In the course of appeal proceedings the A.R of the appellant filed the following written submissions: "Ld. CIT(A). AO has made an addition of Rs. 10,13,900/- as unexplained share capital and further a sum of Rs. 1,41,94,600/- on account of unexplained premium u/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he proves the identity of the creditors/share applicants by either furnishing their PAN or income-tax assessment number and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue-Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68- Revenue has all the power and wherewithal to trace any person- Moreover, it is settled law that the assessee need not to prove the 'source of source ' -In the instant case, the Tribunal has confirmed the order of the CIT(A) deleting the impugned addition holding that the assessee has been able to prove the identity of the share applicants and the share application money has been received by way of account payee cheques-No question of law arises. 3. CIT vs. Winstral Petrochemicals (P) Ltd.: (2011) 330 ITR 603 Income-Case credit-Share application money- Assessee company was found to have received the money through banking channels-Assessee company also furnished written confirmations from the applicant companies, copie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....along with its letter dated 23.12.2011(PB 39-41) which, it appears, has not been considered by the Id. A.0 even though the assessment order has been passed on 23.12.2011 only though it was served on 29.12.2011. It may please be appreciated that assessee along with other groups of companies and their directors were being represented by the same AR, namely Mr. Ram Avtar Agarwal and because of simultaneous proceeding being undertaken and AR being one, there was some delay in furnishing the information. But the last letter was served on the assessee in the evening of a day prior to the date of hearing and on that adjournment was sought in writing and thereafter the above letter dated 23.12.2011 was filed before Ld. AO. 1. Ld.AO has mentioned that assessee had not furnished the justification for premium. In reply, it is submitted that shares were offered at premium in view of the fact that the appellant company was having very good orders in hand and was having very bright future and i.e. why the Board passed a resolution a copy of which was filed to Ld. A.0. taking into account these factors (PB 45). In any case, the issuance of shares at a price is the prero....
X X X X Extracts X X X X
X X X X Extracts X X X X
....td). The AO made the addition as the assessee failed to filed any evidence to establish the identity and capacity of persons who had given the share capital and share premium, and failed to establish the genuineness of the transactions. With reply dated 23.12.2011, assessee furnished following evidences: 7) Copy of confirmation of share holder with their PAN and place of assessment. 8) Copy of bank statement 9) Copy of form No. 2 filed with ROC 10) Copy of Resolution regarding allotment of shares. 11) Details of shares holders, giving the latest address and other particulars downloaded from the site of ROC. 12) Copy of ITR of the subscribers to share capital for Asstt. Year 11-12 in respect of M/s. KMC Portfolio Pvt. Ltd. and M/s. Chotti Leasing & Finance (P) Ltd., and for AY2007-08 in the case of M/s. Moderate Credit Corporation Limited. The assessee has furnished above mentioned documents to prove the identity, capacity, genuineness of the transactions, and creditworthiness of parties. However, the status of these companies is still doubtful in view of the nature of documents submitted during the rem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le u/s 153A/153C, and M/s KMC Portfolio Pvt Ltd, is though apparently not related to Shri Aseem Kumar Gupta, however nature of the transactions in the bank account and papers submitted are apparently similar." Therefore, on the basis of such contradictory observations it is not understood as to how the AO could justify his findings in the assessment order. 16.2. On perusal of the assessment record, I find that the appellant had also filed these additional evidences on 26.12.2011 before the Assessing Officer vide its letter dated 23.12.2011. However, since the assessment order was passed on 23.12.2011, the Assessing Officer did not consider these evidences filed before him on 28.12.2011. 16.3. The appellant has filed the following documents as additional evidences which the Assessing Officer has not examined during the course of assessment proceedings : (i) Copies of confirmations of accounts of M/s KMC Portfolio (P) Ltd, M/s Chotti Leasing & Finance (P) Ltd and M/s Moderate Credit (P) Ltd. (ii) Copy of Board Resolution. (iii) Copy of Form No.2 filed with ROC. (iv) Copy of Company master data of M/s KMC Portfolio (P) Ltd, M/s Cho....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Delhi -110 034. AABCC-8851-H 37190 10/- at Premium 3. Suma Finance & Investment Pvt. Ltd., (presently known as Moderate Credit Corporation Ltd.) 7-B, 1st Floor, Dacres Lane, Kolkata. AAAACS-0309-P 5000 10/- at Premium Further resolved that sh. R.P. Singh a director of the company be & hereby authorize to issue the share certificates under the common seal of the company to the share holder name as above, who have been allotted the share of the company. Certified True Copy For Ravnet Solutions Pvt. Ltd., (Director/Auth Signatory)" 16.7. In instant case, I find that the Assessing Officer has not brought on record any material or cogent evidence to substantiate his observations and findings given in the assessment order. Therefore, such observations and findings are not only vague but are based on mere surmises and conjecture. The Assessing officer has not brought on record any adverse material against the submissions made by the appellant and documentary evidence placed on record. Before treating that the credit entries representing share capital and share premium as un-explained and addin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... falsity of the appellant. When the AO is satisfied with the evidence filed by the appellant and if the AO did not bother to make further enquiries independently regarding the share subscribers, it cannot be said that the appellant faulted and make an addition. 16.10. Therefore, in view of the above discussion and considering the facts of the case as also the various case laws relied upon by the appellant, I hold that the Assessing Officer was not justified in treating the amount of share capital and share premium as unexplained credits u/s 68 of the I.T. Act, 1961. Accordingly, the addition of Rs. 1,52,08,500/- (Rs.47,90,000 + Rs. 4,30,31,800) made by the Assessing Officer is deleted. This ground of appeal is allowed." 5.2. The Ld. CIT(A) similarly deleted additions on merits in remaining assessment years in appeals. 6. The assessee, in all the Departmental Appeals, moved petition under Rule 27 of the Appellate Tribunal Rules, seeking permission of the Tribunal to support the order of the Ld. CIT(A) on the ground that "in any case and in view of the matter and having regard to the facts and circumstances of the case, the Ld. CIT(A) ought to have deleted the addition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ject to the restriction that even if it is accepted, it should be given effect to only for the purpose of sustaining the order in appeal and dismissing the appeal and cannot be made use of, to disturb or to set aside, the order in favour of the appellant [B.R. Bamasi vs. CIT (1972) 83 ITR 223 (Bom) ; TC8R. 911] relied on". 6.3. Decision of Hon'ble Gujarat High Court in the case of Dahod Sahakari Kharid Vechan Sangh Ltd., vs. CIT (2006) 282 ITR 321 (Guj.) in which following question of Law was referred:- 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that it was necessary for assessee to file cross objection in spite of fully succeeding in appeal and therefore, it cannot challenge the finding by the CIT(A) of assessee being guilty of concealment of income and/or furnishing inaccurate particulars? 6.4. The findings of the Hon'ble Gujarat High Court on this question in paras 17 to 21 of the judgment reads as under : "17. Taking up the second issue first. The Tribunal has committed an error in law in holding that the assessee having not filed cross objection against findings adverse to the assessee in the o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erpret the provision in such manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected Rules and an interpretation which makes other connected provisions otiose has to be avoided. Rule 27 of the Tribunal Rules is clear and unambiguous. The right granted to the respondent by the said Rule cannot be taken away by the Tribunal by referring to provisions of section 253(4) of the Act. The Tribunal was, therefore, in error in holding that the finding recorded by the Commissioner (Appeals) remained unchallenged since the assessee had not filed cross objections. 21. Accordingly, the second question (proposed question No. 3) is answered in the negative i.e., in favour of the assessee and against the revenue." 6.5. Decision of ITAT, Delhi Tribunal in the case of ITO, Ward-11(6), New Delhi vs. Smt. Gurinder Kaur (2006) 102 ITD 189 (Del.) in which, in para-11 of the order, it was held as under: "11. Even de hors Rule 27 of the Appellate Tribunal Rules, it is open to the respondent in an appeal before the Tribunal to raise a new ground in defence of the order appealed against. It has been so held by the Su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appeal. This was also a case of the respondent. To the same effect are the decisions of the Allahabad, Gauhati, Kerala and Gujarat High Courts cited on behalf of the assessee. Therefore, whether it is the appellant or the respondent before the Tribunal, new points or contentions can be raised provided they did not involve investigation into facts (as contrasted with the record) and that an opportunity is given to the other side to meet the contentions. Applying these principles to the present case, we overrule the preliminary objection of the Ld. Sr. DR and permit the assessee to raise the new points before us as a respondent." 6.6. The Learned Counsel for the Assessee on merits of such contention relied upon the decision of jurisdictional Delhi High Court in the case of CIT (Central)-III vs. Kabul Chawla (2016) 380 ITR 573 (Del.) in which it was held as under : "Completed assessments can be interfered with by the A.O. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the impugned addition under section 68 of the I.T. Act and no assessment was pending on the date of the search, therefore, no addition could be made on merits under section 153A of the I.T. Act, 1961. Ld. CIT(A) on this ground should have deleted the addition. 7. The Ld. D.R. on the other hand, objected to the admission of the petition under Rule 27 of the Appellate Tribunal Rules. The Ld. D.R. submitted that there was a search in the case of the assessee on 26th March, 2010 and in the case of Shri Aseem Kumar Gupta Group of cases who was running accommodation entry racket. Notice under section 153A was issued to the assessee before completion of the assessment and addition was made under section 68 of the I.T. Act for accommodation entry of share application money. The Ld. CIT(A) dismissed this ground of appeal of the assessee. The assessee did not file any cross-appeal or the cross objection. The assessee is not supporting the order of the Ld. CIT(A) but attacking the order of the Ld. CIT(A) which is not permissible. The Ld. D.R. relied upon the order of the ITAT, Ahmedabad Bench in the case of DCIT vs. Sandeep M. Patel (2012) 137 ITD 104 (Ahd.) in which it was held that "Rul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under section 143(1) of the I.T. Act. Therefore, no assessment was pending prior to the search. The assessment was completed under section 143(1) of the I.T. Act. The Ld. CIT(A) in the impugned order held that 'once search is initiated, provisions of Section 153A are applicable for framing assessment in the case of such person.' The Hon'ble jurisdictional Delhi High Court in the case of CIT vs. Kabul Chawla (supra), considering the conspectus of Section 153A in the light of Law explained in various judgments, decided the legal position and one of them was that "once a search takes place under section 132, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place." To that extent, there is no dispute as regards the legal position is concerned that assessments are to be framed under section 153A of the I.T. Act. However, the Hon'ble Delhi High Court at the end decided that "completed assessments can be interfered by the A.O. while making assessment under section 153A only on the basis of some incrim....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Appellate Tribunal Rules provides - "The respondent, though he may not have appealed, may support of the order appealed against on any of the grounds decided against him." In the present case, the assessee is a respondent and have not filed any cross-appeal or cross objection. The assessee wanted to support the order of the Ld. CIT(A) on the ground which is decided against him because the Ld. CIT(A) decided this issue against the assessee on the ground that search under section 132 of the Act, have been conducted in the case of the assessee. Even if search have been conducted in the case of the assessee under section 132 of the I.T. Act, the A.O. could proceed under section 153A of the I.T. Act. But, completed assessment could be interfered with by the A.O. while making assessment under section 153A only on the basis of the recovery of incriminating material found during the course of search. It is, therefore, not a case set-up by the Revenue that any incriminating material was found during the course of search so as to make the addition under section 68 of the I.T. Act. No new facts are to be investigated. The assessee in the present petition sought to support order of Ld.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....should have conducted enquiry and relied on judgment of jurisdictional Delhi High Court in the case of Jansampark Advertising and Marketing Pvt. Ltd., in ITA.No.525 of 2015 dated 11.03.2015. 10. On the other hand, Learned Counsel for the Assessee, reiterated the submissions made before the authorities below and submitted that assessee produced sufficient evidence before the authorities below on which remand report from the A.O. was called for. The A.O. did not object to the evidences produced by the assessee. The A.O. accepted that Investors are not related to Shri Aseem Kumar Gupta. The A.O. did not summon any of the Investor and nothing was found against the assessee during the course of search. The Learned Counsel for the Assessee relied upon the following decisions of the Delhi High Court on the proposition that addition have been rightly deleted by the Ld. CIT(A). 10.1. Decision of the Hon'ble jurisdictional Delhi High Court in the case of CIT vs. Gangeshwari Metal Pvt. Ltd., (2014) 361 ITR 10 (Del.) (HC) in which it was held as under : "It was held that where complete particulars of share applicants are furnished to the A.O. and the A.O. has not conducted any e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... s.68 can be invoked only where assessee offers no explanation at all or explanation offered is unsatisfactory, and addition thereunder can be made only on that condition." 10.5 Decision of the Hon'ble jurisdictional Delhi High Court in the case of CIT vs. Fair Finvest Ltd., (2013) 357 ITR 146 (Del.) (HC) in which it was held as under : "The A.O. cannot make any addition in respect of share application money without satisfying himself as to the veracity and genuineness of the transaction by examining the bank accounts or the accounts of the companies who had applied for shares." 10.6. Decision of the Hon'ble jurisdictional Delhi High Court in the case of CIT vs. Oasis Hospitalities (P) Ltd., (2011) 333 ITR 119 (Del.) (HC) in which it was held as under : "Income - Cash credit - Share application money - Though the share applicants were not produced in spite of specific direction of the AO, assessee company has filed copies of PAN, acknowledgement of returns of the share applicants and their bank account statements of the relevant period when the cheques were cleared - Thus, primary onus was discharged by the assessee - Assessee was not confront....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the additional evidences by holding that no proper opportunity have been given to assessee at the assessment stage to produce evidences. The Revenue is not in appeal to challenge these findings of the Ld. CIT(A) in admitting the additional evidences. It, therefore, stands proved on record that assessee was prevented by sufficient cause in not producing required evidences before A.O. because no sufficient time was given to the assessee at assessment stage. The assessee later on produced all these additional evidences before Ld. CIT(A) which have been examined by the A.O. as per the directions of the Ld. CIT(A). The A.O. did not point-out any defect or error in the evidences produced at the appellate stage. Thus, all these additional evidences have been examined by the A.O. which clearly prove the identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. Even the A.O. in the remand report submitted that two of the Investors have been assessed in his Circle under section 153A/153C of the I.T. Act and the Investors are apparently not related to Shri Aseem Kumar Gupta. The admission of the A.O. therefore, clearly show that assessee is not benefi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Kamdhenu Steel & Alloys Ltd., & Others 361 ITR 220 in which it was held as under : "Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be discarded or it is proved that it has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under s.68; AO failed to carry his suspicion to logical conclusion by further investigation and therefore addition under s.68 was not sustainable." 11.3. Decision of the Hon'ble jurisdictional Delhi High Court in the case of CIT vs. Laxman Industrial Resources Pvt. Ltd., ITA.No.169 of 2017 dated 14th March, 2017, in which it was held as under : "The CIT(A) took note of the material filed by the assessee and provided opportunity to the AO in Remand proceedings. The AO merely objected to the material furnished but did not undertake any verification. The CIT(A) deleted the addition by relying upon the decision of the Hon'ble Apex Court in the cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of CIT vs. (i) Dwarakadhish Investment P. Ltd., (ITA.No. 911 of 2010) and (ii) Dwarkadhish Capital P. Ltd., (ITA.No.913 of 2010) (2011) 330 ITR 298 (Del.) (HC), in which it was held as under : "In any matter, the onus of proof is not a static one. Though in section 68 of the Income Tax Act, 1961, the initial burden of proof lies on the assesses yet once he proves the identity of the creditors/share applicants by either furnishing their PAN number or income-tax assessment number and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue. Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke section 68. One must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the "source of source". The assessee-company was engaged in the business of financing and trading of shares. For the assessment year 2001-02 on scrutiny of accounts, the Assessing Officer....