TaxTMI 
TaxTMI 
2018 (3) TMI 1672
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....5.00,000 (AY 2012- 13) in the hands of the assessee u/s 68 of the Act which represented sale proceeds received against sale of shares done in the normal course of business. 3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in facts and in law as unsustainable evidences/statements collected without the knowledge or intimation to the assessee were relied upon; no opportunity of cross examination was provided to the assessee which is in defiance of the settled principles of justice based on judicial judgment of the Apex Court in the case of Andaman Timber Industries vs CCE. 4. That the order of the learned CIT(A) being not based on the facts of the case of the appellant and being contrary to law, should hence be quashed and the appellant company be given such relief or reliefs as prayed for. 5. That the ld CIT(A) erred in relying upon the statement of third parties without providing copy of the said statement and without according opportunity of cross examination to the appellant although the impugned statements could not have been relied upon in proceedings u/s.153A of the Act when no incriminating document was found in the....
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.... AXIS BANK 910020019769310 02-08-2010 SCOPE VYAPAR, Harman Hire Purchase Pvt Ltd(Sh) 5000000 AXIS SANK 910020019769310 22-11-2010 SCOPE VYAPARSarwati Vincom Ltd.(Sh) 2000000 Axis Bank-411010200004541 08-05-2010 SCOPE, Alfha Properties P Ltd(SH) 5000000 AXIS BANK 910020019769310 12-11-2010 SCOPE, Astha Industeries P Ltd(SH) 2000000 Axis Bank-411010200004541 05-05-2010 Signet Vinimay Pvt Ltd 5000000 Axis Bank -411010200004541 09-06-2010 Signet Vinimay Pvt Ltd 2500000 Axis Bank *411010200004541 13-05-2010 Signet Vinimay Pvt Ltd 5000000 AXIS BANK 910020019769310 10-07-2010 Signet Vinimay Pvt Ltd 5000000 Axis Bank -411010200004541 29-04-2010 SIGNET, Country Wide Tradecom Pvt Ltd(Sh) 4200000 AXIS BANK 910020019769310 25-08-2010 SIGNET, Country Wide Tradecom Pvt Ltd(Sh) 1800000 Axis Bank -411010200004541 23-04-2010 SIGNET.Country Wide Tradecom Pvt Ltd(Sh) 2000000 AXIS BANK 910020019769310 17-07-2010 Srijan Vyapar Pvt Ltd. 5000000 AXIS BANK 910020019769310 29-12-2010 Srijan Vyapar Pvt Ltd. 3000000 Axis Bank -411010200004541 21-04-2....
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....group got investment of Rs. 10 crores. On page 101 of the said SGINDIA-01, the new shareholders of Midas Capital Pvt. Ltd have been listed. This amount was used to bring unsecured loan in the group companies. The statement of entry operator is annexed below, wherein he detailed the modus operandi as to how the unaccounted cash is laundered and brought back into the books of accounts as share capital. 6. The transactions have been made in FY 2010-11. Page 85 of SGINDIA-01, list out the working of acquisition of the shares. Page 70-83 of the same document, list out various share entries obtained and bank transactions for the same. Page 69 is the bill for transfer of shares accompanied by share transfer form attached therewith. The share transfer forms are incomplete containing only the name of previous shareholders and signature of one of the Directors of the company. This is the common modus operandi of Kolkata based shell companies. Here, unaccounted cash is routed through several layers to reach the intended beneficiary. Finally, when the beneficiary so desires, shares of the company giving the entry are transferred to him at a discount. 7. It is observed by the Assessing Of....
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....nsferred to Midas Capital Pvt. Ltd and Uniworth Agencies Pvt. Ltd." Pradeep Garg: "Q.6 what work is done by Midas Capital Pvt. Ltd and uniworth Agencies Pvt.Ltd. Ans. Sir, actually they all are Jamakharchi Companies. I have signed all the papers as per direction of Raj KumarTharad. Q.8 Please explain the source of funds used for raising share capital in your companies ? Ans. Source of fund for enhancing share capital is unaccounted money of beneficiaries, we used to get cash from beneficiaries first, then we hand it over to people for depositing the cash in various accounts and then transferring it to my companies through cheques. We used to deposit the cheques in my companies for raising share capital. Finally, Raj kumar Tharad used to sell these companies to beneficiaries in lieu of commission. Q.10 Please explain to whom you have sold company of Midas Capital Pvt. Ltd and Uniworth Agencies Pvt. Ltd. and what was the modus operandi? Ans;-These companies were taken over by one Mr. Sunil Gupta of Cuttack, Odisha. The companies were transferred by way of share transfer to Sh. Sunil Gupta and his group companies. Sh. Suni....
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.... this assessee company at the purchase value. The same is clear from a look at the above reproduced data tables. SIGNET VINIMAY PRIVATE LIMITED CIN; U51109WB2008PTC127514 23/1, Principal Khudiram BHose Road, Kolkata-700006 Name of shareholder Type of share No.of share Per share Abhijiet Basu Equity 5000 10/- Pradip Dey Equity 5000 10/- Apex Commotrade P.Ltd. Equity 300 10/- SKM Travele Pvt Ltd. Equity 300 10/- Total: 10600 Mr Abhiset Basu was one of the directors of the assessee M/s. Midas Capital Pvt Ltd. Apart from this, he was also one of the directors of Winall Vinimay Pvt Ltd., and Runicha Merchants Pvt Ltd. who are again shareholders and purchasers of shares of this assessee company. Statement of Sri Abhisej Basu, S/O. Sri Dulal Narayan Basu, aged about 49 years, resident of 2, Indralok, Sodepur, Nilachal Apartment, 3rd floor, Flat No. 3B, Kolkata-700110, u/s.131 of the I.T.Act, 1961 on 15.1.2014 at the office chamber of Dy.Director of Income tax (Inv) Unit-IV91), Kolkata, located at 5th floor, Aayakar Bhavan, Annexe Building, P-13, Chowrin....
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....ompanies/concerns? Ans. I can't explain the source of funds of all these concerns. However, Sri Raj Kumar Tharad, being the accommodation entry operator can explain the motives for the same. Q.15. Are you aware of the business activities of the companies in which you are one of the directors? Ans. So far my knowledge goes all the concerns or companies do not have any actual business activity and are used only for providing, accommodation entries to various beneficiaries. However, Shri Raj Kumar Tharad being the accommodation entry operator will be explains the activities for the same. Q.16. Do you want to add/edot/alter/delete/modify any portion of the statement deposed above? Ans. I have gone through the above statement and confirm that the same has been identified completely and exactly as per my income. I have given the statement voluntarily without pressures, fear or coercion and with full satisfaction. In case I retract from this statement, I will be liable for prosecution in any court of under the provisions of Indian Penal code. B.4.0n this background assessee was required to furnish details of the alleged purchaser compa....
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....Srijan Vyapar Pvt Ltd: No reply was submitted by this company to the letter u/s 133(6). On examination of bank account it was found that this company is engaged in financial transaction with other paper companies like Winall Vinimay Pvt Ltd and Concord Commotrade Pvt. Ltd, who have made investment in SGBL group of companies. Both of these companies have been found by the investigation wing of the Kolkata as engaged in accommodation entry business. iii. Signet Vinimay Pvt Ltd: Although this assessee was required to submit the its audit report and sources of investment, nothing specific was replied except the acknowledgement of IT return and corresponding part of the bank ledger indicating the transfer of money. The Director of this company Mr. Abhset Basu was found by the investigation wing of the Kolkata as a involved in the business providing accommodation entry. Mr Basu was one of the directors of the assessee company M/s Midas Capita! Pvt Ltd. Detail discussion has been made in this order. iv. Winall Vinimay Pvt Ltd: Although this assessee was required to submit the its audit report and sources of investment, nothing specific was replied except the acknowledgem....
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.... run by them. They are only involved in receiving investment from certain similar companies and making investment as share capital in other companies. There is no normal business rationale involved in such transactions. In the above context you are requested to show cause as to why the sales proceeds claimed to have been received from the sales of shares should not be treated as not genuine and thus are unexplained. Your case is fixed for hearing on 11/11/2016 and you are requested to appear along with your explanation on above and all the books of account and documents in support of your return of income. You are also requested to bring the directors of the purchaser companies for examination at this end. Your sincere co-operation is highly solicited in this regard." D: Submission of the Assessee: "Your honor has been pleased to issue the above cited notice directing the assessee company to furnish various details specified in the notice. In response to the same the humble submission of the assessee is as follows. CAPITAL INTRODUCTION: * Your honour, the alleged share capital of Rs. 10,57,45,300 was neither introduced nor raise....
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....So as to enable the assessee to file its replay. Also we request your honour to provide an opportunity of confrontation with Mr. Tharad and Garg for necessary cross examination by the assessee. * Neither Sunil Gupta has. ever seen both Mr. Tharad and Garg nor any cash was given to them. However a brief detail regarding take over is specified hear under. * The assesses company" Midas Capital Pvt Ltd" is a non banking finance company incorporated in the year 1995. Copy of master data is enclosed herewith. * Since this is a NBFC the required registration from Reserve Bank of India has also obtained on dt. 10/07/2003. Copy of RBI regd. Certificated enclosed herewith. * The company was carrying on its business as per law since is incorporation. * Takeover, acquisition, merger are very common part of corporate business. Various statutory authorities of Govt. of India are duly regulating aforesaid activities. A definite procedure was also there in companies act for such takeover, merger etc. * As per the said procedure, SCBL CROUP i.e Sriniwas Gupta and family has acquired the company in the year 2010. * Beside the other legal....
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....e received and shares are issued, it is not as if the share- subscribers and the assessee-company lose touch with each other and become incommunicado. Calls due on the shares have to be paid; if dividends are declared, the warrants have to be sent to the shareholders. It is continuing relationship. The entire transaction is pre-arranged and the assessee company is also a party to that. The share- subscribers in the present case have each invested substantial amounts in the assessee's shares as well as in its group companies. All of them are themselves private limited companies. The assessee-company received the share money; when the Assessee was requested to produce the Directors of the subscriber companies, assessee did not comply. So far as creditworthiness of the share subscribers is concerned, mere furnishing of the copies of the bank Accounts of the subscribers is not sufficient to prove their creditworthiness. There must be some positive evidence to show the nature and source of the resources of the share subscriber himself. If the assessee was serious enough to establish its case, it ought to have produced the principal officers of the subscribing companies before the As....
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....rosanct. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence. The same view had been adopted in the case of: the Hon'ble Delhi High Court has cited the case of ClT Vs Durqa Prasad More (1971) 82 ITR 540 and stated that: - "It is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. in a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or token by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to ....
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.... the books of the assessee company is unexplained and added to the returned income of the assessee u/s.68 of the Act. 12. On appeal, the CIT(A) confirmed the addition by observing as under: "8.3 I have carefully examined the assessment order and submissions of the appellant. I find that an amount of Rs. 9,94,50,000/- was received from the persons mentioned on page-2 of the assessment order. The onus to prove bonafides of these transactions and of all the persons concerned is squarely on the appellant. The assessing officer has specifically asked the appellant to produce directors of the persons who have given money to the appellant, for verification of genuineness of the transaction and identity/creditworthiness of the creditors. The appellant could not produce even a single person. It is also seen from the page-3 of assessment order that earlier share holders had purchased the shares of the appellant at Rs. 100/-. These shares have been purchased by the group companies of the appellant for Rs. 5/- and at a total consideration of Rs. 55,00,000/- on 22.05.2010 i.e. in the same financial year. Naturally this has been done to exercise complete control over the unaccounted ....
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....e to sell the shares just within a years' time at Rs. 486.55 Ps and Rs. 485.65 Ps per share. The broker through whom the shares were sold by the assessee did not respond to the assessing officer's letter seeking the names, addresses and the bank accounts of the persons that had purchased the shares sold by the assessee. The authorities have recorded a clear finding of fact that the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital, gain. While so observing, the authorities held that the assessee had not tendered cogent evidence to explain as to how the shares in an unknown company worth Rs. 5/- of a little known company would jump from Rs. 5/- to Rs. 485/-. The findings recorded by the authorities are pure findings of facts based on a proper appreciation of the material on record. While recording the said findings, the authorities have followed the tests laid down by the Hon'ble Supreme Court and this Court in several decisions. The findings do not give rise to any substantial question of law. " 8.5 It is my considered finding that the appellant has failed to prove the genuineness o....
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.... other 10 names in the panchanama. In the said search premises, certain tally accounts of the regular accounts of the Assessee Company were found. All these accounts were very much the regular accounts of the Assessee, all duly recorded and disclosed as such in the Regular Returns of the Assessee Company. 4. Basing upon the said panchanama, proceeding u/s. 153A was initiated and notice u/s.153A for both the years on 19.2.2016 declaring the same income as declared in the original return of income. 5. Notice u/s 143(2) and 142(1) was served on the Assessee company. The Assessee complied with the said notices however but in protest. The Assessee also filed a detailed submission before the learned AO objecting that the search proceeding was not as per law in the absence of any incriminating seized material found during the course against the Assessee, more so, when no proceedings were pending for the subject assessment years. 6. The learned AO was not satisfied with the submissions made by the Assessee and opined that proceedings u/s 153 A of the Act has been rightly initiated in its case.He further held that the Assessee company is not able to prove the iden....
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....hich were completed assessment years and no proceedings were pending. Notice dated 10.9.2015 u/s.153A of the Act was issued to the assessee. Please note that there was no search proceedings conducted at the registered office of assessee company at Room No.1, G, 1st floor, 11, Pollack St. Kolkata-700001, West Bengal. The assessee company has no other office. Thus, on no basis whatsoever, in an automatic manner, with an absolute predetermined and prejudiced mind, without any jurisdiction, in the total absence of any incriminating material, solely since the name of the Assessee company was mentioned in the Panchnama drawn in the course of proceedings u/s 132 of the Act, impugned proceeding u/s 153A of the Act was initiated on the Assessee company. Assessment proceedings were initiated and Notice u/s 142(1) and 143(2) of the Act for the A.Y. 11-12 and 12-13 were duly served on the appellant alongwith detailed questionnaire. It is here again mentioned by the assessee that the said notices contained no reference to any incriminating seized material and to no adverse finding in the case of the assessee which resulted out of the alleged search conducted on the ap....
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....ach assessment year falling within such six assessment years : Provided further that assessment or reassessment, 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. **(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner : Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the asse....
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...., the assessment was to be made on the basis of seized documents only. There was no scope for disturbing regular assessments. Although there were some analogizes and differences of opinion in some of the provisions of the scheme, however, within the span of about eight years most of the analogizes and disputes were settled by various judgments of Hon'ble Courts and Tribunals but after settling of most of the issues, the Government of India withdrew this scheme in respect of searches made from 1st June 2003 and inserted new sections 153A, 153B, 153C and 153D in Chapter XIV for post search assessment purpose. In the Memorandum explaining the provisions of Finance Bill 2003, it was observed that the existing provision (at that time) for single assessment of undisclosed income for block period were introduced for avoidance of disputes, early finalization of such assessments and reduction in multiplicity of proceedings. However, since there were parallel proceedings, namely, regular assessment proceedings as well as assessment of block assessments for undisclosed income had amounted to multiplicity of proceedings. In order to avoid multiplicity of proceedings, a scheme of singl....
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....ncome for all six assessment years as per first proviso to section 153A, in contradiction of the second proviso, particularly when there is no incriminating material etc., then the same will not only multiply assessment proceedings but will multiply even the appellate proceedings. Obviously this can never be the intention of the Legislature. 3.3 The provision of section 153A starts with nonobstante clause with reference to sections 139, 147, 148, 149, 151 and 153. Sec. 153A contemplates issue of notice for 6 years preceding the search but not for the year of search or requisition and thus no return is required to be filed for the year of search u/s 153A. Only regular return u/s 139 to be filed. First proviso is reiteration of the provision containing clause (b) of section 153A (1) that the AO shall assess or reassess the total income of each of the six assessment years. The second proviso contemplates that if any of the aforesaid six assessments is pending on the date of initiation of the search or requisition, the same shall abate. 3.4 Explaining the second proviso of the section, it is stated that the second proviso provides that if on the date....
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....ction of pre-conditions as contemplated in section 153A, its first proviso, its second proviso read with section 132. The Assessment u/s 153A deals with search cases and therefore, the concept of undisclosed income u/s 132(1)(c) will come into play. 3.9 The second proviso to section 153A is intended to avoid two assessments for the same year. Section 153A does not authorize the making of a de novo assessment. An assessment u/s 153A is not meant to unsettle the income shown in the regular return in respect of which the assessment is complete. Section 153 A does not lead to a whole exercise of assessment to be made afresh in respect of completed assessments. Therefore, in proceedings u/s 153A, no new disallowance can be made by the A.O. where admittedly the regular assessments are shown as completed assessments on the date of initiation of action u/s 132. 3.10 In relation to the years whose assessment is completed, it is laid down by law that in such situations of completed assessments, assessment u/s 153 A of the Act however shall be to the extent of income escaping assessment which comes to the knowledge of the AO during the course of search with referenc....
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....conducted or requisition is made. Thus, the crucial words "search" and "requisition" appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. True it is that the assessment which has to be made in pursuance of the notice is in relation to the six years. An order will have to be made in that regard. While making the order, the income or the return of income filed for all these assessment years is to be taken into account. A reference will have to be made to the income disclosed therein. However, the scone of enquiry though not confined essentially revolves around the search or the requisition under section 132A as the case may be. The provision deals with those cases where assessment or reassessment, if any, relating to the assessment years falling within the period of six assessment years referred to in sub-section (1) of section 153A were pending. If they were pending on the date of the initiation of the search under section 132 or making of requisition under section 132A, as the case may be, they abate. It is only pending proceedings that would abate and not where there are orders made of assessment or reassessme....
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....is of the seized material. (v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word "assess" in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word "reassess" to completed assessment proceedings. (vi) In so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Held accordingly, that the matter related to the asses....
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....re unable to admit the appeal. The appeal is, therefore, dismissed. * Smt. Sunita Bai Versus Dy. Commissioner of Income Tax Central Circle-1, Belgaum2015 (3) TMI397 - ITATPANAJI - TMI "where an assessment order has already been passed for a year or years within the relevant six assessment years, then the AO is duty bound to reopen those proceedings and reassess the total income but by taking note of the undisclosed income if any, unearthed during the search. The expression "unearthed during the search " is quite significant to denote that in respect of completed or nonpending assessment, the AO albeit duty bound to assess or reassess the total income but if there is scope for additions in such assessment, on the basis of income "unearthed during the search ", he can make the addition. In other words, the determination of "total income" in respect of the assessment years for which the assessments are already completed on the date of search, shall not be influenced by the items of income other than those based on the material unearthed during the course of search. However, the scope of such determination of total income is different in respect of the years ....
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....ssment and another as assessment u/s 153A of the Act and not the whole exercise of assessment to be made afresh in respect of completed assessments. " * ACIT vs M/s Delhi Hospital Supply Pvt Ltd (ITA 3996/Del/2011) "7. Keeping in view of the aforesaid findings given by the Ld. CIT(A), we are of the considered view that Ld. CIT(A) has rightly held that in the absence of any material found during the search, as a result, no disallowance / additions can be made in the assessment u/s. 153A of the I.T. Act. Even otherwise, we find force in the Ld. Counsel's submissions that the issue in dispute is also covered by the decision of the Hon'ble Jurisdictional High Court in the case of CIT(Central)-III vs. Kabul Chawla in ITA No. 707, 709, 713/Del/2014 wherein the Hon'ble High Court has held that if the additions are made, but not based on any incriminating material found during search operation, then these additions were not sustainable in the eyes of law. In our considered opinion, the Ld. CIT(A) has rightly adjudicated the issue in dispute and accordingly rightly deleted the additions in dispute. Keeping in view of the above discussion, we uphold the Ld. CIT(A)&#....
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....th the statements recorded and documents seized. The differences of opinion between the Commissioner (Appeals) on the one hand and the Assessing Officer and the Appellate Tribunal on the other hand could not be the sole basis for disagreement with what was essentially a factual surmise that was logical and plausible. The findings of the Appellate Tribunal did not reveal any fundamental error calling for interference. Now coming back to the case under reference it is stated that in the said case, after discussing elaborately the case of CIT vs. Kabul Chawla [380 ITR 573 (Del)] as well as several other cases as referred therein, the distinguishing features of the case of Dayawanti Gupta v. CIT [390 ITR 496 (Del)] were spelt out as under: * There was a clear admission by the Assessee in Dayawanti Gupta (supra) that they were not maintaining regular books of accounts and the transactions were not recorded therein. * there was a chart prepared confirming that there had been a year-wise non-recording of transactions. Having observed as above, the Hon'ble Delhi High Court held as under: "........By contrast, there is no such statement in the present cas....
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.... condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in S. 153A. Kamleshbhai Dharamshibhai Patel 31 TM.com 50 (Guj) approved. SSP Aviation 20 TM.com 214 (Del) distinguished The Bom HC in the said case quoted in 378 ITR 84 on March 25, 2015 held as under:. In terms of section 153C of the Income-tax Act, 1961, the Assessing Officer should be satisfied that any money, bullion, jewellery or other valuable articles or thing or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in section 153A of the Act and he can hand over the seized documents to the Assessing Officer having jurisdiction over that person. Held, dismissing the appeals, that the reasons assigned by the Assessing Officer in the satisfaction note were silent about the assessment year in which specific incriminating information or unaccounted or undisclosed hidden information was discovered or seized by the Revenue from the assessee. In the circumstances, the general....
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..... The Id. CIT(A) has also referred to the decision of ITAT, Kolkata in the case of LMJ International 119 TTJ 214. Against the above order the Revenue is in appeal before us. 13. We have heard both the counsel and carefully perused the records. We have already held in the Assessee's appeal as above that dehors incriminating material no assessment can be done u/s 153C of the Act for the assessment year for which assessments have already been completed. In these circumstances we do not find any infirmity in the order of the ld.CIT(A) and we uphold the same. 5. Thus from all the above decisions it emerges that it is the established position of law that in cases of search, while making assessments u/s 153A/153C of the Act, completed assessments can be interfered with by the A.O. 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. Issues of original assessment which have no relation to the search cannot in any way form basis of assessment of....
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....the proceedings initiated by filing the return are closed. In the present case, the period for issuing the notice u/s 143(2) elapsed. Therefore the process has attained the finality which can only be assailed u/s 148 or 263 of the Act. It can thus be concluded that making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed by absence of issue of intimation under section 143(1) of the Act or by not issuing notice u/s. 143(2) of the Act within the time limit laid down in the proviso to Sec. 143(2) of the Act, results in an assessment proceedings and where such assessment proceedings are completed prior to the date of search then they do not abate in terms of the Second Proviso to section 153A(1) of the Act. The decision of the ITAT Kolkata Bench rendered in the case of Shri Bishwanath Garodia (supra) on identical facts of the case as that of the Assessee in the present case, clearly supports our conclusions as above. 26. In the light of the discussion above, our conclusion is that in the present case, the issue dealt wi....
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....o the Assessee company for making assessment u/s 143(3) of the Act within the time period as laid down in section 143(2) of the Act which was 30-09-2012 for AY 2011-12 and 30.9.2013 for 2012-13. The search was conducted on 06-08-2014. As such, assessment for both the assessment yers stood concluded and thus unabated as on the date of search and was not pending as on that date. 7. Next, analysing the documents whose reference is made by the ld. A.O. in his Assessment Order, it is seen that in the course of the assessment proceedings the Ld. Assessing officer issued a notice to the Assessee company wherein reference to two pages of the seized material, SGINDIA-24, SGINDIA-26. However, the said documents were routine in nature and were duly explained in course of assessment proceedings. These documents did not contain any incriminating information and on being satisfied, no addition was made with reference to the said documents. In the assessment order, the Ld. assessing officer had referred to some pages 69-83 and 85 of seized material i e SGINDIA-1 .However, at no point of time during assessment, the assessee was asked to explain the said pages. A copy of the same ....
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....For AY 2011-12 and AY 2012-13, the assessee filed the return of income on 29-09-2011 and 27-09-2012 respectively. Return for AY 2011-12 was processed on 13-02-2012 and for AY 2012-13 on 20-01- 2014 Admittedly no notice u/s 143(2) of the Act was issued to the assessee company for making assessment u/s 143(3) of the Act within the time period as laid down in section 143(2) of the Act, which was 30-09-2012 for AY 2011-12 and 30-09-2013 for AY 2012-13. The search was conducted on 06-08-2014. As such, assessment for both the relevant years stood concluded and thus unabated as on the date of search and was not pending as on that date. 7 Next analysing the documents whose reference is made by the Id. A.O. in his Assessment Order, it is seen that during the course of the assessment proceeding the Ld. Assessing officer issued 5 (Five) no of notices on various dates in which there was reference of only few seized material such as SG1ND1A-9, SGINDIA-24, SGINDIA-26. However the said documents were routine in nature and were duly explained in course of assessment proceeding. These documents did not contain any incriminating information and on being satisfied, no addit....
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.... 9.1. In connection to the above it is submitted that the asssessee company is totally unaware of any Mr. Raj Kumar Tharad and Mr. Pradeep Garg and the circumstances under which such statement may have been given by them. The statements were not recorded during any proceedings initiated on the Assessee. The said statements were not found or recorded in the course of search and as such, cannot be termed as an incriminating material in the present case. 8.2. At no point of time during the relevant years under consideration, Mr. Raj Kumar Tharad was a director of the assessee company. To substantiate, please find enclosed the relevant extract of the ITR filed for each of the years covered under assessment i.e. AY 2010-11 to AY 2015-16 at page 97-106 of the paper book for AY 2011-12. 8.3. Further, Raj Kumar Tharad and Pradeep Garg in their statement had stated that the assessee company was taken over by Mr. Sunil Gupta by way of share transfer to himself and his group companies. The money for the same was allegedly provided by Shri Sunil Gupta and the same after travelling through several companies got deposited in the books of SGBL (India) Ltd. and other group ....
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....ority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that crossexamination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. In the present case, no opportunity was provided to the assessee to cross examine the persons who had given the alleged statements against the assessee. As such, this is a case of violation of principles of natural justice because of which the assessee has been adversely affected. 9. Further, in the assessment order, the learned AO had referred to the statement recorded from Mr. Abhiset Basu by Investigation Wing of Kolkata in some other proceeding. The said statemen....
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.... In the given case, as would be clearly evident from the assessment order, the entire addition of Rs. 9,94,50,000/- in AY 2011-12 and Rs. 15,00,000/- was on account of sale proceeds received against sale of investments in shares. The entire sale proceeds were received through normal banking channels and were duly recorded in the regular books of accounts. As such, the addition was made by the learned AO on items of regular assessment. No incriminating material was found in course of search in any of the subject assessment years. 11. Without prejudice to the above, coming to the facts of the case, please note that the AO while analysing the investments of the assessee stated that it had been found that all the investments of the assessee company in Kolkata based companies were finally sold to following companies on various dates in the F.Y.s 2010-11 and 2011- 12: i) Signet Vinimay Pvt. Ltd. ii) Scope Vyapor Pvt. Ltd. iii) Sankalp Vincom Pvt. Ltd. iv) Winall Vinimay Pvt. Ltd. v) Srijan Vyapar Pvt Ltd vi) Westline vii) Yogiraj In connection to the above, the Ld. A.O. observed that the sale pro....
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.... learned CIT(A) uphold the assessment order passed by the learned AO on the same grounds. In the appellate order, the learned CIT(A) has cited the following two judicial pronouncements wherein it was held that "It is not necessary that search on which it was founded should have necessarily yielded any incriminating material against assessee or the person to whom such notice u/s.l53A(l)(a), is issued. " 1. E.N. Gopikumar vs C7T(Central) (High Court of Kerala) pronounced on 03-10-2016. 2. CIT ,Central vs Raj Kumar Arora (High Court of Allahabad) pronounced on 11-07-2014. 13.1 In this regard, please note that the issue on whether an assessment u/s 153 A of the Act can be made even if no incriminating material has been found during section 132 search proceedings had already been decided by the Hon'ble Apex Court in the case of Dayawanti Gupta vs. CIT pronounced on 3rd October, 2017. The Apex Court has stayed the operation of the judgement of the Delhi High Court in Dayawanti Gupta vs. CIT [390 ITR 496 (Del). The said judgment has been discussed in the preceding paras. Further, the Apex Court in the case of Sinhgad Technical Education Society (sup....
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....ssee. 14 The learned CIT(A) had alleged in the appellate order that copy of the statement of Rajkumar Tharad and Pradeep Garg were provided to the assessee by the AO. However, the full statements of these parties were never provided to the assessee for cross examination even after making a written request to the AO. Only the extract of the statement which is also produced in the assessment order was provided to the assessee. Hence, the present case is denial of natural justice to the assessee. 14.1 Further, the learned CIT(A) has relied upon the judgment of High Court of Bombay in the case of Sanjay Bimalchand Jain vs PCIT wherein the issue involved was exemption claimed by the assessee u/s 10(38) of the Act. In this case the shares of unknown companies were purchased at a very nominal price in cash on advice of Income Tax Counsel and the same were sold after a year at an exorbitant price, thus the assessee claimed Long Term Capital Gains exempt u/s 10(38) of the Act. The learned AO disallowed the claim of the assessee. The learned CIT(A) sustained the order of the learned AO. On further appeal, the Hon'ble IT AT, Nagpur held that "the fantastic sale price rea....
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....of natural justice to the assessee and hence these statements cannot be used to the disadvantage of the assessee. The sale of investment in shares was duly recorded in the audited books and the same was also not disputed by the learned AO. As such, the entire proceedings u/s 153 A of the Act was not as per law and liable to be quashed. Based on the above detailed submission of the Assessee, it is thus humbly prayed before Your Honours to quash the Assessment Order passed u/s 153 A of the Act for both the subject assessment years de hors any incriminating material found during the course of search." 22. The DR, on the other hand, relied on the orders of Assessing Officer and CIT(A). 23. We have heard rival submissions and perused the orders of lower authorities and materials available on record. In the instant case, the assessee originally filed its return of income on 29.9.2011 for the assessment year 2011-12 and on 27.9.2012 for the assessment year 2012-13 disclosing total income at Rs. 9,56,200/- and Rs. 2,95,840/- and MATY of Rs. 21,90,642/-. 24. In pursuance to search conducted on 6.8.2014, proceedings u/s.153A was initiated in the case of the assessee for the....
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....on 132 on basis of which notice was issued under section 153A(1)(a) Held, yes [Paras 7 and 8] [In favour of revenue). " (b) Commissioner of Income-tax Central, Kanpur v. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad) : "Section 153A, read with section 143 of the Income-tax Act, 1961 - Search and seizure - Assessment in case of (Scope of assessment) - Assessment year 2000-01 - Whether Assessing Officer has power to reassess returns of assessee not only for undisclosed income, which was found during search operation but also with regard to material that was available at time of original assessment - Held, yes [Para 11] [In favour of revenue/Matter remanded]" 27. On the other hand, the AR of the assessee relied upon the following decisions: (i) (1) CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2)All Cargo Global Logistics Ltd. (2015) 374 1TR 645 (Bom), where it was held that the notice u/s.153A of the Act was founded on search. If there was no incriminating material found during the search then the Tribunal was right in holding that the power u/s.153A of the Act being not expected, to be exercised routinely, should be exe....
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....by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed." 28. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision in favour of the assessee should be followed. For this, we derive support from the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC). Therefore, we are of the considered view that in an assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated, then the jurisdiction of the Assessing Officer to make addition in such an assessment, is confined to such incriminating search material and no addition dehors the search material can be made. 29. In the instant case, we find that during the course of the relevant search only tally data of the assessee company was found which shows that the assessee has received cash credit from....