TaxTMI 
TaxTMI 
2018 (5) TMI 1818
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....ainst the order of learned Commissioner of Income Tax (Appeals) XXXI, New Delhi dated 19.05.2014 in ITA No 5424/D/2014. According to the statutory provisions contained in section 253 of the Act, the appeal has to be filed within sixty days of service of order of learned Commissioner of Income Tax (Appeals)-31, New Delhi. 2. In the instant case, the aforesaid order was served on the appellant on 06.06.2014 and, as such the captioned appeal was due to be filed by 05.08.2014 whereas the appeal has been filed on 07.10.2014 leading to a delay of 63 days. The delay so occurred in filing the instant appeal is inadvertent and bonafide. 2.1 It is submitted that since January 2014 factory of the assessee company has been shut down and, the company has laid off all its employees alongwith accounts/taxation staff. As a result, there is multiple litigation with banks and, other statutory authorities. Consequently there was a bonafide inadvertent delay in filing of appeal before the Hon'ble Tribunal. An Affidavit of the directors of the company along with documents in support of the above explanation is enclosed herewith as Annexure to Application. It is therefore prayed that, delay of 6....
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....ne is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of dilatory strategy, the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. While condoning the delay, the court should not forget the opposite party altogether. It must be borne in mind that he is a loser and he too would have incurred quite large litigation expenses" [Emphasis Supplied] iii) 167 ITR 471 (SC) Collector, Land Acquisition vs. Mst. Katiji & Ors. "The expression '"sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in the meaningful manner which sub serves the needs to justice - that being the life -purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy". 3. ....
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.... rejection of the acceptance of these documents is illegal. 2. The assessee craves leave for the addition, modification, alteration of any of the above grounds of appeal." 9. The grounds raised by the department in its appeal read as under: "1. The order of Ld. CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 29,86,532/- made by the Assessing Officer on account of disallowance of pre-operative expenses. 3. The appellant craves leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal." 10. The main grievance of the assessee in this appeal relates to the addition made in the absence of any incriminating material found during the course of search. 11. The facts of the case in brief are that the original return of income was filed by the assessee on 31.10.2005 declaring a loss of Rs. 2,46,66,340/-. Thereafter, a search was conducted on 07.01.2010 at the assessee's premises and notices u/s 153A of the Income Tax Act, 1961 (hereinafter referred to as the Act) were issued on 08.11.2010. The assessee vide reply dated 08.12.2010 filed the retu....
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....ion as per following details: Assessment Year Return filed on 2005-06 31.10.2005 2006-07 4.12.2006 2007-08 14.10.2007 2008-09 30.09.2009 16. It was further submitted that since no notice u/s 143(2) of the Act was issued for the assessment years 2005-06 and 2008-09 and the assessments were framed u/s 143(3) of the Act for the assessment years 2006-07 and 2007-08. Therefore, the original assessment proceedings had attained finality much prior to the date of search on 07.01.2010. The assessee also filed chronological sequence of events which read as under: 1 CHRONOLOGICAL SEOUENCE OF EVENTS Sr. No. Particulars Assessment years 2005-06 2006-07 2007-08 2008-09 i) Original Return of Income (supported by audited financial statement and tax audit report) Date 31.10.2005 4.12.2006 14.10.2007 30.9.2008 Income Declared (2,46,66,340) Nil Nil 2,82,28,086 ii) Original Assessment Date of order 30.12.2008 30.12.2009 Section 143(1) 143(3) 143(3) 143(1) iii) Date of Notice u/s 153A (as a result of search carried on 7.1.2010 on "Gee Ispat Group of cases") 8.11.2010 8.11.2010 ....
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....der also, the AO had not even noted about any alleged seized document or material found as a result of search which could be said to be incriminating material, therefore, the addition made by the AO u/s 153A of the Act in the absence of any incriminating material was not tenable. The reliance was placed on the following case laws: Ø CIT Vs Meeta Gutgutia 395 ITR 526 (Del.) Ø CIT Vs Sinhgad Technical Education Society 378 ITR 84 (Bom.) Ø Anurag Dalmia Vs DCIT in ITA No. 5395 & 5396/Del/2017 order dated 15.02.2018 Ø Jaipuria Infrastructure Developers (P) Ltd. Vs ACIT in ITA No. 5522 & 5523/Del/2015 order dated 27.06.2016 Ø Pr. CIT Vs Sunrise Finlease (P) Ltd. 252 Taxman 407 (Guj.) Ø CIT Vs Kabul Chawla 380 ITR 573 (Del.) Ø Pr. CIT Vs Lata Jain 384 ITR 543 (Del.) Ø CIT Anil Kumar Bhatia 352 ITR 493 (Del.) Ø CIT Vs Kurele Paper Mills P. Ltd. 380 ITR 571 (Del.) Ø CIT Vs MGF Automobiles Ltd. 241 Taxman 440 (Del.) Ø Pr. CIT Vs Ram Avtar Verma (2017) 395 ITR 252 Ø CIT Vs Harjeev Aggarwal 290 CTR 263 (Del.) Ø Suncity Projects (P) Ltd. Vs DCIT 46 CCH 320 (Del.) Ø CIT ....
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.... promoters at very low values, were essentially paper companies or persons who were not doing any business [para 4.2.8 of CIT(A) order]. This modus-operandi of the assessee has also been discussed in detail by the Assessing Officer. 5. The AO has discussed in detail that the features of the modus operandi of introducing share capital by the assessee company which were as follows: a) The assessee company is a Pvt. Ltd. company closely held by family of the promoters. b) In order to enhance their share capital the assessee company did not invite any application through an IPO etc. c) Therefore it may be presumed that the persons investing in the share capital of the assessee company must be known to the promoters very well. d) It was however noted in post search inquiries that the persons paying the share application money had no business relations nor any transactions with the assessee company. Such persons were also not personally related to the promoters by way of family relations etc. e) It was also seen that these nondescript companies and persons who had allegedly invested in share capital of the assessee company have subsequently transferred all their shares to the....
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....ed on the following case laws: Ø CIT Vs Navodaya Castle Pvt. Ltd. (2014) 367 ITR 306 (Del.) Ø Prem Castings (P.) Ltd. Vs CIT (2017) 88 Taxmann.com 189 (All.) Ø CIT Vs Nipun Builders & Developers (P.) Ltd. 350 ITR 407 (Del.) Ø CIT Vs Nova Promoters & Finlease (P) Ltd. 342 ITR 169 (Del.) Ø CIT Vs Ultra Modern Exports (P.) Ltd. 40 Taxmann.com 458 (Del.) Ø CIT Vs Frostair (P.) Ltd. 26 Taxmann.com 11 (Del.) Ø CIT Vs N R Portfolio Pvt. Ltd. (2013) 29 Taxmann.com 291 (Del.) Ø CIT Vs Empire Builtech (P.) Ltd. 366 ITR 110 (Del.) Ø CIT Vs Focus Exports (P.) Ltd. 51 Taxmann.com 46 (Del.) Ø PCIT Vs Bikram Singh in ITA No. 55/2017 (Del.) Ø Rick Lunsford Trade & Investment Ltd. Vs CIT (2016) 385 ITR 399 (Cal.) Ø Rick Lunsford Trade & Investment Ltd. Vs CIT [2016-TIOL- 207-SC-IT] Ø CIT Vs N Tarika Properties Investment (P.) Ltd. (2013) 40 Taxmann.com 525 (Del.) Ø N Tarika Properties Investment (P.) Ltd. Vs CIT (2014) 51 Taxmann.com 387 (SC) Ø Konark Structural Engineering (P.) Ltd. Vs DCIT (2018) 90 Taxmann.com 56 (Bom.) 20. We have considered the submissions of ....
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....." It has further been held as under: "That one of the conditions precedent for invoking a block assessment pursuant to a search in respect of a third party under section 158BD of the Act, i.e., recording satisfaction that undisclosed income belongs to the third party, which was detected pursuant to a search had not been complied with. Though documents belonging to the assessee were seized at the time of search operation, there was no incriminating material found leading to undisclosed income. Therefore, assessment of income of the assessee was unwarranted." 22. In the present case also, the intimation was issued u/s 143(1) of the Act for the assessment years 2005-06 and 2008-09, however, the time to issue the notice u/s 143(2) of the Act had already expired before the search took place on 07.01.2010, therefore, the assessments for these years were not abated. In the instant case, the assessments were completed u/s 143(3) of the Act for the assessment years 2006-07 and 2007-08 much prior to the date of search on 07.01.2010. As such these assessments attained the finality and were not abated. The AO made the additions on account of share application money/share capital/ share p....
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....ion." 24. In the present case, since no incriminating material was found, therefore, the addition made by the AO u/s 153A of the Act was not justified. 25. On an identical issue, the Hon'ble Jurisdictional High Court in the case of CIT Vs Kabul Chawla (2016) 380 ITR 573 (supra) held as under: "The legal position that emerges on a perusal of section 153A and section 132 of the Income-tax Act, 1961, is as under : (i) Once a search takes place under section 132 of the Act, notice under section 153A(ll will have to be mandatorily issued to the person in respect of whom search was conducted 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. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise, (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the "total income"....
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....ITR 252 (supra) observed as under: "The Commissioner of Income-tax (Appeals), after considering the record, was of the opinion that the additions could not be justified, and accordingly granted relief, holding that no incriminating material was recovered during the search. The Revenue's appeal was rejected. The Income-tax Appellate Tribunal held as follows: "10. As per the paper book filed by the learned authorized representative showing the Panchnama from where learned Departmental representative could not point out any material found during the course of search which could give even remote possibilities of altering the income of the assessee based on any incriminating documents. Admittedly both the assessment years in these appeals are completed assessments in case of the assessee. The reliance placed upon by the learned authorized representative on the decision of the Hon'ble Delhi High Court in the case of C/T v. Kabul Chawla [2016] 380 ITR 573 (Delhi) where original assessment have been made under section 143(1) of the Act is apt and squarely covers issue in favour of the assessee. The Hon'ble High Court in paragraph No. 37 of that decision has held that no a....