AI Drafter 
TaxTMI 
TaxTMI 
2018 (5) TMI 1818
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....Sir(s), 1 The assessee has been filed an appeal against 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 her....
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...."It must be remembered that in very case of delay, there can be some lapse on the part of the litigant concerned. That alone 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 approac....
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....essee has submitted the required documents i.e. ITR, Balance Sheet, Confirmations, PAN, Bank Statement of the subscribers at the time of hearing duly acknowledged by the AO in his Assessment order, duly noted by him thereby 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,....
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....made were not based on any incriminating material found as a result of search on the assessee company on 07.01.2010. It was further submitted that it is a case of non-abated assessment as the original returns of income were filed much earlier than the search operation 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 Dec....
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....7,225 (Deleted) 4,50,00,000 (Deleted) Disallowance on account of excessive claim of deprecation --------- 37,07,507 (Deleted) 8,92,250 (Deleted) --------- Addition made on account of undisclosed income as per seized statement of affairs 3,07,71,221 (Deleted) 17. The ld. Counsel for the assessee submitted that none of the documents found as a result of search was incriminating material. A reference was made to page nos. 19 & 20 and 148 & 149 of the assessee's paper book. It was pointed out that in the assessment order 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) L....
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....ore the CIT(A) the details of the seized documents which supported the additions made by the AO [para 4.2.6 of CIT(A) order] 4. Share capital was introduced by the assessee company in 4 assessment years as follows: AY Share Capital (Rs) 2005-06 51,00,000 2006-07 8,62,50,000 2007-08 4,69,50,000 2008-09 4,50,000 This was done through a number of nondescript companies and persons who have subsequently transferred all their shares to the assessee company's directors and their family members at face value or even less. These facts came to light during search and post search enquiries. It was also revealed that these companies to whom shares had been issued at a huge premium which were subsequently transferred to the 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 ....
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....rsonal deposition of principal officers of the entities making contribution to the share capital, it is not possible to produce them". k) Thus the assessee failed to discharge the onus cast upon him u/s 68 of the Act to prove the identity, creditworthiness as well as the genuineness of the transactions in question. On the basis of the above seized material and investigations made in connection with the search the AO was completely justified in making the additions to the alleged share capital introduction by the assessee in the above four assessment years viz. A. Y 2005-06 to 2008-09. The assessment order passed was made u/s 153A on the basis of seized material and inquiries related thereto. The additions can in no manner be termed "arbitrary or made without any relevance or nexus with the seized material." 19. The reliance was placed 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....
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....the Assessing Officer of the persons in whose cases search was conducted transferred the documents to the Assessing Officer of the assessee under section 153C of the Act. Assessment orders under section 143(3) read with section 153C were passed for the assessment years 2004-05 to 2008-09. In respect of the assessment year 2004-05, the Tribunal noted that as on the date the search was conducted i.e., on June 17, 2008, no assessment proceeding was pending and as no undisclosed income was detected, the assessment made under section 153A read with section 153C of the Act the Tribunal quashed the assessment. For the assessment year 2005-06, though no order under section 143(3) had been passed, an intimation under section 143(1) had been issued. The Tribunal held that for the purpose of section 153A read with section 153C of the Act, an intimation under section 143(1) was also an order of assessment. It upheld the validity of the assessment for the assessment year 2005- 06." 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., record....
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....tion strengthens that meaning. From the heading of the section, the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition." 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'b....
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....e 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." 26. A similar view has been taken by the Hon'ble Jurisdictional High Court in the case of Pr. CIT Vs Meeta Gutgutia Prop. M/s Ferns "N" Petals (2017) 395 ITR 526 (supra) wherein it has been held as under: "Any and every document cannot be and is not an incriminating document. No addition can be made for a particular assessment year without there being an incriminating material qua that assessment year which would justify such an addition." 27. Similarly, their Lordships of the Hon'ble Jurisdictional High Court in the case of Pr. CIT Vs Ram Avtar Verma (2017) 395 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 just....