TaxTMI 
TaxTMI 
2019 (3) TMI 698
X X X X Extracts X X X X
X X X X Extracts X X X X
....) which was conducted on 18.02.2013 at the residence, offices, factories and other business concerns of the M/s. Rashmi Group and the assessment for this year was not pending before the AO on the date of search. Since it was not an unabated assessment, the AO could not have made any addition without the aid of any incriminating material and the Ld. CIT(A) has given relief to the assessee taking note of the decision of the Hon'ble Delhi High Court in CIT Vs. Kabul Chawla (2016) 380 ITR 573 (Del), the decision of Hon'ble Calcutta High Court in ITA No. 661 of 2008 Commissioner of Income Tax vs.Veerprabhu Marketing Ltd. and Hon'ble Delhi High Court in Pr. CIT Vs. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571 (Del) which decision has been upheld by Hon'ble Supreme Court reported in (2016) 380 ITR (St.) 69-ed. We note that the Ld. CIT, DR assailed the decision of the Ld. CIT(A) and contended that in Sec. 153A proceedings, there is no necessity of any incriminating materials and the very concept of incriminating materials is alien to the scheme of the search proceedings u/s. 153A of the Act. However, during the hearing before us, we asked to Ld. CIT, DR the pointed question as to wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ows that the a/c of most of the investing companies is in the same bank as that of the assessee company. III) There is no justification on record whatsoever as to whether the company's credentials commanded a huge share premium, particularly when the same is being paid by strangers. IV) Summons U/S 131 to such persons I company have not been adequately responded and the assessee has failed to produce them in response to the show- cause notice. V) The findings that the investing companies which subscribed to the shares were borne on the file of the ROC and that the monies have come through a/c payee cheques is at best, neutral. Mere payment by cheques is not sacrosanct as would not, make a non-genuine transaction as genuine. VI) Bonafide and genuineness of the transactions is the main issue and in this regard, the assessee company has failed miserably. VII) Scrutiny has revealed the camouflage adopted by the assessee and exposed the true nature of the transactions. VIII) Onus is on the assessee to prove the identity of share applicants, their creditworthiness and genuineness of the transactions appearing in its books of sale ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....30/Kol/2013 both pertaining to the assessment year 2005-06. The learned Tribunal was of the opinion that the Assessing Officer had no jurisdiction under Section 153A of the Income Tax Act to reopen the concluded cases when the search and seizure did not disclose any incriminating material. In taking the aforesaid view, the learned Tribunal relied upon a judgement of Delhi High Court in the case of CIT[A] vs. Kabul Chawla in ITA No.707/2014 dated 28th August, 2014. The aggrieved Revenue has come up in appeal." ....In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed." The 'A' Bench of the Delhi ITAT, recently in the case of Anurag Dalmia vs. DCIT in ITA Nos. 5395 & 5396/DEL/2017; Assessment Years: 2006-07 & 2007-08, dt. 15/02/2018, has explained the law on this issue in the following manner:- "12. We have heard the rival submissions, perused the relevant material placed on record and the finding given in the impugned order with respect to legal issue raised vide ground no.5 by the assessee that the additions made in this year are beyond the scope of assessment u/s.153A, as no incriminating material was found du....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In 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 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the wor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under section 153A of the Act which are contrary to and/or not disclosed during the regular assessment proceedings." 63. Even this Court has in CIT v Mahesh Kumar Gupta {supra) and The Pr. Commissioner of Income Tax-9 v. Ram Avtar Verma {supra) followed the decision in Kabul Chawla (supra). The decision of this Court in Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd. {supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue's SLP on 7th December, 2015." 18. Post the judgment of Meeta Gutgutia (supra), also the same principle have been reiterated in the case of PCIT vs. Best Infrastructure (India) Pvt. Ltd. (supra), wherein the Hon'ble High Court held that during the course of search, statement recorded u/s. 132(4) by themselves does not constitute incriminating material and assumption of jurisdiction by the Assessing Officer u/s.153A solely based on stateme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng Section 68 of the Act for the purposes of making additions on account of share capital. 3. As far as the above facts are concerned, there is nothing shown to the court to persuade and hold that the above factual determination is perverse. Consequently, after considering all the facts and circumstances of the case, the Court is of the opinion that no substantial question of law arises in the impugned order of the ITAT which requires examination. 4. The appeal is, accordingly, dismissed. The department had filed special leave petition before the Hon'ble Apex Court against the above judgment of the Delhi High court. (Pr CIT V KURULE PAPER MILLS P. LTD: S.L.P (C) No-34554 of 2015[ 2016] 380ITR (st) 64-Ed).. The Hon'ble Apex court dismissed the special leave petition filed by the department. The relevant Para as mentioned in the ITR is reproduced as under. "Their Lordships Madan B.Lokur and S.A.Bobde JJ dismissed the Department's special leave petition against the judgment dated July 06,2015 of the Delhi High Court in I.T.A No 369 of 2015, whereby the High Court held that no substantial question of law arose since there was a fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t clear as to which of these statements were recorded during the course of search operation u/s 132 of the Act or whether the statements were recorded during the course of any survey operations u/s 133A of the Act. It is well settled that a statement recorded during the course of survey operation cannot be used as evidence under the Act. 10. Coming to the alleged cash trail, none of the material gathered by the Assessing Officer by way of bank account copies of various companies supposed to be part of the chain of companies was not confronted to the assessee. The alleged statements that were recorded from directors of these companies which formed this alleged chain were also not brought on record. Only a general statement has been made. There is no evidence whatsoever that cash has been routed from the assessee company to any of these chain of companies. There is no evidence that any cash was deposited by the assessee company. Moreover, there is no material whatsoever brought on record to demonstrate that the alleged cash deposit made in the bank account of a third party was from the assessee company. No opportunity to cross-examine any these parties was provided to the as....