TaxTMI 
TaxTMI 
2017 (1) TMI 1685
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.... the Commissioner of Income Tax (Appeals)-21, Kolkata (CIT(A) for short), which in turn arise out of orders passed by Assessing Officer (AO)U/s 153A/143(3) of the Income Tax Act, 1961 (in short 'the Act'), dated 30.03.2013/31.03.2013. 2. These ten appeals filed by the Assessee relate to same group companies-assessees, different assessment years, common issues involved, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The Assessee's appeal in IT(SS)A No. 49/Kol/2015 is taken as the lead case. 3. The brief facts qua the assessee are that a search and seizure operation was carried out U/s 132 of the I.T. Act,1961, on the assessee along with the sister concern and or others at various premises/offices of the group on 06.10.2010 and subsequent dates. In some cases survey operations U/s 133A was also conducted on the same date and / or subsequent dates. Later on the case of the assessee along with other assessees of the group were centralized in this charge with administrative jurisdiction of Range -V ( Central) of CIT ( Central)-III, Kolkata. Notices U/s 153A of the Act were issued on the assess....
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....ed share application money from the companies controlled by Shri Naresh Chhaparia. Thus, I am of the opinion that it will not be correct to say that there was no a new fact or material or evidence in consequence to search by which the AO could made addition of regular item declared in the original return; in the proceeding u/s 153A of the Act. I am of the opinion that the decision of the Jurisdictional ITAT in the case of LMJ International Ltd. is not applicable in the case of appellant company on the facts of the case. In view of above, the ground no. 1 is dismissed. 6. In ground no. 2 the assessee has contested the action of the AO making addition of Rs. 10,00,000/- on account of share capital received on the basis of statement of Shri Naresh Chhaparia. As mentioned above, the search operation u/s 132 of the Act was conducted in the case of assessee company on 06.10.2010. On the same date, a survey operation u/s 133A of the Act was conducted at the business premises of Shri Naresh Chhaparia at 3/A/7, 3rd Floor, Lal Bazar, Kolkata. It was gathered that Shri Naresh Chhaparia is one of the entry operators active in the market and he was engaged in the activity of providing ....
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....ss and creditworthiness of the transactions. Further, in view of the fact that entry operator himself filed a letter of his affirmation of providing accommodation entries to the assessee company through his companies made for this purpose, the AO added the sum aggregating to Rs. 10,00,000/- to the income of the assessee u/s 68 of the Act on account of share capital. 7. It is observed that the similar issue as involved in the case of aappellant company was involved in its case for the A.Y. 2007-08 and 2008-09 wherein based on the statement of Shri Naresh Kumar Chhaparia dated 07.10.2010, the AO had made addition of Rs. 25 lakhs and Rs. 5O lakhs respectively on account of share capital/share application money. In the instant appeal, the appellant has filed same submission as filed in its case for the A.Y. 2007-08 and 2008- 09. There is change in submission only to the extent that there is difference in the amount of addition on account of share capital and the change in the names of subscribing companies. Otherwise, the facts of the two cases are exactly similar. The appeals in the appellant's case i.e. M/s Swagat Trexim Pvt. Ltd. for the A. Y. 2007- 08 and 2008-09 have ....
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....see's case under consideration. The search was conducted on 6.10.2010 and assessments u/s.143(3) of various group concerns/sister concerns were completed before 6.10.2010. The period within which notice u/s.143(2) could be issued by the department also expired. The assessment proceedings of various group companies and sister concerns of the assessee were completed before the date of search. During the course of survey a statement was recorded by the survey team which pertains to Shri Naresh Kumar Chhaparia. During the course of appellate proceedings, before the ld. CIT(A), ld. AR for the assessee requested ld. CIT(A) to cross-examine the statement of Shri Naresh Kumar Chhaparia. Mr.Naresh Kumar Chhaparia subsequently retracted by an affidavit stating that statement recorded by the survey team is wrong and should not be relied upon because the statement had been taken by the survey team with threat and coercion. In the affidavit dated 11.10.2010, Shri Naresh Kumar Chhaparia has stated as follows :- "6. That the survey operation was started around 2.P.M on 7.10.2010 and continued up to 2.30 A.M of 08.10.2010. 7. That the survey team was continuously harassing to con....
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....ment, the assessment u/s.153A cannot be made. Ld. AR for the assessee has also relied on the following judgments :- i) M/s MSP Steel & Power Ltd. IT(SS)A No.156-158/Kol/2014, order dated 02.12.2016) : 7. We have heard the rival submissions. We find it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the Act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessments for the Asst Years 2007-08 & 2008-09 were originally completed u/s 143(1) of the Act and time limit for issuance of notice u/s 143(2) of the Act had expired on the date of search and hence it falls under concluded proceeding, as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to those concluded years, the statute does not confer any power on the ld AO to dis....
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....) Salasar Stock Broking Ltd., G.A.No.1929 of 2016 & ITA No.264 of 2016, dated. 24.08.2016 : "We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A.The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." iii) Veerprabhu Marketing Ltd., [2016] 73 taxmann.com 149 (Calcutta) : 7. With respect to the second submission advanced by Mr. Jain, we called upon Mr.Nizamuddin in vain to show us the incriminating material, if any, found either during the search or during the requisition or even during the survey which is or may be relatable to the assessee. Mr.Nizamuddin as unable to show that any such incriminating material was unearthed at any of the three stages pertaining to the assessee.....
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....ing material found during the course of search under section 153A as in the case of the assessee the assessment was not abated for the impugned assessment years in respect of which proceedings were taken under section 153A. 25. We noted that in the case of the assessee, the addition has been made in each of the assessment years on account of the share capital and the share premium as well as the disallowance of the expenses. During the course of the search taken place in the case of the assessee, we noted that no incriminating material was found in respect of the additions made by the Assessing Officer in each of the assessment years. The only material which was found was the Bank account which the assessee was having with the banker. The said Bank account was duly disclosed in the incometax return filed by the assessee. The said Bank account can also not be regarded to be the incriminating material. Even the Assessing Officer has also not made any addition on the basis of said bank account in each of the assessment years. The banker has made the Pay Order in respect of the balance of the Bank account in favour of the Revenue as per the order of ADIT and only that Pay Orde....
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....nies(JamaKharchi Companies). Mr. Naresh Kumar Chhaparia after his statement recorded by the survey team did not report to the Income Tax Authorities that statement was taken by force or by coercion. Ld. DR also pointed out that the statement of Mr.Naresh Kumar Chhaparia is itself a new incriminating document and there is entire nexus which has established by his statement. Ld. DR also pointed out that retraction by Mr. Naresh Kumar Chhaparia is afterthought process and should not be relied on his affidavit. Ld.DR has also relied on the following judgments :- i) ST. Francis Clay Decor Tiles, [2016] 70 taxmann.com 234 (Kerala) ii) Anil Kumar Bhatia, [2012] 24 taxmann.com 98(Delhi) iii) Filatex India Ltd., (2014) 49 taxmann.com 465 (Delhi) iv) Dr.P.Sasikumar, (2016) 73 taxmann.com 173 (Kerala) v) GaribdasChandrika Prasad, (1997) 95 TAXMAN 431 (MP) The sum and substance of the above mentioned judgments are that retraction by Mr.Naresh Kumar Chhaparia is afterthought process and should not be relied on his affidavit. The Assessing officer may assess the income of concluded assessments under section 143(3) and under section 143 (1)/147. ....
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....cuments. No any corroborate material in support of statement of Shri Naresh Kumar Chhaparia was brought by the AO. Even ld. CIT(A) could not bring any corroborative material in support of the statement of Shri Naresh Kumar Chhaparia, who had subsequently denied. Hence, the statement given by Shri Naresh Kumar Chhaparia cannot be relied at all. All the share applicants have submitted the adequate evidence with supporting documents. No addition can be made without any incriminating documents. In addition to this, the assessee under consideration has proved the identity, creditworthiness and genuineness of the transactions. Therefore, ld. AR submitted that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person because later on he retracted. The assessee has proved the identity, creditworthiness and genuineness of the transactions during the proceedings. Therefore, addition made by the AO and confirmed by the ld. CIT(A) may be deleted. Ld. AR has also relied on the following judgments :- i) Zimkele Commodeal Pvt. Ltd., ITA No.959/Kol/2011, dated 24.08.2016 : 7.7. We find that the issue is also covered by another Jurisdiction....
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....he sake of brevity. 7.9 In view of the aforesaid findings and respectfully following the decisions of Hon'ble Apex Court supra ;Hon'ble Jurisdictional High Court (supra) and co-ordinate bench decisions of various tribunals, we find no infirmity in the order of the Learned CIT(A) and accordingly, the grounds raised by the revenue are dismissed. ii) Global Mercantiles Pvt. Ltd., ITA No.1669/Kol/2009, (2016) 46 CCH 0041 Kol Trib : 4.2. On first appeal, the Learned CIT(A) observed that the entire share application monies of Rs. 57,00,000/- were received during the previous year 2004-05 relevant to Asst Year 2005-06 from 20 persons and the shares were allotted to them during the asst year under appeal. He observed that the assessee had furnished details of the share applicants giving the date wise receipts, mode of payment, amount, name, address, income tax returns, PA No. of share applicants along with their balance sheet. The Learned CITA also observed that the assessee in its reply to show cause notice before the Learned AO had requested him to use his power and authority for the physical appearance of the shareholders which was not exercised by the Learn....
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....r dated 29.02.2016: 9. We have heard the rival submissions and perused the material available on record including the detailed paper book containing the statement of computation of total income for the AY 2008-09 & salary certificate to this effect in page 1-5 of the assessee's paper book, assessee's personal balance sheet as at 31.03.2008, Capital A/c & Income & Expenditure A/c in page 6-8 of the paper book, Copies of loan confirmation issued by M/s. Bright Impex & Agencies Pvt. Ltd for the FYs. 2007-08, '08-09 & '09-10 in pages 13-15 of the paper book, copy of audited annual financial accounts of M/s. Bright Impex & Agencies Pvt. Ltd for the FY 2007-08 in pages 16- 28 of the paper book, copy of bank statement in respect of Current A/c No.95111010006717 of M/s. Bright Impex & Agencies Pvt. Ltd in pages 29-32 of the assessee's paper book, PAN details of M/s. Bright Impex & Agencies Pvt. Ltd in page 33 of the assessee's paper book and copy of ld. AO's Remand report in pages 35-36 of the assessee's paper book. On perusal of the aforesaid papers, we find that the lending company, M/s. Bright Impex & Agencies Pvt. Ltd has got paid up capital of ....
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....ty together with the creditworthiness of the loan creditor. We find that the wild allegation is made by the ld.AO that the assessee has laundered his unaccounted money/income and the same is brought back in the form of loan. We find from the entries of the bank statement of the loan creditor that no cash was deposited in the account of the loan creditor immediately before issuing the cheques to the assessee. On the contrary, there were other high value transactions reflected in the bank statement of the loan creditor. Hence, the basic allegation that the assessee has laundered his unaccounted income is not prima facie proved by the ld. AO even during the remand proceedings when the ld.AO got the second opportunity to make necessary verification by using his statutory powers vested on him and provided to him in the statute. We find that the facts of the case clearly proved that the assessee had completely discharged his onus by filing all the documentary evidences in support of the loan transaction from M/s. Bright Impex& Agencies Pvt. Ltd in terms of section 68 of the Act. Hence, it is fully covered by the decision of the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corp....
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.... Kalisaran Properties (P)Ltd in this regard is at page 1 of the paper book. Pages 3 and 4 is the bank statement of Kalisaran Properties (P)Ltd with Federal Bank. The entries in the bank account clearly demonstrates the factum of realisation of investment in Prabhudan Securities Pvt. Ltd by Kali Saran Properties (P)Ltd and such proceeds being utilised to make investments in share application money of the assessee company. The reasons assigned by the and CIT(A) for making addition u/s 68 of the Act are identical as were given while treating the investments by Jai Kali Properties (P)Ltd as unexplained. It is clear from the evidence on record that the assessee has established the identity and creditworthiness and genuineness of the transactions of the receipt of share application money from M/S.Kalisaran Properties (P) Ltd. We, therefore, hold that the addition made by the AO and sustained by CIT(A)should be deleted. vi) Kunj Alloys Pvt. Ltd., ITA No.239/CTK/2007, order dtd. 27.11.2015 : 9. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. D.R. has relied on the order of the Assessing officer in suppor....