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2019 (10) TMI 439
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....le)-8(1), Mumbai (in short DCIT/ITO/ AO) for AYs 2012-13,2013-14, 2014-15, 2015-16 of even dated 22.12.2017, under section 143(3) read with section 153A of the Income-tax Act, 1961 (hereinafter 'the Act'). 2. The first common issue in these appeals of four different assessee's is as regards to the order of CIT(A) confirming the action of the AO in treating transactions of sale of shares of listed companies as bogus thereby making addition under section 68 of the Act being sale proceed of such transactions treating the same as unexplained income under section 68 of the Act. Consequently, also on second interconnected issue, the CIT(A) confirmed the action of the AO in making addition on the basis of presumption that the assessee has paid commission for alleged accommodation entries of long term capital gain and added the same under section 69C of the Act. For this, all these assessee's have raised identical grounds and the facts and circumstances in all the cases are also identical. Both, the learned counsel for the assessee's as well as leaned CIT DR fairly stated that facts on merits in all these appeals are same. Hence, only one appeal was argued and all will be adjudicate acc....
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....addition of Rs. 14,19,36,826/-. 3. The AO/ CIT(A) erred in law and facts in making an addition of Rs. 42,58,104/- under section 69C of the Act on the presumption that commission @ 3% was paid for alleged accommodation entries of long term capital gain. 4. The AO/ CIT(A) erred in law and facts in passing the assessment order Solely on the basis of assumptions. presumptions. surmises and conjecture without any cogent material or evidence hence it is illegal and contrary to the principles of natural justice." 3. Brief facts of the case are that the assessee filed his return i.e. original return of income on 28.08.2015 [wrongly mentioned by CIT(A) as 17.07.2014], whereas the correct date is written by the AO) for AY 2015-16 declaring the total income of Rs. 45,80,790/-. A search and seizure action under section 132 of the Act was carried out by the Income Tax Department on 03.12.2015 at the resident and office premises of the assessee and its group companies and other associates. Consequent to the search action under section 132 of the Act, a notice under section 153A of the Act was issued by the AO on 16.01.2017. In response to notice under section 153A of the Act....
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....190). Copies of broker's ledger and Form 10DB is also enclosed (pages 199-215). The sale transactions of shares have suffered expenses like brokerage, service tax, STT, stamp duty, exchange and SEBI turnover charges, etc. which are specifically shown in the contract notes issued by the Broker. 5. The assessee during the year under consideration has earned long term capital gain (LTCG) amounting to Rs.14,00,76,815/- on sale of shares of Pine Animation Ltd. (PAL) a company listed on Bombay Stock Exchange. The assessee had 15 lacs equity shares of PAL in earlier years and after holding more than one year sold those shares during the year of consideration for a sum of Rs.14,16,80,449/-. The assessee sold these shares on BSE network and paid STT, service tax, stamp duty, etc. The assessee claimed this LTCG as exempt under section 10(38) of the Act. During the course of assessment proceedings, the AO required the assessee to prove his claim of LTCG on sale of shares of PAL vide letter dated 20.11.2017. The assessee filed various details in support of his claim but AO rejected relying on report of investigation wing and held that receipt of sale proceeds from BSE broker or clearing....
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....Narendra Shah and associated brokers, entry operators and the assessee had worked out an arrangement in which the shares were Acquired by the assessee, the share prices were rigged and then with the help of entry operators by routing the cash, shares were sold at high price to arrive at tax free capital gains. d) Analysis of transactions: Facts revealed that such trading transactions of purchase and sale of shares are not been effected, for commercial purpose but to create artificial gains, with a view to evade taxes - i) Transactions of shares were not governed by market factors prevalent at relevant time in such trade, but same were product of design and mutual connivance on part of assessee and the operators. ii) The assesses resorted to a preconceived scheme to procure long-term capital gains by way of price difference in share transactions not supported by market factors. iii) Cumulative events in such transactions of shares revealed that same were devoid of any commercial nature and fell in realm of not being bona fide and, hence, impugned long term capital gain is not allowable. iv) The order of SEBI referred above has also given ....
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....ection 133(6) of the Act was issued to the exit providers to furnish details related to the above said transactions but no compliance was received from the said parties. xiii) The income tax liability is ascertained on the basis of the material available on record, the surrounding circumstances, human conduct and preponderance of probabilities. xiv) After considering the findings of the search/ survey, inquiries conducted in the case of assessee, brokers, operators and the entry providers and the nature of transaction entered into by the assessee the LTCG claimed exempt u/s 10(38) of the act by the assessee cannot be allowed and the amount received back as sales proceeds on sale of shares is required to added back towards his taxable income under section 68 of the Act." Aggrieved, against the order of the AO, assessee preferred the appeal before CIT(A). 6. The CIT(A) also confirmed the action of the AO by observing (the relevant paras are being reproduced) as under: - "Details of the Penny Stock Transaction 12.0 During the year under consideration, the Appellant had claimed LTCG on the shares of PAL, as exempt u/s 10(38) of the Act. As per ....
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....ntial basis to aforesaid allottees were locked-in for a period of one year i.e. up to December 12, 2013 for the 1 preferential allotment and March 14, 2014 for the 2nd preferential allotment in terms of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. 24.4 On May 20, 2013 the equity shares of PAL were split in the ratio of 1:10. Consequently, the paid up share capital of PAL increased to 27,70,00,000 comprising of 27,70,00,000 shares of Rs. 1 each, as on May 20, 2013. ................... 26.4 The Appellant's statement was recorded during the course of search proceedings u/s. 132 of the Act, wherein he had stated that all his affairs related to share markets were managed by his father, Shri Balkrishan Mittal. The Appellant had contended that they had got some information about some scrips, where there were reasonable chances of getting good return in short terms. But the source of information, basis of information, documentary evidence in support of such a claim had not been furnished by the Appellant. Thus, the Appellant had only made general and vague observations on the issue of allotment o....
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....ompany. Further, the similar modus operandi adopted by almost all the Preferential Allottees is not a mere coincidence and leaves no doubt their involvement in the bogus LTCG Scam. Poor Financials of Pine Animation Ltd. 27.0 A perusal of the audited accounts of PAL indicate its poor financial condition and razor thin profit for several years in continuity. Before the audited accounts of PAL are examined and commented upon in details, it is important to reproduce some of the important figures contained in the balance-sheets & profits and accounts for the years ending from March, 2011 to March 2015, as under: - Balance sheet (Figures in Rs. Cr.) Description Mar' 15 Mar' 14 Mar 13 Mar' 12 Mar' 11 Total Share Capital 27.70 27.70 27.70 3.00 3.00 Reserves -1.40 -1.91 -2.50 2.62 -2.55 Inventories 21.78 22.67 16.34 0.00 0.00 Loans and advances 8.69 9.58 11.25 0.06 0.06 Book value (Rs) 0,95 0.93 9.10 1.27 1.51 Profit & Loss Account (Figures in Rs. Cr.) Description 12mths 12mths 12mths 12mths 12mths Operating Profit -0.02 -0.53 0.11....
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.... against the average ESE price of Rs. 95 per share. Thus, the BSE price of PAL is 100 times more than the Book Value of the share. All this clearly reveals that the share price of BSE had been highly manipulated upwards by the Operators and Exit Providers for the purpose of providing a golden exit to the beneficiaries, like the Appellant. Poor Track Record of PAL Scrip on BSE 28.0 The material on record reveals that the scrip was earlier listed on BSE from March 25, 1994 and trading was suspended in the scrip w.e.f. November 09, 1998. Thus, the dubious nature of the PAL scrip was quite evident from the several undisputed historical facts. A prudent investor will never invest in such a suspicious nature of scrip, which had been found to be involved in manipulations on the Stock Exchange and hence, banned from trading. 28.1 However, the suspension of trading in the scrip was revoked w.e.f June 22, 2012 and soon after, PAL was able to raise substantial fund, through preferential allotment of shares. The sudden spurt in the activity and inflow of hinds in PAL, just after the suspension was revoked is not at all based on any real or genuine consideration, but ....
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....May 28, 2013 being the he entire price rise was stage managed by certain Scrip Operator Entities. It was noticed that such entities by executing 1 or 2 trade(s) per day of meagre quantity were able to increase the price of the scrip in a significant manner. 30.2 Thus, it is highly surprisingly that none of the preferential allottee had come forward to sell the shares, during the price rise period. The fact that no preferential allottee had offloaded its PAL shareholding, though the share price of PAL was rising rapidly, is in itself a strong circumstantial residence about the prearranged transaction of LTCG. All the beneficiaries waited for the price rise to achieve the nadir and also waited for the completion of the one year lock in period, which as per the understanding with the Operators was bound to happen together for a sufficient period of time, though at a later stage. High Price of the Scrip, still Volumes Low 31.0 The LTCG Scam is evident from the fact that even when the price was quite high and plateaued, still none of the Beneficiary had offloaded his shareholding in PAL before the lock in period of 1 year was over. This is evident from the fac....
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....during this period. This offloading activity by the 'Beneficiaries' continued for around a year and after that finally, the stock started falling down. Thus, on January 30, 2015, the price of the scrip fell to just Rs. 38.5. During the period starting from December 17, 2013 to January 30, 2015, the scrip was traded with an average volume of 2,74,922 shares per day and total volume of 7,36,79,112 shares were traded in 268 days. Thus, the volumes / during this period were extremely high and the Beneficiaries booked the LTCG during this period of time. 32.2 A graphical Presentation of the simultaneous high price & high volume movement in the scrip of PAL during the period December 17, 2013 to January 30, 2015 is represented, as below: - (copy of above image is taken from CIT(A) order for AY 2015-16 in the case of Mahender B. Mittal) 32.3 In the above pictorial representation, the continuous line represents the closing price of the PAL scrip and the graph in the form of manhattans represent the volume in the PAL scrip. 32.4 Thus, alter the expiry of the lock-in period, the average volume increased astronomically by 4433 times. During this per....
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....ares for an amount of Rs. 15,00,000/-, which after split of 1:10 were finally sold at an amount of Rs. 14,19,36,826.50. Thus, the Appellant had got astronomical return on the investment made in PAL, which is worked, as under: - (14,19,36,826.50 - Rs. 15,00000) * 100 = 9362.45% Rs. 15,00,000 34.1 It is clear that the Appellant along-with other 'Beneficiaries' had made a killing by getting a return of 9362.45% on the investment made for a period of one year. The unrealistic 9362% rate of return on investment for an year, itself proves the bogus and arranged nature of the LTCG transactions. Hence by taking into the account the split of 1:10 in the scrip, it had been noted that the original share of Rs. 10 had been sold by the Appellant at an average price of Rs. 946.24 per 34.2 Such huge rate of return, obviously is not genuine but had been arranged by the Exit Providers, who had provided a lucrative exit to the Preferential Share allottees. This was only possible because the PAL management, promoters & directors, Preferential allottees, Promoter related entities and the Exit Providers were hand in glove with each other. In the whole process, the principle of pr....
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....ncome into books through bogus Long Term Capital Gain. 36.6 Further, on these contentions of the Appellant, it is stated that the appellant had not reproduced the Para 12 of the said order of SEBI, which is quite relevant in this context and the same Is reproduced hereunder, for ready reference: - 12. The revocation of the directions issued vide the abovementioned orders (at paragraph 11) is only in respect of the entities mentioned at paragraph 9 of this order in the matter of Pine Animation Limited. As regards remaining Regulations, etc., were observed and SEBI shall continue its proceedings against them. Hence, the directions issued vide orders dated July 05,2016, August 22, 2016 and June 02, 2017 against the remaining 62 entities shall continue." 36.7 A perusal of the above Para 12 of the SEBI's order makes it clear that the adverse orders passed against the remaining 62 entities shall continue. Hence, the investigations of SEBI into the trading transactions of PAL are still continuing. Hence, the reliance of the Appellant on the SEBI's order dated 19.09.2017 is totally misplaced, as the SEBI's order had not dealt at all with the issue of rouging of t....
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....ently assessed the sale proceed as an unexplained cash credit under section 68 of the Act. The AO has referred to the findings in the general study report of the Investigation Wing of Kolkata and Mumbai, wherein it laid down the purported modus operandi of converting unaccounted money into exempt LTCG. It is stated that a person acquires shares of penny stocks trading at low price either through private placement or on merger of private limited company of which such person is a shareholder with a penny stock company. Thereafter unaccounted money flows to operator's / exit providers who artificially raise the prices of penny stocks on stock exchange. Thereafter, the penny stocks are sold to earn huge exempt LTCG. 10. In regards to the present case the learned Counsel referred to the observations of AO regarding PAL script in his show cause notice: "In the case of M/s Pine Animation Ltd, the Investigation Wing Mumbai has conducted a survey action on M/s Saraf Equity Services Pvt. Ltd. on 03.12.2015, an exit provider in script Pine Animation Ltd. During the course of survey proceedings, statement on oath of Shri. Mandar Dilip Naik, Director of M/s. Saraf Equity Servi....
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....understood from the assessment order the assessee's name or his transactions are not referred in such reports and the AO has not established any link between that report and assessee's transactions. This is also fatal as reliance on such investigation report, without confronting the assessee with the same, renders the assessment bad in law. The Investigation in assessee's case by way of search did not reveal any connection with the findings or evidences as referred to in such reports. 12. He stated that the statements of Anil Khemka & Sanjay Dey and Mandar Naik relied upon the AO does not establish that the assessee has paid any unaccounted money to these parties. None of the replies to the question posed indicate that they received any unaccounted money from the assessee or that they received or utilized the unaccounted money received from the assessee with reference to shares of PAL. It is also not established that they had any arrangement or dealings or relation with the assessee leave apart the alleged accommodation or exit provided who has not stated any dealing with them against the principles of natural justice. Further, as regards the parties listed by AO ....
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....ed exit providers and accommodation entry providers without any evidence or involvement mentioned in such investigation reports and statements of such persons. The seamless process of transactions at BSE as explained hereafter does not identify and provide us the identity of persons who have purchased those shares sold by assessee. The assessee has ordered his broker to sell the shares of PAL who in turn sold the shares on BSE platform. The assessee/his broker were not aware about the buyers or their brokers who purchased the shares of PAL sold by the assessee. The allegation of AO in para 7.2 and 7.3 of the Assessment order that that the assessee mainly traded in one script (PAL) which is suspicious is completely incorrect and not supported by facts. During FY 2014-15 (AY 2015-16) the assessee also traded in following scripts:- STCG: a) ICICI Bank, b) Guj NRE, c) Gitanjali Gems, d) HFCL. E) Wondrella, f) Hind Motors, g) Tata Chem, h) Cr. Griev., i) Coal India, j) Unitech, k) Infosys, L) Tech Mahindra, m) HCL Techno LTCG: a) Pine animation, b) Sundaram Inv. C) Care rating, d) Kolte Patil, e) IDEA, f) Balmer Lawr, g) S. Clayton, h) GFL Finance, i)....
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....other side, the buyer pays the price as per contract note to his broker who pays to the SE who then transfers the amount to the seller's broker on settlement day. Thus, the seller and the buyer or their brokers does not have direct relation nor dealing with each other. Nor they know the buying or selling parties or the brokers. The customers deal with their respective brokers and brokers deal with SE or the clearing system. > In nutshell, the buyer's broker makes payment to SE and seller's brokers deliver shares to the SE. Thereafter, settlement is done by clearing system and transfer of amounts online to seller's brokers bank account and shares to buyer's brokers demat account who in turn pays to the sellers and transfers shares to the demat account of the buyer. Hence sellers and buyers does not deal directly or come in contact nor their broker come in direct contact and neither of them know the contra party. > The whole system of buying and selling of shares done on the stock exchange platform is faceless and SE platform deal with brokers only and parties deal with their brokers. For example, shares sold by X through its broker bought by ABCD broker for....
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....ssee has no connection or nexus with the buyers as also the activities of the buyers. Even if the buyers are doubtful or of suspicious character that does not affect the transactions of sale of shares by the assessee through proper channel i.e. on the recognized stock exchange through the registered broker and payments were received. He argued that during search itself and in the course of investigation the department had made exhaustive survey and enquiry for these transactions from Geojit and other brokers and nothing incriminating was found against the assessee. The details, documents and third party evidences supporting the sale transactions and payments received have been filed by the assessee. The transactions were done at prices prevailing on the date of transaction and STT was paid on such transactions cleared through exchange clearance system. 20. The learned Counsel further referred to SEBI Investigation in case of PAL. It was argued that in case of PAL, the whole time member of SEBI the market regulator, on a preliminary report of its surveillance department has passed ad interim ex-parte order no. WTM/RKA/ISD/36/2015 dated 08.05.2015 against PAL and 177 entities incl....
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....es nor any role in price manipulation, volume manipulation in the script of PAL. No violation of provisions of SEBI Act, SCRA, PFUTP regulation's, etc. were observed in respect of 114 entities (including the assessee). The list of 114 entities referred in the SEBI Order also includes following alleged exit providers discussed in show cause notice and referred to in the assessment order as under: - Sr. No. Name of Exit Provider 121 Dhriti Traders PL 127 Dreamvalley Trading FL 162 Signet Vinimay PL 165 Spice Merchants FL 172 Winall Vinimay P L 22. These alleged exit providers were also exonerated by the SEBI Order and the remaining alleged exit providers viz. 1) Dwarkapuri Constructions P Ltd., 2) Olympia Sales Agencies P Ltd. and 3) Particle Industries P Ltd. were neither referred in the SEBI ex-parte order dated 08.05.201 5 nor in the final order dated 19.09.2017 which goes to prove that neither the assessee nor the exit providers alleged by the AO were involved in any arrangement or accommodation and hence , allegations of AO are wrong and without any evidence. Copies of SEBI ad-interim ex-parte order dated 08.05.2015, confirmatory order date....
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....sold all the shares in a time span of 3 months. To prove the genuineness of the transactions, the assessee provided all the supporting evidences like, share application form, bank statement highlighting the transactions, contract notes, broker's ledger, demat statement Form 10DB, SEBI's final order, SAT Order, etc. 26. However, the AO made addition under section 68 of the Act and CIT(A) confirmed the addition by ignoring all the facts and evidences and without providing any proof of assessee's involvement in the manipulation of price or volume of the shares of the company or pointing out any defect or deficiency in the process of transactions or its eligibility to deduction u/s 10(38) of the Act. We noted that the AO in his Assessment Order in para 7 and 8 has exhaustively mentioned in detail the financials of PAL, preferential allotment of shares, price of PAL, Exit providers, etc. Following paras have been ditto /copied from SEBI ad-interim ex-parte order dated 08.05.2015. Although after Investigation, SEBI in its final order exonerated the assessee and the alleged exit providers but the AO failed to consider the SEBI final order in the assessment order. It mean....
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....ty incurred on all the transactions done on BSE platform, a stock exchange recognized by the market regulator SEBI. The documents have been accepted by the AO. b) Bank statement showing sale proceeds credited by the broker Geojit. Demat account of the assessee showing sold shares debited / transferred to broker. c) The sale consideration is received by assessee from Geojit, a registered broker of SEBI/BSE, with who has been dealing with Geojit for more than 10 years as per contract note directly in the bank account after shares are delivered from demat account and received by the assessee. Copy of demat account and bank statements where sale proceeds are received are submitted as discussed above. Geojit has also been examined and interrogated by the Investigation Department during search proceedings. Geojit's source is BSE settlement system. This explains identity of the creditor and source of money paid by assessee for genuine transaction of sale of shares. d) Sale is done at prevailing price quoted on the BSE. (BSE published quotations daily and rate list of the relevant dates can be produced if required) e) The shares are sold by assessee&....
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.... view of the above, we are of the view that the assessee has explained and submitted evidences to prove identity, nature and source of the cash credit on account of sale proceeds credited / received in the bank account of the assessee and also furnished all evidences comprising contract notes, brokers, banking details in support of the genuineness of the transactions. The AO has not pointed out any deficiency in the documents or inherent weakness in the explanation or doubted genuineness of the transactions for want of any evidence. The AO did not produce any evidence whatsoever to prove the allegation that unaccounted money changed hands between the assessee and the broker or any other person including the alleged exit provider nor proved that the assessee has taken any type of accommodation from any person or so called exit providers to introduce unaccounted money into books by way of LTCG. With the purchase and sale transactions of shares of PAL are proved genuine by third parry evidences - bank, broker; DP-demat account, and in the absence of any material to prove cash changing hands in the transaction, the addition made by the AO under section 68 of the Act, by treating the sa....
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.... preponderance of probability and human behavior. We noted that the AO as well as CIT(A) have rejected all evidences filed by the assessee by referring to 'Modus Operandi" of persons for earning long term capital gains which is exempt from Income tax under section 10(38) of the Act. All these observations are general in nature and are applied across the board to all including the assessee. Specific evidences produced by the assessee are not controverted by the revenue authorities. No evidence collected by the AO from third parties is confronted to assessee. No opportunity of cross-examination of persons, on whose statements the revenue relies to make the addition, it provided to the assessee. The addition is made based on a general report from the investigation wing. 32. The issue for consideration before us is whether in such cases, the legal evidence produced by the assessee has to guide our decision in the matter or the general observations based on statements, probabilities, human behavior and discovery of the modus operandi adopted in earning alleged bogus LTCG and STCG, that have surfaced during investigations, should guide the authorities in arriving at a conclusion a....
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.... generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected by the assessee. The Hon'ble Supreme Court in the case of Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC) had held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC) (SC) the Hon'ble Supreme Court held that, the onus to prove that the apparent is not real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences, which would directly prove the fact of bogusness or establish circumstance unerringly and reasonably raising interference to that effect. The Hon'ble Supreme Court in the case of Umacharan Shaw & Bros. v. CIT (1959) [1959] 37 ITR 271 (SC) held that suspicion however strong, cannot take the place of evidence. In this connection we refer to the general view on the topic of conveyance of immovable prope....
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....ird party documents are collusive transactions. 36. The Hon'ble Supreme Court way back in the case of Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) held that assessment could not be based on background of suspicion and in absence of any evidence to support the same. The Hon'ble Court held: "Adverting to the various probabilities which weighed with the ITO might be observed that the notoriety for smuggling food grains and other commodities to Bengal by country boats acquired by 'S' and the notoriety achieved by 'D' as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidence in that behalf. The mere possibility of the appellant earning considerable amounts in the year under consideration was a pure conjecture on the part of the ITO and the fact that the appellant indulged in speculation (in Kalai account) could not legitimately lead to the inference that the profit in a single transaction or in a chain of transactions could exceed the a....
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....arising out of sale of shares of listed companies and consequent addition under section 69C on the presumption that commission at the rate of 3% was paid is hereby deleted. Accordingly, this common and interconnected issue of the four assessee's appeals is allowed. 38. Similarly, common and inter-connected issues in the cases of Vijay Ratan Balkrishan Mittal in ITA Nos. 3427-3429/Mum/2019 for AYs 2012-13 to 2014-15, Mahendra B Mittal (HUF) in ITA No. 3426/Mum/2019 for AY 2013-14, Pooja Mahendra Mittal in ITA Nos. 3311-3314/Mum/2019 for AYs 2012-13 to 2015-16 & Mahendra B Mittal in ITA Nos. 3264 & 3265/Mum/2019, 3247/Mum/2019 AY 2012-13, 2014-15 & 2013-14 respectively, hence, taking consistent view in these appeals also, we allow the same. 39. The next common issue in these appeals, in the cases of Vijay Ratan Balkrishan Mittal in ITA Nos. 3427-3429/Mum/2019 for AYs 2012-13 to 2014-15, Mahendra B Mittal (HUF) in ITA No. 3426/Mum/2019 for AY 2013-14, Pooja Mahendra Mittal in ITA Nos. 3311-3313/Mum/2019 for AYs 2012-13 to 2014-15 & Mahendra B Mittal in ITA Nos. 3264 & 3265/Mum/2019, 3247/Mum/2019 AY 2012-13, 2014-15 & 2013-14 respectively, is as regards to the assumption of juri....
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....mpanies and constituted incriminating materials and were rightly used by AO in framing assessment under section 143(3) r.w.s 153A of the Act. 42. The learned AR vehemently argued that additions as made by the AO in the assessment framed under section 143(3) r.w.s 153 of the Act dated 22.12.2017 were without jurisdiction as the assessment has not abated on the date of search. The learned AR submitted that in case of unabated assessment on the date of search, the addition has to be made with reference to incriminating material seized during the course of search and if no such material is seized, the addition to the income of the assessee in unabated assessment is beyond the authority of the AO. The learned AR while drawing our attention to provision of section submitted that there where search is conducted under section 132 of the Act, the notice under section 153A of the Act is to be issued in respect of six assessment years falling prior to the date of search. The learned AR submitted that so far as the unabated assessment years are concerned , the AO has very limited jurisdiction so far as the scope of the assessment of the assessee's income is concerned. In other word, the add....
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....dition in the unabated assessment . The case of the assessee is squarely covered by the decision of Hon'ble Bombay High Court decision in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), wherein the Hon'ble Bombay High Court held as under: - "a) Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of Rs. 3,91,55,000/- under section 68 of the Act in respect of share application money and addition of Rs. 11,24,964/- under section 14A made by the Assessing Officer, as it was not based on incriminating material found during the course of search. d) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 3,91,55,000/- under section 68 of the Act in respect of share application money and addition of Rs. 11,24,964/- under section 14A made by the assessing officer without appreciating the fact that the decision of continental warehousing corporation & the decision in the case of All Cargo Global Logistics have not been accepted by the department and an SLP has been filed in the Supreme Court in both the cases....