TaxTMI 
TaxTMI 
2019 (12) TMI 37
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....t. A search u/s 132 was conducted in the cases belonging to Bhalotia Group including the case of the assessee on 01.12.2015. Pursuant to the search, a notice u/s 153A was issued by the AO in response to which the return of income for the year under consideration was filed by the assessee on 16.02.2017 declaring the same total income of Rs. 39,42,030/- as was declared in the return originally filed u/s 139 of the Act. During the course of search, the bank account of the assessee was found showing receipt of share application money of Rs. 3,15,00,000/- during the year under consideration. In order to verify the genuineness of the said share application money, notices u/s 131 were issued by the AO to the concerned share applicants. The said notices, however, either remained unserved or uncomplied with. The assessee company, therefore, was called upon by the AO to offer its explanation in the matter. In reply, it was submitted by the assessee that the share applicants could not respond to the notices issued u/s 131 because of some inconvenience. It was also submitted by the assessee that all the transactions involving the receipt of share application money were routed through bankin....
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....garb of equities through multiple layers. ix. Mere filing of copies of ITRs / bank statements / accounts of the subscribers would not absolve the assessee from the complicity of introducing unaccounted money in his books in the garb of equities. x. The assessee was given reasonable and sufficient opportunities to produce all the shareholders, which he failed to do. The assessee had tailed to explain the inconvenience in producing the share applicants for verification of genuineness of transactions and creditworthiness of the applicants xi. It is true that when transactions are through cheques, it looks like real transactions- But one should look behind the transactions and find out motive behind transactions. Mere receipt of share application money through cheque does not render a transaction genuine. xii. The assessee has not explained the reasons for non service of letters/summons to the shareholding companies which were despatched at their registered office. It shows that these companies only exist on paper and they have no business activity at all. It raises question mark over the genuineness of the transactions and creditworthiness of the sh....
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....r consideration. Aggrieved by the orders of the Ld. CIT(A), the assessee has preferred these appeals before the Tribunal. 7. The additions made by the AO u/s 153A of the Act for both the years under consideration in case of the unabated assessments are challenged by the assessee mainly on the ground that the same having been made without any incriminating material found during the course of search are not sustainable. In this regard, the learned counsel for the assessee submitted that the returns of income for both the years under consideration were regularly filed by the assessee u/s 139 on 01.10.2010 and 22.09.2011 and since no notice u/s 143(2) was issued by the AO within the prescribed time limit, the assessments for both the years consideration had become final before the date of search i.e 01.12.2015. He contended that the scope of unabated assessments for the years under consideration u/s 153A of the Act thus was confined to assessment of undisclosed income of the assessee as detected on the basis of incriminating material found during the course of search and since there was no incriminating material found during the course of search which could form the basis of the ....
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....ating material found during the course of search, the additions made by the AO and confirmed by the Ld. CIT(A) by treating the share application money as unexplained cash credit u/s 68 as well as by way of disallowance u/s 14A read with Rule 8D are not sustainable. 10. We have considered the rival submissions and also perused the relevant material available on record. The main contention raised by the learned counsel for the assessee is that when the assessments originally completed for both the years under consideration had become final before the date of search, there was no abatement of the said assessments and the scope of assessments u/s 153A of the Act made in pursuance of the search was limited to assessing the undisclosed income of the assessee as found / detected on the basis of incriminating material found during the course of search. This contention raised by the learned counsel for the assessee is duly supported by the decision of Delhi High Court in the case of Kurele Paper Mills Pvt. Ltd. (supra) wherein no incriminating evidence related to share capital issue was found during the course of search and keeping in view the same, the addition made by the Assessing Off....