TaxTMI 
TaxTMI 
2018 (2) TMI 1961
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee u/s 68 of the Act which was a part of Rs. 11,17,20,000/- already taxed u/s 68 in the hands of Uniworth Agencies Pvt. Ltd, loan creditor thus leading to double addition of the same income. 3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in facts and in law as unsustainable evidences/statements collected without the knowledge or intimation to the assessee were relied upon; no opportunity of cross examination was provided to the assessee which is in defiance of the settled principles of justice based on judicial judgment of the Apex Court in the case of Andaman Timber Industries vs CCE. 4. That the learned CIT(A) erred in relying upon the statement of third parties without providing copy of the said statement and without according opportunity of cross examination to the appellant although the impugned statements could not have been relied upon in proceedings u/s 153A of the Act when no incriminating document was found in the course of search. 5. That the order of the Ld. CIT(A) being not based on the facts of the case of the appellant and being contrary to law, should hence be quashed and the appellant Compan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n order to verify the genuineness of the loan and subsequent repayment, enquiry was conducted in several banks by calling for corresponding flow of fund and it was found that a number of paper companies detected by the Investigation wing of Kolkata and a share broker who was found to be involved in such transaction were also found to be part of fund flow of loan arrangement and repayment through banks. The names of such companies and person which are part of the chain through which the amount repaid by the assessee was routed are as under: 1. Bhima Agencies Pvt Ltd, 2. Topline Investment Consultant Pvt Ltd. 3. Dalmia Investment Development Ltd. 4. Blackberry Projects Pvt Ltd. 5. Panghat Textile Pvt Ltd. 6. Dream Commodeal Pvt Ltd and 7. Ashok Kumar Kayan (Share Broker) 8. The AO further observed that the profit and loss account, Balance Sheet of most of these companies as per the above listed concern were analysed and found that no business is being run by them. They are only involved in receiving investment from certain similar companies and making investment as share capital in other companies. There is no normal b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also clear from the following table. 2008-09 2009-10 2010-11 2011-12 2012-13 Share Capital/premium 11,18,20,000 11,18,20,000 11,18,20,000 11,18,20,000 11,18,20,000 Investment 11,20,75,000 11,14,80,000 11,99,38,000 3,75,58,000 36,58,000 (d) The identity of the investor company namely Uniworth Agencies Pvt. Ltd. has been established, genuineness of the transaction has been proved as all the transactions are through Bank. Even the detail source of investment in the hands of Uniworth Agency Pvt. Ltd., has been explained with documentary evidences. Credit worthiness has been established and hence the assessee has discharged its onus on the transactions. (e) The alleged statement recorded from Mr. Garg & Tharad was not a voluntary statement and merely got signed from them on pressure. Statement was self contradictory. (f) The assessee company has neither started any business nor a single rupee of revenue is there and hence question of unaccounted money in the hands of assessee does not arise at all. Similarly in the entire SGBL group neither any incrementing document was found nor was any source tres....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... accommodation entries by way of share capital/loan/advances etc. Assessee although produced all the documentary evidence in support of such advance failed to produce the directors of this company for examination. The nature of financial transaction between the assesesee and Uniworth is akin to all type of such transaction in the case of accommodation entry providers. In all such type of transaction accommodation entry is provided by companies having all the proper details in compliance to the ROC and the bank account is used to conduit the fund without any justification of transfer of such huge sum. All these companies have no recognisable real business and their balance sheet show huge share capital and equivalent amount of investments. The activity of such share holders and investment companies are all of same nature. 11. The AO further observed that this is the common modus operandi of Kolkata based shell companies. Here, unaccounted cash is routed through several layers to reach the intended beneficiary. This is explained at length by the statement of two such entry operators viz. Raj Kumar Tharad and Pradeep Garg, who are based in Kolkata. Relevant part of the statement of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Q.8 Please explain the source of funds used for raising share capital in your companies ? Ans. Source of fund for enhancing share capital is unaccounted money of beneficiaries, we used to get cash from beneficiaries first, then we hand it over to people for depositing the cash in various accounts and then transferring it to my companies through cheques. We used to deposit the cheques in my companies for raising share capital. Finally, Raj kumar Tharad used to sell these companies to beneficiaries in lieu of commission. Q.10 Please explain to whom you have sold company of Midas Capital Pvt. Ltd and Uniworth Agencies Pvt. Ltd. and what was the modus operandi? Ans;-These companies were taken over by one Mr. Sunil Gupta of Cuttack, Odisha. The companies were transferred by way of share transfer to Sh. Sunil Gupta and his group companies. Sh. Sunil Gupta approached me in 2010 and handed me cash. This cash was handed over to several of my dummy concerns. The money after travelling through several of my companies controlled by my got deposited into the books of SGBL (India ) Ltd and other group companies controlled by Sunil Gupta. Q.11. please provide t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atement. It is also on record that in most of the cases, the amounts were deposited in the account either on the same day or a day before the issue of cheque to the assessee. The fact that these companies were complying with ROC formalities does not add any credibility or evidentiary value. In any case, it does not ipso facto prove that the transactions are genuine. The mere fact that the transactions were entered into by way of account payee cheques is also not conclusive and cannot be held to be sacrosanct. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence. The same view had been adopted by the Hon'ble Delhi High Court in the case of the CIT Ks Durga Prasad More (1971) 82 ITR 540 and stated that. - "It is true that the apparent must be considered real until it is shown that, there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise ic will be very easy to make self- serving statements in documen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rough the decisions of Hon'ble Courts and Tribunals as furnished by the assessee, the AO observed the said citations are not applicable in the facts and circumstances of the present assessee. The AO, therefore, in the light of the facts of the case and aforesaid exposition of the legal position, with regard to the identity and creditworthiness and genuineness of the transactions, was of the opinion that the credit of Rs. 6.92 crores shown as advance and credited in the books of the assessee company is unexplained and added to the returned income of the assessee u/s.68 of the Act. 17. On appeal, the CIT(A) observed that the assessee has contested that no incriminating material was seized and therefore no addition can be made in assessment u/s.153A of IT. Act, 1961. It is seen from the assessment order that the assessing officer has relied upon seized tally accounts in framing the assessment order. The assessing officer has also relied upon the statements of Rajkumar Tharad and Pradeep Garg, the alleged entry operators, recorded on 13.11.2014. Therefore, the submission of the assessee that no incriminating material is available is incorrect. The decisions relied upon by the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 6,92,00,000/-. It is seen from the assessment order that the assessing officer has relied upon statement of Rajkumar Tharad and Pradeep Garg who testified that the loans given to the assessee from Uniworth Agencies Pvt Ltd are out of cash received from Sri Sunil Gupta, Director of the assessee company and routed through several layers of shell companies. The assessing officer asked the assessee to produce the directors of Uniworth Agencies Pvt Ltd before him for examination. The assessee could not produce directors of Uniworth Agencies Pvt Ltd. Considering these aspects the assessing officer has held that the assessee has failed to establish genuineness of the loan transactions and identity/creditworthiness of the creditors. He further observed that during the course of the appeal proceedings the assessee has stated that all the loans have been routed through the banking channels. The assessee has further stated that Uniworth Agencies Pvt Ltd had its own share capital of Rs. 11.17 crores and the loan has been given out of this funds. It is further contested by the assessee that an assessment has been made in the case of Uniworth Agencies Pvt Ltd and the share capital of Rs. 11.17....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing that the investment made by Uniworth Agency Private Limited in the project of the Appellant Company was not genuine. In appeal before the Ld. Commissioner of Income Tax (Appeals) [CIT(A)] the Ld. CIT(A) has vide his Order dated 13/11/2017 upheld the said additions by the Ld. A.O. Before going on to the submission of the appellant, it is of utmost relevance to firstly lay down in brief, the facts of the case of the appellant relevant to the said case: FACTS OF THE CASE: 1. The Assessee is a Private limited company incorporated in the year 2003 with an object of construction of residential/ commercial building apartments, complex malls along with real estate development for it's commercial exploration. The current registered office of the Assessee is at "C/o: B. P. Shukla, D-2227JndiraNagar, Lucknow, Uttar Pradesh-226016".The Income tax Returns of the Assessee company are duly being filed from this registered office address of Lucknow at JCIT, Range-1, Lucknow, with PANAABCE4000A. Prior to this, during the A.Ys 2012-13 and 2013-14, being the years under appeal before your Honours, the registered office of the Assessee company was a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Agencies Pvt Ltd of Rs. 6,92,00,000/- and Rs. 3,06,00,000/- credited in the books in AY 2012-13 and AY 2013-14 respectively and accordingly added the same to the income of the Assessee, 7. Aggrieved by the order issued by the learned AO, the Assessee filed an appeal before the learned CIT(A). The appeal of the Assessee was dismissed by the learned CIT(A) vide order dated 13-11-2017. 8. Aggrieved by the order of the learned CIT(A), the Assessee has filed an appeal before Your Honours 9. In view of the same, the Assessee hereby makes the following submission before Your Honours setting out the facts and the reasons why the proceedings initiated u/s 153A of the Act is not as per law and hence the entire proceedings are liable to be quashed. SUBMISSIONS: 1. Stating the particular facts of the additions made, it is stated that in the year 2008, the Assessee company was able to get a piece of land from the Cuttack Development Authority (CDA) for which a 10% Emd deposit of Rs. 2,12,57,280/- had been made. 1.1 The cost of the said land being very high, efforts were made to mobilize funds from various parties. The Assessee compa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was drawn in the in the following 11 names of the companies belonging to the Sajjan Kumar Group: i) SGBL Automobiles (P). Ltd (ii) SGBL Multiact (P) Ltd ( iii) SGBL Properties (P). Ltd (iv) Diamond Plaza (P).Ltd (v) E City Projects Lucknow (P).Ltd (vi) Shree Chakanayan Agro (vii) Shree ChakanayanTradelink (P). Ltd (viii) Omkara Associates (P). Ltd (ix) Kamadhenu Trading Co. (x) Midas Capital (P) Ltd (xi) Sai Enclave Copy of the said Panchnamas are enclosed at pages 31-44 of the Paperbook for AY 2012-13. In the said search premises, certain tally accounts all forming part of the regular accounts of the Assessee Company were found. All these accounts were very much the regular books of accounts of the Assessee, all duly recorded and disclosed as such in the Regular books of accounts and covered in the Returns filed u/s 139(1) of the Act. 3.2 As seen from above, along with other names, the name of the Assessee company also appeared on the said Panchnama. Based purely upon the said Panchanama, in the absence of any incriminating material, notice u/s 153A of the Act dated 29....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "*153A. Assessment in case of search or requisition. *(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 ; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ivity. " It would not be out of place to mention here that as per the provisions of Article 141 of the Constitution of India, 1949, the Law declared by Supreme Court shall be binding on all courts within the territory of India and accordingly, it is the law of land. 4.2 Going briefly into the history of the legislations in relation to search proceedings and assessments, it is stated that since the commencement of the Income Tax Act, 1961 there was no separate procedure for assessment of search cases. Prior to 31st May 1995 there were no special provisions for assessment of search cases. Assessments were governed by the regular provision of the I.T. Act as applicable to relevant assessment year as prevailing then. Assessments were used to be reopened having recourse to the provision of section 147 of the Act. However a provisional order u/s 132(5) used to be passed for release of seized assets. 4.3 Thereafter, with effect from 1st June 1995, scheme of block assessment in section 158BC and 158BD as per chapter XIVB of the Act was introduced. The main purpose of introducing block assessment scheme was early finalization of search assessment and reduction in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3A of the Act, it is stated that from the plain reading of the relevant section it would suffice that Section 153A would be applicable where a search is initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A of the Act after 31st May, 2003. Therefore, before invoking the provisions of section 153A of the Act it would be necessary to comply with the provisions contained under section 132(1) of the Act. Once the warrant of authorization or requisition is issued and search is conducted, Panchanama is drawn, the completed assessments for all the relevant years would get reopened irrespective of whether any incriminating material is found or not in relation to a particular assessment year. 5.1 It is clearly inscribed in the law that an assessment u/s 153A is different from regular assessment. The section comes into play only when a search is initiated u/s 132 or books of account, other documents or any assets are requisitioned u/s 132A after 31.5.2003. Also to be highlighted that it is during the course of search itself, such generally incriminating documents or papers etc. or unaccounted assets are found. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of initiation of the search‟, and makes it abundantly clear that only such assessment or reassessment proceedings are liable to abate. In other words, Assessments which are not pending i.e. completed Assessments as on the date of search would hold their base and would not abate. 5.7 Thus what emerges is that only pending Assessments as on the date of search shall abate. The legislature is clear that any appeal, revision or rectification proceedings, if pending as on the date of search shall not abate. Accordingly, as far as completed assessments are concerned, they do not abate and pending appeals etc. in respect thereof continue to exist notwithstanding the fact that the search has been made. Thus a completed assessment becomes final unless some incriminating material is found in the course of search. Otherwise the AO will be empowered to undo what has already been completed and has become final. 5.8 It is important here to note that all reassessment such as under section 147, 263 etc. have to be made within well-defined limits subject to satisfaction of pre-conditions and, therefore, similar limitation may have to be read in the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he process of assessment of the undisclosed income of a tax payer which is not disclosed to the department before the date of search. Thus section 153 A is limited to the assessments of income which are discovery of search. 5.11 Therefore, proper construction would be that in respect of completed assessments, the assessment shall be made only if incriminating documents etc. are found. Therefore, the term "assess and reassess" appearing in section 153(l)(b) means that assessment shall be made in case of pending assessments and reassessments shall be made in respect of completed assessments where incriminating material is found. 6. Having understood the legal position as laid out by the law itself, we now move on to analyse the position as laid out by the following decisions: * Commissioner of Income Tax vs. Continental Warehousing Corporation, All Cargo Global Logistics Ltd.[2015) 374ITR 645 (Bom) Under section 153A of the Income-tax Act, 1961, which enables carrying out of search or exercise of power of requisition, assessment in furtherance thereof is contemplated. There is a mandate to issue notices under section 153(1)(a) and assess o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s conducted requiring, him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the "total income " of the 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 assessment years in which both the disclosed and the undisclosed income would be brought to tax. (iv) Although section 153A 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 Assessing Officer which can he related to the evidence found, it does not mean that the assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....016] 380ITR (St.) 64-Ed.] Pr. CIT-2 v. Salasar Stock Broking Ltd. (G.A. No. 1929 of 2016/ITAT No. 264 of 2016) dated 24/08/2016 Calcutta High Court (copy enclosed) In the said case, the learned Tribunal was of the opinion that the Assessing Officer had no jurisdiction under Section 153 A 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 reported in 380 ITR 573. The aggrieved Revenue appealed before the Hon‟ble High Court. The Hon‟ble High Court dismissed the appeal by observing as under: "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 sectionl53C 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 153A(I), the total income shall be computed afresh uninfluenced by the fact whether or not there is any incriminating material." * Suncity Alloys (P) Ltd. vs. ACIT [2009] 124 TTJ 674, Jodhpur Bench of the ITAT "Upon the perusal of second proviso below Section 153A, it is found clearly laid that assessment or reassessment referred to in Section 153A that are pending on the date of initiation of search or making requisition u/s 132A shall abate. The statute does not say that the assessment or reassessments that have already been made before the date as aforesaid shall also abate. It is also not correct that all the proceedings or returns filed shall also abate. In fact the assessing authority is the custodian of all such returns including the returns relatable to pending assessments that stand abated. Sub-section (2) of Section 153 A mandates that if any proceeding initiated or any order of assessment made u/s. (1) relating to any assessment year which has been abated under the second proviso to Section 153A shall stand revived from the date of receipt of the order of such annulment by the CIT. Thus the entire overthrow or destruction or termina....
X X X X Extracts X X X X
X X X X Extracts X X X X
....routing it would be of relevance to briefly quote the decision of the Delhi High Court in Dayawanti Gupta vs. CIT [390 ITR 496 (Del)] (copy enclosed) wherein the High Court dealt with the issue whether an assessment u/s 153A can be made even if no incriminating material has been found during s. 132 search proceedings. In the said case it was held as under: " (i) that the assessment under section 153A was not arbitrary or made without any relevance or nexus with the various seized materials in the form of documents, agreements, invoices and statements in the form of accounts and calculations, since the assessment under the section could be made only on the basis of the seized material. The statements made under oath by the Assessee and her family members were part of the record and continued to be so. They were never reasonably explained and their probative value was undeniable. The occasion for making them arose because of the search and seizure that occurred and the seizure of various documents pointed to the undeclared income. (ii) That the inferences drawn in respect of undeclared income were premised on the materials found as well as the statements recorded by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er High Courts. (xvi) For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. " It would be further relevant to note at this juncture that the Hon‟ble Supreme Court vide its recently pronounced decision on 3rd October, 2017 has stayed the operation of the judgement of the Delhi High Court in Dayawanti Gupta vs. CIT [390 ITR 496 (Del)] wherein the High Court dealt with the issue whether an assessment u/s 153A can be made even if no incriminating material has been found during s. 132 search proceedings. Copy of the decision of the Apex Court as recently pronounced on 3rd October, 2017 is enclosed herewith. * Thus, it stands as an undisputed fact that the decision in the case of Kabul Chawla [380 ITR 573 (Del)] holds good and the decision in the case of Dayawanti Gupta v. CIT [390 ITR 496 (Del)] has no operation in public domain. * Further reliance is placed on the judgment of the Hon‟ble Pune Tribunal in the case of Sinhg....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... thing or books of account or documents " is found, the assessments for assessment years cannot be disturbed. Further, the concluded assessments should not be disturbed merely for making routine additions, which could have been otherwise done in the regular assessment and of course, the pending assessments fall under exceptions.-Kumar & Co. (ITA No. 463/Pn/2008, dt. 2nd Feb., 2010) and IMJ International Ltd. vs. Dv. CIT (2008) 119 TTJ (Kol) 214 : (2008) 14 DTR (Kol)(Trib) 540 followed; Kumar & Co. (ITA No. 1020/Pn/2008, dt. 2nd Feb., 2010) distinguished. Aggrieved the Revenue went in appeal before the Hon‟ble Bombay High Court. The Hon‟ble High Court dismissed the appeal of the Revenue and observed that, "the tribunal's conclusion cannot be termed as perverse and given the abovenoted factual background. None of these appeals raises any substantial question of law. They are accordingly dismissed. No costs " Aggrieved with the High Court‟s order, the Revenue went in appeal before the Hon‟ble Supreme Court. Dismissing the appeal of the Revenue, the Hon‟ble Apex Court vide order dated 29-08-2017 reported in (2017) 397 ITR 344....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts stood on the date of search being 06/08/2014. 9.1 In connection to the above, your kind attention is invited to the observations made by the Hon‟ble Punjab & Haryana High Court in the case of Vipin Khanna vs CIT 155 ITR 220(PH):- "Therefore, in a case where a return is filed and is processed u/s 143(1)(a) of the Act and no notice under sub section (2) of section (143) thereafter is served on the Assessee within the stipulated period of 12 months, the assessment proceeding u/s 143 come to an end and the matter becomes final. Thus, although technically no assessment is framed in such a case, yet the proceedings for assessment stand terminated. " In simple terms, if the return of income is filed and is processed u/s 143(1) of the Act and notice u/s 143(2) of the Act is not served on the Assessee within the stipulated time period, the assessment would be termed as "concluded assessment‟ i.e. no proceedings are pending. Reliance is also placed on the recent judgment of the Hon‟ble ITAT Kolkata in the case of Smt Yamini Agarwal vs DCIT (ITA Nos.97 & 98/Kol/2015) pronounced on 19-04-2017 wherein the issue of whether the asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment proceedings u/s,153A of the Act as the said issue stood concluded with the Assessee''s return of income being accepted prior to the date of search and no notice having been issued u/s.143(2) of the Act within the time limit laid down in that section. Such assessment did not abate on the date of search which took place on 28.3.2008. In respect of assessments completed prior to the date of search that have not abated, the scope of proceedings u/s.153A of the Act has to be confined only to material found in the course of search. Since no material whatsoever was found in the course of search, the additions made by the AO in the order of assessment for both the Assessment years could not have been subject matter of proceedings u/s.153A of the Act. Consequently, the said various additions made in the orders of Assessment ought not to have or could not be made by the AO. Gr.No.1 raised by the Assessee in both the appeals are accordingly allowed. 27. In view of the above conclusions, the other grounds of appeal raised by the Assessee on merits, do not require any consideration. 9.2 The Proviso to section 143(2) of the Act which stipulates the time period f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the A.Ys 2012-13 and 2013-14 and which was squared up during the A.Y. 2015-16. Further, it was mentioned that enquiries were conducted by the Investigation wing of Kolkata on certain Kolkata based shell companies and it was allegedly found that unaccounted income generated in cash was routed through the said companies and brought back in the books as share capital. The company, Uniworth Agencies Pvt Ltd., was allegedly found to be one of such companies allegedly providing accommodation entries and was managed by a person named Mr. Raj Kumar Tharad. Based on the same, the Assessee company was asked to explain as to why the unsecured loan received by it during the AY 2012-13 (Rs. 6,67,00,000/-) and A.Y. 2013-14 (Rs. 3,06,00,000/-) should not be treated as not genuine and thus unexplained. 11.1 Pursuant to the above said Show Cause dated 07/11/2016, a detailed reply was filed by the Assessee company for the A.Ys. 2012-13 and 2013-14 wherein it was smutted by the Assessee that the Assessee has availed advance from Uniworth Agencies Pvt. Ltd against development of upcoming projects. The entire advance was taken in the normal course of business and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Uniworth Agencies Pvt Ltd of Rs. 11,17,20,000/- had already been assessed to tax and it is evident from the Balance Sheet that the advance given to the Assessee of Rs. 9.73 cr was out of own funds of the said company, the said advance cannot be added again in the hands of the Assessee since the same will lead to double taxation. 11.2 Further, the AO on page 5 of his order has observed that "the promoters of the Assessee company took control of Uniworth by acquiring share of that company just prior to the alleged loan transactions" In this connection it is submitted that the observations made by the Ld. Assessing Officer is totally contrary to facts of the case. At no point of time, the promoters of the Assessee company acquired any shares of the said company i.e. Uniworth Agencies Pvt. Ltd. As has been amply stated above, the Assessee company entered in to a joint venture agreement on 01-06- 2011 to develop a property in Cuttack with Uniworth Agencies Pvt. Ltd. pursuant to which the said sum of Rs. 9.73 crores was received as advance against such property development. Copy of the said agreement was also furnished to the Ld. Assessing Officer during assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proceedings on the Assessee Company. 12. Next, it is seen that the learned AO in the assessment order had also relied on the statement of some alleged entry operators namely Raj Kumar Tharad and Pradeep Garg. The statements were never produced before the Assessee. The relevant parts of the said alleged statements were simply quoted by the ld. A.O. in his order. 12.1 In connection to the above it is submitted that the asssessee company is totally unaware of any Mr. Raj Kumar Tharad and Mr. Pradeep Garg and the circumstances under which such statement may have been given by them. The statements were not recorded during any proceedings initiated on the Assessee. The said statement was not found or recorded in the course of search and as such, cannot be termed as an incriminating material in the present case. 12.2 Allegedly, in their statement, they had stated that the Assessee company was taken over by Mr. Sunil Gupta by way of share transfer to himself and his group companies. The money for the same was allegedly provided by Shri Sunil Gupta and the same after travelling through several companies got deposited in the books of SGBL (India)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tatements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the Assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the Assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. In the present case, no opportunity was provided to the Assessee to cross examine the persons who had given the alleged statements against the Assessee. As such, this is a case of violation of principles of natural justice because of which the Assessee has been adversely affec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case, as would be clearly evident from the assessment order that the entire addition of Rs. 9.98 cr (should be Rs. 9.73 cr) was on account of advance received against booking of space and the same was duly accounted for in the books. As such, the addition was made by the learned AO on items of regular assessment. No incriminating material was found in course of search in any of the subject assessment years and thus the assessment made in the case of the assessee is illegal ab initio and thus liable to be quashed. 15. Without prejudice to the above, coming to the merits of the case of the Assessee, it is seen that the impugned addition of Rs. 9.98 cr was made u/s 68 of the Act on the alleged ground that the Assessee was not able to prove the identity, creditworthiness and genuineness of the loan transaction with Uniworth Agencies Pvt Ltd. 15.1 Here, it is reiterated that the Assessee had duly proved the identity, creditworthiness and genuineness of the loan transaction with Uniworth Agencies Pvt Ltd. A copy of the audited accounts and the copy of the agreement with Uniworth Agencies Pvt Ltd was duly submitted before the learned AO and the learned CIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Act and submitted all the relevant documentary evidences. 16.1 Based on the facts of the case of the Assessee particular attention of your Honours is invited to the recent judgment of the Hon‟ble ITAT, Delhi in the case of M/s Takshila Distributors Pvt Ltd vs A CIT pronounced on 01-02-2018 wherein the facts of the present case are similar to the case of the Assessee. The facts of the said case were that the assessee received credit of Rs. 1,01,00,000 from M/s. Golden Technobuild Pvt. Ltd. The Assessee filed copies of the acknowledgments of I.T. returns, audited accounts, bank statements, ROC Certificate, PAN of the creditor, confirmation of the accounts of the creditor, copy of the bank statement with ledger account of the creditor before the lower authorities. The Tribunal also noted that addition of the similar amount have already been made by the Income Tax Department in regular assessment of the creditor M/s. Golden Technobuild Pvt. Ltd. Accordingly, it was held that, "We have considered the rival submissions. In this case, Assessee received credit of Rs. 1,01,00,000 from M/s. Golden Technobuild Pvt. Ltd., The Assessee file....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... None of the statements recorded during the course of search as are referred to in assessment order prove that Assessee has received any accommodation entry from any person despite the fact that same were not confronted to the Assessee at assessment stage. Therefore, it is proved on record that Assessee has been able to explain the identity of the creditor, its creditworthiness and genuineness of the transaction in the matter. We, accordingly, set aside the orders of the authorities below and delete the addition of Rs. 1,01,00,000. " Thus, it is seen that in facts identical to the Assessee Company, the hon‟ble ITAT that addition having been made in the hands of the creditor, addition for the same amount could not be made in the hands of the Assessee Company. Also it was held that evidences not been disputed or proved wrong the addition u/s 68 of the Act was not sustainable. 16.2 Further, it is submitted that merely rejecting the evidences filed by the appellant does not entitle the assessing officer to make the addition u/s 68 of the Income tax Act, 1961. Such outright rejection of the evidences by the assessing officer is totally contrary to the law as laid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al documents that could have showed light into whether truly the transactions were genuine. It was not a case where the share applicants are merely provided confirmation letters. They had provided their particulars, PAN details, assessment particulars, mode of payment for share application money, i.e. through banks, bank statements, cheque numbers in question, copies of minutes of resolutions authorizing the applications, copies of balance sheets, profit and loss accounts for the year under consideration and even bank statements showing the source of payments made by the companies to the Assessee as well as their master debt with ROC particulars. The AO strangely failed to conduct any scrutiny of documents and rested content by placine reliance merely on a report of the Investigation Wins. This reveals spectacular disregard to an AO‟s duties in the remand proceedings which the Revenue seeks to inflict upon the Assessee in this case. No substantial question of law arises. The appeal is dismissed." > Recently, the Hon‟ble Mumbai High Court in the case of CIT vs Green Infra Limited reported in [2017] 392 ITR 7 (Bom) held that "For the assessment yea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iny of the documents at assessment stage and merely suspected the transaction between the Investor Company and Assessee-company because the Investor Company was from Kolkata. The A.O. thus, did not perform his duties at the assessment stage so as to make addition against the Assessee-company. No cash was found deposited in the account of the Investor. Therefore, the totality of the facts and circumstances clearly prove that Assessee-company discharged initial onus to prove identity of the Investor Company, its creditworthiness and genuineness of the transaction in the matter. The Ld. CIT(A) on proper appreciation of the evidence before him correctly deleted the addition. No interference is called for in the matter. The decisions relied upon by the Ld. D.R. would not support the case of the Revenue in view of the fact that no enquiry have been conducted by the A.O. in this case to dispute the documentary evidence filed by the Assessee- company. The Departmental appeal has no merit and is accordingly dismissed. " Thus it is submitted that once the documentary evidences are submitted by the Assessee, burden shifts to the revenue and then Revenue should bring on record materia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e acceptable proof or acceptable explanation by the Assessee ; " SLP filed by the Revenue against the aforesaid judgment was dismissed by the Supreme Court (216 CTR 195) and it was held that, "If the share application money is received by the Assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of Assessee company "  CIT.v. Expo Globe India Ltd (2014)361 ITR 147 (Delhi) "7. This Court has carefully considered the submissions. The previous discussion, particularly the order of the CIT (A), would reveal that even though the Assessing Officer had initially concluded on the basis of the materials made available at that stage that service of the entry providers had been utilized to bring in capital, after remand the CIT (A) elaborately took into account considerable material furnished by the Assessee. These included income tax returns, balance sheets, ROC particulars and bank account statements. On the basis of these, the CIT (A) held that the share application money....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- received from investors is not liable to be treated u/s. 68 as unexplained credits and to be taxed in the hands of the appellant company. The appellants ground is allowed." In view of the above, and finding no contrary decisions brought on record by the revenue authorities, we find no infirmity in the order of the Ld. CIT(A) and the same is hereby upheld. The appeal of the revenue is, therefore, dismissed. 5. In the result, the appeal of the revenue is dismissed. Aggrieved against the decision of the Hon‟ble ITAT, the department went in appeal before the Hon‟ble jurisdictional High Court wherein the appeal of the department was dismissed and it was held that, "After hearing the learned counsel for the appellant and after going through the decision of the Supreme Court in the case of C.I.T. vs. M/s. Lovely Exports Pvt. Ltd. [supra], we are at one with the Tribunal below that the point involved in this appeal is covered by the said Supreme Court decision in favour of the Assessee and thus, no substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed. " 16.3 In view o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ceedings. However, the learned CIT(A) has completely ignored the judgment of the Hon‟ble Apex Court, thus violating the principles of precedent in following Apex Court verdict which is the law under Article 141 of the Indian Constitution. Article 141 of the Indian Constitution states that "the law declared by Supreme Court shall be binding on all courts within territory of India. 17.2 Further, when an order is passed by a higher authority, the lower authority is bound thereby keeping in view the principles of judicial discipline. This aspect of the matter has been highlighted by this Court in Bhopal Sugar Industries v. Income Tax Officer. Bhopal [AIR 1961 SC 182] in the following terms: "If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior tribunal, yet held that no manifest injustice resulted from such ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 24. In pursuance to a search conducted on 06.08.2014 proceedings u/s.153A of the Act was initiated in the case of the assessee for the assessment year under consideration. In pursuance to this proceeding, the impugned order of assessment was passed on 28.12.2016, where addition of Rs. 6.92 crores was made on account of unexplained cash credit received from M/s Uniworth Agencies Pvt. Ltd. by invoking provisions of Section 68 of the Act. 25. It is not in dispute that the time limit for issuance of notice u/s.143(2) of the Act with reference to the original return filed by the assessee on 30.09.2012, expired on 30.09.2013 and no such notice was issued to the assessee by the said date. Thus, the original return of income became final on 30.09.2013 i.e before the date of the relevant search. In other words, the assessment of the assessment year under consideration was not abated. 26. Further, the other related facts which have been noticed are that the assessee received cash credit of Rs. 6.92 crores by cheque from M/s Uniworth Agencies Pvt. Ltd. during the year under consideration. The above fact was duly disclosed in the return of income filed on 30.09.2012 i.e before date of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atter remanded]" 30. On the other hand, the AR of the assessee relied upon the following decisions :- (i) (1) CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2)All Cargo Global Logistics Ltd. (2015) 374 ITR 645 (Bom), where it was held that the notice u/s.153A of the Act was founded on search. If there was no incriminating material found during the search then the Tribunal was right in holding that the power u/s.153A of the Act being not expected to be exercised routinely, should be exercised if the search revealed any incriminating material. If that was not found then in relation to the second phase of three years, there was no warrant for making an order within the meaning of this provision. (ii) Jai Steel (India) Ltd. Vs. ACIT, [2013] 36 taxmann.com 523 (Raj.HC), wherein the Hon'ble Rajasthan High Court has held that the plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or &....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (SC). Therefore, we are of the considered view that in an assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated, then the jurisdiction of the Assessing Officer to make addition in such an assessment, is confined to such incriminating search material and no addition dehors the search material can be made. 32. In the instant case, we find that during the course of the relevant search only tally data of the assessee company was found which shows that the assessee has received cash credit from M/s Uniworth Agencies Pvt. Ltd. of Rs. 6.92 crores during the year under consideration. The said tally data does not show that the said cash credit was non-genuine or bogus. The argument of the ld.Departmental Representative was that the statement of two persons, namely, Shri Raj Kumar Tharad and Shri Pradeep Kumar Garg were recorded u/s.131 of the Act on 13.11.2014 by the Investigating Wing and those statements show that the cash credit provided by M/s Uniworth Agencies Pvt. Ltd. to the assessee was an accommodation entry. According to the ld. Departmental Representative the said statements recorded in post-search enquiry was a search material an....