TaxTMI 
TaxTMI 
2020 (3) TMI 112
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....ctions of the assessee finally. 3. Since the cross objections filed by the assessee relates to legal issue involved challenging that there was no incriminating material found during the course of search, the materials referred by the AO was recorded in the books of accounts and the ld.CIT(A) has deleted the additions as per Section 292C of the Act, therefore, first we shall take up the cross objections of the assessee and the grounds raised therein are as under :- Grounds raised in CO No.20/CTK/2019 (A.Y.: 2009-2010) : 1. That, the Ld. C.l.T.(A) erred in dismissing the legal ground of the assessee that there being no incriminating material found in course of the search operation, no addition can be made in respect of unabated year in relation to the share capital of Rs. 14,73,00,000/-. 2. That, the order of the Ld. C.I.T.(A) rejecting the above legal ground on the alleged stand that as per sec. 153A there is no need of incriminating material for making additions U/S.153A of the Act is directly in contradiction with several judgments of Hon'ble High Courts and Tribunal, including the decisions of Hon'ble ITAT, Cuttack in the cases of E-City Projects L....
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.... Act dated 28.01.2015 was issued to the assessee for filing income tax return u/s.153A of the Act for the assessment year 2009-2010 on or before the specified date. In response to the said notice, the assessee filed return of income on 02.03.2015 disclosing total income at Rs. 1,08,48,050/- and subsequently the jurisdiction was changed u/s.127 of the Act and necessary compliance was made by both the sides. It was also noted by the AO that the assessee company had filed return of income for the impugned assessment year on 29.09.2009 u/s.139(1) of the Act assessing total income of Rs. 98,44,850/-. During the course of assessment, the AO referred those documents which were found during the course of search and seizure and it was also noted by the AO that the disputed amount was recorded in the books of accounts of the assessee. In this regard, the assessee submitted his written submissions and relied on various documents in support of his claim. Accordingly, the completed the assessment by making various additions and determined total income at Rs. 15,84,80,145/-. 5. Aggrieved from the above order, the assessee appealed before the CIT(A). The assessee also submitted his written sub....
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.... ILLEGAL. 1. The Cross-Objection filed by the Appellant being the basic legal issue before your Honours for the A. Y.s 2009-10 and 10-11 is that the entire assessment U/S 153A for the said years being the unabated years, not being based on any incriminating material found during search, the said assessment proceedings were invalid and illegal. 2. However at this juncture, before going on to the particular detailed facts of the addition, it is first relevant to discuss the history of the legislations in relation to search proceedings and assessments, the specific provisions of the section 153A of the Act, its scope, its implications and also the various judicial decisions on the subject. 3. 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 ....
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.... Memorandum explaining the provisions of the Finance Bill 2012 states that under the existing provisions of search 153A of Act, it is mandatory to issue a notice for filing of tax returns for 6 assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A. 5. Now explaining the specific provisions of the section 153A of the Act, it would be relevant to first make a reference to the provisions of the section 153A of the Act and the observation of the Apex Court in a case, as under: 5.1. The Section 153A of the Income Tax Act, 1961, reads as under: "* 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....
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....on. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that state issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasijudicial controversies as it must in other spheres of human activity. )) 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. 5.2. A plain reading of the relevant section as laid out above lays down 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 requisi....
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....nd the same is pending, then the pending proceedings of the regular assessment shall stand abated and the fresh assessment of the same can be done u/s 153A of the Act. This proviso is enacted specifically to avoid two parallel proceedings of assessment of a particular year of the same person, i.e., one as regular assessment and another as assessment u/s 153A of the Act. 5.4. The word 'abatement' is referable to something, which is pending alive, or is subject to deduction, The abatement refers to suspension or termination of the proceedings either of the main action, or the proceedings ancillary or collateral to it. The proceedings, which have already terminated are not liable for abatement unless statute expressly provides for such consequence thereof 5.5. The word 'pending' occurring in the second proviso to section 153A of the Act, is also significant. It is qualified by the words 'on the date 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 ....
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.... 1st Proviso to "assess" income for six assessment years has to be confined to the undisclosed income unearthed during search and cannot include items which are disclosed in the original assessment proceedings. When nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed. Items of regular assessment cannot be' added back in the proceedings u/s 153A when no incriminating documents were found in the search proceedings. A search assessment under section 153A should be evidence based. Section 153A of the Act is a separate and special provision that has been specially enacted to undertake search related assessments. A search U/S 132 of the Act, is authorized to unearth undisclosed assets or transactions resulting in income which are not recorded in the books of account of a person. Therefore, a search puts in motion the 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 153A is limited to the assessments of income which are discovery of search. 5.9. Therefore, proper construction would be th....
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....ch or making of the requisition. Held, dismissing the appeals, (i) that the notice under section 153A was founded on search. If there was no incriminating material found during the search then the Tribunal was right in holding that the power under section 153A 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 jar making an order within the meaning of this provision. (ii) ...... * Commissioner of Income Tax vs. Kabul Chawla on 28.08.2015 380 ITR 573 (Del) The legal position that emerges on a perusal of section 15JA and section 132 of the Income-tax Act, 1961, is as under: (i) Once a search takes place under section 132 of the Act, notice under section 153A(l) will have to be mandatorily issued to the person in respect of whom search was 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 ....
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....ch the assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. * Principal Commissioner Of Income-Tax V.Kurele Paper Mills P. LTD. 2016J 380 ITR 571 (Del)July 6, 2015. Held, dismissing the appeal, that the order of the Commissioner (Appeals) revealed that there was a factual-finding that no incriminating evidence related to share capital issued was found during the course of search as was manifest from the order of the Assessing Officer. Consequently, it was held that the Assessing Officer was not justified in invoking section 68 of the Income-tax Act, 1961, for the purposes of making additions on account of share capital. There was nothing to show that the factual determination was perverse. [The Supreme Court has dismissed the special leave petition filed by the Department against this judgment : [2016J 380 ITR (St.) 64-Ed.J * Pr. CIT-2 v. Salasar Stock Broking Ltd. (G.A. No. 1929 of2016IITAT No. 264 of2016) dated 2410812016 Calcutta High Court (copy enclosed) In the said case, the learned Tribunal was of the opinion that the....
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....assessments are pending vis-a-vis the years for which assessments are non-pending. The total income shall be determined in respect of assessment year for which original assessments have already been completed on the date of search by restricting additions only to those which' flow from incriminating material found during the course of search. If no incriminating material is found in respect of such completed assessment, then the total income in the' proceedings u/s 153A shall be computed by considering the originally determined income. If some incriminating material is found in respect of such assessment years for which the assessment is not pending, then the "total income" would be determined by considering the originally determined income plus income emanating from the incriminating material found during the course of search. In respect of assessment pending on the date of search which got abated in terms of second proviso to section I53A(1), the total income shall be computed afresh un influenced by the fact whether or not there is any incriminating material." * Suncity Alloys (P) Ltd. vs. ACIT [2009J 124 TTJ 674, Jodhpur Bench of the ....
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....n, we uphold the Ld. CIT(A)'s order which is a well reasoned order and therefore, the same does not need any interference on our part and also by respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of CIT(Central)-III. Kabul Chawla (Supra), we are of the view that Ld. CIT(A) has rightly ITA NO. 3996/Del/2011 deleted the additions in dispute. Accordingly, the issues in dispute are decided against the Revenue and in favour of the Assessee. " * In a very recent decision of the Delhi High Court in the case of Pr CIT vs. Meetu Gutgutia, ITA No. 306/2017, order pronounced on 25th May, 2017 (copy enclosed), the entire law was explained on whether concluded assessments can be reopened u/s 153A even in the absence of incriminating material found during the search in the light of the apparently conflicting verdicts in CIT vs. Kabul Chawla 380 ITR 573 (Del) (supra) and Dayawanti Gupta v. CIT 390 ITR 496 (Del). Here, derouting 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....
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.... there is no such statement in the present case which can be said to constitute an admission by the Assessee of a failure to record any transaction in the accounts of the Assessee for the AYs in question . (xiv) What weighed with the Court in the above decision was the "habitual concealing of income and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the A Y for which he sought to make additions of franchisee commission. (xv) The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other 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 w....
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....ed or undisclosed hidden information was discovered or seized by the Revenue from the assessee. In the circumstances, the general satisfaction and as recorded in the note was not enough. There was absolutely nothing to indicate as to in which educational courses, the education was imparted and institution-wise, whether the admissions were granted to the technical courses merit-wise or on the basis of marks obtained in XII standard HSC exam. Whether any fee structure was approved and cash component was, therefore, collected over and above the sanctioned fees were matters which ought to have been gone into and there could not be a general or vague satisfaction. The Tribunal was justified in setting aside the assessments. * Next, relying upon a very recent decision of the Ranchi IT AT, judged by your Honours itself, we refer to the case of Shri Kamal Deo Sharma and Smt. Tripta Sharma vide IT(SS)A Nos.34 to 40lRANI2019 and IT(SS)A No. 27 to 331RANI2019 (copy enclosed). It was held by your Honours as under: "14. On perusal of the above observations of the AO, we find total absence of reference to any incriminating material which may have any bearing to impugne....
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.... not justified in disturbing the concluded assessment without there being any incriminating material being found in search. In fact, in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone the question of any incriminating material for the year under appeal. Perusal of the assessment orders framed u/s. 153A r.w.s. 143(3) dated 30.3.2014 would reveal that the addition made in respect of share capital and premium does not pertain to any incriminating material found during the course of search. It is only for the reason of making enquiries after the conduct of search and during the course of assessment proceedings carried out in pursuance to section 153A, the AO formed an opinion expressing his doubt regarding genuineness of share capital and creditworthiness of entities -which have invested share capital with the assessee, therefore, the same has been added to the income of the assessee. Therefore, in our considered opinion, the action of the AO is based upon conjectures and surmises and hence, the additions made is not sustaina....
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....#39; in Section 153 A is relatable to abated proceedings (i. e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AD. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. " 6. Respectfully following the prec....
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....Thus, the grounds raised by the assessee for the assessment year 2010-2011 are allowed. 16. In the instant case, on perusal of the assessment order, it was noticed that the AO has not disallowed any specific amount of expenses on account of any incriminating materials found at the time of search. It is pertinent to note that the assessee had filed the return of income on the basis of audited trading profit and loss account and balance sheet. The AO has made addition only on the basis of tax evasion petition filed by somebody else. Copy of the tax evasion petition is placed on record at page Nos. 1 02 to 107. 17. It is pertinent to mention here that completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A of the Act only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. However, in the case in hand, the AO has not referred to any incriminating material found during the co....
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.... record by the Assessing Officer. Notably, there would be assessments in the period of the six assessment years identified in section 153A(1) of the Act, which would have become final (i.e. which are not pending on the date of search),' such assessments do not abate in terms of the second proviso to section 153A(1) of the Act. The scope and ambit of the assessment where the original assessment has not abated is the controversy before us. In this context, it would be pertinent to refer to the judgment of the Hon'ble Bombay High Court in the case of All Cargo Global Logistics Ltd. (supra), wherein the scope of assessment under section 153A of the Act has been considered. One of the points addressed by the Hon'ble High Court was whether the scope of assessment under section 153A of the Act envisages additions, which are otherwise not based on any incriminating material found during the course of the search in the case of the original assessment not abating. As per Hon'ble High Court, no addition could be made in respect of the assessment that had become final, in the event where no incriminating material is found during the course of search. The Hon'ble High Court ....
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....zed material. Obviously an assessment has to be made under this Section only on the basis of seized material. " v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153A is relatable to abated proceedings (i. e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.....
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....sing Officer in the impugned assessment is not with reference to any incriminating material found in the course of search. Thus, following the parity of reasoning laid down by Hon 'ble Bombay High Court in the case of All Cargo Global Logistics Ltd. (supra), the impugned additions could not have been made in the impugned assessment since the original assessment made under section 143(3) of the Act had become final and did not abate. Thus, in the absence of any incriminating material, the Assessing Officer is not empowered to make the impugned additions in an assessment finalized under section 143(3) r.w.s. 153A of the Act. Accordingly, assessee succeeds on its Additional Ground of appeal No. 5 (b), as above. 8.3 As a consequence of above, all the additions made to the returned income are deleted. Thus, all the other issues raised by the assessee in its appeal become infructuous and are not being adjudicated. 18. Further in the case of Priya Holding (P.) Ltd. Vs. ACIT, [2018J 90 taxmann.com 408, the Ahmedabad Bench of the Tribunal has observed as under :- 19. The Delhi Bench of the Tribunal in the case of DCIT Vs. Rajiv Kumar [2018J 99 taxmann.com 371,....
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.....11.2016. In the impugned case, even after calling remand report by the CIT(A) from the Assessing Officer, which is placed on paper book at pages No.55 to 75, the CIT(A) has just confirmed the order of Assessing Officer. However, we may point out that in the remand report vide dated 25.07.2018. The AO had referred to TEP as incriminating material but we are unable to see any observations of description regarding the same in the said remand report, explaining or substantiating that the so-called incriminating material was related or belonging to the assessee. From the said remand report or orders of the authorities below, it is also not clear or discernible that in which manner it can be tagged or levelled as incriminating material belonged or related to the assessee. In the Income Tax Act, the "Assessing Officer has been defined as per Section 2(7A) of the Act, which reads as under= [(7A) "Assessing Officer" means the Assistant Commissioner [or Deputy Commissioner] [or Assistant Director] [or Deputy Director] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 12....
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....n the decision in favour of the assessee should be followed. For this, we derive support from the decision of Hon 'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. [88 ITR 192 (SC)). Therefore, we are of the considered view that in an assessment made uls.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. ln 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 Mls.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 . We have, therefore, no hesitation in deleting the impugned addition of Rs. 6.92 crores being not on the basis of any incriminating material found during the course of search as well as being not based on any admissible, reliable and relevant material. Accordingly, addi....
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.... Therefore, we set aside the orders of lower authorities and delete the addition of Rs. 9,94,50,000/- for the assessment year 2011-12 andRs. 15,00,000/- for the assessment year 2012-13, respectively and allow the grounds of appeal of the assessee. Thus from all the above decisions it emerges that it is the established position of law that in cases of search, while making assessments u/s 153A of the Act, completed assessments can be interfered with by the A.O. only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Issues of original assessment which have no relation to the search cannot in any way form basis of assessment of any completed assessments. 7. In continuation to the above discussion it would be of relevance here to determine what "concluded/completed" assessments are. 7.1. As also discussed earlier above, completed assessments as on the date of search, would be cases where assessment u/s 143(3) of the Act....
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....e proviso to Sec.143(2) of the Act, the proceedings initiated by filing the return are closed. In the present case, the period for issuing the notice u/s 143(2) elapsed Therefore the process has attained the finality which can only be assailed u/s 148 or 263 of the Act. It can thus be concluded that making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed by absence of issue of intimation under section 143 (1) of the Act or by not issuing notice u/s.143 (2) of the Act within the time limit laid down in the proviso to Sec. 143 (2) of the Act, results in an assessment proceedings and where such assessment proceedings are completed prior to the date of search then they do not abate in terms of the Second Proviso to section 153A(l) of the Act. The decision of the ITAT Kolkata Bench rendered in the case of Shri Bishwanath Garodia (supra) on identical facts of the case as that of the Assessee in the present case, clearly supports our conclusions as above. 26. In the light of the discussion above, our conclusion is that in....
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....44,850/- Income Assessed u/s 143(3) of the Act vide Order dated 16/12/2011 at Rs. 1,08,48,050/- A.Y.2010-11: Income Returned on 16/09/2010 at Rs. 1,04,95,320/- Intimation u/s 143(1) of the Act received No Notice u/s 143(2) issued. Time limit for Issuance of 143(2) is 30/09/2011, being period ending 6 months from the end of the financial year of filing of return (31/03/2011) Hence, it stands as a matter of fact that the assessment for the relevant AY.s 2009-10 and 2010-11 stood concluded and thus unabated as on the date of search and was not pending as on that date. 9. Lastly, before concluding this ground, it is to be seen whether any of the additions made by the Id. A.O. in the said concluded years were based on any incriminating documents/information that were found during the course of the search on the Appellant group. 9.1. The additions made in the said years were as under: AY 2009-10 2010-11 2011-12 2012-13 TOTAL I Share Capital Introduced 14,73,00,000 5,41,00,000 20,14,00,000 II Negative cash balance 3,32,095 49,91,258 ....
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....before your Honours that in absence of any incriminating material found in course of search, the Ld. AO is not empowered to disturb the concluded assessments as on date of search being the A.Ys 2009-10 and 2010-11 and frame fresh assessments u/s 153A of the Act thereby making addition on items of regular assessment. 10. Now before concluding on this ground of cross objection, it would be pertinent to analyse the action of the Id. CIT(A) wherein dismissing the ground as raised by the Appellant, the Id. CITCA) held as under: Cat para 5.5 and 5.6) 5.5. The plain reading of section 153A clearly indicates that there is no need of incriminating material for framing the assessment and for making the additions u/s.153A of the Income Tax Act, 1961. When the language of a statute is clear and unambiguous, the courts are to interpret the same in its literal sense and not giving a meaning which would cause violence to the provisions of the statute, as held in Britania Industries Ltd. vs. ClT (2005) 278- ITR-546 at 547 (SC). It is a well settled principle of law that the court cannot read anything into a statutory provision or stipulate a condition, which is plain and unambigu....
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.... during search, the 153A proceedings as initiated by the A.O. and upheld by the Ld. CITCA) is bad in law and thus invalid and illegal. 11. ADDITION ON ACCOUNT OF SHARE CAPITAL (ON MERITS) DEPARTMENT AL APPEAL - Grounds No.(iii) to (xviii) 1. The Grounds of Appeal raised by the Department on this head for the A.Y.s 2009-10 and 2010-11 read as under: For A.Y. 2009-10 vide IT (SS) A No. 1411CTKl2018 Re: Share Capital (on Merits) (iii) That, the Ld. Cl'T (Appeals) erred in law as well as fact ~n deleting the addition of Rs. 14, 73,00,0001- made by A. 0 as unexplained share capital. (iv) That, the Ld. Cl'I' (Appeals) has failed to notice the fact that the assessee was failed to furnish the copy of the application forms submitted by the share applicants though the same was asked for by the A. 0. (v) That, the Ld. Cl'T (Appeals) has failed to notice the fact that copy of incorporation certificate furnished by the assessee before A.O in respect of the subscribed companies did not bear the signature of the registrar nor bear his office seal. Similarly the copies of memorandum of association and articles of ....
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....o years back. (xii) That, the Ld. CIT (Appeals) has failed to notice the fact that the A.O had verified the bank statements of the share applicant companies as submitted by assessee company and the A.O found that their accounts had been credited with substantial amount either on the date of issue of cheques or one day or two days before the date of issue of cheque for shares. (xiii) That, the Ld. CIT (Appeals) has failed to notice the fact that the assessee does not maintain regular books of A/Cs with related bills and vouchers and had not produced the same before A. 0 during the assessment proceeding. (xiv) That, the Ld. CIT (Appeals) has failed to notice the fact that it is found by the A.O from the Bank A/C of the assessee company in which share application money received from different share applicants that substantial amount was withdrawn from the ale either on the same day or two or three days after credit of the share application amount mostly by self cheques or self paid cheques. (xv) That, the Ld. CIT (Appeals) has jailed to appreciate the totality of the fact that share applicant companies did not have such fund to support their c....
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....and the assessee failed to do so by stating that the assessee company had no information for the shift of old address or closure of old share applicants though all the shares issued by assessee company to various Kolkata based share applicant companies had been bought back by the group companies / concerns of the assessee company later on. (viii) That, the Ld. CIT (Appeals) has failed to appreciate the fact that some of the share applicant companies were functioning from the same room (as per address given by the assessee company) which is practically not possible. (ix) That, the Ld. CIT (Appeals) has failed to appreciate the fact that the assessee company could not justify the reason before A. 0 as to how it deserved high premium on shares which was four times the cost per share though it had not run its business for a full year. (x) That, the Ld. CIT' (Appeals) has failed to notice the fact that the assessee company failed to furnish copy of Board meeting resolution before raising share application fund, minutes book regarding decision of Board meeting, copy of Form no. 5 submitted before Roe for increasing shares and other necessary documents which....
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....e appellant craves to add, amend, modify or alter any ground of appeal at the time or before hearing of appeal. 2. A reading of the above grounds shows that the Department in total ignorance of the provision of law which clearly lay down that the assessment in the case of the Appellant for the A. Y.s 2009-10 and 20010-11 was invalid ab initio in as much as there was no incriminating material available from search which pointed to any undisclosed income and thus the unabated and concluded assessments for the said year could not be disturbed. 3. Further it is also to be noted that it stands as a matter of undisputed fact that the addition of the share capital introduced by the Appellant Company from various shareholders was a matter fully on record in the regular books of the Assessee. Not a single incriminating material was found during the course of the search on the Appellant group which pointed to anything incriminating in relation to the share issue. 3.1. In fact it is to be noted here that the seized documents BNRO-4., page nos 15 to 21 which was relied upon by the Id. A.O. himself in making the said addition in respect to the impugned addition ....
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....t without any evidence to the contrary. 4. However, without prejudice to the above, it is submitted before your Honours that going briefly into the merits of the said issue of the share capital, it is submitted that the same was received from 171 share applicants in the A.Y2009-10 and from 54 share applicants in the A.Y2010-11. It was very much an admitted fact by the Id. A.O. also that the Appellant had duly fulfilled all his obligations regarding the initial burden of proof with regard to identity, creditworthiness and genuineness of the transaction by submitting the name, address, PAN, bank statements and the MOA and the AOA of the share applicants. Also the Audited Balance Sheet and profit & Loss Accounts were all submitted. The share applicants were all private limited companies and the certificate of Incorporation was also all provided. All the transactions were through the regular banking channels. In fact the Ld. A.O. had deeply analysed the bank accounts of most of the share applicants. In the said connection it is submitted that the amendment to section 68 of the Act requiring the Assessee to explain the source of the source came into effe....
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....ue to lack of time. According, to the Assessing Officer, the share applicant companies don't do any business and only involved in receiving investment from certain similar companies. And they are making investment as share capital in other companies. The Assessing Officer has further stated that the share premium is unjustified and buy back at lower amount suggest that these are sham/bogus transactions. It is further added by the Assessing Officer that there is no logic jar the share applicant companies for making investment and they do not have credit worthiness. Accordingly, to the Assessing Officer, all the documents are prepared to show that they are genuine, when in fact they are sham transactions. These are only general statements without backing of any evidence. The Assessing Officer has not quoted any statement of any share broker or any intermediary or directors of share applicant companies or directors of appellant company, to substantiate his claims. No evidence was confronted by the Assessing Officer to the appellant. On the contrary, the appellant has submitted copies of share application form ROC details, Income Tax particulars, Profit & Loss acc....
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....ppeals) treated that the same was disclosed by the director in his own hand though the A. 0 had adjusted the disclosed amount with negative cash balance amount and the unadjusted negative cash balance of Rs. 3,32,095/- had been added by the A.O. The plea taken by the assessee before Ld. ClT(Appeals) of "negative peak theory of the group" is not applicable in this case. (ii) That, the Ld. ClT (Appeals) erred in law as well as fact in deleting the addition of Rs. 3,32,095/- made by A. 0 under the head negative cash balance on the basis of seized document ignoring the fact of the case. A total negative cash balance of Rs. 3,88,93,088/- was found in the case of M/s. Maa Tarini & Co., Prop. Bajrang Kumar Agarwal, Mrs. Basukinath & Co. & M/s. Basukinath Roadways Pvt. Ltd. on different dates from the year 2007-08 to 2013-14 during course of search operation of this group. Out of the said negative cash balance, a sum of Rs. 2,26, 50, 5001- had been disclosed in the hands of Bajrang agarwal as additional income on account of land Sauda in the A.Ys. 2008-09, 2009-10, 2010-11 & 2014-15 against the total negative cash balance with M/s. Basukinath & Co. and Basukinath Roadways Pvt. Ltd....
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....#39; at the business premise being Om Niwas, Barsuan, Sundergarh, a pendrive containing tally data from the computers of the Appellant was found and seized, marked as BNRO-21. In connection to the said tally data it was submitted by the Appellant that the same contained the computerised books of accounts of the various group concerns. The computerised accounts contained the cash account of the various group concerns. However due to certain clerical errors and also due to inter-company adjustments within the group which were however not properly reflected in the individual accounts, there arose negative cash balances in the group concerns on various dates from the F.Y.s 2007-08 to 2013-14, as under: A.Y. F.Y. MAA TARINI & CO (BAJRANG KUMAR AGARWAL) BASHUKINATH & CO. BASHUKINATH ROADWAYS (P) LTD. TOTAL DATE AMOUNT DATE AMOUNT DATE AMOUNT 2008-09 2007-08 15-07-2007 11,47,434 11,47,434 2009-10 2008-09 25-08-2008 50,54,548 31-08-2008 8,80,977 06-06-2008 3,32,095 62,67,620 2010-11 2009-10 21-02-2010 29,16,696 29-....
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..../- 2014-15 Rs. 1,70,00,000/- Less: Rs. 56,66,000/- Rs. 1,13,34,000/- Rs. 2,26,50,000/- 4.2. Thus the disclosure of Rs. 2,26,50,000/- was made in the hands of Bajrang Kumar Agarwal as under: AY 2008-09 2009-10 2010-11 2014-15 TOTAL BAJRANG KUMAR AGARWAL (153 A) Income from land sauda - Negative Cash Balance (Declared in 153 A Return ) 11,50,000 45,00,000 1,70,00,000 2,26,50,000 - Declared in Revised Return 153A Return 26,85,000 29,81,000 (56,66,000) (filed on 2.3.2016) 11,50,000 71,85,000 29,81,000 1,13,34,000 2,26,50,000 5. Explaining the above disclosure and the negative cash peak calculation, a detailed submission dated 09103/2016 was filed in the case of Bajrang Kumar Agarwal which has been duly quoted in full by the A. O. in the Assessment Order C copy of the same is enclosed and can be referred to). It was duly explained and is now....
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....ct no day to day grouping of the negatives with the positives. A combined Cash Flow is in fact one in which the daily negatives and positives are all clubbed together, keeping the day to day intra group transfers. The detailed cash flow which was submitted before the A.O. at the various stages of assessment is enclosed herewith and the same will reveal that at page 14, dated 27/08/2008 arises the highest negative peak of the group which is only to the tune of Rs. 59,60,681/-. The Appellant group against this has in utmost good faith and in order to buy peace avoiding all litigations and complications has in fact made an offer of Rs. 2,26,50,000/- which is way in excess. 6. However, ignoring all the above, the Id. A.O., absolutely in total disregard and ignorance to the "peak theory" has followed a "total sum" theory and out of the disclosure of Rs. 2,26,50,0001- has allowed firstly the total of the year wise negative peaks of Bajrang Kumar Agarwal (arising out of Maa Tarini & Co.), then allowed the negative peaks of Bashukinath & Co. (partly, upto the total of Rs. 2,26,50,0001-) and thus added/disallowed the entire year wise negative peaks in the case of the Appellan....
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....he Appellant group of Rs. 2,26,50,000/- being more than sufficient to cover the peak of the negative cash balances arising out of the seized pendrive BNRO-21, no separate and additional addition is to be made on this head in the hands of the Appellant. IV. CONCLUSION: Thus, based on all of the above, it is humbly prayed before your Goodself to kindly grant relief to the Appellant. 8. On the other hand, ld.DR relied on the order of CIT(A) and submitted that as per decisions of the Hon'ble Kerala and Hon'ble Allahabad High Court, even without any incriminating material being available against the assessee, assessment u/s.153A can be concluded against the interest of the assessee, including making additions. Ld. DR further submitted that there is no bar upon the AO as per Section 153A of the Act for passing the separate order. The AO has passed the order after depth examination of the documents submitted by the assessee. Therefore, order of the AO should be restored. 9. After hearing both the sides and perusing the entire material available on record along with the orders of authorities below, we find that the ld. AR of the assessee has challenged legal issue r....
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....dering the case laws cited by both the sides, we are of the considered view that the assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated and even no incriminating material found during the course of search, is unsustainable in the eyes of law. 12. As per the decision of Hon'ble Delhi High Court in the case of Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi), completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A of the Act only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The relevant observations of the Hon'ble Delhi High Court are as under:- "On a conspectus of section 153A(1), read with the provisos thereto, and in the light of the law explained in various decisions, the legal position that emerges is as under: (i) Once a search takes place under section 132, notice under section 153A(1) will have to be mandatorily issue....
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....losed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. [Para 37] The present appeals concern assessment years 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. [Para 38] The revenue's appeals are accordingly dismissed.[Para 40]" 13. Undisputedly, in the instant case, the assessment for the assessment years in question have already been completed on the date of search and the AO has not referred to any incriminating material found during the course of search in the assessment order. Nothing is found contrary to the stated position of the assessee, therefore, the assessment framed u/s.153A of the Act is not sustainable. Respectfully, following the ratio of decision of the Hon'ble Delhi High Court in the case of Kabul Chawla (supra), which clearly applicable on the facts of the present case also, as admittedly no incriminating material relating to these assessment years or as ....