TaxTMI 
TaxTMI 
2019 (11) TMI 1389
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....ment is not based on any incriminating material even during the course or search or as a result of search. The facts and circumstances are exactly identical in both the years i.e. AYs 2009-10 and 2010-11. The grounds raised in both the years by the assessee are identically worded and the grounds as raised in AY 2009-10 in ITA No. 5680/Mum/2018 read as under: - "1. On the facts and circumstances, the Hon'ble Commissioner of Income-Tax (Appeals) has erred in confirming the action of the action of the Assessing Officer that the Order passed under section 143(3) read with section 153A is bad-in-law, without complying with the principles of natural justice. 2. On the facts and the circumstances, the Hon'ble Commissioner of Income Tax (Appeal) has erred in confirming the action of the Assessing Officer in making the addition on account of receipt of share application money/ capital amounting to Rs.4,75,00,000/- without appreciating that no incriminating evidences has been found as a result of search in respect of the same." 3. Briefly stated facts are that the assessee company has joint venture promoted by Sangam India Ltd., M/s Sahakar Global Ltd. and Shri PK Agarwa....
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....date of the search action, the time limit for selecting the case for scrutiny by issuing notice u/s 143(2) had already lapsed and therefore, the assessment for the relevant year was a non-abated assessment which could have been disturbed only on the basis of some incriminating material found during the search action. However, in the instant case, there was enough incriminating material found in course of the search action for the said addition made u/s 68 in respect of share application money as well as share capital received at a huge premium, as demonstrated in the subsequent paras. 7.4 In this case, there is no dispute that Praveen Jam, entry operator in course of his search action had admitted that he through the concerns directly/indirectly controlled by him is solely engaged in the business of providing accommodation entries. Further, there is no dispute that the share application money as well as share capital at a huge premium received by the assessee included amounts received from the concerns of Praveen Jam. There is also no dispute that Shri Pravin Kumar Agrawal, Shri Rampal Soni and other Directors of the assessee company had accepted in course of the search ac....
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....e case of M/s Sahakar Global Ltd.(related concern) at the time of search action, which was explained to have arisen due to cash utilized for availing accommodation entries. Accordingly, it is held that there is no infirmity in the action of the AO in disturbing the non-abated assessment for the relevant year." Aggrieved, now assessee is in appeal before Tribunal. 4. Before us, the learned Counsel for the assessee stated that the CIT(A) has rejected the legal ground on the issue that incriminating material was found from the premises of the assessee during the course of search in the shape of share certificate issued to the said shareholders which led to suspicion about genuineness of the said share application money as well as share capital. The learned Counsel for the assessee before us filed paper book wherein he has filed copy of reply to the DDIT investigation, wing 1(1) dated 15.05.2014 stating that the relevant share certificates were produced before the DDIT investigation Wing by the assessee and the relevant reply read as under: - "During the course of proceeding, directors have been asked to furnish original share certificates/ share register evidencing allo....
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....e. Dealing with all these documents in para number 9.4 of the decision the coordinate bench dealt with the issue as under: - 9.4 Furthermore, three blank documents were found with respect to these companies. These are blank share transfer forms, special power of attorney signed by the authorized signatories and blank receipts against the shares. All these three documents are admittedly nonexecuted and do not show any transactions. Had there been any transaction recorded on blank share transfer forms, receipts regarding any money or transfer in favour of any person, it would have made them suspicious. The entries in those forms are not at all made, but are merely blank. The assessee has given detailed explanation why they were found at the place of assessee. The Assessing Officer has not examined the signatories of these documents to arrive at the true nature of the transactions. The Assessing Officer is just making an assumption that these are the documents which would have been used by the assessee for transferring those shares in the name of the promoters or their group concerns at a price which is far less than the price of shares issued. It is not the case of ....
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.... the assumption of jurisdiction on the basis of statement recorded during the course of search argued that the statements recorded standalone cannot be the basis for treating the documents as incriminating. For this, the learned Counsel for the assessee relied on the decision of Co-ordinate Bench of Delhi Tribunal in the case of DCIT vs. Smt. Shivali Mahajan & Ors. in ITA No. 5585/Del/2015 vide order dated 19.03.2019, wherein it is held as under: - "16. Now, coming to question No.2, we find that this issue is also covered by the decision of Hon'ble Jurisdictional High Court in the case of Harjeev Aggarwal (supra) and Best Infrastructure (India) (P.) Ltd. (supra). In the case of Harjeev Aggarwal (supra), Hon'ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 & 24, which are reproduced below for ready reference: - 19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the assessee in its st....
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....ve decision in the case of Harjeev Aggarwal is with reference to the meaning of undisclosed income u/s 158BB of the Income-tax Act, however, in our opinion, the above observation of Hon'ble Jurisdictional High Court would be squarely applicable while considering the evidentiary value of the statement while making the assessment u/s 153A." 7. On the other hand, the learned CIT DR relied on the assessment order and the order of CIT(A). He stated that shares certificate issued to the shareholders were found at the time of search action, which leads to suspicion of the genuineness of the shareholders and also this fact was admitted by Shri Pravin Kumar Agarwal dated 28.02.2014 and 23.04.2014 recorded under section 132 of the Act admitting receipt of money on account of issuance of bogus share application money. The learned CIT DR, in view of the above argued that the AO has rightly assumed jurisdiction under section 153A of the Act and framed assessment accordingly. 8. We have heard the rival contentions and gone through the facts and circumstances of the case. Admittedly, a search under section 132 of the Act was carried out on the premises of the assessee on 27.02.2014. The....
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....Ltd. (supra), wherein considering the judgment of the Special Bench of the Mumbai Tribunal in the case of All Cargo Global Logistics 137 ITD 287(SB) (Mum), considered this issue that, whether there is scope of assessment u/s. 153A of the Act in respect to completed assessment which is limited only to undisclosed income and undisclosed assets found during the course of search or not? Hon'ble High Court held that on a plain reading of section 153 of the Act it becomes clear that on initiation of the proceedings u/s. 153A of the Act, it is only the assessment/reassessment proceedings that are pending on the date of search u/s. 132 of the Act stand abated and not the assessments/reassessments already final for those assessment years which are covered u/s. 153A of the Act. Hon'ble High Court discussed the CBDT Circular No. 8 of 2003 dated 18.09.2003 reported in 263 ITR (st.) 61 at page 107 wherein CBDT has clarified that on initiation of proceedings u/s. 153A of the Act the proceedings pending in appeal, revision or rectification proceedings against final assessment shall not abate. It is only because the final assessments do not abate the appeal, revision or rectification pendi....
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.... is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six years. It may cause hardship to some assesses where one or more of such assessments has or have been completed before the date of initiation of search. This is hardly of any relevance in view of clear and unambiguous words used by the legislature. This interpretation does not cause any absurd etc. results. There is no casus omissus and supplying any would be against the legislative intent and against the very rule in this behalf that it sh....
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.... "incriminating document". Clauses (a) and (b) of section 132(1) employ the words "books of account or other documents". For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years i....