TaxTMI 
TaxTMI 
2019 (4) TMI 1906
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....re of the controversy and main grievances of the assessee. With this background, we summarize and concise the grounds raised by the assessee as follows: (i). Ground Nos. 1 to 8 raised by the assessee are interlinked and common, which relate to addition made by assessing officer of Rs. 50 lakhs under section 68 of the Act, whereas no proceedings were pending before the assessing officer on the date of search and no incrementing material was found/unearthed by the search team (ii). Ground No.9 relates to the commission charged @ .5% on (such share application money of Rs. 50 lakhs), transaction at Rs. 25,000/- u/s.69C of the Act. 3. Now, we shall take summarize and concise ground raised by the assessee, which reads as follows: (i). Ground Nos. 1 to 8 raised by the assessee are interlinked and common, which relate to addition made by assessing officer of Rs. 50 lakhs under section 68 of the Act, whereas no proceedings were pending before the assessing officer on the date of search and no incrementing material was found/unearthed by the search team. 4. The facts of the case which can be stated quite shortly are as follows: The assessee is a Limited comp....
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....ocuments pertaining to the assessee was found and/or seized, let alone the fact as to whether they were incriminating or not. Therefore, in absence of any incriminating material being found in connection to the assessee, the addition of Rs. 50,00,000/- in garb of unexplained cash credit u/s 68 of the Act, made by the ld AO in the impugned assessment order is wholly untenable in law and on facts of the case. (c) It was also specifically submitted by the assessee that in absence of any incriminating material or document found during the course of search, the Assessing Officer cannot make additions/disallowances in the assessments u/s 153A/143(3) of the Act for the unabated years, that is, assessments were completed before the date of search. Based on these submissions, the assessee prayed before the ld CIT(A) that additions made by assessing officer should be deleted. However, ld CIT(A) rejected the contention of the assessee and upheld the additions made by the Ld AO u/s 68 and 69C of the Act by stating that the assessee had raised objections only on technical grounds, that is, the additions were not based on incriminating materials. 6. Aggrieved by the order of ld CI....
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.... b. Addition of alleged expenditure on commission paid - Rs. 25,000/- For raising the share capital u/s 69C. Total Rs. 50,25,000/- 6) Mr. Keshav Kumar Bubna, the Director of the assessee company (BSL) and is the prima donna of the Bubna Group. He had admitted on oath that the assessee company was not having any business, earlier they were into textiles. (7)Company had issued shares (F.V.10+30 Premium) to two shares subscribing companies (SSCO), thus the premium of Rs. 30 is not based on commercial expediency, in which no prudent person/ company would invest. As on 31/03/2010 Banktesh Synthetic limited, the assessee co. had allotted shares to two (2) share subscribing companies with face value of Rs. 10 with Premium of Rs. 30 total Rs. 40 each per share. It is against the human probability that anyone will invest and Pay Rs. 10/- along with share premium of Rs. 30/- per share without having any future prospect of the earning by the company. It would be pertinent that assessee company BSL had discontinued its earlier business as mentioned by the director of assessee company Mr. Keshav Kumar Bubna (KKB), The current dire....
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....rant. Pursuant to the search operation, a notice u/s 153A of the Act was issued to the assessee for A.Y. 2010-11 and in response, the assessee filed the Return of Income on 10.12.2016, declaring a total income of Rs. 5,98,550/-. Thereafter, an assessment u/s 153A/143(3) of the Act was completed on 31.12.2017 assessing the total income at Rs. 56,23,550/-. In the Assessment Order, the Ld ACIT, Central Circle-3(2), Kolkata (AO) made addition u/s 68 of the Act on account of share capital, to the tune of Rs. 50,00,000/-. We note that on the basis of the search conducted on 29.05.2012, the assessee's assessment stood completed u/s 153A/ 143(3) of the Act, on 30.03.2015. We note that again, during the course of second search operation conducted on 02.03.2016, no documents pertaining to the assessee was found and/or seized, that is, there were no any incriminating material found or unearthed during the search. Therefore, in absence of any incriminating material being found in connection to the assessee, the addition of Rs. 50,00,000/- in garb of unexplained cash credit u/s 68 of the Act, made by the ld AO in the impugned assessment order is wholly untenable in law and on facts....
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....7 and estimated undisclosed income at a certain percentage of amount of disclosure made by assessee in her statement under section 132(4) - High Court in impugned order held that since no incriminating material was unearthed to show that there was failure by assessee to disclose franchise income, addition made by Assessing Officer was unjustified - Whether SLP against said decision was to be dismissed - Held, yes [Para 2[ [In favour of assesse]. " We note that it is by now well settled that in absence of any incriminating material or document found in the course of search, the Assessing Officer cannot make additions/disallowances in the assessment u/s 153A/143(3) of the Act of the years for which assessments did not abate. It is submitted by ld counsel before us that the earlier assessment of the assessee for A.Y. 2010-11, was earlier made u/s 143(3)/153A of the Act. As such assessment for that year did not abate. The Investigation Wing of the Income Tax Department, Kolkata carried out search operations under Section 132 on the Bankatesh Group on 01.03.2016. In the course of search documents bearing identification mark BC/l to BC/6, BUL/1 to BUL/5 and AB/l were seized and ....
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....T) ACIT VsBudhiya Marketing Ltd [ITA No. 1545 of 2012] (Kol ITAT) BiswanathGarodia vs DCIT (76 taxmann.com 81) (Kol ITAT) 11. On similar facts, we also rely on the judgment of the coordinate Bench of ITAT, Kolkata in the case of Mridul Commodities Pvt Ltd Vs Dy.CIT [IT(SS) No. 14 & 15/KoI/2015] dated 07.10.2016, which was also cited by the assessee during the appellate proceedings. In this case there was a search operation u/s 132 on the assessee company. Thereafter notices u/s 153A were issued inter alia including for AYs 2007-08 & 2008-09, whose assessments had not abated on the date of search. In the assessments framed u/s 143(3)/153A for A.Y. 2007-08 & 2008-09, the AO made additions u/s 68 with regard to share capital raised by the assessee in those respective years. The AO observed that the assessee had inflated expenses by making bogus payments and these unaccounted monies were thereafter routed back into the company in form of share application monies. On appeal, the assessee challenged the validity of the assessment framed u/s 153A in absence of any incriminating material found in the course of search. The CIT(A) remanded the matter to the AO and requir....
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....nt bank statements in respect of accounts from which share application monies were paid, PAN and address of the share subscribers for the year ended 31st March 2010. The documents furnished before the AO substantiated that each of the share applicant company was regularly assessed to tax and the payments towards share application monies was made through their respective bank accounts. These documentary evidences proved the identity of the share applicants, the genuineness of the transactions and creditworthiness of transaction with each share applicant. In the circumstances the impugned addition made by the AO was wholly untenable and deserves to be deleted. 13. We note that assessee`s issue under consideration is also covered by the judgment of the Coordinate Bench of ITAT, Kolkata in the case of M/s Garg brothers Pvt Ld & others, in ITA No. 2519, 2520 & 2521/Kol/2017, for A.Y.2009-10, order dated 18.04.2018, wherein a search and seizure operation under the provisions of section 132(1) of the Act was conducted on Banktesh Group on 29.05.2012 and subsequent dates. The assessee is part of the Banktesh Group. On similar facts, the Coordinate Bench of Kolkata, quashed the order of ....
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....t of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the int....
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....ess the `total income' of the aforementioned six years in separate will be only one assessment order in respect of each of the six `AYs " in which both the disclosed and the undisclosed income would be brought to tax". Although Section 153 A 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 AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized 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 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 separatel....
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....ven its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 200102 was even time barred." Support, is also drawn from the following judgments: i) BiswanathGarodiaVs.DCIT (2016) 76 taxmann.com81 ii) CIT Vs.ContinentalWarehousinhg (NhavaSheva) Ltd (2015 374 ITR 645). iii) Jai Steel (India) Jodhpur Vs. ACIT (2013) 259 CTR 281 iv) CIT Vs.Deepak Kumar Aggarwal (2017) 398 ITR 586 v) Principal CIT Vs.DipakJashvantalaPanchal (2017) 397 ITR 253. vi) Principal VIT vs.Lalit Jain (2017) 384 ITR 543 vii) Pr.CIT vs. Dvangi Alias Rupa (2017 394 ITR 184 viii) Chintels India Ltd Vs. DCIT (2017) 397 ITR 416 ix) Smt. Anjli Pandit Vs. ACIT (2017) 157 DTR (Mum) (Tri.) 17 x) Pr.CITVs.MeetaGutgutia (2016)395 ITR 526. 55. In view of the aforesaid ratio decidendi of the Hon'ble High Court as well as Hon'ble Supreme Court's decisions cited above, since assessment for Assessment Year 2009-10 was not pending before the Assessing Officer on the date of search i.e. on 29.0....
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.... Cliff Trexim (P) Ltd. 57, Burtolla Street, Kolkata - 700 007. Sir, Sub: Show Cause Notice u/s 263 of the I.T. Act, 1961 in the case of M/s. Cliff Trexim (P) Ltd..., (PAN-AABCC0961E) for the A.Y 2009-10. Please refer to the above. "Assessment for the A.Y 2009-10 u/s 153A of the Income Tax Act, 1961 in the case of M/s. Cliff TreximPvt. Ltd. which is a part of Banktesh Group was completed on 30.03.2015 by the DCIT, Central Circle 3(2), Kolkata. On analysis of assessment records, it is observed that in the year under consideration, the assessee raised share capital and premium to the tune of Rs. 10.40 crore. During the assessment proceeding, the assessee furnished the list of investors who subscribed in shares of the assessee company. The assessee furnished the supporting documents regarding share transactions of investor companies. But no detailed investigation was carried out at the time of assessment regarding genuineness of introduction of share capital. Meanwhile a search operation against Banktesh group was once again conducted on 02.03.2016 by DDIT(lnv.), Unit 2(2),Kol. During the course of search & post search i....
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....ed investigation was carried out at the time assessment regarding genuineness of introduction of share capital (vi) On 02.03.2016 another search was conducted against the Banktesh Group by DDIT(Investigation), Unit-2, Kolkata (vii) During the search (second search) & post search investigation, it was found that accommodation entries in the form of bogus share capital have been taken by different group of companies by the said group with the help of accommodation entry operators and that the allottee companies are bogus and non-existing. (viii) The statement of entry operators were also recorded during search and seizure operation which confirmed the finding of the investigation wing that in lieu of commission they provided accommodation entry in the form of share capital/premium to the Banktesh Group of Companies (ix) In view of the aforesaid facts, the Pr. CIT is of the view that assessment completed on 30.03.2015 may be erroneous in so far as it is prejudicial to the interest of the Revenue. 59. Further, we note that pursuant to the aforesaid SCN, the assessee's replied to the Pr. CIT, extracts of which has been reproduced by the Princ....
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....T is finding fault with the AO in not conducting detailed enquiry about the share capital introduced into the assessee company. Though in the same breath, the Principal CIT admits that assessee has produced all relevant documents before the AO in respect to the share capital. However, the ld. Principal CIT missed the most important fact that A.Y 200910 was not pending before the Assessing Officer on the date of first search on 29.05.2012, so it is an unabated assessment and the AO could have only reiterated the assessment crystallized as per intimation forwarded by the Department u/s 143(1) dated 25.11.2011 wherein the Department accepted the returned income filed by the assessee on 25.09.2009, because there was no incriminating material unearthed/seized during search (first) on 29.05.2012. It is very important to take note of the Hon'ble Delhi High Court in Kabul Chawla case (supra) wherein on a similar situation laid the law as under: 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 153 A is relatable to abated proceedings (i.e. those pending on the ....
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....IT, it is evident that the sheet anchor on which the Principal CIT based his foundation to find fault with the Assessing Officer is emanating from the second search which happened on 02.03.2016 based on which investigation report has been made wherein the share capital raised by the assessee company for Assessment Year 2009-10 is under suspicion/cloud. So, the Principal CIT refers to the second search which happened on 02.03.2016 and the investigation report thereafter made by the investigation wing which is subsequent and obviously a development after framing the assessment order by the Assessing Officer dated 30.03.2015. The Assessing Officer cannot be said to be a clairvoyant, who could have forecasted or foreseen that a second search would take place on 02.03.2016 and thereby some material/oral/evidence would be collected by the investigation wing a year before i.e. on 30.03.2015 when the assessment order was framed by AO after the fallout of first search conducted on 29.05.2012. 64. From the facts narrated above, we note that it is not the case of the Principal CIT that Assessing Officer failed to take into consideration any incriminating material unearthed during fir....
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....w was laid down by the Hon'ble High Court of Delhi, so the issue raised by the ld. CIT(DR) is no longer res integra and therefore, has no merit. The Hon'ble Calcutta High court's order in Tata Metaliks Ltd. is distinguishable on facts and pertained to filing of revised return of income in cases where assessee received intimation u/s 143(1) of the Act and is not in conflict with the view of Hon'ble Delhi High Court in Kabul Chawla (supra) which is on 153A proceedings after search is conducted by the Department. 67. Moreover, it has to be remembered that Principal CIT cannot do indirectly what he could have done directly. The said proposition of law has been laid in a similar case by this Tribunal in the case of M/s Ujjal Transport Agency vs. CIT, Central-II in IT(SS) No.58/Kol/2013 Assessment Year 2007-08 wherein it has held as under: 16. Having held that the scope of the proceedings u/s.153A in respect of assessment year for which assessment have already been concluded and which do not abate u/s.153A of the Act, that the assessment will have to be confined to only incriminating material found as a result of search, the question to be decided is as to whether the p....