TaxTMI 
TaxTMI 
2020 (12) TMI 256
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....ppeals filed by the Revenue are directed against the separate orders of the ld. CIT(A)-26, New Delhi, relating to different assessment years as mentioned above. 2. The respective assessees have filed cross objections against the appeal filed by the Revenue. Since identical grounds have been taken by the Revenue in these appeals and by the respective assessees in their cross objections, therefore, these were heard together and are being disposed of by this common order. 3. First, we take up ITA No.115/Del/2018 and CO No.73/Del/2018 as the lead case in the case of M/s Moon Beverages Ltd. for A.Y. 2009-10. 4. Facts of the case, in brief, are that the assessee company is one of the group companies of MMG (MM Aggarwal) group and is engaged in the business of preparation, manufacturing, packing and sale of soft drinks on the basis of concentrate and other raw material procured from Coca Cola in the capacity of bottler and distributor of Coca Cola products in India. In addition, the MMG group has business interests in several segments like chartering and leasing of vessels to ONGC and other companies, real estate, education and hospitality etc. It had filed its return of income o....
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....s which grossly lacked creditworthiness and were in the nature of accommodation entries to convert the undisclosed income of the assessee group having been received in the form of such share capital from the stated entities/companies. He further observed that search action revealed the modus operandi of the assessee group for converting their undisclosed income through the aid of various personnel/employees who categorically admitted having aided the group in such mis-demeanor by facilitating the process of creating various bogus companies within the group and having received share capital from such outside non-descript/shell companies and thereafter making the same available in the operating companies of the group through a layered structure as per the instructions of the promoter and his other employees/office bearers. 6.1 The Assessing Officer analyzed the tax returns from the income-tax data base and referred to the enquiries conducted on Delhi and Kolkata based companies. He also referred to the statement of Shri Narender Kumar Jain, who is close confident and associate of the promoter of the MMG Group, Shri Sanjeev Agrawal and their CA, Shri Ashwani Verma, the statement of....
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....e had filed full details on account of the sum received from M/s Fortune Industrial Resources Ltd. (Rs. 3,96,00,000/-), Sterling Foils Ltd. (Rs. 2,00,10,000/-) and Mahesh Finese Pvt. Ltd. (Rs. 50,10,000/-) towards share capital and share premium. It was submitted that the assessee has furnished the complete details including address and PAN of the investor companies along with the distinctive number of share certificates, the various cheques issued on different dates with the name of the bank, the name and address of the directors as on 31.03.2013, the complete copy of the income tax return for assessment year 2009-10, copy of Form No.2 of Moon Beverages Ltd. filed with ROC as 'Return of Allotment', copy of Board Resolution of the assessee company and various other details to substantiate the identity and creditworthiness of the investor companies and the genuineness of the transactions. Therefore, addition cannot be made u/s 68 of the I.T. Act. It was accordingly argued that the addition made by the Assessing Officer should be deleted. 9. However, the ld.CIT(A) was not satisfied with the arguments advanced by the assessee. So far as the legal ground challenging the vali....
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....n the case of the appellant. The overall schema that emerges there from indicates that there was prima facie material available in this regard to enable the AO to initiate proceedings u/s 153A. The assessee contentions in this regard as undera) In respect of share certificate found during the course of search in respect of companies mentioned at serial no 1 & 2 It has also been submitted that companies JA Builders Ltd and JPM Automobiles Ltd was also assessed with the ACIT, Central Circle -13, New Delhi and the order have also been passed at the same time. In the order passed in the case of JA Builders Ltd and JPM Automobiles Ltd no addition towards share capital have been made. As such the appellant contended that same Assessing officer while passing the order at the same time in respect of same issue has formed two different views. b) The shares certificates found in respect of companies mentioned at serial no 3 to 5 is related to investments made by group concerns of JPM group and does not pertain to outsiders 5.3. These merit examination of the case under 153 A of the IT Act 1961. The availability of such documents raises valid doubts on the genuinene....
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....opies of allotment letters. iii) Share Application form duly filled by the investor companies. iv) Confirmation in respect of allotment of equity shares to the investors. v) Copy of PAN card of the investor companies. vi) Memorandum & Articles of Association of the investor companies clearly depicting their corporate identity number. vii) Copies of share certificates issued by the assessee company, viii) A chart showing details of director of the investor companies. ix) A chart showing details of shareholders of the investor companies. i) Copies of the acknowledgement of the Income tax return filed for AY 2009- 10 by the investor companies along with their audited financials for the year ended 31st March 2009. 5.6. The notice u/s 133(6) of the act was complied with and the requisite Information and documents were furnished to the AO required information and documents were available according to text of order itself. The assessee has furnished the details of financials of the investing entities. After considering the identities and financials and credit worthiness of the investor companies and genuinene....
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....ra) to point out why the said decision was distinguishable in its application to the facts of the former case. However, since the same arguments have been advanced by the Revenue in the present case, the said decision in Smt. Dayawanti Gupta v. CIT (supra) is being again discussed herein. 32. In Smt. Dayawanti Gupta v. CIT (supra) the Assessees were dealing in the business of pan masala, gutkha, etc. Firstly, the Assessees therein were, by their own admission not maintaining regular books of accounts. Secondly, they also admitted that the papers recovered during the search contained "details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside books of accounts" and they were "actually unaccounted transactions made" by two of the firms of the Assessees. Thirdly, the Court found as a matter offact that the Assessees were "habitually concealing income" and that they were "indulging in clandestine operations" and that such persons "can hardly be expected to maintain meticulous books or records for long." As pointed out by this Court in Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (supra) the....
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....e that the assessee gave cash to Shri Tarun Goyal and he, after depositing the same in the bank account of various companies, issued cheques for share application money. On these facts, the decision of Hon'ble Jurisdictional High Court in the case of Harjeev Aggarwal (supra) would be squarely applicable. Therefore, we hold that the statement of Shri Tarun Goyal cannot be used against the assessee because: (i) His statement was recorded behind the back of the assessee and the assessee was not allowed any opportunity to cross-examine him. (ii) There is no corroborative evidence in support of the statement of Shri Tarun Goyal. On the other hand, the material found during the course of search and other evidences placed on record by the assessee are contrary to the allegation made by Shri Tarun Goyal in his statement. -- Conclusion - 44. Accordingly the question framed by the Court in IT A Nos. 11, 12 and 21 of 2017 by the order dated 21st March, 2017 is answered in the negative i.e. in favour of the Assessee and against the Revenue by holding that the additions made under Section 68 of the Act on account of the statements made by the Assessee's Dir....
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....ssessee, since no interest was received, nothing was accordingly offered to tax as per the settlement of the dispute with Citi Bank. Similarly, where the income itself is subject matter of dispute, the law is now settled that the income cannot be treated as accruing or arising till such time as the dispute itself is finally settled as was decided in CIT vs. Hindustan Housing and Land Development Trust Ltd., [1986] 161 ITR 524 (SC). After considering the facts of the case, I am of opinion that the addition made of A.O. on account of notional interest of Rs. 4,26,00,000 is not sustainable as such the same is deleted." 11. Aggrieved with the order of the CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds for A.Y. 2009-10:- "1. On the facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 6,46,20,000/- made by AO on account of unexplained Share Capital and Share Premium u/s 68 of the I.T.Act 1961. 2. On the facts & circumstances of the case the CIT(A) has erred in holding the source of share capital genuine when it was specifically established that investor companies are paper companies. ....
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....Moon Beverages Ltd. 6,46,20,000 7,92,18,000 10,98,60,000 5,33,10,000 Hindustan Aqua Ltd. 4,25,00,000 - 4,25,00,000 - Hal offshore Ltd. 7,65,00,000 4,30,00,000 1,55,00,000 9,50,00,000 Sunstar Infra Developers Pvt. Ltd. - - - 2,91,00,000 Fortune Industrial Resources Ltd. - - 9,00,00,000 - Metbrass Plassim India Ltd. 5,24,00,000 1,50,00,000 6,30,00,000 - Competent Infoways Pvt. Ltd. 4,63,63,000 2,11,50,000 - - 14. Identical grounds have been taken by the Revenue in appeal filed in respect of the above cases and the respective assessees have filed cross objections taking identical grounds. 15. The ld. Counsel for the assessee, at the outset, strongly objected to the order of the ld.CIT(A) in upholding the initiation of proceedings u/s 153A of the Act and framing of assessment u/s 153A/143(3) of the Act. He submitted that in absence of any incriminating material qua addition in respect of non-abated assessment, no addition can be validly made. He submitted that the addition made in the instant case is not based on any incriminating material found as a result of the search on respe....
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....n respect of M/s Competent Infoways (P) Ltd. The ld. Counsel, referring to page 42 of the assessment order of Moon Beverages Ltd. for A.Y. 2009-10 submitted that the seized document at page No.59 of A-10 is seized from corporate office of M/s Hindustan Aqua Ltd. at 1010, 10th Floor, Vijaya Building, Barakhamba Road, which is a flow chart showing details of flow of funds from one entity to another entity. He submitted that this document is not in the nature of incriminating material. Referring to the order of the CIT(A) in the case of Moon Beverages Ltd. for A.Y. 2010-11 at page 11, he submitted that the ld. CIT(A) has taken note of this document and did not find it to be incriminating in nature qua the addition made. However, for A.Y. 2009-10, the ld. CIT(A) has observed that the Department found information in respect of share certificates and the counterfoils thereof and other significant related material during the course of search operation that upon collating with the information received by the Department led to specific inputs in respect of doubtful nature on genuineness of the equity infused in the companies of the group. According to the ld.CIT(A), the material so gathered....
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....l for the assessee submitted that there was no surrender for the period under consideration, namely, A.Y. 2009-10 to 2015-16. The surrender was only for A.Y. 2007-08 which too was retracted within two months. Referring to the statement of Shri Sanjeev Agarwal on 29th March, 2015, he submitted that during the course of search, Shri Sanjeev Agarwal on behalf of MM Aggarwal group of companies made an offer of undisclosed income vide letter dated 29th March, 2015 in respect of F.Y. 2007-08, a copy of which is placed at page 83 of the paper book. He submitted that in the said letter, there was no surrender in respect of the period under consideration i.e., 2009-10 to 2015-16. Referring to pages 84 to 91 of the paper book, he submitted that even the surrender made by Sanjeev Aggarwal was retracted by him within a period of two months i.e., on 18th May, 2015. Referring to the order of the Tribunal in the case of Moon Beverages Ltd., vide ITA No.7374/Del/2017 and in the case of Hindustan Aqua Ltd., vide ITA No.7567/Del/2007, common order dated 7th June, 2018 for A.Y. 2013-14, copy of which is placed at pages 226 to 261 of the paper book, the ld. Counsel for the assessee submitted that iden....
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....ector-7, Rohini, Delhi. 28.03.2015 16-27 28-29 ii) Sh Mukesh Agarwal, Director of MM Group M/s Moo Beverages Limited. A-48, Chander Nagar, Ghaziabad, UP 28.03.2015 27-28 iii) Sh Narinder Kumar Garg Office premises of M/s North Delhi Beverages (P) Ltd 28.03.2015 28-29 iv) Sanjeev Agarwal 28.03.2015 43-49 v) Sanjeev Agarwal 1010, 10th Floor, Vijaya Building Barakhamba Road, New Delhi 29.03.2015 29-30, 32-37, 44-45 vi) Krishan Kumar Bajaj GM, M/s Moon Beverages Ltd 28.03.2015 31-32 22. He submitted that no basis whatsoever is emerging with respect to the addition made. Further, the AO has failed to appreciate that there is no whisper of any particular company which is alleged to be in the business of providing accommodation entries. He submitted that the statements made are general in nature and do not contain any specific detail as to the name of the entry provider, amount of entry, bank details, etc. The statements so recorded do not in any way brought out any live nexus with the fact that the assessee company has routed its own unaccounted money through each of the shareholder companies and e....
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....TA No. Appeal filed by Revenue Cross Objection No. i) Moon Beverages Ltd. 2009-10 115/D/18 73/ ii) (25, Bazar Lane, Bengali Market, New Delhi-110001) 2010-11 116/D/ 8 74/D/2018 iii) 2011-12 117/D 18 75/D/2018 iv) 2012-13 118D/18 76/D/2018 v) 2014-15 6955/D/18 6/D/2018 Vi) Metbrass Plassim India Ltd. 2009-10 815/D/18 70/D/2018 vii) (25, Bazar Lane, Bengali Market, New Delhi-110001) 2010-11 124/D/l8 71/D/2018 viii) 2011-12 125/D 18 72/D/2018 ix) Hall Offshore Ltd. (25, Bazar Lane, Bengali Market, New Delhi-110001) 2009-10 1 ll/D/18 79/D/2018 x) 2010-11 112/D/18 80/D/2018 xi) 2011-12 113/D/18 81/D/2018 xii) 2012-13 114/D/18 82/D/2018 xiii) 2015-16 6956/D/18 - xiv) Competent Infoways (P) Ltd. (25, Bazar Lane, Bengali Market, New Delhi-110001) 2009-10 128/D/18 84/D/2018 xv) 2010-11 129/D/18 85/D/2018 xvi) Sun Star Infra Developers (P) Ltd. (25, Bazar Lane, Bengali Market, New Delhi-110001) 2012-13 816/D/l8 88/D/2018 xvii) Fortune Industrial Resources Ltd. (153/1, Niran....
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....kes the assessment invalid and the same should be quashed. For the above proposition, the ld. Counsel also relied on the following decisions: i) Kalyankumar Ray vs. CIT, 191 ITR 634 (SC); ii) Sahara India F(rim) vs. CIT, 300 ITR 403 (SC); iii)Bentrly Nevadia LLC vs. ITO, WP(C) 774/2019 (Del); iv) PCIT vs. Sunrise Finlease (P) Ltd., 252 Taxman 407 (Guj); v) CIT vs. Smt. Phoolmati Devi, 144 ITR 954 (All); vi) M/s M3M India Holdings vs. DCIT, 71 ITR (Trib) 451 (Del); vii) Smt. Indra Bansal vs. Acit, 192 TTJ (JD) 968; viii) Akil gulamali Sonji vs. ITO 137 ITD 94 (Pune) (upheld by Bombay High Court vide ITA No.1416-1419/2012 and SLP dismissed by Hon'ble Supreme Court in the case of CIT vs. Akil Gulamali in ITA No.1417/2012 dated 15.01.2013); and ix) Verma Roadways vs. CIT, 75 ITD 183 (All). 26.1 The ld. Counsel for the assessee submitted that approval envisaged u/s 153D of the Act is not merely an administrative approval but there is a statutory duty on the higher authorities to apply its mind before granting the approval. He submitted that this duty cannot be discharged mechanically by the officers as t....
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.... vs. Well Worth Construction Udyog Ltd. iii) ITA No. 778/2015(Del) dated 13.10.2015 CIT vs. Rakam Money Matters(P) Ltd. iv) ITA No. 467/2016 (Del) dated 24.8.2016 Pr. CIT v. Lakshmi Float Glass Ltd. affirming the decision of Tribunal in ITA No. 535/D/2009 dated 31.3.2015 CIT(A) order dated 18.11.2008 and order of assessment dated 17.12.2007 u/s 143(3) of the Act v) 387 ITR 636 (Del) CIT v. Softline Creations (P) Ltd. vi) ITA No. 678/2016 dated 26.9.2016 (Del) Pr. CIT v. Muni Ram Verma vii) 391 ITR 11 (Del) dated 11.1.2017 Pr. CIT vs M/s N.C. Cables Ltd. viii) ITA No. 169/2017 (Del) dated 14.3.2017 Pr. CIT v. Laxman Industrial Resources Ltd. ix) 101 CCH 004 (Del) dated 8.1.2018 Pr. CIT v. Oriental International Co. (P) Ltd. x) ITA No. 130/2018 (Del) Dated 6.2.2018 Pr. CIT v. M/s Adamine Construction (P) Ltd. xi) ITA No. 151/2018 (Del) dated 9.2.2018 Pr. CIT v. Rathilspat (P) Ltd. xii) 237 Taxman 104 (Del) CIT vs. Shiv Dhooti Pearls & Investment Ltd. xiii) 299 ITR 286 (Del) CIT vs. Divine Leasing & Finance Ltd xiv) 330 ITR 298 (Del) CIT vs. Dwarkadhish Investment (P.) Ltd. ....
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.... v) ITA No. 02 & 03/D2016 AY 2012-13 & 2013-14 ACIT v. DevSumanSindhu vi) ITA No. 3342/D/2013 ITO v. XO Infotech Ltd. vii) ITA No. 2525/D/2015 for Assessment year 2011-12 M/s Prabhatam Investment (P) Ltd. v. ACIT. viii) C.O.No.163, 164 & 165/Del./2016 M/s. Garuda Imaging & Diagnostics Pvt. Ltd v. ACIT ix) ITA No. 2995/D/2015 dated 30.11.2018 Roseberry Mercantile (P) Ltd. vs. ACIT x) ITA No. 2808/D/2016 dated 16.12.2016 M/s Aas Research & Solutions (P) Ltd. v. Pr. CIT xi) ITA No. 2534/Del/2018 dated 10.08.2018M/s Priyatam Plaschem (P) Ltd vs ITO affirmed by Hon'ble High Court in the case of Pr. CIT v. Priyatam Plaschem (P) Ltd. in ITA No. 71/2019 dated 28.1.2019 xii) ITA No. 5637/Del/2013 dated 01.10.2018 Rajat Export Import (India) Pvt Ltd vs ITO., xiii) ITA No. 1162/Kol/2015 dated 14.6.2018 ITO v. Wiz-Tech solutions (P) Ltd. xiv) ITA No. 2924/Mum/2017 dated 16.5.2019 DCIT v. M/s Gladiolus Property & Inv. (P) Ltd. xv) ITA No. 607/Mum/2019 AY 20121-3 dated 17.7.2019 Krishnaping Minerals (P) Ltd. v. DCIT xvi) ITA No. 7006/Mum/2017 AY 2006-07 dated 18.7.2019 ITO v. Manila Gold (P) L....
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.... about identity and creditworthiness of shareholders as well as genuineness of the transactions. She submitted that the SLP filed by the assessee was dismissed by the Hon'ble Supreme Court. 32. Referring to the decision of the Hon'ble Bombay High Court in the case of Konark Structural Engineering (P.) Ltd. vs. DCIT reported in 90 taxmann.com 56, she submitted that the Hon'ble High Court in the said decision has held that where assessee-company received certain amount as share capital from various shareholders, in view of fact that summons served to shareholders under section 131 were unserved with remark that addressees were not available and moreover those shareholders were first time assessees and were not earning enough income to make deposits in question, impugned addition made by AO under sec. 68, was to be confirmed. 33. Referring to the decision in the case of Prem Castings (P.) Ltd. vs. CIT reported in 88 taxmann.com 189, she submitted that the Hon'ble High Court has held that where assessee company had received share capital from various contributors and admitted that alleged investors were close friends and business associates of its directors, burde....
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....sufficient for assessee to merely disclose address and identities of shareholders; it has to show genuineness of such individuals or entities. She also relied on the following decisions :- (i) CIT vs. Focus Exports (P.) Ltd., 51 taxmann.com 46 (Delhi). (ii) PCIT vs. Bikram Singh, ITA No.55/2017 (Delhi). (iii) Rick Lunsford Trade & Investment Ltd. vs. CIT, 385 ITR 399 (Cal). 40. Referring to the decision in the case of Rick Lunsford Trade & Investment Ltd. vs. CIT [2016-TIOL-207-SC-ITJ (Supreme Court), she submitted that the Hon'ble Supreme Court has dismissed the SLP upholding the decision of the Hon'ble High Court that it is open to the Revenue Department to make addition on account of alleged share capital u/s 68, where the assessee company has failed to show genuineness of its shareholders. A.O. has categorically after making necessary inquires & after taking into consideration of investigation reports & search & seizure materials made the addition. 41. The ld. DR summarized the finding of the Assessing Officer and submitted that: (i) Such entities who have invested are paper-existing only without physical existence (ii) Such entities ....
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....n 132 of the I.T. Act 1961 wherein documents/data storage devices etc. were found & seized & on examination & further Investigation on such seized details/Information it was found regarding bogus/non-existent entities who had advanced investment in assessee' company proving that Identity of such entities is not established, genuineness of transaction has been found to be NON-GENUINE & creditworthiness was never proved & such entities were only existing on paper without any physical presence as none of such entities was produced before the said A.O. being of bogus existence and as such these details/ information seized which prove bogus existence / non-genuine transaction having no creditworthiness of such parties can be treated as INCRIMINATING EVIDENCE against the said Assessee proving routing of undisclosed/unaccounted money circulated through bogus share capital & share premium invested by bogus entities & so ratios in Kabul Chawla case of Delhi High Court in 380 ITR 573 & Meeta Gutgutia reported in 395 ITR 526 are NOT applicable in this case being DISTINGUSHABLE as In this case incriminating materials in terms of name & addresses, amounts of accommodation entries etc. which....
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....ditworthiness was never proved & such Entities were only existing without any physical presence as none of such entities was produced before said A.O. being bogus existence. v. Had there been no search & seizure of such paper- documents from said Assessee, then A.O. could not have obtained basis information/details that ultimately, on further inquiry/investigation by A.O., during assessment proceedings, resulted to establish bogus share capital/share premium money as accommodation entries only for routing taxable undisclosed/unaccounted income in a wrongful manner. vi. It is the wisdom of Legislation that no word/concept 'incriminating material' is directly incorporated in provision of section 153A of I.T. Act 1961, although spirit of said provision of section 153A indicate that search & seizure action u/s 132 has been done in the case of Assessee & panchnama has been drawn for said Assessee & that certain materials/information have been found/seized due to such search & that such found/seized materials/information have been utilized for purpose of assessment u/s 153A wherein A.O. has found or established undisclosed/unaccounted taxable income on further i....
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....or which have already been reproduced in the preceding paragraphs. 45. It is the submission of the ld. counsel for the assessee that the original return was filed on 30th September, 2009 declaring income at Rs. 10,21,50,894/- which was assessed u/s 143(3) at total income of Rs. 10,27,91,857/-. This assessment was rectified u/s 154 of the Act determining the income at Rs. 7,50,21,860/-. Thus, assessment was completed and the assessment was not pending on the date of search. Since the addition made by the Assessing Officer is not based on any incriminating material found during the course of search and addition has been made on the basis of post-search enquiry and on the basis of statements recorded u/s 132(4) of the I.T. Act, therefore, the same cannot constitute incriminating material so as to enable the Assessing Officer to assume jurisdiction u/s 153A of the I.T. Act. 45.1 So far as the finding given by the ld.CIT(A) that share certificates and counterfoils thereof were found which, according to him, is incriminating in nature, it is the submission of the ld. Counsel that in a corporate office the company is required to keep the share certificates and, therefore, the same c....
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....ted and was not pending on the date of search. A perusal of the assessment order shows that the addition is not based on any incriminating material, but, based on post-search enquiries or statements recorded u/s 132(4) of the Act. The share certificates and counterfoils thereof found during the search, in our opinion, cannot be construed as incriminating in nature. Even the document appearing at page 59 of Annexure A-10 found and seized from the corporate office of M/s Hindustan Aqua Limited at 1010, Vijaya Building, Barakhamba Road, New Delhi, showing the details of advance for purchase of shares or refund of share application money in our opinion cannot be construed as incriminating since the entries are duly recorded in the books of account. The AO nowhere has disputed or challenged the above submission of the assessee before him as appears at page 43 of the assessment order. Therefore, once the entries are recorded in the books of account, the same in our opinion cannot be construed as incriminating in nature. So far as statements u/s 132(4) is concerned, the same are also not incriminating in nature as held in various decisions. Under these circumstances, we are of the conside....
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....dings were pending at the time of search and was abated, the legal ground objected as such by the appellant was not valid as such the same is bound to be rejected." 37. We further find from the order of the ld. CIT(A) that there was no surrender of income for the impugned assessment year and the surrender was only for the assessment year 2008-09 which too was retracted within two months. He has also observed that the statement was non descriptive and vague and subject to cross checking of fact to be explained after access to books of accounts. We, therefore, find merit in the submissions of the ld. counsel for the assessee that the addition made by the Assessing Officer u/s 68 of the I.T. Act is not based on any incriminating material and is based on statements recorded during search u/s 132(4) and post-search enquiries. 38. The Hon'ble Delhi High Court in the case of CIT vs. Best Infrastructure (India) (P) Ltd. reported in 397 ITR 82 has held that statements recorded u/s 132(4) of the I.T. Act do not by themselves constitute incriminating material. The relevant observation of the Hon'ble High Court reads as under :- "38. Fifthly, stateme....
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.... the admission of accommodation entry in statements under section 132(4) of the Act, the court held that the statement do not constitute as incriminating material. In the instant case, neither is there any statement of any accommodation entry operator claiming that any entry was not provided nor any director has admitted that assessee obtained accommodation entry. Thus, the case of the assessee is on better footing then the case of Best Infrastructure (I) P. Ltd (supra). In such facts and circumstances, respectfully following the decision of the Hon'ble Delhi High Court in the case of best infrastructure (India) private limited (supra), we do not have any hesitation to hold that the statement under section 132(4) of Sh. Sampat Sharma cannot be treated as incriminating material found during the course of search. In the result, we hold that addition of share capital in the year under consideration has been made without relying on any incriminating material found during the course of search." 41. In the light of the above decisions, statements recorded u/s 132(4) of the I.T. Act, 1961 cannot constitute as incriminating material. 42. As mentioned earlier, the addi....
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.... incriminating material was found/seized during the course of search, therefore, following the decisions cited (supra), we hold that no addition could have been ITA No.7374/Del/2017 ITA No.7567/Del/2017 made u/s 153A since the assessment was not abated in the instant case. In view of the above, we hold that the ld. CIT(A) was not justified in upholding the action of the Assessing Officer in assuming jurisdiction u/s 153A of the I.T. Act. Accordingly, the addition made by the Assessing Officer and upheld by the ld. CIT(A) in the 153A assessment proceedings being void ab-initio are deleted. 46. Since the assessee succeeds on this legal ground, arguments made by the ld. counsel for the assessee on merit are not adjudicated being academic in nature." 48. We find, the Hon'ble Delhi High Court in the case of PCIT vs. SMC Power Generation Ltd., ITA 406/2019, order dated 23rd July, 2019, copy of which is placed at pages 429 to 432 of the paper book, has observed as under:- "3. The question sought to be raised by the Revenue is whether the ITAT was justified in quashing the assessment order framed under Section 153A of the Income Tax Act, 1961 (Act) on the ground that t....
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....the impugned order that there was no incriminating material "in respect of the share capital" and therefore the addition was unjustified, was not warranted. According to her this was beyond the judgment of this Court in Kabul Chawla (supra). 9. The fact remains that the Revenue itself is not disputing that in respect of the share capital no incriminating documents were found in the search proceedings. The Court's attention has been drawn to the decision of the Supreme Court in CIT v. Singhad Technical Education Society (2017) 397 ITR 344 (SC) where in the context of Section 153C of the Act it was held that the incriminating material which was seized had to pertain to the AY in question. It is further held that documents seized had to establish a co- relation documents wise with the assessment years for which the addition was sought to be made. 10. The requirement that the incriminating material to have the co-relation to the particular addition sought to be made is a logic that will hold good not only for Section 153 C of the Act but in relation to Section 153A of the Act as well. Consequently, this Court does not find any error having been committed by the ITAT i....
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.... the course of search. While doing so, the Tribunal has relied on the decisions of the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in 380 ITR 573 (Del), CIT vs. Meeta Gutgutia reported in 395 ITR 526, CIT vs. Harjeev Aggarwal reported in 290 CTR 263, CIT vs. Best Infrastructure (India) (P) Ltd. reported in 397 ITR 82 and various other decisions. The relevant observations of the Tribunal from para 35 onwards read as under:- "35. Before deciding the issue on merit, we would first like to decide the legal ground raised by the assessee challenging the validity of the assumption of jurisdiction u/s 153A in absence of any incriminating material found during the course of search when the assessment was not pending as per ground of appeal no.1 to 1.2. It is an admitted fact that the original return of income was filed on 12.09.2013 which was accepted u/s 143(1) vide intimation dated 18.04.2014. The period for issue of notice u/s 143(2) expires on 30.09.2014 i.e. the notice u/s 143(2) could not have been served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. Therefore, in absence of is....
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.... "38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts ITA No.7374/Del/2017 ITA No.7567/Del/2017 in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non- existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission. 39. For all the aforementioned reasons, the Court is of the view that the ITAT was fully justified in concluding that the assumption of jurisdiction under Section 153A of the Act qua the Assessees herein was not justified in ....
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....the I.T. Act, 1961 cannot constitute as incriminating material. 42. As mentioned earlier, the addition of Rs. 11,85,00,000/- was not made on the basis of any incriminating material but is based on statements recorded during the search u/s 132(4) and post-search enquiries. It has been held in various decisions that completed assessments cannot be disturbed u/s 153A in absence of any incriminating material. 43. The Hon'ble Delhi High Court in the case of Kabul Chawla reported in 380 ITR 573 has held that the completed assessment can be interfered with by the Assessing Officer while making the assessment u/s 153A only on the basis of some incriminating material found on or 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 not known in the course of original assessment. Following the above decision, the Hon'ble Jurisdictional High Court in the case of CIT vs. Meeta Gutgutia reported in 395 ITR 526 has taken a similar view and has held that once the assessment has ITA No.7374/Del/2017 ITA No.7567/Del/2017 attained finality for a particu....
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....rial found during the course of search. Therefore, the order of the CIT(A) is upheld on the legal ground. Since the order of the CIT(A) deleting the addition on legal ground is upheld, therefore, the grounds raised by the Revenue on merit become infructuous being merely academic in nature. The appeal filed by the Revenue is accordingly dismissed." 49.1 We find, the coordinate Bench of the Tribunal in the case of M/s Metbrass Plassim India Ltd. vs. ACIT, ITA No.7532/Del/2017, order dated 17th September, 2018 (one of the group concerns and one of the assessees here) for A.Y. 2013-14, has observed as under:- "36. We have considered the rival arguments made by both the sides in the light of the orders of the authorities below. We have also considered the case law that is brought to our notice. Ld. Assessing Officer made addition of Rs. 39 lacs in the hands of the assessee u/s 68 of the Act basing on various enquiries conducted and statements recorded of various persons u/s 132(4) and 131, stating that the assessee failed to substantiate to his satisfaction the identity and creditworthiness of the investor and the genuineness of the transaction with cogent evidence. Accordin....
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.... period for issue of notice u/s 143(2) expired by 30.09.2014 i.e. the notice u/s 143(2) could not have been served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. Therefore, in absence of issue of any notice u/s 143(2) and since no other proceedings are pending, therefore, it had attained the finality much prior to the date of search on 28.03.2015. Under these circumstances, the finding of the ld. CIT(A) that the assessment proceedings were pending at the time of search and was abated is factually incorrect. 40. Para 5 page 11 of the impugned order reads that,- "The basis of addition as taken by the A.O. was statement recorded of Shri Sanjeev Agarwal during the course of search wherein he has surrendered an amount of Rs. 88.52 crore out of which a sum of Rs. 30.78 crores were referred to for the assessment year 2008-09 and rest of amount was non descriptive and vague and was surrendered subject to cross checking of the facts and to explain after access to the books of accounts. The said statement was retracted by said Shri Sanjeev Agarwal on 18.05.2015 within two months from the date of original s....
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....ection 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment." 43. The Co-ordinate Bench of the Tribunal in the case of Brahmaputra Finlease (P) Ltd. vide ITA No.3332/Del/2017 order dated 29.12.2017, following the above decision of the Hon'ble Delhi High Court, has observed as under :- "4.19 We find that in the case of best infrastructure (India) private limited (supra), despite the admission of accommodation entry in statements under section 132(4) of the Act, the court held that the statement do not constitute as incriminating material. In the instant case, neither is there any statement of any accommodation entry operator claiming that any entry was not provided nor any director has admitted that assessee obtained accommodation entry. Thus, the case of the assessee is on better footing then the case of Best Infrastructure (I) P. Ltd (supra....
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....TR 526 has taken a similar view and has held that once the assessment has attained finality for a particular year i.e. it is not pending then the same cannot be subject to tax in proceedings u/s 153A of the Act. This, of course, would not apply if incriminating materials are gathered in the course of search or during the proceedings u/s 153A which are contrary to and/or nor disclosed during the regular assessment proceedings. 48. Again in the case of Pr.CIT vs. Lata Jain reported in 384 ITR 543 the Hon'ble Delhi High Court has held that in absence of any incriminating material found as a result of search, assumption of jurisdiction u/s 153A was not in accordance with law. The various other decisions relied on by the ld. counsel for the assessee also supports his case. 49. In the case of CIT vs. Sinhgad Technical Education Society reported in 397 ITR 344 Hon'ble Supreme Court upheld the decision of Hon'ble Bombay High Court wherein the Hon'ble High Court had upheld the decision of the Tribunal holding that the incriminating material which was seized has to pertain to the assessment years in question and it is an undisputed fact that the documents which were sei....
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....contention and perused the orders of the lower authorities. It is apparent that on the date of initiation of search on 10/2/2009 the assessment proceedings u/s 143 (3) of the income tax act was completed on 18/12/2007. Therefore on the date of search no assessment proceedings were pending for the impugned assessment year. Therefore if any addition is required to be made by the learned assessing officer should have been made on the basis of the seized material found during the course of search. We have perused the various additions/disallowances made by the learned assessing officer and found that there is no discretion of any seized material found during the course of search based on which these disallowances/additions have been made. The learned departmental representative also could not show us any seized material based on which the said additions have been made. Therefore, respectfully following the decision of the honourable Delhi High Court in CIT vs Kabul Chawla (supra) the above additions deserve to be deleted. Accordingly we direct the learned assessing officer to delete the disallowance of payment in contravention is of provisions of section 40A (3) of the income ....