TaxTMI 
TaxTMI 
2021 (8) TMI 324
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....sence of any incriminating material found during the course of search action, as per the grounds stated in the order or otherwise. 2. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in confirming the action of Assessing officer in treating the long term capital gains earned by the appellant as non-genuine and bogus transaction, as per the grounds stated in the order or otherwise. 3. On the facts and circumstances and in law the Ld. CIT(A), erred in confirming the action of Assessing Officer in disallowing the claim u/s 10(38) of the Act being Long Term Capital Gain on sale of shares listed on stock exchange. 4. On the facts and circumstances of the Appellant's case and in law, Ld. CIT(A) erred in confirming the action of Assessing officer in making an addition of Rs. 10,43,74,444/- by invoking provisions of Sec. 68 of the Income Tax Act, 1961, being the amount of sale value of shares without allowing the deduction in respect of the purchases cost amounting to Rs. 77,34,330/-, as per the grounds stated in the order or otherwise. 5. On the facts and circumstances of the Appellant's case and in law, Ld. CIT(A) ....
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.... be made with seized incriminating materials. However ld. CIT(A) dismissed the appeal of the assessee on this issue by holding and observing as under: "5.3 The assessee was covered u/s. 132 on 09.04.2015 by the Investigation Wing, Mumbai, after being armed with such huge adverse evidences against the assessee. It is also relevant to note that the assessee was allotted preferential shares which is normally allotted only to friends, relatives and close associates. It would have been an altogether different matter if the assessee had purchased the shares from the market and not through the preferential route. In view of such a factual scenario, the onus was very heavy on the assessee to explain its claim of LTCG in the said scrip of GIL. However, the assessee could not even explain the basis of having made the decision of investment in the shares of the said scrip where it has earned such improbable/unrealistic profits. It is relevant to mention that GIL and FFSL are promoted by one Shri Anil Agarwal. It is noted that SEBI had carried out detailed investigations on the allegation of market manipulation in the scrip of FFSL and found that Anil Agarwal and entities of his "Comf....
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....which the search is conducted. Under sub-section (4) the authorized officer can during the course of search or seizure examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such persons during; such examination may thereafter be used in evidence in any proceeding under the Act." 5.6 Further, proceedings before the Income-tax authorities, as explained by the Allahabad High Court in Gargi Devi Jwala Prasad v. CIT [1974] 96 ITR 97 , are considered to be of judicial nature where the issues are decided on the basis of evidences which can be oral or documentary. Oral evidences, inter alia, include statements which are made before the income-tax authority in relation to matter of inquiry and may include examination of the assessee itself. Also, the statement on oath recorded in course of the search action u/s 132(4) has been held to be of evidentiary value by the Hon'ble Delhi High Court in the case of Dhingra Metal Works (328 ITR 384) and the Hon'ble Kerala High Court in the case of Paul Mathews (263 ITR 101)as against state....
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....nsequent concealed income cannot be assessed as undisclosed income in Block Assessment. This decision of the Hon'ble ITAT Ahmedabad has also been approved by the Hon'ble Gujarat High Court. In the instant case, the falsity of the claim of LTCG was exposed in the search action and therefore, in principle the action of the AO of making the said additions while completing the assessment u/s 153A rws 143(3), cannot be faulted. 5.9 In view of the above detailed discussion, no infirmity is found in the action of the AO in undertaking said action u/s 153A rws 143(3) since there was sufficient evidence to incriminate the assessee in the form of statements recorded of Shri Amit Patel wherein he could neither explain the basis for the investment in the said scrip nor explain the abnormal rise in the price of the said scrip despite weak fundamentals and no positive corporate announcements. Accordingly, Ground No.1 of the appeal is dismissed." 6. The Ld. A.R. vehemently submitted before us that the assessment in this case has attained finality on the date of search as the assessment related to A.Y. 2010-11 whereas the search was conducted on 09.04.2015 and therefor....
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.... the search team. The ld DR stressed that the search team found material during search which is incriminating and therefore the ground raised by the assessee that addition is not based upon the seized materials is devoid of any merit. The ld DR therefore prayed that the ground no. 1 deserved to be dismissed. 8. In the rejoinder ld AR submitted that the loose sheet found during the search only contained information/details as to the capital gain on sale of shares which has already been disclosed in the books of account of the assessee and in no way incriminating in nature. 9. We have heard the rival submissions of both the parties and perused the material on record. The undisputed facts are that the return of income was filed by the assessee for the instant year on 06.09.2010 declaring an income of Rs. 24,09,303/-. Search and seizure action was conducted on 09.04.2015 and thus on the date of search, the assessment has attained finality and is an unabated assessment on the date of search. We find merit in the arguments of the Ld. A.R. that in the case of unabated assessment year, addition can only be made on the basis of incriminating material found during the course of search ....
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....terial for assessment u/s.!53(A) is not sustainable on the touchstone of above said honourable jurisdictional High Court decision. Therefore, the learned CIT appeals and the learned departmental representative plea in trying to distinguish the same by reference to Hon'ble Delhi High Court decision and honourable Supreme Court decision in the case of Rajesh Jhaveri (supra) doesn't succeed. 44. It may not be out of place here to mention that it is specifically provided in section 153A "that assessment or reassessment if any relating to any relevant assessment year or years referred to in this subsection pending on the date of initiation of search under section 132 or making of requisition under section 132 a as the case may be shall abate." This makes it further abundantly clear that only those assessments which are pending abate. Hence sanguine provisions of the act read with honourable jurisdictional High Court decision as above make it abundantly clear that the assessments which do not abate and assessment and addition under section 153 A without reference to incriminating seized material is not sustainable. 45. The jurisprudence regarding jurisdictional ....
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.... "a) Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) was justified in deleting the addition of Rs. 3,91,55,000/-under section 68 of the Act in respect of share application money and addition of Rs. 11,24,964/- under section 14A made by the Assessing Officer, as it was not based on incriminating material found during the course of search. d) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 3,91,55,000/- under section 68 of the Act in respect of share application money and addition of Rs. 11,24,964/- under section 14A made by the assessing officer without appreciating the fact that the decision of continental warehousing corporation & the decision in the case of All Cargo Global Logistics have not been accepted by the department and an SLP has been filed in the Supreme Court in both the cases decided by the High court i.e. Continental Warehousing Corporation as well as all Cargo Global Logistics vide appeal civil 8546 of 2015 and SLP civil 5254-5265 of 2016 respectively." 45. Since, there is no incriminating material found during the course of search, we ....
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....ers or the persons or the companies dealt in these appeals have been referred in the above said SEBI enquiry noted by the AO in his order. As regards the merits of additions based upon the statement obtained from Survey from 3rd parties the same is not at all sustainable without any corroborative material. This position was expounded by the honourable Supreme Court in the case of S. Kader Khan (supra). That there is no material incrementing available in this regard is clearly evident from the observation of the assessing officer in the order itself. The assessing officer mentions that what is real was not recorded in the books of accounts at any place. He mentions in the assessment order that no book entries to the real transactions either in the books of assessee or in the books of this entry operators are there. This clearly signifies that assessing officer is not referring to any incriminating material seized. As regards the observation of the assessing officer that the share broker has accepted that he was acting on the advice of Shri Prakash Modi on behalf of the assessee, again there is no incriminating seized record in this regard. The same remains....
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....Comfort Intech Ltd. and M/s. Splash Media & Infra Ltd. which are listed on Bombay Stock Exchange were used for providing accommodation entries of long term capital gain/ short term capital gain. The AO discussed the modus operandi of these companies in great detail in the assessment order and required the assessee to show cause as to why the said short term capital gain should not be added to the income of the assessee which was duly replied by the assessee vide written submission. The assessee also filed the proof of purchase and sale of shares including the D-mat account, contract notes etc. and also the details of brokers through whom these transactions were carried out. The AO finally rejected the claim of the assessee under section 10(38) of the Act and added the entire sale consideration realised from sale of shares of these two companies viz. Rs. 7,77,34,439/- as sale of shares of both the companies under section 68 of the Act as unexplained investment in the assessment framed under section 143(3) read with section 153A of the Act dated 27.12.2017. 13. In the appellate proceedings also the Ld. CIT(A) affirmed the order of AO by holding that the long term capital gain as c....