AI Drafter 
TaxTMI 
TaxTMI 
2019 (5) TMI 1893
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Income Tax (Appeals) confirming the order of the Learned Assessing Officer and partly confirming the additions made by concluding that incriminating material was found during the course of search in respect of GSD Trading & Financial Services Pvt. Ltd. 2. On the facts & circumstances of the case the appellant prays that, during the course of search no incrementing material is found or seized in connection with the investment in share capital of the company by GSD Trading & Financial Services Pvt. Ltd. The conclusion of Learned Commr. of Income Tax (Appeals) that in respect of GSD Trading & Financial Services Pvt. Ltd. incriminating material was found is erroneous and contrary to the facts of the case. 3. On the facts & circumstances of the case the appellant prays that in the order passed by Ld. Commr. of Income Tax (Appeals) that there is a reference to incriminating material found during the course of search in respect of the transaction of investment by GSD Trading & Financial Services Pvt. Ltd., is bad in law. In view of this the appellant prays that the order passed by Ld. Commr. of Income Tax (Appeals) by invoking the provisions of Section 153A and confirm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as erred in concluding that the appellant has failed to prove the credit worthiness of the investors as well as genuineness of the transactions. The Ld. Commr. of Income Tax (Appeals) has ignored the evidences, proof and the material produced before him. The appellant prays that addition made by the Ld. Commr. of Income Tax (Appeals), amounting to Rs. 7,91,00,000/-, based on such erroneous conclusion may be deleted. 9. On the facts & circumstances of the case the appellant prays that the appellant with the evidences and explanation has established the identity, credit worthiness and genuineness of the transactions and the claim of the appellant may be accepted and addition made by the Ld. Commr. of Income Tax (Appeals) by invoking the provisions of Section 68, amounting to Rs. 7,91,00,000/- may be deleted. 10. On the facts & circumstances of the case the appellant prays that the amount received towards share capital is in the nature of capital receipt and the provisions of Section 68 cannot be invoked while computing the total income of the appellant. The appellant prays that the addition made by the Ld. Commr. of Income Tax (Appeals) by invoking the provisions of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder u/s 143(3) accepting the contentions and claims of the assessee. A search action under section 132 of the Act was conducted at the office premises of the assessee situated at B/47, Shakti Dhara Society Colony Road, Bapu Nagar, Ahmedabad. The search commenced on 28.01.2015 which was finally concluded on 27.03.2015. Thereafter, notice under section 153A of the Act was issued on 28.07.2016 which was served on the assessee on 05.08.2016. The assessee complied with the said notice by filing a return of income on 26.08.2016 declaring an income of Rs. 20,853/- which was similar to the income declared in the return filed under section 139(1) of the Act. During the course of search, no incriminating material with regard to issue of share capital or investors was found or seized as is clear from the copies of panchnamas placed at page Nos.20-21 and 22-25 of the paper book respectively. In these panchnamas there was no reference to finding of any material relating to share capital/investors and on page No.24 there is a reference to certain loose papers. However, none of them were incriminating and relating to the issue of share capital. The AO on the basis of search operation observed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was also contended that as no incriminating material regarding the issue of shares was found , no addition can be made in the case of completed assessments. The AO did not deal with this issue in the assessment order. Besides the AO has not issued a single notice or letter to any of the 16 parties during 153A proceedings. The AO after taking into consideration the submissions and replies of the assessee found the same to be not acceptable. According to the AO, the assessee has failed to prove the genuineness and creditworthiness of 16 parties from whom the assessee had raised Rs. 30,23,00,000/- by way of share capital and share premium, the details whereof are given on page No.14 to 17 of the assessment order. According to the AO the assessee has failed to prove as to how the shares were issued at a premium of Rs. 115/- per share when the company was not having any substantial business to justify the charging of premium and ultimately the entire amount of Rs. 30,23,00,000/- was added to the income of the assessee as unexplained cash credit under section 68 of the Act by framing assessment under section 143(3) read with section 153A vide order dated 27.12.2016. 5. In the appellat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Appellant Company, namely B/47, Shakti Dhara Society, Thakkarbapa Nagar, Ahmedabad was also covered vide warrant No. PN/ Addl.DIT/ Inv/ Kalyan/ 240/05.01.2015. 19.1 During the course of search operation, no incriminating material relating to the share capital / share premium raised from various parties were found / seized. The Appellant Company had been categorical in stating that during the course of search no document was found indicating the non-genuine nature of the share capital / share premium. To buttress this argument, the copies of the Panchnama dated 28'" January, 2015 had also been filed by the Appellant company, which are placed at Page 254 to 256 of the Paper Book (Part-1) filed during the course of the appellate proceedings. 19.2 I have gone through the various Panchnamas drawn in the name of the Appellant Company, list of the books of accounts and other material seized during the course of the search operation. I am constrained to note that there is no reference to the share capital/share premium in any of the said seized documents. This particular observation is further reinforced by the fact that even in the showcause notice dated 23.11.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the case of a completed assessment, the AO can only rely upon the incriminating material found during the course of search, the Appellant Company had relied on 18 case laws. These case laws had been filed in a compilation titled "Paper Book of Case Laws" containing Pages 1 to 259. The details of the case laws relied upon by the Appellant company are tabulated, as under:- Sr. No. Case Law Citation Courts Page No. 1. Ameeta Mehra Vs Additional Director of Income-tax 395 ITR 185(2017) Delhi High Court 1-13 2. Anil Mahavir Gupta V/s Asst. Commissioner of Income-tax 182 TTJ 265 (2017) Mumbai ITAT 14-39 3. Balasore Alloys Lts. V/s Asst. Commissioner of Income-tax ITA No.1166/621/667/ Mum/2015 Mumbai ITAT 40-56 4. Commissioner Of Income-tax-II, Thane Vs continental Warehousing Corporation (Nhava Sheva) Ltd. 374 ITR 645 Bombay High court 57-84 5. M/s Dalwala Securities Ltd. V/s Dy. Commissioner of Income-tax ITA no. 5932 to 5934/M/2009 Mumbai ITAT 85-99 6. Commissioner of Income-tax-20 Vs Shri Deepak Kumar Agarwal IT A no. 1709 of 2014(2017) Bombay High court&nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inal assessment was already completed, 20.3 In such a scenario, the second proviso to Section 153A(1) specifies that any assessment or reassessment falling with the period of six assessment years pending on the date of initiation of search under section 132 or requisition of books under section 132A as the case may be, shall abate. In this regard, the relevant proviso is reproduced below:- S. 153A. ".......Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this subsection pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate". 20.4 Further, in Para 65.5 of the CBDT Circular No. 7/2003 dated 05.09.2003 giving explanatory notes on the provisions relating to direct taxes in the Finance Act, 2003, the CBDT has clarified as under:- "65.5 The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....search. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. 20.8 It has been categorically observed in the above mentioned judgment that only the pending proceedings, as on the date of search shall abate meaning thereby that the completed proceedings attains finality. 20.9 The next question which needs to be answered is - What is the scope of assessment/ reassessment under the provisions of section 153Aof the Act for the assessments/reassessments which have abated and those which have attained finality ? 20.10 The use of the phrase 'so far as may be'in section 153A{l)(a) implies that all the provisions of the Act as contained under Chapter XIV prescribing the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessment / reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition under Section 132A of the Act stand abated and not the assessments/reassessments already finalized for those assessment years covered under Section 153A of the Act. ii. By a circular No. 8 of 2003 dated 18-9-2003 (See 263 JTR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/ reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending against finalised assessment/reassessments would not abate. iii. Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A, the assessments/reassessments finalised for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A(1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A, the assessments/reassessments finalized for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A(1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A(1). 11. In the present case, as contended by Shri Mani, learned counsel for the assessee, the assessment for the assessment year 1998-99 was finalized on 29-12-2000 and search was conducted thereafter on 3-12- 2003. Therefore, in the facts of the present case, initiation of proceedings under Section 153A would not affect the assessment finalized on 29-12- 2000. 12. Once it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction allowed under section 80HHC of the Income-tax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the IT. Act could not have disturbed....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search." 20.18 The Hon'ble Mumbai Tribunal in the case of Guruprerana Enterprises v. ACIT (57 DTR 465), has held that only the assessments pending before the AO for completion shall abate u/s. 153A and the issues decided in the assessment cannot be reconsidered and re-adjudicated, unless there is some fresh material found during the course of search in relation to such points. 20.19 The Hon'ble Ahmedabad Tribunal in the case of Meghmani Organics Ltd. vs. DCIT (129 TTJ 255)[2010], has held that where there are no pending assessments as on the date of the search then the completed assessment shall rule the field and the income assessed there under cannot be disturbed. 20.20 The Visakhapatnam Bench of the Tribunal, in the case of KGR Exports vs. JCIT (ITA No. 494/V/2007), has held as under :- "Since section 153A overrides provisions of section 147 and 148, can it be the intention of the legislature to give enormo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2 will not abate. In other words, only the assessments pending before the Assessing Officer for completion shall abate. In this case there is no dispute that on the date of search, the assessment in the case of assessee had already been completed by the AO and in terms of the circular of the CBDT, the regular assessment made in case of the assessee will not abate. Therefore in our view the points/ issues decided in the assessment cannot be re-considered in the proceedings under section 153A unless there is some fresh material found during the course of search in relation to such points/issues." 20.22 The Delhi Tribunal in the case of Sanjay Aggarwal v, DOT (47 taxmann.com 210) has after considering the decision of All Cargo Global Logistics Ltd. held, as under:- "In view of provisions of section 153A, in respect of assessment years for which original assessments have already been completed on date of search, total income shall be determined by restricting additions only to those which flow from incriminating material found during course of search; So far as assessments pending on date of search are concerned, those assessments would abate in terms of second proviso to sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....material no income can be assessed. On facts, as the assessments were completed and there was no incriminating material found during the search, the AO was not entitled to make any addition." 20.27 In the case of Guruinder Singh Bawa v DCIT, (2012) (28 taxmann.com 328), the Hon'ble Mumbai IT AT has held that where in search assessment under section 15 3A, all assessments pertaining to six immediately preceding assessment years were complete, the AO can't make any addition there-under, unless there is any incriminating material recovered during search. 20.28 The Hon'ble Delhi High Court in a recent decision in the case of Pr. CIT vs. Meeta Gutgutia [2017-TIOL-1000HC-DEL-IT], has affirmed the view that no addition can be made for a particular assessment year without there being an incriminating material that relates to the said assessment year which would justify such an addition. The Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax, Central IT, New Delhi Vs. Meeta Gutgutia [2018] 96 taxmann.com 468 (SC) has dismissed the SLP in the case and thus upheld the decision of Hon'ble Delhi High Court that invocation of section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....zing the statement of Mr. Raiesh Daftrv 21.0 The AO had in Para 3.6 of the assessment order passed u/s 153A of the Act arrived at certain conclusions and since, the same goes to the root of the matter, it is reproduced hereunder:- "3.6.......The survey u/s 133A conducted at one of such allottees, i.e. M/s GSD Trading & Financial Services Pvt. Ltd., wherein detailed statement Mr. Rajesh Daftary was recorded, proved that they were engaged in the activity of providing accommodation entries in the garb of share capital/ share premium and unsecured loan etc. through a number of companies. Such companies need not be directly owned by such accommodation entry providers, as many a times they keep benamidars at the front while manage whole their affairs personally" 21.1 The above observations of the AO clearly reveals that the AO had in his possession only the statement of Shri Rajesh Daftary and that also in relation to one of the share allottee company namely, M/s GSD Trading & Financial Services Pvt. Ltd.. Though the statement of Shri Rajesh Daftary relate to only one of the share subscriber, namely M/s GSD Trading & Financial Services Pvt. Ltd., but the A.O. h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to be arrived at, on the touchstone of a dispassionate judicial enquiry based upon a complete and comprehensive appreciation of all features of the case, as well as the quality and credibility of evidence brought on record. Reliance is placed on Ashish Batham v. State of MP, AIR 2002 SC 3206. 21.6 The act of raising of presumption itself does not amount to proof. Presumption however strong, cannot take the place of evidence. Reliance is placed on the decisions of Pooja Bhatt 66 TTJ (Mum) 817& D. M. Kamani (HUF) 65 TTJ (Pat) 504.lt is well settled by the Hon'ble Supreme Court in more than one decision that courts have to be watchful and avoid the danger of suspicion to take place of legal proof for some time, unconsciously it may happen to be a short step between moral certainty and legal proof. In this regard, reference may be made to the judgment in the case of Narendra Singh v. State ofMP, 2004 SCC 1893. 21.7 It is well settled proposition of law that the court should safeguard itself against the danger of basing its conclusions on suspicions, howsoever strong they may be. It is equally well settled that the Courts decision must rest not upon suspicion but u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab." 21.11 The Punjab & Haryana High Court in C/T v. Anupam Kapoor [2008] 299 ITR 179did not believe on the allegation: "A cheque had been taken by thelieneficiary i.e. by paying cash equivalent to the cheque amount and the premium thereon". The Hon'ble Court at page 182 observed: There was no material before the Assessing Officer, which could have led to a conclusion that the transaction was, simpliciter a device to camouflage activities, to defraud the Revenue. No such presumption could be drawn by the Assessing Officer, merely on surmises and conjectures". 21.12 The Hon'ble Supreme Court in Parimisetti Seetharamatnma v. CIT [1965] 57-ITR-532 at 536-537observed: - 'By sections 3 and 4, the Indian Income-tax Act, 1922, imposes a general liability to tax upon all income. But the Act does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases, in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted at all with any material whatsoever regarding the so called bogus share capital / share premium. Complete Details furnished in the Proceedings u/s 153A of the Act 23.0 During the course of the assessment proceedings u/s 153A of the Act, the Appellant Company was asked to prove the identity and credit worthiness of the subscribers and the genuineness of the transaction. The Appellant company was also show caused as to why the amount received as share capital and share premium should not to be added back to the total income, as unexplained cash credit u/s 68 of the Act. 23.1 During the 153A proceedings, the Appellant Company had again furnished ledger account confirmation and bank statement of all the parties in which payments made to the Appellant Company on account of share capital / share premium are fully reflected. The Appellant Company had also furnished to the AO, copies of the Income Tax Return, Auditor's Report, Balance Sheet, Profit & Loss Account alongwith schedules etc. The Financials of all the subscribers reflected the investment made by them in the Appellant Company. The Appellant Company had also submitted that all the payments were ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....remium in a routine manner without making any effort to bring any material evidence on record. 24.3 It is the AO's duty to establish with evidences that the facts stated by the Appellant are not correct, since the law of burden is canonized in common law doctrine "incumbitprobatio qui dicit non qui negat", i.e. burden lies upon one who alleges and not upon one who deny the existence of the fact. Nevertheless, the A.O. apart from raising suspicions about the credit worthiness of the parties based on pure assumptions has not brought on record any material to justify such suspicions and assumptions. In the instant case, the A.O. did not carry any of his doubts to a logical conclusion by converting them into hard facts on the basis of evidences during the assessment proceedings. 24.4 I have also taken note of the fact that there was enough time left for completing assessment but the Assessing Officer had passed the order without investigating in to the facts the appellant's case. The Assessing Officer had powers to issue summons to parties u/s 131 of the Act or could have called for information u/s 133(6) of the Act. Instead of doing these exercises, the AO ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, the vital fact that the share capital / share premium had been held genuine by the AO in the original assessment proceedings. Thus, it had been contended that the assessment order passed by the AO is based on the appreciation of wrong facts. Survey conducted u/s 133A on M/s. GSD Trading & Financial Services Pvt. Ltd. 25.0 I have noted that the Inv. Wing had conducted the survey operation only on one of the share subscriber viz. M/s. GSD Trading & Financial Services Pvt. Ltd. In Para 3.6 of the assessment order passed by the Assessing Officer u/s 153A of the Act, it had been clearly stated that a survey u/s. 133A of Act had been conducted at one of the share allottee namely, M/s. GSD Trading & Financial Services Pvt. Ltd.. It was during the course of this survey operation that a detailed statement of Mr. Rajesh Daftary was recorded. Though, the statement of Mr. Rajesh Daftary was recorded specifically in relation to the investment made by M/s. GSD Trading & Financial Services Pvt. Ltd., it is noted that the Assessing Officer has generalized the statement of Mr. Rajesh Daftary for all the share subscribers. Analysis of the Statement of Shri Raiesh Daftar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sidered as incriminating, then it should be restricted to the investment made by M/s GSD Trading & Financial Services Pvt. Ltd. only and the statement of Mr. Rajesh Daftary should not be generalised on conjectures and surmises to cover all the shareholders. 26.4 I have gone through the statement of Mr. Rajesh Daftary, a copy of which had been filed during the course of appellate proceedings. The statement of Mr. Rajesh Daftary had been recorded U/s. 131(1A) of the Act on 28.01.2015 at M/s GSD Trading & Financial Services Pvt. Ltd., "Arihant", Shramjivi Society, Dhebar Road, Opp. AndhMahlla Vikas Gruh, Dhebar Road, Rajkot. The relevant portion of the statement of Mr. Rajesh Daftary is reproduced hereunder;- "Q2 Please mention the name of business concerns in which you and your family members are interested. Ans. Sir, the list of business concerns in which me and my family members have interest: Sr. No. Name of Business Concern Name of the Family member Relation 1. D.S. Integrated Finsec Pvt, Ltd, Self and ila Rajesh Daftary, and Ami Rajesh Daftary Wife and Daughter 2. Samvedn Builders Pvt Ltd. Self and ila Rajesh ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hmedabad, the name of contact person named Chavda, who is a CA. I don't remember exact details of concerned person. The company is engaged in the business of building and construction. The books of accounts are being maintained at our office at Survey No. 65, Vagudad Road, Vajdivad, KalawadRoad, Rajkot. 3. M/s. GSD Trading & Financial Services Pvt. Ltd. This company was purchased from a party from Ahmedabad, the name of contact person named Chavda, who is a CA. I don't remember exact details of concerned person. The company is NBFC and into the business of finance. The books of accounts are being maintained at our office at FF-83, Samruddhi Bhavan, Opp. Bombay Petrol Pump, Gondal Road, Rajkot-360002 andArihant, Sharamjivi Society, Opp. AndhMahilaVikasGruh, DhebarRoad, Rajkot. 4. M/s. Arihant Software Pvt. Ltd. This is a family promoted company. It was incorporated in the year 2004. This company is not engaged in any business at present. It has only interest income. The books of accounts are being maintained at our office at 9th Floor, Opp. Radio Station, Adinath Towers, Rajkot. Q.7 Please state the names of the company/concern which are being run ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmediate receipt in Kotak Mahindra Bank on account of cheque issued by Amount estment made in favour of 23.02.2010 Jasmine Vintrade Ltd 9790000 23.02.2010 Geetanjali Space Pvt Ltd 4350000 24.02.2010 Daffodil Commotrade Pvt Ltd 10000000 24.02.2010 Geetanjali Space Pvt Ltd 10000000 25.02.2010 Fantastic Vincom Pvt Ltd 10000000 25.02.2010 Geetanjali Space Pvt Ltd 10000000 03.03.2010 Satyam Investment Management Pvt Ltd 8000000 04.03.2010 Jasmine Vintrade Pvt Ltd 4500000 04.03.2010 Geetanjali Space Pvt Ltd 9650000 05.03.2010 Jasmine Vintrade Pvt Ltd 1550000 05.03.2010 Geetanjali Space Pvt Ltd 1550000 08.03.2010 Fantastic Vincom Pvt Ltd 10000000 08.03.2010 Geetanjali Space Pvt Ltd 5000000 09.03.2010 Geetanjali Space Pvt Ltd 5000000 11.03.2010 Jasmine Vintrade Pv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is only about one shareholder, namely M/s GSD Trading & Financial Services Pvt. Ltd., about which Shri. Rajesh Daftary had been questioned and he had failed to submit any plausible explanation about the source of investment made in the Appellant Company. No documentary evidence had been furnished by Shri. Rajesh Daftary in relation to the investment made by M/s GSD Trading & Financial Services Pvt. Ltd. Hence, the statement of Mr. Rajesh Daftary in relation to M/s GSD Trading & Financial Services Pvt. Ltd. is considered as an incriminating material for the purpose of making an assessment u/s 153A of the Act. Accordingly, the Assessing Officer is empowered to consider the same in the proceedings U/s. 153A of the Act. 26.9 In the case of Commissioner of Income-tax, Thichur Vs. ST. Francis Clay Decor Tiles [2016] 70 taxmann.com 234 (Kerala), the Hon'ble Kerala High court has held that neither under section 132 or under section 153A, phraseology 'incriminating' is used by Parliament, therefore, any material unearthed during search operations or any statement made during course of search by assessee is a valuable piece of evidence in order to invoke section 153Aofth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mstances, the assessee's argument that they could not be acted upon or given any weight is insubstantial and meritless. This court also notices that the decision in CIT Vs. Anil Bhatia 352 ITR 493 (Del) which held that such statements are relevant, though noticed, has not been doubted in any later decision, including Kabul Chawla, which is the mainstay of the assessee's case. Consequently the first question of law is answered against the assessee and in the revenue's favour." 26.12 To conclude, it is held that the statement of Shri. Rajesh Daftary is to be considered as incriminating only with respect to the investment made by M/s GSD Trading & Financial Services Pvt. Ltd. As far as the other shareholders are concerned, since there is no reference to them in the said statement of Mr. Rajesh Daftary, the same cannot be treated_as incriminating for other shareholders. Accordingly, the Ground Nos. 1 to 4 of the present appeal raising juris die tional issue relating to the scope of section 153A of the Act in a case of completed assessment is partly allowed." 6. Now the assessee is in appeal before us challenging the order of Ld. CIT(A) both on legal issue challe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d during the course of survey proceedings on oath that the said statement constituted an incriminating material. The Ld. A.R. contended that the AO has made the addition in respect of entire share capital receipt in the assessment proceedings by solely relying on the statement of Shri Rajesh Daftary taken in survey proceedings under section 133A of the Act which was deleted by Ld. CIT(A) to the extent of Rs. 22,32,00,000/- in respect of 15 investors and thus the Ld. CIT(A) has erred in considering the statement of Shri Rajesh Daftary to be an incriminating material in respect of investment made by M/s. GSD Trading and Financial Services Pvt. Ltd. amounting to Rs. 7,91,00,000/-. The Ld. A.R. argued that in the statement of Shri Rajesh Daftary there is no reference to the search which was carried out on the assessee and he never admitted that he was engaged in the business of providing accommodation entries. The Ld. A.R. argued that Shri Rajesh Daftary has only stated in answer to the question No.2 & 3 that he had control over M/s. GSD Trading and Financial Services Pvt. Ltd. when the investment was made and thereafter in reply to question No.11 he stated that share holding in M/s. G....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 153A of the Act. Finally, the Ld. A.R. submitted before the Bench that the addition as sustained by Ld. CIT(A) to the tune of Rs. 7,91,00,000/- qua investment made by M/s. GSD Trading and Financial Services Pvt. Ltd. is wrong and against the facts on record and also against the decision of the Hon'ble Bombay High Court in the case of CIT vs. Continental Warehouse Corporation Ltd. 374 ITR 645 wherein it has been held that if there is no incriminating material found during the course of search in respect of unaccounted income then for completed assessments no addition can be made in the order framed under section 143(3) read with section 153A of the Act. The ld Counsel contended that in the present case also since there is no incriminating material seized by the search party during the course of search in respect of the investments by M/s. GSD Trading and Financial Services Pvt. Ltd. and whatever was found was only the form of share application form, copy of bank account, copy of audited financial statement, copy of memorandum of article of association, copy of ITRs etc. and therefore are in no way can be considered as incriminating material. The Ld. A.R., therefore, prayed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ations along with bank and financial statements of the investors. The assessee had also justified the issue of shares at premium by submitting valuation report and the details of shareholdings were also produced. The AO had also verified the said investments by issuing notice under section 133(6) to 16 parties who confirmed the investments and filed all the necessary details as called for by the AO. Thereafter, the assessment was framed under section 143(3) accepting the identity, genuineness and creditworthiness of the investors. Thereafter, a search was conducted on the assessee under section 132 of the Act on 28.01.2015 which was concluded on 27.03.2015. We have examined the copies of panchnamas, copies whereof are placed at page No.20 to 21 and 22 to 25 and find that there is nothing incriminating about the investments/issue of share capital raised by the assessee found by the search party during the course of search. We note that there are some loose papers found and seized during the course of search but none of them were incriminating in nature relating to the issue of share capital. Even in the order framed under section 153A read with section 143(3), there is no whisper ab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Shri Rajesh Daftary recorded during the course of survey is not and can not be treated as incriminating material qua the investment in shares of the assessee company by M/s. GSD Trading and Financial Services Pvt. Ltd. In the statement of Mr Rajesh Daftary there is nothing contrary to the evidences produced by the assessee during the original assessment proceedings or during proceedings u/s 153A of the Act. The ratio laid down by the Hon'ble High Court is that any addition in the assessments abated on the date of search cannot be made de hors the incriminating materials/evidences found during the search. We are therefore not in agreement with the conclusion drawn by Ld. CIT(A) that the statement of Shri Rajesh Daftary is an incriminating material and accordingly the order of Ld. CIT(A) is set aside on this issue and AO is directed to delete the addition. The legal issue raised in ground no 1 to 5 by the assessee is allowed. 10. Even the assessee has a very strong case even on merit which has been challenged by the assessee in ground No.6 to 10. We find from the perusal of the order of AO that assessee was not provided the opportunity of cross examination of Shri Rajesh Daftar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee from 15 shareholder on the ground that genuineness and creditworthiness of the parties were not proved. The facts of the case have been discussed in the assessee's appeal. The order of Ld. CIT(A) deleting the addition has also been reproduced hereinabove. Therefore, for the sake of brevity we are relying on the facts and the operative part of Ld. CIT(A) which has been reproduced above in the assessee's appeal. 13. The Ld. D.R. while arguing the revenue's appeal submitted before the Bench that Ld. CIT(A) has wrongly deleted the addition of Rs. 22,32,00,000/- as made by the AO in respect of 15 shareholders whose creditworthiness and genuineness were not proved. The Ld. D.R. while referring to the buy back of these shares in the subsequent financial year submitted that the said shares were bought back at a very small amount of Rs. 5/- per share and therefore it is clear that the own unaccounted money has been routed to channelize the same into the business of the assessee. The Ld. D.R. submitted that it is very strange that the share issued at a premium of Rs. 115/- of face value of Rs. 10/- were bought back at Rs. 5/-. The mere filing of the documents of the investors an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the original assessment proceedings, the AO even issued notices under section 133(6) to all 16 parties and called upon them to file details of the investments made and source thereof which were duly responded with all the necessary details before the AO. The AO only after examination of all these details accepted the investments and no addition was made. Thus it was proved that all the three ingredients of section 68 identity, genuineness and creditworthiness were proved. Countering the allegation of Ld. D.R. that these shares were bought back in the subsequent year at a very small amount, the Ld. A.R. submitted that any subsequent event can not be extrapolated into the current year to make the addition. In defence of his argument the Ld. A.R. relied on the decision of Chartered Motors Pvt. Ltd., Ahmedabad vs. ACIT ITSS(A)/26/Ahd/2012 A.Y. 2008-09 order dated 28.08.2014 wherein it has been held that the subsequent buy back can not be ground for making addition for issue of shares in earlier years. The Ld. A.R. also distinguished the facts of the case as relied upon by the Ld. D.R. and submitted that the ratio of these decisions is not applicable to the assessee's case. Even the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Developers Pvt Ltd v/s Dy. CIT 3342/DEL/2015 20. Jayneer infrapower & Multiventures P Ltd v/s Dy CIT 103 taxmann.com 118 21. Asstt. Commr. Of Income Tax Vs Bahubali Dyes Ltd. 55 taxmann.com 357 22. Bharti Syntex Ltd. Vs Deputy Commr. Of Income Tax 19taxmann.com 361 23. Asstt. Commr. Of Income Tax Vs. Hitkarni Prakashan Ltd. 15 taxmann.com 316 24. Jadau Jewellers and Manufacturers (P.) Ltd. Vs. Asstt. Commr. Of Income Tax Central Circle - 2 Jaipur 83 taxmann.com 249 25. Income Tax Officer 13(2)(3) Aayakar Bhavan, Mumbai Vs. Shreedham Construction Pvt. Ltd. ITA no 3754/M/2017 ITA no 3755/M/2017 ITA no 3756/M/2017 26. Shalimar Buildcon (P.) Ltd. Vs. Income Tax Officer, Ward-2(2), Jaipur 128 ITD 396 27. Deputy Commissioner Of Income Tax, 1(2) Raipur Vs. RCP Infratech (P.) Ltd., 95 taxmann.corn 163 28. Asstt. Commissioner Of Income Tax, Central Circle-IX, New Delhi Vs. Ravnet Solutions (P.) Ltd. 93 taxmann.corn 59 30. ITO v/s Wiz -Tech Solutions Pvt Ltd. ITA No. 1162 The Ld. A.R. also argued that the assessee is not required to prove the source of source of investment as has been held in the following cases: 1. PCIT vs. Veedhata Tower Pvt. Ltd. ITA N....