TaxTMI 
TaxTMI 
2015 (11) TMI 1854
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppeal :- 1.0 The order passed by the learned Commissioner of Income-tax (Appeals)-3, Bhopal, confirming the assessment order passed u/s 153C r.w. sec 143(3) of the Income-tax Act, 1961 by the Deputy Commissioner of Income-tax is both bad in law and bad in facts. 1.1 In doing so, he did not appreciate that no addition could have been made while completing assessment u/s 153C of the Income-tax Act, 1961 in case of completed assessments if no undisclosed income was determinable from the material found as a result of search. SALE PROCEEDS OF 32,875 SHARES OF ADROIT INDUSTRIES (INDIA) LTD. TREATED AS UNEXPLAINED INCOME : Rs. 13,23,220/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the addition of Rs. 13,23,220/- made in respect of sale of 32,875 shares of Adroit Industries (India) Ltd. by the Assessing Officer as unexplained income of the assessee. 3.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 4.0 The assessee prays for justice." 3. In ITA No. 95/Ind/2015 the assessee has taken the following grounds of appeal :- 1.0 The or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2,10,030 08.11.2013 2,10,430 2,10,430 2007-08 26.10.2007 1,64,090 08.11.2013 1,65,690 1,65,690 2008-09 29.09.200 8 1,51,100 08.11.2013 1,51,240 14,74,460 2009-10 30.03.2011 2,29,530 08.11.2013 1,76,770 1,76,770 2010-11 30.03.2011 2,29,530 08.11.2013 1,60,620 1,04,95,340 2011-12 01.08.2011 1,90,045 08.11.2013 1,83,470 1,90,050 2012-13 28.03.2013 NIL - - NIL Thus, the additions were made only in the assessment years 2008-09 and 2010-11. The assessee filed appeals before the learned C.I.T.(A) - Central, Indore against the assessments completed u/s. 143(3) r.w.s. 153C. The learned CIT(A) dismissed the appeal for the assessment year 2008-09 and partly allowed the appeal for the assessment year 2010-11 against which the assessee has preferred appeals before the Tribunal. SMT. MONIKA SANGLA 6. In ITA No. 109/Ind/2015 the assessee has taken the following grounds of appeal :- 1.0 The order passed by the learned Commissioner of Income-tax (Appeals)-3, Bhopal, confirming the assessment order passed u/s 153A r.w. sec 143(3) of the Income-tax Act, 1961 by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 206/Ind/2015 the revenue has taken the following ground of appeal :- "On the facts and in the circumstances of the case, the CIT(A) erred in restricting the addition made on account of unexplained investment in the shares of Adroit Industries (India) Ltd. to Rs. 37,74,200/- as against the addition of Rs. 1,05,63,851/- made by A.O." BRIEF FACTS OF THE CASE 9. Briefly stated, the facts of the case are that the assessee is an individual. Her sources of income consists of income from house property, share in profit/loss from partnership firm, capital gains, dividend and interest etc. A search and seizure operation u/s.132 was carried out at the business premises of various companies belonging to Signet Group as well as residential premises of the assessee on 03.11.2011. Consequently, a notice u/s.153A was issued. The status regarding return of income furnished by the assessee u/s.139(1) and 153A of the Income-tax Act, 1961 and assessments completed u/s.143(3) r.w.s. 153A of the Act for six years and order u/s 143(3) for assessment year 2012-13 is as under : A.Y. Date of Original return filed Returned income u/s.139 (Rs.) Date of filing return u/s.153A Ret....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order passed by the learned Commissioner of Income-tax (Appeals)-3, Bhopal, partly confirming the assessment order passed u/s.153A r.w. Sec.143(3) of the Income-tax Act, 1961, by the Deputy Commissioner of Income-tax is both bad-in-law and bad-in-facts. 1.1 In doing so, he did not appreciate that no addition could have been made while completing assessment u/s.153A of the Income-tax Act, 1961 in case of completed assessments if no undisclosed income was determinable from the material found as a result of search. ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE SHARES OF ADROIT INDUSTRIES (INDIA) LTD. : Rs. 1,45,600/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming addition of Rs. 1,45,600/- made by the assessing officer on account of unexplained investment in shares of Adroit Industries (India) Ltd. 3.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 4.0 The assessee prays for justice. 13. In IT(SS) A No. 201/Ind/2015 the revenue has taken the following ground :- "On the facts and in the circumstances of the case, the CIT(A) erred ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sult of search. SALE PROCEEDS OF 3,10,550 SHARES OF ADROIT INDUSTRIES (INDIA) LTD. TREATED AS UNEXPLAINED INCOME : Rs. 1,25,00,000/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the addition of Rs. 1,25,00,000/- made in respect of sale proceeds of 3,10,550 shares of Adroit Industries (India) Ltd. by the assessing officer, as unexplained income of the assessee. 3.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 4.0 The assessee prays for justice. 16. In IT(SS) A No. 209/Ind/2015 the revenue has taken the following ground :- "On the facts and in the circumstances of the case, the CIT(A) erred in deleting the addition made on account of unexplained investment in the shares of Adroit Industries (India) Ltd. of Rs. 72,55,750/- made by the A.O." BRIEF FACTS OF THE CASE 17. The assessee is a closely-held company belonging to Signet Group of Indore. It is engaged in the business of trading and investment. A search and seizure operation u/s.132 was carried out at the business premises of various companies belonging to Signet Group as well as r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....prays for justice 20. In IT(SS) A No. 108/Ind/2015 the assessee has taken the following grounds :- 1.0 The order passed by the learned Commissioner of Income-tax (Appeals)-3, Bhopal, partly confirming the assessment order passed u/s.153A r.w. Sec.143(3) of the Income-tax Act, 1961, by the Deputy Commissioner of Income-tax is both bad-inlaw and bad-in-facts. 1.1 In doing so, he did not appreciate that no addition could have been made while completing assessment u/s.153A of the Income-tax Act, 1961 in case of completed assessments if no undisclosed income was determinable from the material found as a result of search. ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE SHARES OF ADROIT INDUSTRIES (INDIA) LTD. : Rs. 85,64,013/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming addition of Rs. 85,64,013/- made by the assessing officer on account of unexplained investment in 3,04,200 equity shares of Adroit Industries (India) Ltd. REJECTION OF ASSESSEE'S LEGAL CLAIM FOR DEDUCTION: 3.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CIT(A). SHRI BALAJI STARTH & CHEMICALS LTD. 24. In IT(SS) A No. 87/Ind/2015 the assessee has taken the following grounds :- 1.0 The order passed by the learned Commissioner of Income-tax (Appeals)-3, Bhopal, partly confirming the assessment order passed u/s.153A r.w. Sec.143(3) of the Income-tax Act, 1961, by the Deputy Commissioner of Income-tax is both bad-in-law and bad-in-facts. 1.1 In doing so, he did not appreciate that no addition could have been made while completing assessment u/s.153A of the Income-tax Act, 1961 in case of completed assessments if no undisclosed income was determinable from the material found as a result of search. ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE SHARES OF ADROIT INDUSTRIES (INDIA) LTD. : Rs. 1,50,14,256/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming addition of Rs. 1,50,14,256/- made by the assessing officer on account of unexplained investment in the shares of Adroit Industries (India) Ltd. 3.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 4.0 The assessee prays for justice. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rred in law as well as in facts in confirming addition of Rs. 1,42,25,000/- made by the assessing officer on account of unexplained investment in the shares of Adroit Industries (India) Ltd. DISALLOWANCE OF ASSESSEE'S CLAIM FOR DEDUCTION U/S.80D : Rs. 15,000/- 3.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the rejection of assessee's legal claim of Rs. 15,000/- u/s.80D by the assessing officer. 4.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 5.0 The assessee prays for justice. BRIEF FACTS OF THE CASE 28. The assessee is an individual,wife of Shri Saurabh Sangla s/o of Shri Mukesh Sangla. The assessee is a proprietor of M/s. Avantika Enterprises.A search and seizure operation u/s.132 was carried out at the business premises of various companies belonging to Signet Group as well as residential premises of the assessee on 03.11.2011. Consequently, a notice u/s.153A was issued. The status regarding return of income furnished by the assessee u/s.139(1) and 153A of the Income-tax Act, 1961 and assessments completed as per original assessment u/s.143(3....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... u/s.153A r.w. Sec.143(3) of the Income-tax Act, 1961, by the Deputy Commissioner of Income-tax is both bad-in-law and bad-in-facts. 1.1 In doing so, he did not appreciate that no addition could have been made while completing assessment u/s.153A of the Income-tax Act, 1961 in case of completed assessments if no undisclosed income was determinable from the material found as a result of search. ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE SHARES OF ADROIT INDUSTRIES (INDIA) LTD. : Rs. 8,19,375/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming addition of Rs. 8,19,375/- made by the assessing officer on account of unexplained investment in 28,500 equity shares of Adroit Industries (India) Ltd. 3.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 4.0 The assessee prays for justice. 32. In IT(SS) A No. 193/Ind/2015 the revenue has taken the following grounds :- "On the facts and in the circumstances of the case, the CIT(A) erred in restricting the addition made on account of unexplained investment in the shares of Adroit Industries (India) Lt....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... search u/s.132 of the Act is initiated after 31.05.2003 in case of a person, the Assessing Officer has no option but to assess or reassess the total income for each of preceding six assessment years. This is clear and unambiguous from the plain language of Sec.153A(1) of the Act and reiteration in the first Proviso to section 153A. The terms Total income and scope of Total Income are defined in Sec.2(45) and Sec.5 of the Income-tax Act respectively. The 'total income' to be assessed or reassessed in terms of sec.153A shall include both regular and undisclosed income in respect of each assessment year falling within such six assessment years. Unlike Chapter XIV-B of the Act, where the definition of 'undisclosed income' was specifically provided in section 158B(b), no separate and distinct definition of 'total income' is provided in section 153A in contradistinction to its definition u/s.2(45) of the Act. Had the legislature intended to curtail the scope of total income in relation to search and seizure assessments, it would have specifically provided it under the relevant provisions. In the absence of the term 'undisclosed income' having been incorporated in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the A.O. which requires recording of his satisfaction. Reliance is placed on the decision of the Hon'ble Madhya Pradesh High Court in the case of C.I.T. vs. Mechmen [I.T.A.no.44/2011 dt.10.07.2015] wherein it is held that satisfaction of A.O. is essential to assume jurisdiction. The relevant paras of the judgment are as follows : "15. We may now turn to Section 153C. No doubt, the form of Section 153C is dissimilar to that of Section 158BD. It is also true that the two provisions are embedded under different chapters. For, Section 153C is in Chapter XIV providing for procedure for assessment, whereas Section 158BD is found in Chapter XIV-B providing for special procedure for assessment of search cases. Further, Section 153C opens with non-obstante clause. However, the nonobstante clause in Section 153C is necessitated to give power to the Assessing Officer having jurisdiction to proceed against the person other than the person referred to in Section 153A, inspite of the action under Section 139, 147, 148, 149, 151 and 153 of the I.T. Act. However, on closer scrutiny of the two provisions, it is indisputable that, these provisions are machinery provisions and have been ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of his duty to be satisfied about the jurisdictional fact that the items belongs or belong to a person other than the person referred to in Section 153A. 18. The concomitant of this conclusion, is that, the legal position as applicable to Section 158BD regarding satisfaction in the first instance of the first Assessing Officer forwarding the items to the Assessing Officer having jurisdiction; and in the second instance of the Assessing Officer having jurisdiction whilst sending notice to such other person (other than the person referred to in Section 153A), must apply propriovigore. The fact that incidentally the Assessing Officer is common at both the stages would not extricate him from recording satisfaction at the respective stages. In that, the Assessing Officer is satisfied that the items referred to in Section 153C belongs or belong to a person (other than the person referred to in Section 153A), being sine qua non. He cannot assume jurisdiction to transmit those items to another file which incidentally is pending before him concerning other person (person other than the person referred to in Section 153A). The question as to whether that may influence the opinion of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....satisfaction of the Assessing Officer(s) dealing with the case at the respective stages referred to in Section 153C. 22. Reverting to the substantial questions of law articulated while admitting these appeals, we hold that the same will be of no avail to the Department considering the fact situation of the present case and for the reasons mentioned hitherto. In that, we have rejected the argument that even in cases, under Section 153C the Assessing Officer(s) need not record satisfaction and in particular at both the stages - be it Assessing Officer of searched person or Assessing Officer having jurisdiction over such other person. Notably, the requirement of recording satisfaction is not for the benefit of the Assessing Officer(s), but lending credence to his satisfaction and on which matters the assessee can give meaningful explanation and reason it out as and when opportunity is given to the concerned assessee. 23. In the present case, the concurrent finding of fact recorded by the Appellate Forums is that, no satisfaction has been recorded by the Assessing Officer before issuing of notice under section 153C. Further, none of the papers seized belongs or belong....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the term 'assessment' has to be read in the context of abated assessments and the term 'reassessment' has been used in the context of unabated assessments. In the case of completed assessments, income has to be re-assessed in terms of Sec.153A. The re-assessment requires belief of assessing officer regarding escapement of income from assessment. The belief should be founded on existence of appropriate material or information. It should be rational belief held in good faith and not arbitrary, subjective or a mere pretence. The material or information in his possession should have direct nexus with his belief regarding escapement of income. The absence of such nexus shall render the re-assessment proceedings invalid. Thus, the re-assessment of income u/s.153A cannot be made sans any incriminating material or merely on change of opinion in relation to material already considered. [Indian & Eastern Newspaper Society Vs. C.I.T. (119 ITR 996 SC); Calcutta Discount Co. Ltd. Vs. I.T.O (41 ITR 191 SC)] The contention of the revenue to the effect that once a notice under Section 153A of the Act is issued, the assessments for all the six years are at large for the AO has no warrant in l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the assessee for the first time under Section 153A of the Act is not completed, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. ............ 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent orreassessment can be made. The word 'assess' in Section 153 Ais 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 separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed 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 made known in the course of original assessment. 38. The present appeals concern AYs, 2002-03, 2005- 06 and 2006-07.Onthe date of the search the said assessments already stood completed. Sinceno incriminating material was unearthed during the search, no additions could have been made t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....facts which is not permissible u/s.153A. 42. On the other hand, on the issue of validity of assessment u/s 153A and 153C of the Act, the ld. DR submitted that this issue has been raised by the assessee in almost in all the appeals filed in this group and the learned CIT(A) has dealt with the same in detail and rejected the assessee's contention with detailed findings. The learned DR placed reliance on the finding of the learned CIT(A) and also placed reliance on the set of case laws of which he has provided a compilation before us. The case laws relied on by the ld. DR are as under :- S.No. Case Law Remarks 1 CIT V/s Rajkumar Arora 367 ITR 517, High Court. Allahabad Validity of Search assessment u/s 153-A/c 2 Nandini Delux V/s ACIT, 37 ITR (Trb) 52, ITAT Banglore, C Bench, -do- 3 Shivnath Rai Harnarain India Ltd. Vs/ DCIT, 117 ITD 74, ITAT, Delhi D Bench -do- 4 Harvay Heart Hospital Ltd. V/s ACIT 130 TTJ 700, ITAT Chennai A Bench -do- 5 Dr. Mansukh Kanjibhai Shah V/s ACIT, 129 ITD 376, ITAT Ahmadabad D Bench -do- 6 Rajat Tradecom India (P) Ltd V/s DCIT, 120 ITD 48, ITAT Indore Bench -do- 7 Canara Ho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....08-09 and reacquisition of some shares in the financial year relevant to the assessment year 2010- 11 were found and seized. There was no abatement of any proceedings in these cases for these assessment years in terms of second proviso to section 153A of the Act. In the case of Mukesh Sangla HUF, the proceedings were initiated u/s 153C of the Act. The Hon'ble jurisdictional High Court in a recent decision in the case of CIT vs. Mechman while deciding the issue relating to assessments made by issuing the notice u/s 153C of the Act has held that the Assessing Officer before issuing notice u/s 153C of the Act has to record satisfaction. Hon'ble High Court held that the Assessing Officer having jurisdiction whilst giving notice to such other person (other than the person referred to in section 153A) must apply proprio vigore. After receipt of the materials, the Assessing Officer having jurisdiction is expected to conduct inquiry and due verification of the relevant facts before forming his prima facie satisfaction. The Assessing Officer must form his independent view before issue of notice. There is no seized material belonging to the assessee which was found and seized in rela....
X X X X Extracts X X X X
X X X X Extracts X X X X
....TR 192. Respectfully following the decision of the Hon'ble Apex Court, we allow these grounds of appeal of the assessee. 44. Ground No. 2.0 in A.Ys.: 2008-09 & 2010-11 of assessee's appeals reads as under : ASSESSMENT YEAR : 2008-09 "SALE PROCEEDS OF 32,875 SHARES OF ADROIT INDUSTRIES (INDIA) LTD. TREATED AS UNEXPLAINED INCOME : Rs. 13,23,220/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the addition of Rs. 13,23,220/- made in respect of sale proceeds of 32,875 shares of Adroit Industries (India) Ltd. by the assessing officer, as unexplained income of the assessee. ASSESSMENT YEAR : 2010-11 ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE SHARES OF ADROIT INDUSTRIES (INDIA) LTD. : Rs. 93,37,094/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming addition of Rs. 93,37,094/- made by the assessing officer on account of unexplained investment in 3,27,675 equity shares of Adroit Industries (India) Ltd. 45. The facts in relation to investment and reacquisition of shares of Adroit Industries (India) Ltd. are that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... post search enquiries or during assessment proceedings which could show that any payment of any consideration over and above the recorded consideration in books of Sangla family and their associate concerns were paid or received as unaccounted cash or otherwise. 47. The Assessing Officer held that no promoter will divest 73.5% of its holding to third parties and that too at a very nominal profit, particularly when the promoter intended to go public and anticipated significant value addition to its investment. Adroit Industries (India) Ltd. has been consistently performing well. Evident from the following table showing year wise turnover, profitability and earnings per share: Financial Years Turnover Profit before Tax Profit after Tax Earning per share 31.03.2007 20,53,03,097 3,24,43,605 2,51,24,433 4.00 31.03.2008 22,11,45,868 2,79,53,727 1,68,66,562 3.00 31.03.2009 24,61,35,713 2,22,92,834 1,45,21,059 2.58 31.03.2010 16,98,84,237 3,13,32,877 2,06,68,119 3.67 31.03.2011 26,16,49,372 6,08,43,868 4,09,00,040 3.89 31.03.2012 23,45,32,888 4,56,79,338 3,20,21,038 3.05 31.03.20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ri Vimal Bandi (both of them are employees of Signet group) categorically admitted that they had neither any idea about the actual affairs of the company nor any information about transfer of shares of Adroit Industries (India) Ltd. Shalimar Ferrous Metal Pvt. Ltd. was used as a conduit to introduce unaccounted and unexplained income through bogus paper company like Lucky Commotrade Pvt. Ltd. of which the ultimate beneficiary is the assessee. Since the assessee has finally received the amount in the guise of sale proceeds of shares of Adroit Industries (India) Ltd., the same is brought to tax as unexplained cash credit in Assessment Year 2008-09. The repurchase of shares by the Signet group, Sangla family and its associate concerns in the Assessment Year 2010-11 from various paper companies was nothing but a colourable device and an arranged and managed affair. Therefore the difference between the fair market value per share i.e. Rs. 40.25 and cost of reacquisition is treated as unexplained investment of the assessee. Accordingly, the following additions are made: Assessment Year Amount (Rs.) Remarks 2008-09 14,72,800 Unexplained Cash Credit 2010-11 1,02,65,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r: No. of shares sold Rate (Rs.) Sale proceeds (Rs.) Short term capital gain (Rs.) Unexplained cash credit (Rs.) 32,875 44.80 14,72,800 1,49,580 13,23,220 For the Assessment Year 2010-11, assuming fair market value of the shares at Rs. 40.25 (original cost of acquisition from Anand Family in March 2007), the difference between the cost of reacquisition and fair market value was treated as unexplained investment. However, to avoid double taxation, addition on account of unexplained investment was not made in relation to shares sold by the group entities in Assessment Year 2008-09 as their sale proceeds was brought to tax u/s.68 as unexplained cash credit. The working in this regard is as under: No. of Shares Actual Rate per share (Rs.) Purchase Rate declared per share (Rs.) Difference Unexplained Investment A b c d (b - c) e (d x a) 1,67,125 (200000-32875) 40.25 12.00 28.25 47,21,281 1,60,550 40.25 11.50 28.75 46,15,813 3,27,675 93,37,094 Accordingly, the following additions were partly confirmed : Asstt. Year Amount (Rs.) Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing & Finance Pvt. Ltd. AABCO 1101A 14,20,000 Signet Leasing & Finance Pvt. Ltd. AAMCS 5841G 1,26,00,000 Swan Holding Pvt. Ltd. AAHCS 5640Q 80,50,000 Signet Impex Pvt. Ltd. AAICS 5582Q 1,26,60,000 Swan Petrochemicals Pvt. Ltd. AABCR 9592C 1,24,40,000 Smt. Monika Sangla ANAPS 5580Q 1,83,32,399 Shri SaurabhSangla ANBPS3195G 1,53,41,162 Shri MukeshSangla ANAPS 5579F 1,34,62,000 Shri MukeshSangla HUF AADHM4930J 81,947 Smt. AvantikaSangla AEOPG 4774R 60,000 Non-group CompaniesLucky Commotrade Pvt. Ltd. AAACL 4501E 5,21,14,350 Pranay Trade Link Pvt. Ltd. AADCP 0735F 1,26,20,000 15,91,81,858 52. The members of Sangla family and its associate concerns sold 22,88,025 shares of Adroit Industries (India) Ltd. to Shalimar Ferrous Metals Pvt. Ltd. ('Shalimar') in May 2007 for a consideration ranging from Rs. 40.35 to Rs. 44.80 per share. As the members of Sangla family and its associate concerns had taken loan from Shalimar while acquiring the shares of Adroit Industries (India) Ltd., the sale proceeds of shares were adjusted against outstanding unsecured loa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y and the proceeds thereof were utilized for repayment of inter-corporate loan to Signet Industries Limited. This fact was explained to the lower authorities with evidence like bank statements of Shalimar, Lucky and Signet, duly confirmed copies of accounts. But the same was brushed aside by them on the pretext that Lucky sold its holding to various 'bogus paper companies' notwithstanding the fact that these so called bogus paper companies produced all the documents as required by the A.O. in terms of notice u/s 133(6) for verification of transaction and establishing their identities and creditworthiness. Surprisingly, the lower authorities did not bother to even look into them and give any finding in this regard. Therefore the transfer of shares by Signet group and Sangla family was genuine transaction. It appears that in the eyes of Income-tax Department, all the finance and investment companies operating from Bombay and Kolkata are bogus paper companies. Notwithstanding plethora of evidence placed before it to establish identity and creditworthiness and genuineness of transaction. 55. The divestment of shareholding of Adroit Industries (India) Ltd. to the extent of 73.5% was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ost efforts to bring IPO and incurred significant cost (about Rs. 83.80 Lacs) in this pursuit but they could not achieve any success due to negative market conditions and sentiments as discussed above. The statement of directors of Shalimar viz. Shri Paras Ram Patidar and Shri Vimal Kumar Bandi was recorded after a lapse of over 4 years (acquisition of shares in May 2007 and their statement was recorded in November 2011). Moreover, the day to day affairs of Shalimar were looked after by the employees of Signet Group and controlled by Shri Mukesh Sangla as its executive officer. As the transactions were verifiable from bank statements of relevant entities, the statements of its directors do not have much significance in relation to creditworthiness and genuineness of transactions. If the transaction with alleged bogus paper companies is held to be colourable device and arrange and managed affair as per the contention of the revenue authorities, the benefit of loss was derived by these intermediary companies and the action should have been taken in their case. As the assessee group did not derive any tax benefit, it cannot be penalized for failure, if any, of intermediary companies t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n which the close relatives of Shri Mukesh Sangla were shareholders and directors. The company was filing its return of income regularly and also assessed to tax. Its paid up share capital was Rs. 30 Lacs and free reserves of Rs. 30 Lacs. As at 31.03.2010, it had a cash and bank balance of Rs. 41,79,012/- and investment of Rs. 8,80,000/- in 2,40,000 shares (including bonus shares 1,60,000) of Signet Industries Ltd. Under these circumstances, the CanIndia Overseas Ltd. cannot be called a bogus paper company. 56. Section 69 of the Act is applicable on cumulative satisfaction of the following conditions : i. The assessee should have made the investments and the same are not recorded in the books of accounts; and ii. The assessee either offers no explanation about the nature and source of investment or the explanation offered is not satisfactory in the opinion of the assessing officer. iii. The satisfaction of the assessing officer cannot be arbitrary and subjective but has to be based on the relevant material b) Sec.69B is applicable on cumulative satisfaction of the following conditions: i. The assessee should have made the investments ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g material whatsoever in relation to investment in shares of Adroit Industries (India) Ltd. in assessment year 2007-08, transfer of these shares in assessment year 2008-09 and their reacquisition subsequently in assessment year 2010-11. No proceedings in relation to assessments for these assessment years were pending and therefore no addition could have been made in assessment completed u/s.153A/153C of the Act in the absence of any incriminating material on account of unexplained cash credits in assessment year 2008-09 and unexplained investment in assessment year 2010-11. The addition made by the assessing officer by way of reassessment in relation to impugned concluded assessments amounted to change in opinion on the same set of facts which is not permissible in law even u/s.153A/153C of the Act. 59. The learned DR relied upon the orders of the authorities below and pleaded that no promoter would divest majority of all the shareholdings and that too at a nominal profit when a public issue was anticipated in near future. He also submitted that Adroit Industries (India) Ltd. was a profit making company and no prudent businessman will divest the huge investment. He also pleaded ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. establishes that Adroit Ind. Ltd. was to go to for public issue. No evidence either during the search operation or in the post search inquiries showing even suggesting that any consideration over and above recorded in the books of accounts of any assessee of Signat group was realised in cash or otherwise. Even no positive evidence was collected during the proceedings u/s 153A/153C of the Act. Thus, there is no evidence regarding any unaccounted transaction with relation to shares acquired, transferred and re-acquired by various family members of Sangla family and associate concerns. The revenue's claim that no promoter would divest with such a huge holding at a very nominal profit is without any basis and only a guess work. The assessee's contention that the promoters were intended to go for public issue is well established by the fact that expenditure incurred in this regard has been debited in the books of accounts of Adroit Industries Ltd., therefore, the revenue's contention that the promoters were not intended to go for public issue is not correct. In our considered view, all such allegations are wild and without any basis. The revenue has even failed to bring anything on r....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., no fresh deduction or claim can be made by the assessee in the Return of Income filed u/s.153A pursuant to a search u/s.132 or requisition u/s.132A because the proceedings u/s.153A are for the benefit of revenue and not for the benefit of the assessee. Now the assessee is in appeal before us. 63. Before us the learned counsel for the assessee submitted that the claims/deductions made by the assessee while filing the Return of Income pursuant to notice u/s.153C were such claim/deductions which were legally allowable to the assessee. In fact, because of their very nature, the assessing officer should have allowed these deductions on his own and he should not have taken advantage of assessee's ignorance. In this regard the reliance is placed on the circular No.14(XL-35), dated April 11, 1955 issued by the Central Board of Direct Taxes, which reads as under : (3) Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer wher....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it. [Para 6]" He also pleaded that the Honourable Madras High Court has held in the case of C.I.T. vs. Geo Industries & Insecticides (I) (P.) Ltd. (234 ITR 541) as under : "We are of the view that, when the assessee made a claim for consideration of an item for deduction during the course of assessment proceedings, it is the duty of the ITO to examine the claim on the merits of the claim. The present case is not a case where the assessee made a claim with reference to a matter which was concluded and has become final in the original assessment proceedings. But, on the other hand, it was found in the subsequent year's assessment proceedings that the liability of the assessee had accrued when the suit for injunction filed by the assessee was dismissed by the city civil Court, Madras and in view of the subsequent event that the deduction might relate to the present assessment year, the assessee made a claim for deduction of the damages and when such a claim was made, the ITO was bound to examine the claim on merits and it is not open to him to reject the claim even at the threshold and refuse to entertain the claim. The zeal of the ITO to carry out the directions of the hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as other items not considered by the higher authorities are concerned, the power of the ITO to reassess the income would be traceable to the provisions of the statute. Therefore, the refusal of the ITO even to consider the claim of the assessee is not justifiable and we are of the opinion that both the C.I.T.(A) and the Tribunal were right in directing the ITO to consider the claim of the assessee on the merits of the matter. Though we are not agreeing with the view expressed by the Tribunal that the entire assessment order was set aside by the C.I.T., still the power of the ITO to consider the claim of the assessee is neither curtailed nor taken away by the order of the C.I.T. The ITO was bound to consider the claim of the assessee under s. 143(3) of the Act when he was in final process of assessment in the determination of total income of the assessee as the assessment pursuant to the directions of the C.I.T. has not reached the stage of finality. We find that the Central Board is more liberal in its approach and directed the ITO to consider the claim of statutory deduction even when the assessee has not made such a claim [Vide:Circular No. 14(XL-35) of 1955 dt. : 11th April, 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssue and also gone through the case law relied upon. While filing the return of income u/s 153A/153C of the Act some of these assessee have claimed deduction u/s 80C and 80D of the Act. No such claim was made while filing the return of income u/s 139(1)/139(4) of the Act. Since we have already allowed the appeal of the assessee on the ground of issue of recording satisfaction prior to issue of notice u/s 153C of the Act and also on the ground that no incriminating document was found and seized, therefore, there is no question of allowing such deduction to the assessee. Further we would also like to state that the provisions of section 153A/153C are not made for the benefit of the assessee. Return filed in response to notice u/s 153A/153C of the Act is not substitute of revised return for the claim of such benefits. Hon'ble Apex Court in the case of Goetze (India) Limited vs. CIT; 284 ITR 323 ruled out that a fresh claim before the Assessing Officer can be made only by filing a revised return and not otherwise. Therefore, whatever claim the assessee has not made while filing the return u/s 139(1)/139(4) of the Act, he cannot make fresh claim by filing the return u/s 153A/153C of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2,84,650 13.03.07 SaurabhSangla 2,84,650 40.25 1,14,57,163 10.05.07 Shalimar 2,84,650 44.20 1,25,81,530 Anand Ferrous Metals Pvt. Ltd. Narinder Kaur Anand Jagjit Singh 3,10,550 13.03.07 Anand Pranay trade link Pvt Ltd 3,10,550 40.25 1,24,99,638 10.05.07 Shalimar Ferrous Metals Pvt. Ltd. 3,10,550 40.40 1,25,46,220 Ishdeep Singh 3,750 13.03.07 M/s 3,750 40.25 1,50,938 10.05.07 Anand MukeshSangla HUF Shalimar Ferrous Metals Pvt. Ltd. 32,875 44.80 14,72,800 Rupinder Singh Anand GamanBhasin 2,500 13.03.07 M/s 2,500 40.25 1,00,625 MukeshSangla HUF Rajendrapal Singh Bhasin Taranjot Kaur Chandok 17,875 13.03.07 M/s 17,875 40.25 7,19,469 MukeshSangla HUF Ranjeet Singh Chandok Rupinder Singh 2,500 13.03.07 M/s 2,500 40.25 1,00,625 Anand MukeshSangla HUF Parminder Kaur Anand Parminder Kaur Anand 2,500 13.03.07 M/s 2,500 40.25 1,00,625 MukeshSangla HUF Rupinder Singh Anand Jashdeep Singh Anand 3,750 13.03.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Gaud Jagjit Singh 500 13.03.07 MukeshSangla 500 30,00 15,000 Punjabi Ashok Awesthi 500 13.03.07 MukeshSangla 500 30,00 15,000 Kishorilal Patel 500 13.03.07 MukeshSangla 500 30.00 15,000 Document 4 Rajesh Seth 500 13.03.07 MukeshSangla 500 30,00 15,000 PahdurangPahalk аг 500 13.03.07 MukeshSangla 500 30,00 15,000 Surendra Singh Chadda 500 13.03.07 MukeshSangla 500 30.00 15,000 22,88,025 22,88,025 CHART II 9,19,40,056 [Further transfer of 22,88,025 shares of Chart-I and 3,10,550 shares originally held by Shri Jagjit Singh Anand and Gajendra Kaur Anand = 25,98,575 Shares] Name of shareholder of Anand Family No. of shares held Date Name 22,88,025 9,44,90,310 2nd Transfer 3rd Transfer No. of Rate shares Amount Date Name No. of shares Rate Amount Jagjit Singh Anand 310,550 13.03.07 Shalimar Ferrous Metals Pvt. Ltd. 310,550 40.25 12,500,000 10.12.07 Lucky CommotradeP vt Ltd 2,598,575 41.37 107,510,026 Gajendra Kaur Anand Date ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....50 11,025,518 19.03.09 Novelty Traders Ltd 375,000 40.55 15,206,250 10.03.09 Olmpus Vision Pvt Ltd 250,000 40.50 10,125,000 1,294,775 52,477,015 3rd Transfer transfer No. of shares Rate Amount Date Name No. of shares Rate Amount 0 0 0 25.09.09 Swan-Holding Pvt Ltd 1,52,500 11.50 17,53,750 26.09.09 Ornate Leasing & Finance Pvt Ltd 2,45,040 11.50 28,17,960 3,97,540 45,71,710 20.03.09 Ispat Sheet Ltd 2,72,235 40.50 1,10,25,518 28.09.09 Shree Balaji Starch & Chemicals Ltd 2,72,235 11.50 31,30,703 0 0 0 22.09.09 Signate Leasing & Finance Pvt Ltd 1,87,500 11.50 21,56,250 24.09.09 Signet ImpextPvt Ltd 1,87,500 11.50 21,56,250 3,75,000 43,12,500 20.03.09 Novelty Traders Pvt Ltd 2,50,000 40.50 1,01,25,000 26.09.09 Shree Balaji Starch & Chemicals Ltd 2,50,000 11.50 28,75,000 Name of shareholder of No. of shares CHART IV [Flow of transfer of 2,37,500 shares originally held by Jagjit Singh Anand& Gajendra Kaur Anand] 1st Transfer ....