TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 774
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....t Year (AY) 2011-12 arises out of the order of learned Commissioner of Income Tax (Appeals)-48, Mumbai [CIT(A)] dated 29/11/2019 in the matter of assessment framed by learned Assessing Officer (AO) u/s. 143(3) r.w.s. 153A on 16/03/2016 on certain grounds of appeal. In Ground No. 2, the assessee has challenged the validity of assessment framed u/s. 153A on the ground that the assessee's case do not fall within the parameters laid down by Section 153A and necessary preconditions for completing the assessment were not satisfied. The ground read as under:- 2. REASSESSMENT 2.1 The Ld. CIT (A) erred in confirming the action of the A.O. in initiating assessment proceedings and framing the assessment of the Appellant by invoking the provisions of section 153A of the Income tax Act, 1961 ["the Act"] 2.2 While doing so, the A.O. failed to appreciate that: (i) The case of the appellant did not fall within the parameters laid down by section 153A of the Act; (ii) The necessary preconditions for initiating and completion thereof were not satisfied. 2.3 It is submitted that in the facts and the-circumstances of the case, and in law, the reassessment framed is bad, illegal and voi....
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..... AO that Long-term capital gains (LTCG) earned by the assessee on sale of shares of an entity namely Prraneta Industries Ltd. (now known as Aadhar Venture India Ltd.) were bogus in nature. The same would stem from another search action carried out by the department on one Shri Shirish C. Shah on 09/04/2013 who allegedly provided bogus accommodation entries of Long-Term Capital Gain in these shares. The same triggered search action on the assessee group. On the basis of data obtained during search action of Shri Shirish C. Shah, it was seen that the assessee and his other family members/concerns declared exempt LTCG in their respective income tax returns. These details have been extracted in para 5.1 of the assessment order. 5.3. During the course of search action on assessee group, Shri Jasmin Ajmera offered the amount of LTCG for taxation. However, the said income was not offered to tax in the return of income on the ground that the transactions were genuine in nature. On the basis of data obtained from BSE Ltd. for the period from 01/04/2009 to 31/12/2011, it was observed by Ld. AO that the shares sold by the assessee group were purchased by various group concerns/entities of S....
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....ansactions to be bogus in nature. It was also submitted that the aforesaid entity came out with preferential issue of shares which was possible only after getting clearance of regulatory authorities. Further, this entity was registered as NBFC with RBI. The family members were regular investor in share market. On the basis of these submissions, the assessee refuted the allegations of Ld.AO. 5.6. Though the material/data obtained from Shri Shirish C. Shah was confronted to the assessee, however, the assessee maintained that the names of the assessee as well as other family members do not appear in any of the documents and the material was not relevant to assessee's case. Few of family member's names were scribbled at few of the places without any correlations and therefore the documents were otherwise mere dumb documents. The assessee denied having carried out any transaction with Shri Shirish C. Shah group. 5.7. However, in the background of material gathered during search operation on Shri Shirish C. Shah group, it was alleged that the assessee indulged in systematic transactions in the shares of Prraneta Industries Ltd. to earn huge tax free gains which would defy all p....
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.... make assessment/reassessment for the six years. The subsequent retraction made by the assessee was devoid of any merits as there was nothing to prove that the statement was taken under pressure, coercion or undue influence. In the retraction dated 02/08/2013, the retraction was general in nature. The said retraction as filed before DDIT (inv.) was rejected being frivolous and contrary to the facts. The allegation of harassment and use of forces by search team was not true as there was no reporting of any such incident to senior officers of the department. Therefore, the action of Ld. AO in making the additions u/s. 68 was upheld. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 7. We have carefully heard the rival submissions and perused relevant material on record including the documents seized by the department from the assessee group during the course of search operations. We find that the assessee had filed original return of income on 20/07/2011 and search operations were carried out on assessee group on 25/07/2013. It is quite evident that on the date of search, no assessment proceedings were pending against the assessee and no notice u....
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....ondent-assessee under protest. A copy of the reasons recorded was furnished by the Revenue on the request of the assessee sometime in November, 2004. The assessee raised various objections, both on jurisdiction and the merits of the subject matter recorded in the reasons. The Revenue disposed of these objections on 4th February, 2005 holding that the initiation of reassessment proceedings was valid and it had jurisdiction to undertake such an exercise. The notice under Section 148 of the IT Act dated 12th May, 2004 was challenged by the respondent-assessee. 23. That Writ Petition was allowed and hence, the Revenue was in Appeal. 24. Mr. Ahuja's argument overlooks this factual aspect and when he relies upon the observations of the Hon'ble Supreme Court, and particularly in paragraph 13, he forgets that they were made in the context of a challenge to the notice under Section 148 of the IT Act. The Supreme Court, in paragraph 13 of this judgment, noted that intimation under Section 143(1)(a) was given without prejudice to the provisions of Section 143(2). Though technically this intimation issued was deemed to be a demand notice issued under Section 156, that did not per s....
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....ssee. In the assessment order, the long-term capital gains earned by the assessee have been held to be bogus in nature, however the same are not corroborated, in any manner, by the seized material. The allegations of Ld. AO are primarily based on the search findings in the case of Shri Shirish C. Shah and his group entities whereas no incriminating material has been seized from the assessee. In fact, in the remand report dated 09/01/2017 (page Nos. 196 to 199) filed by Ld. AO during first appellate proceedings, it has categorically been admitted by Ld. AO that there was no incriminating material in the case of the assessee. Nothing has been shown to us to controvert these findings of Ld. AO. Therefore, the ratio of cited decisions as referred to in para-6 is quite applicable to the facts of the case. 9. So far as the admission in the form of assessee's own statement is concerned, we find that this statement has been retracted by the assessee by way of on affidavit on 02/08/2013 (page Nos. 7 to 10 of assessee's paper book) and therefore, in the absence of any corroborative evidence/material supporting the admission made by the assessee, the addition would become unsustainab....
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....ons on the basis of recorded statement. Similar is the view of Hon'ble High Court in an earlier judgment of CIT Vs. Sunil Aggarwal (379 ITR 367; 2016) and also the decision of Hon'ble Andhra Pradesh High Court in CIT v. Shri Ramdas Motor Transport (238 ITR 177) wherein Hon'ble Court refused to give any evidentiary value to the statement made by the assessee u/s. 132(4) as the department could not find any unaccounted money, article or thing or incriminating document either at the premises of the company or at the residence of managing director or other directors. In such circumstances, the finding of the Tribunal that the statement of managing director recorded patently u/s. 132(4) did not have any evidentiary value, was upheld. The ratio of all these decisions makes it clear that the surrendered income must be correlated with some incriminating material found during the course of search action so as to justify the addition. We find that there is no such incriminating material in the case of the assessee which would show that the transactions under consideration were sham transactions and there was any connection/nexus between the assessee and the group entities of Shri....
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.... search. 7. Reliance was placed on the following decisions in support of her contentions: - (i). Pr. CIT v. Meeta Gutgutia [82 taxmann.com 287 (Del)] SLP dismissed by Hon'ble Supreme Court which is reported in 96 taxmann.com 468 (SC). (ii). CIT v. Gurinder Singh Bawa [386 ITR 483 (BOM)] (iii). CIT v. Kabul Chawla [380 ITR 573 (Del)] (iv). CIT v. Continental Warehousing Corporation [374 ITR 645 (BOM)] (v). CIT v. Anil Kumar Bhatia [352 ITR 493 (Del)] (vi). Brij Bhushan Singal & Ors. v. ACIT in ITA. Nos. 1412 to 141/Del/18 order dated 31.10.2018 (vii). Shri Sanjay and Smt. Aarti Singal v. DCIT in ITA. Nos. 706, 707, 709/Chd/18, order dated 07.02.2020. 8. Ld. DR vehemently supported the orders of the authorities below. 9. Heard rival submissions, perused the orders of the authorities below. In this case assessee filed return on 20.07.2011 and the same was processed u/s. 143(1) of the Act on 21.09.2011 and time limit for issue of notice u/s. 143(2) lapsed on 30.09.2012 and no assessment or re-assessment proceedings were pending as on the date of search. Therefore, admittedly in this case the assessment is unabated on the date of search i.e. 25.07.2013 since ther....
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....g as they had all abated, the Assessing Officer has wrongly invoked Section 153A of the Act. The assessment contemplated by Section 153A is not a denovo assessment and the additions made therein have to be necessarily restricted to the undisclosed income unearthed during the search. The Section has to be strictly interpreted. It is not an assessment such as a normal or regular scrutiny assessment". 13. The Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla (supra) held that- "completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment. Pursuant to search carried out in case of the assessee, a notice under section 153A(1) was issued. In course of assessment, Assessing Officer made addition to assessee's income in respect of deemed dividend. It was undisputed that assessment for assessment years in question had already been completed on date of search. Since no incriminating material was unearthed during the search, no additions could have been....
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....e cannot be made merely on the statements recorded in the course of the search proceedings. 18. In the case of Brij Bhushan Singal & Ors. v. ACIT (supra) the Delhi Bench of the Tribunal held as under:- "117. From the aforesaid Circulars, it is clear that the assessments made pursuant to search operation are required to be based on incriminating materials discovered as a result of search operation in the case of the assessee and not on the recorded statement. In the instant case, the persons who gave the statements, retracted the same and even the opportunity to cross-examine was not afforded to the assessee. In our opinion, it cannot be said that those statements on the basis of which impugned additions were made by the AO, were incriminating material found during the course of search. As we have already noted that no incriminating material was found during the course of search and the additions were made by the AO while framing the assessments u/s. 153A of the Act, the said additions need to be restricted or limited only to incriminating material found during the course of search. However, in the present case, no such incriminating material was found during the course of searc....