TaxTMI 
TaxTMI 
2022 (2) TMI 270
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....Ld. CIT (A) erred in law and on facts in deleting the addition of Rs. 14,57,50,000/- made on account of bogus share capital, without properly appreciating the facts and circumstances of the case, 4. That the ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 8,74,500/- made on account of unaccounted commission paid, without properly appreciating the facts and circumstances of the case. 3. (a) The order of the Ld CITA(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter on amend any/all of grounds of appeal before or during the course of the hearing of the appeal." 2. Briefly stated facts are that, in this case, search and seizure action u/s 132 of the Act was carried out on 20.01.2014 in the case of M/s apsa Logistics Pvt. Ltd., M/s Mapsa Infra Pvt. Ltd. and in case of Late Shri Pyare Lal Gupta, Mrs. Veena Gupta at D-28, Model Town-2, Delhi. During the course of search operation at the above said premises, certain documents/hard disk were found and seized. 2.1 Despite the fact that in the case of the assessee, no search was conducted u/s 132 of the Act, a notice u/s 153A of the Act dated....
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....soever was found and all the documents on the basis of which satisfaction was recorded were not incriminating against the assessee. Hence, no addition could have been made by the AO on the basis of such documents in the assessment, as has been held by the judgment of jurisdictional Delhi High Court in the case of CIT vs. Kabul Chawla reported in 234 Taxman 300. 2.3 Also, the assessee challenged the addition of Rs. 15,57,84,160 on merits on account of Bogus share capital and Unaccounted commission made by the AO on the following grounds: i. All the shareholders had duly confirmed the factum of the investment made in the assessee company as such addition made of the share capital received by the appellant from corporate entities. ii. All the shareholders were corporate entities, duly assessed to tax and, had subscribed to share-capital by account payee cheques and supported by necessary evidence including their permanent account numbers, confirmations, addresses, etc. iii. All shareholders were not only identifiable companies but also had requisite credit worthiness. Notices sent by the AO to all these shareholders u/s 133(6) of the Act were duly served,....
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....nd CIT vs RRJ Securities Ltd 380 ITR 612. 3. After considering the detailed submissions of the assessee as well as the remand reports of the AO, the Ld. CIT(A) quashed the assessment order passed u/s 153C of the Act. The relevant extracts from the order dated 10.03.2017 of the Ld. CIT(A) are reproduced below: "4.3 I have carefully considered the fact of the case, finding of the assessing officer and the submission of the Ld. AR. In this case no action under section 132 of the Act was carried out, hence proceeding under section 153A was rightly dropped by the AO. However, from the perusal of the satisfaction note it is apparent that there is no description or reference of any incriminating documents related to the assessee found or seized during the course of the search from the premises of the group concerns. Further even after making the specific query the AO has failed to identify any incriminating document related or belonging to the assessee which was forwarded by the AO of the searched person. Further from the perusal of documents above it is apparent that all the transactions as specified above have duly been recorded in the books of accounts of the appellant comp....
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.... is held as null and void. Accordingly, the addition of Rs. 14,57,50,000/- made by the AO on account of bogus share capital and Rs. 8,74,500 on account of unaccounted commission paid is deleted. 4.8 Considering my decision on the legal issue in favour of the assessee, the other grounds on merit of the addition demand no specific adjudication. Thus, the legal ground raised by the assessee is allowed and rest of the grounds are dismissed as academic. In result the appeal is allowed for statistical purpose. 6. Before us, the Ld. DR relied upon the order of the AO and submitted that view of the CIT(A) have not been accepted by the Department. 7. On the other hand, Ld. Counsel for assessee, Shri CS Aggarwal, Senior Advocate reiterated the submissions made before the authorities below. Additionally he also relied on the judgment of the jurisdictional High Court in the case of Principal Commissioner of Income Tax, (Central) - 2 vs. Index Securities Pvt. Ltd. reported in [2017] 86 taxmann.com 84. In the aforesaid case, the Hon'ble High Court relying on the judgment of the Apex Court in the case of CIT v. Sinhgad Technical Education Society reported in [2017] 397 ITR 344 has ....
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....on 22.11.2021, the Ld DR placed on record before us the paper book. Upon perusal thereof, it has been observed that all these documents are forming part of assessment records before the AO and have already been considered during the appellate proceedings before the Ld. CIT(A). During the hearing on 22.11.2021, the Ld DR sought to place reliance on the following 2 documents enclosed in the Revenue's paper book: i. Statement of Sh. Arun Kumar Khemka u/s 132(4) dated 20.01.2014 (pg 23-28) Reference was made by Ld. DR to the following questions on pages 25 & 26 of the Revenue's paper book: "Q.10. How are you linked to Sharp Group of companies as well as Mapsa Group of companies? A.10. I am not aware of any Sharp Group of companies. However, Mapsa Group of companies controlled by Shri Mahesh Gupta is my client. I have provided bogus unsecured loan and bogus share capital/ premium entry through paper companies controlled by me to Mapsa Group in lieu of a certain percentage of commission. In case of bogus unsecured loan commission income is derived out of the TDS deducted as well as the interest earned on the TDS. The client used to give me cash in lieu....
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....for Mr. S.K. Jain and Others have also made genuine investment in our company for the same purposes. We do not have any sources of cash to have paid to them for investments in our company. 12. In relation to the aforesaid documents sought to be relied upon by the Ld. DR, without prejudice to the assessee's submissions that no incriminating material whatsoever was found against the assessee during the course of search of third person, following points are worth noting: a) Under the statutory provision contained u/s 153C of the Act, satisfaction has to be recorded vis a vis any money, bullion, jewellery or other valuable article or thing; or any books of account or documents, seized or requisitioned. b) Statements of Sh. Arun Kumar Khemka or Sh. Mahesh Gupta relied upon by the Ld. DR refer to investment in "Mapsa Group of companies" rather than the assessee company. There is nothing either under the Companies Act or under any other law which recognizes "Mapsa Group of companies" or establishes any relationship of the assessee company therewith. c) Sh. Arun Kumar Khemka has later retracted his aforesaid statement dated 20.01.2014 and cannot be relied upon....
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....ahesh Gupta cannot be relied upon as he is not a director in the assessee company. Besides, Mr Mahesh Gupta has nowhere stated that any amount of share capital that has been received by the assessee company is bogus or unexplained. 14. After carefully considering the entirety of facts and principles of law enshrined by various courts including jurisdictional Delhi High Court in the case of Kabul Chawla and Index Securities Pvt. Ltd(supra) and Apex Court in the case of CIT v. Sinhgad Technical Education Society (supra), we are inclined to agree with the view of the Ld. CIT(A)that since the assessment based on the original return of income filed under sec. 139 of the Act was not pending as on the date of search as such, the additions made by the Assessing Officer in the absence of any incriminating material found during the course of search belonging to the assessee for the assessment year under consideration is legally unsustainable. 15. No infirmity has been pointed out in the order of Ld. CIT(A) nor any incriminating material has been placed on record by the Ld DR, except the statements of Sh. Arun Kumar Khemka and Mr Mahesh Gupta. As stated above, these statements were alre....