TaxTMI 
TaxTMI 
2022 (3) TMI 762
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....d which by and large are the same in all the years:- "I. Whether Ld. CIT(A) has erred on facts and in law in deleting the addition made u/s. 69 of the I.T. Act 1961 on account of unexplained investment in J.P. Minda Group Companies aggregating to Rs. 5,12,00,000/- by the assessee company. II. Whether Ld. CIT(A) has erred in deleting the addition despite the fact that the assessee failed to discharge its primary onus to satisfactorily explain source of investments made by the assessee company. III. Whether Ld. CIT(A) has erred in on facts and in law in observing that requisite details and evidences were filed by the assessee to prove the genuineness of the claim despite the fact that based on the enquires conducted it was held that the assessee company is a paper/shell company and not doing any real business." 3. Succinctly, the Revenue has challenged the following additions in respect of all the four assessment years:- Assessment year Addition. 2009-10 Rs. 5,12,00,000/- on account of un-explained investment in JP Minda group companies. 2010-11 Rs. 3,96,00,000/- on account of un-explained investment in JP Minda group compan....
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....ce of motion to following raise the legal ground, in support of the order of the learned commissioner of Income Tax (Appeals): "That the learned commissioner of Income Tax (Appears) has grossly erred in raw and on facts in sustaining the initiation of proceedings under section 153C of the Act by overlooking the basic fact that no addition was made based on the satisfaction note, and the assessment as contemplated under section 153C is not a de novo assessment and as such the additions so made by assessing officer which are beyond satisfaction note are liable to be deleted in totality, as the same are outside the scope of assessment made under section 153C of the Act." It is therefore prayed, it be herd that proceeding initiated u/s. 153C of the Income Tax Act were bad in raw and order of reamed CIT(A) need be upheld even on the ground of 'wrongful assumption of jurisdiction on the part of learned AO to have framed assessment under section 153C of the Income Tax Act. 4. It is submitted that this submission is being made in view of Rule 27 of the Income Tax Appellate Tribunal Rules and is otherwise well settled proposition of law that the respondent is ....
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....urt in the case of Pr. CIT Vs. Sarvar Agency Pvt. Ltd. 397 ITR 400 (Del.) and that this amendment cannot be read retrospectively. 7. He further submitted that none of the additions made by the Assessing Officer are based on any incriminating documents found in the course of search or as recorded in the satisfaction note under Section 153C of the Act and, therefore, all additions made by the Assessing Officer are beyond the scope of assessment under Section 153A/153C of the Act. He drew our attention to the satisfaction note as placed in the paper book which for the sake of ready reference is reproduced here as under:- "Satisfaction Note for issue of notice u/s. 153C of the Income Tax Act. Name of the assessee : M/s. Panchmukhi Management Services Pvt. Ltd. A.Y. : 2008-09 TO 2013-14. PAN : AADCP7635E. Search and seizure action u/s. 132 of the Income Tax Act was carried out on 20.09.2013 in the case of Minda Group of cases for A.Ys. 2008-09 to 2013-14 under Section 153A/143(3). The material seized from the premises of the assessee has been examined by the undersigned being the jurisdictional Assessing Officer. After examining such seize....
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....;, the same is an annual report of the assessee company as on 31.03.2012 relevant for the assessment year 2012-13 and document 'O-2/A-11' is original share certificate dated 9.01.2010, which were transferred to assessee company dated 9.02.2010. This document can be said to be pertaining to assessment year 2010-11. However, there is no such document for the assessment years 2009-10 and 2011-12. Apart from that he submitted that the annual report which is a document cannot be treated as an incriminating material so as to assume jurisdiction under Section 153C of the Act. In support, he has strongly relied upon the consolidated decision of the Tribunal in the Minda Group of Companies in the cases of: (i) M/s. Jay Auto Components Ltd.; (ii) M/s. Jay Iron & Steel Ltd.; (iii) M/s. JPM Tools Ltd.; (iv) M/s. Jay Fe Cylinders Ltd., (v) M/s. Jay Ace Technologies Ltd., (vi) M/s. JJF Casting Ltd.; & (vii) M/s. Jay Nikki Industries Ltd. (order dated 23.12.2021) wherein the Tribunal vide para Nos. 6 and 18 has categorical held that original share certificates cannot be held to be incriminating material for drawing any adverse inference that any undisclosed income relating to assessee com....
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....ssment years from the year of search has to be reckoned from the date when the books of accounts or seized documents were handed over to the Assessing Officer or when the satisfaction was recorded. This proposition has been upheld by the Hon'ble Delhi High Court in the case of CIT-7 Vs. RRJ Securities (2016) 380 ITR 612 (Del) and ARN Infrastructure India Limited v. ACIT [2017] 394 ITR 569 (Del) as well as in the case of Principal Commissioner of Income (Central)-2 vs. Index Securities Pvt. Ltd. ITA No. 566/2017. If the date of search for the purpose of assessments under Section 153C of the Act is taken from the date when the books of accounts or seized documents were handed over and the Assessing Officer or when the satisfaction was recorded, then the 6 assessment years immediately preceding assessment year in which search had taken place will start from assessment year 2010-11 to assessment year 2015-16. Thus, clearly the assessment for assessment year 2009-10 is beyond the scope and ambit of Section 153A read with Section 153C of the Act. Accordingly, we hold that the assessment made for assessment year 2009-10 is invalid and is hereby quashed. 12. In so far as the ground ....
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....of the proceedings but only during the subsequent assessment. From the perusal of the above it may be observed that documents for the year under appeal is not incriminating and thus, additions made by learned Assessing officer is beyond the scope as envisaged under section 153C of the Act, and thus, the assessment needs be quashed and additions made therein needs to be deleted. 3.2 No incriminating Material has been found in the case of assessee. It is judicially settled position of law that additions u/s. 153A/153C of the Income Tax Act, 1961 can only be made on the basis of incriminating material found as a result of search or post search inquiry conducted by Assessing Officer during assessment proceedings. In this regard reliance is placed on the following judicial ruling:- i) Commissioner of Income Tax, (Central) - III Vs. Kabul Chawla ITA No. 707/2014 (Delhi High Court) ii) Principal Commissioner of Income Tax vs. Kurele Paper Mills Pvt. Ltd. 2016 380 ITR 571 (Delhi High Court) iii) Principal Commissioner of Income Tax vs. Lata Jain 2016 384 ITR 543 iv) CIT vs. Continental Warehousing Corporation Ltd. and All Cargo....
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....sessment order it has been mentioned by the Assessing officer that during the search and seizure operation documents belonging to the assessee were seized from the business and residential premises of J.P. Minda group and satisfaction note envisages u/s. 153C was recorded on 29/01/2016 and accordingly a notice u/s. 153C was issued to file the return of income. In this regard the appellant submitted that in response to the notice so issued the assessee submitted the return of income in the prescribed form under protest along with request to furnish the copy of satisfaction note which lead to issuance of notice u/s. 153C of the Income Tax Act It has been seen that the AO has recorded the satisfaction as per law. It has also been submitted by appellant that provisions of section 153C(1) are almost similar and akin to that of Sec. 158BD (which was applicable to searches conducted upto 31.05.2003) and It has been held by Hon'ble Delhi High Court in case of Janki Exports International v. UOI (2005) 278 ITR 296 (Del) and in Amity Hotels Pvt. Ltd. v. CIT (2005) 272 ITR 75 (Del) that where there is no evidence of satisfaction of A.O. regarding suppression of income, notice u/s.....
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....re beyond the scope of addition or assessment for the unabated assessment years. 15. Apart from that, from the perusal of the satisfaction note as incorporated above, only two documents can be said to be relevant to assessment years 2010-11 and 2012-13 and not for assessment year 2009-10 or 2011-12. Even the documents pertaining to assessment year 2010-11, we find that it is annual report of M/s. Panchmukhi Management Services Pvt. Ltd. as on 31.03.2012, which was an audit report and the financial statement of the assessee company. This document cannot be treated as incriminating, or can be inferred as indicating any undisclosed income or anything which can be corroborated by any other incriminating material found in the course of search. Thus, audited annual report per se cannot be treated as incriminating material. Similarly, the original share certificates dated 9.01.2010 which were transferred to the assessee company cannot be treated as incriminating, because, firstly, the Assessing Officer himself has not taken cognizance of this document while making the additions. In any case, the original share certificates in any manner can be reckoned as incriminating without any corr....