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2022 (10) TMI 652
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....ed the following grounds of appeal:- "1. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deciding that AO did not have jurisdiction to make additions in an assessment u/s 153A of the Act in the case of the assessee by ignoring the fact that no incriminating material/ evidence is necessary for assessment proceedings under section 153A of the Income Tax Act, 1961. 2. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in deciding that the assessment u/s 153A cannot be done on the basis of statement recorded under section 132(4) of the Act by ignoring the fact that the statement recorded under the oath do have evidentiary value. 3. On the facts and the circumstances of the case and in law, the Ld. CIT(A) has failed to discuss the merits of the case wherein the assessee has brought its unaccounted income Rs. 4,51,87,500/-into its books of account. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary." 4. We have heard rival submissions and perused the materials available on record. A search and seizure action u/s.132 of the Act was conduc....
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....h regard to the documents filed by the assessee. He heavily relied on the statement recorded during the course of search from one of the Directors of the assessee company Shri Devkumar Thakkar who stated that he was not aware of receipt of share premium and other transactions of the assessee company. He also relied on the statement of one Shri Naresh Khodidas Bhoricha who was an Accountant in M/s. Best Enterprises (same address of the assessee) who stated that he was not aware of the existence of the assessee company on the given address. Accordingly, the ld. AO concluded that the transactions of the assessee company are not genuine and proceeded to treat the receipt of share premium of Rs.4,50,00,000/- and unsecured loan of Rs.1,87,500/- as unexplained cash credit u/s.68 of the Act. 4.3. Before the ld. AO, the assessee made a primafacie objection that proceedings u/s.153A of the Act had been wrongly invoked on him vide letter dated 19/11/2019. The assessee also stated before the lower authorities that the assessment for A.Y.2009-10 was an unabated / concluded assessment as on the date of search and since there was no incriminating material found during the course of search, no ....
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....ments of Shri Dev Kumar Thakkar and Shri Naresh Khodidas Bhoricha. Shri Bhoricha has said that he was not aware of the existence of the assessee company at the given address and Shri Dev Kumar Thakkar, one of the directors of the company, has stated that he was not aware of any transactions relating to this company. However, a perusal of the material on record clearly reveals that the contention of the Appellant is true that not even a single incriminating material has been found from the premises of the Appellant, which could provide any evidence as to the fact that the share capital/premium and unsecured loans not being genuine. Further, there is no incriminating material placed on record, which has been found during the course of search operation in relation to the share capital and unsecured loans taken by the Appellant. 6.2.11. In the present case at hand, the assessee submitted that assessment was previously completed u/s 143(3) r.ws 147 of the Act on 27.03 2015, thereby making it an unabated assessment, as on the date of search. Accordingly, the assessment year under consideration was unabated and not pending before the AO as on the date of search. Since, the procee....
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....e of original assessment proceedings. It was further submitted that in any case, Shri Thakkar has retracted his statement vide affidavits dated 12.07.2017 and 31.07.2017, which were filed before the Assessing Officer on 11.12.2019. The assessee submitted that vide these affidavits Shri Thakkar has clarified that his statement regarding the assessee company were incorrect. As such, there is nothing incriminating in his said statement to form any adverse view as to genuineness of transaction of the assessee company. 6.2.13. The assessee further submitted that even this statement of Shri Thakkar is very general, non-revealing and vague. The assessee further submitted that in any case the statement of Shri Thakkar is not in respect of any document found during the course of search and, therefore, additions cannot be made on the basis of such statement. In this regard, the assessee placed reliance on the several decisions including in the case of Hon'ble Delhi High Court in the case of CIT vs. Harjeev Aggarwal (Supra), CIT vs Best Infrastructure (India Pvt. Ltd.) (Supra) and PCIT vs. Saumya Construction (Pvt. Ltd) (Supra). 6.2.14. The assessee further submitted tha....
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....onsidered view, that itself would not be sufficient to hold that all the transactions of the assessee company are non-genuine without having support of other evidences that too in an assessment u/s 153A which has not abated. More so, when Shri Kirit Nagda, in his statement recorded during the course of search itself has provided the details of share premium received by the company and there was nothing adverse as to the same found during the course of search. I have also taken note of the fact that during the course of original as well as current assessment proceedings the assessee has filed details of share premium received during the year and the loan transactions and even during the course of said assessment proceedings no further evidences were found to hold the transactions as not genuine, rather the same was held genuine in the original assessment. 6.2.17. In this regard, it is pertinent to note that it is not unusual that more than one company functions from one address, especially where they belonged to one group. Several companies can have the same registered office. Businesses raise capital and such capital is rotated in economy for increasing production and trad....
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....in law. 6.2.23. Another issue which requires consideration is statements of Shri Thakkar and Shri Bhoricha recorded during the course of search which are not with reference to or in respect of any documents found during the course of search be considered as incriminating material for making assessment in the impugned assessment proceedings u/s 153A of the Act. I find that the additions made by the AO are primarily made on the basis of statement of Shri Thakkar u/s 132(4) of the Act. I further find that the statement made by Shri Thakkar has no nexus with any seized material. The statement of Shri Bhoricha is also not with reference to any material found during the course of search. In fact, the addition u/s 68 is not based upon any seized/incriminating material at all. Hon'ble Delhi High Court in the case of CIT vs Harjeev Aggarwal, 241 Taxman 199(Delhi) have held that statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material. The relevant findings of the Hon'ble High Court are extracted below for reference: 19. In view of the settled legal position, the first and foremost issue to be addressed is whether a ....
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....g a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 23. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of the Act which expressly provides that the scope of examination under Section 132(4) of the Act is not limited only to the books of accounts or other assets or material found during the search. However, in the context....
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....2018] 94 taxmann.com 461 (Bombay), it was held that in course of block assessment, wherein the assessee brought on record various documents to establish that jewellery seized from him actually belonged to his employer, impugned addition made in respect thereof merely on ground that assessee in course of statement made under section 132, had admitted that said jewellery belonged to him, could not be sustained. 6.2.26. In this regard, it is pertinent to note that the statements recorded during the course of search would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make an assessment u/s 153A/153C for the assessment years which had attained finality and which are unabetted because any admission was made by the Assessee during search operation. 6.2.27. A plain reading of Section ....
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....found, the powers under Section 132(4) of the Act cannot be invoked. The relevant passage from the aforesaid judgment is quoted below. "A plain reading of sub-section (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any ITA No.4223/Del/2018; 4225/Del./2018 & 4226/Del./20118 undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such per son under the Act. Thus, the question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles of things, nor any unaccounted documents nor any such incriminating material either....
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....n their power, pounce upon the assessee, as though he is a hardcore criminal. The nature of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under section 94 of the Code of Criminal Procedure by operation of sub- section (13) of section 132 of the Act. The objective may be genuine, and the exercise may be legal, However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non- existent." "18. It is not without reason that Parliament insisted that the recording of statement must be in relation to the seized and recovered material, which is in the form of documents, cash gold, etc. It is, obviously to know the source thereof, on the spot. Beyond that, it is not a limited licence, to an authority, to script the financial obituary of an assessee," "19. At the cost of repetition, we observe that if the statement made during the course of search remains the same, it can constitute the basis for proceeding further under the Act even ....