TaxTMI 
TaxTMI 
2022 (11) TMI 365
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....n 143(3) of the Act. The AO also reopened the assessment of A.Y. 2011-12 by issuing notice under section 148 of the Act. The AO completed the assessments of AY 2011-12 to 2018-19 by making various additions. Aggrieved by the additions so made, the assessee filed appeals before Ld CIT(A). Some of the appeals were dismissed and some of the appeals were partly allowed. Hence, both the parties have filed appeals before the Tribunal challenging the decision rendered by Ld CIT(A) against each of them. ASSESSMENT YEAR : 2011-12:- 3. We shall first take up the appeal filed by the assessee for A.Y. 2011-12, wherein the assessee has challenged the validity of reopening of assessment. The learned AR submitted that the original assessment for A.Y. 2011-12 was completed under section 143(3) of the Act on 16.11.2013. The Assessing Officer has reopened the assessment by issuing notice on 31.3.2018 i.e. after expiry of four year from the end of the assessment year. He submitted that, as per the first proviso to sec. 147 of the Act, the reopening after expiry of four years from the end of the assessment year could be made by the AO only, if the AO, inter alia, could show that there was failure on....
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.... of the assessee and the reasons did not state that the assessee was master mind or actively involved in the transactions of generating bogus purchases. 6. On the contrary, the learned DR submitted that the Assessing Officer has reopened the assessment after properly recording the reasons and hence reopening is valid. 7. We have heard the rival contention on this legal issue and perused the record. We notice that the assessee has been supplied with the reasons for reopening by the Assessing Officer, vide his letter dated 12.7.2018. It reads as under:- "REASON FOR RE-OPENING On appraisal of the records available, it is found that the M/s Ameet Enterprises (a proprietorship concern of the assessee) has booked purchases from the following hawala dealers: S.No. Name of the party A.Y. Amount (Rs) 1 Everite Corporation 2011-12 4,46,97,240 2 Supper Sales 2011-12 81,91,200 3 Emkay Engineers 2011-12 3,28,89,780 8,57,75,280 Thus, the assessee SHRI SANGEETKUMAR SAWARMAL HISARIA (PROP OF M/S AMEET ENTERPRISES) (PAN: AAAPH2931H) during the AY 2011-12 has availed accommodation entries in the form of bogus purchases from hawala dealers for a sum of....
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....ntries, in the form of bogus purchase, from hawala dealers. Enquiries made by the AO: The statements and the detailed report of the investigation have been examined and the evidences vis-a vis the return of the assessee were also examined. Findings of the AO: From the above facts it is evident that the assessee has availed accommodation entries, in the form of bogus purchase, from hawala dealers, for a sum of 8,57,78,280/-. Basis of forming reason to believe and details of escapement of Income: In the light of above facts and detailed findings, I have Reason to believe that 28,57,78,280/- has escaped assessment within the meaning assigned in the provision of section 147 of the Act, since, the assessee clearly failed to disclose truly and fully all material facts for determination of income, hence, it is a fit case for issue of notice u/s.148 of the Income Tax Act, 1961. Accordingly, approval u/s 151(1) of the Income tax Act, 1961 is solicited for issuing notice u/s 148 of the Act. 9. Admittedly, there is huge variation in the wordings/sentences mentioned in connection with "reasons for reopening", between that given in the letter supplied to the assessee and that mentioned i....
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....The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced." Identical view has been expressed by Hon'ble Madras High Court in the case of Shri Shakti Textiles Ltd. Vs. JC....
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....ch interference. It is the submission of Ld A.R that the search officials did not unearth any incriminating material warranting interference with the capital gains/capital loss declared by these assessees in all the years under consideration. In support of these legal contentions, the Ld A.R placed his reliance on the decision rendered by the jurisdictional Hon'ble Bombay High Court in the cases of Continental Corporation (Nhava Sheva) Ltd (2015)(58 taxmann.com 78)(Bom) and Gurinder Singh Bawa (2017)(79 taxmann.com 398)(Bom). He also submitted that the legal proposition interpreted by the jurisdictional High Court has been followed by the Mumbai bench of Tribunal in the case of Smt Anjali Pandit vs. ACIT ITA No.3028 to 3032/Mum/2011 & others), by its order dated 17.11.2016. 15. The provisions of sec.153A of the Act provide for issuing of notice u/s 153A of the Act for six assessment years immediately preceding the year of search and thereafter, the AO shall assess or reassess the total income for the above said six years. This section further provides that all pending assessment or re-assessment pending as on the date of search shall abate. Hence the assessments of the assessment ....
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....f search shall abate. This means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the assessee is that necessary corollary to this provision is that completed assessment shall not abate. These assessments become final except in so far and to the extent as undisclosed income is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six y....
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....uced, b) summons or notice has been or might be issued, he will not produce the books of account or other documents mentioned therein, or c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word "incriminating document". Clauses (a) and (b) of section 132(1) employ the words "books of account or other documents". For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. 51. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will h....
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....ing assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. 54. It may be mentioned here that Ld. Counsel for All Cargo Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention that all six assessments are to be made, if necessary, on the basis of undisclosed income discovered in the course of search. He was specifically questioned about the jurisdiction of the AO to make original assessment along with assessment u/s 153A, merging into one. However he took an evasive view submitting that this question need not be decided in his case although the question of jurisdiction u/s 153A was vehemently pressed on account of....
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....ehousing Corpn. (Nhava Sheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that in law the proceedings under Section 153A of the Act are without jurisdiction. This in view of the fact that no assessments were pending, so as to abate nor any incriminating evidence was found. The grievance of the revenue is only with regard to finding in the impugned order on the merits of the individual claim regarding gifts and deemed dividend. However once it is not disputed by the revenue that the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra) would apply to the present facts and also that there are no assessments pending on the time of the initiation of proceedings under Section 153A of the Act. The occasion to consider the issues raised on merits in the proposed questions becomes academic. 8. In the above view, the questions as framed in the present facts being academic in nature, do not give rise to any substantial question of law. Thus not be entertained." 18. The co-ordinate bench has followed the above said binding decisions of jurisdictional High Court in the c....
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....ence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is 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 duri....
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.... three issues are urged in this appeal:- (a) Addition made u/s 68 of the Act in respect of Long term capital gains shown by the assessee. (b) Addition made on the basis of information found in the application filed before Income tax Settlement Commission. (c) Charging of Education cess. 26. The first issue relates to the addition of sale consideration of Rs.4.85 crores received on sale of shares of M/s Shantanu Sheroy Aquakult Ltd. The AO noticed that the assessee has sold shares of above company, which is now known as 52 weeks Entertainment Pvt. Ltd. The assessee had declared long term capital gain on sale of the above said shares. The investigation wing reported this share as penny stock. Accordingly, based on the report of the investigation wing, the AO held that the assessee has only taken accommodation entries in respect of these shares. Accordingly, he assessed the sale consideration of RS.4.85 crores as income of the assessee u/s 68 of the Act. The ld CIT(A) also confirmed the same. 27. The Ld A.R submitted that the assessee has purchased these securities in the normal course of his activities. He submitted that the assessee has furnished copies of "Contract notes cu....
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....have been complete. Change of circumstances ought to have, after the result of the investigation, connected the Assessee in some way or either with these brokers and the persons floating the two companies. It is only, after the Assessee who is supposed to dealing in shares and producing all the details including the DMAT account, the Exchange at Calcutta confirming the transaction, that the Appeal of the Assessee has been rightly allowed. The Tribunal has not merely interfered with the concurrent orders because another view was possible. It interfered because it was required to interfere with them as the Commissioner and the Assessing Officer failed to note some relevant and germane material. In these circumstances, he submits that the Appeals do not raise any substantial question of law and deserve to be dismissed. 5. We have perused the concurrent findings and on which heavy reliance is placed by Mr.Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1, 20.2 and 21 of his order, what was important and vital for the purpose of the present case was whether th....
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.... of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either. 7. As a result of the above discussion, we do not find any substance in the contention of M....
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....direct the AO to delete the addition relating to assessment of sale consideration of Rs.4.85 crores realised on sale of shares of Shantanu Sheorey Aqua. 32. The next issue contested by the assessee relates to the addition of Rs.25.50 lakhs made by the AO relying on the application filed before Income tax Settlement Commission. We notice that an identical issue has been examined by the co-ordinate bench in the case of A.T Trade Overseas P Ltd vs. DCIT (ITA No.325/Mum/2021 dated 23.03.2022) and it has been decided in favour of the assessee as under:- "8. Considered the rival submissions and material placed on record, we observed that subsequent to search action assessee has disclosed additional income before ITSC and as per the information available on record assessee has agreed for adhoc disallowance relating to business expenses to the extent of Rs..50 Lakhs. We observed that assessee has agreed for adhoc addition in order to buy peace and to cover if there is any possible deficiency in any of the evidences with respect to the business expenditure incurred by the assessee. Further, assessee agreed for additional expenses of Rs..1.5 Lakhs over and above the above business expendi....
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....l was found during the search relating to undisclosed income then no addition can be made. 17. We have also gone through the judgment of ITAT, Mumbai in the case of Dolat Investment vs. Dy. Commissioner of Income Tax wherein the ITAT has specifically held in para 22 which reads as under: "22. The first issue is whether the case of the assessee for assessment year 2005-06 was admitted by the Settlement Commission under section 245D(1) of the Act? On this issue, we have already seen that in the order dated 30-11-2007 under section 245D(4) of the Act, the Settlement Commission has clearly held that the assessee for assessment year 2005- 06 does not satisfy the criteria of offering income on which at least an income-tax payable should exceed Rs. 1 lakh. The Settlement Commission has further held that when admitting the petition of the assessee for assessment year 2005-06, this aspect was overlooked and that they are rectifying the apparent error by excluding assessment year 2005-06 of the assessee from the process of settlement. Thus, the case of the assessee for assessment year 2005-06 cannot be considered to have been admitted for the process of settlement under section 245D(1) o....
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.... from the end of the month in which the application was made. (2) Where a proceeding before the Settlement Commission abates, the Assessing Officer or as the case may be any other income-tax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made. (3) For the purposes of sub-section (2), the Assessing Officer or as the case may be, other income-tax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it, as if such material, information inquiry and evidence had been produced before the Assessing Officer or other income-tax authority or held or recorded by him in the course of the proceedings before him." 21. Thus, when a proceedings before the Settlement Commission abates, it reverts to the income-tax authority before whom it was pending at the time of making the application for settlement and the income-tax authority h....
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....by the revenue for AY 2017-18. The revenue is challenging the decision of Ld CIT(A) in deleting the addition of Rs.6.90 crores, being cash credits in the form of unsecured loans received by the assessee and also deleting the interest paid on the above said loans. 36. The assessee had received loans from a group company named M/s Anjani Towers P Ltd. The said Anjani Towers P Ltd had borrowed loans from certain other companies. The AO proceeded to enquire the genuineness of loans taken by M/s Anjani Towers P Ltd from 31 parties, by issuing notices u/s 133(6) of the Act. The Ld A.R submitted that 26 parties replied to the notices issued by the AO and five parties did not respond. After making certain discussions, the assessing officer concluded that a sum of Rs.6,90,00,000/- as detailed below is assessable as unexplained cash credit:- Yashashvi Vyapar & Vitt P Ltd - 20,00,000 Bellary Investments & Trading P Ltd - 6,68,00,000 Running balance of M/s Anjani Towers - 2,00,000 6,90,00,000 37. The Ld CIT (A), during the course of appellate proceedings, issued notices u/s 133(6) of the Act to balance five parties and all of them responded. The Ld CIT(A) also deputed inspecto....
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.... months and with interest. It has been stated that there was even credit balance of some of the Hisaria Group entities with Anjani Towers Pvt.Ltd., at the time of search. The assessee has thus clarified that there is nothing wrong or unusual in loans given by Anjani Towers Pvt.Ltd. to the assessee group. The assessee has also clarified that, out of 31 parties who had given loan to Anjani Towers Pvt.Ltd., replies in respect of 26 parties has already been accepted by the AO and there is no reason why replies of other parties namely Bellary Investments & Trading Pvt.Ltd., and Yashasvi Vyapar & Vitt Pvt.Ltd... should not be accepted when, they have already submitted, similar replies in response to notices u/s. 133(6) in the appellate proceedings. In view of the above, I feel that assessee has rebutted various observations made by the AO in this regard and it has produced necessary details and explanation in this respect of loan and independent verification has also been carried out in cases of these entities and in fact, even III has visited the premises of Bellary Investments & Trading Ptid, Yashasi Vyapar & Vitt Pvt.Ltd. Therefore, the assessee has discharged assessee has clarified t....
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.... by Hisaria Group to them. Further, their financial capacity is also not in doubt as they have been doing considerable turnover and business, Thus, neither their identity nor capacity not genuineness of transaction appears to be in doubt. 7.35 In the light of above explanation I am of considered opinion that assessee has discharged its onus in respect of above mentioned two entities namely Bellary Investments & Trading Pvt.Ltd., and Yashasvi Vyapar & Vitt Pvt.Ltd. and they are treated as explained. In view, of the above facts the additions made by the AO in respect of above mentioned two companies as unexplained loans u/s.68 of the Act, becomes unsustainable in law. The same is therefore, directed to be deleted." 7.36 It is seen that, during the current year, the appellant company had received loan of Rs. 6.90 crs. from Yashasvi Vyapar & Vitt Pvt.Ltd., and Bellary Investments & Trading Pvt Ltd, and the same is added in the computation by the AO. In view of the above discussion, the addition made by the AO u/s.68 of the Act in respect of these companies is directed to be deleted." 39. We notice that the ld CIT(A) has deleted the addition by making due enquiries, which have also....
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....ver, the AO rejected the said explanation. Accordingly, the AO held that the remaining amount is unexplained cash expenditure assessable to tax u/s 69C of the Act. The AO computed the remaining amount as Rs.1,01,94,974/- and assessed the same. The Ld CIT(A) also confirmed the same. 44. The Ld A.R submitted that the above expenditure has been met out of the savings available with all the family members. He further submitted that these expenses have not been incurred during the year relevant to AY 2018- 19. In this regard, he submitted that the expenses by way of cheque have been incurred during the year relevant to AY 2017-18. Hence, there is reason to believe that the expenses in cash were also incurred during that period only. Accordingly, he contended that the disallowance made by the AO should be deleted. 45. The Ld D.R, on the contrary, supported the order passed by Ld CIT(A) on this issue. 46. We heard rival contentions and perused the record. The Ld CIT(A) has extracted the details of expenses incurred by way of cheques in pages 10 to 12 of the order and we notice that all the cheque payments have been made on 31.3.2017 or earlier dates. The Ld CIT(A) has also scanned the ....