TaxTMI 
TaxTMI 
2023 (2) TMI 849
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....he appeals as under :- "ITA No.1931/Del/2020 (REVENUE'S APPEAL IN ATUL KUMAR GUPTA CASE) "1. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting addition of Rs.7,99,55,358/- on account of unexplained profit/investment u/s 69A on the ground that no incriminating documents were found in the search proceedings without appreciating the facts that on the basis of information from the seized documents i.e. (A4 to A9) of soft data, Annexure B & Annexure C of soft data etc. the post search enquiries were conducted which has thrown up the material relating to the investments in shares made by assessee in certain companies in which he was the director during the year under consideration. 2. On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs.26,14,151/- on the account of unexplained HDFC credit card payment on the ground that no incriminating documents were found in the search proceedings without appreciating the fact that the scan copy of the incriminating information was clearly apprised by the investigation wing in the appraisal report. 3. Whether on facts....
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.... assessment framed u/s 153A read with section 143 (3), AO noted that original return of income was filed u/s 139 of the Act for the year under consideration on 31.03.2012 declaring an income of Rs.15,38,400/-. That after demonetization, a search & seizure operation was carried out on 21.03.2017 on group cases of Agson Global and others including the assessee. The case of the assessee was centralized by PCIT, Delhi 2. Notice u/s 153A of the Act was issued on 06.08.2018. However AO noted that there was no cooperation from the assessee. He held that since there was no response from the assessee, he was constrained to decide as per the material available on record and finding of the Investigation Officer contained in the appraisal report. 5. AO noted that during the course of search and post-search, it is found that assessee and Shri Rajiv Gupta are co-directors in many companies. In many of these companies, there were substantial amount in the share premium reserves which have been utilized for making investment in immovable and movable properties. AO noted that the facts of companies owned by the assessee wherein substantial investments have been made by the assessee were confront....
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....20,395/- is being treated to be unexplained investment within the meaning of provisions of section 69 of the IT Act 1961 of the IT Act 1961. (Addition of Rs. 200,20,395/-) Since the assessee has failed to comply with the contents of the notices & questionnaires issued from time to time and the assessee failed to disclose his true and correct income which tantamount to concealment of particulars of his income, therefore, a penalty proceedings u/s 271(1)(c) is being initiated separately. b] Investment in the shares of M/s Orion Freight Solutions Pvt. Ltd.: AAAC07310C:- The company has share premium of Rs.3.86 Crs which were invested in unquoted govt. securities. Shares were allotted to dubious entities at premium of Rs.90/- per share. In A,Y. 2010-11, share of the company were acquired by the assessee and his business associate sh. Rajiv Gupta. The company now owns the properties located at Triton Mall Commercial Complex, F-40A, First Floor, Khasra No. 1/1 Village Bassi, Sitarampura, Tehsil Sawal Jaipur, Jhotwara Road, Jaipur and Mitral's Mega Mall, M-3, Sector 25, Part II, HUDA Panipat. The shares from dubious entities went acquire....
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.... income from Undisclosed sources which represents to unaccounted investment for the AY-2011-12. In response, assessee furnished no reply. Under the circumstances and in view of the facts of the case, it is concluded that Rs.63,83,834/- is being treated to be unexplained investment within the meaning of provisions of section 69 of the IT Act 1961. (Addition of Rs.63,83,834/-) Since the assessee has failed to comply with the contents of the notices & questionnaires issued from time to time and the assessee failed to disclose his true and correct income which tantamount to concealment of particulars of his income, therefore, a penalty proceedings u/s 271(1)(c) is being initiated separately. d) Investment in the shares of M/s Micro Spacematrixs Solution P. Ltd. AAECM3093L: As per ROC data shows that on 24/03/2008, shares were allotted at a premium of Rs.90 per share to the various entitles. Thereafter, the shares were transferred to Cham Gupta and Atul Gupta in 2010. The book value of per share works out at Rs.137.5. These shares were acquired at Rs. 10 per share. These entities have charged only face value. This is the way, Cham Gupta & ....
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....nts to unaccounted investment. Addition of Rs.118,37,729/- Since the assessee has failed to comply with the contents of the notices & questionnaires issued from time to time and the assessee failed to disclose his true and correct income which tantamount to concealment of particulars of his income, therefore, a penalty proceedings u/s 271(1)(c) is being initiated separately. f) Investment in the shares of M/s Radical Infratech Pvt. Ltd. AADCR8849Q The company has shown share premium reserves of Rs.3.375 crore. Out of this, Rs.3.25 crore has been given to related parties as loan and advances. There are no operations in the company. As per the ROC Database in March 2008 and 2009, shares were allotted at a premium of Rs.90 per share to various entities. Thereafter, in 2010-11 (AY 2011-12) the shares were acquired by you & Ruth Rengma at Rs.10/ - per share. The book value of per share works out Rs.97.66. These companies had only charged the face value. This is only a means to introduce own unaccounted money through layering 375000 shares have been acquired at Rs.10/- per share (Rs.3750000/-). The actual worth of these shares goin....
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....f to) : Rs.8,41,07,910/- 6. The income of assessee is assessed at an income of Rs.8,41,07,910/-. Issued necessary forms, notice of demand u/s 156 and challan and charged interest as per provisions of the Income Tax Act, 1961." 6. Against the above order, assessee appealed before the ld. CIT (A). After reproducing the assessee's submission, ld. CIT (A) observed that the AO has made the additions relating to unaccounted profits or investments made in respect of M/s Orion Packwell Pvt. Ltd., M/s Orion Freight Solutions Pvt. Ltd., M/s Iris Infrabuild Pvt. Ltd., Micro Spacematrixs Solution Pvt. Ltd., M/s Sigma Supply Chain Solutions Pvt. Ltd. and M/s Radical Infratech Pvt. Ltd. totaling to Rs.7,99,55,358/-. He noted that according to the AO, the assessee has purchased shares of the said companies at a price which is much less than the book value and, therefore, the differential amount, i.e. the difference between the book value and the purchase price represent the unaccounted investment made by the assessee. Ld. CIT (A) noted that assessee has submitted that during the course of search, no incriminating evidence or in fact any other evidence was found to even suggest t....
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....d Annexures A, B & C on which AO has relied upon for his contention that the said documents contained information because of which, post search enquiries resulted in undisclosed income. Ld. CIT (A) noted that it is to be mentioned that AO himself has stated that it is the post search enquiries which led to the determination of this income. Ld. CIT (A) gave a finding that he has perused the documents referred to by the AO before him by the assessee. That none of the documents relate to the purchase of shares in respect of which addition of Rs.7,99,55,358/- has been made. He noted that AO has not furnished any document post search which can be held to be incriminating and indicative of undisclosed income in respect of purchase of shares made by the assessee. Hence, ld. CIT (A) observed that all the facts on record of the AO were placed before him including AO's remand report and these have no reference to any document that is suggestive of any undisclosed income having resulted consequent to this transaction of purchase of shares. Hence, he held that neither the assessment order nor the remand report mentioned that the addition regarding the undisclosed investments in shares has been....
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....pecific document which is suggestive of undisclosed income relating to credit card payments and mutual fund purchases in respect of which, the addition of Rs.26,14,151/- has been made. Ld. CIT (A) noted that in the appellate proceedings, the submissions of the assessee were furnished to the AO. Ld. CIT (A) observed that AO has stated that there were no incriminating documents found during the course of search relating to the addition made by the AO about the credit card payments and mutual fund purchases in respect of which addition of Rs.26,14,151/- was made. Thereafter, after referring to the documents, ld. CIT (A) gave a finding that no incriminating document was found, hence ld. CIT (A) concluded as under :- " I have perused the documents referred to by the AO filed before me by the appellant. None of the documents relates to credit card payments or mutual fund purchases in respect of which, addition of Rs.26,14,151/-has been made. The AO has also not furnished any document post search which can be held to be incriminating and indicative of undisclosed income. The AO has stated in his order that perusal of the AIR/ITR data revealed that the appellant has made credit ca....
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....n the hands of Rajiv Gupta and Rs.8,25,69,509 in the hands of Atul Kumar on the ground that the assessees had purchased shares of 6 companies at the face value of Rs.10 whereas the book value of those shares on date of purchase was much higher. Ld. Counsel for the assessee submitted that this addition is untenable in view of the decision of the Hon'ble Supreme Court in the case of K.P. Varghese v.Income-Tax Officer [1981] 131 ITR 597 (SC) [para 18] wherein it was held that there must be evidence to show that the actual consideration was more than the consideration shown in the books. He submitted that this preposition is also held in the following cases " a. CIT v. Gulshan Kumar [2002} 257 ITR 703 (Delhi High Court)-para 21 b. CIT v. Naresh Khattar, HUF [2003) 261 ITR 664 (Delhi High Court)- para 8 c. JCITv. Sri Bithalnath Malia ITA No. 15/KOL/2013 (Kolkata Trlbunal)-para 10 d. DCIT v. Smt Nirmal Rani ITA No. 2786/ DEL /2010 (Delhi ITAT)- para 15 to 22 e. Dilavar S Lakhani v.ITO ITA No. 5158/MUM/2019 (Mumbai ITAT)- para 6,7 f. DCIT v. Kalawatl Aggarwal ITA No. 112/DEL/2010 (Delhi ITAT)- para 11 g. ACIT v. Sharad Cha....
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....egorical finding that no incriminating material was found during search which can in fact show that assessee has actually invested more and shown less. Ld. CIT (A) asked from the AO to give remand report and indicate the copies of seized material & incriminating documents but AO has not dealt with this aspect. Ld. CIT (A) duly forwarded the entire submissions of the assessee to the AO but AO could not put-forth any seized material which can indicate that assessee has suppressed the purchase consideration. Merely stating that seized materials are there and post search enquiry has shown that the purchase prices have been suppressed, cannot alone prove the case of the AO unless supported by necessary corroborating evidences. In the present case, we note that ld. CIT (A) has given a categorical finding that there is nothing on record which suggest that assessee has incurred higher expenditure on purchase than reflected in the books of account. In this regard, ld. CIT (A) placed strong reliance upon the decision of Hon'ble jurisdictional High Court in the case of Kabul Chawla (supra) which is fully applicable. 16. Apart from the above, another limb of the case is that ld. Counsel of ....
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....hat on the facts and circumstances of the case and in law, the order dated 6.03.2020 passed by the Learned Commissioner of Income tax Appeals ("Ld. CIT(A)"] is erroneous and bad in law. 2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming addition of Rs.10,50,000/- made by the Learned Assessing Officer ("Ld. AO") even though no incriminating material was found during search of the Assessee. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition of Rs.10,50,000 made by the Ld. AO on the basis of unconnected, unrelated documents found in search of others. The Ld. CIT (A) erred in confirming the addition on assumption and generalities. 4. That the grounds of appeal are independent and without prejudice to each other." 21. Brief facts on this issue are as under :- Assessment u/s 153A rws 143(3) of the IT Act has been completed by the Assessing Officer at an income of Rs.30,45,120/- as against returned income of Rs.13,42,260/-. Facts of the case are that there was a search upon the assessee on 21/3/2017 and during the course of search cash, jewellery....
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.... does not make any difference from where the material was found. He referred to the investment by Atul Kumar Gupta and Rajiv Gupta in various companies and was of the opinion that both operated together. He held that the plea of the assessee is acceptable if there is no relation between the Atul Kumar Gupta and Rajiv Gupta. 23. Against this order, assessee is in appeal before us. We have heard both the parties and perused the material. 24. Ld. Counsel of the assessee reiterated that no incriminating document has been found from the premises of Atul Kumar Gupta and this assessment has been done u/s 153A of the Act. He reiterated that as per section 153A, no addition can be made de hors corroborating material found during search. Ld. Counsel of the assessee submitted that a separate independent search was conducted on the assessee and assessment cannot be made u/s 153A because of documents found from Rajiv Gupta. Hence it has been pleaded that as no document was found from the assessee, assessment u/s 153A does not stand. Further, ld. Counsel of the assessee reiterated that authorities below are in mistaken belief that assessee and Agson Global are related parties which is not ....
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....t the documents belongs to the other person, i.e. in this case the Assessee. In such a case, where the document is found in the premises of a person who is searched and the document is purportedly belonging to a third person, it is mandatory for the department to first establish that the document does not belong to the person who has been searched and thereafter, further establish that the document belongs to the third party. e. Very importantly even in the remand proceedings, the Ld. CIT (A) gave full opportunity to the Ld. AO by forwarding the written submissions filed by the Assessee. The Ld. AO reiterated what he stated in the assessment order and, therefore, consciously decided not to respond to any of the contentions raised by the Assessee. 25. Ld. DR of the Revenue relied upon the orders of the authorities below. 26. Upon careful consideration, we note that addition has been made on the assessee u/s 153A assessment on the basis of documents found from a separate search at Rajiv Gupta. Hence, the plea of the assessee is quite correct that the assessment should have been done under section 153C and not under section 153A. Section 153C permits documents found fro....