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2023 (3) TMI 818
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....ee , in the facts and circumstances of the instant case. 3. Before us, the ld. AR raised the legal issue under Rule 27 of the Income Tax Appellate Tribunal (ITAT) Rules, 1963, contending that, before the ld. CIT(A), the assessee had raised legal arguments that the addition made by the ld. AO is not based on any incriminating material or evidence found during the course of search relating to the addition made by the ld. AO and is beyond the scope of section 153C of the Act. Since this issue has been decided against the assessee by the ld. CIT(A) vide para 7 of his order, the assessee is entitled to raise this issue before this tribunal in Rule 27 of the ITAT Rules. This contention of the ld. AR is accepted and accordingly Rule 27 Petition of the assessee is hereby accepted and taken up for adjudication. 4. The facts in brief qua the legal issue are that assessee is a private limited company engaged in the business of rendering maintenance services. The assessee had filed the return of income u/s 139(1) of the Act for the A.Y. 2012-13 on 25.09.2012 declaring NIL income. The assessment was completed u/s 143(3) of the Act on 27.03.2015 determining total income at Rs 2,24,81,707/-....
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....facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. During the course of search & seizure action, in the present case and other group entities, it was found that donations to the tune of Rs. 96.90 crores was given by M/s. Podar Group of Trust including the assessee trust to various entities namely Delhi Vocational School Society, Gyan Shakti Education Welfare Trust, Nav Chetna Educational Trust, Prabodh Foundation etc. These entities after retaining their commission returned the cash to the assessee group. These facts were clearly stated by Shri Kirtikumar Darshibhai Suba in his statement on oath u/s 131, during the course of survey proceedings u/s 133A carried out simultaneously with the search action. Shri Kirtikumar Darshibhai clearly mentioned that cash was received back by the trustees, Shri N.K. Sodhani, Shri Navin Nishar CA etc. In fact Shri N.K. Sodhani in his statement also very clearly accepted that donations given to the tune of Rs. 96.90 Crores were bogus in nature and were channeled back in Podar Group of entities in the form of cash. These donations have been giv....
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....tatements would constitute 'incriminating material' found during the course of search. 9. On the other hand, the Ld. AR submitted that nowhere during the course of search, any books of account belonging or pertaining to the assessee was found or seized from any of the premises of Poddar group nor there is any such material relating to the assessee has been referred in the assessment order which can be related to the assessee company. In fact, there is no mention about the assessee company at all even by the Ld. AO in his assessment order. Thus, without any incriminating material, the addition could not have been made in the assessment which has been already abated at the time of search/recording of satisfaction u/s 153C of the Act. 10. We have heard the rival submissions and also perused the relevant findings given in the impugned order and the material referred to before us qua the legal issue raised by the Ld. AR before us. We find that this matter was even raised before the Ld. CIT (A), wherein the detailed submissions were made by the assessee. The following submissions have been made before the Ld. CIT(A) on this issue, which are as under:- Ground No. 1 ....
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.... received accommodation entries in the form of share premium. However, the AO has not spelt out the contents of the seized material so as to establish that the appellant has indulged in receipt of bogus share premium. In fact, the name of the appellant is nowhere mentioned so as to draw any adverse inferences against him. That being so, the Ld.AO is not enabled to invoke the provisions of section 153C of the Act against the appellant. 15. Further, it is submitted that the search took place on 09.01.2018 and as on the date of search the assessment for the assessment year under consideration had attained finality; no assessment or reassessment was pending that could be abated as per the second proviso to sub-section (1) of section 153A. 16. It is therefore stated that in respect of such completed assessment, and when no assessment/reassessment was pending as on the date of search, no addition/ disallowance could be made in the absence of any incriminating material found during the course of search. 17. The AO has failed to bring on record any incriminating material in respect of the additions made by the AO and thus, the said additions are liable to be dele....
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....d. 11. However, the Ld. CIT (A) has dismissed the aforesaid submission in the manner as incorporated above. 12. It is an undisputed fact that return of income for A.Y. 2012-13 was filed on 25.09.2012 and at the time of issuance of notice u/s 153C of the Act, i.e., on 21.09.2019, the assessment for A.Y. 2012-13 had attained finality which has to be reckoned as 'unabated assessment' in terms second proviso to section 153A of the Act. It is well settled proposition that assessments which had attained finality and are not abated, then additions can be made only when there is any incriminating documents or seized material found during the course of search. In the case of 'other person' covered u/s 153C of the Act, it is sine qua non that, firstly, any money, bullion, jewellery or other valuable article or things seized or requisition belongs to; or secondly, any books of account or documents, seized or requisition pertains to or any other information contained therein, relates to a person other than the person who was searched. It has only when such document pertains to or information contained therein relates to the assessee, then only the Ld. AO can acquire jurisdiction to frame....
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....s. l,15,58,750/- and the payment made for the same as bogus donation was Rs.1,16,22,352/- respectively. 21. It is seen that during the course of Search Proceedings u/s 132 in the case of Jayesh Zanani at Flat No. 1303, Wing-C, Skyline CHS, Shanti Park, Near St. Xavier School, Mira Road, Thane - 401 107, data back-up of laptop were taken from the home of Sh. Jayesh Zanani, In his statement, Sh. Jayesh Zanani has admitted that he used to make the notings of the accommodation entries taken in the Podar Group companies. The same is explained in the data back-up of computer wherein few retrieved deleted files named "REP" date (different file having different dates) marked as MR-11. On perusal of these retrieved deleted file named "REP", it is seen that unaccounted money was being generated in the case of Podar Group. The same was being routed through shell companies and finally received in various concerns of Podar Group in different forms such as share capital, share premium, sale proceeds of penny script investments etc. 22. Further, on perusal of data back-up of laptop, file related to share valuation of Podar group companies being assessed u/s 153C of the Act has b....
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....hat:- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to, or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any Information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] (and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub- section (1) of section 153A] :]" 23.2 The assessee contention that proceedings u/s 153C is bad in law is also found to be not acceptable. The proceedings u/s 153C is valid. Incriminating materials found from searched premises have a bearing on the....
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.... Services Pvt. Ltd. Office No.G- 3, Vijay Apartment, Gurunanak Nagar, Navghar, Behind HDFC Bank, Vasai, Thane-401 202 AADCK2 164P U67190MH200 7PTC169632 04-04-2007 13,50,000/- 5 Khushi Industries Ltd 4A, 2^nd Floor Bombay Hospital Trust, Building 134, Meadou/s street, Fort, Mumbai AAACJI4 57F U70100MH198 7PLC045620 05-02-2009 18,00,000/- 6 Kurmi Developers Ltd. Office No.14/15, 1^st Floor, Bhatbazar Nasinatha Street, Masjid Bunder, Mumbai - 400 009 AAECK3 351M U70200MH201 0PTC198655 07-01-2010 19,35,000/- 7 Nirvana Clothing Pvt. Ltd. Office No.16, 4^th Floor, Bhatbazar Nasinatha Street Masjid Bunder, Mumbai - 400 009 AADCN6 287G U17120MH201 0PTC198511 27-05-2011 19,35,000/- 8 Rishi Automation Pvt. Ltd 9, Janta CHS, Jesal Park, Bhayender (E) Thane- 401 AAACR8 467K U99999MH199 4PTC083972 22-12-1994 19,35,000/- 105 ....
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....he modus operandi unearthed during the course of search in the case of Poddar entities may be relevant for other cases within the group entities wherein there is direct evidence or material which has been discussed in the assessment order as well as in the various statements. But in so far as the assessee is concerned, there is no such reference of any such material or neither any information nor it has been discussed in the entire assessment order. It is based on the entire premise that some modus operandi of Podar group for routing through their unaccounted money in the form of share application / share premium in the group entities was unearthed. Based on that, the Ld. AO has assumed that assessee is also part of the same modus operandi wherein assessee has brought its unaccounted money through the medium of share subscribers. There has to be prima facie material which pertains to the assessee found from the search to rope in the assessee company within the scope of section 153C of the Act to make the additions. The Ld. AO may have discussed the issue on merits but has failed to take any such documents or information that during the course of search anything pertains to the asse....