TaxTMI 
TaxTMI 
2023 (6) TMI 1030
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..../s RRJ Securities as Sec. 153C does not restrict the assessment to incriminating documents. 3. Brief facts of the case are that, a search and seizure operation u/s 132 of the Income Tax Act was carried out on the Rockland Group of cases on 06.09.2011. The assessee belongs to the Rockland group, but warrant was not issued against the assessee. However, notice u/s 153C dated 31.05.2013 was issued to the assessee. The A.O. held that during search and seizure action, various incriminating documents were found and seized relating to share allotment at a heavy premium by sister concerns of the Rockland Group viz., M/s Rockland Hospitals Ltd., M/s Rockland Hotels Ltd. and M/s Rockland Media & Communications Pvt. Ltd. After considering the submissions of the appellant and taking into account various evidence his possession, the A.O. made addition of Rs. 54,59,00,000/- as unexplained cash credit u/s 68 ( on account of share capital received during the year, but treated as accommodation entries) and Rs. 163,77,000/- towards unexplained expenditure that would have been incurred on arranging the accommodation entries. The A.O. noted that many assessees of the Rockland Group of cases, includ....
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.... that the present appeal filed by the Revenue is devoid of merit. 8. We have heard both the parties and perused the material available on record. The Ld. A.O made addition of Rs. 29.73 crores on protective basis and Rs. 24.27 crore on substantive basis in following manners:- "3.15 In view of the above discussion, it is established beyond doubt that the share application money and share premium received by the assessee from various investors is nothing but unexplained cash credits in the books of accounts of the assessee company. The same has also been admitted by the assessee before the Settlement Commission. Further, it has also been established above that the assessee company is a paper company without any real business and has been created as a conduit to receive unaccounted income of flagship companies in the garb of investments, and pass it back to the flagship companies as investment. Such flagship company in this case is M/s. Rockland Hospital Limited and M/s. Rockland Hotels Limited. Hence the unaccounted investment is the unaccounted cash income generated by M/s. Rockland Hospital Limited and M/s. Rockland Hotels Limited. The case of Rockland Hospital Limited i....
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....of Rs. 8.73 crores were circulated on multiple occasion to introduced share capital. The Ld. Settlement Commission recorded its finding at para 4.2.3 of its order dated 16.10.2015 wherein it also dealt with share capital introduced by the assessee i.e., M/s Lipi Finstock limited. The addition was confirmed in the hands of other assessees as listed out at para 4.2.3. of the Ld. Settlement Commission order in following manners:- "4.2.3. Commission's observations and finding The Commission on 07.08.2015during the hearing, directed the Addl. DIT (Inv.) to verify the daim of the applicant about the rotation of entries for Introduction of share capital by RHL. On verification, it was found that the total circulating capital was Rs. 8.73 crores and not Rs. 7.73 crores. Out of this the applicant has declared Rs. 6.79 crore in 12 cases before us and the remaining Rs. 1.04 crore has been stated to be opening cash in hand. Later on, vide letter dated 6.10.2015 during the course of hearing in the cases of individuals, Rs. 1.04 crore also has been declared additionally in the case of Individuals as the source of Initial cash in hand could not be fully substantiated by the ....
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.... settlement Commission, the protective assessment made in the hands of the assessee does not survive. 10. In so far as addition of Rs. 24,27,44,823/- on substantive basis, the said addition has been deleted by the CIT(A) on the ground that the incriminating material found during the search is pertaining to Assessment Year 2010-11 and not for the year under consideration i.e. Assessment Year 2009-10. The Ld. CIT(A) while deleting the addition has held as under:- "4.1.9. The first issue to address is that the preliminary objection of the appellant that the additions made by the A.O. are not emanating from the incriminating material unearthed during search. It is therefore necessary to examine whether the additions were made for A.Y. 2009-10 have their origin in material unearthed during search. The primary evidence in this regard is the statement of Sh. Anil Aggarwal, the hawala entry operator who admitted that he has provided accommodation entries to the appellant. However, closer look at the statement shows that his admission relates to entries provided during the period December, 2010 to August 2011, which is subsequent to the previous year relevant to the A.Y. 2009- 1....
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.... search) were not even confronted to the Directors of the appellant company during the search. The fact that there is evidence of bogus share capital from the period 2006-07 to 2008-09 does not automatically constitute evidence regarding share capital for A.Y. 2009-10. The additions made by A.O., though based on vigorous activity in evidence collection, falls outside the scope u/s 153C as held by the Hon'ble Jurisdictional Delhi High Court in the case of CIT vs. RRJ Securities Ltd. (2015) 62 Taxmann.com 391 (Del), reproduced below, and which I am bound to follow: "21. As discussed hereinbefore, once the AO of the searched person is satisfied that the seized assets/documents belong to another person and the said assets/documents have been transferred to the AO of such other person, the proceedings for assessment/reassessment of income of the other person has to proceed in accordance with provisions of Section 153A of the Act. Section 153A requires that where a search has been initiated under Section 132 of the Act, the AO is required to issue notice requiring the noticee to furnish returns of income in respect of six assessment years relevant to die six previous years prece....
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....the search takes place. The AO has the. power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should he strictly made on the basis of evidence 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 re la table to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as ....
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....rson other than a searched person would proceed in accordance with the provisions of Section 153A of the Act. The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized. 38. As indicated above, in the present case, the documents seized had no relevance or bearing on the income of the Assessee for the relevant assessment years and could not possibly reflect any undisclosed income. This being the undisputed position, no investigation was necessary. Thus, the provisions of section 153C, which are to enable an investigation in respect of the seized asset, could not be resorted to; the AO had no jurisdiction to make the reassessment under Section 153C of the Act." 4.1.10. This aspect is further noticed on a reading of the satisfaction note which is reproduced below:- M/S. ROCKLAND HOTELS LIMITED & M/S ROCKLAND HOSPITAL LIMITED During the course of search and seizure operation conducted on 06/09/2011 at Premises C-30, Panchsheel Enclave, New Delhi of M/s Rockland Hotels Limited and A-33-34, Qutub Institutional Area, New Delhi, of M/s Rockland Hospital Limite....
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....rd to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Not and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004 05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges there from is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senio counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was eve time barred. 19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it i....
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.... 9400000 Kunal Medicare Pvt Ltd. 61640000 5400000 56240000 Paradise Realtech Pvt. Ltd. 58640000 Kadhika Surgical Pvt. Ltd $100000 Regal Builders & Promotes Pvt. Ltd. 12500000 58640000 9100000 12500000 Umesh Pharmaceuticals Pvt. Ltd. 14100000 14100000 Aditya Medicos Pvt. Ltd. 46860000 AveeMedi Surgical P Ltd, 3930000 Glory Lifesciences Pvt. Ltd, 61630000 400000 500000 6280000 46-460000 B480000 55350000 Uptrinstock Umited 294335000 8450000 285885000 Mona Infotech Pvt. Ltd. 14870000 400000 14470000 Prabhat Health Care Services Pvt. Ltd. 11110000 11110000 Total (1) 730675000 23030000 767645000 Corporate Subscribers Samya Constructions Pvt. Ltd 2000000 2000000 Sukumar Enterprises Pvt Ltd 38100000 113 38099887 Rock Land Ltd. 450000 450000 Sunskrit TradexPvt Ltd 57000000 58 56999942 Rockland Media & Comm. Pvt. Ltd 8500000 8500000 Vaibhav India SurgicalsPvt Ltd: 111000000 72 110999928 Rockland Hotels Limited. 24900000 3200000 21700000 Purnendu Traders Pvt Ltd 34290000 146 ....