TaxTMI 
TaxTMI 
2014 (9) TMI 1288
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....e & Holdings Pvt. Ltd. as also the Cross Objections thereto may be taken as the base appeal. 3. Shri Ajay Kumar Singh, ld. CIT(D.R.) represented on behalf of the Revenue and Shri A.K. Tibrewal, FCA, represented on behalf of the assessees in these bunch of appeals. 4. In the Cross Objections filed by the assessee, the assessee has raised the following grounds:- (1) That the ld. Commissioner of Income Tax (Appeals) erred in holding that there was a valid search under section 132 of the Income Tax Act, 1961 in the case of the respondent assessee and therefore, the Assessing Officer legally assumed jurisdiction for issue of notices under section 153A of the Income Tax Act, 1961 for the six assessment years. (2) That the ld. Commissioner of Income Tax (Appeals) erred in holding that the impugned assessment order passed by the Assessing Officer under section 153A of the said Act was legal in pursuance to search conducted at the premises of Bank in pursuance to Warrant of Authorisation issued in the name of "A/c. No. 6323 with Axis Bank Ltd., Lake Town, Kolkata of M/s. Patangi Trade & Holdings Pvt. Ltd." and "A/c. No. 03828640000291 with HDFC Bank, G.C. Avenue Branch, Kolkata-13 wit....
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....ion of the warrant. It was thus the submission that the searches in the case of the assessee had not taken place. It was the further submission that all that was done by the execution of the search warrant and the drawing of the Panchnama was the seizure of the balances as available in the said two Bank A/cs. It was the submission 153A required the pre-condition that the search or requisition must be in the case of the assessee and the search on the Bank A/cs. and the Bank premises was not a search on the assessee nor were any incriminating document found in the course of the search. Ld. A.R. further drew our attention to page no. 13 of the paper book, which was the copy of the notice under section 153A, which mentioned that the search was on the Office premises. It was the submission that there was no search on the Office premises of the assessee and there is no search warrant on the Office premises of the assessee nor is there Panchnama in respect of the execution of such a search warrant. Ld. A.R. placed reliance on the following decisions to support his contention that the search and the consequential Panchnama drawn in respect of the Bank A/c. did not amount to the search on t....
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....sioner of Income Tax [2014] 44 Taxmann.com 167 (Mum ITAT); (9) Sanjay Aggarwal-vs.-DCIT-ITA No. 3184/Del/2013 (ITAT Delhi); (10) CIT-vs.-Murli Agro Products Limited-Income Tax Appeal No. 36 of 2009 (Bom. HC); (11) ACIT-vs.-Jayendra P. Jhaveri [2014] 46 Taxmann.com 457 (ITAT Mumbai) (12) ACIT-vs.-Hindustan Storage & Distribution Co. Ltd.-IT(SS) A No. 133/Kol/2011 (Kolkata ITAT). 8. It was the submission that the ld. CIT(Appeals) had not accepted the contention of the assessee but had relied upon the decision of the Hon'ble Delhi Bench of this Tribunal in the case of Shivnath Rai Harnaraian reported in 117 TTJ 480 (Del.) to reject the assessee's prayer. It was the submission that the Hon'ble Delhi Bench in a subsequent decision in the case of Anil Kumar Bhatia in ITA Nos. 2660 to 2665/Del/2009 had itself expressed its disagreement with the view of the coordinate Bench of Delhi Bench of this Tribunal in the case of Shivnath Rai Harnaraian being the case cited supra which has been relied upon by the ld. CIT(Appeals). 9. In respect of Ground No. 4, it was the submission that the assessee had no liability to pay advance tax and consequently no interest under section....
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....uential in nature. 11. In reply, ld. A.R. submitted that the statement of Shri Santosh Kumar Shah and his employees were being attempted to be linked with the assessee. It was the submission that the Bank was in no way an agent of the assessee nor was the Bank Manager, an agent of the assessee. It was the further submission that no undisclosed money or incriminating document had been found in the course of the search on the Bank accounts. On a specific query as to what was the status of Shri Santosh Kumar Shah with the assessee-company. It was submitted by the ld. A.R. that Shri Santosh Kumar Shah was a Director in the assessee-company and in the other companies either Shri Santosh Kumar Shah was the Director or his relatives were the Directors. It was further admitted by the ld. A.R. that the said two Bank accounts were operated by Shri Santosh Kumar Shah in the assessee's case. It was the submission that just because Shri Santosh Kumar Shah had made statements that he was doing entry operation, it does not mean that the settled assessment in the case of the assessee could be reopened under the guise of proceedings under section 153A. It was the submission that the statements....
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....which had huge share capital. It was the further submission that the statement from the relatives and the employees of Shri Santosh Kumar Shah had also been recorded and they had also admitted to Shri Santosh Kumar Shah being the controlling person in respect of such transactions and on whose instructions the operations were carried out. 13. Ld. CIT, D.R. further drew our attention to page 13 para 6.14 of the order of the ld. CIT(Appeals). It was the submission that the ld. CIT(Appeals) had held that the Assessing Officer had not brought anything on record to show that the source of the assessee's share application/share capital and share premium money emanated from its unaccounted income. It was the submission that the Assessing Officer had categorically brought out in his order the statement of Shri Santosh Kumar Shah as also the employee of Shri Santosh Kumar Shah which showed the source of the unaccounted income. It was the submission that the order of the ld. CIT(Appeals) was liable to be reversed and that of the Assessing Officer restored. Ld. CIT, D.R. also submitted that Shri Santosh Kumar Shah was the Director who had also filed the returns of many of the assessee-com....
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....see's case. It was submitted by the ld. A.R. that the case of Nova Promoters & Finlease Pvt. Ltd. was distinguishable in so far as in the case of Nova Promoters & Finlease Pvt. Ltd. two of the persons to whom summons had been issued, had confirmed that the transactions were entries given. It was the submission that those two entry operators had also accepted that they were entry operators and they had subsequently retracted their statements and opportunity was given to the assessee to cross examine the said two persons which the assessee did not use. It was the submission that in the case of Nova Promoters & Finlease Pvt. Ltd., the link was established to show that it was the assessee's money which had been routed through the entry operators for making the share application. It was the submission that in the assessee's case, no such link has been shown by the Department. It was the submission that only on the basis of the statement made by Shri Santosh Kumar Shah, the addition has been made. It was the submission that after the decision of the Hon'ble Delhi High Court in the case of Nova Promoters & Finlease Pvt. Ltd., the Hon'ble Delhi High Court had in the cas....
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....he same is being disposed of. In the Cross Objections, the main argument of the assessee is that there was no valid search, in so far as the warrant is in the name of the Bank account and not the assessee. On this issue what is to be primarily understood is that the copy of the warrant is never given to the assessee. It is only the copy of the Panchnama that goes to the assessee. A perusal of the provisions of section 132(1) shows that the warrant is to be specifically in the name of the person and it has to specify the place. 20. A perusal of the Panchnama clearly shows that the name of the assessee is mentioned in the Panchnama, the place has been identified categorically as the Bank account. On a specific direction to the ld. CIT, DR, he has shown the copy of the warrant to the Bench. The warrant also contains the name of the assessee and the Bank account number and the Branch name, etc. In any case, when an assessee is challenging the warrant to be illegal, then it is required to be challenged by filing affidavit alleging the same. In any case, such an affidavit has not been filed in any of the Cross Objections in the bunch of appeals. Consequently we are of the view that the ....
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....rust, it was held that it was not search on the assessee in the individual case of the assessee. In the assessee's case, the search warrant is executed on the Bank Manager of the Branch where the account of the assessee is operating. In fact, the decision in the case of Dr. Mansukh Kanjibhai Shah goes against the argument raised by the assessee. As we have held that the search warrant has been rightly executed, the question of abatement does not arise. 22. Coming to the issue of levy of interest under section 234B, though the ld. A.R. has filed a detailed note at pages 140-145 of the paper book, we are unable to agree with the ld. A.R. in so far as the levy of interest under section 234B is now consequential in nature. The argument that there was no advance tax liability does not hold water in so far as the addition are on which TDS was not liable to be made and the assessee had the liability to pay advance tax. The additions made are clearly under sections 68 & 69 of the Act. In these circumstances, the Cross Objections filed by the assessee stand dismissed. 23. Coming to the Revenue's appeals, we have considered the submissions. The Tribunal being the highest Fact Findi....
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....ecorded in April, 2012, he has also identified the relationship between him and the various Directors of the various Companies. In his statement of October, 2012, he again reiterates that he is a Director of the assessee-company. In the statement he has explained how he has accommodated the persons. A perusal of the return of income in the case of the assessee for the assessment year 2004-05 shows that Shri Santosh Kumar Shah has signed the verification of the return. This clearly shows that Shri Santosh Kumar Shah was controlling the affairs of the assessee. A perusal of the Bank account of the assessee, South Indian Bank, Kolkata shows that cash has been deposited varying between Rs. 25,000/- and Rs. 1,50,000/- on various dates and immediately when the amount reaches a figure of two to three or more lakhs, immediately cheques were issued to various other companies or other accounts. It shows that the Director of the assessee company Shri Santosh Kumar Shah himself has given a statement explaining the transactions of how he has done the accommodation entries in the assessees cases. Consequently the question of cross examining Shri Santosh Kumar Shah no more survives in so far as h....
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....es. Now once the controlling interest is taken, then the balance sheet has to be cleaned. The balance sheet which now holds in current assets the unquoted shares of other shell companies and loans and advances get cleaned by again liquidating these current assets. Now these current assets representing the share application money or the inventories being shares in the unquoted companies are sitting at a premium because these shares have also been applied for and purchased at a premium. How this money was brought back into the company has not been examined. When this has come back has not been examined and who are the people responsible when these transactions took place has not been examined. Here the second round of laundering of unaccounted funds is done. Much less being examined, the details are not available nor given. This is because the inventories are also shares of shell companies and no investor worth his salt would acquire the shares of such shell companies at such premium. The question would arise also as to whether any of these shell companies in which the assessee company has made the investment, have also been sold or transferred. In such a case, it becomes more intric....
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....th February, 2010. A list of 404 bank accounts was found from applicant's premises in the course of search. According to the CIT's report, the total deposits in these accounts amounted to Rs. 642.80 crore. It was clarified later by the AR that apart from the 404 accounts referred to by the Commissioner, there were 29 more accounts through which the applicant had carried out his business. As such, there were in all 433 accounts. It is applicant's case that only 101 bank accounts out of these were used by the applicant for initial deposits. The rest of the accounts were used only for circulation of money with the objecting of providing multiple layers of cover for the transactions of accommodation entries. The applicant has provided the details of these 101 accounts, such as names of the account holders, account numbers and the names of the banks. As far as the remaining bank accounts are concerned, they are held by 274 companies and 58 individuals whose names have been furnished by the applicant. It was stated that 58 accounts in the names of the individuals were held in the names of applicant's staff members, family members and relatives. It was stated that these ar....
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....essing Officer for re-adjudication and we do so. The arguments raised by the ld. A.R. that the decision of the Hon'ble Delhi High Court in the case of Nova Promoters & Finlease Pvt. Ltd. does not apply and it is the decision in the case of Gangeswari Metals Pvt. Ltd., that is to be applied also does not hold water, in so far as in the present case Shri Santosh Kumar Shah is the Director of the assessee-company, he is the signatory to the return, he is the signatory to the Bank accounts and he has admitted categorically in his statement in the search that he is providing entries. He has explained the methodology adopted by him though not all the beneficiaries in its entirety and he has also gone to the extent of filing settlement application which has been rejected by the Settlement Commission. 26. These facts clearly show that it is the decision in the case of Nova Promoters & Finlease Pvt. Ltd. referred to supra which apply to the facts of the assessee's case and not the decision in the case of Gangeswari Metals Pvt. Ltd. We may also mention here that though there has been an argument that the share applicants have responded for providing 133(6) notices. It is not only th....
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....stances, we are of the view that the decision of the Hon'ble Delhi High Court in the case of Nova Promoters & Finlease Pvt. Ltd. would clearly apply to the assessee's case. But instead of dismissing the assessee's claim following the decision in the case of Nova Promoters & Finlease Pvt. Ltd., in the interest of justice, the assessee is being granted another opportunity to clean up its case and place all the facts and details before the Assessing Officer for proper adjudication. 27. We may also in the present situation place reliance on the decision of the Hon'ble Gujarat High Court in the case of Yogendrakumar Gupta-vs.-ITO reported in (2014) 366 ITR 186 (Guj.), wherein the Hon'ble Gujarat High Court has held as follows:- "18. As mentioned hereinabove, we had called for the original file, which had revealed new, valid and tangible information supporting The Assessing officer's opinion received from the Deputy Commissioner of Income-tax, Kolkata, based on the material found during the search by the CBI, where Basant Marketing Pvt. Ltd., is said to be a dummy company of one Shri Arun Dalmia. What has been emphasized by the learned senior counsel appearin....
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....rmation. To that limited extent, the court may look at the view taken by the Income-tax Officer and can examine whether any material is available on record from which the requisite belief could be formed by the Assessing Officer and whether that material has any rational connection or a live link with the formation of the requisite belief. It is also immaterial that at the time of making the original assessment, the Assessing Officer could have found by further inquiry or investigation as to whether the transactions were genuine or not. If on the basis of subsequent valid information, the Assessing Officer forms a reason to believe on satisfying the twin conditions prescribed under section 147 of the Act that no full and true disclosure of facts was made by the assessee at the time of original assessment and, therefore, the income chargeable to tax had escaped assessment, his belief and the notice of reassessment based on such belief/opinion needs no interference. In the present case, since both the necessary conditions have been duly fulfilled, sufficiency of the reasons is not to be gone into by this court. The information furnished at the time of original assessment, when by s....