AI Drafter 
TaxTMI 
TaxTMI 
2024 (12) TMI 423
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....Spiral E-Systems Private Limited, which has since merged with present assessee. Subsequently, on the basis of search and seizure operations conducted on 2nd January, 2020 in M/s Sushen Mohan Gupta and other group of cases at different business and residential premises of the group, the case of the assessee was also covered and was centralized with DCIT, Central Circle-15, New Delhi. After issuing notice u/s 153A, the assessee had responded by filing the return for the assessment year 2011-12 on 09.09.2021 declaring a loss of Rs. 2,74,57,310/-. Admittedly, during the year under consideration, the assessee was engaged in the business of providing financial and investment services. The case of the Revenue is that during the search conducted in the case of M/s Sushen Mohan Gupta and other group of cases to which the above named assessee company also belongs, incriminating documents in the form of share transfer forms bearing signatures and seals of certain companies were found and seized. Further, the original documents, i.e., application form for equity shares, receipt of shares, confirmation from investor companies, certified true copies of Board Resolutions passed, affidavit for app....
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....ther family members and concerns for a meager amount in FY 2013-14. The AO also observed from the list of shareholders of M/s Spiral E-Systems Pvt. Ltd.,the applicants for shares for this company were also shareholders who had subscribed to the share capital of M/s American Hotels and Restaurants Pvt. Ltd., which was another group company of Sushen Mohan Gupta group. The AO relied the statement of Shri Sushen Mohan Gupta that cash was brought into the books of M/s American Hotels and Restaurants Pvt. Ltd through the above transaction of share capital subscription. The documents found and seized referred at Annexure A-29 was also confronted to Shri Sushen Mohan Gupta and he had stated that his brother Sushant Mohan Gupta were aware of these transactions. Then, a similar set of documents was also seized from Narain Manzil premises and these documents were referred as Annexure A-32 and pertained to M/s American Hotels and Restaurants Pvt. Ltd. The ld. AO had drawn an inference that the shareholders/share capital subscribers of M/s Spiral E-Systems Pvt. Ltd., were same as M/s American Hotels and Restaurants Pvt. Ltd., and, thus, concluded that share application/share capital subscripti....
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....tion of the investor companies does not support the investment made by them. Hence, the creditworthiness/capacity remains unexplained and un-corroborated. b. The source of investment made by the investor companies was examined from the bank statements furnished by the assessee company as well as from the incriminating material contained in Annexure A-29 (total 341 pages). The perusal of the corresponding bank statements reveals back-to-back transactions of same amount, i.e. credit and debit of the same amount on the same date(s)/following date(s) with several other deposits and withdrawals. This observation, clubbed with the fact that the sales and income figures of the investor companies are negligible and don't justify such huge fund transfer transactions in their bank accounts, which along with other observations as mentioned above, clearly suggests that these accounts belong to various entry providing companies and the same were utilized to provide accommodation entries to the assessee company (being beneficiary). c. The investor companies were asked to provide the details of due diligence done by them before investing in assessee company. However, no reply/sp....
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....arn dividends? * Why an investor would invest with an entity about whose business activities he does not have any knowledge? * Why these share applicants/ share capital subscribers invested their purported hard money in such manner which did not yield any return to them? * Why investments would be made with no return yielding entities when there are unlimited other return yield/ventures available? * As a prudent investor no one would like to invest the funds without security. * Investments in private limited companies are just like giving funds to a family concern. Why an investor would impart his investment to such entities? * As to how and from where the assessee company contacted the share applicants/ share capital subscribers about whom it does not know anything? * Whether these share applicants/ share capital subscribers knew the Assessee or any of its Directors? * Whether any meetings of the Assessee company were attended by these share applicants/ share capital subscribers? * Whether any negotiations took place between the share applicants/ share capital subscribers and the Directors of the Asse....
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....y) without any due diligence. No security existed for them for their investments and the same were not freely tradable also. Further, creditworthiness of investors is not proved since the source of funds with these purported investors could not be adduced on record by the assessee company or by these purported investors. As stated earlier, whether or not onus is discharged depends upon facts of each case. It depends on whether the two parties are related or known to each; the manner or mode by which the parties approached each other, whether the transaction was entered into through written documentation to protect the investment, whether the investor professes and was an angel investor, the quantum of money, creditworthiness of the recipient, the object and purpose for which payment/investment was made, etc. These facts are basically and primarily in knowledge of any assessee and it is difficult for revenue to prove and establish the negative. Certificate of incorporation of company, payment by banking channel etc. cannot in all cases tantamount to satisfactory discharge of onus. The facts of the present case noticed above speak and are obvious. Further even at th....
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....) has erred in deleting the addition of Rs. 3,82,00,000/- made by AO on account of share capital and share premium received from 05 investor companies. 2) Whether on the facts & circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition without appreciating the addition has made on the basis of seized material and seized material consists of incriminating documents in the form of original blank unexecuted share transfer forms bearing signature and seals of Investor companies, original blank power of attorney to shares of share capital subscribers signed by their directors, original blank receipts, original blank delivery note etc. 3) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering and giving the findings in respect of blank share transfer forms, blank delivery notes, blank receipt and blank power of attorney duly signed by the investor companies and found from the premises of assessee company during the course of search, making it clear that the investor companies were just a conduit to bring back unaccounted money in the books of the assessee company in the form of share capit....
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..... In the subject proceedings under Section 153A, the Respondent was assessed to tax as the documents seized during the course of a search conducted from 02.01.2020 to 08.01.2020, marked as Annexure A-29 of the seized material, were found to be incriminating by the Ld. AO. The assessee having failed to satisfy the Ld. AO in terms of Section 68 of the Income Tax Act, 1961 as to identity, genuineness and creditworthiness so far as the share application money received by Spiral E-Systems Pvt. Ltd., during A.Y. 2011-12, from five investor companies, additions were made (It is not in dispute that Spiral E-Systems had been merged with the assessee, by an order dated 20.12.2017, and hence, the addition was required to be made in the hands of the assessee). 2. In appeal, the Ld. CIT (A) did not even examine the contents of the seized documents. The short question he posed to himself was whether they were "...incriminating in nature or were merely statutory records/ documents mandatory under the Companies Act...". Once he confined himself to this question, the answer that followed was there was "nothing unusual" as to the seized documents under Annexure A-29 and they were not incrim....
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.... date of search and would have completed all the formalities relating to the said sale under the Companies Act. Hence, the documents found have to be considered from point of view of a shareholder who has sold the shares of the company and the records which the company required to maintain in relating to the said sale..." 7. This finding is also based entirely on conjectures and surmises. Not only this, various other findings in the impugned order have also been returned on conjectures and surmises. For instance, after having held that the documents under Annexure A-29 are "...statutory records..." that had to be maintained by Spiral E-Systems as its shares were sold, and the said documents are related to the said sale, the Ld. CIT (A) proceeds to also observe that confirmations from investor companies "...had been obtained for the purposes of income tax and other proceedings...". This was not even the case of the Ld. AR for the assessee. 8. In ways more than one, as later detailed in this note, the Ld. CIT (A) proceeds to make out a better case for the assessee that even the Ld. AR had himself urged, and thereafter, relying on judgments of this Hon'ble Tribunal, ....
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...., is wholly irrelevant. 11. It is submitted that the belief formed in the mind of the Ld. AO from the seized material under Annexure A29, is very clearly discernible from the assessment order, inasmuch as: a. At page 20 of his order, the Ld. AO points out that while the assessee had at all times contemporaneously held out that it had received a genuine investment from five investor companies, the seized documents give rise to a belief that this is not at all genuine share application money, but money received from entry operators. The Ld. AO specifically points to bank statements seized during the search which reveal several back-to-back transactions of the amount(s) invested by the so-called investor companies in the shares of Spiral E-Systems, i.e. credit followed by debit transactions of the same amount on the same date(s)/following date(s), which gave rise to a belief in his mind that the source of investment never emanated from funds belonging to the said investor companies. (In this context, this Hon'ble Tribunal may bear in mind that no assessment order under Section 143(3) of the Income Tax Act, 1961, in respect of Spiral E-Systems Pvt. Ltd. for A....
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....n Nair v. CIT,(2001) 1 SCC 135 by the Hon'ble Supreme Court of India. 15. There is no gainsaying that the findings returned by the Ld. CIT (A) are also on conjectures and surmises, and without any cogent material. This is plainly impermissible as per the law declared by Hon'ble Supreme Court in DhirajlalGirdharlal v. CIT, (1954) 26 ITR 736. 16. During the course of the hearing, an observation fell from this Hon'ble Tribunal that the Revenue's criticism of the impugned order of the Ld. CIT (A) equally well applies to the order of the Ld. AO as well. With utmost respect, it is submitted that the belief created in the mind of the Ld. AO from the seized documents is discernible from the assessment order and the same criticism therefore cannot apply. 17. Be that as it may, if this Hon'ble Tribunal is still inclined to hold that the order of the Ld. AO is non-speaking, it is submitted that even then the instant appeal may not be dismissed. This Hon'ble Tribunal may, instead, consider laying down parameters on which the seized material ought to have been examined by the forums below and remand the matter to the Ld. AO, to enable him to apply these parameters to ....
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....ay therefore set aside the impugned order and remand the matter to either the Ld. CIT (A) or the Ld. AO, as it considers appropriate, with a direction to evaluate the contents of the seized documents, ascertain their true character, and decide if it has a nexus to the addition sought to be sustained, and the relevance to the belief that income has escaped assessment, in terms of the law laid down in CIT v. Manohar Glass Works, (1998) 232 ITR 302 and Smt. Thakuri Devi v. CWT, (1983) 139 ITR 271. 21. The Revenue is also fortified by principles laid down by a Full Bench of the Hon'ble High Court of Bombay in Ahmedabad Electricity Co. Ltd. v. CIT, (1993) 199 ITR 351, which has been subscribed to by this Hon'ble Tribunal in Shahid Atiq(supra) as set out below, and submits that the first ground of appeal is broad enough to cover all these aspects and enable this Hon'ble Tribunal to carry out this exercise, in view of the expression "thereon" in Section 254(1). In re: "Unusual" features discernible from the contents of the seized documents 22. At the final hearing, the Revenue had also invited this Hon'ble Tribunal to independently apply its mind to the seized m....
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....ed that its assessment was made in the past and therefore all the confirmations may have been obtained then for the purpose of the said assessment proceedings. From the above discussion, quite clearly it comes out that these documents cannot be said to be indicative of any undisclosed income. There is nothing unusual about these documents found with the company. In fact, these are statutory records which the company is obliged to maintain, particularly, when a share transfer place in the name of the investor, and thereafter from the investors to another person..." 24. The cross references of these documents from Annexure A-29, are as under: Application forms: a) Ladliji - Pg. 22 of Paper Book (Seized Material) Vol-I filed by the AR b) Madhav Fincap-Pg. 75-76of Paper Book (Seized Material) Vol-I filed by the AR c) Top-Tech Cables - Pg. 4 of Paper Book (Seized Material) Vol-II filed by the AR d) Pine View Investments - Pg. 59 of Paper Book (Seized Material) Vol-II filed by the AR e) Arrow Equity - Pg. 154 of Paper Book (Seized Material) Vol-II filed by the AR Confirmation upon allotment: a) Ladl....
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....-17 (at p. 58 of Paper book Vol. II filed by the Revenue).Attention is invited to Form No. MGT-7 filed by Spiral for AY 2016-17 (See p. 44 of Paper book Vol. II filed by the Department). * It follows that transfer of shares by Sushant Gupta in favour of DMG Finance and Investment Pvt. Ltd. was done sometime prior to 31.03.2016 (at Pg. 59 of Paper book Vol. II filed by the Department), and not by the so-called investor companies as held the Ld. CIT (A). * The attention of this Hon'ble Tribunal was invited at the hearing to the fact that details of transfer of the subject shares from investor companies were sought by the Revenue in the course of the assessment proceedings for A.Y. 2011-12, but were neither furnished by the assessee, nor by the so-called investor companies. * Details were again sought by the Revenue during the course of the assessment proceedings for AY 2016-17, under Section 153A. Yet again, there was complete silence as is a matter of record (See assessment order dated 30.09.2021 for A.Y. 2016-17 at Pg. 60-69 of Paper book Vol-II filed by the Department). * A fortiori, the seized signed share transfer forms at p. 20-21 of the Pape....
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....able in law as a higher onus is cast on an assessee under Section 68 in matters of private placement to demonstrate the genuineness of the transaction under consideration, inter alia, as per the Memorandum to the Finance Act, 2012. b. Secondly, the Revenue handed over the entire bunch of seized documents across the bar to this Hon'ble Tribunal and demonstrated that it was apparent on the face of it that all these seized documents were signed and executed on the very same day. It was specifically urged that this Hon'ble Tribunal may, if it considers it appropriate to do so, direct a forensic analysis into the entire bunch of documents, since that would leave no doubt that the paper on which all these documents are signed is of the same age and provenance, and even from the ink with which signatures have been affixed, it is clear that the same person signed each one of these documents in one go, on the same day at the same time. This is a complete response to the submission urged by the Ld. AR for the assessee, that the documents being undated, could very well have actually been given in AY 2016-17, making the Ld. CIT (A)'s finding factually plausible. c. Thirdly, t....
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.... of the Indian Stamp Act, 1899 unstamped share applications are impounded on presentation. Section 35 of the Indian Stamp Act, 1899 debars any statutory authority from even "acting upon" such an instrument, till deficit stamp duty and penalty, as assessed thereon, is recovered. This bar cannot even indirectly be circumvented, as emphatically held by the Hon'ble Supreme Court of India in Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao, (1971) 1 SCC 545. d. Fourthly, the Ld. CIT (A) there is "nothing unusual" in the seized documents flies in the face of settled law that beneficial interest in these shares stood duly transferred to the ultimate beneficiary by the investor companies, as borne out from their contents. The Ld. AO in the assessment order, had clearly held that this is something no prudent investor would do, but an accommodation entry provider would certainly do so at the behest of the ultimate beneficiary. The Ld. CIT (A) fails to appreciate that even though the register of the company may later have been rectified pursuant to allotment, still: i. As per E.D. Sassoon & Co. Ltd. v. Patch, (1943) 45 Bom LR 46, in a situation such as the one at hand, the t....
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....luded the confirmation of receipts from sale of shares (for instance, at Pg. 25 of Paper Book (Seized Material) Vol-I in the case of Ladliji). This is again something no prudent investor would do, but an accommodation entry provider would certainly do so, at the behest of the ultimate beneficiary, as held by the Ld. AO.The fact that Ladliji, for instance, is giving a signed blank receipt (at Pg. 39 of Paper book (Seized Material) Vol-I filed by the AR) at the time of applying for the shares quathe amounts to be received for full and final sale proceeds of those shares, is incriminating as no genuine investor would issue such a document, but an entry provider would. This confirmation of receipt has to be appreciated with the Delivery Note (See p. 40of Paper Book (Seized Material) Vol-I) which no bona fide investor would issue, not knowing whether at all if he would ever be retransferring the shares, and if so, when, and at what consideration. An entry provider would however give a blank but signed form, with a seal, at the time of providing the share application money itself, as held by the Ld. AO. Leave aside the fact that no explanation is forthcoming as to why a....
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....ed it "to transfer any of the said shares to any person or persons or Corporation whether on sale or otherwise..."which cannot be unilaterally revoked, and therefore does confirm the transfer of beneficial interest and securing of the interest of the beneficiary as explained above. This further demonstrates the unsustainability of the finding of the Ld. CIT (A). In contrast, at page 33 of the assessment order, the AO has clearly observed that the assessee could not provide any explanation as to why blank but signed irrevocable power of attorney of the authorized representative/director of the investor companies was found at its premises. This fact has to be appreciated with the seized share transfer forms as it clearly gives rise to a belief that right from the time of transfer of share application money, a beneficial interest had simultaneously been created in favour of the ultimate beneficiary, which an entry operator would have no reservations in creating, as was held by the Ld. AO. g. Seventhly, it is submitted that there is no statutory provision requiring an assessee to maintain the following documents that were seized, and neither the Ld. CIT (A) has identified any ....
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....s pertaining to the company "...Similarly, an affidavit for allotment of shares; power of attorney, abstract of resolution passed, list of directors are all records pertaining to the company and an affidavit for allotment of shares can even be for the purpose of the shareholders which can be kept by the company as a confirmation by the shareholders to be filed for statutory proceeding..." 27. The cross references of these documents from Annexure A-29, are as under: Affidavit for allotment of shares: a) Ladliji -Pg. 34 of Paper Book (Seized Material) Vol-I filed by the AR b) Top-Tech Cables - Pg. 7 of Paper Book (Seized Material) Vol-II filed by the AR c) Pine View Investments - Pg. 61, 144 of Paper Book (Seized Material) Vol-II filed by the AR d) Arrow Equity - Pg. 157 of Paper Book (Seized Material) Vol-II filed by the AR Power of Attorney: a) Ladliji-Pg. 36-38 of Paper Book (Seized Material) Vol-I filed by the AR b) Top-Tech Cables - Pg. 9-11of Paper Book (Seized Material) Vol-II filed by the AR c) Pine View Investments - Pg. 63-66, 146-148of Paper Book (Seized Material) Vol-II filed by the ....
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....raises a suspicion on the genuineness of the very transaction." d. Fourthly, to the extent the Affidavit (for instance, at Pg. 34 of Paper Book (Seized Material) Vol-I) is shorn of material particulars, such as Share Certificate No./Distinctive No., etc.,it could not have been used for any statutory proceedings, which demonstrates yet again, the utter perversity of the impugned order passed by the Ld. CIT (A). e. As far as the fact that blank but signed irrevocable power of attorney belonging to, and signed by the authorized representative/director of the so-called investor companies is concerned, it has been demonstrated hereinabove that investor company has already appointed Spiral as its agent from the outset, and authorised it "to transfer any of the said shares to any person or persons or Corporation whether on sale or otherwise..." which cannot be unilaterally revoked, and thus does confirm the transfer of beneficial interest and securing of the interest of the beneficiary as explained above. This is to be appreciated in view of the fact that the assessee has failed to explain as to why the blank but signed power of attorney was unearthed in the premises of ....
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....re never even allotted. This further begs the question - were 14,600 additional fresh shares ever issued by Spiral, so as to be capable of being allotted to any person, much less Ladliji? From the records that are publicly available, this does not seem to be the case. Only an entry operator will issue a certificate reflecting allotment of shares that do not even exist, in law. 31. Nowhere in the impugned order does the Ld. CIT(A) even advert to this seized document which is incriminating in nature. This document yet again gave rise to a belief in the mind of the Ld. AO that the source of investment never emanated from funds belonging to the said investor companies. Contrary to the submission of the Ld. AR for the assessee that the test identity was proved as soon as the five investor companies were served for purposes of Section 133(6), the true test of identify as held by the Hon'ble High Court of Delhi in CIT v. NR Portfolio, [2014] 42 taxmann.com 339, is the real and actual business undertaken. It is submitted that till date, no material has been brought on record as to what was the real business undertaken by the so called five investor companies. Even if money was rec....
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....come, would constitute an 'incriminating material' sufficient to make assessment for the purposes of the Act..." 37. It is submitted that Section 153A does not employ the expression "incriminate". In point of fact, this expression is not defined anywhere in the Income Tax Act, 1961. The question as to whether a document "incriminates" has to be considered in the facts of every single case, contextually, having regard to the income disclosed by the assessee in its return, and the belief to the contrary created by the seized material. For the purpose of Section 68, "incrimination" has to be appreciated from the lens of the belief created by the seized material which dislodges the initial burden of proof and shifts the burden on the assessee to establish on the basis of matters especially within his knowledge, the aspects of identity, genuineness and creditworthiness. 38. In appreciating the phraseology employed in Section 153A, due regard must also be had to the background/mischief for which purpose it was enacted. Till 1995, in respect of income that had escaped assessment, the one machinery provision was of Section 148. When the mechanism of block assessme....
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....sing officer is under a bounden duty to assess the total income of the assessee, even when the return filed, was processed in terms of Section 143(1), or when an order of assessment was actually passed in terms of Section 143(3): "20...A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3). If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the restrictions imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub-section (1) of Section 153A opens...With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case i....
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....rmed regarding income having escaped assessment...". In re: Extracts from the pen drive placed on record in terms of Rule 29 44. The Revenue is not relying on the extracts from the pen drivei, produced in terms of Rule 29, to establish/make out jurisdiction for purposes of Section 153A. It is submitted that the 341 pages of seized documents is more than sufficient for that purpose. 45. Once the door of Section 153A however opens, the Revenue, while assessing total income, cannot be precluded from considering any other material that is otherwise available on the record, to substantiate any addition sought to be made/sustained. 46. The Revenue has placed on the record the extracts from the pen drive, and respectfully submits that this would have to be considered by the Ld. CIT (A), in the event it succeeds in the present appeal. It is submitted that even though jurisdiction is being assumed on the basis of the incriminating documents under Annexure A-29 alone, to restrict the ability of the Revenue to rely on the pen drive material before the Ld. CIT (A), if it succeeds in this appeal, would tantamount to rewriting Section 153A by unnecessarily whi....
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...., which the learned 1st appellate authority, has not found to be incriminating material. Therefore, by way of this application revenue intends to file pendrive that was received from the directorate of enforcement subsequent to search action and which will help establishing certain incriminating facts. Learned special counsel has submitted that the learned AO had found annexure A-29 sufficiently in committing and did not refer to other material which was otherwise available and need to refer to the said material has a reason only after the impugned order of Ld. 1st appellate authority. We find that 2 separate paper books have also been filed which have certain documents including which were part of seized material as annexure A-32. 8.1 The merits of this application can be conveniently discussed at later stage having considered the rival submissions in regard to the issues before this bench. 9. Accordingly, we first take up the merits of the grounds and for that we have carefully gone through the material before us and the submissions of learned representatives of both the sides. To be fair to the Shri. Debesh Panda, Ld. Spl. Counsel for the department, we have reproduced his....
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....the learned Spl. counsel for the Department has relied the ratio of Hon'ble jurisdictional High Court, in the case of Dayawanti v. CIT (2017)390 ITR 496, to argue that once the seized material gives rise to 'belief' in the mind of the assessing officer, then that is sufficient to consider the 'seized material' to be 'incriminating material' and that CIT(A) was wrong in the approach having presuppositions that unless a document carries a stamp of incrimination on its forehead, its contents need not be examined and the belief created thereby, is wholly irrelevant. 13. In this context only, it was argued, that this 'belief', was sufficient to transfer the onus of rebuttal of this 'belief' on the assessee for the purpose of section 68 of the Act. Despite being very generous to all the contentions of ld. Spl. Counsel for the Department, we fail to agree with the same. We are of the considered view that the 'seized material' can be considered to be 'incriminating material' for the purpose of section 153A of the Act, when the fact in issue, is established by the direct evidence from some of the content of the document itself. If it is a question of establishing the fact in issue by cir....
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....re spilling out of the disputed documents. The assessing officer seems to have been convinced himself on his understanding of the seized documents that as the seized documents are generally used for transactions of bogus share capital receipt so they are incriminating material for the purpose of search assessment. 17. It can be observed from the impugned assessment order that same is marred by use of language which in no manner would suggest that any document was specifically examined in its nature or contents to give the finding that as to how that seized document is 'incriminating material'. Except for inferences and presumptions, drawn on assessing officer's own prudence, the conclusion was arrived. 18. In this context we note that the assessing officer has drawn an inference on the basis of some shareholders being common with another company to make it 'evident' that both the company's investments bear the same colour and nature. Ld. AO has also half heartedly relied the statement of Sh. Sushen Mohan Gupta recorded under section 132(4), but without actually bringing on record of assessment order as to what was incriminating against the assessee company. The relevant part ....
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.... subscription was outrightly discarded by the assessing officer by following observations at the concluding part of page No. 10 and beginning of page No. 11 as follows:- "As per para 4(a) of the above submissions, the assessee has contended that the documents seized as annexure A-29 are not incriminating in nature and there was no evidence of any cash given for share capital subscription. In this regard, the issue is being elaborately discussed in subsequent paras. However, to give a quietus to the aforesaid contention of the assessee, the very fact that original blank unexecuted share transfer deeds/share transfer forms, original blank power of attorney to sell shares of share capital subscribers signed by their directors were found as part of the seized annexure A-32. If, these are not incriminating, what else is incriminating In the present case, as already and subsequently discussed, there were specific and clear incriminating material which in light of circumstantial evidence and human probability would only render the assessee (lest there is lack of prudence), answerless. As per para 4(b) of the above submissions, the assessee has contended that the document....
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....tance of something which is true or correct. Else it is merely surmises and conjectures which cannot be basis to hold the seized material be incriminating and which fails to pass the rigour of tests for completing a search assessment on basis of incriminating material. 21. It can be observed from the impugned assessment order that assessing officer has laid more emphasis on the examination of the reasons for investment, financials of the investor companies, their assets, taxable income etc., for drawing a conclusion that investor companies were shell companies and based upon this conclusion a backward flip is taken to draw an inference that existence of the disputed documents and the possession with the assessee makes these disputed documents 'incriminating material' for purpose of section 68 of the Act. 22. We are of considered view that it is only after establishing that seized material is incriminating the same can be relied for the purpose of seeking an explanation from an assessee for the purpose of section 68 of the Act. However, here in the case in hand the assessing officer has first examined the veracity of the investment and then concluded that the seized material i....
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....Court of India in Sumati Dayal Case(supra), as relied by Ld. AO, was not in regard to search assessment. Similarly the assessing officer has relied on judgement of Hon'ble Supreme Court of India in Pr. CIT v. NRA Iron and Steel Pvt. Ltd. (supra) and same is also not in an assessment under section 153A of the Act. This helps us to also take up the proposition of ld. Spl. Counsel for the Department, that the scope of search assessment cannot be narrower but is in fact wider than the case of reopening assessment. This proposition has no legs to stand as without doubt the scope of search assessment is narrower and for that reason Hon'ble Supreme Court of India in the judgement of PCIT vs Abhisar Buildwell P. Ltd. [Civil Appeal No. 6580 of 2021] dated 24.04.2023 has left the revenue with an alternate remedy of reopening assessments in cases where there is no incriminating material to conclude the search assessment. 25. The ld. Spl. Counsel for the Department has also strenuously argued that on the facts of the case, this Tribunal is empowered to rectify the errors/deficiencies/lacuna in orders passed by the forums below after independently examining/considering all the incriminating ....
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....not applied its mind to any of the contents or the specific nature of the disputed documents and there consequences for building a case based on incriminating material. The learned assessing officer seems to have been driven more on doctrine of Res Ipsa Loquitur, which is a latin phrase that means the 'facts speaks for themselves'. No attempt was made to examine the disputed documents individually to bring forth a case as has been casted before us by the learned spl. counsel for the Department. 30. Now if the Department wants to succeed before us on the grounds as raised the burden was to show that though the learned assessing officer had done his work but the ld. 1st Appellate authority has fallen in error in not appreciating the contents of the disputed documents in right prospective as was done by the learned assessing officer. However, that seems to be not the case of the Department and the learned counsel for the Department asserts that even if assessing officer had erred the learned CIT(A) should have examined the disputed documents independently to establish as to how the disputed documents were incriminating material for the purpose of search assessment. 31. However, ....
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....rther enquiry into questions of fact which touch the question of assumption of jurisdiction under particular sections of the Act. 33.1 The attempt of Department to now improve the case further by bringing on record certain part of seized material not at all relied by the learned assessing officer or which was subsequently received from enforcement directorate cannot be sustained and this material cannot be considered additional evidences so as to be admitted and considered or to be sent back for verification. The additional evidences can only be accepted from and Appellant in support of the claim or defence already on record or additional plea accepted to be considered. However, the revenue cannot come up with the plea of examining the issue of incriminating material afresh on pretext of relying additional evidences. 33.2 Taking a call upon the contentions of ld. Special Counsel about the seriousness of the issues involved due to the background of the search operations, we also considered the contents of the complaint filed by the Directorate of Enforcement made available in the form of additional evidence from page No.181 to 304. We find that at internal pages No.82 to 90, o....
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....undisclosed income of the assessee company. 33.5 This establishes that the assessing officer seems to have been driven by a 'borrowed belief' arising out of the examination of transactions by the Enforcement Directorate. Nothing was found specifically implicating the Spiral E-Systems Pvt. Ltd. or any investor company or Shri Susant Mohan Gupta. The fundamental principle of assessment being of taxing real income even if under the deeming provisions seems to have been ignored and on a principles of alchemy, all the transactions around Shri Sushen Gupta and M/s American Hotels and Restaurants Pvt. Ltd. were considered tainted. 33.6 Accordingly we also find no merit in application dated 18.10.2024, filed under section 254(1) of the Act on 18.10.2024, by the appellant department and same is hereby dismissed. 34. We are equally inclined to accept that the seized materials which included the alleged incriminating material were primarily statutory records required to be maintained under the relevant Companies law provisions. These alleged incriminating material were also of the nature which any assessee would have kept as record of past transactions or for future convenience refer....
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....f) Index Securities Pvt. Ltd. (86 taxmann.com 84) g) Therapeutic India Pvt. Ltd. (ITA No. 4515/Del/2012 h) M/S. Brahamputra Finlease (P) Ltd. V DCIT, ITA No. 3332/Del/2017 59 35. There is no substance to allege that the learned CIT (A) proceeded on a predetermined notion to hold their was nothing unusual about the documents. Learned sr. counsel for the Department has vehemently stressed that on the point that on the basis of seized material a belief had formed in the mind of assessing officer, however, when such belief is not exhibited in the form of reasoning such belief is of no consequence and learned 1st appellate authority was justified to hold that merely because of possession these disputed documents will not become incriminating material. The findings of learned 1st appellate authority cannot be said to be on conjectures and surmises rather the same applies to the assessment order as framed. There is no substance in the contention of learned counsel appearing for the Department that the learned 1st appellate authority has proceeded to make out a better case for the assessee and for that reason the impugned order should be held to be erroneous. Rather we....