TaxTMI 
TaxTMI 
2026 (2) TMI 61
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....nk account no. 910010004736234 in the name of the assessee with Axis Bank Ltd. was also searched. A copy of second panchnama is at pages 6 to 9 of the paper book. Consequent to the search, assessment in the case of Mohan India P. Ltd. for AY 2013-14 was completed vide assessment order dated 31.03.2016 u/s. 153A/143(3) of the Act, with NIL addition. On the basis of same search, assessment for AY 2014-15 in the case of assessee was completed making addition of Rs. 473,71,00,000/-. Aggrieved by the assessment order dated 31.03.2016, the assessee filed appeal before the CIT(A), inter alia assailing addition on merits as well as on legal grounds. The CIT(A) vide impugned order reiterated findings of the Assessing Officer and dismissed appeal of the assessee. Hence, the present appeal by the assessee. 3. Shri Mohit Gupta appearing on behalf of the assessee, challenging validity of search submits that the panchnama dated 24.10.2013 was drawn in the name of bank account no. 910010004736234 and not in the name of assessee. Search cannot be in the name of a bank account it should be on the person/holder of said bank account. To support his submissions, he placed reliance on the decision i....
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....each director holding it as the income under section 2(24)(iv) of the Act. 3.3. The first plank of argument made by ld. AR of the assessee is that income can be charged only if it falls under any of the heads of income specified in section 14 of the Act, i.e. the charging section. In the Assessment Order the AO has made addition u/s. 2(24)(iv) of the Act which is a section for the definition and not the charging section. Only provisions of section 2(24)(iv) of the Act cannot be invoked for making addition. In first appellate proceedings the CIT(A) has sustained the addition by giving the passing reference of section 28(i) of the Act stating the since these receipts were in the nature of business receipts of the group companies hence the same would be treated as the income of the assessee of same nature. He asserted that for any addition to be valid in assessment, it must not only fall within the definition of income, must also be chargeable to tax under the charging provision. To support his argument he placed reliance of the following decisions: - CIT vs. Rajan Nanda 349 ITR 8 (Delhi); and - Nanikant Ambalal Mody vs CIT 61 ITR 428 (SC). 3.4 Next ld. AR of t....
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....details of siphoning off of funds by the assessee, except in the last paragraph where the name of the assessee has been mentioned along with the name of Jai Shankar Shrivastava. He contended that in similar manner with regard to purchase of gold and immovable property no finding has been given by the Assessing Officer that the assessee purchased any gold/immovable property by the assessee for his personal benefit. 3.8. The ld. AR submitted that despite the fact that the AO while passing the assessment order for AY 2013-14 has rejected books of the company, makes no addition in the income returned. Likewise, in the case of Tavishi Enterprises P. Ltd. and Brinda Commodities P. Ltd. verbatim assessment orders have been passed, books of account rejected, NIL addition was made. The AO in the respective assessment orders of the three company's records finding that the investment in immovable property/gold, etc. have been made by the respective companies. Whereas in the case of assessee, the AO has accepted books of account of the assessee and still makes addition alleging siphoning off funds from the accounts of M/s. Mohan India P. Ltd., Tavishi Enterprises P. Ltd. and Brinda Commodit....
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....as not only relied on material seized during search but has also made independent enquiries and has recorded the statements of various persons on oath. The analysis of fund flow clearly establishes that monies were paid without corresponding delivery of goods - an arrangement which squarely falls under mischief of section 2(24)(iv) r.w.s 28(iv) of the Act. The transactions have been rightly taxed by the AO as Business Income of the assessee. The funds siphoned off from NSEL represents income in hands of the assessee and not merely a liability repayable to NSEL by the company. The ld. DR placed reliance on the decision rendered in the case of Ketan Parik vs. UOI 134 Taxman 234 (Bom) to contend that circular fund movement to camouflage real income can be unraveled by lifting the corporate veil and taxing the substance of transaction. 4.2 The ld. DR asserted that addition of Rs. 473.71 crores u/s. 2(24)(vi) of the Act is fully justified in law and facts of the case. The assessee either directly or through its group entities has received funds from NSEL without any commensurate obligation. The doctrine of real income is not applicable in situation where the benefit has accrued and v....
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....appeal are dismissed being devoid of any merit. 7. In ground of appeal No.6 & 7, the assessee has assailed validity of assessment order as the same has been passed u/s143(3) of the Act instead of section 153A of the Act. The date of search is 26/8/2013, therefore, AY 2014-15 is the year of search. The provisions of section 153A of the Act (as they were applicable to assessment year under appeal) provides that the AO shall issue notice to the person searched u/s 153A to furnish return of income in respect of six AY immediately preceding the AY in which search was conducted. Thus, the assessment for immediately six preceding AY shall be made u/s 153A of the Act and the assessment for the year of search shall be made u/s 143(3) of the Act. Thus, the assessment has been rightly framed by the AO for AY 2014-15 u/s 143(3) of the Act. The ground of appeal 6 & 7 are dismissed being devoid of any merit. 8. The assessee in appeal has raised as many as 17 grounds. Ground no. 9 & 10 are the primary grounds assailing addition of Rs. 473.71 crores u/s. 2(24)(iv) of the Act, rest of the grounds are argumentative and are support of ground no. 9 & 10. 9. At the outset, we would like to obs....
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....Jag Mohan) is that the affairs of the companies i.e. M/s. Mohan India P. Ltd. and Tavishi Enterprises P. Ltd. are managed by Jai Shankar Shrivastava. Jag Mohan in his statement recorded on 22.08.2013, has categorically stated that Jai Shankar Shrivastava is dealing with the two companies M/s. Mohan India P. Ltd. and Tavishi Enterprises P. Ltd. and is not aware about day to day working and trading of the said companies. It is not emanating from the assessment order that this fact was at any stage rebutted by Jai Shankar Shrivastava. There is no conflict or contradiction in the said statement made by the assessee. 12. The AO in assessment order has observed that the money received by Mohan Group of companies from NSEL for purchase of commodity i.e. sugar has been diverted by the Directors for their personal gains and investments. From perusal of statement of Jag Mohan post search, it emerges that the money received from NSEL was utilized for investment in properties etc. as there was no check on the manner of utilization of NSEL funds. However, it is not conclusively proved that the entire amount of Rs. 947.71 crores was diverted by the Directors and in particular the assessee. Si....
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....n so far as remaining properties at Sr. no. 2 to 6 name of the purchaser was not disclosed in the statement. At the same time, no enquiry was conducted by the Assessing Officer to find the name of beneficial owner of the remaining five properties at Sr. No. 2 to 6. There is no positive finding of fact by the AO that any of the properties mentioned in the above table are in the name of the assessee or the assessee is the beneficial owner of any of the above properties. 14. We find that the AO in the assessment order has observed that, "from perusal of the bank statement it was seen that the assessee has advanced huge money to the following person". The AO, thereafter, has tabulated the name of the parties (70 nos.) and amount (aggregating to Rs. 208.835 crores) to whom advances were given. Since, the assessment order in the case of assessee is copy of the assessment order passed in the case of company in Ay 2013-14, it is not clearly emerging that the expression "assessee" used by the AO refers to Mohan India Ltd. or Jag Mohan. Nevertheless, from the context in which it is used, it would be apt to presume that the bank statement referred to in the assessment order is the bank sta....
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....2013-14. Further, the AO observed that immovable property of Rs. 6.66 crores was purchased in AY 2013-14 and Rs. 10.58 crores was purchased during AY 2014-15. On the one hand, the AO has rejected books of account of the companies and on the other he is referring to the same books to hold that investment in gold and immovable properties were made. Be that as it may, no adverse inference can be drawn on such investments when the same have been made in the name of the company and have been reflected in the books of the company. 18. The Assessing Officer has tried to make out a case of syphoning of funds by the Directors of the Mohan Group of Companies. The assessee being one of the Director has been attributed with usurping 50% (Rs.473.71 crores) of the Total funds received NSEL (Rs.947.42 crores). The Assessing Officer made addition u/s 2(24(iv) of the Act. The said section defines "Income". The same is reproduced herein under:- "(24) "income" includes- (iv) the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has substantial interest in the company, or by a relative of the ....