TMI Blog2018 (2) TMI 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ch material and, therefore, could be used in making addition even in case of unabated assessment. These statements were recorded on 13.11.2014 i.e. after completion of the search on 07.11.2014, therefore, these statements were not material found during the course of search. However, nowhere in these statements transactions which took place between the assessee and M/s Uniworth Agencies Pvt. Ltd. were impeached and no evidences were brought on record to show that cash was received from the assessee company by the said M/s Uniworth Agencies Pvt. Ltd. in lieu of cheque issued by that company to the assessee company. Most importantly it is not in dispute that the assessee company was not allowed any opportunity to cross-examine the two makers of the statements before using the same against the assessee. CIT(A) observed that lack of opportunity to cross-examine the operators is not fatal to the addition made by the AO. CIT(A) is contrary to the decision in case of M/s Andaman Timber Industries Vs. CCE [ 2015 (10) TMI 442 - SUPREME COURT] wherein held - According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the assessee were relied upon; no opportunity of cross examination was provided to the assessee which is in defiance of the settled principles of justice based on judicial judgment of the Apex Court in the case of Andaman Timber Industries vs CCE. 4. That the learned CIT(A) erred in relying upon the statement of third parties without providing copy of the said statement and without according opportunity of cross examination to the appellant although the impugned statements could not have been relied upon in proceedings u/s 153A of the Act when no incriminating document was found in the course of search. 5. That the order of the Ld. CIT(A) being not based on the facts of the case of the appellant and being contrary to law, should hence be quashed and the appellant Company be given such relief or reliefs as prayed for. 6. That the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds 3. The facts and issue involved in all the grounds of appeal are common, hence, they are disposed of together as follows :- 4. Brief facts of the case are that the assessee is a company. It derives income from bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks. The names of such companies and person which are part of the chain through which the amount repaid by the assessee was routed are as under: 1. Bhima Agencies Pvt Ltd, 2. Topline Investment Consultant Pvt Ltd. 3. Dalmia Investment Development Ltd. 4. Blackberry Projects Pvt Ltd. 5. Panghat Textile Pvt Ltd. 6. Dream Commodeal Pvt Ltd and 7. Ashok Kumar Kayan (Share Broker) 8. The AO further observed that the profit and loss account, Balance Sheet of most of these companies as per the above listed concern were analysed and found that no business is being run by them. They are only involved in receiving investment from certain similar companies and making investment as share capital in other companies. There is no normal business rationale involved in such transactions. He further observed that in the above context assessee was requested to show cause as to why the said amount claimed to have received during the A.Yrs. 2012-13 (₹ 6,67,00,000/-) and 2013-14 (₹ 3,06,00,000/-) should not be treated as not genuine and thus unexplained. In reply to the show cause notice, the assessee contended as under :- 6.4 Assessee in his submission submitted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,99,38,000 3,75,58,000 36,58,000 (d) The identity of the investor company namely Uniworth Agencies Pvt. Ltd. has been established, genuineness of the transaction has been proved as all the transactions are through Bank. Even the detail source of investment in the hands of Uniworth Agency Pvt. Ltd., has been explained with documentary evidences. Credit worthiness has been established and hence the assessee has discharged its onus on the transactions. (e) The alleged statement recorded from Mr. Garg Tharad was not a voluntary statement and merely got signed from them on pressure. Statement was self contradictory. (f) The assessee company has neither started any business nor a single rupee of revenue is there and hence question of unaccounted money in the hands of assessee does not arise at all. Similarly in the entire SGBL group neither any incrementing document was found nor was any source tresses leading to unaccounted generation of cash. Hence the allegation that the receipt is unaccounted money of assessee routed through Kolkata Company is completely baseless. 9. The AO after considering the above submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction between the assesesee and Uniworth is akin to all type of such transaction in the case of accommodation entry providers. In all such type of transaction accommodation entry is provided by companies having all the proper details in compliance to the ROC and the bank account is used to conduit the fund without any justification of transfer of such huge sum. All these companies have no recognisable real business and their balance sheet show huge share capital and equivalent amount of investments. The activity of such share holders and investment companies are all of same nature. 11. The AO further observed that this is the common modus operandi of Kolkata based shell companies. Here, unaccounted cash is routed through several layers to reach the intended beneficiary. This is explained at length by the statement of two such entry operators viz. Raj Kumar Tharad and Pradeep Garg, who are based in Kolkata. Relevant part of the statement of those two persons are reproduced below : Raj Kumar Tharad: Q.6 what work is done by Midas Capital Pvt. Ltd and uniworth Agencies Pvt.Ltd. Ans. Sir, actually they all are Jamakharchi Companies. Myself is the director in above c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferring it to my companies through cheques. We used to deposit the cheques in my companies for raising share capital. Finally, Raj kumar Tharad used to sell these companies to beneficiaries in lieu of commission. Q.10 Please explain to whom you have sold company of Midas Capital Pvt. Ltd and Uniworth Agencies Pvt. Ltd. and what was the modus operandi? Ans;-These companies were taken over by one Mr. Sunil Gupta of Cuttack, Odisha. The companies were transferred by way of share transfer to Sh. Sunil Gupta and his group companies. Sh. Sunil Gupta approached me in 2010 and handed me cash. This cash was handed over to several of my dummy concerns. The money after travelling through several of my companies controlled by my got deposited into the books of SGBL (India ) Ltd and other group companies controlled by Sunil Gupta. Q.11. please provide the details of money trail used to in depositing cash and routing it back to Companies like Midas Capital Pvt. Ltd and Uniworth Agencies Pvt. Ltd ? Ans: I will provide it later on. However, the cash was deposited in various concerns which after travelling several layers reached companies like Singnet Vinimay Pvt. Ltd, Scope Vyapaa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transactions are genuine. The mere fact that the transactions were entered into by way of account payee cheques is also not conclusive and cannot be held to be sacrosanct. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence. The same view had been adopted by the Hon ble Delhi High Court in the case of the CIT Ks Durga Prasad More (1971) 82 ITR 540 and stated that. It is true that the apparent must be considered real until it is shown that, there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise ic will be very easy to make self- serving statements in documents either executed or taken by a party and rely on those recitals. If all that on assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present, case to show that the apparent was not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuineness of the transactions, was of the opinion that the credit of ₹ 6.92 crores shown as advance and credited in the books of the assessee company is unexplained and added to the returned income of the assessee u/s.68 of the Act. 17. On appeal, the CIT(A) observed that the assessee has contested that no incriminating material was seized and therefore no addition can be made in assessment u/s.153A of IT. Act, 1961. It is seen from the assessment order that the assessing officer has relied upon seized tally accounts in framing the assessment order. The assessing officer has also relied upon the statements of Rajkumar Tharad and Pradeep Garg, the alleged entry operators, recorded on 13.11.2014. Therefore, the submission of the assessee that no incriminating material is available is incorrect. The decisions relied upon by the assessee are of no assistance to assessee, as the facts are different. 18. The CIT(A) further observed that the judicial opinion in the latest judgments is that under section 153A/153C of I.T.Act, 1961, the assessing officer is empowered to make addition even without any incriminating material being available against the assessee. In this regard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer asked the assessee to produce the directors of Uniworth Agencies Pvt Ltd before him for examination. The assessee could not produce directors of Uniworth Agencies Pvt Ltd. Considering these aspects the assessing officer has held that the assessee has failed to establish genuineness of the loan transactions and identity/creditworthiness of the creditors. He further observed that during the course of the appeal proceedings the assessee has stated that all the loans have been routed through the banking channels. The assessee has further stated that Uniworth Agencies Pvt Ltd had its own share capital of ₹ 11.17 crores and the loan has been given out of this funds. It is further contested by the assessee that an assessment has been made in the case of Uniworth Agencies Pvt Ltd and the share capital of ₹ 11.17 Crores has been assessed to tax in the hands of Uniworth Agencies Pvt Ltd, from where the loans have been given to the assessee. The CIT(A) observed that he has carefully examined the assessment order and submissions of the assessee and found that an amount of ₹ 6,92,00,000/- was received from Uniworth Agencies Pvt Ltd. The onus to prove bonafides of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevance to firstly lay down in brief, the facts of the case of the appellant relevant to the said case: FACTS OF THE CASE: 1. The Assessee is a Private limited company incorporated in the year 2003 with an object of construction of residential/ commercial building apartments, complex malls along with real estate development for it's commercial exploration. The current registered office of the Assessee is at C/o: B. P. Shukla, D-2227JndiraNagar, Lucknow, Uttar Pradesh-226016 .The Income tax Returns of the Assessee company are duly being filed from this registered office address of Lucknow at JCIT, Range-1, Lucknow, with PANAABCE4000A. Prior to this, during the A.Ys 2012-13 and 2013-14, being the years under appeal before your Honours, the registered office of the Assessee company was at B 53 Sector A, Mahanagar, Lucknow, Uttar Pradesh-226001 . The said office was changed to the current registered office after all due formalities with the ROC. 2. For AY 2012-13, the Assessee has filed the Income tax return u/s 139(1) on 30-09-2012 declaring Nil income and for AY 2013-14, the return was filed on 01-10-2013 declaring the Nil income. 3. Subsequently on 6thAu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A), the Assessee has filed an appeal before Your Honours 9. In view of the same, the Assessee hereby makes the following submission before Your Honours setting out the facts and the reasons why the proceedings initiated u/s 153A of the Act is not as per law and hence the entire proceedings are liable to be quashed. SUBMISSIONS: 1. Stating the particular facts of the additions made, it is stated that in the year 2008, the Assessee company was able to get a piece of land from the Cuttack Development Authority (CDA) for which a 10% Emd deposit of ₹ 2,12,57,280/- had been made. 1.1 The cost of the said land being very high, efforts were made to mobilize funds from various parties. The Assessee company raised a total sum of ₹ 21,94,75,000 in FY 2011-12. Out of this, a sum of ₹ 6,92,00,000/- was received from Uniworth Agencies (P) Ltd. as advance from customer against development of upcoming projects. The same was duly recorded for in the books under the head Advance from prospective buyers‟. A sum of ₹ 3,06,00,000/- was raised from Uniworth Agencies (P) Ltd in FY 2012-13 and the same was also duly recorded in the regular books. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kanayan Agro (vii) Shree ChakanayanTradelink (P). Ltd (viii) Omkara Associates (P). Ltd (ix) Kamadhenu Trading Co. (x) Midas Capital (P) Ltd (xi) Sai Enclave Copy of the said Panchnamas are enclosed at pages 31-44 of the Paperbook for AY 2012-13. In the said search premises, certain tally accounts all forming part of the regular accounts of the Assessee Company were found. All these accounts were very much the regular books of accounts of the Assessee, all duly recorded and disclosed as such in the Regular books of accounts and covered in the Returns filed u/s 139(1) of the Act. 3.2 As seen from above, along with other names, the name of the Assessee company also appeared on the said Panchnama. Based purely upon the said Panchanama, in the absence of any incriminating material, notice u/s 153A of the Act dated 29/04/2015 was issued on the Assessee company for the A.Ys. 2012-13 and 2013-14. However, it is to be noted here that no search proceeding was conducted at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 ; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years ** ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the history of the legislations in relation to search proceedings and assessments, it is stated that since the commencement of the Income Tax Act, 1961 there was no separate procedure for assessment of search cases. Prior to 31st May 1995 there were no special provisions for assessment of search cases. Assessments were governed by the regular provision of the I.T. Act as applicable to relevant assessment year as prevailing then. Assessments were used to be reopened having recourse to the provision of section 147 of the Act. However a provisional order u/s 132(5) used to be passed for release of seized assets. 4.3 Thereafter, with effect from 1st June 1995, scheme of block assessment in section 158BC and 158BD as per chapter XIVB of the Act was introduced. The main purpose of introducing block assessment scheme was early finalization of search assessment and reduction in multiplicity of proceedings. In this scheme, the assessment was to be made on the basis of seized documents only. There was no scope for disturbing regular assessments. Although there were some analogizes and differences of opinion in some of the provisions of the scheme, however, within the span of about eight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 153A of the Act it would be necessary to comply with the provisions contained under section 132(1) of the Act. Once the warrant of authorization or requisition is issued and search is conducted, Panchanama is drawn, the completed assessments for all the relevant years would get reopened irrespective of whether any incriminating material is found or not in relation to a particular assessment year. 5.1 It is clearly inscribed in the law that an assessment u/s 153A is different from regular assessment. The section comes into play only when a search is initiated u/s 132 or books of account, other documents or any assets are requisitioned u/s 132A after 31.5.2003. Also to be highlighted that it is during the course of search itself, such generally incriminating documents or papers etc. or unaccounted assets are found. 5.2 If the AO is allowed to assess / reassess the total income for all six assessment years as per first proviso to section 153A, in contradiction of the second proviso, particularly when there is no incriminating material etc., then the same will not only multiply assessment proceedings but will multiply even the appellate proceedings. Obviously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legislature is clear that any appeal, revision or rectification proceedings, if pending as on the date of search shall not abate. Accordingly, as far as completed assessments are concerned, they do not abate and pending appeals etc. in respect thereof continue to exist notwithstanding the fact that the search has been made. Thus a completed assessment becomes final unless some incriminating material is found in the course of search. Otherwise the AO will be empowered to undo what has already been completed and has become final. 5.8 It is important here to note that all reassessment such as under section 147, 263 etc. have to be made within well-defined limits subject to satisfaction of pre-conditions and, therefore, similar limitation may have to be read in the instant provision. Therefore, making any Assessment which is already completed will also require the satisfaction of pre-conditions as contemplated in section 153A, its first proviso, its second proviso read with section 132. The Assessment u/s 153A deals with search cases and therefore, the concept of undisclosed income u/s 132(1)(c) will come into play. 5.9 The second proviso to section 153A is intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153(l)(b) means that assessment shall be made in case of pending assessments and reassessments shall be made in respect of completed assessments where incriminating material is found. 6. Having understood the legal position as laid out by the law itself, we now move on to analyse the position as laid out by the following decisions: Commissioner of Income Tax vs. Continental Warehousing Corporation, All Cargo Global Logistics Ltd.[2015) 374ITR 645 (Bom) Under section 153A of the Income-tax Act, 1961, which enables carrying out of search or exercise of power of requisition, assessment in furtherance thereof is contemplated. There is a mandate to issue notices under section 153(1)(a) and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, the crucial words search and requisition appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. True it is that the assessment which has to be made in pursuance of the notice is in relation to the six years. An order will h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es place. The Assessing Officer has the power to assess and reassess the total income of the 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 assessment years in which both the disclosed and the undisclosed income would be brought to tax. (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can he related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance nr nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material. (v) In the 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 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word reassess to completed assessment proceedings. (vi) In so far as pending assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue appealed before the Hon‟ble High Court. The Hon‟ble High Court dismissed the appeal by observing as under: We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre- requisite before power could have been exercised under sectionl53C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed. Smt. Sunita Bai Versus Dy. Commissioner of Income Tax Central Circle-1, Belgaum2015 (3) TMI397 - ITATPANAJI - TMI where an assessment order has already been passed for a year or years within the relevant six assessment years, then the AO is duty bound to reopen those proceedings and reassess the total income but by taking note of the undisclosed income if any, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act the assessing authority is the custodian of all such returns including the returns relatable to pending assessments that stand abated. Sub-section (2) of Section 153 A mandates that if any proceeding initiated or any order of assessment made u/s. (1) relating to any assessment year which has been abated under the second proviso to Section 153A shall stand revived from the date of receipt of the order of such annulment by the CIT. Thus the entire overthrow or destruction or termination of pending assessments before the assessing authority who can take original cognizance is only to avoid two parallel proceedings of assessment of a particular year of the same person, i.e., one as regular assessment and another as assessment u/s 153A of the Act and not the whole exercise of assessment to be made afresh in respect of completed assessments. ACIT vs M/s Delhi Hospital Supply Pvt Ltd (ITA 3996/Del/2011) 7. Keeping in view of the aforesaid findings given by the Ld. CIT(A), we are of the considered view that Ld. CIT(A) has rightly held that in the absence of any material found during the search, as a result, no disallowance / additions can be made in the assessment u/s. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and her family members were part of the record and continued to be so. They were never reasonably explained and their probative value was undeniable. The occasion for making them arose because of the search and seizure that occurred and the seizure of various documents pointed to the undeclared income. (ii) That the inferences drawn in respect of undeclared income were premised on the materials found as well as the statements recorded by the Assessees. Therefore, the additions were not baseless. The assessing authorities in such cases had to draw inferences, because of the nature of the materials, since they could be scanty. The element of guess work had to have some reasonable nexus with the statements recorded and documents seized. The differences of opinion between the Commissioner (Appeals) on the one hand and the Assessing Officer and the Appellate Tribunal on the other hand could not be the sole basis for disagreement with what was essentially a factual surmise that was logical and plausible. The findings of the Appellate Tribunal did not reveal any fundamental error calling for interference. Now coming back to the case under reference it is stated that in the said case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3rd October, 2017 is enclosed herewith. Thus, it stands as an undisputed fact that the decision in the case of Kabul Chawla [380 ITR 573 (Del)] holds good and the decision in the case of Dayawanti Gupta v. CIT [390 ITR 496 (Del)] has no operation in public domain. Further reliance is placed on the judgment of the Hon‟ble Pune Tribunal in the case of Sinhgad Technical Education Society vs. ACIT (2011) 57 DTR 0241. Facts: Search and seizure-Assessment under s. 153C-Absence of incriminating material-Where no assessment year specific incriminating material or document is found, assessments of such assessment years cannot be disturbed by invoking the provisions of s. 153 C-Search and seizure operation under s. 132 was carried out in the case of N. president of the Assessee-society-AO issued notice under s. 153C to the Assessee after recording the reasons on the basis of loose papers seized from N and eventually made assessment by denying exemption under s.11-Impugned reasons mentioned by the AO are silent insofar as discovery of any assessment year specific incriminating information relating to the Assessee is concerned-Satisfaction note recorded by the AO is very ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these appeals raises any substantial question of law. They are accordingly dismissed. No costs Aggrieved with the High Court‟s order, the Revenue went in appeal before the Hon‟ble Supreme Court. Dismissing the appeal of the Revenue, the Hon‟ble Apex Court vide order dated 29-08-2017 reported in (2017) 397 ITR 344 (SC) held that, The ITAT permitted additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the assessment years in question and it was an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four assessment years. Since this requirement under Section 153C of the Act was essential for assessment under that provision, it becomes a jurisdictional fact. Further in the case of Trishul Hi-Tech Industries vs DCIT (IT(SS).A.82,84-86/Kol/2011), it was held that, 12. Upon Assessee‟s appeal the Id. CIT(A) has deleted the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded assessment‟ i.e. no proceedings are pending. Reliance is also placed on the recent judgment of the Hon‟ble ITAT Kolkata in the case of Smt Yamini Agarwal vs DCIT (ITA Nos.97 98/Kol/2015) pronounced on 19-04-2017 wherein the issue of whether the assessment is pending or concluded as on the date of search was discussed in detail and it was held that, We therefore hold that the scope of the proceedings u/s. 153 A in respect of assessment year for which assessment have already been concluded and which do not abate u/s,153A of the Act, that the assessment will have to be confined to only incriminating material found as a result of search. The next aspect to be considered is as to when returns of income filed u/s.139 of the Act are shown to have been accepted without an intimation u/s.143(1) of the Act or without any notice issued u/s.143(2) of the Act within the time limit contemplated by the proviso thereto, can be said to be assessment proceedings concluded that have not abated u/s.153A of the Act. Section 153A of the Act, uses the expressing pending assessment or reassessment . When a return is filed and when neither an acknowledgement or intimation u/s, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals are accordingly allowed. 27. In view of the above conclusions, the other grounds of appeal raised by the Assessee on merits, do not require any consideration. 9.2 The Proviso to section 143(2) of the Act which stipulates the time period for issuing of the notice u/s 143(2) of the Act read as follows: Provided that no notice under clause (ii) shall be served on the Assessee after the expiry of six months from the end of the financial year in which the return is furnished.] As such, the prescribed time limit to issue notice u/s 143(2) of the Act is six (6) months from the end of the financial year in which the return is furnished. Now, considering the above decision and the said proviso, the facts of the present case are discussed in para 9.3 below. 9.3 In the present case, for the A.Y. 2012-13 no proceedings were pending. In other words, assessment for AY 2012-13 stood concluded and thus unabated as on the date of search i.e 06-08-2014. For the said AY 2012-13, the Assessee filed the return of income on 30-09-2012. Return for AY 2012-13 was processed on 16-12-2013. Admittedly, no notice u/s 143(2) of the Act was issued to the Assessee company for making asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessee that the Assessee has availed advance from Uniworth Agencies Pvt. Ltd against development of upcoming projects. The entire advance was taken in the normal course of business and through normal banking channels. To substantiate the identity and creditworthiness of the party and the genuineness of the transaction, the Assessee filed the bank statements and audited accounts of the said company. It was also proved that the entire advance of ₹ 9.73 crores was funded by Uniworth Agencies Pvt Ltd out of own funds of ₹ 11,17,20,000/- raised in the earlier years. It was pointed out that since the financial year 2008-09 (A.Y. 2009-10), no fresh induction of capital was made in Uniworth Agencies Pvt. Ltd . It was in the said year (during AY 2009-10), that Uniworth Agencies Pvt. Ltd raised a share capital of ₹ 11,17,20,000/-. This entire amount of Rs.l1,17,20,000/- has however been duly assessed as income in the hands of Uniworth Agencies Pvt. Ltd. vide Assessment Order u/s 263/148/144 of the Act dated 28-03-2014. A copy of the order is enclosed at page 75-81 of paperbook for AY 2012-13. The fact that no fresh fund has been introduced in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered in to a joint venture agreement on 01-06- 2011 to develop a property in Cuttack with Uniworth Agencies Pvt. Ltd. pursuant to which the said sum of ₹ 9.73 crores was received as advance against such property development. Copy of the said agreement was also furnished to the Ld. Assessing Officer during assessment proceedings. A copy of the same is again enclosed at page 101-108 of the paperbook for AY 2012-13. However, due to certain delay in completion of the project and contractual issues with M/s Uniworth Agencies Pvt Ltd, the said advance received from them was refunded during AY 2015-16 Further, since the advance was received pursuant to a joint venture agreement i.e. a business deal and the Assessee has successfully proved the identity of the person and genuineness of the transaction provisions of section 68 cannot be invoked. However, as stated earlier also, the learned AO was not convinced with the submissions of the Assessee and he added the sum of ₹ 6.92 cr (should be ₹ 6.67 cr) and ₹ 3.06 cr in AY 2012-13 and 2013-14 respectively. 11.3 Here, further note that the learned AO during the course of search assessment proceedings had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny was taken over by Mr. Sunil Gupta by way of share transfer to himself and his group companies. The money for the same was allegedly provided by Shri Sunil Gupta and the same after travelling through several companies got deposited in the books of SGBL (India) Ltd. and other group companies controlled by Shri Sunil Gupta. However, here please note that when asked about the details of money trail used to in depositing cash and routing it back to the Assessee company, both Raj Kumar Tharad and Pradeep Garg have stated that the same will be provided later on. As such, it is evident that both these persons do not possess the knowledge about the money trail used for depositing cash. As such, the allegation made by the learned AO that the Assessee has introduced its own funds is baseless. 12.3 Further, please note that both Raj Kumar Tharad and Pradeep Garg had given the same, verbatim identical reply vide their statements which simply means that that the statements were pre-printed and they were just asked to just sign the impugned statements. 12.4 Further, please note that at no point of time during the course of assessment, the AO had referred to the statements recorded of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross examine the persons who had given the alleged statements against the Assessee. As such, this is a case of violation of principles of natural justice because of which the Assessee has been adversely affected. Further, the said statements were not found during the course of search to constitute the same as incriminating document. 13. Now, based on all the facts of the case all detailed above, it stands proved beyond doubt, that the learned AO was not in possession of any incriminating material, found during the course of search. 13.1 The entire addition in both the years was made on account of advance received from Uniworth Agencies Pvt Ltd in the normal course of business and was duly accounted for in the regular books of accounts and the same was received through normal banking channels. The same is evident from the assessment order itself, please refer page 1 of the assessment order, wherein the AO has himself stated that 'On examination of the seized tally accounts of the Assessee, it was found that the company had claimed to have received an amount of ₹ 9.98 crores brought as unsecured loan from Kolkata based company Uniworth Agencies Pvt Ltd. ‟ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the audited accounts and the copy of the agreement with Uniworth Agencies Pvt Ltd was duly submitted before the learned AO and the learned CIT(A). Further, undisputedly, the source of advance to the Assessee by Uniworth Agencies Pvt Ltd was its own funds and more so, the same had already been assessed to tax as evident from the assessment order of Uniworth Agencies Pvt Ltd. for AY 2009-10 enclosed at page 76-81 of the paper book for AY 2012-13 . As such, the said advance to the Assessee company, being out of own funds cannot be added again in the hands of the Assessee since the same will lead to double taxation of the same sum. 15.2 However, ignoring the entire submissions of the appellant, the ld. A.O. passed the Assessment Orders for the said A.Y.s 2012-13 and 2013-14 wherein he held that the credit of ₹ 6.92 cr and ₹ 3.06 cr respectively, shown as advance and credited in the books of the Assessee was unexplained and thus added the same u/s 68 of the Act. 16. In connection to the above it is submitted that in the Assessee‟s case for AY 2012-13, there were no pending proceedings as on the date of search. Further, no incriminating material was found dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,01,00,000 from M/s. Golden Technobuild Pvt. Ltd., The Assessee filed copies of the acknowledgements I.T.returns, audited accounts, bank statements, ROC Certificate, PAN of the creditor, confirmation of the accounts of the creditor, copy of the bank statement with ledger account of the creditor before the authorities below. Copies of the same are filed in the paper book. The documents filed on record have not been disputed by the authorities below. The credit have been taken through banking channel and creditor was having sufficient amount with them to make investment in Assessee-company. The Assessee, therefore, discharged its initial onus to prove identity of the creditor, creditworthiness of the creditor, genuineness of the transaction in the matter. Further held, It is also noted that the creditor M/s. Golden Technobuild Pvt. Ltd., received entry from other group company and then gave it to the Assessee However, none of these evidences on record prove that Assessee received any bogus credit into the matter. If the creditor has received some entry from some other person, Assessee could not be liable for the same. The Assessee has to explain source of its amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing officer is totally contrary to the law as laid down by Apex Court in the case of CIT vs Orissa Corporation Pvt Ltd (1986) 159 ITR 0078 wherein it was held that, Sec. 68 of 1961 Act was introduced for the first time in the Act. There was no provision in 1922 Act corresponding to this section. The section only gives statutory recognition to the principle that cash credits which are not satisfactorily explained might be assessed as income. The cash credit might be assessed either as business profits or as income from other sources. (Para 7) It is not in all cases that by mere rejection of the explanation of the Assessee, the character of a particular receipt as income could be said to have been established; but where the circumstances of the rejection were such that the only proper inference was that the receipt must be treated as income in the hands of the Assessee, there is no reason why the assessing authority should not draw such an inference. Such an inference is an inference of fact and not of law. (Para 10) The Assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2011-12, the Department raised an issue before the Appellate Tribunal that the share premium of the Assessee had to be charged to tax under section 68 of the Income-tax Act, 1961. The Appellate Tribunal examined the applicability of section 68 on the parameters of the identity of the subscribers to the share capital, genuineness of the transaction and the capacity of the subscribers to the share capital. It found that the identity of the subscribers were confirmed by the issuance of notices to them under section 133(6) by the Assessing Officer. It also held that the Department made no grievance of the identity of the subscribers. So far as the genuineness of the transactions of the share subscribers was concerned, it held that the entire transactions were recorded in the books of account and shown in the financial statements of the Assessee since the subscriptions were done through banks as evidenced by bank statements which were examined by it. Again, the Hon‟ble Mumbai High Court in the case of CIT vs Gagandeep Infrastructure Pvt Ltd Limited reported in [2017] 394 ITR 680 (Bom) held that Held, (i) that the three essential tests laid down by the courts, namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded that the investments were, in fact, made by the Assessee and not by the depositors. The following decisions are relevant on this point:- CIT vs Value Capital Services Pvt Ltd. (2009) 221 CTR 0511 Income-Cash credit-Share application money-CIT(A) accepted the existence of the applicants-It is very difficult for the Assessee to show the creditworthiness of strangers-Revenue has not shown that the applicants did not have the means to make the investment and that such investment actually emanated from the coffers of the Assessee company-Addition rightly deleted by the Tribunal-No substantial question of law arises Held: CIT (A) having accepted the existence of the share applicants and the Revenue having not shown that the applicants did not have the means to make the investment and that such investment actually emanated from the coffers of the Assessee company, addition was rightly deleted by the Tribunal; no substantial question of law arises. CIT vs Dwarkadhish Investment (P)Ltd. (330 ITR 298)(Del) Though in section 68 of the Income-tax Act, 1961, the initial burden of proof lies on the Assessee yet once he proves the identity of the creditors/shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinion that no interference was warranted having regard to the facts of this case. This Court is of the opinion that the only sentence in paragraph-6 of the impugned order that amounts were refunded to the applicants itself should not be a ground to conclude that the findings recorded by the lower authorities are not on the basis of evidence. The entire controversy sought to be raised is purely factual. 8. The Court is not satisfied that the view of the Tribunal is so unreasonable as to warrant interference under Section260A. 9. The Appeal is accordingly dismissed. ITO vs. Roseberry Mercantile Pvt Ltd (ITA No. 2119/Kol/2009) The ratio laid down by the Hon 'ble Supreme Court in the case of M/s. Lovely Exports Pvt. Ltd would be squarely applicable to the case under consideration. In the present case, the appellant has furnished all the details relevant to share capital contribution before the A.O and also before me. The A.O except noticing certain unusual features in fund flow chain could not establish the link between the unaccounted incomes of the appellant company and share capital contributors. Even otherwise as held by the Apex Court such amounts c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Agencies Pvt Ltd dated 01- 06-2011. The transaction was entered into via normal banking channels and the same was duly reflected in the books of accounts of both the parties. Further, the source of loan of ₹ 9.73 crores was own funds of Uniworth Agencies Pvt Ltd which had already been assessed to tax. In spite of all these factual background, the learned AO proceeded on his whims and fancies and completed the impugned assessment by adding a sum of ₹ 6.92 crores and ₹ 3.06 cr in AYs 2012-13 and 2013-14 respectively to the income of the appellant u/s 68 of the Act. 17. Aggrieved, the Assessee went in appeal before the learned CIT(A). The learned CIT(A) uphold the assessment order passed by the learned AO on the same grounds. In the appellate order, the learned CIT(A) has cited the following two judicial pronouncements wherein it was held that It is not necessary that search on which it was founded should have necessarily yielded any incriminating material against Assessee or the person to whom such notice u/s,153A(1)(a), is issued. 1. E.N. Gopikumar vs C7T(Central) (High Court of Kerela) pronounced on 03-10-2016. 2. CIT, Central vs Raj Kumar Arora (H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07-12-2017 2. M/s Empire Realtech Pvt Ltd vs DCIT ITA.No.3407/Del./2017 pronounced on 21.11.2017 3. ACIT vs Superb Developers I.T.A.No.-52/Del/2014 pronounced on 21-04-2017 However, in all the above three cases, the Hon‟ble Delhi Tribunal has held that invocation of Section 153A by the Revenue was without any legal basis as there was no incriminating material found during the course of search. Hence, the judgments cited by the learned CIT(A) do not hold good in the present case by virtue of the judgment on an identical issue pronounced by the Hon‟ble Supreme Court in favour of the Assessee. 18. The learned CIT(A) has also alleged in the appellate order that copy of the statement of Rajkumar Tharad and Pradeep Garg were provided to the Assessee by the AO. However, the statement of these parties were never provided to the Assessee for cross examination. Hence, the present case is denial of natural justice to the Assessee. The Assessee has duly submitted all the documentary evidences before the learned AO and learned CIT(A) substantiating the identity, creditworthiness of the parties and genuineness of the transactions and more so, the source of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to show that the said tally account found during the course of search reflected that the above cash credit was not genuine. In the above background, the contention of the assessee is that the addition of ₹ 6.92 crores as unexplained cash credit u/s.68 of the Act made in a proceeding initiated u/s.153A of the Act in absence of any search material, was without jurisdiction as the assessment of the said assessment year was not abated. 29. On the other hand, the ld. CITDR is of the view that in a proceeding u/s.153A of the Act even in the case of unabated assessment, addition can be made dehors incriminating search material. Ld. DR in support of his above view relied upon the following decisions :- (a) E.N. Gopakumar v. Commissioner of Income-tax (Central) [2016] 75 taxmann.com 215 (Kerala) : Section 153A, read with section 132, of the Income-tax Act, 1961 - Search seizure - Assessment in case of (Scope of) - Whether for issuance of a notice under section 153A(1)(a), it is not necessary that search on which it was founded should have necessarily yielded any incriminating material against assessee or person to whom such notice is issued - Held, yes - Whether, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. (iii) Pr.CIT Vs. Meeta Gutgutia Prop. M/s.Ferns N Petals [2017) 395 ITR 526 (Del), wherein it was held that it is only if during the course of search u/s.132 of the Act incriminating material justifying the re-opening of the assessments for six previous years is found that the invocation of Section 153A qua each of the assessment years would be justified. (iv) In case of Pr. CIT-2, Kolkata Vs. M/s Salasar Stock Broking Ltd., G.A.No.1929 of 2016 (ITAT No.264/Kol/2016), order dated 24.08.2016, the Hon ble Kolkata High Court has held as under :- We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre- requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents transactions which took place between the assessee and M/s Uniworth Agencies Pvt. Ltd. were impeached and no evidences were brought on record to show that cash was received from the assessee company by the said M/s Uniworth Agencies Pvt. Ltd. in lieu of cheque issued by that company to the assessee company. Most importantly it is not in dispute that the assessee company was not allowed any opportunity to cross-examine the two makers of the statements before using the same against the assessee. In this context the CIT(A) observed that lack of opportunity to cross-examine the operators is not fatal to the addition made by the Assessing Officer. We find that the above view of the CIT(A) is contrary to the decision of Hon ble Supreme Court in case of M/s Andaman Timber Industries Vs. CCE, Civil Appeal No.4228 of 2006, order dated 02.09.2015, wherein it has been held as under :- According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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