2015 (11) TMI 1854 - ITAT INDORE

Validity of assessment order passed u/s 153C - Mandation Recording of satisfaction - HELD THAT:- There is nothing in the assessment order or otherwise to show that the satisfaction as envisaged u/s.153C was ever recorded by the A.O. Considering it, the A.O. did not assume jurisdiction to complete assessment u/s.153A and therefore, the assessment order passed by him is invalid. He pleaded that even when there is same Assessing Officer for searched person and where 153C action is taken then also recording of satisaction in both the cases is necessary in view of decision of the Hon'ble jurisdictional High Court in the case of Mechman [2015 (7) TMI 538 - MADHYA PRADESH HIGH COURT]

The harmonious construction of entire provision would lead to an irresistible conclusion that the term ‘assessment’ has to be read in the context of abated assessments and the term ‘reassessment’ has been used in the context of unabated assessments. In the case of completed assessments, income has to be re-assessed in terms of Sec.153A. The re-assessment requires belief of assessing officer regarding escapement of income from assessment. The belief should be founded on existence of appropriate material or information. It should be rational belief held in good faith and not arbitrary, subjective or a mere pretence. The material or information in his possession should have direct nexus with his belief regarding escapement of income. The absence of such nexus shall render the re-assessment proceedings invalid. Thus, the re-assessment of income u/s.153A cannot be made sans any incriminating material or merely on change of opinion in relation to material already considered. - Decided in favour of assessee.

Unexplained investment - HELD THAT:- There is no evidence regarding any unaccounted transaction with relation to shares acquired, transferred and re-acquired by various family members of Sangla family and associate concerns. The revenue’s claim that no promoter would divest with such a huge holding at a very nominal profit is without any basis and only a guess work. The assessee’s contention that the promoters were intended to go for public issue is well established by the fact that expenditure incurred in this regard has been debited in the books of accounts of Adroit Industries Ltd., therefore, the revenue’s contention that the promoters were not intended to go for public issue is not correct. In our considered view, all such allegations are wild and without any basis.

Revenue has even failed to bring anything on record to establish that any unaccounted transaction in any form was done by any of the persons of this group and associates. There is no evidence against the assessee with regard to transfer and reacquisition of shares of Adroit Industries Ltd. during the relevant period to the assessment years 2007-08, 2008-09 and 2010-11 respectively. The revenue’s allegations are general and not supported by any evidence. In our considered view, no addition could be sustained only on the basis of guess work or in the absence of any positive evidence. In view of this factual matrix, we find no merit in the addition made in the assessment year 2008-09 on the transfer of shares of Adroit Industries Limited and also the addition made for unexplained investment on account of reacquisition of shares of Adroit Industries Ltd. during the financial year 2010-11. We direct to delete the same.

Assessee claimed deduction u/s 80C and 80D filing the return of income u/s 153A/153C - HELD THAT:- Since we have already allowed the appeal of the assessee on the ground of issue of recording satisfaction prior to issue of notice u/s 153C of the Act and also on the ground that no incriminating document was found and seized, therefore, there is no question of allowing such deduction to the assessee. Further we would also like to state that the provisions of section 153A/153C are not made for the benefit of the assessee. Return filed in response to notice u/s 153A/153C of the Act is not substitute of revised return for the claim of such benefits.

Apex Court in the case of Goetze (India) Ltd [2006 (3) TMI 75 - SUPREME COURT] ruled out that a fresh claim before the Assessing Officer can be made only by filing a revised return and not otherwise. Therefore, whatever claim the assessee has not made while filing the return u/s 139(1)/139(4) of the Act, he cannot make fresh claim by filing the return u/s 153A/153C of the Act and reduce the taxable income originally declared - this ground of the assessee’s appeal stands dismissed.