2015 (12) TMI 1795 - ITAT INDORE

Assessment u/s 153A - Addition u/s 68 - share application Money received - unsecured loan - HELD THAT:- Once notice u/s 153A of the Act issued, then assessment for six years shall be at large both for Assessing Officer and assessee have no warrant of law. It has been also held that in the assessment years where assessments have been abated in terms of second proviso to section 153A then AO acts under original jurisdiction and one assessment is made for total income including the addition made on the basis of seized material.

But where there is no abatement of assessments and assessments were completed on the date of search then addition can be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized in relation to sale and repurchase of shares of Adroit India Ltd. No assessment proceedings were abated in these assessment years of these assessees. Thus  assessments for these assessment years were completed on the date of search. The assessments were completed u/s 143(3) of the Act read with section 153A/153C of the Act after the search.

There is no seized material belonging to the assessee which was found and seized in relation to  additions made. In view of this fact, there is no justification for action u/s 153C of the Act that too without recording satisfaction. In our considered view, the Assessing Officer must have some material to prima facie satisfy himself to record the satisfaction prior to issue of notice u/s 153C .

Addition u/s 68 - It is not a simple case of taxing of share application money under section u/s 68 as the assessee has tried to project. It is a case of unaccounted income brought back into the books of accounts of the assessee company in a systematic & organized manner which can be evidenced from the pattern of cash deposits in the bank accounts of the companies discussed above in detail from whom share application money were received by the assessee. These companies have been used as mere conduit companies for routing of unaccounted money into the business in the grab of share application money. During the assessment proceeding in Asst.Year 2005-06 in the case of the companies from whom the assessee companies received share application money, it was reveal that cash deposits were found in their bank accounts but source of cash deposited were not properly explained by the above companies. Hence, the source of share application money as received by the assessee company can not be treated as properly explained. 

Share application money as received by the assessee in the year under consideration be added to the income of the assessee U/s 68 of the Income Tax Act.

Chargeability of interest u/s 234B is mandatory, therefore, dismissed on merit.

Disallowance of income u/s 40(ia) - AO disallowed fright payment  on the ground that no TDS was deducted - The assessee has taken the ground that by virtue of Finance Act, 2008 w.e.f. 1.4.2005, the said section was amended which says that if the amount so deducted is deposited by the assessee till due date of filing of return is allowable deduction prior to March in that case - HELD THAT:- In this case, TDS was deducted and payment was made prior to March, hence, assessee has paid the tax on time, therefore, he requested the Bench to allow this additional ground. It is the legal claim of the assessee, therefore, it may be allowed. We find that this claim is a legal claim of the assessee, which is allowable claim, therefore, in the interest of justice and fair play, we allow the ground of the assessee and restore this matter to the file of the Assessing Officer with direction to the Assessing Officer to decide the issue as per amended section as per law. Thus, ground of appeal is allowed for statistical purposes.