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TMI Blog2014 (8) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... h which itself was unlawful and invalid in the eye of law. 3. On the facts and circumstances of the case, Learned CIT(Appeals) has erred both on facts & in law in rejecting the contention of the assessee that the proceedings initiated under sec. 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search. 4. On the facts and circumstances of the case, Learned CIT(Appeals) has erred both on facts and in law in going ahead with the reassessment order and not closing the reassessment proceedings,, despite the fact that no incriminating material belonging to the assessee was found and has been subject matter of addition in any of the reassessment under sec. 153A for all the six years. 5. On the facts and circumstances of the case, Learned CIT(Appeals) has erred both on facts and in law in ignoring the fact that the additions made by the A.O. are otherwise untenable since the same is not arising from the any incriminating material seized during the course of search and reassessment under sec. 153A/143(3) consequent to search is to be confined only to the incriminating material belonging to the assessee found d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing decisions: 1) Shri Kabul Chawla vs. ACIT, ITA No. 779/Del/2013 (A.Y. 2002- 03) dated 23.5.2014; 2) Shri V.K. Fiscal Services P. Ltd. vs. DCIT, ITA No.5460/Del/12 & Ors. (A.Ys. 2004-05 to 2009-10) dated November 2013. 3) ACIT vs. Asha Kataria ITA No. 3105/Del/2011 order dated 20.5.2013. 4) Kusum Gupta vs. DCIT, ITA No. 4873/Del/2009 order dated 28.3.2013. 5. DCIT vs. Vrindavan Farms Pvt. Ltd. ITA Nos. 3359, 3360, 3361/Del/2013 dated 6.6.2014. 6. DCIT vs. DCM Shriram Ind Ltd. ITA Nos. 1648-1653/Del/2013 dated 11.10.2013 (Delhi Tri.); 7. V.K. Fiscal Services P. Ltd. vs. DCIT ITA Nos. 5460- 5465/Del/2012 dated 27.11.2013. 8. Jakson Engineering Ltd. vs. ACIT ITA No. 349-350/Del/13 dated 11.4.2014. 9. Dream Buildcon Pvt. Ltd. vs. DCIT ITA No. 5392/Del/2012; 10. Bharati Vidyapeeth Medical Foundation vs. ACIT ITA No. 36, 37, 39/2012 dated 10.4.2014 (Bom.); 11. ACIT vs. Prithvi Sound Products Co. Pvt. Ltd. ITA No. 3422- 6/Del/2011 dated 17.4.2014 (Delhi Tri.). 12. A1 Cargo Global Logistics Ltd. 23 Taxman.com 103(Mum)(S.B). 4. Learned CIT(DR) on the other hand tried to justify the first appellate order on the issue. He submitted that the plain reading of the statute is req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of search. In the present case before us, undisputedly the assessment had reached its finality in absence of issuance of notice under sec. 143(2) of the Act within the prescribed time limit from the end of the month in which the return of income was filed and the return of income was processed under sec. 143(1)(a) of the Act. There is also no dispute that during the course of search, no incriminating material was found and seized as it is evident from the assessment order as nothing has been mentioned by the Assessing Officer about the incriminating material, if any, found during the course of search on the basis of which he has made additions in question. Under, almost similar facts in the decisions relied upon by the learned AR, an identical issue has been decided in favour of the assessee. 8. Considering the above submissions and having gone through the decisions relied upon, we find that the special bench of the Tribunal in the case of All Cargo Global Logistics Ltd. (supra) vide para No. 58 of its order has answered the issue as under :- "58. Thus, question No. 1 before us is answered as under :- (a) In assessments that are abated, the AO retains the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial was found, was apparently left open. However, we find that there are sufficient indirect hints given by the Hon 'ble Delhi High Court in the case of Anil Kumar Bhatia (supra) about not making of any addition in respect of an assessment year for which the assessment is already completed unless some incriminating material is found during the course of search. This can be seen from the . following observations of the Hon'ble High Court :- "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) of the Act. 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." 9. The above extracted observations of the Hon'ble High Court, which are though obiter dicta, make the point clear that where an assessment order has already been passed for a year(s) within the relevant six asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition to the special bench order in the case of All Cargo Global Logistics Ltd. (supra). The other judgment relied by the Ld. DR in the case of Madugulu Venu (supra) also talks about the need for making fresh assessment in respect of the assessment years for which the assessments are not pending on the date of search but does not set out the scope of such assessment, which is the issue before use. " 11. The issue raised in the cross-objection preferred by the assessee is thus decided in favour of the assessee, with this finding that Learned CIT(Appeals) was not justified in upholding the validity of the proceedings initiated under sec. 153A of the Act and the assessment framed under sec. 153A read with section 143(3) in furtherance thereto. We, thus, while setting aside orders of the authorities below in this regard hold that the initiation of proceedings under sec. 153A of the Act and framing of assessment under sec. 153A read with sec. 143(3) in furtherance thereto in absence of any incriminating material found during the course of search were not valid and in consequence the assessment is quashed. The related objection Nos. 1 to 5 of the C.O. on the issue are thus allowed. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing the cases of the respective parties in detail has deleted the additions made by the Assessing Officer against which the revenue is in appeal raising the above grounds. 16. Ground No.1: The facts in brief are that Assessing Officer made an addition of Rs. 6,44,11,974 as unexplained income under sec. 68 of the Income-tax Act, 1961. The amount in addition comprises of two figures, viz. (i) M/s. Jayco Closure Rs. 6,24,94,474; and (ii) M/s. Jayco Pipes Ltd. Rs. 19,17,500. The reasons for the addition shown by the Assessing Officer remained that the above loan creditors were not produced before him for verification. The assessee had merely filed a photocopy titled as confirmation-cum-no dues certificate dated 31.10.2007. Learned Assessing Officer thus came to the conclusion that the assessee had not been able to prove the identity, creditworthiness of the above loan creditors and genuineness of the loan. The assessee questioned the action of the Assessing Officer in this regard before the Learned First Appellate Authority and the Learned CIT(Appeals) being satisfied with the submissions of the assessee has deleted the addition which has been questioned by the revenue. 17. In sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has deleted the addition. Learned CIT(Appeals) had given his own colour to the transaction and has even accepted the contradictory submissions of the assessee before him to the letter dated 22.12.2011 filed by the assessee before the Assessing Officer. In this regard, Learned CIT(Appeals) referred letter dated 22.12.2011 written on behalf of the assessee to the Assessing Officer during assessment proceedings under sec. 143(2)/153A of the Act mentioning that the funds received amounting to Rs. 6,24,94,470 from Mrs. Jaina during the financial year 2003-04 was wrongly credited to S.H. Ltd. 18. Learned AR on the other hand submitted that before the Assessing Officer, it was brought on record by the assessee on 14.12.2011 that the mistake of crediting this loan amount taken from the above two parties in the account of S.H. Ltd. had occurred and after making the necessary corrections, this amount was transferred in the account of above two persons on 01.01.2006 though the details filed with the return of income showed credit in the account of partners Shri Parvesh Jain and Sarthak Jain by an amount of Rs. 3,86,47,184 and Rs. 2,57,64,789 respectively after waiver of the loans. It was po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reference: "9.4 M/s. Jayna Closure - Prop. Rakesh Kumar (Rs.6,24,94,470) I have gone through the assessment order, the written submissions, the remand report and the rejoinder filed by the appellant on the remand report and have perused the paper book filed by the appellant in support of its contention. On going through the assessment order, it is noticed that the A.O. has made the addition of Rs. 6,24,94,470 as unexplained credit in the year under consideration in the name of Nayna Closure Prop. Rakesh Kumar. The allegation of the A.O. is that the appellant has failed to explain he creditworthiness, identity etc. under sec. 68 of the Income-tax Act, 1961 and hence the addition is to be made. The appellant on the other hand has filed evidences which shows that there is no actual credit per se, of the said amount received during the yaer under consideration from Jayna Closure Prop. Rakesh Kumar, but the same is mere journal entry passed in assessment year 2006-07. From the facts and evidences available on record it is seen that the appellant has been regularly dealing with a company, named Schenectady Herdillia Ltd. to whom they are selling dyes and chemicals regularly and it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , I fail to understand how in the year under consideration the A.O. can come to the conclusion that the appellant has received Rs. 6,24,94,494 from Jayna Closure Prop. Rakesh Kumar when actually no such amount has been received from it. The account statements submitted by the appellant support the above facts explained by the appellant. The identity and genuineness of the transactions with Schenectady Herdillia Ltd. has not been questioned by the A.O. also. Hence in view of these facts the contention of the appellant is correct that no addition can be made on account of unexplained credit of Rs. 6,24,94,474 as has been made by the A.O. in the year under consideration. In the remand report the A.O. has raised the issue that the appellant has not been able to establish that how an amount due to a limited company being a business associate of the appellant has been converted in the name of Jayna Closure. The A.O. has further stated that the appellant has failed to provide any reason and the documents for transferring this amount in the name of Jayna Closure. In my humble view, this contention of the A.O. cannot be the sole ground for justifying an addition under sec. 68 of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book. Based on these documents, the Learned CIT(Appeals) has come to this conclusion that there is no actual credit in the books of the assessee on account of M/s. Jayna Closure, Proprietor Rakesh Kumar as stated by the Assessing Officer whereas the same was accounting adjustment passed in the accounts of S.H. Ltd. and that since the identity of S.H. Ltd. is not in dispute, the source of payment is also not in dispute as well as the transaction entered into by the assessee with S.H. Ltd. are also not in dispute. These material finding of the Learned CIT (Appeals) have not been successfully rebutted by the Learned D.R. We are thus having no reason to interfere with the first appellate order which, in our view, is a comprehensive and reasoned order. We, thus, uphold the action of the Learned CIT(Appeals) in deleting the addition of Rs. 6,24,94,474 made by the Assessing Officer under sec. 68 of the Income-tax Act, 1961 in this regard as justified. 21. The revenue has also not been able to rebut the finding of the Learned CIT(Appeals) that the amount of Rs. 19,17,500 was outstanding in the assessment year 2001-02 also, which was a carried forward balance in the current year from the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion identity was thus not established by the assessee nor any relevant evidence was filed by the assessee in support of the genuineness of the claim and further that substantial credit has been written off which also raised doubts about the genuineness of the transaction. In this regard, he placed reliance on the decision of Hon'ble Delhi High Court in the case of NAF Academy Pvt. Ltd. 2013 , TIOL.1017-XE-Del-IT. 24. Learned AR on the other hand placed reliance on the first appellate order. He also referred copies of several documents filed in the shape of paper book on behalf of the assessee in support of its claim before the Tribunal as well. He also referred the following case laws relied upon by him; a) Addl. CIT Bihar vs. Hanuman Agarwal (1985) 151 ITR 151 (Patna); b) Jalan Timber vs. CIT (1997) 223 ITR 11 (Gauhati High Court); c) Neeru Devi Kothari vs. ITO (2001) 116 Taxman 224 (Jodhpur); 28 d) Sarogi Credit Corporation vs. CIT (1976) 103 ITR 344 (Patna HC); e) Nemi Chand Kothari vs. CIT (2004) 264 ITR 254 (Gau.) f) S. Hastimal vs. CIT 49 ITR 272; g) CIT vs. K.S. Kanan Kunhi 87 ITR 3958; h) CIT vs. Pithampur Conzima (P) Ltd. (2000) 244 ITR 442 (MP High Court); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Quassar India Fincap Pvt. Ltd. for the year 31st March, 2002, 2003, 2004, 2005 and 2006 and it is seen that the net worth of the Quasar India Fincap Pvt. Ltd. as on 31st March 2004 was more than Rs. 10 crores. The amount standing in the name of the appellant firm is being shown in the balance sheet of each of the year of the creditor company. Further Quasar India Fincap P. Ltd. has been filing its income-tax return and these returns have been accepted and the assessment orders are placed in the paper book. No adverse inference has been drawn about these transactions and the financials of the creditor company by the tax authorities. Thus, it cannot be said that the creditor is not in existence. The appellant firm has filed sufficient evidences in support of its contention regarding the credit worthiness and genuineness of the transaction. The payments have been received through banking channel and the bank statement filed in support also in support of then contention of the appellant. There is nothing incrimination material brought on record by the Assessing Officer. It is also not a case of the A.O. that anything adverse or incriminating material was found regarding this cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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