TMI Blog2015 (10) TMI 1514X X X X Extracts X X X X X X X X Extracts X X X X ..... that under such circumstances, the condition precedent for issuance of notice under section 153C was not fulfilled and any action taken under section 153C of the Act stood vitiated. The Hon’ble Delhi High Court in the case of ‘Pepsico India Holding (P.) Ltd. vs. ACIT (2014 (8) TMI 898 - DELHI HIGH COURT) has held that the AO should not confuse the expression ‘belongs to’ with the expression ‘relates to’ or ‘refers to’. The Hon’ble High Court has held that unless it is established that the document in question does not belong to the searched person the question of invoking section 153C does not arise. Admittedly, the documents in the case in hand belonged to the searched person. Under such circumstances the reopening in the case in hand has rightly been done under section 147 of the Act by the AO. So far as the contention that the limitation period had expired for reopening of assessment under section 147 of the Act is concerned, we do not find any merit in the said contention. The income which the AO believed to have escaped assessment was above ₹ 1 lakh i.e. ₹ 5 lakh which is more than ₹ 1 lakh. As per the provisions of section 149, the reassessment can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of shares is accordingly decided in favour of the assessee. - ITA No.2672/M/2012 - - - Dated:- 9-9-2015 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER For The Assessee : Shri Prakash Chand Yadav, A.R. and Shri Vinod Rawal, A.R. For The Revenue : Shri Vijay Kumar Boara, D.R. ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 09.02.2012 of the Commissioner of Income Tax (Appeals) [(hereinafter referred to as CIT(A)] relevant to assessment year 2003-04. The assessee through the grounds of appeal has agitated the addition of ₹ 41,25,550/- u/s. 68 of the Income Tax Act. 2. The assessee has taken the following grounds of appeal: 1. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the reopening of the assessment u/s 147 made by the Assessing Officer without appreciating the facts that the same was done on the general and vague information of the investigation wing. 2. On the facts and circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f shares was treated to be unexplained credit which was added by the Assessing Officer (hereinafter referred to as the AO) u/s.68 into the income of the assessee. Aggrieved by the above said additions, the assessee preferred appeal before the Ld. CIT(A). 4. Before the Ld. CIT(A), it had been contended by the assessee that certain shares were purchased through sub-broker M/s. Gold Star Finvest Pvt. Ltd and they were transferred in name of assessee in the companies records and then sold through the same sub-broker M/s. Gold Star Finvest Pvt. Ltd. and in the process, the assessee company had earned profits of ₹ 41,25,550/-. The shares purchased and sold were backed by the contract notes/ purchase and sale invoices issued by M/s. Gold Star Finvest Pvt. Ltd. who was registered member of stock exchange and having SEBI registration number and that the sale proceeds were received through cheques only. That all the documents were submitted before the AO and he was satisfied about the transactions and did not raise any query in this respect. It was therefore claimed by the assessee that the transactions were genuine transactions only. The assessee before the Ld. CIT(A) also submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of searched person or under section 153C in relation to person other than the searched person, if any, documents relating to that other person are found in the premises of the searched person. The Ld. A.R. has further contended that in the reasons recorded for reopening of the assessment, the AO has mentioned that he had reason to believe that the assessee company had created and claimed bogus losses on account of sale and purchase of shares and claimed setoff of the same against income generated. However, in the assessment proceedings, the AO had made the addition in respect of profit on sale of shares treating the same as unexplained cash credit under section 68 of the Act. The Ld. AR , therefore, relying upon the decision of the Hon ble Bombay High Court in the case of CIT vs. Jet Airways 331 ITR 236 (Bom.) has contended that if in a case, the AO has found a reason to believe about an income which in his view has escaped assessment but ultimately is not found to have escaped assessment and no addition is made on that account, then it is not open to the AO to independently assess some other income. The Ld. AR has further vehemently contended that even the limitation for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f account or document seized or requisitioned should belong to such other person. If the above requirement is not satisfied recourse cannot be heard to the provisions of section 153C. The Hon ble High Court has further observed that though in the loose papers recovered during the search proceedings, there was a reference to the petitioner in as much as his name was reflected in the list. However, the loose papers did not belong to the petitioner. The Hon ble High Court, therefore, has held that under such circumstances, the condition precedent for issuance of notice under section 153C was not fulfilled and any action taken under section 153C of the Act stood vitiated. The Hon ble Delhi High Court in the case of Pepsico India Holding (P.) Ltd. vs. ACIT (2015) 228 Taxman 116 (Del.) has held that the AO should not confuse the expression belongs to with the expression relates to or refers to . The Hon ble High Court has held that unless it is established that the document in question does not belong to the searched person the question of invoking section 153C does not arise. Admittedly, the documents in the case in hand belonged to the searched person. Under such circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that no sanction has been taken from the authorities, as envisaged in section 151 for reopening of the assessment. Even from the record, we do not find that any such issue has been ever raised by the assessee before lower authorities. In the absence of any specific evidence in corroboration of the contention raised, we do not find any merit in this plea of the assessee. 7. We further find that the issue of reopening of the assessment in the circumstances as that of the case of the assessee is squarely covered by various other decisions of the Tribunal in the cases of other persons whose name also figured during the search action in the group companies of Shri Mukesh Chokshi. The co-ordinate bench of the Tribunal in the case of Smt. Jyoti D. Shah ITA No.1843/M/2012 decided on 18.12.14, in almost identical facts, while adjudicating the issue of reopening on the basis of statement of Shri Mukesh Chokshi and further on the basis of details obtained during the search by the investigation wing, has held that under the circumstances the AO was having sufficient reason to believe that there was an escapement of income and accordingly he was justified in reopening the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that in series of Tribunal decisions in various cases wherein on similar statement of Shri Mukesh Chokshi, the cases were reopened and additions were made. In all those cases, the Tribunal has decided the issue of long term capital gain in favour of the assessee holding that the said statement of Shri Mukesh Chokshi was a general statement and could not be corroborated by any material evidence. Some of the decisions in this respect are as following : 1. Kataria Ketan Ishwarlal Vs. ITO ITA No.4304/M/2007 decided on 30.04.2010. 2. ACIT Vs. Shri Ravindrakumar Toshniwal ITA No.5302/M/2008 decided on 24.02.2010 3. ITO Vs. Truptic Shah ITA No.1442/M/2010 decided on 29.04.2011 4. Smt. Manjulaben L. Shah Vs. ITO ITA No.3112/M/2014 decided on 31.10.2014 5. M/s SDB Estate private ltd. vs. ITO ITA No. 584/M/2015 decided on 15.04.2015 10. We find that the facts of the above stated cases were all most identical to that of the assessee. In the case of Kataria Ketan Ishwarlal Vs. ITO (supra), the transactions were carried out through the same broker i.e. M/s Gold Star Finvest Pvt. Ltd. The Tribunal allowed the appeal of the assessee observing as under: 6.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off market transactions; b) The address of the M/s Buniyad Chemical Ltd. and M/s Talent Infoway Ltd. was the same and the contact person for M/s Buniyad Chemical Ltd. on the floor of ASEL was Shri Mukesh Chokshi. c) Mr. Mukesh Chokshi had stated that the sale proceeds have been paid to the assessee through the funds provided by the assessee. 12. As regards point (a) above, we find that the issue is covered by the decision of the Tribunal in the case of Mukesh R. Marolia wherein it has been held that off market transaction is not a unlawful activity and there is no relevance in seeking details of share transaction from stock exchange when the sale was not on stock exchange and relying upon it for making addition. 13. As regards points (b) (c) above, we find that the assessee has filed relevant documentary evidence before the AO but the AO has failed to consider the same. The CIT[A] in his order has considered the said evidence and has come to the conclusion that the share transactions are genuine. However, as held by the Tribunal in the case of Rajinidevi A. Chowdhary [cited supra], which is on similar set of facts, the AO could have verified from the Registrar of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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