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TMI Blog2015 (11) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... reas, the assessee is in appeal in the Asstt.Year 2008-09. Since common issues are involved in these appeals, therefore, we heard them together and deem it appropriate to dispose of these appeals by common order. 2. First common dispute is involved in the Asstt.Year 2006-07 and 2007-08. The assessee has pleaded that the assessment order framed under section 143(3) r.w.s. 153A are void ab-initio because no search was carried out upon the assessee, therefore, the AO has no jurisdiction to initiate proceedings under section 153A of the Income Tax Act, 1961. 3. Brief facts of the case are that search and seizure operation was carried out at the residential premises of Karta who happened to be a sub-group of Laxmipati group in Surat. This search was carried out on 20.1.2009. The assessee has filed return of its income under section 139 of the Income Tax Act on 31.7.2006 declaring an income of Rs. 3,42,930/-. Along with search, a survey under section 133A of the Act was conducted at the business premises of the assessee on 20.1.2009. The ld.AO had issued notice under section 153A of the Income Tax Act on 27.7.2009 which was duly served upon the assessee. In response to the notice, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said decisions dated 21.1.2013 has been placed at page no.63 of the case compilation. Apart from these two decisions from the jurisdictional High Court, the assessee has relied upon the orders of the ITAT in the case of A.L. Ahuja Vs. DCIT, 1 SOT 475 (Del), ACIT Vs. Smt. Mohinder Kaur, ITA No.13/CHD/2006 and Jindal Stainless Ltd. Vs. ACIT, 19 DTR 0345 (Del.Trib.). The ld. Counsel for the assessee has also placed the copies of these decisions. 6. In his next fold of submissions, the ld. Counsel for the assessee submitted that during the course of survey, a paper bearing no.15 of Annexure-AS/27 was found and impounded from group premises. This paper contains the details of payment for purchase of three plots bearing nos.30, 31 and 32 of Central Park, Pandesara, Surat, which were purchased by the assessee on 19.4.2006. The statement of Shri Rakesh Sarawagi was recorded under section 131 of the Act by the DIT (Investigation) Surat on 23.1.2009. In the statement, it was disclosed that these plots were purchased by Shree Siddhi Vinayak Sarees Pvt. Ltd. for a consideration of Rs. 1,72,34,775/-. As far as the consideration is concerned, there is no dispute between the assessee and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153A of the Income Tax Act. She further contended that the recipient in his statement recorded on 3.8.2010 under section 131 of the Act has replied that the payment was received before the execution of the sale deed, meaning thereby, the assessee has made payment in the accounting year relevant to the Asstt.Year 2006-07. 10. We have duly considered rival contentions and gone through the record carefully. The Hon'ble Gujarat High Court in the case of CIT Vs. Ramesh D. Patel, Tax Appeal No.347 of 2013 and other appeals) has considered an issue that where search warrant was not issued in the name of the assessee, then the AO will have no jurisdiction to assess him under section 153A of the Income Tax Act. The question framed by the Hon'ble Gujarat High Court in the case of Ramesh D. Patel (supra) read as under: "Whether the ITAT was justified in law and in facts in annulling the assessment finalized u/s.153A(b) on technical ground that in absence of search warrant, no order can be passed u/s.153A(b) of the Act, without appreciating fact that the assessee did not challenge issue of statutory notice calling for return u/s.153A of Income Tax Act, 1961 within stipulated time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of such person for six assessment years immediately preceding the assessment year relevant to the previous year in which such search was conduced or requisition was made. In the present case, the Tribunal came to a factual finding that no search authorization was produced. This was necessary because the Assessing Officer had made contradictory references to the assessee being subjected to search or not. In absence of a search authorization, the Tribunal correctly held that assessment orders under section 153A could not have been passed." 12. Similarly, in the case of Jolly Fantasy World ltd. (supra), the Hon'ble Gujarat High Court has framed the following question of law, and answered these questions as under: (i) "Whether the Hon'ble Appellate Tribunal has committed substantial error of law in accepting the additional ground of the assessee that since, the name of these assessees are not appearing in the authorization/requisition, proceedings initiated u/s 158BC of the Act against them are void initio without appreciating the fact that the order under dispute was passed in pursuance of an order passed by the Tribunal itself? (ii) Whether the Tribunal wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered under this section. Before considering this argument, let us take note of the authorization. Copy of the Panchnama is available at page no.57. The relevant part of this Panchnama reads as under: "Party No.E-1 PANCHNAMA Dt. Of search : 20/1/2009 (To be prepared n quadruplicate) A) Warrant in the name Shri Govind Prasad G. Sarawagi, Sanjay Kumar G. Sarawagi, Maojkumar G. &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asstt.Years 2006-07 and 2007-08. 16. We now take the appeal of the Revenue i.e. ITA No.3306/Ahd/2011. 17. The grievance of the Revenue is that the ld.CIT(A) has erred in deleting the addition of Rs. 73,19,460/-. 18. Brief facts of the case are that the assessee has filed its return of income on 31.3.2010 declaring total income of Rs. 7,63,23,722/-. As discussed above, the assessee has purchased three plots in Central Park Area, where it paid a sum of Rs. 73,19,462/-, over and above the amount stated in the sale deed. This amount was paid in cash. The assessee has offered this amount for taxation in the Asstt.Yar 2009-10. The ld.CIT(A) has directed the AO to exclude this amount on the ground that equivalent to this amount has been added in the income of the assessee for the Asstt.Year 2006-07 and 2007-08. The ld.CIT(A) was of the opinion that the sale deed was executed in the accounting year relevant to Asstt.Year 2006-07, and therefore, the assessee must have paid amount before the sale deed. We have quashed the assessment order on the ground that no search action was taken against the assessee and therefore, no assessment order can be framed under section 153A of the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re sold in March, 2007. The ld.AO found that the assessee has not made the payment of purchase of shares upto the end of the financial year on 31.3.2006. According to the AO, the DEMAT account of the assessee reflects that almost all the shares are credited in April, 2007 and they were within a maximum period of 5 days. Thus, in the opinion of the AO, the assessee has not earned any long term capital gain, which is exempt from tax. He worked out an amount of Rs. 6,98,606/- as unexplained investment and made addition under section 69B of the Income Tax Act. This amount has been worked out after debiting purchase price of Rs. 1,97,890/- out of sale price of Rs. 8,69,496/-. Before the ld.CIT(A), it was contended that the assessee had made purchases from Swan securities Pvt. Ltd. which is duly registered with SEBI and concerned stock exchange. All the purchases are supported by bills, giving full details as to the name of scrips, quantity, price, total purchase consideration, brokerage, bills of brokers etc. The purchases were made at the prevailing market rate as quoted by the recognized stock exchange. The relevant quotes were produced before the AO. The purchase price of the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock exchange and the appellant has not deposited any advance money with the broker because the transaction were carried on mutual trust of buyer and seller, is also of no help to the appellant because had the appellant shown purchase of shares through M/s.Swan Securities P.Ltd,, but it sold the shares through M/s.Motial Oswal Securities Ltd who is another broker. The payment to M/s. Swan Securities P. Ltd. was reflected in the ledger account of M/s.Swan Securities P.Ltd, only after realization of sale proceeds of shares sold through Motial Oswal Securities Ltd. This also proves that shares were not pooled in the demat accout of Swan Securities P. Lid. g) The appellant has utterly failed to prove the share holding for more than 12 months by producing any other credible evidence in the form of demat account by showing purchases of shares in the demat account of the appellant or broker and payment for the purchase of shares in the normal course of business i.e. in normal time period. The purchases of shares were also not made through any of the recognized stock exchange which is clear from the bills issued by M/s.Swan Securities P.Ltd. on which the bill dates and .the settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the same shares were sold through the broker M/s. Motilal Oswal Securities Ltd. and payments have been received through account payee cheques on which security transactions taxes and stamp duty have been paid. The same is supported by PB-2 which is ledger account of the broker through whom shares were sold at Rs. 16.42 lacs. PB-3 to 7 are the brokers contract note to show that shares were sold in March, 2007. Copy of the bank statement was filed in support of the contention. PB-22 is the balance sheet of the assessee as on 31- 03-2006 to show outstanding liability in the name of M/s. Swan Securities Pvt. Ltd. through whom shares were purchased. The assessment order for assessment year 2006-07 u/s 143(3) of the IT Act passed after scrutiny in which returned income is accepted on furnishing the documents on the record of the AO. Therefore, it is unbelievable that the assessee would not have filed the profit & loss and balance sheet for the assessment year 2006-07 before the AO. We may further note that the AO in the assessment order merely holding that purchases are not genuine presumed that sales of the shares are bogus. The AO has not mentioned even the name of the brokers in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld before search and capital gain was shown in the return. The copy of the DEMAT account of the assessee also shows that some part of the shares purchased have been received in the DEMAT account of the assessee and have been later on sold through M/s.Motilal Oswal Securities Ltd. in the Bombay Stock Exchange. The case of the Revenue, on the other hand, is that the assessee did not make payment of purchase price before 31.3.2006. Thus, it gives a suspicion about the genuineness of the transaction. The second reasons assigned by the ld.CIT(A) is that the alleged balance sheet was not annexed with the return filed on 31.7.2006, because, nothing is mentioned to this effect in the list of enclosures. On an analysis of the objections pointed out by the ld.CIT(A) extracted supra, we find basically two circumstances are being highlighted against the assessee for doubting its claim of long term capital gain. The first circumstance is that payment of purchase price was not made before 31.3.2006. The contention of the assessee is that it has ordered for the purchase of shares and purchase was made on account of mutual trust that payment will be made. These have actually been made by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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