TMI Blog2015 (11) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... Securities Pvt. Ltd. and Swan Securities Pvt. Ltd. has trust in the assessee of payment, then actual payment not made before 31st March would not create any dent in the transaction of the assessee. The ld.AO failed to point out any defect in the confirmation of Swan Securities Pvt. Ltd. or any documents furnished to him in response to his query under section 133(6) of the Act. The shares have actually been sold by the assessee. It means it must have been purchased. The purchase and sale both happen before the date of search. There cannot be any specific reason for the assessee to make such a claim after the search, because nothing discriminatory qua this transaction was found. If the Swan Securities Pvt. Ltd. has confidence of recovery of its amount incurred for purchase of shares at the instructions of the assessee, then, merely on account of the reason that payment was outstanding, transaction cannot be doubted. The payment has been subsequently made reflects the relationship between Swan Securities Pvt. Ltd. and the assessee. - Decided in favour of assessee. - IT(SS)A Nos. 539 & 540/Ahd/2011, ITA No. 3177/Ahd/2011, ITA No. 3306/Ahd/2011 - - - Dated:- 30-9-2015 - IN THE INCOM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable income of the assessee at ₹ 72,42,926/-. An addition of ₹ 69,00,000/- was made by the AO on the ground that the assessee has made payment of on-money in purchase of plot bearing nos.30,31 and 32 of Central Park, Pandesara, Surat from Central Corporation. A total on-money of ₹ 73,19,460/- was paid out of which ₹ 69,00,000/- was paid during the accounting period relevant to the Asstt.Year 2006-07. 4. In the Asstt.Year 2007-08 also, notice under section 153A was issued on 27.7.2009 and assessee has filed its return of income on 13.1.2009 showing total income of ₹ 3,42,926/-. The assessment order was passed on 31.12.2010. The ld.AO has determined the taxable income of the assessee at ₹ 35,78,370/- while passing the assessment order under section 143(3) r.w.s. 153A of the Income Tax Act. The ld.AO has basically made two additions. One addition of ₹ 4,19,460/- which is part of payment of on-money falling in this accounting year and addition of ₹ 28,58,402/- on account of unexplained investment in shares. 5. The ld.counsel for the assessee has raised two fold submissions. In the first fold submission, he contended that no authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. ₹ 9,15,315/- was outstanding out of the cheque amount. The case of the assessee is that this amount of ₹ 73,19,460/- paid in cash was paid to Shri Javed S. Dalal in the accounting period relevant to the Asstt.Year 2009-10. It was submitted by the assessee before the AO that Shri Javed S. Dalal has booked these plots orally and ultimately the assessee has purchased these plots with the help of Shri Javed S. Dalal. It has paid on-money of ₹ 73.00 lakhs to Shri Javed S. Dalal. The assessee has produced Shri Javed S. Dalal, who in his statement recorded on 23.7.2010 disclosed that this amount was received by him before the sale deed, but, later on he filed confirmation before the AO that the payment was received during the accounting period relevant to the Asstt.Year 2009-10. He has shown this payment in his return for the Asstt.Year 2009-10. The assessee has also shown this payment in the return for the Asstt.Year 2009-10. In other words, the assessee has offered this amount for taxation in the Asstt. Year 2009-10. The statement of Shri Rakesh Sarawagi, director of Shree Siddhi Vinayak Sarees Pvt. Ltd. was recorded on 3.3.2009. In his statement, he has categorical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following observations: Having heard the learned counsel for the parties, we find from the record that the Assessing Officer had made contradictory statements with respect to the assessee being subjected to search. In one order, he noted that no search warrant was issued against the assessee, while in another order, he recorded that not only M/s.J.K.Securities Group, but the assessee was also subjected to search. To clear this confusion, the Tribunal gave multiple opportunities to the Revenue to produce the record of search and authorization. Despite sufficient opportunities, the Revenue could not produce the same. The Tribunal, therefore, concluded that there was no search warrant against the assessee. The Tribunal, therefore held that in absence of any search warrant, the orders passed by the Assessing Officer under section 153B of the Act were invalid. We have no reason to interfere with the order passed by the Tribunal. Section 153A of the Act pertains to assessment in case of search or requisition. Sub-section (1) thereof provides that notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153 of the Act, in case of a person where a search is initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch without any justification by the assessee for such delay? (iv) Whether the Hon'ble Tribunal was justified in law in accepting the contention raised by assessee at a later stage that block assessment failed for want of jurisdiction even though the facts of the case clearly shows that the assessee had responded to notices, filed return, participated in block assessment proceedings and accepted the assessment proceedings and further participated in set-aside assessment proceedings and suffered an assessment as per the direction of Hon'ble Tribunal, without raising such contention. .. 12. The aforesaid observations go to show that if the condition precedent for block assessment under Section 158BC is not satisfied, such would go to the root of the matter and the jurisdiction, which has not been expressly conferred by the statute, cannot be invested with the AO for the block assessment. 14. On facts, as recorded here above, admittedly, there was no warrant authorization on the name of the assessee and hence, the Tribunal has found the assessment as ab initio void, which, in our view, calls for no interference, on facts and on law. 15. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Daughter in law of Karta Mr. Manoj Govindprasad Sarawagi Son of Karta Mrs. Sarla Manoj Sarawagi Daughter in law of Karta Mr. Rakesh Govindprasad Sarawagi Son of Karta Mrs.Sujata Rakesh Sarawagi Daughter in law of karta Name of the HUF, who is separate taxable entity, is no where available in the Panchnama. It is also pertinent to note that all the members of the HUF were not covered under the search action. In section 153A, nowhere it has been provided that if the search is conducted on the partners, in their individual cases, then the firm would automatically deem to have been covered under search action. Similarly, there cannot be any implied search action on the HUF merely on the ground that some of the individual members of the HUF were covered under the search action. For invoking jurisdiction, there cannot be any implied operation of law. It should be specific and direct. Thus, no search was conducted on the HUF, and therefore, no order under section 153A ought to be passed. 15. Since we have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch do not call for recording of any specific finding. Hence, they are rejected. 21. In ground no.1, the assessee has pleaded that the ld.CIT(A) has erred in confirming the action of the AO for adding ₹ 6,98,606/- in the total income of the assessee under section 69B of the Income Tax Act, as unexplained investment. In ground no.2, the assessee has pleaded that the ld.Revenue authorities have erred in rejecting its claim of long term capital gain exempt from tax amounting to ₹ 7,61,589/-. 22. Both these grounds are inter-connected to each other, therefore, we take them together. Brief facts of the case are that the assessee has filed its return of income on 13.9.2008 declaring total income of ₹ 16,23,748/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act dated 16.9.2009 was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has shown long term capital gain of ₹ 7,61,589/- which it claimed as exempt. The ld.AO has noted the details of purchase and sales of shares in paragraph 4 at page no.2 of the assessment order. A perusal of these details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to prove that the purchases of shares were pooled in the demat account of the broker in the month of April,2005. c) Copy of the demat account of Motilal Oswal Securities Ltd. clearly proves that the shares were credited in the account of broker from April,2007. In the debit side of the demat account transaction report inter depository reference is made for the same shares on the same date but -from which depository account, the shares were transferred, was never explained before the Assessing Officer or during the appellate proceedings. d) The purchase of shares in the month of April,2005 was never done through recognized stock exchange or even contract note of broker was never produced before the Assessing Officer or during the appellate proceedings e) The appellant had not filed any balance sheet for the year ended on 31.3.2006 alongwith the original return which reflected the investment in shares. It is clear from the copy of the return of income filed during the appellate proceedings because as per list of enclosures, the balance sheet was not enclosed with the return. The appellant has made wrong claim that the balance sheet as on 31.3.2006 alongwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the objections raised by the Revenue, we would like to make reference of the observations made by the ITAT in the case of Manojkumar Sarawagi (HUF) in Asstt.Year 2007-08. The observations of the Tribunal read as under: 7. We have heard the rival submissions and perused the materials available on record. The assessee claimed long term capital gains on sale of shares. It was claimed that shares have been purchased from broker M/s. Swan Securities Pvt. Ltd. in April, 2005. The assessee filed confirmation of the broker M/s. Swan Securities Pvt. Ltd. before the Assessing Officer who has confirmed purchase of shares by the assessee through them in April, 2005. Copy of the account was also furnished and the consideration was made through banking channel. PB-17 and is the ledger accounts of the party to confirm purchase of the shares through banking channel. PB-9 is debit note of the broker charging interest on the outstanding amount against the assessee in accounting year 2006-07. PB-17 is ledger account to show that shares have been purchased by the assessee in April, 2005 through the broker M/s. Swan Securities Pvt. Ltd. PB-22 is also the statement of bills containing the clos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aws relied upon by the learned Counsel for the assessee deleted similar addition and held in Para 10 and 11 of the order dated 16- 09- 2011 as under .. : 26. The case of the assessee is that it has purchased shares for consideration of ₹ 1,97,890/- pertaining to three companies on 1.4.2005 and 11.4.2005 through Swan Securities Pvt. Ltd., meaning thereby, the shares were not purchased from stock market, but, they were purchased off-line. According to the assessee, these shares were credited to its DEMAT account maintained with M/s.Motilal Oswal Securities Ltd. in the month of April, 2007, and thereafter, these shares were sold. The assessee had computed long term capital gain on the sale of these shares and claimed exemption of ₹ 7,61,589/-. The AO has rejected the claim of the assessee. In support of its claim, the assessee has submitted the confirmation from the broker, copy of the bill raised by the broker, details of payments through account payee cheques, receipt of sale proceeds through account payee cheques. The AO had issued summons under section 133(6) to Swan Securities Pvt. Ltd. who has confirmed the transaction and submitted requisite details. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to make such a claim after the search, because nothing discriminatory qua this transaction was found. If the Swan Securities Pvt. Ltd. has confidence of recovery of its amount incurred for purchase of shares at the instructions of the assessee, then, merely on account of the reason that payment was outstanding, transaction cannot be doubted. The payment has been subsequently made reflects the relationship between Swan Securities Pvt. Ltd. and the assessee. Under similar circumstances, the ITAT has deleted the addition made by the AO on account of unexplained cash credit in the case of Manojkumar Sarawagi-HUF (supra). Though this decision has not laid down any proposition of law, it has been put in service simply in order to corroborate that Swan Securities Pvt. Ltd. and M/s.Motilal Oswal Securities Ltd. are genuine brokers dealing in share transactions. 27. Taking into consideration all the facts and circumstances, we allow both the grounds of appeal raised by the assessee, and the direct the AO to accept the claim of long term capital gain made by the assessee. 28. In the result, appeals of the assessee and that of the Revenue are allowed. Order pronounced in the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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