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2015 (11) TMI 993 - ITAT AHMEDABAD

2015 (11) TMI 993 - ITAT AHMEDABAD - TMI - Assessment under section 153A - assessment of HUF - Held that:- 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 .....

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tax rejected - Held that:- Once the assessee has been pleaded that it has made purchase of shares through Swan 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 shar .....

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tanding, 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 INCOME TAX APPELLATE TRIBUNAL BENCH 'C' AHMEDABAD IT(SS)A Nos. 539 & 540/Ahd/2011, ITA No. 3177/Ahd/2011, ITA No. 3306/Ahd/2011 Rajpal Yadav, JM And Anil Chaturvedi, AM Date of Decision: Se .....

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13.10.2011. The Revenue is challenging the order of the CIT(A) in the Asstt.Year 2009-10, whereas, 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 .....

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7; 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 assessee has filed its return of income on 13.1.2010 declaring total income of ₹ 3,42,926/-. After hearing the assessee, the ld.AO has passed the assessment order under section 143(3) r.w.s. 153A on .....

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e 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 payme .....

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hnama exhibiting the authorization issued for covering the persons under the search action. On the strength of these details, he contended that since no search action was initiated in the case of the assessee, therefore, the AO has no jurisdiction to take action under section 153A of the Income Tax Act. For buttressing his contentions, he relied upon the decision of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Jolly Fantasy World Ltd., in Tax Appeal No.1254 of 2014 (Guj). H .....

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. 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, Pandes .....

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7; 73,19,460/- in cash over and above, the amount stated in the sale deed. In other words, the assessee had paid an amount of ₹ 90.00 lakhs by cheque. ₹ 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 ul .....

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r 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 categorically stated that the payment of ₹ 73,19,460/- was made in cash. It was made in the month of November, 2008. According to the ld.cousnel for th .....

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on of the same amount. This order of the CIT(A) is being impugned by the Revenue in ITA No.3306/Ahd/2011. 9. The ld.DR on the other hand, contended that once the authorization was issued in the name of the members of HUF, then it should be construed that search warrant was issued in the name of HUF also. The AO has rightly taken cognizance under section 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 repl .....

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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 .....

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h 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 a .....

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or any assets are requisitioned under section 132A after 31st of May 2003, the Assessing Officer shall issue a notice to such person requiring him to furnish the return of income and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Section 153B of the Act provides for time limit for completion of assessment under section 153A. Learned counsel for the assess .....

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essment 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 h .....

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id 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 was justified in law in accepting the additional grounds of the assessee which were raised after a lapse of 5 years of filing of second round of appeal and 14 years after the search 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 a .....

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w 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 fa .....

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any assets are requisitioned under section 132A after the 31st day of May, 2003, The AO shall (a) issue notice to such person ………. (b) assess or reassess the total income. The condition precedent for taking action under this section that search ought to have been initiated under section 132 of the Income tax Act upon that person. The learned DR appearing on behalf of the Revenue did not dispute with regard to this proposition. Her contention was that once on the members of .....

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B) Warrant to search (Details & Ownership of place of search) Telephone numbers 9-C, 8-C, Rudravan Apptts., Athwalines, Surat. C) (A) and (B) stated to be assessed (A) (B) 14. The assessee has submitted a list of members of the HUF, which reads as under: Name Relation Mr.Govinprasad Gopiram Sarawagi Karta Mrs. Kanta Devi Govindprasad Sarawagi Spouse of Karta Mr. Sanjay Govindprasad Sarawagi Son of Karta Mrs. Sandhya Sanjay Sarawagi Daughter in law of Karta Mr. Manoj Govindprasad Sarawagi So .....

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tically 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 not upheld the assessment order passed under .....

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lots in Central Park Area, where it paid a sum of ₹ 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 ye .....

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Asstt.Year 2006-07 and 2007-08, therefore, the arguments of double taxation would not be available to the assessee. The ld. Counsel for the assessee did not dispute for setting aside the order of the CIT(A) and inclusion of this amount for taxation in the Asstt.Year 2009-10, as offered by the assessee in its return of income. We allow the appeal of the Revenue and restore the addition of ₹ 73,19,460/-. The total taxable income of the assessee will be of ₹ 7,63,23,720/- which has been .....

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onfirming 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 r .....

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order. A perusal of these details would indicate that the assessee had purchased shares of three companies from Swan securities Pvt. Ltd. in the month of April, 2005 for consideration of ₹ 2,04,659/-. These shares were 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 t .....

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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 is proved and there is no dispute about the source of payment. The .....

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ot;a) The shares claimed to have been purchased through Swan Securities P.Ltd. were purchased un 1.4.2005 and 11.4.2005 No payment is made upto 31,3.2006 and from the copy of the account of the subsequent period, it is clear that the payment was made after sale of these shares through another broker Motilal Oswal Securities Ltd. b) No demat account of Swan Securities P.Ltd. or the appellant was produced before the Assessing Officer to prove that the purchases of shares were pooled in the demat a .....

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ares 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 .....

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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 appellan .....

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and .the settlement date is same and shares were not purchased and settled through any stock exchange." 23. The ld.counsel for the assessee has reiterated the contentions as raised before the CIT(A). He relied upon the order of the ITAT passed in ITA No.3233 and 3156/Ahd/2010 in the case of Manojkumar Sarawagi HUF for the Asstt.Year 2007-08. He contended that addition of ₹ 22,93,718/- in the case of one of the HUFs associated with group concern was made. This addition was made on acco .....

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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 con .....

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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 closing balance of the shares purchased by the assessee on 31-03-2006. PB-12 to 16 are the brokers debit note to support the contention of the assessee that shares were purchased in April, 2005. The assessee also filed sale bills to show that the same shares were sold through the broker M/s. Motilal Oswal Secu .....

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bility 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 holdin .....

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of the sale proceeds of the shares through identified party who has also acknowledged the same, therefore, no addition u/s 68 could have been made against the assessee unless purchases of the shares are made, sales could not be doubted by the AO. Therefore, there is no undisclosed cash credit involved in this case and as such the learned CIT(A) rightly held that the sale proceeds of the shares cannot be termed as unexplained cash credit. The coo-ordinate Bench in the group cases of Smt. Vimlabr .....

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sed 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 b .....

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is also pertinent to note that these shares were sold 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 .....

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nt 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 assessee later on. Thus, this is not such an issue which can doubt the very transaction. The next reason assigned by the ld.CIT(A) is that the assessee has not made deposit of advance money with the broker. To our mind, these circumstances highlighted by .....

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