TMI Blog2017 (1) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to ₹ 2 lakhs in the assessment year 2005-06. Similar addition was made on account of share capital in the assessment year 2004-05. 3. Rival contentions have been heard and record perused. 4. The brief facts of the case are that a search seizure action u/s.132(1) of the Act was carried out in the business premises of M/s. Flemingo / Bermaco Group of companies as well as in the residential premises of the Directors of the group on 31.10.2009. During the course of search unaccounted cash and documents were found and accordingly appropriate assets / documents were seized. Arguments were based on these seizures, framed in the case of M/s.Flemingo/Bermaco Group u/s.153A. The assessee is one of the group company. Consequent to the search seizure action, notices u/s.153C of the Act were issued and assessments u/s.153C r.w.s. 143(3) of the Act were completed for AYrs.2004-05 and 2005-06 5. During the course of scrutiny assessment, AO made addition on account of share capital by observing that assessee could not substantiate genuineness of transaction and source of fund. By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinder Singh Bawa v/s.DCIT - 28 taxrnann.com 328 c) ITAT Mumbai Bench in the case of Anil P. Khimani vs. DCIT - ITA No. 2855 to 2860/Mum/2008 dated 23-02-2010 d) ITAT Jodhpur Bench in the case of Vishal Dembla vs. DCIT - 157 TTJ 189 e) High Court of Bombay on the case of CIT v. Murli Agro Products Ltd. [2014] 49 Taxrnann.com 172 f) ITAT Mumbai Bench in case of ACIT v. Jayendra P. Jhaveri [2014] 65 SOT 118 g) Jodhpur ITAT in the case of Ayushi Builders Developers vs. DCIT [2014] 166 TTJ 25 h) ITAT Pune Bench in case of ACIT vs. SRJ Peety Steels P. Ltd. [2011] 137 TTJ 627 i) Mumbai Tribunal In the case of Nikki Agarwal vs. ACIT dated 22-01-2014 being ITA No. 879/M/2011 [2014-TIOL-75-ITAT-MUM] j) Mumbai Tribunal in the case of Parag M. Sanghvi vs. ACIT in ITA No. 8027/Mum/2010 dated 30-09-2015 k) Mumbai Tribunal in the case of Zeenat P. Sanghvi vs. DCIT in ITA No. 8026/Mum/2010 dated 19-12-2014 l) Jaipur Tribunal in the case of Jadau Jewellers Manufacturers Ltd. vs. ACIT in ITA No. 686/JP/2014-[2016j 175 TTJ 344 m) Latest decision of Mumbai Tribunal in the case of Group company of Appellant, M/ s Bermaco Energy Systems Ltd Vs DCIT dated 31 May 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity of share applicant, genuineness of transaction creditworthiness of said party, assessee company submitted its explanation and various documents. However in para 9 on page 4 of the assessment order for AY 2004-05 the AO mentioned that the assessee could not satisfactorily explained the cash credits into its books and merely submitted following documents of the share applicant parties: i) MOA/ AOA of the investing companies; ii) Share Applications form; iii) PAN Details; iv) Board resolution of the investor companies; v) Confirmations; vi) Balance sheet of those companies; and vii) Copy of Income-tax returns filed by the share applicant companies for relevant Assessment Year. 15. On the other hand, learned DR relied on the order of the lower authorities and contended that assessee could not substantiate genuineness of transaction and creditworthiness of shareholder, therefore, AO was justified in making addition on account of share capital. With regard to legal ground, contention of learned DR was that at para 8.4, CIT(A) has observed that recording of satisfaction is not necessary as there is no need for handing over of the books or documents for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eopening of the assessment. Thus, the assessment for both the assessment years i.e. A.Y.2004-05 2005-06, had become final and was not pending, therefore, there was no question of abatement. We had carefully gone through the order of AO as well as CIT(A). We had also gone through the statement recorded u/s.132(4) and did not find any mention of incriminating material with regard to bogus share capital or unsecured loans having been received by assessee in these years. Whatever share capital and unsecured loans were received by the assessee, was duly recorded in the regular books of account and shown in the audited accounts filed along with the return of income for the respective years. Applying the proposition of law laid down by ITAT Special Bench in the case of All Cargo Logistics Ltd., 137 ITD 287, which was confirmed by Hon‟ble Bombay High Court vide order dated 21-4-2015, to the facts of the instant case, we can safely reach to the conclusion that in respect of the years for which assessment was not pending on the date of search and when no incriminating material was found during the course of search, the addition so made in the A.Y.2004-05 2005-06 were not justified. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding anything and within the meaning of the above provisions having been concluded, it is open for the revenue to make an assessment. It is also open to the revenue to make a reassessment in cases where it exercises the powers to requisition books of account etc. This is because it is of the view that the books of account are required to be summoned or taken into custody. It, therefore, issues a summons in that regard. It may also requisition the books of account or other documents for that might be useful and or any assets representing withholding or part income or property which has not been or would not have been disclosed for the purpose of the Indian Income-tax Act, 1922 or the Income-tax Act of 1961 by any person from whose possession or control they have been taken into custody. This is when the authorities have reason to believe that such powers need to be exercised. Therefore, the fetters and which are to be found in other provisions are removed and a notice of assessment in such cases is then issued. That is mandated by sub-section (1) of section 153A. It is not only the issuance of the notice but assessment or reassessment of total income of six assessment years immedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153A establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order ■ The stand of revenue that these observations are made in passing or that they are not binding on instant Court is not agreeable because the essential controversy before the Bench was somewhat different. Revenue urged that was only in relation to the legality and validity of the order of the Commissioner under section 263. Had that been the case, the Division Bench was not required to trace out the history of section 153A and the power that is conferred thereunder. When the revenue argued before the Division Bench that the power under section 153A can be invoked and exercised even in cases where the second proviso to sub-section (1) is not applicable that the Division Bench was required to express a specific opinion. The provision deals with those cases where assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifically disapproved in CIT v. Anil Kumar Bhatia [2012] 24 taxmann.com 98/211 Taxman 453 (Delhi). However, this argument is not found to be accurate. Upon reading of the observations of the Delhi High Court as a whole and in entirety, it is not possible to agree with revenue that the High Court of Delhi reached a conclusion different than the view taken by the Division Bench. 23. ITAT Delhi Bench in the case of Jakson Enterprises, ITA No.383/Del/2013, order dated 27-5-2015, held as under :- 9. Having gone through the orders of the authorities below, we find that the Learned CIT(Appeals) has rejected the contentions of the assessee on the issue of validity of assessment framed under sec. 153A read with sec. 143(3) of the Income-tax Act, 1961 in absence of incriminating material found during the course of search and in the absence of the pendency of the assessment as on the date of search on the basis that for framing assessment under sec. 153A, no such requirement is there and the only requirement is that search has been conducted under sec. 132 of the Act. 10. Having gone through the decisions cited by the learned AR including the decision of Special Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me incriminating material was found in respect of a non-pending assessment. It was in that background that the Hon'ble High Court held that sec. 153A applies if incriminating material is found even if assessments are completed. The question as to whether any addition can be made in respect of completed assessments when no incriminating material 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 reop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending on the date of search which would abate in terms of second proviso to sec. 153A( 1), the total income shall be computed afresh uninfluenced by the fact whether or not there is any incriminating material. In fact, this is the position which follows when we read the judgment of the Hon'ble Delhi High Court in Anil Kumar Bhatia (supra) in juxtaposition 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 us. 13. We, thus, find that the decision of the Hon‟ble Jurisdictional Delhi High Court in the case of Anil Kr. Bhatia (supra) supports the case of the assessee that in absence of incriminating material found during the course of search an addition u/s 153A of the Act cannot be made in the assessment framed thereunder. The decisions relied upon by the ld. CIT, DR in the cases of Canara Housing Development Company vs. DCIT (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and addition u/s 115JB was made by the AO in absence of incriminating material concerning this addition. This addition was questioned by the assessee on the basis that there was no incriminating material found concerning the addition made in the assessment u/s 153A of the Act, which has been rejected by the Hon‟ble High Court with the above finding. It was held by the Hon‟ble High Court that there cannot be multiple assessments, once sec. 153A of the Act is applicable. Section 153A(1) postulates one assessment; putting the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted or requisition was made. 14. In para no. 3 of the judgment the Hon‟ble Delhi High Court while discussing the cited decisions in the cases CIT vs. Chetan Das (2012), 254 CTR (Del) 292 and CIT vs. Anil Kr. Bhatia (2012), 2010-11 Taxman 453 (Del) cited by the ld. AR of the assessee appellant, has noted certain observations made and findings given by the Hon‟ble Court therein. Thereafter in para no. 4 of the judgment, the Hon‟ble High Court has held as under: The first question, we no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of accounts or other documents have to be taken into consideration while assessing or re-assessing the total income under the provisions of sec. 153A of the Act. Even any undisclosed income or undisclosed property has been found after the conclusions of the search, same would also be taken into consideration. The requirement of assessment or re-assessment under the said section has to be read in the context of sections 132 or 132A of the Act, in much as, in case nothing incriminating is found on account of such search or requisition, then the question of re-assessment of the concluded assessment does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. 17. In the case of SSP Aviation Ltd. vs. DCIT (supra) where the validity of assessment framed u/s 153C was challenged it was held that if the AO is satisfied that any money, bullion, Jewellery or other valuable article or thing or books of account or documents seized in the course of the search belongs to a person other than the person who was searched, then such assets or books of accounts or documents shall be handed ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and void, the other issues raised in other ground nos. 7 and 8 questioning the validity of the disallowance of deduction u/s 80IB on scrap sales (ground no.7) and disallowance made u/s 14A (ground no.8) have become infructuous and academic only. These grounds thus do not require any adjudication. The same are being disposed off as such. 24. Similar view has been taken by ITAT Jodhpur in the case of Vishal Dembla, 40 taxmann.com 134, wherein it was held that where the assessee has already submitted his return prior to search which has attained finality and no incriminating document was found during the search, gifts already disclosed by the assessee in the return of income which has attained finality, could not be disturbed u/s.153A. 25.The Hon‟ble jurisdictional High Court in the case of Murli Agro Products Ltd., 49 taxmann.com 172, held as under :- Held : The object of inserting sections 153A, 153B and 153C by Finance Act, 2003 by discarding the existing provisions relating to search cases contained in Chapter XIV B of the Act, as stated in the Memorandum explaining the provisions in the Finance Bill 2003 was that under the existing provisions relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessments years covered under section 153A stand abated cannot be accepted. Similarly on annulment of assessment made under section 153A(1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A(1). [Para 10] In the instant case, the Assessing Officer while passing the independent assessment order under section 153A read with section 143(3) could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. In the present case there was nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings which would show that relief under section 80HHC was erroneous. In such a case, the Assessing Officer while passing the assessment order under section 153A read with section 143(3) could not have disturbed original assessment order relating to section 80HHC deduction and consequently the Commissioner could not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere intimation and the Assessing Officer had reason to believe that income had escaped assessment and it was open to the Assessing Officer to re-assess the income under section 153A, even without any incriminating material found during the search action, is not tenable. The next argument of the revenue has been that since in the case in hand, no books of account were found during the search action that itself is the incriminating material against the assessee, has no force of law. Though the revenue may not be satisfied with the explanation of the assessee that the books of account were lost in flood, still the assessment or addition cannot be made on this ground. Such an inference of concealment of income cannot be made just on mere assumptions, presumptions or suspicion. The next limb of argument of the revenue, while relying upon the authority of Supreme Court has been that the Court should not place reliance on the decisions without discussing as to how the factual situation fits to the factual situation of the decision on which reliance is placed. His contention is that one additional or different fact may make a world of difference between conclusions in two cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Zeenat P. Sanghvi vs. DCIT in ITA No. 8026/Mum/2010 dated 19-12-2014 xi) Jaipur Tribunal in the case of Jadau Jewellers Manufacturers (P) Ltd. vs. ACIT in ITA No. 686/JP/2014-[2016] 175 TTJ 344 29. The ITAT Delhi Bench in the case of M/s Suncity Projects Pvt. Ltd., 2016-TIOL-643-ITAT-Del, held as under:- 13. We have carefully considered the arguments of both the sides and have perused the material placed before us. In the case of Kabul Chawla (supra), Hon'ble Jurisdictional High Court has considered all earlier decisions of Hon'ble Delhi High Court and has also considered the decisions of other High Courts and Tribunals and summarized the legal position in paragraph 37 and at the conclusion of the case in paragraph 38, which are reproduced below:- Summary of the legal position. 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:- i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 14. In clause (iv) above, their Lordships held Obviously an assessment has to be made under this Section only on the basis of seized material . In clause (v), the same is reiterated by holding In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made . In clause (vii), it is stated Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search . Hon‟ble Delhi High Court in the case of RRJ Securities Ltd., 2015-TIOL-2539-HC-DEL-IT, held as under :- In respect of such assessments which have abated, the AO would have the jurisdiction to proceed and make an assessment. However, in respect of concluded assessments, the AO would assume jurisidciton to reassess provided that the assets/documents received by the AO represent or indicate any undisclosed income or possi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded ujs. 132(4) of the Act dated 31-10-2009 and 1-11-2009 it is very clear that no such facts have been recorded on the issue of share capital money received by the Appellant Company as mentioned by the Ld AO. 18. From the record we found that inspite of requests by the assessee, Ld AO has not furnished copy of the satisfaction note to the assessee. The same is also evident from the reply furnished by the AO in response to the CIT(A) vide remand report dated 21.02.2014. Ld CIT(A) has discussed the above contention of the assessee in para 6.1 to 7.2. Thereafter he has given his decision in para 8 of the appellate order. In para 8.4 Ld CIT(A) has held that I am of the view that recording of satisfaction is not necessary as there is no need for handing over of the books or documents or the assets seized to another AO as the AO in the case of the Appellant company is also the AO in the group cases of Flemingo/ Bermaco where the search operations were conducted on the basis of joint warrant of authorization issued. 19. The Hon'ble Supreme Court in the case of Mls Calcutta Knitwears in its detailed judgement in Civil Appeal No 3958 of 2014 dated 12.03.2014 has laid down that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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