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TMI Blog2016 (11) TMI 1387X X X X Extracts X X X X X X X X Extracts X X X X ..... g the legality of assessment passed under section 143(3) read with section 153A for the reason that these two assessments were not abated as no incriminating material found in the course of search action under section 132 based on which the additions were made. The Ld. Counsel submits that the Ld. CIT(A) rejected the grounds of legality of assessment holding that there is material found in the course of search or 153A proceedings which is factually not correct. 3. The Ld. D.R. submits that the Ld. CIT(A) rejected the appeal of the assessee holding that there is seized material found and therefore the assessments were abated. However, the Ld. CIT(A) deleted the additions under section 68 on merits. 4. On hearing both the parties, we admit the petitions filed by the assessee under section 27. The Ld. CIT(A) in his order in page 11, though taking note of the decision of the jurisdictional High Court in the case of CIT vs. Murali Agro Products Ltd. and also observing that in assessee's case there is material found/unearthed during the search proceedings he confirmed the legality of assessment made under section 153A holding that these two assessments were abated. On a careful perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue, the first issue is that the Ld. CIT(A) erred in deleting the addition of Rs. 22,25,265/- under section 68 of the Act. 7. The Ld. Counsel for the assessee at the outset submits that there is no incriminating material found in the course of search based on which this addition under section 68 was made. The Ld. Counsel for the assessee further submits that all these transactions were recorded in the books of accounts and without verification of the books of accounts the Assessing Officer has made these additions without any basis. He submits that since there is no seized material found in search no part of the addition is warranted. 8. When asked by the Bench, the Ld. D.R. could not bring to our notice the kind of seized material found leading relating to this addition and the Ld. D.R. could not rebut the submissions of the Ld. A.R. 9. On hearing both the sides and perusing the orders of the authorities below, we find that there is no incriminating material found in the course of search which leads to the addition made under section 68 of the Act. It is also the undisputed fact that these transactions were entered in the regular books of accounts as could be seen from the obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfrastructure Projects Ltd. @ Rs. 40/- per share before its Initial Public Offer and was allotted bonus shares in the ratio of 2:1 i.e. 8,00,000 shares. It was further found that during the year under consideration, on 23.07.2008, the assessee had sold 50,000 shares to one M/s. Tao Builders Pvt. Ltd. The said shares were sold at Rs. 13.33 per share. However, the A.O had taken the sale price of the share at Rs. 125/- per share on the ground that in case of Bhuta Investment Pvt. Ltd., one of the assessee's in the group, on similar date, sold the shares at Rs. 125/- per share. This led to the addition of Rs. 55,83,500/-. The A.O assessed the total income at Rs. 1,39,60,760/- u/s.143(3) r.w.s. 153A of the Act. Aggrieved by the above order, assessee filed appeal before the CIT(A) and it was submitted that as regards sale of 50,000 shares of ARSS to M/s Tao Builders N. Ltd. at Rs. 13.33 per share, the assessee had explained before the AO that it had acquired the ARSS shares @ Rs. 40/- per share and received 2 bonus shares for every 1 share, which reduced the cost price post- bonus to Rs. 13.33 per share. As the assessee had sold at cost price 50,000 shares of ARSS to M/s. Tao Builder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise the AO is able to prove that the consideration received by the assessee is more than what is shown in the return of income. Since the AO has failed to bring any cogent material on record to substitute the actual sale consideration received by the assessee, there is no justification for the addition made by disregarding the actual sale consideration received by the assessee. From the record we found that assessee had shown the shares as investment, therefore, profit or loss arising on their sale are liable to be taxed under the head of capital gain rather than business income, therefore, the contention of ld. DR that since the addition has been made u/s.68, the question of taking actual sale consideration does not arise. In view of the above discussion, we do not find any infirmity in the order of CIT(A). 18. We had also carefully gone through the seized documents to which our attention was invited by ld. DR and found that seized papers are draft MOU and agreement in the name of Devan Mehta, which shows that he was indulged in the business of providing services for listing of shares on various stock exchanges, which is not an illegal, no cogent material was there to indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying, transferring and manipulating the shares of M/s ARSS Infrastructures Project Ltd before its listing on 3.3.2010. The AO observed that the assessee sold 60000 shares to Shri Suresh Gaggar @ Rs. 13.33 ps per share and thus the AO noted that the assessee was involved in managing the IPO to which private limited companies and Mr. Suresh Gaggar were privy to such operations. According to the AO, two groups were indulged in manipulation in the share transactions of M/s ARSS Infrastructures Project Ltd before IPO and purchase and sales were made at different rates thereby earning profit outside the books of accounts. Finally, the AO came to the conclusion that the assessee sold 60000 shares of the price of Rs. 13.33 per share as disclosed by the assessee and accordingly, considering the sale price of these shares at Rs. 200 per share on the basis of sale instances on the same date held the assessee has concealed income to the tune of Rs. 1,20,00,000/- and added the same to the total income of the assessee from undisclosed sources of income besides making the other additions by passing order u/s 143(3) dated 30.3.2011 determining the total income at Rs. 4,88,38,370/-. Aggrieved by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of search statement of Mr. Devan Mehta was recorded, wherein he has clearly stated that assessee's business was investment. Shares were also reflected in the balance sheet as investment. There is no question in not treating the income from sale of shares as capital gain. Even in the assessment order except in the computation part the AC has mentioned the addition as made u/s.68. The AC has referred to para 5 of his order which para also describes activity in which assessee is engaged i.e. investment in shares. Provision of Section 68 cannot be involved because requirement of Section is nature and source, both should be unexplained. In the instant case both the nature and source of money has been explained and only addition has been made by substituting the actual sale price. Accordingly, addition has been wrongly made byAC u/s.68." In view of the above discussion and on perusal of the Tribunal order cited supra, we find that the case of the assessee squarely covered in favour of the assessee. Therefore, respectfully following the ratio laid down in the above case law, we dismiss the appeal of the revenue." 15. It was the submission of the Ld. Counsel that in the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the assessee placed reliance on the orders of the Ld. CIT(A). 21. We have perused the orders of the authorities below and heard the rival submissions. The Ld. CIT(A) after considering the elaborate submissions of the assessee and the averments of the Assessing Officer deleted the addition made under section 68 observing as under: "6.4 A private and confidential note was also seized at the premises of Shri Jitendra & Devan Mehta and seized as Annexure A-1 at page No.91 to 94 (copy enclosed) is understanding document for bringing the IPO of the ARSS Infrastructure Project Ltd. This document is however found incomplete and last few pages are not available but clearly indicates the arrangement between the ARSS group and Devan Mehta. This copy of agreement found at the place of Mr. Devan Mehta clearly establish the fact that Devan Mehta himself and Mr Jitendra Mehta were actively involved in share transactions and manipulation and arranging the finance and the structured share transaction before the IPO as this fact is further strengthened by the following documents found at the place of Mr Devan Mehta and Mr Jitendra Mehta the documents seized in annexure A-1 at page No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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