9911796707
TMI Blog2017 (6) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... r alleged commission paid @ 0.5% to obtain accommodation entries though there is absolutely no material available on record. Thus, the said addition must be deleted. 3. Without prejudice to the grounds taken above, the learned CIT(A) erred in law and on facts in confirming the additions of Rs. 2,95,00,000/- and Rs. 1,47,500/- made in hands of the appellant even when all the surrounding circumstances quite evidently indicate that the alleged undisclosed income could belong to the original promoters who had surreptitiously surrendered the same in the hands of the appellant, though they were the sole and ultimate beneficiaries of the impugned accommodation entries introduced by way of share capital. Thus, the said addition so confirmed in the hands of the appellant- company must be deleted." 3. Briefly stated, the facts giving rise to this appeal are that the AO completed assessment u/s 153A r.w.s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'. making two additions/disallowance viz. addition of Rs. 2,95,00,000/- on account of unexplained cash credit and another addition of Rs. 1,47,500/- on account of commission paid to accommodation entry provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account or other material not produced in the course of original assessment but which could alleged to have been found in the course of search or an undisclosed income or property discovered therein; and (b) as the assessment proceedings were not abated but were already completed. Thus, all additions so made in the assessment order should be deleted following the Special Bench decision dated 06/07/12 in the case of All Cargo Global Logistics Ltd. Vs. DCIT (2013) 137 ITD 287 (Mum.)(SB)." 8. In view of the legal issue sought to be raised by the assessee, the additional Ground no. 5 we observe that by this ground, the assessee has challenged the sustainability of additions made in the assessment order passed u/s 153A of the Act alleging the same as bad in law because the additions were not based on any material which could allege to have been found during the course of search and seizure operation carried out on the assessee on 24.9.2009 u/s 132 of the Act. 9. We may point out that as per the ratio of the decision of Hon'ble Supreme Court in the case of NTPC [supra], a legal issue not involving any fresh investigation into the facts except those already on record of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. AR further drawing our attention towards last para at page 11 of the assessment order submitted that the A.O proceeded to made addition on account of commission @ 0.5% of the sum for which alleged entry was provided on the basis of so called statement of Shri Mahesh Garg without confronting the same to the assessee by accepting the statement of Shri Mahesh Garg and others as sacrosanct and gospel truth without further investigation. Therefore, this addition without any incriminating material is not sustainable. The ld. AR further pointed out that as per the details of seized documents referred to in the assessment order i.e, Annexure A-5 of Party Y-2, the ld. AR submitted that this Annexure contains share transfer deeds of third party for transfer of shares for M/s Ishu Finance & Invest. [P] Ltd alongwith other related documents pertaining to shares allotted to those third parties by M/s Ishu Finance & Investments [P] Ltd and not the assessee company i.e Shyam Sunder Infrastructure P Ltd. 13. Regarding Annexure A-1 of Party Y-2, the ld. AR further submitted that this Annexure contains shares application documents and share transfer deeds for transfer of shares of M/s Mamram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance and Investment Pvt Ltd and there is no mention of the assessee company i.e. M/s Mamram Developers Pvt Ltd and the changed name of assessee i.e Shri Shyam Sunder Pvt. Ltd, therefore, the so called incriminating material cannot be linked as "belonging to" or "pertaining to" the assessee and thus, it has to be held that no incriminating material against the assessee was found during the course of search and seizure operation or during post search investigations by the INV team or by the A.O. 16. The ld. AR further drawing attention towards statement of Shri Ram Kishan Gupta recorded on 24.9.2009 during search and seizure operation u/s 132(4) of the Act, the ld. AR submitted that the assessee surrendered and provided the break-up of disclosure of Rs. 19 crores while replying to question No. 28 and asked some time to submit the same. The ld. AR further submitted that replying to question No. 30, Shri. Ram Kishan Gupta categorically stated that he has offered for taxation of additional income of Rs. 19 crores in the hands of himself, his family members and other business concerns for F.Y 2009-10 relevant to A.Y 2010-11 to account for the discrepancies found during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta were rightly held as not tenable under the law and the same were rightly rejected by the ld. CIT(A) for upholding the rejection. 18. The ld. DR drawing attention towards reply to Question No. 7, given by Shri Mahesh Garg, submitted that Shri Garg clearly stated that he knew Shri R.K. Gupta and many times he visited resident and office of Shri R.K. Gupta alongwith Shri Subhash Singhal. The ld. DR vehemently pointed out that in view of this statement and facts stated by Shri Garg therein there is no iota of doubt that there was a link between entry provider Shri Mahesh Garg with Shri R.K. Gupta and thus the statement of Shri Mahesh Gupta can very well be relied for making addition u/s 68 of the Act. The ld. DR further submitted that the statement of Shri Mahesh Garg has been recorded by the ACIT, CC-15, New Delhi u/s 131 of the Act on 9.11.2011 which has been taken into cognizance by the A.O in para 11 of the impugned order, therefore, this statement recorded during post search proceedings is an incriminating material which can be taken as basis for making addition in the hands of the assessee. 19. Replying to the above, the ld. AR further drew our attention towards the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s Mamram Ltd. alongwith other related documents pertaining to shares allotted to those third parties by M/s Mamram Ltd. cannot be taken as incriminating material against the assessee. Further, we find that the Annexure A-5 of party Y-2 contains share application documents and share transfer deeds for transfer of shares of M/s Mamram Ltd and as per Company Master Data the directors were Smt. Kamla Garg, Shri Sanjay Gupta and Smt. Renu Gupta and this company was incorporated on 8.3.1990 having its Registered Office at Flat No. 101, Pkt-D-10, Om Sai Apartment, Sector 7, Rohini, New Delhi - 110 085. . 23. On a specific query from the Bench, the ld. DR could not controvert this fact that the assessee company was incorporated on 27.2.2003 in the name of M/s Mamram Developers Ltd which was subsequently changed into M/s Shyam Sunder Infrastructure Pvt. Ltd having directors as Shri Surendra Gupta and Shri Sumit Gupta having its Registered Office at G-18 & 19 Mamram Majesty Mall, Plot No. 2, Road No. 43, Gurharkishan Marg, Pitampura, New Delhi 110 034. He could not establish any connection or nexus of the present assessee company with the said company M/s Mamram Ltd. Therefore, Annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -DR drawing our attention to para 3.10 of the first appellate order submitted that the addition is based on the statement of Shri Ram Kishan Gupta recorded u/s 132(4) of the Act on 24.9.2009 during search and seizure operation. He further contended that as per the ratio of the decision of the Hon'ble High Court of Delhi in the case of Rajhans Towers [P] Ltd Vs. CIT reported as [2015] 56 Taxman.com [Delhi], Bhagirath Aggarwal Vs. CIT reported as [2013] 13 Taxmann.com 274 [Delhi] and the decision of Hon'ble Madras High Court in the case of B. Kishore Kumar Vs. CIT [2014] 52 Taxmann.com 449 [madras], which has been upheld by the Hon'ble Supreme Court reported as [2015] 62 Taxmann.com 215 [SC], he contended that when the assessee himself has stated in sworn statement during search and seizure operation about his undisclosed income, tax has to be levied on the basis of admission without scrutinizing documents. 28. Replying to the above contention of the ld. DR, the ld. AR submitted that as per reply to Question No. 30 in the statement of Shri Ram Kishan Gupta, the surrender of Rs. 6 crore has been made for A.Y 2010-11 in the hands of the assessee and not for A.Y 2005-06 thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to state that these figures are tentative and are not final and may undergo some change depending upon business developments over the remaining period of current financial year 2009-10 may change or deviate. We shall try to pay income tax as per the Income-tax Act in this FY only. In respect of individuals I will be able to provide detail only after going through the contents of the lockers and seized material". 30. Thereafter, we also find it appropriate to reproduce the findings of the Tribunal in the case of a group company M/s Babushka Promoters [P] ltd [supra] wherein at para 9-10 it was held thus: "9. On careful consideration of allegations made by the AO for making the impugned addition, it is vivid that the AO made addition in present A.Y 2010-11 in pursuance to some alleged discrepancies pertaining to A.Y 2009-10. In our considered opinion, if any allegation of discrepancies relating to accounting of income has been found in report of any other particular year i.e. A.Y 2009-10 in the present case, then the fact may be considered for making addition or disallowances, if permissible and sustainable under the provisions of the Act but not in the other period relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed income for A.Y 2005-06. Thus, in our considered opinion, on the strength of such bald statement, no addition can be made taking the same as incriminating material or evidence found by the AO during the search operation. 33. In view of the above noted conclusion, from the order of the Tribunal in assessee's own case for A.Y 2010-11 dated 03.01.2017 [supra] it is discernible that the Tribunal by following earlier Tribunal order in the case of M/s Babhuska [supra] also held that no addition can be sustained on the strength of statement of Shri Gupta. Therefore, we hold that in absence of details about the nature of income he was surrendering in the case of a particular company or person of a group and particular head income the statement of Shri Gupta cannot be taken as valid basis for making addition u/s 68 of the Act for A.Y 2005-06. 34. So far as the application of the ratio of the decision as relied upon by the ld. DR is concerned, we are of the view that in the present case, we are unable to see any disclosure by Shri Gupta in his statement recorded during search u/s 132(4) of the Act which states that surrender of such amount under such head in the hands of the present ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same time, we also note that the ld. DR has also placed reliance on the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla [supra] and submitted that conjective reading of para 37 (v) and (vi) make it amply clear that incriminating document is must only where assessment u/s 143(3) of the Act has been completed as there is no assessment u/s 143(i)(a) of the Act. 37. For resolving and proper adjudication of the above rival contentions, at the outset, we find it appropriate to reproduce the relevant para 37 of the judgment of Hon'ble Jurisdictional High Court of Delhi in the case of Kabul Chawla [supra] wherein their Lordships summarised the legal position and laid down the following the proposition: "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 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. It has also been held that the word 'assess' in Section 153 A is relatable to abated proceedings '(i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings". The Hon'ble High Court in sub-para (vi) further held that "in so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the finding of the search and any other material existing or brought on the record of the AO. vii. 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 or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 39. In the present case, on being asked by the Bench, both the parties agreed to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Lata Jain reported [2016]-TIOL-866- HV-DEL-IT wherein it was held that it is necessary to incriminate material recovered for the purpose of framing assessment u/s 143(3) r.w.s 153A of the Act. In this order, their Lordships speaking for the Hon'ble Jurisdictional High Court of Delhi and after considering their earlier decision in the case of Kabul Chawla [supra] held that if no incriminating material was found during the course of search addition is not sustainable and deserves to be deleted. 41. In view of the above conclusion, we hold that the addition made u/s 68 of the Act by the AO in the assessment order passed u/s 143(3) r.w.s 153A of the Act for A.Y 2005-06, were not based on any books of account or any other material not produced during the course of original assessment which alleged to have been found in the course of search or undisclosed income or property discovered during the course of search and seizure operation, then all the additions made in the assessment order deserve to be deleted as the assessment proceedings for A.Y 2005-06 were not abated but already completed on the date of search i.e. 24.9.2009. Our conclusion also gets support from the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
