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Shri Shyam Sunder Infrastructure [P] Ltd Versus The A.C.I.T Central Circle –15 New Delhi

2017 (6) TMI 824 - ITAT DELHI

Addition u/s 68 - 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. - Assessment u/s 153A - Held that:- We hold that the addition made u/s 68 by the AO in the assessment .....

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i.e. 24.9.2009. We hold that the impugned assessment order framed u/s 143(3) r.w.s 153A of the Act for A.Y 2005-06 dated 26.12.2011 is bad in law and thus the same is sustainable and deserve to be quashed and hence we quash the same. - ITA No. 6216/Del /2013 - Dated:- 7-4-2017 - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER, AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Shri Sanjeev Bindal, Adv For Th eRespondent : Shri S.S. Rana, CIT DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This .....

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hird party whose statements was relied upon by the department against the appellant-company. Thus, the said addition so made must be deleted. 2. The learned CIT(A) erred in law and on facts in confirming the addition of ₹ 1,47,500/- made for 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 .....

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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 ₹ 2,95,00,000/- on account of unexplained cash credit and another addition of ₹ 1,47,500/- on account of commission paid to accommodation entry providers. Aggrieved, the assessee carried the mat .....

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case of ACIT Vs. Bhagwati Printers [P] Ltd [2006] 102 TTJ [Del] 480 in the case wherein it was held that the legal ground or issue not involving any fresh investigation into the facts except those already on record, then if the additional ground goes to the root of the case should be admitted and adjudicated in the interest of justice. Further placing reliance on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Company [1998] 229 ITR 383 [SC], the ld. AR conten .....

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in the case of All Cargo Global Logistics Ltd Vs. DCIT [2013] 137 ITD 287 [Mum][SB]. 6. In rejoinder, the ld. AR submitted that the additional ground raised by the assessee is purely a legal ground arising out of facts and material already on record and does not require any further investigation beyond the record, therefore, in view of the ratio laid down in the case of NTPC Ltd [supra] additional ground No. 5 may kindly be admitted for hearing and adjudication. 7. On careful consideration of th .....

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ncome 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 sustainabili .....

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e already on record of the Tribunal, can be raised by way of additional ground at the belated stage first time before the Tribunal. In the instant case, the legal issue sought to be raised by the assessee way of additional Ground No. 5 is purely a legal issue which does not require any fresh investigation into the factual matrix of the case except the facts and documents already on record and raised on the basis of advice and correct legal position and the omission to raise the same earlier was .....

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Finally, application of the appellant for admission of additional ground is allowed. Additional Ground No. 5 11. We have heard the rival submissions and have carefully perused the relevant material on record. At the very outset of the opening of the hearing, the ld. AR submitted that no incriminating material was found during the search and seizure operation held u/s 132(1) of the Act conducted by the DIT[INV]-II on 24.9.20009 in the case of M/s Mamram Group of cases including the assessee. The .....

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earch and seizure operation of the assessee on 24.9.2009, therefore, no addition could have been validly made on the assessment which already stood completed on the date of search and seizure operation as no assessment proceedings pertaining to A.Y 2005-06 i.e. A.Y under consideration were pending on the date of search. Therefore, no addition could have been made validly in the absence of any incriminating material. 12. The ld. AR further drawing our attention towards last para at page 11 of the .....

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ils 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 furt .....

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tered Office at G-18 & 19 Mamram Majesty Mall, Plot No. 2, Road No. 43, Gurharkishan Marg, Pitampura, New Delhi 110 034 whereas the said company to which Annexure A-1 to Part Y-2 pertains was incorporated on 8.3.1990 with Mrs. Kamla Garg, Shri Sanjay Gupta, Smt. Renu Gupta as directors having its registered office at Flat No. 101, Pkt-D-10, Om Sai Apartment, Sector 7, Rohini, New Delhi - 110 085. 14. Placing copy of the Company Master Data of both the companies, the ld. AR strenuously pointe .....

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by the A.O in the assessment order i.e. Annexure A-5 of Party Y-2 and Annexure A-1 of partly Y-2 has no relation in any manner with the present assessee company. Therefore, neither Annexure A-5 of Party Y-2 nor Annexure A-1 to party Y-2 can be taken as an incriminating material for validly framing assessment u/s 153A of the Act against the present assessee in the instant case. 15. The ld. AR further submitted that even as per the statement of Shri Mahesh Garg recorded on 09-11-2011 u/s 131 of th .....

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Limited and the other was M/s Ishu 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 investigation .....

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as offered for taxation of additional income of ₹ 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 of search in respect of individuals and company and also to account for any other discrepancies found during search and post search proceedings and giving details of the additional income as declared and disclosed during the search operation. Therefore, Shri Ram Ki .....

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per contra, the statement of Shri Mahesh Garg clearly states that accommodation entries were provided to M/s Mamram Ltd which is a separate and distinct company which has no relation in any manner, with the present assessee. Therefore, the aid of statement of Shri Mahesh Garg cannot be taken as basis and incriminating material for making additions in the hands of the present assessee u/s 68 of the Act for A.Y 2005-06. 17. Replying to the above ld. DR, first of all, drew our attention to para 3.1 .....

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. The ld. DR further submitted that Shri R.K. Gupta and his wife held almost entire share holding i.e. 96% on the date of search and he was also promoter of the M/s Mamram Group, Therefore, statement given by him u/s 132(4) of the Act has to be held as valid and indicates to utilize his statement was given by the A.O to the assessee by way of notice u/s 143(1) of the Act on 9.12.2011 and again by note sheet entry dated 2.12.2012. Therefore, facts being same for the reasons mentioned in the case .....

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a 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 .....

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lopers Pvt. Ltd for F.Y. 2009-10 pertaining to A.Y 2010-11 was made with a condition that these figures are tentative and not final and may undergo some change depending upon the business developments over the remaining period of current financial year 2009-01 may change or deviate. Therefore, the surrendered amount of ₹ 6 crores cannot be ignored by taking into consideration the alleged addition of ₹ 2,95,000/- made u/s 68 of the Act. 20. The ld. AR placing on record a copy of the o .....

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as such failure of the Revenue authorities, addition cannot be made without any basis for A.Y 2010-11 . 21. On careful consideration of the above noted rival submissions and on vigilant perusal of the relevant material placed on record, we observe that the main contention of the assessee-appellant posed for adjudication before us is that there was no incriminating material found during the course of search u/s 132 of the Act on the assessee group of companies on 24.9.2009. On the contrary, the l .....

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l ground No. 5 of the assessee cannot be allowed. 22. Further, in our view, the so called incriminating material at Annexure A-5 of Party Y-2, which contains the share application documents and share transfer deeds for transfer of shares 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 applic .....

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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, Annexure A-5 of Party Y-2 which contains share transfer deeds of t .....

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related documents pertaining to shares allotted to these third parties by M/s Mamram Ltd which is also not related, in any manner, with the assessee company, thus the same cannot be validly taken as incriminating material belonging to or pertaining to the present assessee i.e. M/s Shyam Sunder Infrastructure Pvt Ltd. Thus, in our considered opinion, Annexure A-5 of Party Y-2 and Annexure A-1 of Party Y-2 pertains to some other companies and belonged to some other persons and not the appellant c .....

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.7: Yes, I personally know Sh. Ram Kishan Gupta and many a times I have visited his place of residence as well as his office along with Sh. Subhash Singhal and have collected money from his premises and in lieu of it I along with Sh. Subhash Singhal have repaid the sum in the form of cheque / demand draft. Q. 8: Can you provide the name of companies of Sh. Ram Kishan ji to whom cheques were issue by you / by your companies in lieu of cash? A.8: So far I remember it was M/s Mamram Limited and the .....

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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 r .....

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sessee and not for A.Y 2005-06 thus the impugned addition cannot be made on account of surrender made for A.Y 2010-11. To support this contention, the ld. AR also placed reliance on para 10 of the order of the ITAT Delhi D Bench in the case of M/s Babushka Promoters [P] Ltd for A.Y 2010-11 [ITA No. 6444/DEL/2013 dated 20.9.2016 and submitted that above decision was also followed in the present assessee s own case for A.Y 2010-11 [ITA No. 6446/DEL/2013] in the order dated 13.1.2017. The ld. AR ve .....

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and no amount has been surrendered for A.Y 2005-06. 29. On careful consideration of the above rival contentions, first of all, we find it appropriate to reproduce the relevant question and answer No. 30 of Shri Ram Kisah Gupta which was recorded during search and seizure operation on 24.9.2009, which reads as follows: Q. 30 Please refer to the above question in which you have sought time for giving details of bifurcation of additional income of ₹ 19,00,00,000/- and sought time to verify th .....

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ies and also to account for any other discrepancies found during search and post-search proceedings. I am giving below detail of additional income in the hands of companies with which we are associated: Name of Company Amount (Rs.) Symphony Celebrators Pvt. Ltd. 1.00 cr Athena Logistics Park Pvt. Ltd. 1.00 cr Mamram Developer Pvt. Ltd. 6.00 cr Babushka Promoters Pvt. Ltd. 2.00 cr Total: 10.00 cr. I would also like to state that these figures are tentative and are not final and may undergo some c .....

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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 disall .....

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nce of any such disclosure and relevant material to establish the undisclosed income for the present A.Y 11, addition cannot be made. Since at the time of surrender and statement recorded u/s 132(4) of the Act Shri Ram Kishan Gupta was not asked to provide details and the nature of income he was surrendering in the case of a particular company or person and particular head of income and as such failure of the Revenue authorities, addition cannot be made without any basis for A. Y. 2010-11.. 31. .....

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t in the absence of any such disclosure and relevant materials to establish the undisclosed income for A.Y 2010-11, addition cannot be made. After consideration of statement the Tribunal categorically held that since at the time of surrender and recording of statement u/s 132(4) of the Act, Shri Gupta was not asked to provide details of the nature of income which he was surrendering in the case of a particular company or person and particular head of income and as such failure of the Revenue aut .....

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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 .....

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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 assessee company for A.Y 2005-06, therefore, we respectfully hold that the benefit of the ratio of the decision as relied by the ld. DR on this issue, is not available for the Revenue. Finally, we hold that the strength of the statement of Shri Gupta, addition cannot be made treating the same as incriminati .....

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der an intimation is required to be sent to the assessee if the AO accepts the return u/s 143(1)(a) of the Act. 36. In this context, the ld. AR submitted that since in the case of the assessee company no assessment was framed u/s 14393) of the Act for A.Y 2005-06, therefore, ratio laid down by the Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla [2016] 380 ITR 573 [Del] in the case of completed assessments, original assessment order can be interfered with by the AO while making a .....

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in any manner, therefore, same cannot be held as incriminating material against the assessee company for making addition u/s 68 of the Act for A.Y 2005-06. The ld. AR also contended that statement of Shri Ram Kishan Gupta recorded during the course of search and seizure operation does not reveal any fact of surrendering any amount in the hands of the assessee company for A.Y 2005-06 under any head. Therefore, same cannot also be treated as incriminating material found during the course of search .....

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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 positio .....

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ise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say t .....

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sment can be reiterated and the abated assessment or reassessment can be made. 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. vi. Insofar 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 .....

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and respectful reading of the above summarised legal position, in our humble understanding, the Hon'ble High Court has observed in sub-para (v) that in absence of any incriminating 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 assessme .....

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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 fact that on the date of search and seizure operation that was on 20.4.2009, assessment for A.Y 2005-06 was not pending .....

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t assessment for A.Y 2005-06 was completed on the date of search. In view of the above ratio laid down by the Hon'ble High Court of Delhi in the case of Kabul Chawla [supra, when we logically analyse the facts of the present case, then we reach to a logical conclusion that the so called incriminating material Annexure A-5 and A-1 of party 2 as well as statement of Shri Ram Kishan gupta recorded during the course of search and seizure operation cannot be held as incriminating material unearth .....

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para (vii) regarding completed assessment would be applicable to the present case on all four corners and in view of the foregoing discussion, we reach to a fortified conclusion that there was no incriminating material before the AO for making addition u/s 68 of the Act in the hands of the assessee for A.Y 2005-06. Therefore, we hold that no addition could have been made in the assessment u/s 143(3) r.w.s. 153A of the Act in respect of unabated assessment/completed assessment for A.Y 2005-06 wh .....

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peaking 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 .....

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