TMI Blog2017 (8) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 8 crores was only for the AY in question and not for each of the six AYs preceding the year of search. Secondly, when Mr. Anu Aggarwal was confronted with A- 1, A-4 and A-11 he explained that these documents did not pertain to any undisclosed income and had, in fact been accounted for. Even these, therefore, could not be said to be incriminating material qua each of the preceding AYs. ITAT was fully justified in concluding that the assumption of jurisdiction under Section 153A of the Act qua the Assessees herein was not justified in law. The question framed is answered in the affirmative i.e. in favour of the Assessee and against the Revenue by holding that having regard to the materials seized in the course of search under Section 132 and the statements made on behalf of the Assessee, the assumption of jurisdiction under Section 153 A of the Act and the consequent additions made by the AO were not justified. Assessee appeal allowed. - ITA No. 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22/2017 - - - Dated:- 1-8-2017 - S. Muralidhar And Prathiba M. Singh, JJ. For the Appellant : Mr. Rahul Kaushik, Senior Standing Counsel For the Respondent : Mr. Ved Kumar Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statement of Mr. Tarun Goyal as recorded on 15th September, 2008 during the survey/search and relied upon by the Revenue reads as under: Q. No.2 Please provide details of your transaction with Best Group of Companies, such as M/s Best Infrastructure (I)(P) Ltd, M/s Best City Projects (I)(P) Ltd., their directors, Sh. Harjeet Singh Arora, Sh. Balvinder Singh, Sh. Anu Aggarwal and other group concern? Ans. Personally, I had made no transactions with Best Group of Companies or their directors. However, certain companies for which I am the authorized signatory has made transactions with the Best Group of Companies, such as M/s Best Infrastructure (I) (P) Ltd., M/s Best City Projects (I) (P) Ltd., M/s Best City Realtors (I) (P) Ltd. and other group concerns. M/s Best group of companies, through their Directors, Sh. Harjeet Singh Arora had approached us for providing them entry for share capital. They had provided us cash, against which we issued him cheques through companies of which I am the authorized signatory. These companies have taken a commission of 0.25% for providing them cheque against the cash received. We have provided them approx. 8 crores of bogus share ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) Natraj Buildwell (P) Ltd. Mahipalpur, Delhi (v) Best Group of Companies - Pitampura, New Delhi (vi) S.K. Enterprises -Ashok Vihar, New Delhi The amount of accommodation transaction are with above mentioned six companies are ₹ 5.0 Cr. ₹ 5.0 Cr, ₹ 3.0 Cr, ₹ 2.0 Cr., ₹ 8.0 Cr. and ₹ 2.0 Crores respectively. The same is also represented in the table at next page. Regarding other beneficiaries and amount at accommodation entries can only be stated after going through the records which I will submit later on. S.No. Name of the beneficiary Amount 1 M. Tech Developers (P) Ltd. (Delhi Ashram) Rs.5.00 Cr. 2 Green City Buildtech (P) Ltd. Noida (UP) Rs.5.00 Cr. 3 AMR Infrastructure (P) Ltd. Noida Rs.3.00 Cr. 4 Natraj Buildwell (P) Ltd. Mahipalpur, Delhi. Rs.2.00 Cr. 5 Best Group of Companies Pitam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty not reflected in the books of accounts, Annexure A-4, pages 1 to 31 and Annexure A-11 pages I to 100 which give details of expenses made for construction work which are also not reflected in the books of accounts. You are requested to explain these documents and reconcile them with your regular books of accounts. Ans: I have gone through these documents in Annexure A-l, A- 4 and A-11 and I am unable to explain these documents. We have received cash as Advance for sale of property in certain instances which has not been reflected in our books of accounts. Part of the cash received which has not been accounted by us in regular books of accounts has been utilized for making expenses in our construction business. This reflects our unexplained, unaccounted work in progress. This is the explanation for the seized documents Annexure A-4 and A-11. The unaccounted cash reflects are reflected in the seized documents Annexure A-I To account for these seized documents and other seized documents which cannot be adequately explain by us, we voluntarily offer a sum of ₹ 8 Crores (Rs. Eight Corers) which is over and above the normal income earned by us during the course of the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 8 Cr. on account of unexplained cash received from various bookings in my group companies and the unexplained expenses towards the work in progress of various projects in those companies and other outgoing. These unexplained receipts and out goings can be correlated and detailed at the time of assessment after going through the seized material and other available records. Q. No. 7 At the time of search on 15-09-2008 to the question No. 15, you also confirmed in your answer that this surrender of ₹ 8 Cr. includes receipt of share capital and share premium. Please explain and clarify the same. Ans. As explained in the answer to the question no. 6, the utilization of the unexplained receipts and its correlation with the outgoings can be ascertained after examining the seized material and therefore it is difficult to detail if any amount from the surrender was utilize towards the receipt of any share capital or not. Q. No.8 During the course of statement on oath u/s 131(IA) of Sh. Mahesh Garg, who was running two companies namely M/s Dreamland Solutions (P) Ltd. and M/s Meghdoot Express (P) Ltd. having business address at 104, B.D. Chambers, D.B. Gupta Road, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit and accordingly added ₹ 3.60 Crores to the assessable income of the Assessee under Section 68 of the Act. The reason given by the AO for this addition was that the Assessees had failed to give any explanation or furnish any documentary evidence to prove the identity of the investors and their creditworthiness. They were also unable to prove the genuineness of the above transactions. It was also noted that the Assessees failed to produce the persons who purportedly advanced the alleged share application money or their bank accounts. 13. In para 5.3 of the assessment order, the AO noted that the Assessee has submitted some evidences in the form of affidavit and certificate of incorporation regarding Tarun Goyal Group of Companies, which were examined on test check basis. The AO further noted that the said affidavits were undated and not countersigned by Notary/Oath Commissioner. These affidavits were on forms that were purchased before the date of payment by the so called Directors of Tarun Goyal Group of Companies. The AO also noted that Mr. Anu Aggarwal in her statement had categorically denied knowing these directors of Tarun Goyal Group of Companies and he went ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. As regards the merits of the additions made under Section 68 of the Act, the CIT (A) again referred to the statements recorded in the course of search and in particular the statement of Mr. Anu Aggarwal where he accepted undisclosed income of ₹ 8 crores earned during the year on account of unexplained cash receipts, unexplained work-in-progress as well as share capital and share premium received. The CIT (A) noted in the course of the appellate proceedings that the authorised representative ( AR ) of the Assessee had filed detailed written submissions dated 7th February, 2012 and his arguments were, thus, summarised as under: i) The appellant company has placed on record entire evidence and material to discharge the burden which lay upon it u/s 68 of I.T. Act. Ne emphasized that following evidences were filed in support of genuineness of share capital. a) PAN of shareholder. b) Name, address and confirmation of shareholder. c) Each shareholder is a corporate entity, i.e. identity of shareholder is not doubtful. d) Payment is through banking channels. ii) As a result of search and seizure operation u/s 132 no cash or loose papers were even f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs, the Directors of the Best Group had never demanded to cross- examine Mr. Goyal. 21. The CIT (A) had further noted the submission of learned counsel for the Assessee that Mr. Tarun Goyal had later retracted his statement made under Section 132 (4) of the Act on 10th October and 4th November, 2008 and stating that they had been taken under coercion. The CIT (A) relied on the disclosure of Mr. Anu Aggarwal offering ₹ 8 crores to tax during the search proceedings. Reference was made to Annexure A-1 and A-11 which contained details of unaccounted cash received and expenses which had not been entered in the books of accounts. Reference was also made to the statements of Mr. Harjeet Singh and Mr. Tarun Goyal. The version of the AO that till 15th October, 2008 Mr. Anu Aggarwal kept quiet and did not ask for a copy of the statement of Mr. Goyal or seek his cross-examination was accepted by the CIT (A). Consequently, the additions made by the AO were sustained. Appeals before the ITAT 22. As already noted that separate assessment orders and separate corresponding orders were passed in appeal by the CIT (A) in respect of each of the Assessees forming part of the Best Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Kumar Bhatia (supra). He also sought to distinguish the recent decision of this Court in Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia 2017 (295) CTR 466 (Del). 27. As regards additions made on merits under Section 68 of the Act, Mr. Kaushik again took this Court through the materials and submitted that the deletion made by the ITAT, of the additions which had been made by the AO which were further confirmed by the CIT (A), was not called for in the facts and circumstances of the case. Submissions of counsel for the Assessee 28. Supporting the order under appeal, Mr. Ved Kumar Jain, learned counsel appearing for the Assessee, submitted that the surrender of ₹ 8 crores made by Mr. Anu Aggarwal was only vis-a-vis the year of search and not other years. Even for the year of search, the additions under Section 68 of the Act were found to be unjustified by the ITAT. He pointed out that the ITAT had examined thoroughly the entire evidence and returned a factual finding which has not been assailed on the ground of perversity. 29. Mr. Jain submitted that as far as the assumption of jurisdiction was concerned, the so-called documents seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search contained details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside books of accounts and they were actually unaccounted transactions made by two of the firms of the Assessees. Thirdly, the Court found as a matter of fact that the Assessees were habitually concealing income and that they were indulging in clandestine operations and that such persons can hardly be expected to maintain meticulous books or records for long. As pointed out by this Court in Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia (supra) the decision in Smt. Dayawanti Gupta v. CIT (supra), therefore, turned on its own facts and did not dilute the law explained in Commissioner of Income Tax (Central-III) v. Kabul Chawla (supra). 33. At this stage, it requires to be noticed that the decision of this Court in Commissioner of Income Tax (Central-III) v. Kabul Chawla (supra) took note inter alia of the decision of the Bombay High Court in Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bom), wherein it was held that if no incriminating material was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment 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 findings 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 153 A only on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showed that the attempts by the AO, in ensuring the presence of Mr. Tarun Goyal for cross-examination by the Assessees, did not succeed. The onus of ensuring the presence of Mr. Tarun Goyal, whom the Assessees clearly stated that they did not know, could not have been shifted to the Assessees. The onus was on the Revenue to ensure his presence. Apart from the fact that Mr. Tarun Goyal has retracted his statement, the fact that he was not produced for cross- examination is sufficient to discard his statement. 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o hold that the above finding of the ITAT on the legal position regarding the Revenue being disabled from relying on the statement of Mr. Tarun Goyal suffers from any perversity. Further the ITAT has in the impugned order in paras 45 and 46 observed as under: 45. Now, we come back to the facts of the assessee's case in respect of the share application money received. The assessee has furnished the affidavit of the director of share applicant company, share application form, confirmation from share applicant, certificate of incorporation of the shareholder company and copy, of income tax return of share applicant company. The Assessing Officer has disputed the validity of the affidavit on the ground that affidavit is not certified by the notary and the stamp paper for purchase of affidavit is dated prior to the application made for share application money. On verification of the copy of the affidavit which is placed at pages 48 49 of the assessee s paper book, we find that the affidavit is not made in the presence of notary public and, therefore, it cannot be considered as affidavit in legal sense. Nevertheless, it remains a self-declaration by the director of share appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax PAN Number: AADCA5439P Ward 1(3), New Delhi. Share Certificates Received: Yes We do hereby confirm that the information furnished above is correct. For Aries Crafts Private Limited Sd/- Authorised Signatory 46. From the above, it is evident that the share applicant company has given the confirmation on its letter head which gives the complete address of the said company. In the confirmation, number of shares applied and the amount invested has been given. Details of payments i.e., cheque number, date of cheque and name of the bank on whom cheque is drawn is given. Address of the bank and bank account number has also been given, source of fund is given as well as permanent account number of the company is also given. 42. Thereafter the ITAT held in para 48 as under: 48. .....In the case under consideration before us, the assessee has duly furnished the declaration of the director of the share applicant company, share application form, confirmation and certificate of incorporation from Registrar of Companies as well as income tax return of the share applicant company. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Assessee's Directors in the course of search under Section 132 of the Act were rightly deleted by the ITAT. 45. The question framed in ITA Nos. 13 to 20 and 22 of 2017 by the order dated 21st March, 2017 is answered in the affirmative i.e. in favour of the Assessee and against the Revenue by holding that having regard to the materials seized in the course of search under Section 132 and the statements made on behalf of the Assessee, the assumption of jurisdiction under Section 153 A of the Act and the consequent additions made by the AO were not justified. 46. Consequently, the appeals of the Revenue are dismissed but in the circumstances, with no orders as to costs. CM 831/2017 in ITA 11/2017;CM 834/2017 in ITA 12/2017 CM 836/2017 in ITA 13/2017; CM 839/2017 in ITA 14/2017 CM 842/2017 in ITA 15/2017; CM 845/2017 in ITA 16/2017 CM 848/2017 in ITA 17/2017; CM 851/2017 in ITA 18/2017 CM 854/2017 in ITA 19/2017; CM 857/2017 in ITA 20/2017 CM 865/2017 in ITA 21/2017; CM 862/2017 in ITA 22/2017 47. For the reasons stated in the applications, the delay in filing the appeals is condoned. The applications are, accordingly, disposed of. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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