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DCIT, Central Cirlce-5, New Delhi Versus Qualitron Commodities Pvt. Ltd. and vice-versa

2015 (1) TMI 1341 - ITAT DELHI

Assessment framed u/s 153C - Addition u/s 68 - unexplained share application money - CIT-A deleted the addition admitting additional evidence - Held that:- The documents seized during the course of search and seizure proceedings from the Rajdarbar Group have been referred as "relating to" the assessee, in the satisfaction note recorded by the AO while initiating the proceedings u/s 153C of the Act against the assessee. - Finding a reference in the satisfaction note recorded by the AO for in .....

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notice issued u/s 153C in the present case is held invalid. Besides there was no incriminating material found during the course of search and the assessment was not pending or abated to justify the assessment framed u/s 132A r.w.s 153C as well as section 143(3) of the Act against the assessee. The assessment in the question framed in furtherance to the said invalid notice and in absence of incriminating material is thus held as void and the same is quashed as such. - Decided in favour of assesse .....

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share application money by admitting additional evidence in contravention of Rule 46A of Income Tax Rules 1962. 2. The assessee on the other hand has objected first appellate order on the validity of the assessment framed u/s 153C r.w.s. 143(3) of the Act and upholding of the disallowance of ₹ 34,61,585/- on account of the short term capital loss on the sale of land situated at Rajokri, Delhi (objections Nos.-1, 1.1, 2, 3 & 3.1). 3. The ld. AR drew our attention to the application move .....

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rits. In turn application is allowed. 5. Since the issue raised in objections Nos.-1 & 1.1 of the cross-objection preferred by the assessee questioning the validity of assessment framed u/s 153C of the Act goes to the root of the matter, we prefer to adjudicate upon it first. 6. We have heard and considered the arguments advanced by the parties in view of the orders of the authorities below, material available on record and the decisions relied upon. 7. The facts in brief are that search and .....

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e had allotted 1,25,00,000 shares of ₹ 10/- each at a premium of ₹ 90/- per share to the six companies. The assessee was asked to prove the genuineness of the transaction by filing necessary evidence. The assessee was also asked to file a note on share premium account. The assessee furnished the list of companies to whom shares were allotted at premium alongwith amount. It also furnished documents like confirmation, bank statement of these companies, their balance sheets etc. The AO .....

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by the assessee in this regard to justify the claimed loss and he disallowed the amount and added the same to the income of the assessee. 9. Before the Ld. CIT(A) the assessee questioned the validity of the assessment framed u/s 153C of the Act in absence of incriminating material found during the course of search and the additions made by the AO on the merits of the case. The Ld. CIT(A) did not agree with the contention of the assessee regarding the validity of assessment framed u/s 153C of the .....

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eclaring a loss of ₹ 34,72,761/- duly supported by Audited Financial statement for the year under consideration. The said return was accepted as such no notice u/s 143(2) of the Act was served upon the assessee. Thereafter notice u/s 153C of the Act was issued to the assessee as a result of search conducted at the premises of Rajdarbar Group. In response to the notice issued u/s 153C of the Act return of income was filed declaring a loss as was declared in the original return of income. He .....

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a result of search conducted on Rajdarbar Group of cases proceedings u/s 153C were also initiated for the assessment years 2003-04 to 2009-10, however no additions have been made therein on the basis of any incriminating material found as a result of search. Thus the additions made by the AO during the year are without jurisdiction. Ld. AR also referred page No.19 to 23 of the Paper Book filed on behalf of the Revenue. These are copies of certificate of incorporation, e-filing receipt, Form No. .....

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osure by the searched person that such documents belong to the assessee. Mere use or mention of the word Satisfaction or the words I am satisfied in the order or the note would not meet the requirement of the concept of satisfaction as used in section 153C of the Act. He submitted further that the statutory documents are not incriminating material which confer jurisdiction u/s 153C of the Act. In this regard he placed reliance on the decision of Hon ble Delhi High Court in the cases of Pepsico I .....

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DSL Properties, ITA-1344/Del/2012 order dated 22.03.2013; (vii) Kusum Gupta & others vs DCIT (ITA No.-4873/Del/2009 order dated 28.03.2013); (viii) ACIT vs Preadeep Kumar (ITA No.-4016/Del/2011 order dated 16.06.2014); (ix) SSP Aviation Ltd. vs DCIT 346 ITR 177 (Del.) 12. Ld. DR on the other hand placed reliance on the first appellate order with this contention that a plain reading of provision of section 153C of the Act indicates that the assessment u/s 153C is mandatory even when no incri .....

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rs the AO to issue notice and make assessment of specified six years where a search is initiated u/s 132 or requisition is made u/s 132A of the Act. He placed reliance on the following decisions:- (1) IPCA Laboratory Ltd. vs DCIT 266 ITR 521 (SC); (2) Prakash Nath Khanna & Another vs CIT & Another 266 ITR 1 (SC); (3) Padmasundara Rao (DECD.) & Others vs State of Tamil Nadu & Others 255 ITR 147 (SC); (4) Indian Rayon Corporation Ltd. vs CIT 231 ITR 26 (Bom.); (5) Smt. Tarulata Shy .....

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below:- 11. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under section 153C, there is nothing which would indicate as to how the presumption which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word "satisfaction" or the words "1 am satisfied" in .....

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Section 153C of the said Act. 12. This being the position the very first step prior to the issuance of a notice under Section153C of the said Act has not been fulfilled. Inasmuch as this condition precedent has not been met, the notices under Section 153 are liable to be quashed. It is ordered accordingly. The writ petitions are allowed as above. There shall be no order as to costs. 14. Again in the case of Pepsico India Holdings Pvt. Ltd. (cited supra), the Hon ble High Court has been pleased t .....

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r originals do not belong to the searched person, the question of invoking section 153C of the Act does not arise. The Hon ble High Court has also been pleased to make it clear that the AOs should not confuse the expression belongs to with the expression relates to or again refers to . A registered sale deed for example belongs to the purchaser of the property although it obviously relates to or again refers to vendor. In this example if the purchaser s premises are searched and registered with .....

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e copy of the supply and loan agreement can be said to belong to the petitioner. With these observations the Hon ble High Court was pleased to hold that the ingredients of section 153C of the Act have not been satisfied. Consequently notices issued u/s 153C were quashed. 15. Similar are the facts of the present case before us. The documents seized during the course of search and seizure proceedings from the Rajdarbar Group have been referred as relating to the assessee, in the satisfaction note .....

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