TMI Blog2018 (1) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee. The departmental appeal has no merit and is accordingly dismissed. Assessment u/s 143(3)/153A - Held that:- Delhi High Court in the case of BDR Builders & Developers Pvt. Ltd. [2017 (8) TMI 42 - DELHI HIGH COURT] held that when assessee company ceases to exist from appointed date, was not liable for assessment under section 153A of the I.T. Act. The assessment under section 153A is void abinitio. The Hon’ble Delhi High Court similarly in the case of Maruti Suzuki Ltd. [2017 (9) TMI 387 - DELHI HIGH COURT] held that assessment order in the name of amalgamating company is not a procedural irregularity. Assessment order in the name of non- existing amalgamating company untenable. Considering the facts and circumstances of the case and in the light of judgment of the Hon’ble Delhi High Court dated 19th January, 2011, we are of the view that assessment framed against the assessee under section 143(3)/153A is bad in law and void abinitio. Resultantly, we set aside the orders of the authorities below and quash the assessment order. In the result, ground No.1 of cross objection of assessee is allowed. Disallowance under section 14A read with Rule 8D - Held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA.No.449/Del./2016 CO.No.163/Del./2016 (A.Y. 2007-2008) : 3. The Departmental Appeal as well as Cross Objection by assessee are directed against the common order of the Ld. CIT(A)-27, New Delhi, dated 09.11.2015, for the A.Y. 2007-2008. 4. Briefly, the facts of the case are that search, seizure and survey operation under section 132/133A of the I.T. Act were conducted on 12th April, 2012 in the case of the assessee along with other cases of Aryan Sanik group at various residential and business premises. In pursuance to notice under section 153A of the Act issued on 23rd October, 2003, assessee filed return of income. The A.O. after giving opportunity of being heard to the assessee, completed the assessment under section 143(3) r.w.s.153A of the I.T. Act on 30th March, 2015. The A.O. made addition of ₹ 3.35 crores of unexplained share application money under section 68 of the I.T. Act, which was challenged before Ld. CIT(A). The A.O. noted that assessee has received amount of ₹ 3.35 crores as share application money in assessment year under appeal from 07 parties namely (1) M/s. Reward Vinimay Pvt. Ltd., (2) M/s. Suvidha Stock Broking Services Pvt. Ltd., (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in deleting addition of ₹ 3.35 Crores under section 68 of the I.T. Act. 7. The Ld. D.R. relied upon the order of the A.O. and relied upon the following decisions : (i) CIT vs. Nipun Builders Developers (P.) Ltd., (2013) 30 taxman.com 292. (ii) CIT vs. Nova Promoters Finlease (P.) Ltd., (2012) 18 taxman.com 217. (iii) CIT vs. N.R. Portfolio Pvt. Ltd., (2013) 29 taxman.com 291. (iv) CIT vs. Focus Exports (P.) Ltd., (2014) 51 taxman.com 46 8. On the other hand, Learned Counsel for the Assessee, reiterated the submissions made before the authorities below and submitted that entry in the books of account cannot be treated be recovered during the search. In this case, nothing was found against the assessee during the course of search. The A.O. did not make any enquiry on the documents filed by assessee. The A.O. without conducting any enquiry, made the addition. Therefore, Ld. CIT(A), correctly deleted the addition. He has also submitted that CIT(A) has examined the balance-sheet of the investor company also. There were no adverse material found during the course of search to prove that share application money was bogus. He has relied upon the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or indirectly by the A.O. on the documentary evidences filed by assessee at assessment stage. Since no adverse material was found during the course of search to prove that share application money received by assessee was bogus or was an arranged affair of the assessee, the A.O. was not justified in making the addition under section 68 of the I.T. Act against the assessee. We may refer to following decisions in support of our findings. 9.1. Decision of the Hon ble Supreme Court CIT vs Lovely Exports P.Ltd. [2008] 216 CTR 0195 in which it was held as under : If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of assessee company. 9.2. Decision of Delhi High Court in the case of CIT vs Kamdhenu Steel Alloys Ltd. Ors. 361 ITR 0220 (Delhi) in which it was held as under : Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the impugned order is set aside. 9.6. Decision of Hon ble Delhi High Court in the case of CIT vs. Divine Leasing Finance Ltd., 299 ITR 268, in which it was held as under : No adverse inference should be drawn if shareholders failed to respond to the notice by A.O. 9.7. Decision of Hon ble Madhya Pradesh High Court in the case of CIT vs. Peoples General Hospital Ltd., (2013) 356 ITR 65, in which it was held as under : Dismissing the appeals, that if the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented the company's own income from undisclosed sources. It was nobody's case that the non-resident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Appellate Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) as it was also of the opinion that the assessee had been able to prove the identity of the share applicants and the share application money had been received by way of account payee cheques. On appeal to the High Court: Held, dismissing the appeals, that the deletion of addition was justified. 9.9. Decision of Hon ble Delhi High Court in the case of CIT vs. Winstral Petrochemicals P. Ltd., 330 ITR 603, in which it was held as under : Dismissing the appeal, that it had not been disputed that the share application money was received by the assessee-company by way of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to the Assessing Officer. Since the applicant companies were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be non-existent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound Nos. 2, 3 and 4 are raised in support of the order of the Ld. CIT(A) in deleting the addition of ₹ 3.35 crores under section 68 of the I.T. Act. Since we have dismissed the Departmental Appeal on this issue, therefore, no further findings are required on the Ground Nos. 2, 3 and 4 of the cross objections. 12. On Ground No.1 of the cross-objection, the assessee submitted that the assessment order passed by the A.O. and subsequently the departmental appeal are bad in law and void abinitio as the same have been framed by the Revenue Department on a merged entity, which is no longer in existence. 13. Learned Counsel for the Assessee submitted that the assessee company M/s. Garuda Imaging and Diagnostics Pvt. Ltd., M/s. Sindhu Holdings Ltd., and other companies have merged with M/s. Bhandari Consultancy and Finance Ltd., vide judgment dated 19th January, 2011 passed by the Hon ble Delhi High Court in a Scheme of Amalgamation pursuant to Section 391 and 394 and other relevant provisions of the Companies Act. Copy of the judgment dated 19th January, 2011 is filed at page-75 of the paper book. He has referred to PB-116 of the paper book which is judgment of the Hon ble Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 153A against the assessee, the assessee-company did not exist. Therefore, issue of notice under section 153A itself was void abinitio and bad in law. The Hon ble Delhi High Court in the case of BDR Builders Developers Pvt. Ltd., 397 ITR 529 held that when assessee company ceases to exist from appointed date, was not liable for assessment under section 153A of the I.T. Act. The assessment under section 153A is void abinitio. The Hon ble Delhi High Court similarly in the case of Maruti Suzuki Ltd., 397 ITR 681 held that assessment order in the name of amalgamating company is not a procedural irregularity. Assessment order in the name of non- existing amalgamating company untenable. Considering the facts and circumstances of the case and in the light of judgment of the Hon ble Delhi High Court dated 19th January, 2011, we are of the view that assessment framed against the assessee under section 143(3)/153A is bad in law and void abinitio. Resultantly, we set aside the orders of the authorities below and quash the assessment order. In the result, ground No.1 of cross objection of assessee is allowed. 16. On ground No.5 of the cross objection, assessee submitted that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03-04. 17.2. It is not in dispute that on the date of search, assessment for assessment year under appeal under section 143(3) dated 30.10.2009 already stood completed. It is also not in dispute that no incriminating material was unearthed during the search, no addition could be made to the income already assessed. The A.O. made addition under section 68 of the Act on the basis of the entries recorded in the books of account of the assessee. Therefore, issue is covered in favour of the assessee by the above judgments of the Hon ble Delhi High Court. The A.O. thus, cannot make any addition including under section 68 of the I.T. Act against the assessee. On this ground also, we set aside the orders of the authorities below and delete the entire addition. In the result, ground No.5 of the cross objection is allowed. 17.3. No other point have been argued or pressed by the parties. 18. In the result, Departmental Appeal is dismissed and Cross Objection of the assessee is allowed. ITA.No.450/Del./2016 CO.No.164/Del./2016 (A.Y. 2009-2010) : 19. The Departmental Appeal as well as Cross Objections by assessee are directed against the common order of the Ld. CIT(A)-27, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning exempt income was incurred. He has stated that assessee had made certain investments in equity shares, income on which i.e., dividend is exempt from tax. He took average of opening and closing amount of investment and calculated the disallowance @ % in accordance with Rule 8D. The assessee did not give details of expenses attributable for earning dividend income and did not quantify disallowance under section 14A. The A.O. admitted that disallowance of ₹ 96,743 had been made in the ITR filed under section 14A, however, no working have been given. 23.1. The assessee challenged the findings of the A.O. before Ld. CIT(A). The assessee explained that no expenditure was incurred in respect of exempt income earned, if any. The A.O. did not record his satisfaction regarding computation submitted by the assessee as contemplated under section 14A(2) of the I.T. Act. No incriminating material was found with regard to this issue. The assessee relied upon several decisions in support of the contention that addition is wholly unjustified. The assessee further prayed that in case the addition has to be made, then the calculation should be restricted to the amount of investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 25. On Ground Nos.2, 3 and 5 of the cross objection, assessee merely raised the same point in support of the order of the Ld. CIT(A) in deleting the addition of ₹ 4.50 crores under section 68 of the I.T. Act and deleting the addition under section 14A read with Rule 8D of I.T. Rules. 26. Since, we have dismissed departmental appeal on these grounds, therefore, these grounds require no further finding. 27. On Ground Nos.1 and 4 of the cross objection, assessee challenged the orders of the authorities below to be bad in law and void abinitio as the same have been framed by the Revenue Department on merged entity and that since no incriminating material was discovered in the course of search under section 132 of the I.T. Act and original assessment had been completed, therefore, no addition can be made in assessment order under section 143A in view of decision of the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra). 28. These grounds are same as have been decided in favour of the assessee in A.Y. 2007-2008 above. Following the reasons for decision, we set aside the orders of the authorities below and quash the assessment order under section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. On Ground Nos. 2 and 3, the Revenue challenged the deletion of addition of ₹ 65 lakhs on account of unexplained share application money under section 68 of the I.T. Act, 1961. 37. In the Cross Objection, on ground Nos. 2 and 3, assessee supported the orders of the Ld. CIT(A) in deleting the above additions. On ground Nos. 1 and 5 of the cross objection, the assessee challenged the orders of the authorities below to be bad in law and void abinitio, as assessment have been framed on merged entity and that no addition can be made under section 153A of the Act, in the absence of recovery of any incriminating material as per decision of the Hon ble Delhi High Court in the case of Kabul Chawla (supra). 38. All these issues are similar as have been decided in the case of M/s. Garuda Imaging and Diagnostic Pvt. Ltd., New Delhi (supra) in A.Ys. 2007-08, 2009-10 and 2010-2011. Following the reasons for decision of the same, we set aside the orders of the authorities below and quash the assessments. The department appeal fails on these ground. However, the cross objection of assessee are allowed. 39. In Departmental Appeal on ground No.4, Revenue challenged the deletion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has raised ground Nos. 3 and 4 in support of the order of the Ld. CIT(A) in deleting the above additions. On ground Nos. 1 and 5 of the cross objection, the assessee challenged the orders of the authorities below to be bad in law and void abinitio as assessment have been framed by Revenue Department on merged entity and in making addition under section 153A without recovering any incriminating material as per decision of the Hon ble Delhi High Court in the case of Kabul Chawla (supra). 46. This issue is same as have been considered in the case of assessee for A.Y. 2008-2009 (supra). Following the reasons for decision for the same, we set aside the orders of the authorities below and quash the assessment order and delete all the additions. 47. On ground No.2 of the cross objection of the assessee, the assessee challenged addition of ₹ 98,38,651 on the basis of fictitious profit/loss accruing out of client code modification facility. 48. It is argued on behalf of the assessee that no opportunity were given to the assessee and no independent finding have been given by the Ld. CIT(A) for confirming the addition. 49. The Ld. D.R. submitted that no details are file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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