TMI Blog2015 (11) TMI 1758X X X X Extracts X X X X X X X X Extracts X X X X ..... made on the basis of seized material. But where there is no abatement of assessments and assessments were completed on the date of search then addition can be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized. No assessment proceedings were abated in these assessees. Thus assessments for these assessment years were completed on the date of search. The assessments were completed u/s 143(3) of the Act read with section 153A/153C of the Act after the search. There was no abatement of any proceedings in these cases for these assessment years in terms of second proviso to section 153A of the Act. There is no seized material belonging to the assessee which was found and seized in relation to additions made. We allow the appeals on the ground of sec. 153A of the I.T. Act wherein we have already held that in absence of any incriminating documents found and seized during the course of search, the Assessing Officer is not justified in making the addition in non-abated assessment order while passing the order u/s 153A r.w.s. 143(3) of the Act. - Decided in favour of assessee - IT(SS)A Nos. 31, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PAN No Shares Amount Status 1. Priyans Saree P Limited AAACP1882C 20000 10,00,000 Share Allotted 2. Indo Capital Market Limited AAACI3899L 5,00,000 Amount refunded on 05-03-2002 2.3.3] Assessment Year 2003-04 S.no Name of Company PAN No Shares Amount Status 1. Delta Fashion Ltd. AAACD5697H 400000 2000000 Share Allotted 2. Frec Wings Import Limited AAACF4480A 300000 1500000 Share Allotted 3. Himgiri Dynamics Ltd. AABCJ0296M 600000 3000000 Share Allotted 4. Hindustan continental Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 400000 1600000 2000000 5 Mcsure Capital Ltd. 100000 400000 500000 6 Lyton Mgmt. Services Ltd 600000 2400000 3000000 7 Cube communication Ltd. 500000 2000000 2500000 8 Shreshth Leasing Finance Ltd. 400000 1600000 2000000 9 Shreevar Overseas Ltd 500000 2000000 2500000 3800000 15200000 1,90,00,000 That ₹ 20,00,000/- transferred from share application money to share capital account in respect of M/s Authentic Investment and finance Limited of ₹ 10,00,000/- and M/s Priyans Sarees Industries Limited of ₹ 10,00,000/-. The assessee was asked to justify the amount of share capital and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has properly discharged onous lying on him. The assessee has proved identity and genuineness of the investment made by all the shareholders in the share application money of the assessee company. Hence, there is no reason for making any addition in respect of share application money. . That in view of the above, when the assessee has properly discharged onus lying on it by proving the identity of the share holders and genuineness of the transaction. In the present case the assessee had filed complete details of share holders and also filed confirmations as received from all these share holders before the Assessing officer. All are regularly assessed to tax and the amounts were also received through an account payee cheque. In that case there is no justification for making any addition on account of share application / share capital of ₹ 2,35,00,000/-( Correct amount of ₹ 1,90,00,000 /). That in view of the above, it is submitted that the amount of share application money / share capital of ₹ 2,35,00,000/-( Correct amount of ₹ 1,90,00,000 /) as received by the assessee is genuine. The same requires to be accepted as genuine. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. M/s Delta Fashion Limited 6. M/s Cube Communication (P) Limited 7. M/s Lyton Management Services (P) Limited 8. M/s Free Wings Exports limited 9. M/s Hindustan Continental Limited 10. M/s Mosure Capital Market Limited 11. M/s Shreevar Overseas Limited M/s SHRESTH LEASING FINANCE LIMITED That M/s Shresth Leasing Finance Limited was incorporated on 16-02-1995.That office of the above company was shifted from Surat to Mumbai w.e.f. 03-04-2006 on the following address:- M/s Shresth Leasing Finance Limited 308, Rupraj Building 497, S.V.P.Road, Opera House Mumbai Copy of Article of Association and Memorandum of Association as filed with the Registrar of the companies are also enclosed. The assessee had received an amount of ₹ 2000000/- towards consideration of 40000 Equity shares of ₹ 10/- each with premium of ₹ 40/-.The amount of share application money were received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HDFC Bank 500000 1000000 Copy of share application form alongwith Board resolution has already been filed on Page Nos 55 to 57 of the submission as filed for the Assessment Year 2001-02.Copy of certificate of Incorporation, Annual return as filed with the Registrar of Companies, Article of Association, Memorandum of Association, Form No 32 for change of Director and copy of Balance Sheet as filed with the registrar of companies for the year ended on 31.03.2003 are separately enclosed with this submission and also in the Asst Year 2001-02.The assessee has properly discharged onus lying on him by proving the identity , capacity and genuineness of the share application/ share capital.That when the assessee had filed complete details as to prove the genuineness of the amount of share application money/ share capital. The amount of share application/ capital was also received through an account payee cheque. Compete documents as available with the assessee has also been filed and as obtained by it with the ROC after depositing the requisite fee. In that case there is no reason to disbelieve on the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the balance sheet itself it is proved that investment in the share application/ capital in the unquoted companies duly considered in the audited final account of that company. From this balance sheet itself, the amount of investment made by that company in the share application/ capital stand proved.The assessee is enclosing copy of Incorporation certificate, Annual return as filed for the year 2005-06, Copy of audited final account for the year ended on 31.03.2003 to 31.03.2005.The assessee has properly discharged onus lying on him by proving the identity , capacity and genuineness of the share application/ share capital.That when the assessee had filed complete details as to prove the genuineness of the amount of share application money/ share capital. The amount of share application/ capital was also received through an account payee cheque. Compete documents as available with the assessee has also been filed and as obtained by it with the ROC after depositing the requisite fee. In that case there is no reason to disbelieve on the amount of share application/share capital as received by the assessee. M/s PRIYANS SAREES INDSUTRIES LIMITED The assessee had received an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of share application money/ share capital as received by the assessee be treated as genuine. M/s DELTA FASHION LIMITED The assessee had received an amount of ₹ 20,00,000/- from M/s Delta Fashion Limited, Mumbai towards share application money for allotment of 40000 Equity shares of ₹ 10/- each with a premium of ₹ 40/-.Details of share application money as received by the assessee of ₹ 20, 00,000/- is as under:- Date Cheque No Bank Amount( Rs) 15-02-2003 898280 State Bank of Hyderabad 10,00,000/- 20-02-2003 898394 95 State Bank of Hyderabad 10,00,000/- Copy of covering letter, share application form and Copy of Board resolution enclosed on Page Nos 37 to 40 of our previous submission. Share application forms were signed by director one Shri Vivek Mundada.Copy of PA No detail, TAN No , Certificate of Incorporation as issued by the Registrar of Companies, Form No 18 regarding change of address, Form No 32 in respect of change of Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... director to the ecomonic offence wing, existence of the above company stand proved. Hence, the amount of share application money/ share capital as received by the assessee be treated as genuine. M/s CUBE COMMUNICATION (P) LIMITED The assessee had received an amount of ₹ 25,00,000/- from the above company as a share application money in respect of 50000 Equity shares of ₹ 10/- each with premium of ₹ 40/- each.That entire amount of share application money were received by the assessee through an account payee cheques. Details of the same are as under:- Date Cheque No Bank Amount( Rs) 01-03-2003 141721 IDBI Bank 1500000 07-03-2003 141729 IDBI Bank 1000000 2500000 Copy of covering letter, share application form and copy of Board resolution enclosed on Page Nos 70 to 75 of our earlier submission.Name of the applicant company changed from M/s Cube Communications (P) Limited to M/s Cube Communications Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20-02-2003 141609 IDBI BANK 500000 20-02-2003 141610 IDBI BANK 500000 24-02-2003 141619 IDBI BANK 1000000 24-02-2003 141620 IDBI BANK 500000 3000000 Copy of covering letters , share application forms and copy of board resolution are enclosed on Page Nos 58 to 69 of our earlier submission.That copy of TAN allotment letter, Certificate of Incorporation, Annual return as filed with the registrar of companies for the year ended on 31.03.2005, Article of Association and memorandum of Association are enclosed.That from the above documents as obtained from the site of Income Tax and from Registrar of Companies. Existence of the company stand proved. Here, we would also like to clarify that the assessee company had received share application money in the year 2002- 03 relevant to the Asst Year 2003-04 and search was conducted on the business premises of the assessee during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company stand proved. Copy of confirmation letter as received by the assessee has also been filed with our earlier submission.The assessee has properly discharged onus lying on him by proving the identity , capacity and genuineness of the share application/ share capital.That when the assessee had filed complete details as to prove the genuineness of the amount of share application money/ share capital. The amount of share application/ capital was also received through an account payee cheque. Compete documents as available with the assessee has also been filed and as obtained by it with the ROC after depositing the requisite fee. In that case there is no reason to disbelieve on the amount of share application/ share capital as received by the assessee.That from the above documents and detail of PA No existence of the above company stand proved. Hence, the amount of share application money/ share capital as received by the assessee be treated as genuine. M/s HINDUSTAN CONTINENTALS LIMITED The assessee had received an amount of ₹ 20,00,000/- on account of share application / share capital.The share application money of ₹ 20,00,000/- were received by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare application/ share capital.The share application and share capital was received by the assessee through an account payee cheque in respect of 10000 Equity shares of ₹ 10/- with share premium of ₹ 40/-. Copy of share application form and Board resolution enclosed on Page No 56 57 of our earlier submission.Name of the assessee company has been changed from M/s Mcsure Capital Market Limited to M/s Samyak International Limited w.e.f 01-04-2005. That on perusal of the Balance Sheet for the year ended on 31.03.2004 and perusal of the previous year figure. You will find that total issued capital was of ₹ 30322000/- and investment in shares as shown by the assessee in Schedule- E was of ₹ 11072000/-.PA No and TAN No of the above company are as under:- PA No:- AABCM3526F TAN No BPLM01586E Copy of certificate of Incorporation, certificate of incorporation in respect of change of Name of the company, Form o 32 in respect of change of directors, Copy of audited final accounts for the year ended on 31.03.2004 31.03.2007, Article of Association and Memorandum of Association are enclosed as to justify the identity and existence of the company.The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simple case of taxing of share application money u/s 68 of the I.T Act, as the assessee has tried to project . It is a case of unaccounted income brought back into the books of accounts of the assessee company in a systematic organized manner which can be evidenced from the pattern of cash deposits in the bank accounts of the companies discussed above in details from whom share application money were received by the assessee. These companies have been used as mere conduit companies for routing of unaccounted money into the business in the garb of share application money. As per reports received from Add DIT ((INV) Mumbai , DDIT (INV) Surat and Add DIT (INV) Kolkata, in respect of these companies (which have given share application money) just after search proceedings , it was observed that most of the companies were not in existence. Some of the companies not having any worth and were providing only accommodation entries. Hence, the source of share application money as received by the assessee company can not be treated as properly explained. Regarding Hindustan continental Ltd in the case of Shri Sanjay Agrawal in A.Y 2005-06 in the case of Smt Meena Kumari Agrawal for A.Y 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Authentic Investment Finance Limited AAACA7079C 1000000 Share Allotted 2. Indo Capital Market Limited AAACI3899L 5,00,000 Amount Refunded on 05-03-2002 vide Ch mNo 631437 2.3.2] Assessment Year 2002-03 S.No. Name of Company PAN No Shares Amount Status 1. Priyans Saree P Limited AAACP1882C 20000 10,00,000 Share Allotted 2. Indo Capital Market Limited AAACI3899L 5,00,000 Amount refunded on 05-03-2002 2.3.3] Assessment Year 2003-04 S.no Name of Company PAN No Shares Amount Status 1. Delta Fashion Ltd. AAACD5697H 400000 2000000 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 Copy of Audited final account 8 Copy of Form No 18 filed with ROC for change of address of the 9 Copy of secretarial Compliance Certificate 10 Copy of Annual Return 11 Share Application money form 12 Copy of Board resolution regarding investment in the share application 2.5.1] The assessing officer while adding the amount of share application to the income of the appellant on the basis of report of the Investigation wing of Mumbai, Surat and Kolkata. He also referred the decision of Shri Sanjay Agrawal and Smt Meena Agrawal in the case of Hindustan Continentals Limited. However, these reports were not provided to the assessee. In case of Shri Sanjay Agrawal and Smt Meena Agrawal, the assessing officer making detailed inquiry in respect of Long term capital gain shown by both these persons in their income tax file but in the present case, the assessee has received share application money and complete details with documents were filed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee was reproduced in the assessment order and not counters by the assessing officer. 2.6] The assessing officer made an allegation that cash was deposited prior to issuance of the cheques to the assessee company but factually the said allegation was also not correct. The same can also be verifiable from the bank account of the share applicants as filed by the assessee in compilation. 2.7.1] The assessing officer also grossly erred in adding the amount of share application money on the basis of inquiry done by the Investigation wing without confronting the same to the assessee. That any information and inquiry made in the case of the assessee and the same was not confronted with the assessee cannot be relied against the assessee. 2.7.2] Hon ble Apex Court in the case of Union of India vs. T.R. Verma reported in AIR 1957 (SC) 882 has held :- When the assessing officer recorded a statement behind the back of the assessee, it was his duty to have allowed the assessee to cross examines such a witness. Statement of person cannot be used against the assessee; it was not for the assessee to demand cross examination but was for the AO to allow cross examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Indore Bench of ITAT in the case of M/s Agrawal Coal Corporation, as discussed by the AO, has categorically held that if the identities of the share holders stand proved. In that case, no addition is to be made to the income of the assessee. 2.10.3] That Hon ble Apex Court in the case of Lovely exports P Limited as reported in 11 ITJ 35 has held that:- 2. Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that 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. Hence, we find no infirmity with the impugned judgment. That Lovely exports P Limited byname represent is a private limited company and not a public limited company. Hence, in case of share application money the assessee need to prove only identity of the shareholders. 2.10.4]That Hon ble Jurisdicitonal high Court in the case of CIT vs People General Hospital Ltd [ Appeal No M.A.I.T No 27/ 2008 dt 27-06-2013] . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant. The Ld CIT DR and Sr DR placed reliance on the following decisions:- S.No. Reference of Decision Citation of the Decision 1 CIT vs Korlay Tradingn CO Ltd 232 ITR 820 [ Calcutta] 2 N Tarika Property Invest (P) Ltd 51 taxmann.com 387 [SC] 3 CIT vs N R Portfolio (P) Ltd 42 taxmann.com 339 [ Delhi] 4 Gayathri Associates 41 taxmann.com 526 [ AP 5 CIT vs Focus Exports (P) Ltd 51 taxmann.com 46 [Delhi] 6 CIT vs P Mohankala 291 ITR 278 [SC] 7 CIT vs MAF Academy (P) Ltd 42 taxmann.com 377 [Delhi] 8 Subhlakshmi Vanijya (P) Ltd 60 taxmann.com 60 [ Kolkata] 9 Agrawal Coal Corporation (P) Ltd 19 taxmann.com 209 [ Indore] 10 CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled position of law in absence of any inquiry by the assessing officer no addition is to be made to the income of the assessee. For this preposition the assessee relied on the following decisions. That in the present case also the assessing officer failed to make any independent inquiry. Hence, no addition is to be justified on account of share application money. S.No REFERENCE CITATION 1 CIT vs. GANGESHWARI METAL PVT. LTD 361 ITR 010 [ Delhi ] 2 M/s Excellance Town Planner P Limited 32 CCH 432 [ Delhi] 3 CIT vs Expo Globe India Limited 361 ITR 147 [ Delhi ] 4 CIT vs Fair Finvest Ltd 357 ITR 146 [ Delhi ] 5 M/s Gabs Fabrics (P) Ltd ITA No 3473/ Del/ 2013 2.15] That in the present appeal, the assessee company has properly discharged its onus as lying U/s 68 of the Income Tax Act. The assessing officer utterly failed to make independent inquiry. Hence, foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 342 ITR 169 [Delhi] 7. We have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that assessing officer while adding the amount of share application to the income of the appellant on the basis of report of the Investigation wing of Mumbai, Surat and Kolkata. He also referred the decision of Shri Sanjay Agrawal and Smt Meena Agrawal in the case of Hindustan Continentals Limited. However, these reports were not provided to the assessee. In case of Shri Sanjay Agrawal and Smt Meena Agrawal, the assessing officer making detailed inquiry in respect of Long term capital gain shown by both these persons in their income tax file but in the present case, the assessee has received share application money and complete details with documents were filed before the AO and before the Appellate authority.It is worth noting that the assessing officer himself while passing the assessment order has not make any Independent inquiry but he simply referred the inquiry conducted by the Investigation wing. The information as collected by the Investigation wing was also not made available to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer.The assessing officer made an allegation that cash was deposited prior to issuance of the cheques to the assessee company but factually the said allegation was also not correct. The same can also be verifiable from the bank account of the share applicants as filed by the assessee in compilation.The assessing officer also grossly erred in adding the amount of share application money on the basis of inquiry done by the Investigation wing without confronting the same to the assessee. Any information and inquiry made in the case of the assessee and the same was not confronted with the assessee cannot be relied against the assessee. When the assessee with the ample documents proved the identity of the shareholders and also proved the genuineness and creditworthiness of the share applicants and the assessing officer utterly failed to disprove the documents filed by the assessee. Hence, there was no justification for the Assessing officer for adding the amount of share application money to the income of the assessee.The Ld CIT(A) while maintaining the addition, heavily relied on the buyback of the shares by the directors and his other family members on single date i.e on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ications were made, amount given and the source of income of the applicant. In view of these facts, we are of the considered opinion that there is no justification for making the impugned addition because once the existence of the investor/share subscribers is proved, onus shifts on the revenue to establish that either the share applicants are bogus or the impugned money belongs to the assessee company itself. Once the confirmation letters are filed, no addition can be made on account of share application in the hands of the company. Our view finds support from the decision in Shri Barkha Synthetics Ltd. v/s ACIT 155 Taxman 289 (Raj). The cases like CIT V/s GP International Ltd.229 CTR (P H) 86, CIT V Steller Investment Limited 192 ITR 287 and Sophia Finance Limited 205 ITR 98 (Del) support the case of the assessee. The above order of ITAT Indore bench has also been confirmed by the Hon ble M.P. High Court in the case of CIT V/s STL Extrusion (P) Ltd reported in 53 DTR 97(2011) after referring its earlier order in the case of CIT V/s Rathi Finlease Ltd. reported in 215 CTR 429 has decided in favour of the assessee wherein Hon ble Jurisdictional high court also relied on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts P Limited as reported in 11 ITJ 357 has held that:- 2. Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that 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. Hence, we find no infirmity with the impugned judgment. ITAT, Indore Bench in the case of M/s Rajshree Finsec P Ltd [Appeal No 545/ Ind/2010 dt 06-02-2012 for the Asst Year 2007-08 ] had an occasioned to discussed the decision in the case of M/s Agrawal Coal Corporation and held that :- 5. During hearing the learned Senior DR contended that the issue is covered by the decision of the Tribunal in the case of M/s Agrawal Coal Corporation decided by this Bench on 31st October, 2011 in ITA Nos. 151/Ind/2009,283,136and34/Ind/2010,190/Ind/09,158/Ind/2010 etc. We are not agreeing with this proposition because in that case the identity of such share applicants was not proved and even the addresses of such share applicants wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmation by them. 7. In view of these facts, the decision from Hon'ble Apex Court in Lovely Exports (supra) and uncontroverted fact that the summons issued to the impugned share applicants were duly received by them with further filing of confirmation by such share applicants, at least their identity is proved, therefore, this appeal of the assessee deserves to be allowed. Hon ble Delhi High Court in the case of CIT Vs. Oasis Hospitalities (P) Ltd reported in 333 ITR 119 (2011) has held as under:- (i) Section 68 provides that if the assessee is not able to give satisfactory explanation as to the nature and source of a sum found credited in his books, the sum may be treated as the undisclosed income of the assessee. The initial burden is on the assessee to explain the nature and source of the credit and to do so, the assessee is required to prove (a) Identity of the shareholder (b) Genuineness of transaction and (c) credit worthiness of shareholders; (a) The identity of the shareholder can be proved by either (if individual) producing him before the AO or by way of documents, registered address, PAN etc; (b) The genuineness of the transaction c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (P) Ltd. (supra) itself this Court has observed, in the context of Lovely Exports (P) Ltd. (supra), as under: - The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holdersı register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec.68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between selfconfessed accommodation entry providers , whose business it is to help assessees br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit in the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was ₹ 55,50,000/- and not ₹ 1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount is to be taken at ₹ 55,50,000/-. The assessee has further tried to explain the source of this amount of ₹ 55,50,000/- by furnishing copies of share application money, balance sheet, etc. of the parties mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly considered and found not acceptable. This entry remains unexplained in the hands of the assessee as has been arrived by the Investigation wing of the Department. As such entries of ₹ 55,50,000/- received by the assessee are treated as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has furnished inaccurate particulars of its inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents. We place these observations on the record and direct a copy of the judgment to be furnished to the concerned income tax authorities for appropriate action towards reflecting these observations suitably in service record of the concerned AO to avoid such instances in the future. 7. For the above reasons, this Court is of the opinion that the concurrent findings of fact, as to the true identity of the share applicants, their creditworthiness and genuineness of the transaction, are based on sound reasoning and do not call for interference. No substantial question of law arises. The appeals are dismissed. [ Emphasis supplied ] In the case of ACIT vs M/s Krishna Sheet Processors P limited [ Appeal No ITA No 546/ Mum/ 2013 dt 30-06-2015] the amount of share premium of ₹ 1000/- was duly accepted as genuine. In view of the above, once the assessee has established the identity of the share holder in that case the amount of share premium is not an issue. If the assessing officer has not satisfied with the explanation of the share applicant, necessary addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, onus lying on the assessee has properly been discharged. Thus, fact of the present case is distinguishable with the fact of the case of M/s Gayathri Associates. In case of CIT vs Focus Exports (P) Ltd as reported in 51 taxmann.com 46, Hon ble Delhi high court has observed that address and PA No of the share applicant was not provided. In the present appeal in hand the appellant company has provided the complete address , PA No and various other documents as to discharged onus lying on it. Hence, fact of the present appeal is distinguishable with the fact of Focus Exports (P) Ltd. In case of CIT vs P Mohankala as reported in 291 ITR 278, Hon ble Apex Court has analysis the provision of section 68 of the Income Tax Act and observed that explanation of the assessee not accepted by the assessing does not tantamount to income of the assessee. In that case the Ld CIT[A] and Hon ble ITAT also approved the order of the Assessing officer. In the present appeal in hand, the assessee company has explained the correct nature of transactions though the same was not accepted by the Assessing officer but by the Ld CIT[A]. Since, the assessee company has filed ample documents to suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to substantiate its contention. In the present appeal the assessing officer did not make any inquiry. Hence, rather decisions of the Hon ble Delhi High court in the case of CIT vs Nova Promoters Finlease (P) Limited [supra] support the case of theassessee. 9. On consideration of above and respectfully following the decision of the jurisdictional High Court in the case of CIT vs. STL Extrusion, 53 DTR 97 and jurisdictional High Court in the case of CIT vs. Peoples General Hospital (Appeal No.27/2008) (supra) and the decision of Hon'ble Supreme Court in the case of Lovely Export (supra), 11 TTJ 357 and other decisions as reproduced above, we are of the view that assessee co. has received share premium because assessee co. is engaged in business of rolling steel Bar. The co. was incorporated in 13.10.1995 and having experience of more than 18 years of this line business. We are of the view that huge profit on the amount of share capital is justified. We are of the view that assessee has proved the identity, credit worthiness and genuineness of the transaction. In this case, the identity of shareholders is proved by from producing PAN, bank details etc. the money is received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application money and share capital received from the following persons:- 1 Delta Fashion Ltd. D-1Nirnaya Sagar Press building,Dr.M.B. Velkar Street , Mumbai,400002 AAACD5 697H 400000 1600000 2000000 2 Frec Wings Import Limited 3,Mallick street,Kolkata, 700007 AAACF4 480A 300000 1200000 1500000 3 Himgiri Dynamics Ltd. 9, Moraji Velji Bldg. 1st Floor 7-C Dr.M.B. Velkar Street,Kalba Devi Road,Mumbai AACJO0 296M 600000 2400000 3000000 4 Hindustan continental Ltd. 7, Bamroo Colony, Jaora Comp.,Indore AABCH1 575M 400000 1600000 000000 5 Mcsure Capital Ltd. 308,Malwa Tower,10 Old Palasia, Indore AABCM 3526F 100000 400000 500000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in cl. (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under s.139; (b) assessee or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under s. 132 or making of requisition under s. 132A, as the case may be, shall abate. 1.4.2.2] That from the language of the first proviso of section 153A of the Income Tax Act it is clear that the Assessing officer shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch and the same is to be added with the regular income assessed under s. 143(3) or computed under s. 143(1) for each of the six preceding assessment years. Where any prepaid taxes are there, the same are required to be given credit for computing the further tax payable by the assessee. The assessee is also required to pay interest under ss. 234A and 234B on the tax due on the basis of new calculation. Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed. The construction that the Department seeks to place on the impugned provisions would lead to serious hardship, inconvenience, injustice, absurdity and anomaly. Suppose in the course of a search, nothing incriminating was found. Does this mean that an honest citizen be unduly harassed by facing automatic reopening of the concluded assessments merely because there was search action against him ? The absurdity of the construction gets all the more pronounced when say, no incriminating material is found relating to the other person but the material found indicates disclosed income. Suppose, loan confirmations relating to loans duly disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch U/s 132 of the Income Tax Act was executed on 21-11-2006 and in consequence of search action, notice u/s 153A of the Income Tax Act was issued on 08-10-2007 for the Asst Year 2001-02 to 2006-07 and year of search was for the Asst Year 2007-08. 1.3] Year-wise details of Income tax return as originally filed by the assessee areas under:- S.No Asst Year Return originally filed on Time for issuance of the notice u/s143[2] Status of the assessment Amount of addition [Rs] 1 2001-02 31-10-2001 31-10-2002 Concluded Assessment 15,00,000 2 2002-03 29-10-2002 31-10-2003 Concluded Assessment 15,00,000 3 2003-04 31-10-2003 31-10-2004 Concluded Assessment 1,90,00,000 4 2004-05 01-11-2004 30-11-2005 Concluded assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .6.3] That as per sub- section (2) of section 153A of the Income tax read as under:- [2] If any proceeding initiated or any order of assessment or re-assessment made under sub- section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub- section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal commissioner or commissioner. 1.6.4] That in the present appeal relates to the Asst years 2001-02 to 2004-05 , return of income in respect of all the assessment years have already been filed and time for issuance of notice U/s 143[2] of the Income Tax Act has also been expired prior to the date of search on 21-11-2006. Hence, all the assessment years are completed assessment years prior to the date of search itself. Accordingly, no assessment of the assessee company was abate, in view of the second proviso to clause (b) of sub- section (1) of section 153A of the Income Tax Act . 1.6.5] The appellant in its appeal has challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that additions should 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said lease transaction as sale transaction and taxed the total security deposit receivable as sale consideration of sale of land. The addition made in the search assessment order pertained to the issue already dealt in the original assessment order i.e. lease transaction categorized as sale transaction. The fact that the aforesaid issue bears no relation to the any of the material / documents / records found and seized during the search action on 16.04.2009. Ld. CIT(A) has relied upon the Circular No. 7 of 2003 which clarifies the position of the pending appeals as on the date of the search. The relevant portion is produced herewith The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate .. Accordingly, as far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment u/s 153A of the Act, 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 was not produced or not already disclosed or made known in the course of original assessment. In all these cases no assessments were pending on the date of search for these assessment years. No assessments were abated in terms of second proviso to section 153A of the Act. Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) has considered various High Court decisions relied upon by the learned DR. The Hon'ble Delhi High Court has considered the cases of Canara Housing Development Co. vs. DCIT; Madugula vs. DCIT; CIT vs. Chetandas Laxmandas and CIT vs. Anil Kumar Bhatia (supra). The only decision of the Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora; 367 ITR 517 relied on by the learned DR was not considered by Hon'ble Delhi High Court while deciding the issue in the case of Kabul Chawla. The Hon'ble Allahabad High Court has reversed the order of the Tribunal and remanded the issue to the Tribunal to consider the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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