TMI Blog2019 (6) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... l, CIT, DR ORDER PER R.K. PANDA, AM: ITA No.7971/Del/2018 filed by the assessee is directed against the order dated 3rd October, 2018 of the CIT(A)-26, New Delhi, relating to assessment year 2009-10. ITA Nos.7972 7974/Del/2018 filed by the respective assessees are directed against the separate orders dated 5th October, 2018 of the CIT(A)-26, New Delhi, relating to assessment year 2011-12. ITA No.7973/Del/2018 filed by the assessee is directed against the order dated 5th October, 2018 of the CIT(A)-26, New Delhi, relating to assessment year 2009-10. 2. Since identical grounds are involved in all these appeals, therefore, these were heard together and are being disposed of by this common order for the sake of convenience. ITA No.7971/Del/2018 (A.Y. 2009-10) Shri Rathi Steel Ltd. 3. Facts of the case, in brief, are that the assessee is a company and is engaged in the business of manufacturing of TMT bars having a manufacturing facility at Ghaziabad. It filed its return of income on 28th September, 2009 declaring total income of ₹ 1,72,95,890/-. The Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement with bank book of the investing companies to substantiate their claim of investment, so that the existence, genuineness and credit worthiness of the investing company can be examined. He also asked the assessee to inform the directors to produce their personal Profit Loss Account or Income Expenditure Account, balance sheet and personal bank statement for the relevant year. The assessee filed various details such as: a) Assessment particulars including PAN and ward/Circle where assessed to income tax (income tax return) b) Copy of ledger account of the Investor Companies in the books of Assessee for the relevant year under consideration c) Copy of Bank statement of Investor Companies d) Copy of Audited Financial Statements of Investor Companies e) Confirmations provided by Investor Companies. 5. On the basis of the various details furnished by the assessee establishing the identity and credit worthiness of the investor companies and the genuineness of the transactions, it was argued that the assessee has discharged the onus coast on it. Relying on various decisions, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. In appeal, the ld.CIT(A), after considering the remand report of the A.O. and rejoinder of the assessee to such remand report, upheld the action of the Assessing Officer in making addition of ₹ 6 crores to the total income of the assessee u/s 68 of the IT Act, 1961. 7.1. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- 1. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding addition of ₹ 6,00,00,000/-made by the assessing officer under section 68 of the Income- tax Act, 1961 ( the Act ), not appreciating that the appellant has rightly discharged the primary onus by proving the identity, genuineness and creditworthiness of the entities by submitting plethora of evidences. 1.1 That the Commissioner of income-tax (Appeals) erred on facts and in law in not appreciating that the aforesaid addition has been made by the assessing officer de-hors any material found/ seized during the course of search in the premises of the appellant and is not sustainable in law. 1.2 That the Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a the assessment year for which the Assessing Officer wants to make assessment. He submitted that the SLP filed by the assessee against the decision of the Hon'ble Delhi High Court in the case of Meeta Gutgutia was dismissed by the Hon'ble Supreme Court. 9. Referring to the decision of the Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society, vide Civil Appeal No.11080 of 2017, order dated 29th August, 2017, he submitted that an issue had arisen as to whether the Assessing Officer is entitled to make addition without there being any incriminating material relating to the assessment year in case of search in respect of assessment year which has not abated. He submitted that the Hon'ble Supreme Court upheld the order of the High Court confirming the order of the ITAT quashing the assessment making the addition in respect of the year which was within the block year, but, there was no incriminating material pertaining to this assessment year. He also relied on the following decisions and submitted that where the addition made by the Assessing Officer is not based on any incriminating material found during the course of searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following decisions:- i) PCIT vs. NRA Iron and Steel (2019) 103 taxmann.com 48 (SC); ii) NDR Promoters Pvt. Ltd. (2019-TIOL-172-HC-DEL-IT) iii) Prem Castings (P) Ltd. vs. CIT (2017) 88 taxmann.com 189 (All); iv) Prem Castings (P) Ltd. vs. CIT 2018-TIOL-274-SC-IT; v) CIT vs. MAF Academy (P) Ltd., 361 ITR 258 (Del); vi) CIT vs. Navodaya Castle Pvt. Ltd. (2014) 367 ITR 306 (Del); vii) Konark Structural Engineering (P) Ltd. vs. DCIT (2018) 96 taxmann.com 255 (SC); viii) Konark Structural Engineering (P) Ltd. vs. DCIT (2018) 90 taxmann.com 56 (Bom);] ix) Pratham Telecom India Pvt. Ltd. vs. DCIT (2018-TIOL-1983-HC-MUMIT); x) JJ Development Pvt. Ltd. vs. CIT (2018-TIOL-395-SC-IT); xi) DRB Exports (P) Ltd. vs. CIT (2018) 93 taxmann.com 490 (Cal); xii) CIT vs. Nipun Builders Developers (P) Ltd., 30 taxmann.com 292; xiii) CIT vs. Nova Promoters Finlease (P) Ltd., 18 taxmann.com 217; xiv) CIT vs. Ultra Modern Exports (P) Ltd., 40 taxmann.com 458; xv) CIT vs. Frostai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he various decisions cited before us. We find the original assessment in the instant case was completed u/s 143(3) of the Act vide order dated 29th December, 2011 assessing the total income at ₹ 1,74,70,890/- as against the returned income of ₹ 1,72,95,890/- wherein addition of ₹ 1,75,000/- was made on account of RoC fees paid for increase on authorized share capital. A search and seizure operation u/s 132 of the Act was conducted in the case of the assessee on 20th January, 2015. The Assessing Officer completed the assessment u/s 153A/143(3) on 30th December, 2016 determining the total income at ₹ 7,71,16,920/- wherein he has made addition of ₹ 6 crores u/s 68 of the IT Act on account of share capital and share premium received by the assessee during the year from three companies, the details of which are given at para 3 of this order. It is an admitted fact that the addition of ₹ 6 crores made by the Assessing Officer is not based on any incriminating material, but, on the basis of the balance sheet filed by the assessee according to which the assessee has raised share capital including share premium of ₹ 6 crores. Under the above factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the financial year in which the return is furnished. Therefore, in absence of issue of any notice u/s 143(2) and since no other proceedings are pending, therefore, it had attained the finality much prior to the date of search on 28.03.2015. Under these circumstances, the finding of the ld. CIT(A) that the assessment proceedings were pending at the time of search and was abated is factually incorrect. 36. We find the ld. CIT(A) at para 5 page 11 of his order has observed as under :- The basis of addition as taken by the A.O. was statement recorded of Shri Sanjeev Agarwal during the course of search wherein he has surrendered an amount of ₹ 88.52 crore out of which a sum of ₹ 30.78 crores were referred to for the assessment year 2008-09 and rest of amount was non descriptive and vague and was surrendered subject to cross checking of the facts and to explain after access to the books of accounts. The said statement was retracted by said Shri Sanjeev Agarwal on 18.05.2015 within two months from the date of original statement. Though the appellant has stated to have recorded all the transactions under appeal in its books of account and offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in was not justified in law. 39. We find the Hon'ble Delhi High Court in the case of CIT vs. Harjeev Aggarwal reported in 290 CTR 263 has observed as under :- 23. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of the Act which expressly provides that the scope of examination under Section 132(4) of the Act is not limited only to the books of accounts or other assets or material found during the search. However, in the context of Section 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 40. The Co-ordinate Bench of the Tribunal in the case of Brahmaputra Finlease (P) Ltd. vide ITA No.3332/Del/2017 order dated 29.12.2017, following the above decision of the Hon'ble Delhi High Court, has observed as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not pending then the same cannot be subject to tax in proceedings u/s 153A of the I.T. Act. This of course would not apply if incriminating materials are gathered in the course of search or during the proceedings u/s 153A which are contrary to and/or nor disclosed during the regular assessment proceedings. 44. The Hon'ble Delhi High Court again in the case of Pr.CIT vs. Lata Jain reported in 384 ITR 543 has held that in absence of any incriminating material found as a result of search, assumption of jurisdiction u/s 153A was not in accordance with law. The various other decisions relied on by the ld. counsel for the assessee also supports his case. The Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society reported in 397 ITR 344 has upheld the decision of Hon'ble Bombay High Court wherein the Hon'ble High Court had upheld the decision of the Tribunal holding that the incriminating material which was seized has to pertain to the assessment years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four assessment years. 45. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer de-hors any material found/ seized during the course of search in the premises of the appellant and is not sustainable in law. 1.2 That the Commissioner of Income-tax (Appeals)erred on facts and in law on confirming the addition which was merely on the basis of information received from the Investigation Unit of Income tax department without even an iota of evidence or adverse document in context to the same. 1.3 That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that the Appellant had submitted all the relevant information and documents to prove the identity, genuineness and creditworthiness of share applicants. 1.4 That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that information received in pursuant to the remand report is deficient in establishing the capacity of the investor and genuineness of the share capital subscription transactions. The appellant craves leave to add, amend, alter or vary the above grounds of appeal at or before the time of hearing. 22. After hearing both the sides, we find the above grounds are ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.7974/Del/2018, A.Y. 2011-12 (Shri Rathi Steel (Dakshin) Ltd.) 25. The grounds of appeal raised by the assessee read as under:- 1. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding addition of ₹ 50,00,000/-made by the assessing officer under section 68 of the Income- tax Act, 1961 ( the Act ), not appreciating that the appellant has rightly discharged the primary onus by proving the identity, genuineness and creditworthiness of the entities by submitting plethora of evidences. 1.1 That the Commissioner of income-tax (Appeals) erred on facts and in law in not appreciating that the aforesaid addition has been made by the assessing officer de-hors any material found/ seized during the course of search in the premises of the appellant and is not sustainable in law. 1.2 That the Commissioner of Income-tax (Appeals)erred on facts and in law on confirming the addition which was merely on the basis of information received from the Investigation Unit of Income tax department without even an iota of evidence or adverse document in context to the same. 1.3 That th ..... 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