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TMI Blog2017 (1) TMI 1685X X X X Extracts X X X X X X X X Extracts X X X X ..... )-21, Kolkata (CIT(A) for short), which in turn arise out of orders passed by Assessing Officer (AO)U/s 153A/143(3) of the Income Tax Act, 1961 (in short 'the Act'), dated 30.03.2013/31.03.2013. 2. These ten appeals filed by the Assessee relate to same group companies-assessees, different assessment years, common issues involved, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The Assessee's appeal in IT(SS)A No. 49/Kol/2015 is taken as the lead case. 3. The brief facts qua the assessee are that a search and seizure operation was carried out U/s 132 of the I.T. Act,1961, on the assessee along with the sister concern and or others at various premises/offices of the group on 06.10.2010 and subsequent dates. In some cases survey operations U/s 133A was also conducted on the same date and / or subsequent dates. Later on the case of the assessee along with other assessees of the group were centralized in this charge with administrative jurisdiction of Range -V ( Central) of CIT ( Central)-III, Kolkata. Notices U/s 153A of the Act were issued on the assessee group companies. In response to such no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trolled by Shri Naresh Chhaparia. Thus, I am of the opinion that it will not be correct to say that there was no a new fact or material or evidence in consequence to search by which the AO could made addition of regular item declared in the original return; in the proceeding u/s 153A of the Act. I am of the opinion that the decision of the Jurisdictional ITAT in the case of LMJ International Ltd. is not applicable in the case of appellant company on the facts of the case. In view of above, the ground no. 1 is dismissed. 6. In ground no. 2 the assessee has contested the action of the AO making addition of Rs. 10,00,000/- on account of share capital received on the basis of statement of Shri Naresh Chhaparia. As mentioned above, the search operation u/s 132 of the Act was conducted in the case of assessee company on 06.10.2010. On the same date, a survey operation u/s 133A of the Act was conducted at the business premises of Shri Naresh Chhaparia at 3/A/7, 3rd Floor, Lal Bazar, Kolkata. It was gathered that Shri Naresh Chhaparia is one of the entry operators active in the market and he was engaged in the activity of providing entries to the beneficiaries through the concerns contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the fact that entry operator himself filed a letter of his affirmation of providing accommodation entries to the assessee company through his companies made for this purpose, the AO added the sum aggregating to Rs. 10,00,000/- to the income of the assessee u/s 68 of the Act on account of share capital. 7. It is observed that the similar issue as involved in the case of aappellant company was involved in its case for the A.Y. 2007-08 and 2008-09 wherein based on the statement of Shri Naresh Kumar Chhaparia dated 07.10.2010, the AO had made addition of Rs. 25 lakhs and Rs. 5O lakhs respectively on account of share capital/share application money. In the instant appeal, the appellant has filed same submission as filed in its case for the A.Y. 2007-08 and 2008- 09. There is change in submission only to the extent that there is difference in the amount of addition on account of share capital and the change in the names of subscribing companies. Otherwise, the facts of the two cases are exactly similar. The appeals in the appellant's case i.e. M/s Swagat Trexim Pvt. Ltd. for the A. Y. 2007- 08 and 2008-09 have been decided by the undersigned vide Appeal No. 461/CC-3(2)/C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments u/s.143(3) of various group concerns/sister concerns were completed before 6.10.2010. The period within which notice u/s.143(2) could be issued by the department also expired. The assessment proceedings of various group companies and sister concerns of the assessee were completed before the date of search. During the course of survey a statement was recorded by the survey team which pertains to Shri Naresh Kumar Chhaparia. During the course of appellate proceedings, before the ld. CIT(A), ld. AR for the assessee requested ld. CIT(A) to cross-examine the statement of Shri Naresh Kumar Chhaparia. Mr.Naresh Kumar Chhaparia subsequently retracted by an affidavit stating that statement recorded by the survey team is wrong and should not be relied upon because the statement had been taken by the survey team with threat and coercion. In the affidavit dated 11.10.2010, Shri Naresh Kumar Chhaparia has stated as follows :- "6. That the survey operation was started around 2.P.M on 7.10.2010 and continued up to 2.30 A.M of 08.10.2010. 7. That the survey team was continuously harassing to convert the survey into search and also to cover my residence in search. They also threaten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- i) M/s MSP Steel & Power Ltd. IT(SS)A No.156-158/Kol/2014, order dated 02.12.2016) : 7. We have heard the rival submissions. We find it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the Act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessments for the Asst Years 2007-08 & 2008-09 were originally completed u/s 143(1) of the Act and time limit for issuance of notice u/s 143(2) of the Act had expired on the date of search and hence it falls under concluded proceeding, as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to those concluded years, the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and those p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed by the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A.The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." iii) Veerprabhu Marketing Ltd., [2016] 73 taxmann.com 149 (Calcutta) : 7. With respect to the second submission advanced by Mr. Jain, we called upon Mr.Nizamuddin in vain to show us the incriminating material, if any, found either during the search or during the requisition or even during the survey which is or may be relatable to the assessee. Mr.Nizamuddin as unable to show that any such incriminating material was unearthed at any of the three stages pertaining to the assessee. 8. We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre-requisite before power could have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch proceedings were taken under section 153A. 25. We noted that in the case of the assessee, the addition has been made in each of the assessment years on account of the share capital and the share premium as well as the disallowance of the expenses. During the course of the search taken place in the case of the assessee, we noted that no incriminating material was found in respect of the additions made by the Assessing Officer in each of the assessment years. The only material which was found was the Bank account which the assessee was having with the banker. The said Bank account was duly disclosed in the incometax return filed by the assessee. The said Bank account can also not be regarded to be the incriminating material. Even the Assessing Officer has also not made any addition on the basis of said bank account in each of the assessment years. The banker has made the Pay Order in respect of the balance of the Bank account in favour of the Revenue as per the order of ADIT and only that Pay Order was seized. It is not the case that the Bank account was not disclosed. Except the Bank account, no other assets, documents or material were brought to our knowledge by the ld. D.R., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcion. Ld. DR also pointed out that the statement of Mr.Naresh Kumar Chhaparia is itself a new incriminating document and there is entire nexus which has established by his statement. Ld. DR also pointed out that retraction by Mr. Naresh Kumar Chhaparia is afterthought process and should not be relied on his affidavit. Ld.DR has also relied on the following judgments :- i) ST. Francis Clay Decor Tiles, [2016] 70 taxmann.com 234 (Kerala) ii) Anil Kumar Bhatia, [2012] 24 taxmann.com 98(Delhi) iii) Filatex India Ltd., (2014) 49 taxmann.com 465 (Delhi) iv) Dr.P.Sasikumar, (2016) 73 taxmann.com 173 (Kerala) v) GaribdasChandrika Prasad, (1997) 95 TAXMAN 431 (MP) The sum and substance of the above mentioned judgments are that retraction by Mr.Naresh Kumar Chhaparia is afterthought process and should not be relied on his affidavit. The Assessing officer may assess the income of concluded assessments under section 143(3) and under section 143 (1)/147. 9. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paria, who had subsequently denied. Hence, the statement given by Shri Naresh Kumar Chhaparia cannot be relied at all. All the share applicants have submitted the adequate evidence with supporting documents. No addition can be made without any incriminating documents. In addition to this, the assessee under consideration has proved the identity, creditworthiness and genuineness of the transactions. Therefore, ld. AR submitted that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person because later on he retracted. The assessee has proved the identity, creditworthiness and genuineness of the transactions during the proceedings. Therefore, addition made by the AO and confirmed by the ld. CIT(A) may be deleted. Ld. AR has also relied on the following judgments :- i) Zimkele Commodeal Pvt. Ltd., ITA No.959/Kol/2011, dated 24.08.2016 : 7.7. We find that the issue is also covered by another Jurisdictional High Court decision in the case of CIT vsMitul Krishna Kapoor in ITA No. 333 of 2009 dated 9.6.2016) wherein the question raised and the decision rendered thereon are reproduced below:- "Whether on the facts and in the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) and accordingly, the grounds raised by the revenue are dismissed. ii) Global Mercantiles Pvt. Ltd., ITA No.1669/Kol/2009, (2016) 46 CCH 0041 Kol Trib : 4.2. On first appeal, the Learned CIT(A) observed that the entire share application monies of Rs. 57,00,000/- were received during the previous year 2004-05 relevant to Asst Year 2005-06 from 20 persons and the shares were allotted to them during the asst year under appeal. He observed that the assessee had furnished details of the share applicants giving the date wise receipts, mode of payment, amount, name, address, income tax returns, PA No. of share applicants along with their balance sheet. The Learned CITA also observed that the assessee in its reply to show cause notice before the Learned AO had requested him to use his power and authority for the physical appearance of the shareholders which was not exercised by the Learned AO. Instead the Learned AO continued to insist on the assessee to produce the shareholders before him. He ultimately concluded that the assessee had duly discharged its onus of providing complete details of the shareholders and in any case, no addition could be made u/s 68 of the Act in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l balance sheet as at 31.03.2008, Capital A/c & Income & Expenditure A/c in page 6-8 of the paper book, Copies of loan confirmation issued by M/s. Bright Impex & Agencies Pvt. Ltd for the FYs. 2007-08, '08-09 & '09-10 in pages 13-15 of the paper book, copy of audited annual financial accounts of M/s. Bright Impex & Agencies Pvt. Ltd for the FY 2007-08 in pages 16- 28 of the paper book, copy of bank statement in respect of Current A/c No.95111010006717 of M/s. Bright Impex & Agencies Pvt. Ltd in pages 29-32 of the assessee's paper book, PAN details of M/s. Bright Impex & Agencies Pvt. Ltd in page 33 of the assessee's paper book and copy of ld. AO's Remand report in pages 35-36 of the assessee's paper book. On perusal of the aforesaid papers, we find that the lending company, M/s. Bright Impex & Agencies Pvt. Ltd has got paid up capital of Rs. 3,25,85,000/- as on 31-03-2008 and Reserves & Surplus of Rs. 26,87,67,396/- as on 31-03-2008. We also find that the said lending company, M/s. Bright Impex & Agencies Pvt. Ltd is a registered Non Banking Financial Company (NBFC) engaged in the business of granting of loans and advances and had indeed derived interest inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of the loan creditor immediately before issuing the cheques to the assessee. On the contrary, there were other high value transactions reflected in the bank statement of the loan creditor. Hence, the basic allegation that the assessee has laundered his unaccounted income is not prima facie proved by the ld. AO even during the remand proceedings when the ld.AO got the second opportunity to make necessary verification by using his statutory powers vested on him and provided to him in the statute. We find that the facts of the case clearly proved that the assessee had completely discharged his onus by filing all the documentary evidences in support of the loan transaction from M/s. Bright Impex& Agencies Pvt. Ltd in terms of section 68 of the Act. Hence, it is fully covered by the decision of the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corporation reported in 159 ITR 78(SC). The facts before the Hon'ble SC and the facts of the case before us are exactly similar. Hence, the addition made on this count u/s. 68 of the Act based on mere surmises and suspicion is hereby deleted. This ground of revenue's appeal is also dismissed. iv) Harshwardhan Gems Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing utilised to make investments in share application money of the assessee company. The reasons assigned by the and CIT(A) for making addition u/s 68 of the Act are identical as were given while treating the investments by Jai Kali Properties (P)Ltd as unexplained. It is clear from the evidence on record that the assessee has established the identity and creditworthiness and genuineness of the transactions of the receipt of share application money from M/S.Kalisaran Properties (P) Ltd. We, therefore, hold that the addition made by the AO and sustained by CIT(A)should be deleted. vi) Kunj Alloys Pvt. Ltd., ITA No.239/CTK/2007, order dtd. 27.11.2015 : 9. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. D.R. has relied on the order of the Assessing officer in support of the Revenue's case on this issue, the ld. Counsel for the assessee has pointed out that the total amount of Rs. 19.26 crores was raised towards shares by the assessee- Company as well as other group Companies including the amount in question during the assessment years 2001-02 to 2007-08. He has submitted that pursuant to the search con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed. In view of the dismissal of the appeal, the connected stay application is also dismissed. 13. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the judgments of the ITAT and Hon'ble High Courts. The Ld. AR pointed out that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person and later on he reiterated the statement by filing the affidavit. The share applicants have submitted the required document and evidences. The addition made by the AO u/s.68 is without any basis and without any incriminating material. The assessee has proved the identity, creditworthiness and genuineness of the transactions. Therefore, considering the factual position and the case law cited by ld. AR, we are of the view that the addition made by the AO u/s.68 and confirmed by the ld. CIT(A) needs to be deleted. Accordingly, we delete the addition. 13.In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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