9911796707
TMI Blog2018 (2) TMI 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ,17,20,000/- already taxed u/s 68 in the hands of Uniworth Agencies Pvt. Ltd, loan creditor thus leading to double addition of the same income. 3. That on the facts and in the circumstances of the case, the learned CIT(A) erred in facts and in law as unsustainable evidences/statements collected without the knowledge or intimation to the assessee were relied upon; no opportunity of cross examination was provided to the assessee which is in defiance of the settled principles of justice based on judicial judgment of the Apex Court in the case of Andaman Timber Industries vs CCE. 4. That the learned CIT(A) erred in relying upon the statement of third parties without providing copy of the said statement and without according opportunity of cross examination to the appellant although the impugned statements could not have been relied upon in proceedings u/s 153A of the Act when no incriminating document was found in the course of search. 5. That the order of the Ld. CIT(A) being not based on the facts of the case of the appellant and being contrary to law, should hence be quashed and the appellant Company be given such relief or reliefs as prayed for. 6. That the appellant craves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several banks by calling for corresponding flow of fund and it was found that a number of paper companies detected by the Investigation wing of Kolkata and a share broker who was found to be involved in such transaction were also found to be part of fund flow of loan arrangement and repayment through banks. The names of such companies and person which are part of the chain through which the amount repaid by the assessee was routed are as under: 1. Bhima Agencies Pvt Ltd, 2. Topline Investment Consultant Pvt Ltd. 3. Dalmia Investment Development Ltd. 4. Blackberry Projects Pvt Ltd. 5. Panghat Textile Pvt Ltd. 6. Dream Commodeal Pvt Ltd and 7. Ashok Kumar Kayan (Share Broker) 8. The AO further observed that the profit and loss account, Balance Sheet of most of these companies as per the above listed concern were analysed and found that no business is being run by them. They are only involved in receiving investment from certain similar companies and making investment as share capital in other companies. There is no normal business rationale involved in such transactions. He further observed that in the above context assessee was requested to show cause as to why the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Investment 11,20,75,000 11,14,80,000 11,99,38,000 3,75,58,000 36,58,000 (d) The identity of the investor company namely Uniworth Agencies Pvt. Ltd. has been established, genuineness of the transaction has been proved as all the transactions are through Bank. Even the detail source of investment in the hands of Uniworth Agency Pvt. Ltd., has been explained with documentary evidences. Credit worthiness has been established and hence the assessee has discharged its onus on the transactions. (e) The alleged statement recorded from Mr. Garg & Tharad was not a voluntary statement and merely got signed from them on pressure. Statement was self contradictory. (f) The assessee company has neither started any business nor a single rupee of revenue is there and hence question of unaccounted money in the hands of assessee does not arise at all. Similarly in the entire SGBL group neither any incrementing document was found nor was any source tresses leading to unaccounted generation of cash. Hence the allegation that the receipt is unaccounted money of assessee routed through Kolkata Company is completely baseless." 9. The AO after considering the above submissions of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sesesee and Uniworth is akin to all type of such transaction in the case of accommodation entry providers. In all such type of transaction accommodation entry is provided by companies having all the proper details in compliance to the ROC and the bank account is used to conduit the fund without any justification of transfer of such huge sum. All these companies have no recognisable real business and their balance sheet show huge share capital and equivalent amount of investments. The activity of such share holders and investment companies are all of same nature. 11. The AO further observed that this is the common modus operandi of Kolkata based shell companies. Here, unaccounted cash is routed through several layers to reach the intended beneficiary. This is explained at length by the statement of two such entry operators viz. Raj Kumar Tharad and Pradeep Garg, who are based in Kolkata. Relevant part of the statement of those two persons are reproduced below : Raj Kumar Tharad: "Q.6 what work is done by Midas Capital Pvt. Ltd and uniworth Agencies Pvt.Ltd. Ans. Sir, actually they all are Jamakharchi Companies. Myself is the director in above companies as discussed in questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. We used to deposit the cheques in my companies for raising share capital. Finally, Raj kumar Tharad used to sell these companies to beneficiaries in lieu of commission. Q.10 Please explain to whom you have sold company of Midas Capital Pvt. Ltd and Uniworth Agencies Pvt. Ltd. and what was the modus operandi? Ans;-These companies were taken over by one Mr. Sunil Gupta of Cuttack, Odisha. The companies were transferred by way of share transfer to Sh. Sunil Gupta and his group companies. Sh. Sunil Gupta approached me in 2010 and handed me cash. This cash was handed over to several of my dummy concerns. The money after travelling through several of my companies controlled by my got deposited into the books of SGBL (India ) Ltd and other group companies controlled by Sunil Gupta. Q.11. please provide the details of money trail used to in depositing cash and routing it back to Companies like Midas Capital Pvt. Ltd and Uniworth Agencies Pvt. Ltd ? Ans: I will provide it later on. However, the cash was deposited in various concerns which after travelling several layers reached companies like Singnet Vinimay Pvt. Ltd, Scope Vyapaar Pvt. Ltd., Sankalp vincom Pvt. Ltd., etc. Subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions were entered into by way of account payee cheques is also not conclusive and cannot be held to be sacrosanct. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence. The same view had been adopted by the Hon'ble Delhi High Court in the case of the CIT Ks Durga Prasad More (1971) 82 ITR 540 and stated that. - "It is true that the apparent must be considered real until it is shown that, there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise ic will be very easy to make self- serving statements in documents either executed or taken by a party and rely on those recitals. If all that on assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present, case to show that the apparent was not the real. The taxing authorities were not required to pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of Rs. 6.92 crores shown as advance and credited in the books of the assessee company is unexplained and added to the returned income of the assessee u/s.68 of the Act. 17. On appeal, the CIT(A) observed that the assessee has contested that no incriminating material was seized and therefore no addition can be made in assessment u/s.153A of IT. Act, 1961. It is seen from the assessment order that the assessing officer has relied upon seized tally accounts in framing the assessment order. The assessing officer has also relied upon the statements of Rajkumar Tharad and Pradeep Garg, the alleged entry operators, recorded on 13.11.2014. Therefore, the submission of the assessee that no incriminating material is available is incorrect. The decisions relied upon by the assessee are of no assistance to assessee, as the facts are different. 18. The CIT(A) further observed that the judicial opinion in the latest judgments is that under section 153A/153C of I.T.Act, 1961, the assessing officer is empowered to make addition even without any incriminating material being available against the assessee. In this regard the following judgments are relied upon: (a) E.N. Gopakumar v. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd before him for examination. The assessee could not produce directors of Uniworth Agencies Pvt Ltd. Considering these aspects the assessing officer has held that the assessee has failed to establish genuineness of the loan transactions and identity/creditworthiness of the creditors. He further observed that during the course of the appeal proceedings the assessee has stated that all the loans have been routed through the banking channels. The assessee has further stated that Uniworth Agencies Pvt Ltd had its own share capital of Rs. 11.17 crores and the loan has been given out of this funds. It is further contested by the assessee that an assessment has been made in the case of Uniworth Agencies Pvt Ltd and the share capital of Rs. 11.17 Crores has been assessed to tax in the hands of Uniworth Agencies Pvt Ltd, from where the loans have been given to the assessee. The CIT(A) observed that he has carefully examined the assessment order and submissions of the assessee and found that an amount of Rs. 6,92,00,000/- was received from Uniworth Agencies Pvt Ltd. The onus to prove bonafides of these transactions and of the creditors concerned is squarely on the assessee. The assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HE CASE: 1. The Assessee is a Private limited company incorporated in the year 2003 with an object of construction of residential/ commercial building apartments, complex malls along with real estate development for it's commercial exploration. The current registered office of the Assessee is at "C/o: B. P. Shukla, D-2227JndiraNagar, Lucknow, Uttar Pradesh-226016".The Income tax Returns of the Assessee company are duly being filed from this registered office address of Lucknow at JCIT, Range-1, Lucknow, with PANAABCE4000A. Prior to this, during the A.Ys 2012-13 and 2013-14, being the years under appeal before your Honours, the registered office of the Assessee company was at "B 53 Sector A, Mahanagar, Lucknow, Uttar Pradesh-226001". The said office was changed to the current registered office after all due formalities with the ROC. 2. For AY 2012-13, the Assessee has filed the Income tax return u/s 139(1) on 30-09-2012 declaring Nil income and for AY 2013-14, the return was filed on 01-10-2013 declaring the Nil income. 3. Subsequently on 6thAugust 2014, there was a search & seizure proceeding u/s.132 in case of directors family by IT investigation department of Odish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our Honours setting out the facts and the reasons why the proceedings initiated u/s 153A of the Act is not as per law and hence the entire proceedings are liable to be quashed. SUBMISSIONS: 1. Stating the particular facts of the additions made, it is stated that in the year 2008, the Assessee company was able to get a piece of land from the Cuttack Development Authority (CDA) for which a 10% Emd deposit of Rs. 2,12,57,280/- had been made. 1.1 The cost of the said land being very high, efforts were made to mobilize funds from various parties. The Assessee company raised a total sum of Rs. 21,94,75,000 in FY 2011-12. Out of this, a sum of Rs. 6,92,00,000/- was received from Uniworth Agencies (P) Ltd. as advance from customer against development of upcoming projects. The same was duly recorded for in the books under the head "Advance from prospective buyers‟. A sum of Rs. 3,06,00,000/- was raised from Uniworth Agencies (P) Ltd in FY 2012-13 and the same was also duly recorded in the regular books. However, please note that out of the total sum of Rs. 6,92,00,000/- credited as received from Uniworth Agencies, a sum of Rs. 25,00,000/- was actually received from Growth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts were very much the regular books of accounts of the Assessee, all duly recorded and disclosed as such in the Regular books of accounts and covered in the Returns filed u/s 139(1) of the Act. 3.2 As seen from above, along with other names, the name of the Assessee company also appeared on the said Panchnama. Based purely upon the said Panchanama, in the absence of any incriminating material, notice u/s 153A of the Act dated 29/04/2015 was issued on the Assessee company for the A.Ys. 2012-13 and 2013-14. However, it is to be noted here that no search proceeding was conducted at the registered office of the Assessee company which was at Lucknow, being "D-2227,Indira Nagar, Lucknow, Uttar Pradesh- 226016" as has been stated above. Thus, on no basis whatsoever, in an automatic manner, with an absolute predetermined and prejudiced mind, without any jurisdiction, in the total absence of any incriminating material, solely since the name of the Assessee company was mentioned in the Panchnama drawn in the course of proceedings u/s 132 of the Act, impugned proceeding u/s 153A of the Act was initiated on the Assessee company. Assessment proceedings were initiated and Notice u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly as if such return were a return required to be furnished under section 139 ; (b) assess 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 Assessing Officer 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 sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. **(2) If any proceeding initiated or any order of assessment or reassessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 4.3 Thereafter, with effect from 1st June 1995, scheme of block assessment in section 158BC and 158BD as per chapter XIVB of the Act was introduced. The main purpose of introducing block assessment scheme was early finalization of search assessment and reduction in multiplicity of proceedings. In this scheme, the assessment was to be made on the basis of seized documents only. There was no scope for disturbing regular assessments. Although there were some analogizes and differences of opinion in some of the provisions of the scheme, however, within the span of about eight years most of the analogizes and disputes were settled by various judgments of Hon‟ble Courts and Tribunals but after settling of most of the issues, the Government of India withdrew this scheme in respect of searches made from 1st June 2003 and inserted new sections 153A, 153B, 153C and 153D in Chapter XIV for post search assessment purpose. In the Memorandum explaining the provisions of Finance Bill 2003, it was observed that the existing provision (at that time) for single assessment of undisclosed income for block period were introduced for avoidance of disputes, early finalization of such assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er documents or any assets are requisitioned u/s 132A after 31.5.2003. Also to be highlighted that it is during the course of search itself, such generally incriminating documents or papers etc. or unaccounted assets are found. 5.2 If the AO is allowed to assess / reassess the total income for all six assessment years as per first proviso to section 153A, in contradiction of the second proviso, particularly when there is no incriminating material etc., then the same will not only multiply assessment proceedings but will multiply even the appellate proceedings. Obviously this can never be the intention of the Legislature. 5.3 The provision of section 153A starts with non-obstante clause with reference to sections 139, 147, 148, 149, 151 and 153. Sec. 153A contemplates issue of notice for 6 years preceding the search but not for the year of search or requisition and thus no return is required to be filed for the year of search u/s 153A. Only regular return u/s 139 to be filed. First proviso is reiteration of the provision containing clause (b) of section 153A (1) that the AO shall assess or reassess the total income of each of the six assessment years. The second proviso cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 263 etc. have to be made within well-defined limits subject to satisfaction of pre-conditions and, therefore, similar limitation may have to be read in the instant provision. Therefore, making any Assessment which is already completed will also require the satisfaction of pre-conditions as contemplated in section 153A, its first proviso, its second proviso read with section 132. The Assessment u/s 153A deals with search cases and therefore, the concept of undisclosed income u/s 132(1)(c) will come into play. 5.9 The second proviso to section 153A is intended to avoid two assessments for the same year. Section 153A does not authorize the making of a de novo assessment. An assessment u/s 153A is not meant to unsettle the income shown in the regular return in respect of which the assessment is complete. Section 153 A does not lead to a whole exercise of assessment to be made afresh in respect of completed assessments. Therefore in proceedings u/s 153A, no new disallowance can be made by the A.O. where admittedly the regular assessments are shown as completed assessments on the date of initiation of action u/s 132. 5.10 In relation to the years whose assessment is completed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... templated. There is a mandate to issue notices under section 153(1)(a) and assess 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. Thus, the crucial words "search" and "requisition" appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. True it is that the assessment which has to be made in pursuance of the notice is in relation to the six years. An order will have to be made in that regard. While making the order, the income or the return of income filed for all these assessment years is to be taken into account. A reference will have to be made to the income disclosed therein. However, the scone of enquiry though not confined essentially revolves around the search or the requisition under section 132A as the case may be. The provision deals with those cases where assessment or reassessment, if any, relating to the assessment years falling within the period of six assessment years referred to in sub-section (1) of section 153A were pending. If they were pending on the date of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean that the assessment can be arbitrary or made without any relevance nr nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material. (v) In the 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 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word "reassess" to completed assessment proceedings. (vi) In so far 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 assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A 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 ..... officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed. * Smt. Sunita Bai Versus Dy. Commissioner of Income Tax Central Circle-1, Belgaum2015 (3) TMI397 - ITATPANAJI - TMI "where an assessment order has already been passed for a year or years within the relevant six assessment years, then the AO is duty bound to reopen those proceedings and reassess the total income but by taking note of the undisclosed income if any, unearthed during the search. The expression "unearthed during the search " is quite significant to denote that in respect of completed or non-pending assessment, the AO albeit duty bound to assess or reassess the total income but if there is scope for additions in such assessment, on the basis of income "unearthed during the search ", he can make the addition. In other words, the determination of "total income" in respect of the assessment years for which the assessments are already completed on the date of search, shall not be influenced by the items of income other than those based on the material unearthed during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular year of the same person, i.e., one as regular assessment and another as assessment u/s 153A of the Act and not the whole exercise of assessment to be made afresh in respect of completed assessments. " * ACIT vs M/s Delhi Hospital Supply Pvt Ltd (ITA 3996/Del/2011) "7. Keeping in view of the aforesaid findings given by the Ld. CIT(A), we are of the considered view that Ld. CIT(A) has rightly held that in the absence of any material found during the search, as a result, no disallowance / additions can be made in the assessment u/s. 153A of the I.T. Act. Even otherwise, we find force in the Ld. Counsel‟s submissions that the issue in dispute is also covered by the decision of the Hon'ble Jurisdictional High Court in the case of CIT(Central)-III vs. Kabul Chawla in ITA No. 707, 709, 713/Del/2014 wherein the Hon'ble High Court has held that if the additions are made, but not based on any incriminating material found during search operation, then these additions were not sustainable in the eyes of law. In our considered opinion, the Ld. CIT(A) has rightly adjudicated the issue in dispute and accordingly rightly deleted the additions in dispute. Keeping in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s work had to have some reasonable nexus with the statements recorded and documents seized. The differences of opinion between the Commissioner (Appeals) on the one hand and the Assessing Officer and the Appellate Tribunal on the other hand could not be the sole basis for disagreement with what was essentially a factual surmise that was logical and plausible. The findings of the Appellate Tribunal did not reveal any fundamental error calling for interference. Now coming back to the case under reference it is stated that in the said case, after discussing elaborately the case of CIT vs. Kabul Chawla [380 ITR 573 (Del)] as well as several other cases as referred therein, the distinguishing features of the case of Dayawanti Gupta v. CIT [390 ITR 496 (Del)] were spelt out as under: * There was a clear admission by the Assessee in Dayawanti Gupta (supra) that they were not maintaining regular books of accounts and the transactions were not recorded therein. * there was a chart prepared confirming that there had been a year-wise non-recording of transactions. Having observed as above, the Hon‟ble Delhi High Court held as under: "........By contrast, there is no such stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voking the provisions of s. 153 C-Search and seizure operation under s. 132 was carried out in the case of N. president of the Assessee-society-AO issued notice under s. 153C to the Assessee after recording the reasons on the basis of loose papers seized from N and eventually made assessment by denying exemption under s.11-Impugned reasons mentioned by the AO are silent insofar as discovery of any assessment year specific incriminating information relating to the Assessee is concerned-Satisfaction note recorded by the AO is very general one-Reasons recorded by the AO do not contain anything incriminating for the assessment years upto 2003-04-There is no mention of any document relatable to four years in question and thus incriminating nature of the same is out oj question-Concluded assessments cannot be disturbed merely for making routine additions-Therefore, order passed by the AO under s. 153C is bad in law Held: The impugned reasons mentioned by the AO are silent insofar as any assessment year-specific- incriminating-information or others i.e. unaccounted or undisclosed or hidden information to the Revenue by the Assessee. The impugned satisfaction note is very general one f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed had to pertain to the assessment years in question and it was an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four assessment years. Since this requirement under Section 153C of the Act was essential for assessment under that provision, it becomes a jurisdictional fact. * Further in the case of Trishul Hi-Tech Industries vs DCIT (IT(SS).A.82,84-86/Kol/2011), it was held that, 12. Upon Assessee‟s appeal the Id. CIT(A) has deleted the addition by holding that the matter has attained the finality in the regular assessment. He also noted that no incriminating materials have been found during the search. The Id. CIT(A) has also referred to the decision of ITAT, Kolkata in the case of LMJ International 119 TTJ 214. Against the above order the Revenue is in appeal before us. 13. We have heard both the counsel and carefully perused the records. We have already held in the Assessee‟s appeal as above that dehors incriminating material no assessment can be done u/s 153C of the Act for the assessment year for which assessments have already been completed. In these circumstances we do not find any infirmit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext aspect to be considered is as to when returns of income filed u/s.139 of the Act are shown to have been accepted without an intimation u/s.143(1) of the Act or without any notice issued u/s.143(2) of the Act within the time limit contemplated by the proviso thereto, can be said to be assessment proceedings concluded that have not abated u/s.153A of the Act. Section 153A of the Act, uses the expressing "pending assessment or reassessment". When a return is filed and when neither an acknowledgement or intimation u/s,143(1)of the Act is issued nor a notice u/s,143(2) of the Act is issued within the time limit laid down in the proviso to Sec.143(2) of the Act, the proceedings initiated by filing the return are closed. In the present case, the period for issuing the notice u/s 143(2) elapsed. Therefore the process has attained the finality which can only be assailed u/s 148 or 263 of the Act. It can thus be concluded that making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed by absence of issue of intimation under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove decision and the said proviso, the facts of the present case are discussed in para 9.3 below. 9.3 In the present case, for the A.Y. 2012-13 no proceedings were pending. In other words, assessment for AY 2012-13 stood concluded and thus unabated as on the date of search i.e 06-08-2014. For the said AY 2012-13, the Assessee filed the return of income on 30-09-2012. Return for AY 2012-13 was processed on 16-12-2013. Admittedly, no notice u/s 143(2) of the Act was issued to the Assessee company for making assessment u/s 143(3) of the Act within the time period as laid down in section 143(2) of the Act which was 30-09-2013 for AY 2012-13. The search was conducted on 06-08-2014. As such, assessment for AY 2012-13 stood concluded as on the date of search and was not pending as on that date. For AY 2013-14, the return was processed on 25-07-2014 and no notice was issued u/s 143(2) of the Act till the date of search. 10. Now, analysing the documents whose reference is made by the ld. A.O. in his Assessment Order, it is seen that in the course of the assessment proceedings the Ld. Assessing officer issued a notice to the Assessee company wherein reference to two pages of the seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made in Uniworth Agencies Pvt. Ltd . It was in the said year (during AY 2009-10), that Uniworth Agencies Pvt. Ltd raised a share capital of Rs. 11,17,20,000/-. This entire amount of Rs.l1,17,20,000/- has however been duly assessed as income in the hands of Uniworth Agencies Pvt. Ltd. vide Assessment Order u/s 263/148/144 of the Act dated 28-03-2014. A copy of the order is enclosed at page 75-81 of paperbook for AY 2012-13. The fact that no fresh fund has been introduced in the hands of Uniworth Agencies Pvt. Ltd. is also clear from the following table. 2008-09 2009-10 2010-11 2011-12 2012-13 Share Capital and Securities Premium 11,18,20,000 11,18,20,000 11,18,20,000 1,18,20,000 11,18,20,000 The aforesaid figures above make it clear that no fresh introduction was there in the hands of Uniworth Agencies Pvt. Ltd. Further, a copy of the annual accounts of Uniworth Agencies Pvt. Ltd as at 31-03-2009, 31-03-2010, 31- 03-2012 and 31-03-2013 is enclosed at page 89-100 of the paperbook for AY 2012-13. It is very much evident from the Balance Sheet as at 31-03-2012 and 31-03-2013 that the entire advance to the Assessee company against development of the upcoming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not convinced with the submissions of the Assessee and he added the sum of Rs. 6.92 cr (should be Rs. 6.67 cr) and Rs. 3.06 cr in AY 2012-13 and 2013-14 respectively. 11.3 Here, further note that the learned AO during the course of search assessment proceedings had sent a notice to M/s Uniworth Agencies Pvt Ltd u/s 133(6) of the Act asking for various information in the case of the Assessee company for AYs 2009-10 to 2015-16. Copy of the notice is enclosed at page 110 of the paper book for AY 2012-13. M/s Uniworth Agencies Pvt Ltd duly replied to the same vide letter dated 22-08-2016. Copy of the reply and the courier receipt dated 25-08-2016 is enclosed at page 111-165 of the paper book for AY 2012-13. As evident from the said reply, M/s Uniworth Agencies Pvt Ltd had submitted the relevant bank statements, ledger copy of the Assessee company in its books for AY 2012-13, 2013-14 and 2015-16 and also the ITR acknowledgments and audited accounts for AY 2012-13, 2013-14 and 2015-16, thus substantiating its identity, creditworthiness and genuineness of the transactions with the Assessee company. However, the assessment order is completely silent on this point for reasons b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents which simply means that that the statements were pre-printed and they were just asked to just sign the impugned statements. 12.4 Further, please note that at no point of time during the course of assessment, the AO had referred to the statements recorded of Raj Kumar Tharad and Pradeep Garg in the notices issued to the Assessee. 12.5 Also, opportunity to cross examine these parties was not provided to the Assessee which is denial of natural justice to the Assessee. It is a settled position as decided in several judicial pronouncements, cited as under, that if an Authority is relying on the testimony of a witness/document, the Assessee is required to be afforded an opportunity to cross-examine the witness/document failing which the testimony cannot be utilized against the Assessee. If this procedure is not followed, then there would be a case of denial of natural justice to the Assessee. To buttress the above contention of the Assessee, reliance is placed on the recent judgment of the Apex Court in the case of Andaman Timber Industries vs Commissioner of Central Excise 2015 281 CTR 241(SC) wherein it was held that, "Not allowing the Assessee to cross-examine the witne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f stated that 'On examination of the seized tally accounts of the Assessee, it was found that the company had claimed to have received an amount of Rs. 9.98 crores brought as unsecured loan from Kolkata based company Uniworth Agencies Pvt Ltd. ‟ Thus simply the finding of regular books of accounts and documents during the course of search without a single incriminating document is not sufficient to vest jurisdiction u/s 153A of the Act. Incriminating material reflecting some undisclosed income is necessary for the purpose of initiating any proceeding u/s 153 A of the Act. 13.2 Further, he has referred to some enquiries and statements taken on oath by certain parties but the same too cannot be said to be incriminating documents as already discussed in the preceding paras. 14. Thus concluding our submission on the legal front it is submitted that in no situation whatsoever, as has been amply held in a number of judicial precedents (discussed elaborately at para 6 above) that the ld. AO is not empowered to disturb the concluded assessments and frame fresh assessments de-hors any incriminating material found during the course of search. At the cost of repetition, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same u/s 68 of the Act. 16. In connection to the above it is submitted that in the Assessee‟s case for AY 2012-13, there were no pending proceedings as on the date of search. Further, no incriminating material was found during the course of search and the assessment was made on the basis of regular books of accounts. Even in AY 2013-14, no addition can be made u/s 68 of the Act for the following reasons: 1. Enquiries made by the Investigation Wing, based on statements of certain persons were not provided to the Assessee for cross examination. 2. Statement of Raj Kumar Tharad and Pradeep Garg was not provided to the Assessee for cross examination. As such, this is a case of denial of natural justice to the Assessee and hence these statements cannot be used to the disadvantage of the Assessee. More so, the money trail that the Assessee had introduced its own funds in the garb of advance taken (as alleged by the AO) was not provided by these persons in their statements which simply mean that they themselves do not have any knowledge about the money trail to even remotely suggest that the Assessee has introduced its own funds. 3. The source of advance from Uniworth A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record prove that Assessee received any bogus credit into the matter. If the creditor has received some entry from some other person, Assessee could not be liable for the same. The Assessee has to explain source of its amount received from the creditor. If the creditor has received some amount from Jain brothers it could not be linked with the Assessee-company. In the group case of M/s. Mission Verdes Estate Pvt. Ltd. (supra), the ITAT, Delhi Bench, considered identical issue in which also credit was received from the same creditor M/s. Golden Technobuild Pvt. Ltd., who in turn, has taken credit from other group company and the Tribunal has deleted the addition based on the similar documents produced on record. The Tribunal also noted that since addition of the similar amount have been made by the Income Tax Department in reeular assessment of the creditor M/s. Golden Technobuild Pvt. Ltd., therefore, no addition could be made asainst the Assessee. Learned Counsel for the Assessee filed a chart to demonstrate that same amount is added in the hands of the creditor, therefore, it would amount to double addition if the same amount is added in the hands of the Assessee-company. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Such an inference is an inference of fact and not of law. (Para 10) The Assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax Assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing notices under s.131 at the instance of the Assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the allowed loans. 1 here was no effort made to pursue the so-called alleged creditors. In those circumstances, the Assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the Assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises. It cannot, therefore, be said that any question of law arose in these cases. The High Court was, therefore, right in refusing to refer the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ‟ble Mumbai High Court in the case of CIT vs Gagandeep Infrastructure Pvt Ltd Limited reported in [2017] 394 ITR 680 (Bom) held that "Held, (i) that the three essential tests laid down by the courts, namely, the genuineness of the transactions, identity and the capacity of the investors of the share application money along with the premium, had all been examined by the Appellate Tribunal and on facts found satisfied. If the Department took the view that the amount of share application money had been received from bogus shareholders, then it was for the assessing authority to proceed by reopening the assessment of such shareholders and assessing them to tax. It did not entitle the Department to add the money received to the Assessee‟s income as unexplained cash credit. ‟‟ > Reliance is also placed on the recent judgment of the Hon‟ble ITAT, Delhi pronounced on 01- 01-2018 in the case of ACIT vs TRN energy Pvt Ltd (C.O.No.96/Del./2016 arising out of ITA.No.453/Del./2016) , "Considering the facts of the case in the light of material on record, it is clear that Assessee-company produced sufficient documentary evidence before A.O. to prove the ingredi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dwarkadhish Investment (P)Ltd. (330 ITR 298)(Del) "Though in section 68 of the Income-tax Act, 1961, the initial burden of proof lies on the Assessee yet once he proves the identity of the creditors/share applicants by either furnishing their PAN number or income-tax assessment number and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus ofproof would shift to the Revenue. Further, reliance is placed on the following judicial pronouncements in support of the appellant's contention: The Delhi High Court in case of Commissioner of Income-tax v. Lovely Exports P. Ltd.[299 ITR 268] held that "In the case of a company the following are the propositions of law under section 68. The Assessee has to prima facie prove (1) the identity of the creditor/subscriber ; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels ; (3) the creditworthiness or financial strength of the creditor/subscriber ; (4) if relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in fund flow chain could not establish the link between the unaccounted incomes of the appellant company and share capital contributors. Even otherwise as held by the Apex Court such amounts cannot be added in the hands of the appellant company. The Ld. A.R has also relied on certain case laws which are listed in the submissions. I find the cases listed are very much relevant to the issue on hand. The Ld. A.R brought to my notice that on similar facts the Hon'ble ITAT, Kolkata Bench passed orders in favour of the Assessee. He also furnished copies of ITAT judgments in the case of DCIT Vs. M/s. Howrah Gases Ltd. (ITA No. 270/Kol/2009 dt.. 23.4.09), ITO V. M/s. Yashuri Securities Pvt. Ltd (ITA No. 1276/Kol/2008 dt, 16.10.2008) and Bear Bull Distributors (P) Ltd. Vs. ITO (ITA No. 1652/Kol/2008 dt, 24.12.2008). I find that following the ratio laid down by Apex Court in Lovely Exports Pvt. Ltd. (supra), the Hon'ble ITAT, Kolkata Bench allowed the appeals in favour of the Assessee. Having regard to the facts and circumstances of the case and respectfully following Hon'ble Supreme Court decision in the case of M/s. Lovely Exports Pvt. Ltd. and Kolkata Tribunal's decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to whom such notice u/s,153A(1)(a), is issued." 1. E.N. Gopikumar vs C7T(Central) (High Court of Kerela) pronounced on 03-10-2016. 2. CIT, Central vs Raj Kumar Arora (High Court of Allahabad) pronounced on 11-07-2014. 17.1 In this regard, please note that the issue on whether an assessment u/s 153A of the Act can be made even if no incriminating material has been found during section 132 search proceedings had already been decided by the Hon‟ble Apex Court in the case of Dayawanti Gupta vs. CIT pronounced on 3rd October, 2017. The Apex Court has stayed the operation of the judgement of the Delhi High Court in Dayawanti Gupta vs. CIT [390 ITR 496 (Del.). The said judgment has been discussed in the preceding paras. Further, the Apex Court in the case of Sinhgad Technical Education Society (supra) has also held that " Where no assessment year specific incriminating material or document is found, assessments of such assessment years cannot be disturbed by invoking the provisions of s. 153C. Hence, this issue has already been decided by the Hon‟ble Apex Court and the same was also relied upon by the Assessee in the course of appellate proceedings. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces before the learned AO and learned CIT(A) substantiating the identity, creditworthiness of the parties and genuineness of the transactions and more so, the source of the amount received from Uniworth Agencies Pvt Ltd had already been assessed to tax. 19. Concluding the submission of the Assessee, based on the above detailed submission of the Assessee, it is thus humbly prayed before Your Honours to quash the Assessment Order passed u/s 153A of the Act for both the subject assessment years de hors any incriminating material found during the course of search and more so, when the Assessee had successfully explained the identity, creditworthiness and genuineness of the advance received from Uniworth Agencies Pvt Ltd." 22. The DR, on the other hand, relied on the orders of Assessing Officer and CIT(A). 23. We have heard rival submissions and perused the orders of lower authorities and materials available on record. In the instant case the assessee originally filed its return of income on 30.09.2012 in the assessment year under consideration disclosing total income at Nil. 24. In pursuance to a search conducted on 06.08.2014 proceedings u/s.153A of the Act was initiated in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have necessarily yielded any incriminating material against assessee or person to whom such notice is issued - Held, yes - Whether, therefore, assessment proceedings generated by issuance of a notice under section 153A(1)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(1)(a) - Held, yes [Paras 7 and 8] [In favour of revenue). " (b) Commissioner of Income-tax Central, Kanpur v. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad) : "Section 153A, read with section 143 of the Income-tax Act, 1961 - Search and seizure - Assessment in case of (Scope of assessment) - Assessment year 2000-01 - Whether Assessing Officer has power to reassess returns of assessee not only for undisclosed income, which was found during search operation but also with regard to material that was available at time of original assessment - Held, yes [Para 11] [In favour of revenue/Matter remanded]" 30. On the other hand, the AR of the assessee relied upon the following decisions :- (i) (1) CIT Vs. Continental Warehousing Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed." 31. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision in favour of the assessee should be followed. For this, we derive support from the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC). Therefore, we are of the considered view that in an assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated, then the jurisdiction of the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected." 34. Thus, it is observed that the addition of Rs. 6.92 crores in the instant case has been made solely on the basis of statement of two persons, who were admittedly entry operators and were not allowed to be cross-examined by the assessee company before assuming their submissions as gospel truth. We, thus, find that these statements are not admissible at all. In absence of these statements, there is absolutely no material available on record on the basis of which the impugned addition can be sustained. We have, therefore, no hesitation in deleting the impugned addition of Rs. 6.92 crores being not on the basis of any incriminating material found during the course of search as well as being not based on any admissable, reliable and relevant material. Accordingly, addition of Rs. 6.92 crores is deleted and the appeal of the assessee is allowed. 35. The assessee has filed stay application for stay of demand. As we have heard and decided the appeal of the assessee, the stay petition of the assessee has become infr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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