TMI Blog2019 (11) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... not abate. It is only because the final assessments do not abate the appeal, revision or rectification pending against final assessments would not abate. Therefore, Hon'ble High Court rejected the arguments of the Revenue that on initiation of proceedings u/s. 153A of the Act, the reassessment final for assessment years covered u/s. 153A of the Act stands abated. Only the pending assessments get revived u/s. 153A of the Act. Hon'ble High Court further held that once assessment has attained finality, then the AO while passing independent assessment order u/s. 153A/143(3) of the Act could not disturb the assessment order which has attained finality unless the material gathered in the course of search u/s. 132/153A of the Act established that the finality attained in the assessment were contrary to the facts unearthed during the course of search. If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the grounds as raised in AY 2009-10 in ITA No. 5680/Mum/2018 read as under: - 1. On the facts and circumstances, the Hon ble Commissioner of Income-Tax (Appeals) has erred in confirming the action of the action of the Assessing Officer that the Order passed under section 143(3) read with section 153A is bad-in-law, without complying with the principles of natural justice. 2. On the facts and the circumstances, the Hon ble Commissioner of Income Tax (Appeal) has erred in confirming the action of the Assessing Officer in making the addition on account of receipt of share application money/ capital amounting to ₹4,75,00,000/- without appreciating that no incriminating evidences has been found as a result of search in respect of the same. 3. Briefly stated facts are that the assessee company has joint venture promoted by Sangam India Ltd., M/s Sahakar Global Ltd. and Shri PK Agarwal. The assessee company is engaged in the business of toll collection, sand dredging etc. and construction business etc. A search action by the Income Tax Department was conducted under section 132 of the Act on the assessee on 27.02.2014. This search was a result of search conducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial found during the search action. However, in the instant case, there was enough incriminating material found in course of the search action for the said addition made u/s 68 in respect of share application money as well as share capital received at a huge premium, as demonstrated in the subsequent paras. 7.4 In this case, there is no dispute that Praveen Jam, entry operator in course of his search action had admitted that he through the concerns directly/indirectly controlled by him is solely engaged in the business of providing accommodation entries. Further, there is no dispute that the share application money as well as share capital at a huge premium received by the assessee included amounts received from the concerns of Praveen Jam. There is also no dispute that Shri Pravin Kumar Agrawal, Shri Rampal Soni and other Directors of the assessee company had accepted in course of the search action that the share application money as well as share capital intrd 151d in the assessee company is bogus. Further, it is a fact that share certificate issued to the said shareholders were found at the time of the search action which leads to suspicion about the genuineness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, now assessee is in appeal before Tribunal. 4. Before us, the learned Counsel for the assessee stated that the CIT(A) has rejected the legal ground on the issue that incriminating material was found from the premises of the assessee during the course of search in the shape of share certificate issued to the said shareholders which led to suspicion about genuineness of the said share application money as well as share capital. The learned Counsel for the assessee before us filed paper book wherein he has filed copy of reply to the DDIT investigation, wing 1(1) dated 15.05.2014 stating that the relevant share certificates were produced before the DDIT investigation Wing by the assessee and the relevant reply read as under: - During the course of proceeding, directors have been asked to furnish original share certificates/ share register evidencing allotment of shares of the company. On the demand, the company had asked for original share certificates from their company secretary s office which were produced to tax authorities for their verification which were available at the secretary s office of the purpose of transfer in d-mat form. 5. In view of the above, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three documents are admittedly nonexecuted and do not show any transactions. Had there been any transaction recorded on blank share transfer forms, receipts regarding any money or transfer in favour of any person, it would have made them suspicious. The entries in those forms are not at all made, but are merely blank. The assessee has given detailed explanation why they were found at the place of assessee. The Assessing Officer has not examined the signatories of these documents to arrive at the true nature of the transactions. The Assessing Officer is just making an assumption that these are the documents which would have been used by the assessee for transferring those shares in the name of the promoters or their group concerns at a price which is far less than the price of shares issued. It is not the case of the Assessing Officer that either such shares are subsequently transferred at lower price, or such shares stood disposed of by the investor companies. In view of this, the case of the Revenue is merely based on assumption and surmises. 63. Therefore, apparently compared to all those decisions cited above which are referred by the learned authorised representative where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 vide order dated 19.03.2019, wherein it is held as under: - 16. Now, coming to question No.2, we find that this issue is also covered by the decision of Hon'ble Jurisdictional High Court in the case of Harjeev Aggarwal (supra) and Best Infrastructure (India) (P.) Ltd. (supra). In the case of Harjeev Aggarwal (supra), Hon'ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 24, which are reproduced below for ready reference: - 19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words evidence found as a result of search would not take within its sweep statements recorded during search and seizure operations. However, the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the order of CIT(A). He stated that shares certificate issued to the shareholders were found at the time of search action, which leads to suspicion of the genuineness of the shareholders and also this fact was admitted by Shri Pravin Kumar Agarwal dated 28.02.2014 and 23.04.2014 recorded under section 132 of the Act admitting receipt of money on account of issuance of bogus share application money. The learned CIT DR, in view of the above argued that the AO has rightly assumed jurisdiction under section 153A of the Act and framed assessment accordingly. 8. We have heard the rival contentions and gone through the facts and circumstances of the case. Admittedly, a search under section 132 of the Act was carried out on the premises of the assessee on 27.02.2014. The assessee filed its return of income originally on 27.09.2009 for AY 2009-10 and assessment was completed under section 143(3) of the Act dated 30.11.2011 during which the assessee filed complete details in regard to share application money received from various parties during the financial year 2008-09 relevant to this AY 2009-10. On the date of the search on 27.02.2014, this assessment was unabated because no ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at on a plain reading of section 153 of the Act it becomes clear that on initiation of the proceedings u/s. 153A of the Act, it is only the assessment/reassessment proceedings that are pending on the date of search u/s. 132 of the Act stand abated and not the assessments/reassessments already final for those assessment years which are covered u/s. 153A of the Act. Hon'ble High Court discussed the CBDT Circular No. 8 of 2003 dated 18.09.2003 reported in 263 ITR (st.) 61 at page 107 wherein CBDT has clarified that on initiation of proceedings u/s. 153A of the Act the proceedings pending in appeal, revision or rectification proceedings against final assessment shall not abate. It is only because the final assessments do not abate the appeal, revision or rectification pending against final assessments would not abate. Therefore, Hon'ble High Court rejected the arguments of the Revenue that on initiation of proceedings u/s. 153A of the Act, the reassessment final for assessment years covered u/s. 153A of the Act stands abated. Only the pending assessments get revived u/s. 153A of the Act. Hon'ble High Court further held that once assessment has attained finality, then the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six years. It may cause hardship to some assesses where one or more of such assessments has or have been completed before the date of initiation of search. This is hardly of any relevance in view of clear and unambiguous words used by the legislature. This interpretation does not cause any absurd etc. results. There is no casus omissus and supplying any would be against the legislative intent and against the very rule in this behalf that it should be supplied for the purpose of achieving legislative intent. The submissions of the Ld. Counsels are manifold, the foremost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. Bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year of search. The word used is shall and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is shall and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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