TMI Blog2020 (12) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... d on any incriminating material found during the course of search and since we have already held that statements recorded u/s 132(4) are not incriminating in nature, therefore, the addition made by the AO being not based on any incriminating material, the addition cannot be sustained in the orders passed u/s 153A/143(3) of the Act. - Decided in favour of assessee. - ITA Nos.115 to 118/Del/2018, CO Nos.73 to 76/Del/2018 (ITA Nos.115 to 118/Del/2018), ITA Nos.122 & 123/Del/2018, CO Nos.86 & 87/Del/2018 (ITA Nos.122 & 123/Del/2018) - - - Dated:- 27-11-2020 - ITA Nos.111 to 114/Del/2018, CO Nos.79 to 82/Del/2018 (ITA Nos.111 to 114/Del/2018), ITA No.816/Del/2018, CO No.88/Del/2018 (ITA No. 816/Del/2018), ITA No.119/Del/2018, CO No.90/Del/2018 (ITA No.119/Del/2018), ITA Nos.124 125/Del/2018 815/Del/2018, CO No.71, 72 70/Del/2018 (ITA Nos.124 125/Del/2018 815/Del/2018), ITA Nos.128 129/Del/2018, CO Nos.84 85/Del/2018 (ITA Nos.128 129/Del/2018) Shri R.K. Panda, Accountant Member And Ms Suchitra Kamble, Judicial Member For the Assessee : Shri Gautam Jain, Advocate For the Revenue : Ms Pramita M. Biswas, CIT-DR ORDER PER R.K. PANDA, AM: Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up value Premium received Total Financial Year 2008-09 1. Fortune Industrial Resources Ltd. 66,000 10/- 6,60,000 3,89,40,000 3,96,00,000 2. Sterling Foils Ltd. 33,350 10/- 3,33,500 1,96,76,500 2,00,10,000 3. Mahesh Finese Pvt. Ltd. 8,350 10/- 83,500 49,26,500 50,10,000 Total 1,07,700 10,77,000 6,35,43,000 6,46,20,000 6. He observed that during the course of pre-search enquiries, it was gathered that the assessee group had received substantial amount of share capital from various non-descript and shell companies which did not have any factual identity and creditworthiness. It was also gathered that the investment by such entities with the assessee g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditworthiness and genuineness of the parties wherefrom funds were received by the investor of the assessee who are also group companies of the assessee group. Since the assessee has received an amount of ₹ 6,46,20,000/- towards share capital and share premium and the assessee could not discharge the burden cast on it to the satisfaction of the Assessing Officer, he treated the same as unexplained cash credit u/s 68 of the I.T. Act as the income of the assessee for the relevant period under consideration. 7. Before the CIT(A), the assessee, apart from challenging the addition on merit, challenged the assumption of jurisdiction u/s 153A of the Act. It was submitted that original return in this case was filed on 30th September, 2009 declaring an income of ₹ 10,21,50,894/- which was assessed at an income of ₹ 10,27,91,857/- u/s 143(3) of the Act. This assessment was subsequently rectified u/s 154 of the Act determining the total income at ₹ 7,50,20,860/-. The search u/s 132 was conducted in this case on 28.03.2015 and notice u/s 153A was issued on 10.05.2016. It was argued that no incriminating material was detected as a result of search and the addition wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O was statement recorded of Shri Sanjeev Agarwal during the course of search wherein he 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. The disclosure was non descriptive and vague and it was also contended that the appellant shall explain the transactions after examining 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 offered all the necessary and relevant proof thereof as such. These being primary and basic the legal ground going to the root of the assessment, it is necessary to examine the nature of incrimination material conferring upon the AO necessary jurisdiction u/s 153 A to utilize such material arising consequent to the search operation. The material so found and seized and thereafter relied upon and utilized thereon in the assessment of the assessee leading the AO to conclude that the share application / capital received by the appellant are unexplained. But, It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such situations. Therefore, this action of the AO is in tune with judgment of Hon ble Delhi High Court in CIT (C)-III vs. Kabul Chawla (Delhi) [2015] 61 taxman.com 412 (Delhi), 234 Taxman 30. The same is further strengthened by the judgment of Hon ble Delhi High Court in the case of Dayawanti Gupta vs CIT in ITA Nos 357,358.359/2015 and other dated 27/10/2016. Having considered the detailed and belaboured submissions of the Ld AR and the material on record, I am drawn to the conclusion that the action of the AO does not go at variance with the provisions of law and the available jurisprudence in this matter in so far as invoking the proceedings per section 153A is concerned. The AO was well within his powers to invoke section 153 A of the Act on prima facie finding about information that surfaced during the search. Basis above discussions, these grounds of appeal are not sustainable. The ground No.4(a) and 4(b) are therefore dismissed. 10. He, however, deleted the addition made by the AO on merit by observing as under:- 5.4 Regarding the merits, as per ground of appeal No.3, I have gone through the assessment order passed by the AO and verified the material placed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 155 (Del.), Commissioner of Income-tax vs Winstral Petrochemicals P. Ltd. 2011 330 ITR 603 (Del.), CIT v. Divine Leasing and Finance Ltd. [2008] 299 ITR 268 (Delhi), CIT v. Stellar Investments Ltd 192 ITR 287 (Del.) CIT v. Stellar Investment Ltd 2001 251 ITR 263 (SC) and contended that the appellant duly discharged the initial burden to establish the identity, creditworthiness and genuineness by submitting necessary documentary evidences in respect of the share application money. Reliance is also placed on the judgments in CIT v. Lovely Exports Pvt. Ltd. 319 ITR (ST.) 5 (SC), CIT v. Divine Leasing Fiance Ltd 299 ITR 268 (Del.), [SLP rejected by Hon ble SC vide order dated 21.01.2008], CT=It vs Five Vision Promoters Pvt Ltd 65 taxmann.con 71 (Dehli HC), CIT v. Vrindavan Farms Pvt Ltd (ITA 71/2015) (Delhi He), CIT V. Kamdhenu Steel Alloys Ltd. [2004] 361 ITR 0220 (Del HC). 5.8. It is pertinent to refer to the recent judgment dated 01st August 2017 in the case of Principal Commissioner of Income Tax, Delhi - 2 vs Best Infrastructure India Pvt Ltd ITA No 13/2017 covers the case of the appellant on the facts. Relevant Para of the judgment is extracted below:- 31. In Princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd CIT v. Chetan Das Lachman Das [2012] 254 CTR 392 (Del) were extensively discussed in Commissioner of Income Tax (Central-Ill) v. Kabul Chawla (supra). The Court in Commissioner of Income Tax (Central-Ill) v. Kabul Chawla (supra) had also discussed and concurred with the decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (2013) 36 Taxman 523 (Raj) which had held that the assessment in respect of each of the six assessment years, preceding the year of search is a separate and distinct assessment. It was further held in the said decision that If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. 38. Before the learned CIT (A), the assessee has produced the copy of bank account of all the share applicant companies. The CIT (A) has admitted the same as, additional evidence and has called for the remand report from the Assessing Officer. There is no cash deposit in the bank account of any of the share applicant before the issue of cheque for share appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital / share premium / share application money and no disclosure have been made with regard to share capital / share premium / share application money / unsecured loan. As such, the addition made by the Assessing officer is unsustainable on the various legal grounds and on facts of the case. The addition made in the case of the appellant is deleted. These grounds a re-accordingly allowed. 10.1 So far as M/s Moon Beverages Ltd. for A.Y. 2011-12 is concerned, the AO, apart from addition u/s 68, has made another addition of ₹ 4,26,00,000/- being interest received on investments with Citi Bank, Gurgaon. The ld.CIT(A) deleted the same by observing as under:- As per ground of appeal no. 4, the Appellant has raised objection on addition made by AO for ₹ 4,26,00,000/- on account of interest received from the Citi Bank. I have gone through the submission and facts of the case, the appellant has been victim of fraud committed by an authorized representative of the Citi Bank and had given deposits of ₹ 71.00 crores. Ultimately the appellant and bank had settlement which categorically mentioned that the depositor would get principal amount only and whatever paid ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CO by taking the following grounds:- 1. That the learned Commissioner of Income Tax (Appeals)-26, New Delhi has erred both in law and on facts in upholding the initiation of proceedings u/s 153 A of the Act and, framing of assessment u/s 153 A/143(3) of the Act since no incriminating material was found as a result of search conducted on the appellant and therefore, both the notice issued and, assessment framed were without jurisdiction and, deserved to be quashed as such. 1.1 That addition made of ₹ 6,46,20,000/- is without jurisdiction since it is not based on any material found as a result of search on the appellant, as have been also held by the judgments of Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in 380 ITR 573 and Pr. CIT vs. Meeta Gutgutia reported in 395 ITR 526. 2. That since approval obtained u/s 153D of the Act was a mechanical and, invalid approval having been granted without due application of mind to the facts of the assessee company, order of assessment made u/s 153 A/143(3) is invalid and not in accordance with law. It is therefore, prayed that it be held that notice issued u/s 153A of the Act and also assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assessee. Referring to pages 1-9 of the common paper book, the ld. Counsel for the assessee submitted that a panchnaama was drawn dated 30th March, 2015 in respect of the premises, namely, 1010, Vijaya Building, Barakhamba Road, New Delhi, which shows that the aforesaid search was initiated pursuant to purported warrant in the name of following entities:- Sr. No. Name of the entity Address as per ROC If any incriminating document found from the address of Assessee under consideration i) Moon Beverage Limited Superior House 25, Bazar Lane, Bengali Market, New Delhi DL 110003 IN No. ii) Hindustan Aqua Limited Superior House 25, Bazar Lane, Bengali Market New Delhi DL 110003 IN No iii) HAL Offshore Limited 4wing B/Plot No.32 Corporate Aveneue - Premises, Off Mahakali Caves Road, Village Gundavali Paper Box, Mumbai Mumbai City MH 400093 IN No iv) Fortune Industrial Resources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this document and did not find it to be incriminating in nature qua the addition made. However, for A.Y. 2009-10, the ld. CIT(A) has observed that the Department found information in respect of share certificates and the counterfoils thereof and other significant related material during the course of search operation that upon collating with the information received by the Department led to specific inputs in respect of doubtful nature on genuineness of the equity infused in the companies of the group. According to the ld.CIT(A), the material so gathered is prima facie incriminating in its nature and substance so as to attract the provisions of section 153A of the Act in the case of the assessee. The ld. Counsel for the assessee submitted that such a finding is also vague and factually incorrect and in absence of any specific incriminating material qua the addition, no addition is tenable u/s 153A of the Act in view of the decision of the Hon ble Delhi High Court in the case of CIT vs. Meeta Gutgutia, reported in 395 ITR 526. 16.1 Referring to the decision of the Hon ble Delhi High Court in the case of PCIT vs. SMC Power Generation Ltd. reported in ITA 406/2019, order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration i.e., 2009-10 to 2015-16. Referring to pages 84 to 91 of the paper book, he submitted that even the surrender made by Sanjeev Aggarwal was retracted by him within a period of two months i.e., on 18th May, 2015. Referring to the order of the Tribunal in the case of Moon Beverages Ltd., vide ITA No.7374/Del/2017 and in the case of Hindustan Aqua Ltd., vide ITA No.7567/Del/2007, common order dated 7th June, 2018 for A.Y. 2013-14, copy of which is placed at pages 226 to 261 of the paper book, the ld. Counsel for the assessee submitted that identical addition made on the basis of such surrender was deleted by the Tribunal. Referring to the decision of the Tribunal in the case of Metbrass Plassim India Ltd., vide ITA No.7532/Del/2017, order dated 17th September, 2018, for A.Y. 2013-14 and batch of other appeals, copy of which is placed at pages 370 to 398 of the common paper book, he submitted that here also identical addition made on the basis of such surrender was deleted by the Tribunal in the case of group companies. 20. The ld. Counsel for the assessee submitted that no assessment has abated for A.Y. 2009-10 to 2013-14 and, therefore, in absence of any incriminating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.03.2015 43-49 v) Sanjeev Agarwal 1010, 10th Floor, Vijaya Building Barakhamba Road, New Delhi 29.03.2015 29-30, 32-37, 44-45 vi) Krishan Kumar Bajaj GM, M/s Moon Beverages Ltd 28.03.2015 31-32 22. He submitted that no basis whatsoever is emerging with respect to the addition made. Further, the AO has failed to appreciate that there is no whisper of any particular company which is alleged to be in the business of providing accommodation entries. He submitted that the statements made are general in nature and do not contain any specific detail as to the name of the entry provider, amount of entry, bank details, etc. The statements so recorded do not in any way brought out any live nexus with the fact that the assessee company has routed its own unaccounted money through each of the shareholder companies and each of the shareholder companies were bogus and non-existent. Referring to the order of the ld. CIT(A), he submitted that he has referred to the statement so r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moon Beverages Ltd. 2009-10 115/D/18 73/ ii) (25, Bazar Lane, Bengali Market, New Delhi-110001) 2010-11 116/D/ 8 74/D/2018 iii) 2011-12 117/D 18 75/D/2018 iv) 2012-13 118D/18 76/D/2018 v) 2014-15 6955/D/18 6/D/2018 Vi) Metbrass Plassim India Ltd. 2009-10 815/D/18 70/D/2018 vii) (25, Bazar Lane, Bengali Market, New Delhi-110001) 2010-11 124/D/l8 71/D/2018 viii) 2011-12 125/D 18 72/D/2018 ix) Hall Offshore Ltd. (25, Bazar Lane, Bengali Market, New Delhi-110001) 2009-10 1 ll/D/18 79/D/2018 x) 2010-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt orders are liable to be quashed. For the above proposition, he relied on the decision of the Mumbai Bench of the Tribunal in the case of Shreelekha Damani reported in 173 TTJ 332 which was affirmed by the Hon ble Mumbai High Court in the case of PCIT vs. Smt. Shreelekha Damani reported in 174 DTR 86. Referring to clause 9 of Manual of Office Procedure, Volume II (Technical) issued in the month of February, 2003 by the Directorate of Income-tax on behalf of CBDT, he submitted that the said clause mandates the assessing officer that he should submit the draft assessment order for such approval well in time. The submission of the draft order must be docketed in the order sheet. However, such mandatory direction prescribed by the CBDT has not been followed. Therefore, the approval granted u/s 153D for completing the assessment u/s 153A read with section 143(3) of the Act being mechanical in nature and granted without due application of mind, makes the assessment invalid and the same should be quashed. For the above proposition, the ld. Counsel also relied on the following decisions: i) Kalyankumar Ray vs. CIT, 191 ITR 634 (SC); ii) Sahara India F(rim) vs. CIT, 300 ITR 403 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rthmetal Electrical (P) Ltd. reversing the decision of Mumbai Tribunal reported in 4 SOT 484 and Hon ble High Court in ITA No. 590/2005 dated 15.10.2008 iii) ITA No. 2525/D/2015 M/s Prabhatam Investment (P) Ltd. v. ACIT iv) C.O.No.163, 164 165/Del./2016 M/s. Garuda Imaging Diagnostics Pvt. Ltd v. ACIT. v) 251 ITR 263 (SC) CIT vs. Stellar Investment Ltd. reported in SUPREME COURT i) 319 ITR 5 (St.) CIT v Lovely Exports (P) Ltd. ii) 159 ITR 78 (SC) CIT vs. Orissa Corp. (P) Ltd iv) 262 Taxman 207 (SC) Pr. CIT v. Chain House International (P) Ltd. affirmed the judgment in the case of Pr. CIT v. Chain House International (P) Ltd. reported in 98 taxmann.com 47 (MP). DELHI HIGH COURT i) ITANo. 645/2012 dated 13.1.2015 Funnay Time Finvest Ltd. ii) ITA No. 443/2014 dated 25.2.2015 (Del)CIT vs. Well Worth Construction Udyog Ltd. iii) ITA No. 778/2015(Del) dated 13.10.2015 CIT vs. Rakam Money Matters(P) Ltd. iv) ITA No. 467/2016 (Del) dated 24.8.2016 Pr. CIT v. Lakshmi Float Glass Ltd. affirming the decision of Tribunal in ITA No. 535/D/2009 dated 31.3.2015 CIT(A) order dated 18.11.2008 and order of assessment dated 17.12.2007 u/s 143(3) of the Act v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT v. Chain House International (P) Ltd. reported in 98 taxmann.com 47 (MP) CALCUTTA HIGH COURT i) ITA No. 263/2011 GA No. 2856/2011 (Cal) dated 21.9.2011 CIT vs. Dataware (P) Ltd. ii) 2016 TIOL 1227 CIT v. J. J. Development (P) Ltd. INCOME TAX APPELLATE TRIBUNAL i) ITA No. 6492/M/2016 AY 2007-08 Arceli Realty Ltd. v. ITO ii) ITA No. 453/D/2016 AY 2012-13 ACIT v. TRN Energy (P) Ltd. iii) ITA No. 5955/D/2014 AY 2010-11 dated 23.2.2018 Umbrella Projects (P) Ltd. Ltd. iv) 62 ITR (T) 512 (Del) ACIT v. Shyam Indus Power Solutions (P) Ltd. v) ITA No. 02 03/D2016 AY 2012-13 2013-14 ACIT v. DevSumanSindhu vi) ITA No. 3342/D/2013 ITO v. XO Infotech Ltd. vii) ITA No. 2525/D/2015 for Assessment year 2011-12 M/s Prabhatam Investment (P) Ltd. v. ACIT. viii) C.O.No.163, 164 165/Del./2016 M/s. Garuda Imaging Diagnostics Pvt. Ltd v. ACIT ix) ITA No. 2995/D/2015 dated 30.11.2018 Roseberry Mercantile (P) Ltd. vs. ACIT x) ITA No. 2808/D/2016 dated 16.12.2016 M/s Aas Research Solutions (P) Ltd. v. Pr. CIT xi) ITA No. 2534/Del/2018 dated 10.08.2018M/s Priyatam Plaschem (P) Ltd vs ITO affirmed by Hon ble High Court in the case of Pr. CIT v. Priyatam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Delhi High Court in the case of CIT vs. Navodaya Castle Pvt. Ltd. reported in 367 ITR 306, she submitted that the Hon'ble High Court remitted the matter back to the Tribunal for fresh adjudication since the assessee was unable to produce the directors and the principal officers of the six shareholder companies and also that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer had genuine concerns about identity and creditworthiness of shareholders as well as genuineness of the transactions. She submitted that the SLP filed by the assessee was dismissed by the Hon'ble Supreme Court. 32. Referring to the decision of the Hon'ble Bombay High Court in the case of Konark Structural Engineering (P.) Ltd. vs. DCIT reported in 90 taxmann.com 56, she submitted that the Hon'ble High Court in the said decision has held that where assessee-company received certain amount as share capital from various shareholders, in view of fact that summons served to shareholders under section 131 were unserved with remark that addressees were not available and moreover those shareholders were first time assessees and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Pvt. Ltd. reported in 29 taxmann.com 291, she submitted that the Hon'ble Delhi High Court has held that if AO doubts the documents produced by assessee, the onus shifts on to the assessee to further substantiate the facts or produce the share applicant in assessment proceeding. 39. Referring to the decision in the case of CIT vs. Empire Builtech (P.) Ltd. reported in 366 ITR 110, she submitted that the Hon'ble Delhi High Court has held that u/s 68 it is not sufficient for assessee to merely disclose address and identities of shareholders; it has to show genuineness of such individuals or entities. She also relied on the following decisions :- (i) CIT vs. Focus Exports (P.) Ltd., 51 taxmann.com 46 (Delhi). (ii) PCIT vs. Bikram Singh, ITA No.55/2017 (Delhi). (iii) Rick Lunsford Trade Investment Ltd. vs. CIT, 385 ITR 399 (Cal). 40. Referring to the decision in the case of Rick Lunsford Trade Investment Ltd. vs. CIT [2016-TIOL-207-SC-ITJ (Supreme Court), she submitted that the Hon'ble Supreme Court has dismissed the SLP upholding the decision of the Hon'ble High Court that it is open to the Revenue Department to make addition on account of alleged s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding no incriminating material is available she filed the written synopsis and submitted that it has no merit on facts law for following reasons: i.Provision of section 153A of LT. Act 1961 inserted w.e.f 01.06.2003 is an OVERRIDING ( Notwithstanding) Provision if search seizure is conducted after said date of insertion in this case search seizure was conducted at assesseee's business/different premises covered under section 132 of the I.T. Act 1961 wherein documents/data storage devices etc. were found seized on examination further Investigation on such seized details/Information it was found regarding bogus/non-existent entities who had advanced investment in assessee' company proving that Identity of such entities is not established, genuineness of transaction has been found to be NON-GENUINE creditworthiness was never proved such entities were only existing on paper without any physical presence as none of such entities was produced before the said A.O. being of bogus existence and as such these details/ information seized which prove bogus existence / non-genuine transaction having no creditworthiness of such parties can be treated as INCRIMINAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income through bogus share capital share premium investment by non- existent entities having no creditworthiness by non- genuine transaction thus falling under section 68 of Income Tax Act 1961. The basic information/materials obtained by seizure which were inquired/investigated further to establish by A.O. that Identity of such entities is not established, genuineness of transaction has been found to be NONGENUINE creditworthiness was never proved such Entities were only existing without any physical presence as none of such entities was produced before said A.O. being bogus existence. v. Had there been no search seizure of such paper- documents from said Assessee, then A.O. could not have obtained basis information/details that ultimately, on further inquiry/investigation by A.O., during assessment proceedings, resulted to establish bogus share capital/share premium money as accommodation entries only for routing taxable undisclosed/unaccounted income in a wrongful manner. vi. It is the wisdom of Legislation that no word/concept 'incriminating material' is directly incorporated in provision of section 153A of I.T. Act 1961, although spirit of said provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 68 are clearly attracted. We find, in appeal, ld. CIT(A) deleted the addition made by the Assessing Officer on merit, the reasons for which have already been reproduced in the preceding paragraph. He however has dismissed the ground raised by the assessee challenging the validity of assumption of jurisdiction u/s 153A in absence of any incriminating material found during the course of search, reasons for which have already been reproduced in the preceding paragraphs. 45. It is the submission of the ld. counsel for the assessee that the original return was filed on 30th September, 2009 declaring income at ₹ 10,21,50,894/- which was assessed u/s 143(3) at total income of ₹ 10,27,91,857/-. This assessment was rectified u/s 154 of the Act determining the income at ₹ 7,50,21,860/-. Thus, assessment was completed and the assessment was not pending on the date of search. Since the addition made by the Assessing Officer is not based on any incriminating material found during the course of search and addition has been made on the basis of post-search enquiry and on the basis of statements recorded u/s 132(4) of the I.T. Act, therefore, the same cannot constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minating material found during the course of search when the assessment was not pending. As mentioned earlier, the original return was filed on 30th September, 2009 declaring income at ₹ 10,27,91,857/-. The assessment was completed u/s 143(3) determining the total income at ₹ 10,27,91,857/-. This assessment was rectified u/s 154 of the IT Act determining the income at ₹ 7,50,21,860/-. Thus, the assessment was completed and was not pending on the date of search. A perusal of the assessment order shows that the addition is not based on any incriminating material, but, based on post-search enquiries or statements recorded u/s 132(4) of the Act. The share certificates and counterfoils thereof found during the search, in our opinion, cannot be construed as incriminating in nature. Even the document appearing at page 59 of Annexure A-10 found and seized from the corporate office of M/s Hindustan Aqua Limited at 1010, Vijaya Building, Barakhamba Road, New Delhi, showing the details of advance for purchase of shares or refund of share application money in our opinion cannot be construed as incriminating since the entries are duly recorded in the books of account. The AO n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 offered all the necessary and relevant proof thereof as such. Since the assessment proceedings were pending at the time of search and was abated, the legal ground objected as such by the appellant was not valid as such the same is bound to be rejected. 37. We further find from the order of the ld. CIT(A) that there was no surrender of income for the impugned assessment year and the surrender was only for the assessment year 2008-09 which too was retracted within two months. He has also observed that the statement was non descriptive and vague and subject to cross checking of fact to be explained after access to books of accounts. We, therefore, find merit in the submissions of the ld. counsel for the assessee that the addition made by the Assessing Officer u/s 68 of the I.T. Act is not based on any incriminating material and is based on statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 :- 4.19 We find that in the case of best infrastructure (India) private limited (supra), despite the admission of accommodation entry in statements under section 132(4) of the Act, the court held that the statement do not constitute as incriminating material. In the instant case, neither is there any statement of any accommodation entry operator claiming that any entry was not provided nor any director has admitted that assessee obtained accommodation entry. Thus, the case of the assessee is on better footing then the case of Best Infrastructure (I) P. Ltd (supra). In such facts and circumstances, respectfully following the decision of the Hon'ble Delhi High Court in the case of best infrastructure (India) private limited (supra), we do not have any hesitation to hold that the statement under section 132(4) of Sh. Sampat Sharma cannot be treated as incriminating material found during the course of search. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain 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. Since in the instant case addition of ₹ 11,85,00,000/- was made on the basis of statements recorded u/s 132(4) and post-search enquiry and no incriminating material was found/seized during the course of search, therefore, following the decisions cited (supra), we hold that no addition could have been ITA No.7374/Del/2017 ITA No.7567/Del/2017 made u/s 153A since the assessment was not abated in the instant case. In view of the above, we hold that the ld. CIT(A) was not justified in upholding the action of the Assessing Officer in assuming jurisdiction u/s 153A of the I.T. Act. Accordingly, the addition made by the Assessing Officer and upheld by the ld. CIT(A) in the 153A assessment proceedings being void ab-initio are deleted. 46. Since the assessee succeeds on this legal ground, arguments made by the ld. counsel for the assessee on merit are not adjudicated being academic in nature. 48. We find, the Hon ble Delhi High Court in the case of PCIT vs. SMC Power Generation Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court questioning the correctness of the said decision. Nevertheless the fact remains that there is no stay of the operation of the decision of this Court in Kabul Chawla (supra) and it continues to hold the field. 8. Learned counsel for the Revenue submitted that the observations of the ITAT in the impugned order that there was no incriminating material in respect of the share capital and therefore the addition was unjustified, was not warranted. According to her this was beyond the judgment of this Court in Kabul Chawla (supra). 9. The fact remains that the Revenue itself is not disputing that in respect of the share capital no incriminating documents were found in the search proceedings. The Court s attention has been drawn to the decision of the Supreme Court in CIT v. Singhad Technical Education Society (2017) 397 ITR 344 (SC) where in the context of Section 153C of the Act it was held that the incriminating material which was seized had to pertain to the AY in question. It is further held that documents seized had to establish a co- relation documents wise with the assessment years for which the addition was sought to be made. 10. The requirement that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (supra). We find the Tribunal, relying on various decisions held that no addition could have been made u/s 153A since the assessment was not abated and the addition was made on the basis of statements recorded u/s 132(4) and post search enquiry and no incriminating material was found/seized during the course of search. While doing so, the Tribunal has relied on the decisions of the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in 380 ITR 573 (Del), CIT vs. Meeta Gutgutia reported in 395 ITR 526, CIT vs. Harjeev Aggarwal reported in 290 CTR 263, CIT vs. Best Infrastructure (India) (P) Ltd. reported in 397 ITR 82 and various other decisions. The relevant observations of the Tribunal from para 35 onwards read as under:- 35. Before deciding the issue on merit, we would first like to decide the legal ground raised by the assessee challenging the validity of the assumption of jurisdiction u/s 153A in absence of any incriminating material found during the course of search when the assessment was not pending as per ground of appeal no.1 to 1.2. It is an admitted fact that the original return of income was filed on 12.09.2013 which was accepted u/s 143(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT vs. Best Infrastructure (India) (P) Ltd. reported in 397 ITR 82 has held that statements recorded u/s 132(4) of the I.T. Act do not by themselves constitute incriminating material. The relevant observation of the Hon'ble High Court reads as under :- 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts ITA No.7374/Del/2017 ITA No.7567/Del/2017 in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non- existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of share capital in the year under consideration has been made without relying on any incriminating material found during the course of search. 41. In the light of the above decisions, statements recorded u/s 132(4) of the I.T. Act, 1961 cannot constitute as incriminating material. 42. As mentioned earlier, the addition of ₹ 11,85,00,000/- was not made on the basis of any incriminating material but is based on statements recorded during the search u/s 132(4) and post-search enquiries. It has been held in various decisions that completed assessments cannot be disturbed u/s 153A in absence of any incriminating material. 43. The Hon'ble Delhi High Court in the case of Kabul Chawla reported in 380 ITR 573 has held that the completed assessment can be interfered with by the Assessing Officer while making the assessment u/s 153A only on the basis of some incriminating material found on or during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or not known in the course of original assessment. Following the above decision, the Hon'ble Jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal, the grounds of which are already reproduced in the preceding paragraphs, however, the Revenue has not challenged the order of the CIT(A) deleting the addition in absence of any incriminating material found during the course of search. Therefore, the order of the CIT(A) is upheld on the legal ground. Since the order of the CIT(A) deleting the addition on legal ground is upheld, therefore, the grounds raised by the Revenue on merit become infructuous being merely academic in nature. The appeal filed by the Revenue is accordingly dismissed. 49.1 We find, the coordinate Bench of the Tribunal in the case of M/s Metbrass Plassim India Ltd. vs. ACIT, ITA No.7532/Del/2017, order dated 17th September, 2018 (one of the group concerns and one of the assessees here) for A.Y. 2013-14, has observed as under:- 36. We have considered the rival arguments made by both the sides in the light of the orders of the authorities below. We have also considered the case law that is brought to our notice. Ld. Assessing Officer made addition of ₹ 39 lacs in the hands of the assessee u/s 68 of the Act basing on various enquiries conducted and statements recorded of various persons u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search when the assessment was not pending. It is an admitted fact that the original return of income was filed on 26.09.2013 which was processed u/s 143(1) of the Act. The period for issue of notice u/s 143(2) expired by 30.09.2014 i.e. the notice u/s 143(2) could not have been served on the assessee after the expiry of six months from the end of 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. 40. Para 5 page 11 of the impugned order reads that,- 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 fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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. 43. 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 :- 4.19 We find that in the case of best infrastructure (India) private limited (supra), despite the admission of accommodation entry in statements under section 132(4) of the Act, the court held that the statement do not constitute as incriminating material. In the instant case, neither is there any statement of any accommodation entry operator claiming that any entry was not provided nor any director has admitted that assessee obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove decision, the Hon ble Jurisdictional High Court in the case of CIT vs. Meeta Gutgutia reported in 395 ITR 526 has taken a similar view and has held that once the assessment has attained finality for a particular year i.e. it is not pending then the same cannot be subject to tax in proceedings u/s 153A of the 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. 48. Again in the case of Pr.CIT vs. Lata Jain reported in 384 ITR 543 the Hon ble Delhi High Court 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. 49. In the case of CIT vs. Sinhgad Technical Education Society reported in 397 ITR 344 Hon ble Supreme Court 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned order as follows: 40. We have carefully considered the rival contention and perused the orders of the lower authorities. It is apparent that on the date of initiation of search on 10/2/2009 the assessment proceedings u/s 143 (3) of the income tax act was completed on 18/12/2007. Therefore on the date of search no assessment proceedings were pending for the impugned assessment year. Therefore if any addition is required to be made by the learned assessing officer should have been made on the basis of the seized material found during the course of search. We have perused the various additions/disallowances made by the learned assessing officer and found that there is no discretion of any seized material found during the course of search based on which these disallowances/additions have been made. The learned departmental representative also could not show us any seized material based on which the said additions have been made. Therefore, respectfully following the decision of the honourable Delhi High Court in CIT vs Kabul Chawla (supra) the above additions deserve to be deleted. Accordingly we direct the learned assessing officer to delete the disallowance of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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