TMI Blog2020 (12) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... seized paper merely reflect the date, name of transferor and transferee and number of shares. The document does not speak of any unexplained investment made by any of the assessees. No material was found during the course of search so as to indicate any unaccounted investment made by assessee. No evidence of any unaccounted investment have been found during the course of search. The A.O. made addition merely on presumption. Thus, it is clear that when no assessment was pending in the case of assessee for the assessment year under appeal on the date of search and no incriminating material was found during the course of search so as to make the impugned addition, therefore, the issue is covered in favour of the assessee by the Judgments of Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] - Decided in favour of assessee. - ITA.No.6182/Del./2018, 6171/Del./2018, 6173/Del./2018, 6174/Del./2018, 6187/Del./2018, 6175/Del./2018, 6178/Del./2018, 6179/Del./2018, 6930/Del./2018, 5854/Del./2018, 6181/Del./2018, 6183/Del./2018, 6185/Del./2018, 6186/Del./2018 - - - Dated:- 6-10-2020 - SH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly established the orchestrated and contrived nature of transactions and therefore were clearly incriminating. 2. The Ld. CIT(A) has erred in law and on facts of the case in determining the quality of incriminating material as the same is beyond the ambit of the ratio of Kabul Chawla 61 taxman.com 412 (Delhi). 3. The Ld. CIT(A) has erred in law in relying on Kabul Chawla 61 taxman.com 412 (Delhi) and in holding that completed assessment could not be interfered by the AO without incriminating material. On the contrary, for making the assessment u/s 153A of the Act, 1961, the Act does not stipulates any such conditionality on A.O. 4. The Assessee in the Cross Objection has challenged that the impugned assessment order is invalid since approval obtained under section 153D is not in accordance with Law and that the Ld. CIT(A) should have deleted the addition on merits. 5. Briefly the facts of the case are that a search and seizure operation under section 132(1) of the I.T. Act was conducted by the Investigation Wing of the Department on 08.07.2015 in the case of K.R. Pulp and Papers Ltd., Group of cases and the case of assessee was also covered u/s 132(1) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Therefore, apparently, it could not be treated as any evidence much less incriminating material found during the course of search. It was further submitted that A.O. has failed to appreciate that the purchase of shares at high premium by seller of shares is not a relevant consideration. The assessee relied upon Judgment of Hon ble Jurisdictional High Court in the case of CIT vs., Five Vision Promoters (Pvt.) Ltd., 380 ITR 289 (Del.). It was also submitted that the shares subsequently sold at a reduced price was not germane to the question of genuineness of investment in share capital of assessee, hence, no addition could be made. It was also submitted that issue is covered by Judgment of Hon ble Jurisdictional High Court in the case of CIT vs., Kabul Chawla reported in 380 ITR 573 (Del.) wherein it has been held that no addition can be made in the case of completed assessment if no incriminating evidence/document is found during the course of search proceedings for that year. The Ld. CIT(A) considering the explanation of assessee in the light of material on record deleted the entire addition. His findings in paras 6 to 8 of the impugned order are reproduced as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance or nexus with the seized material. As per Hon'ble Court, such assessment has to be made under the section only on the basis of the seized material. It is further opined by Hon'ble Court that completed assessment can be interfered with by the Assessing Officer while making the assessment in the section 153A only on the basis of some incriminating material found 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 made known in the course of original assessment. In the subsequent decisions also, Hon'ble Court has substantiated the aforesaid view. In the case Pr. CIT vs Ram Avtar Verma 395 ITR 252, Hon'ble Court has reiterated the aforesaid finding that if the assessments are completed on the date of search and no incriminating material is found during the search, assessment u/s 153A of the Act is invalid. Similar view has been taken by Hon'ble Court in another case i.e. Pr. CIT vs Meeta Gutgutia 395 ITR 526 also wherein assessments were completed on the date of search but no incriminating material pertaining to those completed assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court has not considered its earlier decisions in the case of CIT vs., Chetan Das Laxhman Das 25 taxmann.com 227 (Del.) and Fila Tex India Ltd., vs., CIT 49 taxmann.com 465 (Del.). The Ld. D.R. also relied upon Judgment of Hon ble Kerala High Court in the case of E.N. Gopakumar vs., CIT 75 taxmann.com 215 (Kerala) and Judgment of Hon ble Allahabad High Court in the case of CIT vs., Rajkumar Arora 52 taxmann.com 172 in which the issue have been decided against the assessee. The Ld. D.R, therefore, submitted that the Order of the Ld. CIT(A) may be reversed. 8. On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the authorities below and also filed consolidated synopsis. Learned Counsel for the Assessee submitted that for assessment year under appeal no assessment was pending on the date of search which fact is not disputed. He has submitted that the seized paper which is list of transfer of shares since 01.04.2010 to 31.03.2011 which is the basis for making the impugned addition was seized during the search of the factory premises of Jalalabad Road, Shahjahnapur, which fact is also mentioned in the assessment order. He has submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and therefore were clearly incriminating. 2) The Ld. CIT(A) has erred in law and on facts of the case in determining the quality of incriminating material as the same is beyond the ambit of the ratio of Kabul Chawla 61 taxman.com 412 (Delhi). 3) The Ld. CIT (A) has erred in law in relying on Kabul Chawla 61 taxman.com 412 (Delhi) and in holding that completed assessment could not be interfered by the AO without incriminating material. On the contrary, for making the assessment u/s 153A of the Act, 1961, the Act does not stipulate any such conditionality on A.O. 2. The facts in brief qua the grounds raised by the Revenue are that a search and seizure operation was carried out u/s.132 on 08.07.2015 in the case of KR Pulp Papers Ltd. Group wherein the assessee was also covered. Ld. Assessing Officer observed that the group companies have received share capital and share premium ranging from ₹ 40/- to ₹ 190/- from non descript companies based at Kolkata and Delhi and the said shares were subsequently repurchased by the family members of the directors including the assessee. The Ld. Assessing Officer also noted that during the course of search and se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under: As it is clear from the above chart that 400000 shares were acquired by the companies like M/s Bahar Paper Pvt. Ltd., Blue Print Securities Pvt. Ltd. etc. of ₹ 2,00,00,000/- from M/s KR Pulp Papers Ltd, group company of KR Pulp Papers. These shares were acquired by Mr. Madho Gopal Agarwal, from mostly Kolkata based company, these Kolkata based company acquired share of from M/s KR Pulp Papers Ltd, group company of KR Pulp Papers at very high premium value like 50. This entire arrangement was made to transfer/raise capital for from M/s KR Pulp Papers Ltd, group company of KR Pulp Papers via adopting route of share premium from Kolkata based Companies. So the difference amount ₹ 1,96,02,000/- (2,00,00,000 - 3,98,000) considered as amount expended on making investment exceeds the amount recorded in this behalf in books of account maintained by the assessee for which assessee has not any satisfactory explanation, so the difference amount of ₹ 1,96,02,000/- is treated as unexplained investment u/s 69B of the I T Act, 1961 and is added to the total income of the assessee for the year under consideration. Penalty proceedings u/s. 271(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO, as mentioned above, for A.Y. 2010-11, is not sustainable and deserves to be deleted. I, therefore, delete the addition made by him and allow the grounds taken by the appellant. 5. Before us, the ld. CIT-DR submitted that the Assessing Officer in the impugned assessment order has incorporated the seized documents which pertain to transfer of shares only, and therefore, addition made by the Assessing Officer with regard to the share premium is within the scope and purview of Section 153. Hence, it cannot be held that no incriminating material has been found. 6. On the other hand, ld. counsel for the assessee, Mr. Gautam Jain submitted that from a bare perusal of the seized document, copy of which has been placed in the paper book from pages 41 to 43, it can be seen that these are only list of transfer of shares and that too pertains for period from 01.04.2010 to 31.03.2011, i.e., relevant to the Assessment Year 2011-12 and not for the impugned Assessment Year, i.e., Assessment Year 2010-11, therefore, even if it is said to be a material then also it does not pertain to the same assessment year in question. Accordingly the principle laid down by the Hon ble Jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jhandewalan Extn., New Delhi. vs. M/s. Kapis Impex LLP (Erstwhile M/s. Kapis Impex (P) Ltd.,), 301, Roots Tower, Community Centre, District Centre, Laxmi Nagar, Delhi 110 092. PAN AARFK7460P (Appellant) (Respondent) Cross Objection No.10/Del./2019 Arising out of ITA.No.6180/Del./2018 - Assessment Year 2011-2012 M/s. Kapis Impex LLP (Erstwhile M/s. Kapis Impex (P) Ltd.,), 301, Roots Tower, Community Centre, District Centre, Laxmi Nagar, Delhi 110 092. PAN AARFK7460P vs. The ACIT, Central Circle-19, Room No.104, ARA Centre, E-2, Jhandewalan Extn., New Delhi. (Appellant) (Respondent) For Revenue : Shri J.K. Mishra, D.R. For Assessee : Shri Gautam Jain, Advocate. Date of Hearing : 29.06.2020 Date of Pronouncement : 30.06.2020 ORDE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural justice and relied upon Judgments of Hon ble Delhi High Court in the cases of Kabul Chawla 380 ITR 573 (Del.) and in the case of Pr. Commissioner of Income Tax vs., Meeta Gutgutia 395 ITR 526 (Del.). The A.O. stated that these decisions cannot be accepted because the Departmental SLP is pending before the Hon ble Supreme Court. The A.O. considering the material on record did not accept the explanation of assessee and made addition of ₹ 1,52,09,500/- on account of unexplained investment under section 69B of the I.T. Act, 1961. 2.1. The assessee challenged the addition before the Ld. CIT(A). The assessee has raised various submissions and also submitted that case is covered in favour of the assessee by the Judgments of Hon ble Delhi High Court in the cases of Kabul Chawla and in the case of Meeta Gutgutia (supra). The Ld. CIT(A) accepted the contention of assessee and noted that no incriminating material were found in the case of the assessee during the course of search proceedings for making the assessment in assessment year under appeal. Therefore, no addition could be made. The appeal of assessee was allowed. 3. The Revenue is in appeal. The assessee has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al concealing of income and indulging in clandestine operations and that a person indulging in such activities can hardly be accepted to maintain meticulous books or records for long. These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions of franchisee commission. 70. The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. Conclusion 72. To conclude : (i) Question (i) is answered in the negative i.e., in favour of the Assessee and against the Revenue. It is held that in the facts and circumstances, the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompleted assessments can be interfered with by the A.O. 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 were not produced or not already disclosed or made known in the course of original assessment 9.1. The Hon ble Jurisdictional Delhi High Court in the case of Pr. CIT vs., Meeta Gutgutia (supra) held as under : 69. What weighed with the Court in the above decision was the habitual concealing of income and indulging in clandestine operations and that a person indulging in such activities can hardly be accepted to maintain meticulous books or records for long. These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions of franchisee commission. 70. The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Departmental Appeal as have been considered in the above cases. No evidence of any unaccounted investment have been found during the course of search. The A.O. made addition merely on presumption. Thus, it is clear that when no assessment was pending in the case of assessee for the assessment year under appeal on the date of search and no incriminating material was found during the course of search so as to make the impugned addition, therefore, the issue is covered in favour of the assessee by the Judgments of Hon ble Delhi High Court in the case of Kabul Chawla (supra) and Meeta Gutgutia (supra) as well as covered by the Orders of the Delhi Tribunal in the group cases of Madho Gopal Agarwal (supra) and M/s. Kapis Impex LLP (supra). We, therefore, do not find any justification to interfere with the Orders of the Ld. CIT(A). We confirm his Order and dismiss the Departmental Appeal. 10. Since the issue raised in the cross objection has not been decided by the Ld. CIT(A) and we have dismissed the Departmental Appeal, therefore, the cross objection is left with academic discussion only and have become infructuous. Therefore, the same is accordingly dismissed. Remaining Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
