TMI Blog2021 (3) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... R Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) 21, (hereinafter the ld. CIT(A) ), passed u/s. 250 of the Income Tax Act, 1961 (the Act ), dt. 07/06/2018, for the Assessment Year 2011-12. 2. The assessee is a company and originally filed its return of income on 27/09/2011 for the Assessment Year 2011-12, declaring total negative income of ₹ 5,203/-. A search and seizure operation u/s 132 of the Act was conducted on the Ferro Alloys Group on 12/08/2015. Notice u/s 153A of the Act was issued on the assessee on 08/12/2016. The assessee in response filed a return on 13/02/2017 declaring the same income as was declared in the original return of income filed u/s 139 of the Act. Thereafter notice u/s 143(2) and 142(1) of the Act, was served on the assessee and ultimately the assessment was completed u/s 153A/153D/143(3) of the Act on 31/12/2017, determining the total income of the assessee at ₹ 59,94,797/- interalia making addition of ₹ 60,00,000/- u/s 68 of the Act, on the ground that the share application money received by the assessee along with share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and indicating any incriminating material and where time limit for issue of notice u/s 143(2) had already been expired much before the date of search and assessment was not abated in view of the second proviso to section 153A of the I.T. Act, therefore, addition sustained by the Ld. CIT(A) is completely arbitrary, unjustified and illegal and should have been quashed. 3. For that on the facts of the case, the Ld. CIT(A) was wrong in not considering the facts that original return of income was filed u/s. 139(1) on 27.09.2011 and the time for issue of notice u/s. 143(2) of the Act was expired on 27.09.2012 and assessment was completed u/s. 143(1), there was a search under seizure action u/s. 132 on 12.08.2015 and no incriminating material was found with reference to the addition made by the A.O. on account of share application money with share premium by wrongly treating the same as unexplained cash credit u/s 68 amounting to ₹ 60,00,000/ - , therefore, no addition can be made in an assessment made u/s. 153A of the I.T. Act covered by various Court's judgements. 4. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. He further submitted that in the case of Tapovan Dealer Pvt. Ltd., the assessment order was passed u/s 147/143(3) of the Act for the Assessment Year 2014-15 on 16/12/2016, in the case of Maximum Commercial Pvt. Ltd., assessment order was passed u/s 143(3) of the Act on 18/07/2011 for the Assessment Year 2009-10, in the case of Farista Vanijya Pvt. Ltd., the assessment order was passed u/s 143(3) of the Act on 08/12/2017 for the Assessment Year 2015-16, and that the Tribunal in a number of decisions, has held that, in cases where the assessments of the share applicant companies are completed u/s 143(3) of the Act, no addition can be made in the hands of the assessee company. 9. On a query from the Bench, the ld. D/R could not point out any incriminating material found during the course of search, based on which, the additions in question were made. Nevertheless he relied on the order of the ld. CIT(A) and argued that there is no requirement of incriminating material be found the course of search based on which an addition can be made in an assessment u/s 153A/143(3) of the Act. He relied on certain judgments of the Hon ble Kerala High Court for this proposition and argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the monies have come through a/c payee cheques is at best, neutral. Mere payment by cheques is not sacrosanct as would not, make a non-genuine transaction as genuine. VI) Bonafide and genuineness of the transactions is the main issue and in this regard, the assessee company has failed miserably. VII) Scrutiny has revealed the camouflage adopted by the assessee and exposed the true nature of the transactions. VIII) Onus is on the assessee to prove the identity of share applicants, their creditworthiness and genuineness of the transactions appearing in its books of sale which is not proved in this case. In fact, genuineness of the transactions has not been established in spite of repeated opportunities. IX) There is enough material on record to doubt the veracity of the transactions. A perusal of the above demonstrates that the additions in question are not based on any incriminating material found during the course of search. 8.2. On the legal position, we find that the various Courts of law under similar circumstances have held as follows:- CIT, Kolkata-III Vs. Veerprabhu Marketing Limited [2016] 73 taxmann.com 149 (Calcutta) : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 143(2) was issued thereafter or any other proceedings have been commenced to disturb said return of income, accordingly, it had attained finality much prior to the date of search which was on 20.01.2012. Hence in terms of 2nd Proviso to Section 153A the assessment for the Assessment Year 2006-07 was not pending and accordingly, has to be reckoned as unabated assessment. Under the jurisdiction of Hon'ble Delhi High Court, the law is well settled that in case of unabated assessment, the additions which can be roped-in, in the assessments framed u/s.153A, would only be with regard to any incriminating material or evidence unearthed or found during the course of search. If no incriminating material has been found during the course of search, then no addition can be made in the assessment years where assessments had attained finality. The relevant observations and the ratio laid down would be discussed in the later part of this order. 15. Now coming to the ratios laid down by the Hon ble Jurisdictional High Court, first of all, in the case of Kabul Chawala (supra), the Hon'ble Court after discussing the issue threadbare and analysing the various judgments of different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A 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. This judgment of the Hon'ble Delhi High Court has been followed in several judgments not only by the Hon'ble Delhi High Court but also by other Hon'ble High Court like, Pr. CIT vs. Somaya Construction Pvt. Ltd. 387 ITR 529 (Guj), CIT vs. IBC Knowledge Park Pvt. Ltd. 385 ITR 346 (Kar) and CIT vs. Gurinder Singh Bawa reported in 386 ITR 483. In the latest judgment the Hon'ble Delhi High Court in Pr. CIT vs. Meeta Gutgutia , their Lordships reiterated the same principle after discussing and analyzing catena of decisions including that of Anil Kumar Bhatia (supra) and Dayawanti Gupta. The Hon'ble HighCourt observed and held as under:- 62. Subsequently, in Principal Commissioner of Income Tax-1 v. Devangi alias Rupa {supra), another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer was not justified in invoking section 68 of the Act for the purpose of making additions on account of share capital 9. Applying the propositions of law laid down in the above case-law to the facts of the case on hand, we find that the only addition made is of share application received u/s 68 of the Act and addition of commission paid allegedly for the share application money and finally a disallowance u/s 14A of the Act. No incriminating material has been found during the course of search. 12. The Hon ble Jurisdictional High Court in the case of Pr. CIT vs. Rashmi Infrastructure Pvt. Ltd. in ITAT 99 of 2019, G.A. No. 1211 of 2019 (Calcutta HC), judgment dt. 24/02/2020 has held as under:- The question is whether the assessee had unexplained cash credit in their books which could be charged to income tax in the previous year in question ? We find on scrutiny of paragraphs 10 and 10.2 of the order of the tribunal that questions of fact and evidence were discussed and adjudicated upon by it. We set out paragraphs 10 and 10.2 of the impugned order of the tribunal is as follows : 10. Coming to the alleged cash trail, none of the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd: SLP (C) No. 34554 of 2015 dt. 07.12.2015, I am of this view that in order to maintain judicial continuity on this issue and respectfully following the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (Supra), assessee's appeal on ground no 1 is allowed and as such I am not inclined to adjudicate appeal on ground no. 2 on merit. The tribunal is the final fact finding authority. A plausible adjudication on facts has been made. We cannot reopen the facts any more in this jurisdiction. No questions of law far less any substantial question of law is involved. 13. The Hon ble Calcutta High Court in the case of CIT vs. Veerprabhu Marketing Ltd. reported in [2016] 73 taxmann.com 149 (Calcutta), held as follows:- 5. He relied upon the following views expressed in paragraph 50 of the judgment in the case of CIT v. IBC Knowledge Park (P.) Ltd. [2016] 69 taxmann.com 108 (Kar.):- Materials such as books of account, documents or valuable assets found during a search should belong to a third party which would lead to an inference of undisclosed income of such third party. Such an inference should be recorded by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch 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. 10. We find no infirmity in the aforesaid act of the learned Tribunal. The appeal is, therefore, dismissed. 14. The Hon ble Calcutta High Court in the case of Principal Commissioner of Income Tax vs. M/s. Salasar Stock Broking Ltd. in G.A. No. 1929 of 2016, ITAT No. 264 of 2016, judgment dt. 24th August, 2016, under identical circumstances, followed the judgment in the case of CIT vs. Veerprabhu Marketing Ltd. (supra) and dismissed the appeal of the revenue. 15. This Bench of the Tribunal in the case of ACIT vs. Majestic Commercial (P) Ltd. [2020] 116 taxmann.com 412 (Kolkata-Trib.), has held as follows:- 12. We find that the Hon'ble Delhi High Court while adudicating the appeal in the case of Kabul Chawla (supra) had judicial note of host of the earlier decisions in the cases of CIT v. Anil Kumar Bhatia [2012] 24 taxmann.com 98/211 Taxman 453/[2013] 352 ITR 493 (Delhi) ; CIT v. Chetan Das Lachman Das [2012] 25 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances.' In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed.' 14. In his written and oral submissions, the ld. CIT, DR relied on several judgments of the Hon'ble High Courts justifying addition made in the order u/s 153A for the AY 2011-12 which on the date of search did not abate. After careful perusal of each judgment relied upon by the Ld. CIT, DR in his submissions but having regard to the specific facts involved in the assessee's case, we find that none of the judgments advance the revenue's case since the factual and legal matrix of the present case is distinguishable. For the following reasons therefore, we find that the Revenue's case is not furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court was not applicable. (B) In the case of Smt. Dayawanti Gupta v. CIT [2016] 75 taxmann.com 308/[2017] 245 Taxman 293/390 ITR 496 (Delhi), the additions were made on the basis of the admission made by the assessee's son u/s 132(4) with reference to incriminating material found in the course of search. Assessee's case before the Hon'ble Delhi High Court was that the statement admitting additional income was not given by her. She had categorically mentioned that she did not have her own source of income and that she was a proprietor of a concern only on paper. On these facts the Hon'ble High Court held that it was not in dispute that in course of search, incriminating material in relation to out of books turnover was found and with reference thereto the statement of the assessee's son was recorded in which he had admitted of earning undisclosed income. In the circumstances when the assessee was the owner of the proprietary concern which was carrying on the business, the Court upheld the Revenue's action of making addition on account of profits from such undisclosed business transactions. We however find that in the present case neither the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, relatives and/or persons who are connected with the assessee and are having transaction/dealings with such assessee.' Applying this principle, the Court held that since in the simultaneous proceedings conducted against connected parties, with whom the assessee had transactions, evidence was found regarding undeclared payments, the assessment of undisclosed income was justified. We however note that no proceedings were simultaneously conducted against the so-called entry operator Shri Anand Sharma nor any documentary evidence supporting assessee's transactions with any of the entry operators was found from the assessee's premises during the course of search. We therefore find that the facts of the present case were materially different from the facts before the Hon'ble Apex Court in the case of S. Ajit Kumar (supra) and in that view of the matter the said judgment does not have any application. (E) As regards the ld. CIT, DR's reliance on the judgment of the Hon'ble Allahabad High Court in the case of Raj Kumar Arora v. CIT [2014] 52 taxmann.com 172/367 ITR 517, we find that in the said judgment, the Hon'ble High Court simply followed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in relation to unabated assessment. Applying the ratio laid down in said judgment to the facts of the present case, we find that the assessee's case is on a much better footing. In the first instance we note that no simultaneous search or survey proceedings were carried out against Mr. Anand Sharma when the second search was conducted against the assessee in March 2016. We further find that nowhere in the statements of so-called entry operators they had admitted of providing accommodation entries to the assessee during the relevant year. In fact we find that prior to the completion of assessment u/s 153A on 31-12-2017, the AO himself never personally examined any of the so-called entry operators nor was opportunity of cross examination afforded to the assessee though the addition was justified solely with reference to their so-called statements. On the contrary we fid that although the statements of the so-called entry operators recorded in 2013 and 2014 were available with the AO's predecessor who completed the assessments u/s 153C on 30-03-2015, he did not find that the said statements constituted any incriminating evidence found in the course of search and therefore no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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