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TMI Blog2021 (9) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... not tenable on facts and in law. 4. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. A.Y. 2010-11 "1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting addition of Rs. 9,00,00,000/- made u/s. 68 of the IT Act on account of unexplained share capital and premium. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting addition of Rs. 7,64,22,000/- made u/s. 68 of the IT Act on account of unexplained investment in property. 3. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in holding that on the prevailing facts of the case the onus on the part of the assessee u/s. 68 of the Act stands discharged. 4. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 5. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 2. The ld. counsel for the respondent-assessee had raised following legal ground as additional ground under Rule 27 of ITAT Rules, challenging the validity of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany has shown receipt of Rs. 154,52,96,260/- as security premium. During the course of assessment proceedings, the assessee company was requested to furnish details of person to whom new shares were issued. As per the details received, Assessing Officer noticed that the assessee has shown receipt of share capital and share premium from Kolkata, Guwahati and Mumbai based companies. 5. Thereafter, in the entire assessment order there is neither reference nor whisper about that these companies are based on any documents found during the course of search in the case of the assessee company. 6. Ld. CIT(A) has deleted the addition on merits and after detailed discussion, has deleted the addition made u/s. 68 on the plea that the assessee has explained identity, genuineness and creditworthiness of the parties and Assessing Officer has failed to make further enquiry in the case and addition of unexplained investment in property was deleted on the plea that there is no evidence found which suggest that the unaccounted payment was made by the assessee-company for purchase of property and in therefore, in absence of any adverse material or evidence, no unaccounted investment in the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made was found. Therefore, no addition could have been made in the assessment order passed U/s 153A of the Act. Ld. AO has made addition U/s 68 on account of issue of share capital of Rs. 73.47 crore and Rs. 9 crore in AY 2009-10 & AY 2010-11 respectively. In addition to this, in A Y 2010-11 AO also made addition for unexplained investment of Rs. 7.64 crore on account of difference between stamp duty value and transaction value for purchase of property during the year. There was no incriminating document found during the course of search for both the addition. In case of unexplained investment the purchase deed of property was seized but it cannot be treated as incriminating document as merely difference in stamp duty value and transaction value does not lead to any unexplained investment. Under such circumstances the said registered deed cannot be treated as incriminating document. Further provisions of section 56(2) Is not applicable to company assessee during the relevant year. Therefore, there is no specific provision under the Act to deal with such transaction. Hence action of the Assessing Officer otherwise is also not sustainable. 10. Further Ld. CIT(A) has not accepted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search conducted under Section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open." Thus from the above finding it is clear that their Lordships in the above decision has not adjudicated the issue when no incriminating document found during the course of search. 14. However, Ld. CIT(A) has mentioned that in the post search proceeding, the AO has conducted enquiry about the shareholders on the basis of shareholders details found during the course of search. For A.Y. 2010-11 additions for unexplained investment, the sale deed was seized during the search. Hence, in his opinion, the addition is based on seized material. 15. Such a reasoning of Ld. CIT(A) cannot be sustained, because, mere details of shareholders found during the course of search and registered sale deed cannot be termed as incriminating material so as to warrant any addition within the scope of Section 153A. Details of shareholders and share capital were already disclosed in the audited accounts and were part of return of income which stood assessed and attained finality. Once the addition has been made with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the offer of such income was being made "to buy peace of mind", therefore, the statement recorded under section 133A can hardly be said to be incriminating material. [para 44] ...in the circumstances, it is not possible to accept the plea of the revenue now made that the so-called additional incriminating material qua each of the assessment years could not be verified and, therefore, not discussed by the assessing officer because the assessee did not produce its books of account. It appears that the revenue did have access to the entire books of account of the assessee which were also shown to have also been maintained in soft form on the computers of the assessee which were already seized by the revenue during search operations. [para 46] In the remand proceedings, the assessing officer could not dispute the above information. As already noticed, the assessee had brought with herself all the franchisee agreements to substantiate submission made in her affidavit. It is for this reason that in the commissioner (appeals) for assessment year 2004-05, it held: "no evidence to dispute the affirmations in the affidavit have been brought on record by the assessing officer in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of search in the assessments framed u/s. 153C. The Hon'ble Court upheld the order of the Tribunal in the following manner:- 16) In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The events recorded above further disclose that the issue pertaining to validity of notice under Section 153C of the Act was raised for the first time before the Tribunal and the Tribunal permitted the assessee to raise this additional ground and while dealing with the same on merits, accepted the contention of the assessee. 17) First objection of the learned Solicitor General was that it was improper on the part of the ITAT to allow this ground to be raised, when the assessee had not objected to the jurisdiction under Section 153C of the Act before the AO. Therefore, in the first instance, it needs to be determined as to whether ITAT was right in permitting the assessee to raise this ground for the first time before it, as an additional ground. 18) The ITAT permitted this additional ground by giving a reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts make no reference to the seized material or any other material for the years under consideration, that was found during the course of search, in the case of the assessee. Mr. Maratha is also unable to point out any incriminating material related to the assessee which could justify the action of the Revenue. Merely because a satisfaction note has been recorded, cannot lead us to reach to this conclusion, especially when the Revenue has not laid any foundation to support their contention. In the factual background as explained above, the assumption of jurisdiction under section 153C cannot be sustained in view of the decision of this Court in the case of Kabul Chawla (supra)" 20. Thus, considering the facts and circumstances of the case as above and in view of aforesaid binding judicial pronouncements, we hold that the additions made in the order passed U/s. 153A, for the captioned assessment years which are unabated assessments, cannot be made, because same are beyond the scope of assessments u/s. 153A as the same are without any incriminating documents found during search. Hence on legal grounds the impugned additions are deleted. 21. In the result Revenue's appeals are d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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