9911796707
TMI Blog2015 (11) TMI 1854X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Commissioner of Income-tax (Appeals)-3, Bhopal, confirming the assessment order passed u/s 153C r.w. sec 143(3) of the Income-tax Act, 1961 by the Deputy Commissioner of Income-tax is both bad in law and bad in facts. 1.1 In doing so, he did not appreciate that no addition could have been made while completing assessment u/s 153C of the Income-tax Act, 1961 in case of completed assessments if no undisclosed income was determinable from the material found as a result of search. SALE PROCEEDS OF 32,875 SHARES OF ADROIT INDUSTRIES (INDIA) LTD. TREATED AS UNEXPLAINED INCOME : Rs. 13,23,220/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the addition of Rs. 13,23,220/- made in respect of sale of 32,875 shares of Adroit Industries (India) Ltd. by the Assessing Officer as unexplained income of the assessee. 3.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 4.0 The assessee prays for justice." 3. In ITA No. 95/Ind/2015 the assessee has taken the following grounds of appeal :- 1.0 The order passed by the learned Commissioner of Income-tax (Appeals)-3, Bhopal, confirming the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 30.03.2011 2,29,530 08.11.2013 1,76,770 1,76,770 2010-11 30.03.2011 2,29,530 08.11.2013 1,60,620 1,04,95,340 2011-12 01.08.2011 1,90,045 08.11.2013 1,83,470 1,90,050 2012-13 28.03.2013 NIL - - NIL Thus, the additions were made only in the assessment years 2008-09 and 2010-11. The assessee filed appeals before the learned C.I.T.(A) - Central, Indore against the assessments completed u/s. 143(3) r.w.s. 153C. The learned CIT(A) dismissed the appeal for the assessment year 2008-09 and partly allowed the appeal for the assessment year 2010-11 against which the assessee has preferred appeals before the Tribunal. SMT. MONIKA SANGLA 6. In ITA No. 109/Ind/2015 the assessee has taken the following grounds of appeal :- 1.0 The order passed by the learned Commissioner of Income-tax (Appeals)-3, Bhopal, confirming the assessment order passed u/s 153A r.w. sec 143(3) of the Income-tax Act, 1961 by the Deputy Commissioner of Income-tax is both bad in law and bad in facts. 1.1 In doing so, he did not appreciate that no addition could have been made while completing assessment u/s 153A of the Income-tax Act, 1961 in case of completed assessments if no undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated, the facts of the case are that the assessee is an individual. Her sources of income consists of income from house property, share in profit/loss from partnership firm, capital gains, dividend and interest etc. A search and seizure operation u/s.132 was carried out at the business premises of various companies belonging to Signet Group as well as residential premises of the assessee on 03.11.2011. Consequently, a notice u/s.153A was issued. The status regarding return of income furnished by the assessee u/s.139(1) and 153A of the Income-tax Act, 1961 and assessments completed u/s.143(3) r.w.s. 153A of the Act for six years and order u/s 143(3) for assessment year 2012-13 is as under : A.Y. Date of Original return filed Returned income u/s.139 (Rs.) Date of filing return u/s.153A Returned income u/s.153A (Rs.) Assessed income u/s.153A/ 143(3) Rs. 2006-07 06.06.2006 7,88,670 22.03.2013 8,69,607 8,69,610 2007-08 26.10.2007 7,46,550 22.03.2013 7,99,400 7,99,400 2008-09 29.09.2008 6,24,450 22.03.2013 18,04,630 1,13,64,010 2009-10 30.09.2009 4,31,480 22.03.2013 5,59,570 5,59,570 2010-11 22.02.2011 7,54,400 22.03.2013 6,19,750 1,13,18,250 2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UNT OF UNEXPLAINED INVESTMENT IN THE SHARES OF ADROIT INDUSTRIES (INDIA) LTD. : Rs. 1,45,600/- 2.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming addition of Rs. 1,45,600/- made by the assessing officer on account of unexplained investment in shares of Adroit Industries (India) Ltd. 3.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 4.0 The assessee prays for justice. 13. In IT(SS) A No. 201/Ind/2015 the revenue has taken the following ground :- "On the facts and in the circumstances of the case, the CIT(A) erred in restricting the addition made on account of unexplained investment in the shares of Adroit Industries (India) Ltd. to Rs. 1,45,600/- as against the addition of Rs. 89,81,625 made by the A.O.". BRIEF FACTS OF THE CASE 14. The assessee is a closely-held company belonging to Signet Group of Indore. It is engaged in the business of trading and investment. A search and seizure operation u/s.132 was carried out at the business premises of various companies belonging to Signet Group as well as residential premises of the assessee on 03.11.2011. Consequently, a notice u/s.153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in deleting the addition made on account of unexplained investment in the shares of Adroit Industries (India) Ltd. of Rs. 72,55,750/- made by the A.O." BRIEF FACTS OF THE CASE 17. The assessee is a closely-held company belonging to Signet Group of Indore. It is engaged in the business of trading and investment. A search and seizure operation u/s.132 was carried out at the business premises of various companies belonging to Signet Group as well as residential premises of the assessee on 03.11.2011. Consequently, a notice u/s.153A was issued. The status regarding return of income furnished by the assessee u/s.139(1) and 153A of the Income-tax Act, 1961 and assessments completed as per original assessment u/s.143(3) / 143(1) as well as u/s.153A are as under : A.Y. Date of Original return filed Returned income u/s.139 (Rs.) Date of filing return u/s.153A Returned income u/s.153A (Rs.) Assessed income u/s.153A/ 143(3) (Rs.) 2006-07 13.09.2006 9,470 28.02.2013 9,470 9470 2007-08 10.09.2007 31,071 28.02.2013 316 31,071 2008-09 21.07.2008 (27,114) 28.02.2013 21,810 1,29,96,864 2010-11 29.08.2010 65,872 28.02.2013 81,170 73,36,920 2011-12 27.07.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/- made by the assessing officer on account of unexplained investment in 3,04,200 equity shares of Adroit Industries (India) Ltd. REJECTION OF ASSESSEE'S LEGAL CLAIM FOR DEDUCTION: 3.0 The learned Commissioner of Income-tax (Appeals) erred in law as well as in facts in confirming the rejection of assessee's claim for the following legal deductions by the assessing officer : a) Sec.80C : Rs. 29,216/- b) Bank Charges : Rs. 2,507/- 4.0 The assessee may be allowed to add, amend, alter or raise additional grounds of appeal. 5.0 The assessee prays for justice 21. In IT(SS) No. 205/Ind/2015 the the revenue has taken the following grounds :- "On the facts and in the circumstances of the case, the CIT(A) erred in restricting the addition made on account of unexplained investment in the shares of Adroit Industries (India) Ltd. to Rs. 85,64,013/- as against the addition of Rs. 1,67,35,250/-." BRIEF FACTS OF THE CASE 22. The assessee is an individual and is a member/director of various companies belonging to Signet Group. His sources of income consists of income from Salaries, house property, share in profit/loss from partnership firm, capital gains, dividend, interest etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed to add, amend, alter or raise additional grounds of appeal. 4.0 The assessee prays for justice. BRIEF FACTS OF THE CASE 25. The assessee is a closely-held company belonging to Signet Group of Indore. It is engaged in the business of trading and investment. A search and seizure operation u/s.132 was carried out at the business premises of various companies belonging to Signet Group as well as residential premises of the assessee on 03.11.2011. Consequently, a notice u/s.153A was issued. The status regarding return of income furnished by the assessee u/s.139(1) and 153A of the Income-tax Act, 1961 and assessments completed as per original assessment u/s.143(3) / 143(1) as well as u/s.153A are as under : A.Y. Date of Original return filed Returned income u/s.139 (Rs.) Date of filing return u/s.153A Returned income u/s.153A (Rs.) Assessed income u/s.153A/ 143(3) Rs. 2006-07 30.11.2006 - 28.02.2013 - NIL 2007-08 31.10.2007 - 28.02.2013 - NIL 2008-09 30.09.2008 - 28.02.2013 - NIL 2009-10 24.09.2009 - 28.02.2013 - NIL 2010-11 15.09.2010 - 28.02.2013 - 1,50,14,260 2011-12 05.08.2011 (5,080) 28.02.2013 (9,320) 2,87,44,920 2012-13 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Original return filed Returned income u/s.139 (Rs.) Date of filing return u/s.153A Returned income u/s.153A (Rs.) Assessed income u/s.153A/ 143(3) Rs. 2006-07 30.03.2007 2,04,148 03.04.2013 2,08,507 2,08,510 2007-08 17.02.2009 55,094 03.04.2013 55,094 55,090 2008-09 29.03.2009 1,26,160 03.04.2013 16,350 1,26,160 2009-10 30.03.2010 1,79,500 03.04.2013 85,110 1,79,500 2010-11 28.03.2011 2,47,910 03.04.2013 2,36,200 1,44,72,910 2011-12 01.08.2011 3,09,400 03.04.2013 2,94,160 3,09,400 2012-13 28.03.2013 NIL - - NIL 29. The assessee filed appeals before the learned Learned CIT(A) against the assessments completed u/s.153A. The learned C.I.T.(A) partly allowed the assessee's appeals against which the assessee has preferred the present appeal. SWAN HOLDING PVT. LTD. 30. In IT(SS) A No. 89/Ind/2015 the assessee has taken the following grounds :- 1.0 The order passed by the learned Commissioner of Incometax (Appeals)-3, Bhopal, partly confirming the assessment order passed u/s.153A r.w. Sec.143(3) of the Income-tax Act, 1961, by the Deputy Commissioner of Income-tax is both bad-in-law and bad-in-facts. 1.1 In doing so, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch and seizure operation u/s.132 was carried out at the business premises of various companies belonging to Signet Group as well as residential premises of the assessee on 03.11.2011. Consequently, a notice u/s.153A was issued. The status regarding return of income furnished by the assessee u/s.139(1) and 153A of the Income-tax Act, 1961 and assessments completed as per original assessment u/s.143(3) / 143(1) as well as u/s.153A are as under : A.Y. Date of Original return filed Returned income u/s.139 (Rs.) Date of filing return u/s.153A Returned income u/s.153A (Rs.) Assessed income u/s.153A/ 143(3) Rs. 2006-07 22.06.2006 9,480 28.02.2013 9,880 9,880 2007-08 29.09.2007 11,172 28.02.2013 11,170 11,170 2008-09 23.08.2008 15,231 28.02.2013 16,920 84,83,110 2009-10 16.09.2009 13,884 28.02.2013 13,890 13,890 2010-11 14.09.2010 91,233 28.02.2013 92,114 66,61,490 2011-12 26.07.2011 1,684 28.02.2013 1,680 1,38,51,680 2012-13 29.09.2012 NIL - - NIL The assessee filed appeals before the learned CIT(A) against the assessments completed u/s.153A who partly allowed the assessee's appeals. Now the assessee has filed these app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of a search assessment only on the basis of evidence found as a result of search or other documents and such other materials or information as are available with the AO and relatable to the evidence found. The AO is statutorily required to make assessment u/s.153A for all such six years and compute total income of the assessee including undisclosed income notwithstanding that returns of these assessment years have already been processed u/s 143(1) or assessed u/s 143(3) of the Act. The scope of Sec.153A is similar to Sec.143(3) and in that context, the legislature used the word 'Total Income'. The first and second Proviso to sec.153A are complementary to each other and requires the AO to assess or re-assess the 'total income' in respect of each assessment year falling within such six assessment years in assessment orders u/s.153A. In support of his contention, reliance was placed upon Memorandum explaining the provisions in the Finance Bill, 2003 [(2003) 260 ITR (St.) 191], the rule of construction laid down in Heydon's Case for interpretation of the language used in sec.153A and the following judgements: C.I.T. vs. Raj Kumar Arora 367 ITR 517 (All) Canara Housing Deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in both the situations, the Assessing Officer engaged in carrying on search of the assessee within his jurisdiction, if seizes or requisitions the items (books of account or other documents or any assets for Section 158BD; and money, bullion, jewellery or other valuable article or thing or books of account or documents for Section 153C), is expected to handover those items to the Assessing Officer having jurisdiction over such other person and thereafter the Assessing Officer having jurisdiction has to proceed against such other person within his jurisdiction. Even for the purpose of Section 153C, the Assessing Officer before handing over the items to the Assessing Officer having jurisdiction must be "satisfied" that the items belongs or belong to the person other than the person referred to in Section 153A. That satisfaction of the concerned Assessing Officer is a sine qua non. The consequences flowing from the action to be taken on the basis of such information handed over to the Assessing Officer having jurisdiction, for the assesse, who is a person other than the person referred to in Section 153A, is drastic - of assessment or reassessment of his income falling within six asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the same reason, we must reject the argument of the Department that the discretion of the Assessing Officer having jurisdiction will be impaired in any manner, if he were to hold a different view. Similarly, as there is no provision either express or implied (in the Act) to dispense with the requirement of satisfaction, if the Assessing Officer happens to be the same, as in this case, the argument of the Department must be negatived. 19. After receipt of the materials, the Assessing Officer having jurisdiction is expected to conduct enquiry and due verification of the relevant facts; before forming his prima facie satisfaction. The Assessing Officer having jurisdiction will be well within his rights to form an independent view before issuing notice to the other person (person other than the person referred to in Section 153A) under his jurisdiction on the basis of his own enquiry. In our opinion, the view formed by the Assessing Officer after his own enquiry does not entail in seating in appeal over the satisfaction of the first Assessing Officer, who had handed over the items to him. 20. As a result, we hold that there is no infirmity in the view taken by the Tribunal on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must fail. 24. Accordingly, these appeals are dismissed with no order as to costs." 38. The learned counsel for the assessee submitted that in the assessee's case, there is nothing in the assessment order or otherwise to show that the satisfaction as envisaged u/s.153C was ever recorded by the A.O. Considering it, the A.O. did not assume jurisdiction to complete assessment u/s.153A and therefore, the assessment order passed by him is invalid. He pleaded that even when there is same Assessing Officer for searched person and where 153C action is taken then also recording of satisaction in both the cases is necessary in view of decision of the Hon'ble jurisdictional High Court in the case of Mechman (supra). He further submitted that no addition can be made in non-abated assessments sans incriminating material. The assessment u/s.153A is made only in cases where a search is initiated u/s.132 or books of account, other documents or any assets are requisitioned u/s.132A after 31.05.2003. Therefore, Section 153A of the Act cannot be read in isolation. The requirement of assessment or reassessment of total income under the said section has to be read in the context of Sections 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; on the date of initiation of search or requisition and in terms of Section 153A a return is filed and the AO is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under Section 153A of the Act would be the assessment for the said year. 20. The necessary corollary of the above second proviso is that the assessment or reassessment proceedings, which have already been 'completed' and assessment orders have been passed determining the assessee's total income and, such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In such cases, where the assessments already stands completed, the AO can reopen the assessments or reassessments already made without following the provisions of Sections 147, 148 and 151 of the Act and determine the total income of the assessee. 21. The argument raised by the counsel for the appellant to the effect that once a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search or requisition of documents. 2. C.I.T. vs. Kabul Chawla [I.T.A.No.707/2014 dt.28.08.2015 (Del)(HC)] 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the a fore mentioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the' total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3390/M/2011 dt.10.01.2014 (Mum.Trib.)] 7. A.C.I.T. vs. Pratibha Industries Ltd. [28 taxmann.com 246 (Mum. Trib)] 8. Gurinder Singh Bawa vs. D.C.I.T.[28 taxmann.com 328 (Mum. Trib)] 9. Dinesh Tobacco industries vs. D.C.I.T. [148 ITD 118 (Jodh. Trib)] 39. As regards judgments relied upon by the C.I.T. (A), the learned counsel for the assessee submitted that the same were distinguishable on facts inasmuch as recovery of incriminating material either during search or post search inquiries. 40. On the issue of addition sans incriminating material, the learned counsel for the assessee submitted that there are two views of various judicial authorities. It is a settled legal position that if two views are possible on a particular issue, the view which is favourable to the assessee should be followed. [C.I.T. vs. Vegetable Products Ltd. 88 ITR 192 (SC)]. 41. The learned counsel for the assessee further submitted that in the assessee's case, there are no incriminating material whatsoever in relation to investment in shares of Adroit Industries (India) Ltd. in assessment year 2007-08, transfer of these shares in assessment year 2008-09 and their re-acquisition subsequently in assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Assessing Officer is bound to issue notice u/s 153A of the Act. Once notices are issued u/s 153A of the Act then assessee is legally obliged to file return of income for six years. The assessment and reassessment for six years shall be finalised by the Assessing Officer. It is also held by various Courts that once notice u/s 153A of the Act issued, then assessment for six years shall be at large both for Assessing Officer and assessee have no warrant of law. It has been also held that in the assessment years where assessments have been abated in terms of second proviso to section 153A then Assessing Officer acts under original jurisdiction and one assessment is made for total income including the addition made on the basis of seized material. But where there is no abatement of assessments and assessments were completed on the date of search then addition can be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized in relation to sale and repurchase of shares of Adroit India Ltd. No assessment proceedings were abated in these assessment years of these assessees. Thus assessments for thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi High Court in the case of CIT vs. Kabul Chawla (supra) has held that completed assessments can be interfered with by the Assessing Officer while making assessment u/s 153A of the Act, 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 was not produced or not already disclosed or made known in the course of original assessment. In all these cases no assessments were pending on the date of search for both the assessment years 2008-09 and 2010-11. No assessments were abated in terms of second proviso to section 153A of the Act. Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) has considered various High Court decisions relied upon by the learned DR. The Hon'ble Delhi High Court has considered the cases of Canara Housing Development Co. vs. DCIT; Madugula vs. DCIT; CIT vs. Chetandas Laxmandas and CIT vs. Anil Kumar Bhatia (supra). The only decision of the Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora; 367 ITR 517 relied on by the learned DR was not considered by Hon'ble Delhi High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,000 In May 2007, various entities of Signet group and members of Sangla family sold 22,88,025 shares to Shalimar Ferrous Metals Pvt. Ltd., Indore, ('Shalimar') at various rates ranging from Rs. 40.35 to Rs. 44.80 per shares. The resultant short term capital gain was duly shown in their Return of Income filed before the Income-tax Department. At the end of March 2009, the Signet group was holding only 26.51% of the total paid up share capital of Adroit Industries (India) Ltd. (14,91,400 shares) and rest of the shares were held by non-Signet group entities (41,33,600 shares). In August and September 2009, the shares of Adroit Industries (India) Ltd. held by non-Signet group were acquired by members of Sangla family and other associate concerns at around Rs. 11.25 to Rs. 12.25 per share. By March 2010, the entire share capital of Adroit Industries (India) Ltd. i.e. 56,25,000 shares of Adroit Industries (India) Ltd. were again held by various entities of members of Sangla family and associate concerns. The total funds provided directly or indirectly from Signet Industries Ltd. amounted to Rs. 16.47 Crores apart from its own investments of Rs. 6.00 crores in shares o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not bring anything on record that there was high interest bearing debt to be discharged or was facing any financial liquidity problem. Further, nothing was brought on record to show that the sale proceeds were utilized for discharging any interest bearing liability. If the acquisition of Adroit Industries (India) Ltd. was so risky, why the investment in Adroit Industries (India) Ltd. was made in the first place? It is not possible to accept the assertion of the assessee that the divestment of part of the investment was to reduce the assessee group's risk. Merely because the entire transaction was through banking channels would not make a sham transaction genuine. The A.O. held that these investor companies were paper companies having meager profits and were not regularly filing their return of income. The group did not make any attempt to go public in F.Y.2007-08 and 2008-09. It was only after the shares of Adroit Industries (India) Ltd. were acquired in September 2009, that the group tried for its public issue in F.Y.2011- 12. 48. Therefore the contention of the assessee that the shares were reacquired for a price ranging from Rs. 11.25 to Rs. 12.25 per share due to its inab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to unrelated parties after taking over the control and management of Adroit Industries (India) Ltd. The contention of the assessee about public issue of Adroit Industries (India) Ltd. in future being a reason for divestment is also unconvincing. Relying upon the case of C.I.T. vs. Rathi Finlease Ltd. (2008) 215 CTR 429 (MP) and Industrial Filters and Fabrics Pvt. Ltd. [Appeal No.IT185/09-10/510 order dt.30.03.2012 passed by C.I.T.(A), Indore], it was held that the intermediary companies like Shri Aniket Shares and Securities Pvt. Ltd., Unno Industries Ltd., Siddhachal Developers Pvt. Ltd. and Palasia Leasing and Investment Pvt. Ltd. were entry providers. Further, in case of Signet Industries Ltd., it was held that Lucky Commotrade Pvt. Ltd. is a paper company which is used by the Sangla group to introduce unsecured loan and share application money within the group concerns. The transaction of transfer of shares of Adroit Industries (India) Ltd. by various members and concerns of Sangla group were only accommodation entries and not genuine transactions and therefore, the amount of sale proceeds credited in the books of various members and concerns of Sangla group amounted to unexp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, 1961. The returned income was accepted. During financial year relevant to the assessment year 2007-08 Shalimar Ferrous Metal Pvt. Ltd. received unsecured loan from following entities :- Name of the company P.A.No. Amount (Rs.) Nalanda Merchant Pvt. Ltd. (Out of loan of Rs. 3,50,00,000/- given by Signet Overseas Ltd.) AACCN 2446 C 3,50,00,000 RatnagiriVinimay Pvt. Ltd. AABCR 1870R 15,00,000 Utility Exim Pvt. Ltd. (Out of loan of Rs. 3,50,00,000/-given by Signet Overseas Ltd.) AAACU 8022B 3,50,00,000 Anubhav Infrastructure Pvt. Ltd. AAFCA 5482J 40,00,000 Snehshil Marketing Pvt. Ltd. AAJCS 5894E 50,00,000 Lekhraj Steel Pvt. Ltd. AABCL 0866B 2,05,000 Kamdeep Marketing Pvt. Ltd. AAACK 9556A 2,30,000 Signet Overseas Ltd. AABCS 3489F 5,46,05,407 Bank Overdraft (Cheque issued but not presented for payment in the bank and cleared in the immediately succeeding year out of loan of Rs. 3,73,15,000/- received from Signet Overseas Ltd.) 3,58,47,845 17,13,88,252 The unsecured loans so received were advanced to the following persons/entities for acquiring shares of Adroit Industries (India) Ltd. :- Name of the company P.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucky Commotrade Private Ltd. u/s. 143(3) for Assessment Year 2005-06 and Assessment Year 2007-08, Income-tax department, Indore has no locusstandi to treat it as a 'bogus paper company' and a 'known entry provider' particularly when no investigation what so ever was conducted by it and not an iota of evidence was brought on records in support of such serious and baseless allegations. In fact, during the entire assessment proceedings u/s.153A/153C of the Act in respect of almost all the assessees of the group, the authorities below did not issue even a single notice to it u/s.133(6) to collect information or summon u/s 131 for making investigation. Therefore, these charges against Lucky Commotrade Private Ltd. are baseless, hearsay and mere conjectures and surmises. In case of Lal Chand Bhagat Ambica Ram Vs. C.I.T. 37 ITR 288, honourable Supreme Court strongly disapproved the practice of making addition in the assessment on mere suspicion and surmises or taking note of so called notorious practice prevailing in trade circles. 54. Shalimar sold its shareholding in Adroit Industries (India) Ltd. to Lucky and the proceeds thereof were utilized for repayment of inter-corporate loan to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xit which are ultimately provided by the promoters i.e. Signet Group after protracted negotiations by acquiring shares at a mutually agreeable price band of Rs. 11.25 to Rs. 12.25. The details of investors were placed on record and had also been reproduced in the assessment order. Therefore, the inference of the assessing officer that no investor was named by the assessee is totally baseless. The multiple transfers in some cases were due to requirements and convenience of investing companies and their promoters. Generally, the investors enter a company before its public issue with the intention to earn significant gains on listing of shares. However, sometimes their calculation go haywire and they have to exit at a significant loss particularly in a situation in which most of the public issues devolved on bankers and guarantors and there was no public participation. The same is evident from the fact that many IPOs were withdrawn or deferred by various companies during this period and no of IPOs fell from 108 in 2007 to 22 in 2009. In the case of Adroit Industries (India) Ltd., the promoters made utmost efforts to bring IPO and incurred significant cost (about Rs. 83.80 Lacs) in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry by the assessing officer. The High Court never held that Palasia Leasing was a 'Bogus paper company' and known entry provider. In the assessee's case, the notice u/s.133(6) were duly served and the copies of bank statements and other requisite details were filed before the assessing officer in which the transactions were duly reflected. Therefore, the inference of C.I.T.(A) is without appreciation of the judgement as well as the facts placed on record. As regard Shri Anekant Shares and Securities Pvt. Ltd., Unno Industries Ltd., Siddhachal Developers Pvt. Ltd., the assessee was not given the copy of judgement passed by C.I.T.(A) II, Indore in the case of Industrial Filters and Fabrics Pvt. Ltd. and therefore, the same cannot be used for adverse inference against the assessee. Moreover, in compliance of notice issued u/s.133(6), these companies furnished the copies of their bank account, return of income filed by them etc. in which the transactions were duly reflected and no discrepancy whatsoever was brought on record by the lower authority. As regard Can-India Overseas Ltd., it was a company in which the close relatives of Shri Mukesh Sangla were shareholders and directors. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee group cases,the original purchase of shares at Rs. 40.25 per shares as well as reacquisition of shares at Rs. 11.25 to Rs. 12.25 were duly recorded in the books of accounts of the respective assessee. A chart showing source of re-acquisition of shares by Signet Group, members of Sangla family and other associate concerns was filed. The revenue did not bring any evidence to show that actual consideration paid by the assessee group either at the time of original acquisition or at the time of reacquisition was more than the stated and recorded consideration in the books of respective assessee. The A.O. merely presumed the fair value of shares at Rs. 40.25 per share (original cost of acquisition from Anand Family in March 2007) and treated the difference between the cost of reacquisition and fair value per share as unexplained investment in the case of the assessee, without bringing any evidence on record. He simply rejected the explanation given by the assessee group. In the assessee's case, there were no incriminating material whatsoever in relation to investment in shares of Adroit Industries (India) Ltd. in assessment year 2007-08, transfer of these shares in assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sangla family and associates acquired management and controlling rights in Adroit Industries Ltd. which was 100% export oriented auto ancillary unit from Anand family in the month of March, 2007. There is no dispute regarding the price of shares paid for acquiring shares from Anand Family as well as to other persons. In May, 2007 some of the shares were sold by the assessee and other group persons and associates. The resultant short term capital gain was offered for taxation in the return of income. There was no incriminating document seized during the search operation in relation to acquisition of shares of Anand family and transfer of shares by the assessee. The assessee has explained the reason for transfer of shares to raise the funds. It is also established that Adroit Industries Ltd. was to go for public issue for which expenditure has been debited in the financial years 2010-11 and 2011-12. Ultimately this public issue could not be materialised. The expenditure debited in the books of Adroit Industries Ltd. establishes that Adroit Ind. Ltd. was to go to for public issue. No evidence either during the search operation or in the post search inquiries showing even suggesting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee claimed the following deductions: S.No Particulars Amount (Rs.) (a) Section 80C 76,860/- (b) Section 80D 15,000/- The said claims were not made while filing the return u/s.139(1)/139(4). The Assessing Officer held that the contention of the fresh claim of deductions of the assessee for the return filed u/s.153C is rejected as the assessee cannot make the fresh claim for deduction/exemption in proceedings initiated u/s.153C of the Act. He also held that If the assessee found any mistake in his original Return of Income, the correct course was to revise the return which has not been done. Aggrieved, the assessee went in appeal before the learned CIT(A) and the learned CIT(A) relying on the judgement of Jai Steel India vs. A.C.I.T. [36 taxman.com 523 (Raj)] and Charchit Agarwal vs. A.C.I.T. [34 SOT 348 (ITAT-Del)], the C.I.T.(A). held that where a claim for deduction/exemption was not made by the assessee in original return of income filed u/s.139(1), no fresh deduction or claim can be made by the assessee in the Return of Income filed u/s.153A pursuant to a search u/s.132 or requisition u/s.132A because the proceedings u/s.153A are for the benefit of revenue and not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting Assessing Officer not to take advantage of assessee's ignorance and/or mistake. Therefore, the above Circular should always be borne in mind by the officers of the respondent -revenue while administering the said Act. [Para 5] There was a fundamental error in the order of C.I.T. as it proceeds on the erroneous basis that the assessee had admittedly not claimed the benefit of sections 10(34) and 10(38) in respect of its dividend income and long term capital gains on sale of shares respectively in its return of income. In fact, in the return of income, the assessee had admittedly sought to exclude its dividend income and long term capital gains from sale of shares under section 1O as is evident from the return of income. However, in the return of income as filed originally on the assessee by mistake, omitted to exclude the dividend income and income from long term capital gains from the total income being declared by it. [Para 6]" He also pleaded that the Honourable Madras High Court has held in the case of C.I.T. vs. Geo Industries & Insecticides (I) (P.) Ltd. (234 ITR 541) as under : "We are of the view that, when the assessee made a claim for consideration of an item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of fulfillment of the conditions for rectification is not a sine qua non and even the conditions to rectify the mistakes are not present, the ITO, in our opinion, should examine the claim of the assessee on merits of the case. The power of the ITO to make the assessment as observed by this Court in C.I.T. vs. Seth ManicklalFomra (supra) is derived from the statutory provisions of s.143(3) of the Act. Though the Supreme Court in the case of Modi Industries Ltd. vs. C.I.T. (supra) has held that the jurisdiction of the ITO is derived from the order of the C.I.T., his jurisdiction to allow or disallow the carry forward losses of the defunct business would be derived from the order of the C.I.T., but in other respects and, for completing the assessment, his powers would be traceable to s. 143(3) of the Act. This Court in FaizunnissaBegam vs. Asstt. CED (supra) has indicated such an approach and it was held that in so far as other items not considered by the higher authorities are concerned, the power of the ITO to reassess the income would be traceable to the provisions of the statute. Therefore, the refusal of the ITO even to consider the claim of the assessee is not justifiable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gain at the rate of 20%, but it was expected from the A.O. to know the latest amendment. The mistake might have been corrected by passing an order under section 154 of the Act. In the case of C.I.T. Vs. Mahalaxmi Sugar Mills Co. Ltd. (1986) 160 ITR 920 (SC), it was observed that: "There is a duty cast on the Income-tax Officer to apply the relevant provisions of the Indian Income-tax Act for the purpose of determining the true figure of the assessee's taxable income and the consequential tax liability. Thus the assessee fails to claim the benefit of a set-off cannot relieve the Income-tax Officer of his duty to apply section 24 in an appropriate case. " 64. The learned counsel for the assessee submitted that similar view was taken by the honourable I.T.A.T. Indore in the case of Subhadra Devi Gupta vs. A.C.W.T. (WTA Nos.1 to 6/IND/2012 dt.28.06.2013). 65. We have heard both the sides on this issue and also gone through the case law relied upon. While filing the return of income u/s 153A/153C of the Act some of these assessee have claimed deduction u/s 80C and 80D of the Act. No such claim was made while filing the return of income u/s 139(1)/139(4) of the Act. Since we have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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