TMI Blog2022 (3) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessment year 2010-11, we find that it is annual report of M/s. Panchmukhi Management Services Pvt. Ltd. as on 31.03.2012, which was an audit report and the financial statement of the assessee company. This document cannot be treated as incriminating, or can be inferred as indicating any undisclosed income or anything which can be corroborated by any other incriminating material found in the course of search. Thus, audited annual report per se cannot be treated as incriminating material. the original share certificates dated 9.01.2010 which were transferred to the assessee company cannot be treated as incriminating, because, firstly, the Assessing Officer himself has not taken cognizance of this document while making the additions. In any case, the original share certificates in any manner can be reckoned as incriminating without any corroborating document or material found in the course of search that they are not genuine or indicative of undisclosed income. Thus, none of the documents as mentioned can remotely be considered as incriminating so as to warrant any addition within the scope of assessment under Section 153A/153C of the Act in these years where assessments wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t doing any real business. 3. Succinctly, the Revenue has challenged the following additions in respect of all the four assessment years:- Assessment year Addition. 2009-10 ₹ 5,12,00,000/- on account of un-explained investment in JP Minda group companies. 2010-11 ₹ 3,96,00,000/- on account of un-explained investment in JP Minda group companies. 2011-12 ₹ 4,71,46,602/- on account of un-explained investment in JP Minda group companies.; and ₹ 4,71,46,602/- made u/s. 68, 2012-13 ₹ 5,92,00,000/- on account of un-explained investment in JP Minda group companies. 4. It is important to note here that in so far as the additions made on account of unexplained investment, the Assessing Officer has made protective addition in the case of the assessee company and substantive addition has made in the case of J.P. Minda group of companies. It has been pointed out by the Ld. Senior Counsel for the assessee, Shri Salil Aggarwal that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assessment made under section 153C of the Act. It is therefore prayed, it be herd that proceeding initiated u/s. 153C of the Income Tax Act were bad in raw and order of reamed CIT(A) need be upheld even on the ground of 'wrongful assumption of jurisdiction on the part of learned AO to have framed assessment under section 153C of the Income Tax Act. 4. It is submitted that this submission is being made in view of Rule 27 of the Income Tax Appellate Tribunal Rules and is otherwise well settled proposition of law that the respondent is entitled to raise a regal ground at any stage of the proceedings, even though he may not have filed an appeal against such an order. The Judicial pronouncements are as under: 1. 83 ITR 223 (Bom) (B.R. Bamsi vs. CIT) 2. 129 ITR 475 (Ail) (Moratia Sons vs. CIT) 3. 220 ITR 398 (Ker) (CIT vs. Cochin Refineries Ltd.) 4. 176 CTR 406 (Gau) (Assam Company (I) Ltd. vs. CIT) 5 102 ITD 189 (Del) (ITO vs. Gurvinder Kaur) 6. 284 ITR (sic) (SC) CIT V. Varas International p. Ltd. 7. 149 taxmann 456 (Guj.) KharidVechan Sangh Ltd. vs. CIT. 8. 397 ITR 282 (All) CIT Vs. Jindal Polyester Ltd. 5. The respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 153C of the Income Tax Act. Name of the assessee : M/s. Panchmukhi Management Services Pvt. Ltd. A.Y. : 2008-09 TO 2013-14. PAN : AADCP7635E. Search and seizure action u/s. 132 of the Income Tax Act was carried out on 20.09.2013 in the case of Minda Group of cases for A.Ys. 2008-09 to 2013-14 under Section 153A/143(3). The material seized from the premises of the assessee has been examined by the undersigned being the jurisdictional Assessing Officer. After examining such seized material I am satisfied that the following seized documents belong to persons other than Minda Group of cases. The details of such papers are as under:- Party No./ Annexure No. / Seized from: Page No. of Annexure Brief description of documents. Person to whom the Documents belongs. F. Y. involved. O 2/A-4, JAY USHIN LTD. GP-14, Sector 18, Gurgaon. 28 to 34 Annual Report of M/s. Panchmukhi Management Services Pvt. Ltd. as on 31.3.2012 M/s. Panchmukhi Management Services Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate dated 9.01.2010, which were transferred to assessee company dated 9.02.2010. This document can be said to be pertaining to assessment year 2010-11. However, there is no such document for the assessment years 2009-10 and 2011-12. Apart from that he submitted that the annual report which is a document cannot be treated as an incriminating material so as to assume jurisdiction under Section 153C of the Act. In support, he has strongly relied upon the consolidated decision of the Tribunal in the Minda Group of Companies in the cases of: (i) M/s. Jay Auto Components Ltd.; (ii) M/s. Jay Iron Steel Ltd.; (iii) M/s. JPM Tools Ltd.; (iv) M/s. Jay Fe Cylinders Ltd., (v) M/s. Jay Ace Technologies Ltd., (vi) M/s. JJF Casting Ltd.; (vii) M/s. Jay Nikki Industries Ltd. (order dated 23.12.2021) wherein the Tribunal vide para Nos. 6 and 18 has categorical held that original share certificates cannot be held to be incriminating material for drawing any adverse inference that any undisclosed income relating to assessee company has been un-earned or found and thus, these documents cannot be at all considered to be incriminating. Thus, most of the additions made by the Assessing Officer canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction was recorded. This proposition has been upheld by the Hon'ble Delhi High Court in the case of CIT-7 Vs. RRJ Securities (2016) 380 ITR 612 (Del) and ARN Infrastructure India Limited v. ACIT [2017] 394 ITR 569 (Del) as well as in the case of Principal Commissioner of Income (Central)-2 vs. Index Securities Pvt. Ltd. ITA No. 566/2017. If the date of search for the purpose of assessments under Section 153C of the Act is taken from the date when the books of accounts or seized documents were handed over and the Assessing Officer or when the satisfaction was recorded, then the 6 assessment years immediately preceding assessment year in which search had taken place will start from assessment year 2010-11 to assessment year 2015-16. Thus, clearly the assessment for assessment year 2009-10 is beyond the scope and ambit of Section 153A read with Section 153C of the Act. Accordingly, we hold that the assessment made for assessment year 2009-10 is invalid and is hereby quashed. 12. In so far as the ground raised by the assessee under Rule 27, which are arising from the facts and issue as discussed in the impugned order and discussed above that these additions are beyond the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions made by learned Assessing officer is beyond the scope as envisaged under section 153C of the Act, and thus, the assessment needs be quashed and additions made therein needs to be deleted. 3.2 No incriminating Material has been found in the case of assessee. It is judicially settled position of law that additions u/s. 153A/153C of the Income Tax Act, 1961 can only be made on the basis of incriminating material found as a result of search or post search inquiry conducted by Assessing Officer during assessment proceedings. In this regard reliance is placed on the following judicial ruling:- i) Commissioner of Income Tax, (Central) - III Vs. Kabul Chawla ITA No. 707/2014 (Delhi High Court) ii) Principal Commissioner of Income Tax vs. Kurele Paper Mills Pvt. Ltd. 2016 380 ITR 571 (Delhi High Court) iii) Principal Commissioner of Income Tax vs. Lata Jain 2016 384 ITR 543 iv) CIT vs. Continental Warehousing Corporation Ltd. and All Cargo Global Logistic Limited 2015 374 ITR 645 (Bombay High Court) As such it is necessary to examine whether any incriminating material have been found with regard to investment made/credit appearing the bank account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 153C was recorded on 29/01/2016 and accordingly a notice u/s. 153C was issued to file the return of income. In this regard the appellant submitted that in response to the notice so issued the assessee submitted the return of income in the prescribed form under protest along with request to furnish the copy of satisfaction note which lead to issuance of notice u/s. 153C of the Income Tax Act It has been seen that the AO has recorded the satisfaction as per law. It has also been submitted by appellant that provisions of section 153C(1) are almost similar and akin to that of Sec. 158BD (which was applicable to searches conducted upto 31.05.2003) and It has been held by Hon'ble Delhi High Court in case of Janki Exports International v. UOI (2005) 278 ITR 296 (Del) and in Amity Hotels Pvt. Ltd. v. CIT (2005) 272 ITR 75 (Del) that where there is no evidence of satisfaction of A.O. regarding suppression of income, notice u/s. 158BD is held to be not valid. The case law is distinguishable on the facts as the AO has recorded/conveyed the satisfaction as per the assessment record, hence complied with the provisions of law for framing the assessment and passing the order under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2009-10 or 2011-12. Even the documents pertaining to assessment year 2010-11, we find that it is annual report of M/s. Panchmukhi Management Services Pvt. Ltd. as on 31.03.2012, which was an audit report and the financial statement of the assessee company. This document cannot be treated as incriminating, or can be inferred as indicating any undisclosed income or anything which can be corroborated by any other incriminating material found in the course of search. Thus, audited annual report per se cannot be treated as incriminating material. Similarly, the original share certificates dated 9.01.2010 which were transferred to the assessee company cannot be treated as incriminating, because, firstly, the Assessing Officer himself has not taken cognizance of this document while making the additions. In any case, the original share certificates in any manner can be reckoned as incriminating without any corroborating document or material found in the course of search that they are not genuine or indicative of undisclosed income. Thus, none of the documents as mentioned can remotely be considered as incriminating so as to warrant any addition within the scope of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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