TMI Blog2022 (6) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... idence relating to the assessee has been found and the same has been made available by the AO of the person searched to the AO of the person in respect of whom the evidence has been found then the AO of the person in respect of whom the evidence has been found would have to examine the same. Here, clearly evidence in the form of ledger and the transactions of giving the loan to Shri Vikash Gupta and his family members have been found and handed over to the AO of the assessee. Whether the said evidence is incriminating or not would have no bearing insofar as the AO of the searched person is concerned, but the evidence having been provided to the AO of the person in respect of whom the evidence has been found, it is the duty of such AO to examine and verify the same. For the purpose of verification the only option available to the AO is to initiate the proceedings u/s.153C of the Act, for that relevant assessment years to which those evidence relate. That is exactly what the AO has done in the present case. Once the assessment is opened u/s.153C provisions of the regular assessments would come into play and such additions and disallowance as is possible under regular assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Ld. CIT-Appeals-2, Bhubaneswar should not have allowed the addition of same amount over and above the income as per return during pendency of appeal before CIT- Appeals, Kolkata-4. 3. Because, several contents of impugned order are contrary to the documents on records. As per Assessment order, the Company has given loan to other persons/concern up to Rs. 300.04 lakhs for non-business purpose and hence; there was no rational for disallowing entire interest expenditures incurred on loan of Rs. 940.0 lakhs. Because, the proceedings and assessment order u/s 153 (c) are not valid since; the preconditions for invoking 153C was not existing at all. There was no any incriminating document before AO for the relevant year based upon which it recorded satisfaction and preceded in the matter. 4. Because, the entire interest expenditures of Rs. 134.872 lakhs are for the business purpose including the interest free loan of Rs. 304 lakhs given in previous years. The Company has derived substantial business benefits and income in subsequent years; which will be submitted in detail petition. These facts are ignored in remand proceedings and Ld. ClT relied upon remand report without due a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 300.04 lakhs from IFCI during the year and no loan of Rs. 304.0 lakhs was given by Company, as observed in order. As a result, the adverse conclusion is drawn on presumption and not upon evidence. More examples will be cited in detail petition. 3. Because, the interest free loan given to promoters of Shiva Cement in the previous year was Rs. 304 lakhs and hence; the presumptive loss of interest is Rs.41.80 lakhs out of total interest expenditures of Rs. 98.52 lakhs, as observed. Hence, disallowance of Rs. 93.14 lakhs is unjust. 4. Because, the entire interest expenditures of Rs. 98.52 lakhs are for the business purpose including the interest free loan of Rs.304 lakhs given in previous years. The Company has derived substantial business benefits and income in subsequent years; which will be submitted in detail petition. These facts are ignored in remand proceedings and Ld. CIT relied upon remand report without due application of judicial mind. 5. Because, the strategic business decision for availing loan from IFCI Factors Ltd and incurring interest cost is purely a strategic business decision arising due to commercial expediency and hence, the disallowance of interest exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the third party was recorded on December 27,2016, (Supplementary Paper Book page 23) is without jurisdiction bad in law also Void ab initio 3. In the facts and circumstance of the case in law, the entire assessment was completed within 4 days in great haste from the transfer of jurisdiction and hence the entire order in bad in law and without jurisdiction. 4. In the facts and circumstance of the case in law, there is no nexus, linkage, connection or corroboration between the seized Materials / documents and the subject additions in the impugned order are not based on the seized materials and hence impugned order is not maintainable in law. 5. In the facts and circumstance of the case in law, the seized documents as per Satisfaction Note as referred therein are page 67-93 and 94-97 of SMLO-05 don't belong to and no way related to Appellant. 6. In the facts and circumstance of the case in law, the seized documents as per Annexure A of the Satisfaction Note is IFCI Factors sanction letter for financial assistance to the Appellant and money received by the SMLO 52 are not Incriminating material I documents. Moreover no Appellant from Shivom Minerals Ltd. du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DY CIT vis Salasar Dewellers Pvt. Ltd. ITA No 5707/MUM/2015 AY 2008-09; (v) Jute Corporation Of India Ltd vis Commissioner of Income Tax Anr. 1991 AIR 241, 1990 SCR Supl. (1) 340; (vi) National Thermal Power Co. Ltd. vis Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998229 ITR 383 SC, (1997) 7 SCC 489; (vii) Commissioner of Income Tax - Ill, Pune v/s Sinhgad Technical Education Society (2018) 11 SCC 490. 5. Similarly, the assessee has filed additional grounds for the assessment year 2013-2014 on 05.10.2019, which read as under :- 1. In the facts and circumstance of the case in law, the Pr. Commissioner of Income Tax - 4, Kolkata erred in passing order for transfer of jurisdiction from Kolkata to Sambalpur without giving an opportunity to the Appellant before transfer. Which is a clear violation of section 127 of the Income Tax Act. 2. In the facts and circumstance of the case in law, the Satisfaction Note must be prepared before transfer of jurisdiction, since it affects the third party rights, in the present case the transfer order was placed on record on December 26, 2016, whereas satisfaction note u/s 153C of the third party was recorded on Decemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der without issuing any show cause notice and without affording any opportunity of hearing. The initiation of the proceeding by DCIT, Central Circle, Sambalpur is void ab initio. The Appellant applied to the Authorities on dated June 21, 2019 for certified copies of seized documents. These documents are supplied after the appeal filed, in the meantime the Appellant submitted Appeal Memo cum Paper Book before this Hon'ble Tribunal with addition I alteration of earlier grounds with facts of the case . 2. The above mentioned grounds are purely legal issues which goes to the root of the matter and make the assessment order bad in law and void ab initio. The Additional Grounds which are purely based on legal issues be admitted and deliberated by the Hon'ble Tribunal as laid down in various Judicial decisions as duly mentioned herein below: (i) The Pr. Commissioner of Income Tax Central - 3 vis M/s Dreamcity Buildwell Pvt. Ltd. ITA 1152/2017 Delhi High Court; (ii) Noorul Islam Education Trust vIs CIT Ors. Supreme Court; (iii) Vijayasanthi Investment Pvt. Ltd. vIs CIT - 1991 187 ITR 405 Andhra High Court; (iv) CIT v/s Calcutta Kintwears (2014) Supreme Court fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Tribunal as laid down in-various Judicial decisions as duly mentioned herein below: (i) National Thermal Power Co. Ltd. v/s Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998 229 ITR 383 SC, (1997) 7 SCC 489; (ii) Jute Corporation Of India Ltd v/s Commissioner of Income Tax Anr. 1991 AIR 241,1990 SCR Supl. (1) 340; (iii) Commissioner of Income Tax-III, Pune V/s Sinhgad Technical Education Society (2018) 11 SCC 490. 7. Similarly, the assessee has filed additional grounds for A.Y.2013-2014 on 12.11.2019, which read as follows :- 1. In the facts and circumstance of the case in law, there is no nexus, linkage, connection or corroboration between the seized Materials / documents and the subject additions in the impugned order are not based on the seized materials and hence impugned order is not maintainable in law. 2. In the facts and circumstance of the case in law, the seized documents as per Satisfaction Note as referred therein are age 67-93 and 94-97 of SMLO-05 don't belong to and no way related to Appellant. 3. In the facts and circumstance of the case in law, no additions are made in the Assessment Order based upon the seized mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder based upon the seized materials as referred in SMLO - 5 52. 4. In the facts and circumstance of the case in law, under any event and circumstances, the documents mentioned in Satisfaction Note is not incriminating material and do not pertain to relevant Assessment Year, since it is only Sanction Letter of IFCI Factor Bank and money received by Appellant from Shivom Minerals Ltd. 5. The AO grossly erred in framing the assessment disregarding the fact that the original assessment u/s 143(3) were already completed and therefore the assessment does not abate and additions could only have been made based on seized materials. Justification 1. The Appellant applied to the Authorities on dated June 21, 2019 for certified copies of seized documents. These documents are supplied after the appeal filed, in the meantime the Appellant submitted Appeal Memo cum Paper Book before this Hon'ble Tribunal with addition/alteration of earlier grounds with facts of the case. 2. The above mentioned grounds are purely legal issues which goes to the root of the matter and make the assessment order bad in law and void ab initio. The Additional Grounds which are purely based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on legal issues be admitted and deliberated by the Hon'ble Tribunal as laid down in various Judicial decisions as duly mentioned herein below: (i) National Thermal Power Co. Ltd. v/s Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998 229 ITR 383 SC, (1997) 7 SCC 489; (ii) Jute Corporation Of India Ltd v/s Commissioner of Income Tax Anr. 1991 AIR 241,1990 SCR Supl. (1) 340; (iii) Commissioner of Income Tax - Ill, Pune vis Sinhgad Technical Education Society (2018) 11 SCC 490. 10. On perusal of the additional grounds taken by the assessee for both the assessment years under consideration on 04.12.2020, we found that these grounds are identical to the additional grounds filed by the assessee in both the appeals separately on 12.11.2019 but the same are unsigned. 11. At the time of hearing, ld. Senior Counsel appeared on behalf of the assessee submitted that he desires to argue only on the additional grounds raised in both the appeals which have been filed on 12.11.2019. And, no other grounds have been argued. 12. It was submitted by the ld. Senior Counsel that there was a search conducted on the premises of Shivom Minerals Ltd. and group cases on 24th 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an expenditure cannot be part of an assessment u/s.153C of the Act much less an incriminating material. The ld. Senior Counsel further drew our attention to page Nos.15 16 of the paper book, which were the details of the seized material referred to in the satisfaction note being SMLO-05 and SMLO-52. It was the submission that SMLO-05 was in no way connected to the assessee and SMLO-52 contained the letter from IFCI Factor Ltd. to the assessee regarding the financial assistance requested for by the assessee. It was also the submission that these were not incriminating materials and in fact these transactions are very well recorded in the regular books of the assessee. 14. It was further submitted that originally the assessment in the case of the assessee came to be completed u/s.143(3) of the Act for the assessment year 2012-2013 on 26.02.2015, wherein there was a disallowance u/s.14A of the Act. This assessment was the subject matter of an appeal before the ld. CIT(A), who vide his order dated 20.05.2019 had deleted the disallowance. It was, thus, submitted that if at all, the disallowance of the interest could have been done under regular assessment but it could not be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther drew our attention to the decision of the Hon ble Delhi High Court in the case of SSP Aviation Ltd. Vs. DCIT, reported in [2012] 20 taxmann.com 214 (Delhi), wherein at para 17, the Hon ble High Court has categorically mentioned that AO who has reached the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the AO having jurisdiction over the other person and thereafter it is for the AO having jurisdiction over the other person to follow the procedure prescribed by the Section 153A of the Act in an attempt to ensure that the income reflected by the document has been accounted for by such other person. It was then the submission by the ld. CIT-DR that evidence has been found in respect of the assessee in the course of search conducted in the premises of M/s Shivom Minerals Ltd. and the same having been passed on to the AO having jurisdiction over the assessee and such AO having completed the assessment in accordance with law, therefore, the ld. CIT-DR submitted that the order of the CIT(A) upholding the assessment framed by the AO deserves to be affirmed. 17. In reply to the above submission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A perusal of the Annexure-A annexed to the satisfaction note, reproduced hereinabove, by the AO of the person searched shows that in the seized material SMLO-52, there is a ledger which contains the loan taken from IFCI Factors Ltd. to an extent of Rs.9,40,52,064/-. A further perusal of the said Annexure-A shows that out of this amount of Rs.9,40,52,064/- loan taken by the assessee from IFCI Factors, an amount of Rs.3.11 crores has been given as loan to Shri Vikash Gupta and his family members. Admittedly, the ledger account is part of the regular books of the assessee and the same cannot be treated as an incriminating material. However, the information that the loan has been given to Shri Vikash Gupta and his family members out of the said loan taken by the assessee company from IFCI Factors Ltd. has come out of the evidence found in the course of search. The evidence in relation to the impugned assessment years have been found in the course of search on Shivom Minerals Ltd. but relating to the assessee. When evidence relating to the assessee has been found and the same has been made available by the AO of the person searched to the AO of the person in respect of whom the evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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