TMI Blog2018 (4) TMI 1938X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on any search material. Additions so made de hors search material is unsustainable - Decided in favour of assessee. - IT(ss) A No.38/CTK/2018 S.P. No.21/CTK/2018, IT(ss) A No.39/CTK/2018 S.P. No.22/CTK/2018, IT(ss) A No.40/CTK/2018 S.P. No.23/CTK/2018, IT(ss) A No.41/CTK/2018 S.P. No.24/CTK/2018, IT(ss) A No.42/CTK/2018 S.P. No.25/CTK/2018 - - - Dated:- 19-4-2018 - S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER For the Assessee : Shri P.S.Panda, AR For the Revenue : Shri Saad Kidwai, DR ORDER Per N.S.Saini, AM These are the appeals filed by the assessee in the case of following assessees against the orders of the CIT(A)-1, Bhubaneswar for the assessment year 2008-2009 as detailed below: Name of assessee Date of order of CIT(A) 1. Sadhna Dalmia 23.3.2018 2. Gangol Vincom (P) Ltd 26.3.2018 3. Ahinsa Vinimay Pvt Ltd 26.3.2018 4. Surendra Kumar Dalmia 23.3.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for the transfer, read with Para 1 2 above will be Rs. 15.50 crores (Rupees Fifteen Crores Fifty Lacs Only). Effective price for each share will be Rs. 31 ( Rupees thirty one only). b) Rs. 15.50 Crores (Rupees Fifteen Crores Fifty Lacs Only) will be paid by way of PDCs of different dates by DDA to SKD drawn in favour of the respective shareholders as per the enclosed Schedule - A. The last date of the Cheques will not be later then 15th January, 2008. c) Personal / corporate guarantee of SKD for the loan availed by the Company from Bank or from any other institutions will be released before transfer of the shares. Both parties to this MOU have to explore all possibilities in consultation with the consultants / advocates, as the case it may be, to replace the personal guarantee of SKD on or before 15.01.2008. d) The present MOU will be filed before the learned Company Law Board on the next date of hearing and kept on record. An application will be filed before the Learned Company Law Board to list the case after 15.01.2008 for disposal of the terms of the present MOU duly signed by both the parties. 14. In the above MOU it was agreed that Sri S. K. Dalmia group w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Annual return filed for the AGM held on 29.09.2008 with ROC is enclosed as Annexure - 9 . 24. On completion of the transfer of shares, necessary capital gain tax due were duly paid by the above appellants. From the above it may kindly be concluded that the credit entry in the books of the appellants were against a sale transaction of 50% shares in Surya Sponge Iron Ltd. by Sri S.K. Dalmia Group to Sri Dindayal Agarwal Group and remained o/s in the books for non completion of the transfer process by 31.03.2008 which was because of pending release of the security offered by Sri S.K. Dalmia group for availing loan for Suryaa Sponge Iron Ltd. The funds received were from entities to whom Sri Dindayal Agarwal wanted the shares to be transferred and Sri S.K. Dalmia group had no know/edge of the said entities to whom the shares were transferred. In view of the above, the issue of genuineness, identity and creditworthiness are not grounds on which the additions could have been made. Without prejudice to above, the appellant would like to mention before your honour, that the prov. of sec. 68 of the Act is not applicable to the group since it is not advance in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined at Kolkata Office. 2. During the survey proceedings u/s 133A in the premises of the N.R. International Ltd. no books of account/ documents/ evidence were found with regard to the said share transactions. 5. Dewdrop Merchants Pvt. Ltd. 1. .Sri Deepak Agarwal, one of the director of M/s. N.R. International Ltd. ( the buyer from whom the amount were received and laying as advance received as on the balance sheet date) in response to summon issued u/s 131 could not clarify as to how the price of such shares was fixed at Rs.31/-. 2. Sri Agarwal could not produce the original documents asked for which he stated that the same are maintained at Kolkata Office. 3. During the survey proceedings u/s.133A in the premises of the N.R.International Ltd., no books of account/documents/evidences were found with regard to the said share transaction. With the above background, the Id. A.O. concluded that all the above 5 appellants have not proved the identity, genuineness and creditworthiness of the creditors and considered the payment received against sale of shares as unexplained cash credit u/s 68 of the Income Tax Act, 1961. In this regard, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e copy of the annual return filed for the AGM held on 29.09.2008 is enclosed as Annexure - 9. 6. The company is assessed since inception at Bhubaneswar its PAN is AADCS7760D. 7. Sri S.K. Dalmia resides at Bhubaneswar and is also assessed in Bhubaneswar and Sri D.D. Agarwal resides at Cuttack and also assessed at Cuttack. 8. All of them are\established business men of their locality and assessed to Income Tax since more than three decades under Odisha circle. 9. In 2007 dispute arose between Sri S.K. Dalmia Group and Sri D.D. Agarawal Group. 7. The CIT(A) after considering the submissions of the assessee confirmed the order of the Assessing Officer. The observations of the CIT(A) in the case of Sadhana Dalmia are as under: I have considered the matter with reference to the materials on record. I have also gone through the assessment order and the written submission of the assessee. It is a fact that the assessee has not been able to prove the identity of the company M/s. N. R. International Ltd. from whom the advance was allegedly received for sale of shares of Surya Sponge Iron Ltd. There was a survey operation conducted U/S.133A in the premises of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent year cannot be a ground for not taxing the unexplained cash credits u/s.68. The above decision of the Hon'ble Supreme Court cannot be interpreted in the manner in which the assessee interprets the same. Similarly!, the decision of the Hon'ble Apex Court in the case of CIT v. Durga Prasad More cannot help the assessee in any manner so far as addition u/s.68 is concerned. This decision rather supports the action of the AO. In the case of Smt. Harshila Chordia 298 ITR 349, the Hon'ble Rajasthan High Court opined that addition u/s.68 cannot be made in respect of the amount which was found to be cash receipt from the customers against which delivery of goods was made to them. 1 wonder how this decision can help the assessee. M/s. N. R. International Ltd. is not a regular customer of the assessee and the assessee is not involved in any trading activities with that company on a regular basis. The decision of the Hon'ble Rajasthan High Court was delivered on a completely different set of facts and clearly not applicable to the case of the assessee. The facts in the case Ghai Lime Stone Company decided by the Hon'ble M. P. High Court 144 ITR 140 are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated advance against sale from shares in M/s. Surya Sponge Iron Ltd., On these facts, it was his submission that the return of income for assessment year 2009-2010 was filed by the assessee as under: Name of the assessee Date of return Sadhana Dalmia 20.7.2009 Gangol Vincom (P) ltd., 22.8.2009 Ahinsa Vinimay Pvt Ltd. 22.8.2009 Surendra Kumar Dalmia 20.7.2009 Dewdrops Merchants P.ltd. 22.8.2009 11. These returns were processed and accepted by the department and no notice u/s.143(2) of the Act was issued on or before 30.9.010. Thus, the returns of income attained finality and were abated on the date of search conducted on the assessee on 12.2.2013. As the assessment u/s.153A of the Act vide order dated 12.2.2013 has been made on the basis of books of account of the assessees without reference to any search material found during the course of search, the additions made cannot be sustained in law in view of the decision of Hon ble Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143 (Bom) 7) Pr. CIT vs. Dharmapal Premchand Ltd., in ITA No. 512, 513 514/2016 order dated 21.08.2017(Delhi) 15. Coming to the facts of the case under appeal, it is observed that all the assessees had duly disclosed the receipt of advance which is under appeal in their regular books of account. The assessees claimed to have sold shares against these advances in the immediately succeeding assessment year i.e. 2009-2010 and have also paid capital gains tax on the gains derived on sale of such shares. It is not in dispute that the related long-term capital gains have been also accepted as genuine by the department in the assessment for the assessment year 2009-2010. Ld D.R. could not point out any material which was unearthed because of the search and which shows that the advances in question were not genuine in respect of which addition was made by the Assessing Officer and confirmed by the CIT(A). Thus, it is observed that the additions in question were not based on any search material. Respectfully following the above cited decisions, in our considered view, additions so made de hors search material is unsustainable. We, therefore, delete the additions made in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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