TMI Blog2023 (2) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... that the actual consideration was more than the consideration shown in the books. In this regard, ld. Counsel of the assessee referred to catena of case laws. We find that this aspect is fully applicable in the assessee s case. No evidence whatsoever is on record that actual consideration paid is any how suppressed. Hence, the assessee s case is covered on the touchstone of Hon ble Apex Court in the case of K.P. Varghese (supra). Apart from the value of investment, another addition made by the AO is with regard to credit card payments. In this aspect, ld. CIT (A) has given a finding that there is no incriminating material and in this view of the matter, addition is not sustainable on the touchstone of Hon ble Delhi HIgh Court in the case of Kabul Chawla (supra). - Decided against revenue. Whether assessment should have been done under section 153C and not under section 153A ? - Section 153C permits documents found from another search to be sent to the AO of that person after due satisfaction and then on the basis of those documents assessment u/s 153C can be done. In the present case, material found at the premises of Rajiv Gupta has been taken as if they are material found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 2. On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs.26,14,151/- on the account of unexplained HDFC credit card payment on the ground that no incriminating documents were found in the search proceedings without appreciating the fact that the scan copy of the incriminating information was clearly apprised by the investigation wing in the appraisal report. 3. Whether on facts and in the circumstances of the case, Ld. CIT(A) was legally justified in allowing relief relying on the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (2015) 380 ITR 573 restricting additions only related to the incriminating documents found during search and seizure operations u/s 132 of the Income Tax Act, 1961 whereas Hon'ble Supreme Court has admitted SLP vide Diary No.37848/2015 in the case of APAR Industries Ltd. decided by Hon'ble Bombay High Court in ITA No. 1669 of 2013 dated 08.05.2015 which is a lead case tagged with more than 115 cases on the issue of restriction of additions only to incriminating material found during search. 4. That the order of Ld CIT (A) is perverse, erroneous and is not tenable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d post-search, it is found that assessee and Shri Rajiv Gupta are co-directors in many companies. In many of these companies, there were substantial amount in the share premium reserves which have been utilized for making investment in immovable and movable properties. AO noted that the facts of companies owned by the assessee wherein substantial investments have been made by the assessee were confronted during the course of assessment proceedings vide questionnaire. Assessee responded only that Rajiv Gupta is not my brother. It was further stated that there was substantial amount of premium in various companies referred to. It was submitted that the question is also not relevant so far as 153A assessment is concerned. AO opined that from the submissions, it is clear that assessee has nothing to explain. Further, assessee has not denied his shareholdings in the companies. Hence AO was of the opinion that a part of assessee in the shareholdings in those companies is held to be unexplained in the absence of any explanation and documentary evidence supplied by the assessee during the course of assessment proceedings despite providing sufficient opportunities. Thereafter, the AO made v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness associate sh. Rajiv Gupta. The company now owns the properties located at Triton Mall Commercial Complex, F-40A, First Floor, Khasra No. 1/1 Village Bassi, Sitarampura, Tehsil Sawal Jaipur, Jhotwara Road, Jaipur and Mitral's Mega Mall, M-3, Sector 25, Part II, HUDA Panipat. The shares from dubious entities went acquired by assessee Shri Rajiv Gupta in 2010-11 at Rs. 10 per share. The book value of per share works out at Rs.90.77. The dubious entities have only charged the face value. This is the means resorted to introduce own unaccounted money through layering 326000 shares have been acquired Rs.10/- per share (Rs.3260000/-). The actual worth of these shares as per the books value of these shares in Rs.295,92,228/-. The differential amount of Rs.263,32,228/- represents unaccounted investment by the assessee. During the course of assessment proceedings, the assessee was asked to explain as to why Rs.131,66,114/- (i.e. 50% of Rs.263,32,228/-) may not be considered to be your income for A.Y. 2011-12 on account of unaccounted investment. In response, assessee furnished no reply. Under the circumstances and in view of the facts of the case, it is concluded that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the shares were transferred to Cham Gupta and Atul Gupta in 2010. The book value of per share works out at Rs.137.5. These shares were acquired at Rs. 10 per share. These entities have charged only face value. This is the way, Cham Gupta Atul Gupta have introduced their unaccounted money through layering. 195000 shares acquired at Rs. 10/- per share, total investment was of Rs.1950000/-. The actual worth of these shares as per book value is Rs.268,16,200/-. Thus the differential amount of Rs.248,66,200/- represents to unaccounted investment made by the assessee and Charu Gupta. During the course of assessment proceedings the assessee was specifically asked to explain as to why Rs.124,33,000/- may not be considered unaccounted investment in each case. In response, assessee furnished no reply. Under the circumstances and in view of the facts of the case, it is concluded that Rs.124,33,000/- is being treated to be unexplained investment within the meaning of provisions of section 69 of the IT Act 1961. (Addition of Rs.124,33,000/-) Since the assessee has failed to comply with the contents of the notices questionnaires issued from time to time and the assessee fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introduce own unaccounted money through layering 375000 shares have been acquired at Rs.10/- per share (Rs.3750000/-). The actual worth of these shares going by the book value of these share is Rs.36623377/-. The differential amount of Rs.32873377/- represents unaccounted investment of the two individuals. With regard to the above, you are therefore, required to explain as to why Rs.161,14,286/- [i.e. 50% 328,73,377/-) may not be considered to be your income from undisclosed sources which represents to unaccounted investment for AY-2011-12. Addition of Rs.161,14.286/- Since the assessee has failed to comply with the contents of the notices questionnaires issued from time to time and the assessee failed to disclose his true and correct income which tantamount to concealment of particulars of his income, therefore, a penalty proceedings u/s 271(1)(c) is being initiated separately. 4. Perusal of AIR/ITS data revealed that the assessee had made HDFC credit card payment of Rs.6,14,151/- and Rs.20,00,000/- towards purchase of mutual funds. Assessee was required to explain the sources of these payments vide questionnaire dated 28/08/2018 and subsequent questionnaires; but, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. and M/s Radical Infratech Pvt. Ltd. totaling to Rs.7,99,55,358/-. He noted that according to the AO, the assessee has purchased shares of the said companies at a price which is much less than the book value and, therefore, the differential amount, i.e. the difference between the book value and the purchase price represent the unaccounted investment made by the assessee. Ld. CIT (A) noted that assessee has submitted that during the course of search, no incriminating evidence or in fact any other evidence was found to even suggest that the assessee had paid any money over and above the purchase price paid by the assessee through account payee cheques. The assessee relied upon the decision of Hon ble Delhi High Court in the case of Kabul Chawla (2016) 380 ITR 573 (Delhi) for the proposition that the proceedings for the impugned assessment year on the date of search were deemed to have been completed and, therefore, unless and until any incriminating documents were found relating to the addition, no addition could be made in the assessment. The assessee has also stated that seized documents were found from the premises of Rajiv Gupta and, therefore, it was outside the scope of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be incriminating and indicative of undisclosed income in respect of purchase of shares made by the assessee. Hence, ld. CIT (A) observed that all the facts on record of the AO were placed before him including AO s remand report and these have no reference to any document that is suggestive of any undisclosed income having resulted consequent to this transaction of purchase of shares. Hence, he held that neither the assessment order nor the remand report mentioned that the addition regarding the undisclosed investments in shares has been made in this case on the basis of incriminating document seized during the course of search. Thereafter, ld. CIT (A) referred to the ratio of judgment of Hon ble jurisdictional High Court in the case of Kabul Chawla (2016) 380 ITR 573 (Delhi). Referring to the above, he held that this decision has lucidly pronounced that in the case of completed assessments, it may be interfered only on the basis of some incriminating material found during the course of search. Ld. CIT (A) also referred to the decision of Hon ble Delhi High Court in the case of Pr.CIT (Central)-I vs. M/s. SMC Power Generation Ltd. ITA 406/2019. Ld. CIT (A) concluded as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument was found, hence ld. CIT (A) concluded as under :- I have perused the documents referred to by the AO filed before me by the appellant. None of the documents relates to credit card payments or mutual fund purchases in respect of which, addition of Rs.26,14,151/-has been made. The AO has also not furnished any document post search which can be held to be incriminating and indicative of undisclosed income. The AO has stated in his order that perusal of the AIR/ITR data revealed that the appellant has made credit card payments and mutual fund purchases. 7.21. Hence, the assessment order and the remand report have no reference to any document that is suggestive of any undisclosed income relating to credit card payments and mutual fund purchases in respect of which, addition of Rs.26,14,151/- has been made. Hence, respectfully following the aforesaid judgments, I hold that there is no incriminating document found during the course of search relating to the addition regarding payments made through HDFC Credit card and mutual fund purchases totaling to Rs.26,14,151/- and, therefore, the said addition stands deleted and Ground No.9 is allowed. 8. Against this order, R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gulshan Kumar [2002} 257 ITR 703 (Delhi High Court)-para 21 b. CIT v. Naresh Khattar, HUF [2003) 261 ITR 664 (Delhi High Court)- para 8 c. JCITv. Sri Bithalnath Malia ITA No. 15/KOL/2013 (Kolkata Trlbunal)-para 10 d. DCIT v. Smt Nirmal Rani ITA No. 2786/ DEL /2010 (Delhi ITAT)- para 15 to 22 e. Dilavar S Lakhani v.ITO ITA No. 5158/MUM/2019 (Mumbai ITAT)- para 6,7 f. DCIT v. Kalawatl Aggarwal ITA No. 112/DEL/2010 (Delhi ITAT)- para 11 g. ACIT v. Sharad Chaudhary [2015) 55 taxmann.com 324 (Delhi- TrIb.)-para 28 h. Omega Estates v. Income-tax Officer [2007) 106 ITD 427 (Chennai ITAT)-para 18 i. ITO v. Dua Auto Components (P.) Ltd. [2011) 16 taxmann.com 58 (Delhi) -para 6.4 and 6.5 12. Ld. Counsel further submitted that there is also a settled law that the AO cannot substitute the selling price determined between a willing buyer and a willing seller merely based on book value or fair market value. In this regard, reliance is placed on the following case laws :- a. CIT v. Smt. Nilofer I. Singh [2009] 309 ITR 233 (Delhi HC)-para 4,7,10 b. Dev Kumar lain v. Income-tax Officer [2009) 309 ITR 240 (Delhi HC)-para 8 c. Arjun Malhotra v. Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has given a categorical finding that there is nothing on record which suggest that assessee has incurred higher expenditure on purchase than reflected in the books of account. In this regard, ld. CIT (A) placed strong reliance upon the decision of Hon ble jurisdictional High Court in the case of Kabul Chawla (supra) which is fully applicable. 16. Apart from the above, another limb of the case is that ld. Counsel of the assessee has referred to the decision of Hon ble Apex Court in the case of K.P. Varghese (supra). The submission in this regard is that AO made these additions in the hands of Rajiv Gupta and Atul Kumar Gupta on the ground that the assessee has purchased share of 6 companies at the face value of Rs.10 whereas the book value of these shares on the date of purchase was much higher. Now, in this regard, mere such submission cannot fortify the case of the assessee. In the case of K.P. Varghese (supra), Hon ble Apex Court duly expounded that there must be evidence to show that the actual consideration was more than the consideration shown in the books. In this regard, ld. Counsel of the assessee referred to catena of case laws. We find that this aspect is fully appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent and without prejudice to each other. 21. Brief facts on this issue are as under :- Assessment u/s 153A rws 143(3) of the IT Act has been completed by the Assessing Officer at an income of Rs.30,45,120/- as against returned income of Rs.13,42,260/-. Facts of the case are that there was a search upon the assessee on 21/3/2017 and during the course of search cash, jewellery and some foreign currency was found. The Assessing Officer on the basis of the appraisal report and AIR ITS data had treated payments made on account of credit card of Rs.6,52,857/- as income of the assessee u/s 153A assessment. During the course of search of Agson group and Rajiv Gupta annexure A4 to A9 was seized, page 24 of the annexure contained a ledger account of Dildar (atul sir) which contains payment received by the assessee during the year under consideration of Rs.10,50,000/- in cash. The appellant had taken the plea before the AO that the paper was in the name of dildar and it also did not relate to the appellant. It was also stated in the reply by the appellant before the AO that in any case this paper was not found during his search and therefore this cannot be considered in his asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t search was conducted on the assessee and assessment cannot be made u/s 153A because of documents found from Rajiv Gupta. Hence it has been pleaded that as no document was found from the assessee, assessment u/s 153A does not stand. Further, ld. Counsel of the assessee reiterated that authorities below are in mistaken belief that assessee and Agson Global are related parties which is not correct. It has been pleaded that Rajiv Gupta and the assessee have no relationship with Agson Group. He claimed that since independent searches were conducted in the case of assessee and Rajiv Gupta and the materials were found from Rajiv Gupta, these cannot be taken as material u/s 153A in the hands of the assessee. He further submitted that AO has been in the mistaken belief that Atul Kumar Gupta is the brother of Rajiv Gupta. He pleaded that Rajiv Gupta is a separate entity and separate search was conducted on him. Hence, ld. Counsel of the assessee pleaded that the material found from the premises of Rajiv Gupta cannot be directly considered u/s 153A in the hands of assessee. If at all, the assessment should have been conducted u/s 153C after due satisfaction which has not at all been done. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below. 26. Upon careful consideration, we note that addition has been made on the assessee u/s 153A assessment on the basis of documents found from a separate search at Rajiv Gupta. Hence, the plea of the assessee is quite correct that the assessment should have been done under section 153C and not under section 153A. Section 153C permits documents found from another search to be sent to the AO of that person after due satisfaction and then on the basis of those documents assessment u/s 153C can be done. In the present case, material found at the premises of Rajiv Gupta has been taken as if they are material found during search at the assessee, Atul Kumar Gupta, which is not at all correct. Hence, the very basis of addition is missing. The assessment has been made u/s 153A and not u/s 153C, and this has led to a fatal error in the assessment order which is not curable. Moreover, as rightly contended by the ld. Counsel of the assessee that the presumption u/s 132 (4A) cannot be extended to material found at somebody else place and de hors corroborating documents, these cannot be linked to the assessee. Furthermore, the assessee s plea that assessee s name is nowhere directly men ..... X X X X Extracts X X X X X X X X Extracts X X X X
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