TMI Blog2023 (9) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant to A.Y. 2012-13 and earned capital gains of Rs. 5,96,11,906/-. Thus, during the assessment year, the column Asset does not show either the investment in the immovable property being land or building or both, shares and securities, loans and advances . In the absence of any asset being in possession of the assessee, the Assessing Officer shall not have issued the notice to the assessee for making the addition u/s 153A of the Act . In view of the above, the addition made in the hands of the assessee is liable to be deleted. There is one more reason to come to the conclusion that the Assessing Officer should have made more efforts to bring on record some tangible material besides the statement of the assessee namely, A. Mahesh Reddy to show that the assessee has agreed to pay the profit during the assessment year under consideration and would be ready to forego the claim made by the assessee at assessment stage during the course of original assessment proceedings. The statement given by the assessee or the director of M/s. Twenty First Century Securities Limited, does not bind the assessee unless it is duly supported by the cogent incriminating material and we find mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Act, 1961 (hereinafter referred to as the Act ) was conducted in the case of M/s. AMR India Limited and Others on 02.05.2018. As part of the search operations, the case of the assessee was covered u/s 132 of the Act. Subsequently, the case of the assessee was notified to Central Circle 2(1), Hyderabad vide order of the Pr. Commissioner of Income Tax 1, Hyderabad in F.No. 5/Pr.CIT-1,Hyd/Juris/2018-19, dtd. 18.07.2018. 2. In view of the aforesaid submissions, we, for the sake of convenience, proceed to dispose of all the captioned appeals by a consolidated order but however, refer to the facts in ITA No. 40/Hyd/2023. 3. As all the grounds raised by the assessees in all the appeals are identical, ITA No. 40/Hyd/2023 for A.Y. 2012-13 is taken as lead case and the grounds raised therein are reproduced below: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in upholding the notice issued u/s 153A and the consequent assessment order passed u/s 143(3) r.w.s 153A despite the same being illegal, bad in law, barred by limitation or otherwise void for want of jurisdiction. 2. On the facts and circumstances of the case and in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my case on 02.05.2018 and, as such A. Y. 2012 13 falls beyond the period comprising six assessment years prior to the assessment year relevant to the year of search. Further, no incriminating material, constituting tangible evidence for any escapement of income from assessment for A. Y. 2012-13, was found during the said search operation. In view of this fact, the assumption of jurisdiction u/s. 153 A of the Act for such year is legally unsustainable, Hence, you are requested to kindly drop the proceedings initiated u/s. 153 A for A. Y. 2012-13. Without prejudice to the above prayer and accordingly reserving the rig/it to appeal against such assumption of jurisdiction u/s. 153 A, the return in response to the notice referred to above was filed on 04.07.2019 vide Acknowledgement No. 559646680040719. 4.1. It was the case of the assessee before the Assessing Officer that no incriminating material, constituting tangible evidence for escapement of income was found during the course of search conducted on 02.05.2018 for the assessment year 2012-13, which is beyond the period of 6 years. Therefore, no assessment can be made in the hands of assessee. The Assessing Officer mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion entry of bogus LTCG/STCL. The share brokers have stated in their statements that they have facilitated various paper/bogus entities to trade in the shares of M/s. Twenty First Century India Limited and other penny scrips for providing accommodation entry of bogus LTCG/.STCL. The relevant information is forwarded by the Directorate of Investigation, Kolkata. 1.6 Information received from the Directorate of Kolkata, wherein it is found that the directors / family members / promoters of M/s. AMR Jnia Limited have used penny stock to route their undisclosed income by booking Long Term Capital Gains through a company by name M/s. Twenty First Century (India) Limited managed by Sri Anil Kumar Khemka. Subsequently, a Search and Seizure operation u/s 132 of the Act was conducted in the business premises of M/s. AMR India Limited and residential premises of the directors on 02.05.2018. During the course of search operation, a statement was recorded from Sri A. Mahesh Reddy, Managing Director of M/s. AMR India Limited. 4.4. Besides that, the Assessing Officer also made strong reliance upon the statement of assessee recorded by the officer of the Revenue during the course of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is covered by the decision of Hon'ble Supreme Court and the decision of co-ordinate Bench of the Tribunal that no addition can be made in the hands of assessee as the requirements of the 4th proviso are not fulfilled and for the above said purposes, he has drawn our attention to the order passed by the Mumbai Bench of the Tribunal in the case of Viraj Profiles Limited wherein the Tribunal after discussing about the 4th proviso to section 153A of the Act, has granted the relief to the assessee. It was submitted that the language used in 4th proviso of Section 153A of the Act is parametria similar to the newly inserted section 149(b) of the Act w.e.f. 01.04.2022 whereby the word expenditure and entries in the books of accounts have been added along with others in the definition of Asset . Prior to Amendment : Explanation For the purposes of clause (b) of this sub-section, asset shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. Post Amendment : Section 149(b) : If three years, but nor more than 10 years, have elapsed from the end of the relevant as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence. It was submitted that the statement recorded by Investigation Wing is not an incriminating evidence and therefore, no addition can be made based on such statement. 8.4. Ld.AR further submitted that on merit, the assessee has traded through the stock exchange after paying the necessary STT charges and the gain arose to the assessee was disclosed by the assessee in the return of income filed by him in the normal tax provision and therefore, no addition can be made in the hands of the assessee. Further, it was submitted that the report referred by the ld. CIT(A) at page 74 of his order i.e., No. PKB/AO-97/2009 and PKB/AO-117/2009 dt. 23.09.2009 was not against M/s. Twenty First Century Private Limited. It was submitted that the whole finding of the ld. CIT(A) is based on the SEBI Report dt. 23.03.2009 wherein some penalty was imposed on the trader to an extent of Rs.3 lakhs. Further, it was submitted that the decision relied upon by the ld. CIT(A) in the case of PCIT Vs. Swati Bajaj (supra) is not applicable to the facts of the present case, as there was no report of SEBI in the case of assessee, scrip of M/s. Twenty First Century Limited and further, there was no evidence s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in Para 8.2 to 9.1 had held as under : 8. We have gone through the record in the light of the submissions made on either side. Insofar as the facts and figures are concerned, there is not much dispute. The return of income filed by the assessee for the assessment year 2013-14 on 27/07/2013 was processed under section 143(1) of the Act and notice under section 143(2) of the Act was never issued. By the date of search on 15/11/2018, four years elapsed after the last date for issuance of notice under section 143(2) of the Act in this case. It is also not the case of the Revenue that any incriminating material was found during the search that was considered by the learned Assessing Officer, but made the assessment. In these circumstances, the question that arises for consideration is whether any interference could be made with the concluded assessments while assessing the income under section 153A of the Act, when no incriminating material was found. 9. As stated earlier, the return of income filed by the assessee for the assessment year 2013-14 on 27/07/2013 was processed under section 143(1) of the Act by 30/09/2014. Neither notice under section 143(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned CIT(A) cannot be upheld. We accordingly allow the appeal of assessee. 11. In the present case, admittedly, no incriminating material was referred to by the Assessing Officer in the assessment order and the same is also in the case of ld.CIT(A). Therefore, in our view, no addition can be made in the hands of the assessee in view of the law laid down by the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra). 12. Further, the question that arises is as to whether the information collected by the Director, Investigation from the Brokers in the form of statement etc. form the basis for making the addition in the hands of the assessee or not ? In our view, the answer to that is also No, as no material has been brought to our notice either in the assessment order or in the order of ld.CIT(A) showing that the said brokers in their respective statements have indicated that they had provided the accommodation entries to the assessee. Ironically, the Assessing Officer in Para 7 of his order referred to the statement of Shri Kailash Prasad Dhyawala and also of Anil Kumar. However, in none of the said statements, the name of the assessee or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of six years unless (1) Assessing Officer is in possession of books of accounts and (2) there are other documents or evidence which reveal that income reflected in the form of assets was escaped from assessment. 14. In the present case, the Assessing Officer was neither in possession of books of accounts nor other documents or evidence, at the time of reassessment which shows any escapement of amount reflected in the assets head. Admittedly, the term Asset was defined under Explanation 2, which include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. In the present case, the assessee has purchased 5000 shares on 27.10.2009 and 14.12.2009 of M/s. Astha Tradelink Private Limited for Rs.400/- each. Thereafter, those 5000 shares were converted into 1,90,000/- shares of M/s. Twenty First Century Private Limited and the assessee sold part of the shares in A.Y. 2011-12 relevant to A.Y. 2012-13 and earned capital gains of Rs. 5,96,11,906/-. Thus, during the assessment year, the column Asset does not show either the investment in the immovable property being land or building or both, shares and securities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 16.1. In view of the above, all the legal grounds raised by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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