TMI Blog2023 (3) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of search about providing accommodation entries. This statement was also recorded in case of other assessees. The statement originally made by the assessee was retracted. Whether on the basis of statement made by the assessee any absence of any other incriminating material, addition can be made or not in concluded assessment years? - The answer has been given by the Hon'ble Delhi HC in case of PCIT vs. Best Infrastructure (India) (P.) Ltd.[ 2017 (8) TMI 250 - DELHI HIGH COURT] wherein the question of law framed held that the addition made under Section 68 of the Act on account of statement made by the Assessee's Directors in the course of search under Section 132 of the Act were rightly deleted by the ITAT. Having regard to the materials seized in the course of search under Section 132 and the statements made on behalf of the Assessee, the assumption of jurisdiction under Section 153A of the Act and the consequent additions made by the AO are not justified. Statements under Section 132(4) of the Act do not by themselves constitute incriminating material. See CIT v. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and CIT v. Continental Warehousing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed for statistical purposes. Validity of reopening of assessment - AY 2007-08 - HELD THAT:- Reopening has been made on the basis of reasons recorded by the learned assessing officer wherein the information is received from the investigation wing . Further search was carried out in case of Shri Gautam Jain and others in his group. It was found that assessee is part of that group. We find that there is a tangible material available with the learned assessing officer to reopen the assessment in case of the assessee. In view of this, we do not find any infirmity in the order of the learned assessing officer in reopening the case by issuing notice under section 148 of the act. The learned CIT-A has also confirmed the same for the reason that the learned assessing officer has tangible material. Therefore, all the grounds challenging the reassessment proceedings are dismissed. - ITA No. 1397/Mum/2019, ITA No. 1398/Mum/2019, ITA No. 2269/Mum/2019, ITA No. 2270/Mum/2019, ITA No. 2271/Mum/2019, ITA No. 2272/Mum/2019, ITA No. 2273/Mum/2019, ITA No. 2274/Mum/2019, ITA Nos. 2275 2276/Mum/2019 Shri Prashant Maharishi, AM And Shri Kuldip Singh, JM For the Assessee : Mr. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessed Income Addition made by the AO 1. 2008-09 2,74,000 2,05,12,220 2,02,38,223 2. 2009-10 3,79,720 3,49,33,888 3,45,54,168 3. 2010-11 5,61,580 2,79,25,630 2,73,64,051 4. 2011-12 5,87,600 3,55,84,330 3,49,96,734 5. 2012-13 5,32,810 1,90,49,300 1,85,16,494 6. 2013-14 8,21,590 2,36,25,530 2,28,03,935 7. 2014-15 7,92,310 2,31,04,110 2,23,11,796 08. In the assessment order, the learned Assessing Officer was of the view that the statement of Mr. Gautam Bhanwarlal Jain was recorded under Section 131(1A) of the Act on 16th October, 2013, where the assessee failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enhancement was made in case of Ganesh Gems as there is no transaction for that year. The learned CIT (A) tabulated the commission income with respect to these three proprietary concerns of the assessee from A.Ys. 2009-10 to 2014-15 and also accumulative enhancement of ₹20,53,87,487/- was made for all these years. Before the learned CIT (A), the assessee reiterated all the submissions made before the learned Assessing Officer. Thus, a consolidated order for A.Ys. 2008-09 to 2014-15 was passed on 30 November 2018. 011. Assessee is in appeal in all these years before us. 012. At the time of hearing, assessee filed an additional ground of appeal stating that the addition is made in all these years without any incriminating material as well as without discovering any undisclosed income or assets. Assessee relied on several judicial precedents and mainly in case of Smt. Kalpana Mukesh Ruia Vs DCIT of co-ordinate Bench in ITA No. 6519 to 6521/Mum/2019 dated 31st December, 2020. Assessee also filed a consolidated chart of grounds of appeal. 013. The assessee has raised additional ground as under:- 1. The learned Assessing Officer has erred assuming jurisdiction under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case, search was initiated u/s, 132 of the Act on the assessee company and a statement of Shri. Gautam Bhanwarlal Jain, Director of M/s. Karishma Diamond Pvt Ltd i.e. assessee company was recorded u/s. 131(1A) of the Act on 06.10.2013 and u/s. 132(4) of the Act at the time of PO operation on 11.10.2013 and he categorically admitted that no actual business was being conducted by the company and the company was only paper concern engaged in providing accommodation entries. Thus, incriminating document including recording of a statement under section 132(4) itself presuppose that there is a search on the assessee and sec 132(4) being a part of search, such statement becomes a part of search. Therefore, the notice u/s. 153A of the Act was issued by AO is valid and objection of validity of issuance of notice under section 153A, is baseless and liable to be rejected. 4. In respect of additions made without any incriminating documents found during search proceedings. As per information available and on verification from ITBA, it is gathered that under the PAN of the assessee company, no scrutiny assessment was completed u/s. 143(3) of the Act for any Assessment Year in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is submitted that the word incriminating is neither used in section 153A nor defined in the statute and therefore limiting the scope of section 153A only to undisclosed income is not justifiable when as per the section, the AO has to assess or re-assess the total income of the six assessment years. It is the assessment of total income which is required to be made u/s. 153A, which is defined u/s. 2(45) of the Act to be computed as per section 5 of the Act. In support of the above the following judicial pronouncements are relied upon: (a) Decision of Allahabad High Court in Raj Kr Arora 367 DTR 517 wherein it is held that there is no requirement of incriminating material for invoking provision of section 153A. (b) Decision of Andhra Pradesh High Court in case of Gopal Lai Bhadruka 253 CTR 80 wherein it is clearly held that by virtue of section 158B-1 the various provisions of Chapter XIV-B are made inapplicable to proceedings under section 153A/153C. The effect of this is that while the provisions of Chapter XIV-B limit the inquiry by the Assessing Officer to those materials found during the search and seizure operation, no such limitation is found in so far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he never heard of Karishma Diamond Pvt Ltd. Further, it is submitted that on verification of regular ITR of the Assessee company for A.Y.2014-15 it is seen that the same address is mentioned in ITR. Therefore, the contention of the assessee that the search was conducted on different premises other than the address mentioned in PAN and ROI is misleading and far from the realm of the facts. 6. In view of the above, there are no merits in the contentions raised by the assessee and additional grounds raised by the assessee may kindly be dismissed. 7. Submitted for your kind consideration and further direction if any. 016. The learned Authorized Representative submitted that search took place on 3 October 2013 in case of the assessee. Therefore, in concluded assessments addition is required to be made only on the basis of incriminating material found during the course of search. It was submitted that there is no incriminating material found during the course of search. The whole addition is made on the basis of the statements of the assessee and other premises. There is no reference of any incriminating material in the assessment order or in the order of the learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi High Court in case of Filatex India Ltd. Vs. CIT (2014) 49 taxmann.com 465 (Del) dated 14th July, 2014 to submit that the addition need not be restricted or limited to incriminating material found. He further referred to the decision of the Indore Bench of Madras High Court in CIT vs. Tollaram Hassomal (2008) 298 ITR 22 dated 10th March, 2006, against the admission of additional ground. 018. We have carefully considered the rival contentions and perused the orders of the lower authorities. First, we determine that what are the concluded assessments before the date of search are. The date of search is 3 October 2013. Therefore, assessment proceedings up to A.Y. 2013-14 were concluded and not open on the date of search i.e. 3 October 2013. However, for A.Y. 2014-15 is a pending assessment as on the date of search and therefore, that shall abate. Therefore, in case of this assessee the addition if any to be made up to A.Y. 2013-14 shall be based on incriminating material found during the course of search. For A.Y. 2014-15, the assessment would be made under Section 143(3) read with section 153A of the Act on the basis of information contained in the return of income as well as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not justified. Further, in case of PCIT vs. ...similar view was taken following the decision of Best Infrastructure (India) (P.) Ltd. (supra). Recently in the case of PCIT vs. Pilot Industries Ltd. [2023] 146 taxmann.com 233 (Delhi) dated 19th October, 2022, the addition made on the basis of the statement of the assessee under Section 132(4) of the Act was not considered as incriminating material. Further, the co-ordinate Bench in ITA No. 4223/Del/2018 in ACIT vs. M/s Kuber Khadyan Pvt. Ltd. dated 26th March, 2021, deleted the addition based upon the admission under Section 132(4) of the Act, holding that mere statement is not a incriminating material. Based on which addition can be made in the hands of the assessee. 021. Similarly, the co-ordinate Bench in ITA No. 332/Del/2017 in case of Brahmputra Finlease Pvt Ltd dated 29th December, 2017, has also categorically held that the statement recorded under Section 132(4) of the Act do not constitute an incriminating material. 022. The learned Departmental Representative has relied on the decision of the co-ordinate Bench in case of M/s Skyway Infra Projects Pvt. Ltd. (supra). The leading decision of the Hon'ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y holding that the assessee has carried on the activities of accommodation entry providers and accordingly in case of his proprietary concern M/s believed diamonds the commission income was calculated at 97,89,370/- and in case of Parshwanath Gems commission income of ₹ 3,396,463 and Shri Ganesh James of ₹ 8,059,203. 026. The addition has been made in case of the assessee based on the statement of the assessee as well as several other persons. Though the books of accounts of the assessee are audited, however the learned assessing officer rejected the books of accounts for the reason that during the course of search the AO did not find any sign of any business activity at the premises, the premises were mostly locked, no physical infrastructure, no documents relating to the concern were found in those premises. Before the assessing officer, the assessee could not produce the evidence that how the material was purchased and sold, how goods have been transported/delivered etc. therefore the learned assessing officer issued notice under section 145 (3) of the act. The assessee contended that the books of accounts of the assessee are audited, the statement based on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showing the correct picture. It is the duty of the assessee to substantiate the transactions of purchases and sales of diamond with proving the chain of the business transaction with proper evidences. The learned AO has also rejected the books of accounts merely on the basis of the statement as well as absence of evidence of carrying on of the business actually by the assessee at the time of search. In view of this facts, we set-aside the issue of determination of the fact of actually carrying on of business by the assessee of purchase and sale of diamonds to the file of the learned assessing officer with direction to the assessee to substantiate that in fact assessee is carrying on the business and not merely an accommodation entry provider. The learned assessing officer is directed to examine the purchase and sales invoices as well as other evidences of each part of the chain of the trading and then decide whether the assessee is engaged in the business or is merely an accommodation entry provider. If the learned assessing officer reaches at the conclusion that assessee is an accommodation entry provider, then necessary action may also be intimated in case of the beneficiaries of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the five appeals of the same assessee involving the similar facts. 038. For assessment year 2007-08 assessee filed its return of income on 16/10/2007 declaring a total income of ₹ 309,324/ . The case was reopened for assessment year 2007-08 recording the reasons that assessee is engaged in the activities of providing accommodation entries as stated in case of Shri Gautam Jain and others. In this case, while framing the assessment order, the assessing officer is estimated net commission income of 0.5% on the total sales of ₹ 1,328,154,228/ . The assessment order under section 147 read with section 143 (3) of the act was passed on 27/3/2015. Subsequently on appeal before the learned CIT-A the reopening of the assessment as well as the addition on the merits were upheld by passing a consolidated order for assessment year 2007-08, 2011 12, 2012-13, 2013-14 and 2014-15. The learned CIT-A further made total enhancement of ₹ 46,815,336/ estimating the commission income for all those years. 039. The assessee has challenged the reopening of the assessment as well as the addition on the merits of the case. 040. We have heard the rival contentions and find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 046. Accordingly, all these three appeals of the assessee are allowed for statistical purposes. ITA Nos. 2275 2276/Mum/2019 (Assessment Year 2014-15 2013-14) [Two Appeals] Frontline Diamond Put Ltd 047. These are the two appeals of the assessee filed against the Consolidated appellate order passed by the learned CIT-A on 31/1/2019 wherein the addition made by the learned assessing officer with respect to the commission income on by the assessee at the rate of 0.5% on total turnover and further enhanced by the addition of ₹ 3 and 67,26,374/ on account of commission income on accommodation entries. 048. Both the parties confirmed that the facts are identical to the case of these Mr. Gautam Jain for assessment year 2014-15. 049. We have carefully considered the rival contention and find that we in the case of Mr. Gautam the new set-aside the issue back to the file of the learned assessing officer for assessment year 2014-15 to decide the issue afresh, with similar direction we set-aside both these appeals to the file of the learned assessing officer. 050. In the result, both the appeals are allowed for statistical purposes. ITA No. 2269/M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 the addition is made on the basis of the statements, which have been retracted, by the assessee and several other persons. Identically in case of Mr. Gautam Jain we have held that in absence of any incriminating material found during the course of search, no addition can be made in the hence of the assessee in concluded assessment. The assessment year 2012-13 and 2013-14 are concluded assessment. Therefore, for the reasons given by us in deciding the appeal of Mr. Gautam Jain, we allow the appeal of the assessee as the addition has been made by the learned a 7 Assessment years in appeal is tabulated as under:- assessing officer without any incriminating material. 058. For assessment year 2014-15, we set-aside the whole issue back to the file of the learned assessing officer in case of Mr. Gautam Jain to decide the income of the assessee afresh. With similar direction we set-aside the appeal of the assessee back to the file of the learned assessing officer. 059. In the result appeal filed by the assessee for assessment year, 2012-13 and 2013-14 are allowed and appeal for assessment year 2014-15 is allowed for statistical purposes. 060. In the result, all the 50 appeals invol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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