TMI Blog2024 (2) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of search in terms of share certificates and therefore cannot be used to turn the share certificates as incriminating in nature. Being a case of completed/unabated assessment, in absence of any incriminating material found during the course of search in case of the assessee, the addition so made cannot be sustained and is hereby directed to be deleted. In the result, the ground of the assessee s appeal is allowed. - Shri. Sanjay Garg, JM And Shri. Vikram Singh Yadav, AM For the Assessee : Shri Sudhir Sehgal, Advocate For the Revenue : Smt. Kusum Bansal, CIT DR ORDER PER VIKRAM SINGH YADAV, A.M. : The present appeal has been filed by the Assessee against the order of the Ld. CIT(A)-5, Ludhiana dt. 08/05/2023 pertaining to Assessment Year 2013-14. 2. In the present appeal, Assessee has raised the following grounds of appeal: 1. That the Ld. CIT(A) has erred in confirming the order of Assessing Officer in making the addition of Rs. 99,16,874/- on account of long term capital gain on sale of shares, which was claimed to be exempt u/s 10(38), amounting to Rs. 99,16,874/-. 2. That the Ld.CIT(A) has failed to appreciate that dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by 'contract notes' and no defect have been pointed out in respect of such documentary evidences and all the transactions being through normal banking channel and, thus, there was no basis of making the uncalled for addition. 8. That the Ld. CIT(A() has failed to appreciate the judgment of Jurisdictional ITAT in the case of Sh. Jatinder Kumar Jain and bearing ITA No.338/Chd/2018 and Sh. Sunny Jain in ITA No.1167/Chd/2019, in which, under similar facts and circumstances, the addition on account of long term capital gain on merits have been deleted. 9. That the confirmation of addition on the basis of human probability/surrounding circumstances was uncalled for and against the documentary evidences furnished by the assessee and, as such, the very basis of making the addition is uncalled for. 10. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. Briefly the facts of the case are that the assessee filed his original return of income declaring total income of Rs. 40,93,498/- on 26/07/2013 and in the return of income so filed, the assessee has claimed exemption towards Long Term Cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 shares in lieu of each shares held in M/s Maple Goods (P) Ltd. and accordingly, the assessee received 39950 shares of M/s Access Global Ltd. pursuant to the scheme of amalgamation. Thereafter the AO referred to the report of the Directorate of Income Tax (Inv.), Kolkata dt. 27/04/2015 on accommodation entries of LTCG and stated that the share of M/s Access Global Ltd. and M/s Maple Goods (P) Ltd. resembled the character of Penny Stocks which have been investigated at length by Investigation Wing, Kolkata. 3.5 The AO further referred to the statement of Shri Suresh Khemka, the broker through which the share of M/s Maple Goods (P) Ltd. were purchased by the assessee which was recorded on oath on 13/03/2015 by Investigation wing, Kolkata wherein he has admitted that he has issued kachha panna (purchase contract notes) of M/s Maple Goods (P) Ltd. and the name of the assessee found mentioned in the list of the client to whom said contract notes have been issued. 3.6 The AO thereafter referred to the financial data of M/s Maple Goods (P) Ltd. and stated that the credentials of M/s Mapple Goods Pvt. Ltd. were not satisfactory as it has no fixed assets, no turnover, no profitabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and companies, both having dubious credentials. The timing of the recording of the statements after the transaction as well as the content of statements were found important by the AO as the same shows that both M/s Maple Goods (P) Ltd. and M/s Access Global Ltd. were penny Stocks and LTCG earned thereon were bogus in nature. 3.9 Regarding assessee s contention that no incriminating material was found during the course of search, the AO stated that the said contention is not tenable as the perusal of the contents mentioned at page no. 1 to 182 of Annexure - A seized from Locker no. 194, HDFC Bank shows that the character of certificate is itself incriminating as it has been issued by unauthorized brokers indulging into illegal trading. The AO accordingly held that the LTCG income of Rs. 99,16,874/- disclosed in the return of income by Shri Vibhav Jain in reality represented introduction of assessee s unaccounted money, that the assessee s alleged transaction of purchase and sale of shares were not real, that the assessee has only attempted to present as fact that the amount received from the stock broker represented sale proceeds of shares, however, in reality, there was no genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09/2017 was also placed on record. 4.5 It was further submitted that since there was no response to the said letter, it can be safely held that there was no incriminating material that was found and sized by the Income Tax Department during the search in case of the assessee. Therefore, in view of the fact that there was no abated assessment as on the date of search for the impugned assessment year, the assessment completed under section 153A r.w. 143(3) is illegal and bad in law in absence of any incriminating material found during the course of search. 4.6 It was further submitted that the completed assessment can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which is clearly absent in the present case. Regarding finding of the AO that the character of certificate as found in the locker is itself incriminating material as it has been issued by the unauthorized broker indulging into an illegal trading, it was submitted that it is only an allegation and that the AO has not brought any material on record to prove this contention. 4.7 It was further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same shows that the AO was bent upon to make the additions with illogical methods which are not permitted in the eyes of law and treating the genuine LTCG as bogus. 4.9 It was further submitted that the assessee has given the complete details and documentary evidences on the issue of long term capital gains. Even the information has been obtained from Calcutta Stock Exchange's Website Portal. These evidences have been ignored by the AO and the reasons are best known to him. It shows that the AO has made the additions for the sake of additions which are not permitted in the eyes of law. Even the correct facts of the case have not been given in the assessment order; rather distorting facts have been mentioned in the assessment order. The arguments given to the AO during the proceedings have also not been considered. The AO has also tried to distort the facts by making allegations, which are simply allegations and no documentary evidences have been placed on records. 4.10 It was further submitted that the following facts are to be considered while calculating the long term capital gains: a) The shares of Maple Goods Private Limited Company were purchased in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of shares have been made through Recognized Stock Exchange which is regulated by SEBI on real time basis. It is not possible to sale/purchase the shares of any company on the stock exchange in variance to the prevailing market price at any point of time. Further, the share price is always determined by the market mechanism which is transparent. Therefore, the Long Term Capital Gain raised from such sale of shares is exempt under section 10(38) of the Income Tax Act, 1961. It was accordingly requested to accept the contention of the assessee and delete the addition made under the wrong notion of Law. 5. The submissions so filed by the assessee alongwith the documents placed on record, were thereafter sent by the ld CIT(A) to the AO for seeking his comments. 5.1 Regarding the assessee s contention that in absence of any incriminating material, the assessment completed under section 153A r.w.s 143(3) was illegal, the AO in his remand report submitted that the same cannot be accepted and pointed out that at pages no. 35-51 and 177, 178 179 of Annexure-A seized from locker no. 194, HDFC Bank, Ludhiana, contains details of share for which bogus LTCG has been claimed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention so raised by the assessee is without merits and deserves to be rejected. 6. The assessee in his rejoinder submitted that LTCG stood disclosed in the A.Y. 2013-14 for which the computation of income had already been submitted as part of the paper book and even in the original return of income. LTCG on the shares of M/s Access Global Ltd. stood disclosed and in the computation also the date of the purchase is in F.Y 2011-12 and purchase and sale price have already been mentioned therein and the assessment was duly framed under section 143(1) of the Act and thus it was a case of an unabated assessment. 6.1 It was submitted that the said disclosed income / documents cannot be treated as incriminating material. It was further submitted that there is no evidence or document which was found or noticed to suggest any receipt outside the books of accounts and the said capital gain has been duly reflected in the computation of income and the purchase of the shares were made through banking transactions as per copy of the HDFC Bank duly submitted and placed on record. It was further submitted that even the copy of account duly confirmed from the books of Shri S.K. Khemka was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions so filed by the assessee, the remand report and comments of the AO and the rejoinder so submitted by the assessee were considered by the Ld. CIT(A) and he passed the impugned order dated 08/05/2023. 7.1 As per the Ld. CIT(A), on perusal of the assessment order and remand report of the AO dt. 05/02/2020, it clearly brings out on record that the share certificates and the contract bills were seized from the bank locker no. 194, HDFC Bank on the basis of which bogus LTCG have been claimed by the assessee. It was held by the Ld. CIT(A) that the said documents are incriminating in nature as they have a direct bearing on the estimation of correct income of the assessee. 7.2 It was further stated by the Ld. CIT(A) that statement of the broker, Shri Suresh Kumar Khemka was recorded on oath on 13/03/2015 by Investigation Wing, Kolkata in which the said broker admitted providing bogus LTCG entries to the assessee. The said statement was corroborated by the evidence in nature of shares seized during the course of search. Thereafter the Ld. CIT(A) referred to an article published in Taxman and stated that the documents seized from the assessee i.e, share certificates and cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain article reported in a tax journal is without any basis and substance as it has been held in various judgments of Hon ble High Courts / Tribunal that the mere statement cannot be held to be incriminating material found during the search and further the assessee had never conceded during the course of search that such claim of LTCG was bogus. 9.3 Elaborating his arguments further, the Ld. AR submitted that the AO has stated that share certificates and contract notes on account of purchase of shares of M/s Maple Goods (P) Ltd. which was found from the locker of Shri Sunil Kumar Jain, father of the assessee is in the nature of incriminating material. It was submitted that firstly, the said share certificates and contract notes were not found from the possession of the assessee. Secondly, the share certificates and the contract notes relating to purchase of shares cannot be anyway an incriminating material. Rather the said documents support the case of the assessee that the purchase of shares is genuine and is backed by proper documents. Further regarding the various statements of Shri S.K. Khemka and Shri Sunil Kumar Kayan, and other persons referred to by AO as well as by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said judgment must be followed and implemented. Further reliance was placed on the decisions Pr. CIT Vs. S.S. Con build Pvt. Ltd. 455 ITR 506 (SC), Pr. CIT Vs. King Buildcon Pvt. Ltd. in Civil Appeal No. 4326/2023 dt. 10/07/2023 (SC), DCIT Vs. U K Paints Overseas Ltd. reported in [2023]150 taxmann.com 108 (SC) wherein the legal proposition so laid down in Abhisar Buildwell has been subsequently followed and reiterated by the Hon ble Supreme Court. Further, our particular reference was drawn to decisions in case of Pr. CIT Vs. Shardaben Arvindbhai Patel [2023] 152 Taxmann.com 535 (Guj HC) and Pr. CIT Vs. Ms. Kavita Agarwal [2022] 143 Taxmann.com 404 (Del HC) wherein the said principle has been followed by the Hon ble Gujarat and Delhi High Court in context of long term capital gains on sale of shares. 9.8 It was further submitted that under identical set of facts and circumstances, in case of group cases, namely Shri Ashish Jain, Shri Akhil Jain and Shri Bipin Jain (ITA no. 352/CHD/2023 others dated 23/01/2024), wherein similar additions were made by the AO by denial of claim of LTCG basis identical nature of material found from the bank locker of the father of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, no addition can be made in the hands of the assessee in case of unabated assessment as on the date of search. It was submitted that in the instant case even though it is a case of unabated assessment as on the date of search, the fact remains that incriminating documents in the form of share certificates and the contract notes has been found during the course of search and where read alongwith the statement of Shri Suresh Kumar Khemka, the same are clearly incriminating in nature. 10.3 It was submitted that once the AO was seized of the said statement and the documents have been physically seized and found during the course of search, the AO was well within his jurisdiction to reassess the income and making the addition as has been done in the instant case. 10.4 Further ld CIT/DR relied on the findings of the AO as well as the Ld. CIT(A). 10.5 It was accordingly submitted that there is no basis in the contentions so advanced by the Ld. AR that no incriminating material has been found and seized during the course of search in the case of the assessee and the addition so made by the AO therefore has been rightly sustained by the ld CIT(A) and the same should be confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation other material, though no incriminating material is found during the search even in respect of completed/unabated assessments. 7. At the outset, it is required to be noted that as such various High Courts, namely, Delhi High Court, Gujarat High Court, Bombay High Court, Karnataka High Court, Orissa High Court, Calcutta High Court, Rajasthan High Court and the Kerala High Court have taken the view that no addition can be made in respect of completed/unabated assessments in absence of any incriminating material. The lead judgment is by the Delhi High Court in the case of Kabul Chawla (supra), which has been subsequently followed and approved by the other High Courts, referred to hereinabove. One another lead judgment on the issue is the decision of the Gujarat High Court in the case of Saumya Construction (supra), which has been followed by the Gujarat High Court in the subsequent decisions, referred to hereinabove. Only the Allahabad High Court in the case of Pr. CIT v. Mehndipur Balaji [2022] 447 ITR 517 has taken a contrary view. 7.1 In the case of Kabul Chawla (supra), the Delhi High Court, while considering the very issue and on interpretation of section 153A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts can be interfered with by the AO while making the assessment under section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 7.2 Thereafter in the case of Saumya Construction (supra), the Gujarat High Court, while referring the decision of the Delhi High Court in the case of Kabul Chawla (supra) and after considering the entire scheme of block assessment under section 153A of the Act, 1961, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no additional can be made by the AO and the AO has no jurisdiction to re-open the completed assessment. In paragraphs 15 16, it is held as under: 15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well settled as held by the Supreme Court in a catena of decisions that the heading of the, section can be regarded as a key to the interpretation of the operative portion of, the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning From the heading of section 153, the intention of the Legislature is clear, viz, to provide for assessment in case of search and requisition. When, the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the 'undisclosed' income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under section 153A are triggered by conducting of a valid search under section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under section 153 of the Act to the person, requiring him to furnish the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if such order of annulment is set aside Explanation. For the removal of doubts, it is hereby declared that, (i) save as otherwise provided in this section, section 153-B and section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 11. As per the provisions of Section 153A, in case of a search under section 132 or requisition under section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under section 153A of the Act is linked with the search and requisition under sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub-section (2) of Section 153A would be redundant and/or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material unearthed during the course of search, the AO would assume the jurisdiction to assess or reassess the total income in case of completed/unabated assessment taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the return. In case, no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments and has upheld the decisions of Hon ble Delhi High Court in case of CIT Vs. Kabul Chawla [2016] 380 ITR 573 and Hon ble Gujarat High Court in case of Pr. CIT Vs. Saumya Construction (P.) Ltd. [2016] 387 ITR 529. 14. As to what constitute incriminating material found/unearthed during the course of search, the Hon ble Delhi High Court in case of Kabul Chawla (Supra) held that completed assessment can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be read in the manner suggested by Mr. Pinto. Not only the finalised assessment cannot be touched by resorting to those provisions, but even while exercising the power can be exercised where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31st March, 2003. There is a mandate to issue notices under section 153(1)(a) and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, the crucial words search and requisition appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. It being enacted to a search or requisition that its construction would have to be accordingly. That is the conclusion reached by the Division Bench in Murli Agro Products Ltd. (supra) with which we respectfully agree. These are the conclusions which can be reached and upon reading of the legal provisions in question. 31. We, therefore, hold that the Special Bench's understanding of the legal provision is not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdly of any relevance in view of clear and unambiguous words used by the legislature. This interpretation does not cause any absurd etc. results. There is no casus omissus and supplying any would be against the legislative intent and against the very rule in this behalf that it should be supplied for the purpose of achieving legislative intent. The submissions of the Ld. Counsels are manifold, the foremost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. 49. Before proceeding further, we may now examine the provision contained in sub-section (2) of section 153, which has been dealt with by Ld. Counsel. It provides that if any assessment made under sub-section (1) is annulled in appeal etc., then the abated assessment revives. However, if such annulment is further nullified, the assessment again abates. The case of the Ld. Counsel is that this provision further shows that completed assessments stand on a different footing from the pending as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in section 132(1). 52. The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year of search. The word used is shall and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is shall and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be retained in case of any future contingency. 16. The matter relating to incriminating material coupled with various other issues again came up for consideration before the Hon ble Bombay High Court recently in case of Ashok Commercial Enterprises vs Assistant Commissioner of Income tax (Writ petition no 2595 and others dated 04/09/2023). Referring to the decision of Hon ble Supreme Court in case of Pr. CIT Vs. Abhisar Buildwell (P) Ltd. (supra), it was held that no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act. Referring to the decision of Hon ble Supreme Court in case of CIT Vs. Sinhgad Technical Education Society 397 ITR 344 (SC), it was held that the incriminating material seized must pertains to assessment year in question and notice issued under section 153C for other assessment years are not sustainable. It was further held by the Hon ble Bombay High Court that the question whether any material found during the course of proceedings under section 132 is incriminating or otherwise has to be tested based only on the satisfaction note recorded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 and the same is not relevant to Assessment Year 2017-2018. (f) Accordingly, it is irrefutable that no incriminating material relating to petitioner has been found during proceedings under Section 132 of the Act in the case of Hubtown Limited; 17. We therefore find that the term incriminating material have to be read and understood in the context of one or more of the conditions stipulated in section 132(1) and on satisfaction of which, a search can be authorised and search warrant can be issued. That is, there is information in possession of the competent authority and basis which he has reasons to believe that (a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced under the erstwhile 1922 Act or under section 142(1) of the present Act, (b) summons or notice has been or might be issued, he will not produce the books of account or other documents mentioned therein, or (c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tinkered with or distrusted where some incriminating material is found and seized during the course of search indicating undisclosed income of the assessee. Therefore, the AO would assume the jurisdiction to reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the return. In case no incriminating material is unearthed during the search, the AO cannot reassess taking into consideration the other material in respect of completed assessments/unabated assessments. 20. In the instant case, search and seizure operations were carried at the business and residential premises of M/s Jain Amar Clothing Pvt. Ltd. Group of cases on 26/02/2016 and the assessee, being part of the said group were also searched on the said date along with other family members. What has been found and seized are certain documents from a bank locker maintained with HDFC Bank, Kidwai Nagar, Ludhiana which admittedly doesn t belong to the assessee but is in the name of and belongs jointly to Shri Sunil Kumar Jain, the father of the assessee and Smt. Kamla Jain, the grandmother of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same search operations and action is initiated u/s 153A in his case, the same doesn t take away the statutory requirement of recording of satisfaction note by the Assessing officer of family members whose locker has been searched and from where the documents belonging to the assessee has been found and seized. 22. Moving further, we look at the show cause dated 14/09/2017 issued during the reassessment proceedings in case of the assessee wherein the AO referred to page no. 1 to 34 and 180 to 182 of Annexure-A seized from aforesaid bank locker and stated that the document so seized relates to purchase of shares on different dates by the assessee in terms of share certificate of M/s Maple Goods (P) Ltd. and the copy of the contract cum bill notes issued by the share broker, Shri S.K. Khemka and which has been termed as incriminating in nature. 23. In this regard, it is an admitted and undisputed position that the assessee had purchased the shares of M/s Maple Goods (P) Ltd. during the financial year 2010-11 relevant to assessment year 2011-12 and thus, the said transaction doesn t pertain to impugned assessment year 2012-13 and cannot be held as incriminating in natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. Therefore, once the scheme of amalgamation has been implemented, Maple Goods (P) Ltd loses its legal existence and identity and merges into Access Global and the fresh shares of Access Global have been issued and credited in the D-mat account of the assessee against the shares held in Maple Goods (P) Ltd. In the impugned assessment year 2012-13, we find that the assessee has sold certain shares of Access Global and disclosed long term capital gains on sale of shares of Access Global as part of the original return of income filed on 29/02/2012 well before the date of search on 26/02/2016. While calculating the long term capital gains, the assessee has disclosed sale consideration on sale of shares of Access Global and has claimed cost of acquisition of original shares of M/s Maple Goods (P) Ltd which matches with particulars as per the share certificates initially purchased and transferred in the name of the assessee and contract notes issued by the broker Shri S.K Khemka which were found from the locker of the family members. Thus, the transaction of sale and purchase of shares have been duly disclosed as part of the original return of income and the assessment thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be termed as incriminating in nature. Therefore, where there is no incriminating material found during the course of search, the statement of Shri S.K Khemka (and what has been stated therein) which is recorded well before the date of search in case of the assessee and in the context of some other proceedings, independent of the impugned search proceedings, is availability of certain other material/documentation with the AO during the course of reassessment proceedings but not material/documentation which is incriminating in nature found during the course of search in case of assessee for the impugned assessment year. 28. As per ld CIT/DR, the statement of Shri S.K Khemka is corroborated by evidence in nature of share certificates and contract notes seized during the course of search and basis the same, it was contended that documents so seized would fall within the definition of incriminating material. In other words, the statement of Shri S.K Khemka has formed the basis for forming the belief that share certificates and contract notes are incriminating in nature. As we have noted above, the question whether any material found during the course of proceedings under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal on merits of the case, lack of opportunity for cross-examination, etc have become academic in nature and we don t deem it necessary to adjudicate the same. These grounds of appeal are thus left open, to be decided at appropriate time should the need for the same arise in future and for the present, dismissed as infructious. 12. Following the aforesaid decision, in the instant case as well, the copy of share certificates found from the locker of family members and not that of the assessee, corroborate and confirm the disclosed transaction of purchase of shares and cannot be termed as incriminating in nature. The statement of Shri S K. Khemka is availability of other material/documentation which has come in the knowledge and possession of the AO for the first time during the course of reassessment proceedings and the said statement cannot augment/supplement the material found during the course of search in terms of share certificates and therefore cannot be used to turn the share certificates as incriminating in nature. Being a case of completed/unabated assessment, in absence of any incriminating material found during the course of search in case of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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