TaxTMI 
TaxTMI 
2016 (4) TMI 1469
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....case of the appellant company, in spite of the fact that during the course of the Search proceedings at the premises of the UIC Group, no incriminating materials against the appellant company had been found. 3.(a) On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the addition of the sum of ` 1,39,50,000/- u/s. 68 of the Act,, by considering the receipt of the said amount as unexplained in spite of there being ample evidences about the genuineness of the said receipt of money by the appellant. 3.(b) On the facts and in the circumstances of the case, the learned CIT(A) erred in not taking into consideration the fact that the appellant had not been provided with opportunity by the learned AO to cross-examine the depositions of four witness; and thereafter in relying on such unverified depositions." Shri S.K. Tulsiyan, Ld. Authorized Representative appearing on behalf of assessee and Shri Rajat Subhra Biswas, Ld. Departmental Representative appearing on behalf of Revenue. 2. First we take up assessee's ground No. 2 regarding the validity of the proceedings initiated under section 158BD of the Act on the ground that there was no incrimina....
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....hered that a part of the funds of the following share holding companies had come from four bank accounts i.e. Account No. 4886, 4914, 4934 and 4933 maintained with Federal Bank of India, Sura Bazar Branch, Kolkata and standing in the name of Shri Rajendra Kumar Surana, Shri Surtil Kumar Jain; Shri Shankarlal Godh and Shri Surendra Kumar Hirauiai and Shri Shankarlal Godh respectively Apart from the above mentioned companies there exists some other companies (not shareholders in UIC Group of Companies) controlled by Shri Sandip Kumar Singhi which have also received money from the bank accounts of the aforesaid four persons. The names of these companies are indicated below:- Millia Tracon (P) Ltd. 91 NS Road Kolkata '700001 Enquiry has further revealed that the aforesaid four persons deposited substantial cash in their four bank accounts and that these four persons are not traceable. Summons u/s. 131 of the IT Act, 1961 could not be served in their given addresses. It establishes that fictitious bank accounts were opened in the name of those name of those four persons. It was further observed that bank accounts were introduced by Shri; Sandip Kumar Singhi. Since the cash fro....
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....ty, genuineness as well as creditworthiness of these transactions remained doubtful, I had reasons to believe that disclosed fund of your company had traveled to the UIC Group. Accordingly, proceedings u/s. 158BD were initiated'. Besides the above the AO also observed that on the day of the search & seizure operation conducted u/s. 132 on 07/05/02 at the office premises of M/s. UIC Wires Ltd., 227 AJC Bose Road, Anandlok (1st Floor), Kolkata, 2 Lacs share certificates bearing distinctive numbers 490301 to 690300 allotted to assessee company on 12/08/2000 with a face value of Rs. 10/- amounting to a total value of Rs. 20 lacs, were found and seized from its office premises. The UIC Wires Ltd. failed to explain why the shares sold to the assessee in the year 2000 were still lying at the office premises. This invoked the AO that UIC group in connivance with the assessee was channeling unaccounted cash in the form of bogus purchase/sale of shares. It was also observed that the aforesaid 4 persons from their bank accounts have transferred to the assessee bank account after depositing cash amount in their respective account just prior to one or two day before transfer. 2.2 As the a....
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.... & 2000-2001 and we have not yet received any share certificates. 8. What was your role in investment made in the companies owned/controlled by Mr. Rajesh Jajodia and Mr. Rajiv Jajodia? A. Our role was that of an investor. 12. Is it true that money received as investment in your companies from the aforesaid four persons was invested partly in the companies controlled and managed by Rajesh Jajodia and partly as direct investment in the UIC group of companies? A. Yes, it was invested partly in the companies controlled and managed by Rajesh Jajodia and partly as direct investment in the UIC group of companies. 13. Did the companies managed and controlled by you also invest in the UIC group directly? Yes, certain investment were made directly with the UIC Group. Deposition of the aforesaid four persons Shri Rajendra Kumar Surana, Shri Sunil Kr. Jain, Surendra Kr. Hirawat and Shri Shankarlal Godh holding the four bank accounts were also taken and they were produced by the Director, Mr. Sandeep Kr. Singhi Deposition recorded of the aforesaid persons by the D.D.I.T. (Inv.) are reproduced below, "2) What are your source of Income? Surender Kr. Hirawat:- My source of income....
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....hat the purpose of the sale and purchase of shares was to convert the unaccounted money of the UIC group in accounting form and for this purpose the services of Mr. Sandip Kr. Singhee were availed. Accordingly the amount of Rs. 1,39,50,000/- received by the assessee company for the sale of the shares of UIC group to the aforesaid four persons was in actually the money of the UIC group. The assessee was just acting as a conduit for channelizing the money of UIC and for which it must be getting some form of commission. Therefore, the amounts in question should be rather taxed on protective basis in the hands of the assessee company and on substantive basis in the hands of the UIC Group. Hence, this amount is taxed on a protective basis in the hands of the assessee company. 3. Aggrieved assessee preferred an appeal to Ld. CIT(A) where it was submitted that as under: The investments of the assessee was sold to the to the above-mentioned four persons for sale consideration of Rs. 1,39,50,000/- which was duly received by the assessee through account payee cheques. The sale transaction was duly recorded in the books of accounts and income tax return was filed after incorporating the ab....
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....come of any other person. 158BD. Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly." What section 158BD requires for initiation of block-assessment proceedings in case of person other than the searched person is that the A.O. should be satisfied that any undisclosed income belongs to such other person. In the instant case, evidence was found as a result of search that during the block-period under appeal the appellant-company had invested in a part of the share capital of certain companies of the UIC Group, about the sources of which the A.O. was not satisfied. Since, the A.O. was not satisfied about the sources of the money invested by the appellant in the ....
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....ion over the assessee. In our considered view, we find lot of force in the argument made by Ld. AR before us with regard to the satisfaction recorded as per the provisions of section 158BD of the Act. In this connection, we rely in the decision of Hon'ble Gujrat High Court in the case of CIT vs. Champakbhai Mohanbhai Patel [2015] 370 ITR 700 (Guj) where it was held that "5. On having heard the learned counsel and on examination of the material on record, we could notice that the assessee had raised essentially the issue of assessment under section 158BO read with section 158BC for the block period from April 1, 1995, to December 19, 2001, as bad in law since no satisfaction was recorded by the Assessing Officer having jurisdiction over the non-searched person. It is to be noted that in the case of Lalitkumar Patel (supra), as also in the case of the present assessee-respondent, common reasons were recorded by the Assessing Officer for issuance of notice under section 158BD of the Act. In the case of Lalitkumar Patel, when the matter had reached this court challenging the order of the Tribunal, the same was sustained by this court, extensively dealing with the various provisio....