9911796707
TMI Blog2025 (5) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... of brevity and convenience, all the appeals are disposed of through this consolidated order. (1.2) The grounds of appeal are as under: - IT(SS)A. No.431/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that no assessment for the year under consideration was pending, the assessing officer could not have assumed jurisdiction under section 153A of the Income Tax Act, 1961. The law in this regard is now well settled by the Hon'ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any 'seized' material whatsoever, much less any 'incriminating' material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he report in its entirety in order to defend its case. On this count alone viz. intentional non-observance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 22,60,570/under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of Shant Sheorey 52 Week Entertainments (a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee squarely discharged its onus of proving the identity, genuineness and creditworthiness in relation to the Long-Term Capital Gain derived by it, by filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. 13) The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing." IT(SS)A. No.435/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that no assessment for the year under consideration was pending, the assessing officer could not have assumed jurisdiction under section 153A of the Income Tax Act, 1961. The law in this regard is now well settled by the Hon'ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz. intentional non-observance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 22,60,570/under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of Shant Sheorey 52 Week Entertainments (a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of a sum of Rs. 1,21,135/- as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 11) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. 13) The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing." IT(SS)A. No.432/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that the assessment proceedings for the year under consideration had already been completed vide ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate the statement of Sh. Naresh Jain under Section 132(4) of the Income Tax Act, 1961. 5. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was not provided with an opportunity to cross-examine Sh. Naresh Jain or his associates, basis whose statements, the addition under Section 153A was done. It is submitted that despite requesting for such opportunity before the Assessing Officer as well as the Commissioner of Income Tax (Appeals), no cross-examination was afforded to the Assessee, which resulted in flagrant violation of the principles of natural justice and equity. It is submitted that the assessment order as well as the consequential appellate order are liable to be quashed on this ground alone viz. intentional non-observance of principles of natural justice. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the scrip from open market, in order to derive Long-Term Capital Gain. Given such extenuating circumstances in the present case, the modus operandi as alleged in the statement of Sh. Naresh Jain (contained in the report of the DIT (Investigation) Mumbai) did not apply to the facts of the case and therefore, the additions made were liable to be quashed. 11)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant was a regular investor, and not only invested in the shares of M/s Risa International Ltd. to derive Long Term Capital Gain but also traded in it. It is submitted that while the trading profit/loss from the sale of shares of M/s Risa International Ltd has been accepted by the Assessing Officer as business income, the exemption under Section 10(38) of the Income Tax Act, 1961 with respect to the same scrip has been disallowed on a totally misconceived motion. Thus, the Assessing Officer, as also the Commissioner of Income Tax (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153A of the Income Tax Act is invalid when there is no incriminating material to support it. 3. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that No jurisdiction could be assumed by the Assessing Officer under Section 153A of the Income Tax Act, 1961, by merely relying upon the statement of Sh. Naresh Jain and his associates, recorded under Section 132(4) of the Income Tax Act, 1961, since such statements, which were recorded much after the date of search, could not by themselves constitute incriminating material found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate the statement of Sh. Naresh Jain under Section 132(4) of the Income Tax Act, 1961. 4. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was not provided with an opportunity to cross-examine Sh. Naresh Jain or his associates, basis whose statements, the addition under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitrary given the fact that the Assessee squarely discharged its onus of proving the identity, genuineness and creditworthiness in relation to the Long-Term Capital Gain derived by it, by filing all documentary evidence viz. contract notes, DEMAT account details, details of Securities Transactions Tax, bank details, details of broker etc. Neither such evidence was rebutted by the Assessing Officer or the Commissioner of Income Tax (Appeals), nor were they rejected / doubted. 9) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the scrip from open market in F.Y. 2010-11 and sold it in F.Y. 2016-17 ie, after holding it for about six (6) years, in order to derive Long- Term Capital Gain. Given such extenuating circumstances in the present case, the modus operandi as alleged in the statement of Sh. Naresh Jain (contained in the report of the DIT (Investigation) Mumbai) did not apply to the facts of the case and therefore, the additions made were liable to be q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome tax act, 1961. The law in this regard is now well-settled by the Hon'ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any 'seized' material whatsoever, much less any 'incriminating' material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on what incriminating material was found during the year under assessment, which formed the basis of passing order under Section 153A of the Income Tax Act, 1961. Thus, the addition made under section 153A of the Income Tax Act is invalid when there is no incriminating material to support it. 3. BECAUSE on the facts and circumstances of the case and in law, the issue Pertaining to investment in shares was examined threadbare during the Course of scrutiny assessment, which culminated into the passing of the assessment order under Section 143(3) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the additions having been made on the basis of conjectures and surmises, Ought to be quashed. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz., intentional non-observance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 8. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 35,30,429/under Section 68 of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in making an estimated addition of a sum of Rs. 80,155/- as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 13) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 14)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. 15)The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing." (2.1). These appeals have been filed after the time mentioned in section 253(3) of the Income Tax Act, 1961 ("the Act", for short) The assessee's have filed applications explaining the delay, and seeking condonation of delay in filing of aforesaid appeals. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are trading account and income has been offered for tax at normal rates. In case of PFL Infotech shares had been purchased in the case of different entities details breakup is enclosed here with. The brief sale and purchase of shares year wise is as under PFL Particulars AY 2013-14 AY 2014-15 2015-16 Purchase Soles Purchase Sales Purchase Sales Quantity 2,03,327 2,03,317 2,41,366 1,74,118 62,134 1,30,392 Value 86,35,187 94,70,135 3,28,45,371 6.07,70.726 3,67,88,348 7,15,87,130 Trading Profit 8,34,495 3,33,19,904 (45.18.537) LTCG 3,75,22,307 From the above chart we find that the assessee their family and companeis had been trading in the said script of PFL Infotech on regular basis as part of their normal trading activity. The purchases of share were mode when the price of the script during 2013-14 was around Rs 46.50 per share which increased to Rs 349 in subsequent year 2014-15 due to which we find that there was a substantial gain of Rs 3,33,19,904 in trading account in AY 2014-15. It has been emphasised in your notice that there was no significant activities In the company which could substantiate the exponential rise of its sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand on 31.3.14 out of which 65,784 shares which could not be sold in the year were carried forward and sold in subsequent year which resulted in a LTCG in the hand of three individuals viz. Mrs Meena Agarwal, Mrs Anuradha Mittal and Mrs Rupali Mittal. And the maximum no of shares were in case of Meena Agarwal so we find that there was a substantial LTCG amount in case of Mrs Meena Agarwal for Rs 3,27,03550 and simultaneously there was a trading profit of Rs 3,23,655 on shares which had less period of share holding. We have enclosed the details of script wise tronsaction in each and every entity to show that there was both trading profit/loss and long term capital gains/loss in the same script. As a matter of principle the assessee had been purchasing and selling shares to earn trading profit however at times due to longer period of holding there are LTCG on same share due to longer holding period. Sir if there was an understanding with Mr Naresh Jain as alleged then why would the assessee suffered trading loss and make normal income of Rs 3,33,19,904 in AY 14-15. So if there was a normal profit or loss there is no issues of penny stock but if there is a LTCG which happened due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rip are Fair Intermediate Investment Pvt Ltd, Eureka Stock and Share Broking Services Ltd (Kolkata) and others, I have arrange for prospective beneficiaries in this scrip. 4. 52 weeks entertainment Ltd Centre> The brokers who have helped me in frontrunning and rigging the price of theis scrip are Fair Intermediate Investment Pvt Ltd. Shiraram Insight Shere Brokers Ltd (Mumbai/Kolkata), Koushik Shah Shares and securities Pvt Ltd.(Mumbai) Shirish C Shah has also done rigging this scrip. If we see the statement of Mr Naresh Jain in response to specific question put to him regarding the shores in which he had dealt with Fair Intermediate Pvt Ltd. Sandeep and Mahesh Mittal he has given the list of the same wherein we do not find the name of PFL so as far as PFL Shares are concerned even the main person has not alleged to have given bogus LTCG to the assessee. In comparative chart for the proceeding period we find that the assessee's have made profits and well as loss in both trading and LTCG. In case of PFL there was trading profit as well as LTCG in case of Meena Agarwal, Rupali Mittal and Anuradha Mittal however there was only trading profit or loss in case of Ashroj. If there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have traded in the same but we do not find that the assessee had its associate companies have traded in the said script. It is very interesting that the entire allegation are based upon the statement of one Mr Naresh Join but there is no corroboratory evidence to support his statement both found in search as well as on record. Moreover, it is a well known fact that in case of penny stocks there is a preferential allotment of shares and the price is jacked up in two to three years but these guided modus operandi of providing bogus capital gain do not apply when the assessee had made the sales after a gap of more than 7 years. We are enclosing here with the details of purchases as reflected in the books of the assessee as purchased in 2009-10 and sales being made on terminal. We have prepared the script wise transactions done by the group in the alleged script and we find that there was both profit as well as loss so the allegation that the assessee have taken bogus LTCG does not apply on the facts of each case. In view of above it is requested that as the entire allegations are based upon the statement of one Mr Naresh Jain so it is requested that a cross examination be arrang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law as well as on facts, in making an assessment u/s 153A of completed assessments in absence of any incriminating material for the year found during the search and not restricting the proceeding only to the seized material/evidence found during the course of search. (ii) That under the facts and circumstances of the case, the AO erred in making addition of a sum of Rs 29,58,183/for the Long Term Capital Gain claimed by the assessee on sale of certain Listed shares and STT paid u/s 68. The addition, being based on the information passed upon by the Investigation Wing Mumbai, surmise and conjecture of the AO, need to be deleted. (iii)That under the facts and circumstances of the case, the AO erred in making an estimated addition of a sum of Rs. 63,740/- for commission to have been paid to obtain the Long Term Capital Gain which has 'been treated as bogus and need to be deleted. (iv)That under the facts and circumstances of the case, the AO erred in charging interest under sec.234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. (v) That the AO was wrong in initiating penalty proceedings under sec. 271(1)(c) of 61 the Income Tax Act, 1961. (vi) That the assessee cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de under section 153A of the LT. Act, 1961. Therefore, the order passed by the Assessing Officer u/s 153A is bad in law and deserves to be quashed. 2. Your kind attention is invited towards the decision of the Hon'ble Delhi High court in the case of Principal CIT, Central-2, New Delhi Vs. Meeta Gutgutia [2017] 395 ITR 526. In the said decision, the Hon'ble Court categorically observed that the invocation of Section 153A of the 1.T. Act, 1961, to reopen assessment of earlier years, in the absence of incriminating material found during search qua each assessment year is not correct. The Hon'ble High Court noted that Section 153A of the Act is titled "Assessment in case of search or requisition". It is connected to Section 132 which deals with 'search and seizure'. Both these provisions, therefore, have to be read together. It was further observed that Section 153A is an extremely potent power which enables the Revenue to reopen at least six years of assessments earlier to the year of search, and is therefore not to be exercised lightly. The High Court therefore held that it is only if during the course of search under Section 132 incriminating material justifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of Proesailit under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CITA), affirmed by the ITAT, deleting the addition, was not interfered with. 7. In fact, the Hon'ble Delhi High Court in CIT (Central)v. Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi) while discussing the decision of the Rajasthan High Court in the case of Jai Steel (India) Jodhpur v. ACT (2013) 36 Taxman 523 (Raj) observed: "33. The decision of the Rajasthan High Court in Jai Steel (India) (supra) involved a case where certain books of accounts and other documents that had not been produced in the course of original assessment were found in the course of search it was held where undisclosed income or undisclosed property has been found as a consequence of the search the same would also be taken into consideration while computing the total income under Section 153A of the Act. The Court then explained as under: "22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case of the Assessee. Before invoking section 69 or 69C, the condition precedent as to existence or of investment, expenditure, etc. must be conclusively established by material on record/evidence. c) The Ld AO erred in law as well as in facts of the case by first deeming the amount of expenditure on ad-hoc basis @ 3% of sale value of shares and then invoked section 69C as the source of such expenditure remains unexplained. How can the source of expenditure be explained if it has not been incurred in the first place and is merely deemed so by the AO himself? It is being brought on record that the Appellant has dealing in shares for the last several years and has shown both capital gains as well as business profit/loss from same shares in the stock market while being a registered broker for BSE and NSE. So, there was no reason for payment of any commission. It is being brought on record that the Appellant was subjected to search and no evidence for payment of any commission has been found in the course of the search. In view of the same, it is prayed that addition of estimated commission of Rs. 63,740/- made on some vague and baseless reasons without having any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year falling within the period of six assessment years referred to in this section 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. Explanation-F or the removal of doubts, it is hereby declared that, (i) save as otherwise provided in this section, section 153B and section 153C, 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. 153B. Time-limit for completion of assessment under section 153A.-(1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment, (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of section 153A, within a period of two years from the end of the financial year in which the last of the authorizations for search under section 132 or for requisition under section 132A was executed; (b) in respect of the assessment year rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or 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 against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A." 6.3 On perusal of provisions of section 153A of the Act, it transpires that in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 318! day of May, 2003, the Assessing Officer shall issue notice to such person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the Tribunal was correct in having affirmed the view of the CIT (Appeals) that the balance-sheet submitted by the assessee before the Bank as (ii) on 31.08.1995 cannot be relied on for reason of that document having not been recovered on search and the figures reflected therein being anomalous when compared with the figures in the balance-sheet filed by the assessee as on the close of the respective assessment years? (iv) AO at the rate of Rs. 5 lakhs per year on the unaccounted sales which could have been carried out by the assessee? (v) Ought not the Tribunal have sustained the undisclosed interest income which was based on the assessee's own entries in a Diary recovered on search? (vi Had not the Tribunal acted in a totally perverse manner in deleting the additions made by the A.O? 6.5.2 In order dated 10-01-2019 vide para no-23 it has been held by the Hon'ble High Court of Kerala as under: "23. We have already found that there is lack of material insofar as the prior years of the block period, but the same has been held to be inconsequential, in so far as the A.O being conferred with the power to make assessment in the best of his judgment. The AO was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years in separate assessment orders for each of the six years. in other words there will be only one assessment order in respect of each of the six assessment years 'in which both the disclosed and the undisclosed income would be brought to tax'. Although section 153A does not say that additions should be strictly made on (iv) the basis of evidence found in the course of the search, or other post-search : material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment 'can ), arbitrary or made without any relevance or nexus with the seized materia Obviously an assessment has to be made under this section only on the basis of seized material.' In absence of any incriminating material, the completed assessment Can be reiterated and the abated assessment or reassessment can be made. The wrong (V) 'assess' in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to complete assessment proceedings. insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: - "7.1 Ground No, 2 : That under the facts and circumstances of the case, the AO erred in making addition of a sum of Rs. 29,58,183/for the Long Term Capital Gain claimed by the assessee on sale of certain Listed shares and STT paid u/s 68. The addition, being based on the information passed upon by the Investigation Wing Mumbai, surmise and conjecture of the AO, need to be deleted. 7.2 During the assessment proceedings, the Assessing Officer noted that the appellant carried out sale transactions in respect of shares of M/s Monotype India (Monot), in the year. The learned Assessing Officer looked into the various details of the said transaction. The appellant submitted that the resultant LTCG (Long Term Capital Gains) flowing out of the impugned transaction was exempt under section 10(38) of the IT Act. The Assessing Officer further noted that the move to acquire the shares of M/s Monotype India (Monot) a predetermined move which had the sole aim to bring back unaccounted money. Considering the financials and fundamentals of the company M/s Monotype India (Monot), in the context of no significant corporate announcements or any big orders of purchase, the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.4.1 During the assessment proceeding, the appellant also submitting copy of bank statement in the name of the appellant, contracts notes; demat accounts, ledger accounts as the evidence towards alleged purchase/sale of the shares of M/s Monotype India (Monot). 7.4.2 The company M/s Monotype India (Monot) was incorporated 30 September 1974. 7.5 The appellant's decision to purchase the shares when the financial results of M/s Monotype India (Monot) was not at all splendid with no or meager chance of 'any lucrative gains at the stage of purchase of its shares was a predetermined action on the part of the appellant leading to the objective to acquire-4TCG by ways of dubious methods. This predetermined action with specific intention was one of the circumstantial evidence leading to the conclusion that LTCG was not a genuine one. 7.6 I further observe the statement made by Shri Naresh Jain as referred to by the Assessing Officer. The weight of the evidence in the face of unequivocal admission by the concerned accommodation provider that the shares of M/s Monotype India (Monot) has been rigged through in-paper-only jama-kharchi companies to provide LTCG/STCL through arranged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sight of. The fact of abnormal and arranged increase in the share price has actually been corroborated by the statement of persons as named above during the action by the Investigation by the Investigation Wing of Mumbai clearly evident. The price pattern between year 2013 to 2016 it is evident that when organized work of entry providing through Long Term Capital Gain was finished, share price is continuing at lowest level since then. Today share of M/s Monotype India (Monot) is at Rs 0.28 These facts justify that in share rigging there were involvements of various companies as stated in the Investigation report of Investigation Wing of Mumbai. 7.7.2 On perusal of graph at the BSE platform, it is clear that the volume of trade jumps manifold immediately when the market prices of shares reach at optimum level so as to result in LTCG assured to the beneficiaries. This maximum is reached around the time when the initial allottees have held the shares for one year or little more and thus, their gain on sale of such shares would be eligible for exemption from Income Tax. Further it is clear that the price of the share falls very sharply after the shares of LTCG beneficiaries have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an Income-tax Consultant, she purchased shares of two penny stock Calcutta based companies at Rs. 5.50 per share and Rs. 4/ - per share respectively in 2003. Both the companies had no standing and the AO their existence of dubious characters. Both purportedly with other company, namely, Khoobsurat Ltd. and the assessee received Shares in Khoobsurat Ltd. in lieu of her shares in earlier companies. The assessee was able to sell the shares at the price of Rs. 486.55 and R.485.65 respectively in 2005. The purchase by the assessee of share of two unknown companies whose details were not at all known by the assessee can by no stretch of imagination be said to be an investment transaction. The company whose shares rose from Rs. 5/to Rs. 485y. within extremely short span has no worthwhile position and balance sheet and is not at all dividend paying company. The broker company through which the shares were sold did not respond to AO's letter regarding the names and address and bank account of the person who purchased the shares sold by the assessee. In these circumstances it is a clear case where the assessee had indulged in bogus and dubious share transaction meant to account for the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not find any infirmity in the revenue taxing the receipt in this regard. The entire amount of the so called receipt of share sales could well also be treated as unexplained credit u/s 68 of the I.T. Act as it has all the ingredients of attracting the rigours of the said section. Section 68 of the I.T. Act provides that where any sum is found credited in the books of the assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the AO satisfactory, the sum so credited may be charged to income tax as income of the assessee of that year. In the present case the assessee's explanation that the said receipt is on account of investment in shares whereby share of Rs. 5/of unknown company has jumped to Rs. 485/- in no time has been totally rejected by the authorities below. The assessee has not at all been able to adduce cogent evidences in this regard. There is no economic or financial justification for the sale price of these shares. The so called purchaser of these shares has not been identified despite efforts of the AO. The broker company through which shares were sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the assessee has made purchases of 4000 shares of M/s Shiv Om Investment and Consultancy Limited for Rs. 4,080/on 11th May, 2004 in the previous year relevant to the assessment year 2005-06. The said shares were purchased in off market transactions for which payments were made in cash. The said purchases have been treated as bogus and sham transactions by the Revenue as it is alleged that certain brokers have manipulated and issued pre-dated contract notes which even did not have details such as time of contract, trade number, transaction details etc and payments were also made in cash by the assessee against such sham and bogus purchase with the objective of introducing by manipulating tax free exempt long term capital gains u/s 10(38) of the Act leading to escapement of income from taxation, and the said findings of the AO with respect to bogus and sham purchases have become conclusive and final as the assessee has not challenged the findings of the learned AO made in the assessment order dated 24.12.2009 passed by the AO u/s 143(3) read with Section 147 of the Act in the first appeal filed with learned CIT(A) for the assessment year 200506 and hence the finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat purchases of shares were bogus and sham as was held by the Revenue in the assessment year 2005-06 which has not been dislodged so far as the assessee accepted the said findings which became conclusive, thus the facts in the instant case are distinguishable as against the relied upon case of the assessee in Smt Aarti Mittal (supra) on that ground itself. Similarly, contentions of the assessee that the Revenue has accepted the gains on sale of 1500 shares of M/s Shiv Om Investment and Consultancy Limited in the succeeding assessment year 200708 as long term capital gains while processing of return u/s 143(1) of the Act is not of help to the assessee as every assessment year is separate assessment year and merely because the Revenue has not selected the case under scrutiny by issuing notice u/s 143(2) of the Act and framing detailed scrutiny u/s 143(3) of the Act instead chose to process the return u/s 143(1) of the Act without scrutiny will not entitle the assessee to get the well reasoned assessment orders and appellate orders of the learned CIT(A) dislodged in the absence of the cogent material and evidences to demolish the findings of the authorities below. The Revenue in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith M/s. Oasis Cine Communication Ltd. (OCL) along with another company M/s. SakshiVyapar Ltd.(SVL). The assessee was allotted 27200 shares of OCL against the original 800 shares held by him in M/s. STL. These shares were sold at a whopping amount of Rs. 83 lakhs during May 2010. As against the initial investment of Rs. 272000/in the shares of M/s STL in December 2008, the assessee received Rs. 83 lakhs in May 2010, within a short span of one and a half years. The question before the Hon'ble Tribunal was whether the unnatural LTCG @3072% over a period of one and half years from the purchase of shares of an unlisted company, whose net worth was also not known to the assessee at the time of purchase, is beyond the business logic and whether it is a valid reason to make addition towards undisclosed income. The other question was whether on facts the whole process of trading in shares is depicted just to avoid tax liability and whether the addition towards undisclosed income should be upheld. The Hon'ble ITAT replied both the questions in favour of Revenue. The ITAT observed that the AO had brought out certain glaring facts which cannot be ignored and which are clearly indicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7.23... 7.24.... 7.25... 7.28 Considering the above discussion and submission of the appellant on this ground, I am of view that order of the Assessing Officer on this ground did not call any interference. Hence, this issue has no force. 7.29 Therefore appeal on this ground is dismissed. 8.1 Ground No. 3 : That under the facts and circumstances of the case, the AO erred in making an estimated addition of a sum of Rs. 63,740/for commission to have been paid to obtain the Long Term Capital Gain which has been treated as bogus and need to be deleted. 8.2 In the ground no 2 it has been discussed that how the planning has been made for earning the alleged Long Term Capital Gain for introducing the un-accounting income in garb of same. For arrangement of this type of entries like providing LTCG the operators charged their fees. This varies from 2 to 5 percentages as on the basis of facts of the particular case. In this case 2% commission has been rightly applied by the Assessing Officer; therefore I am in agreement with the decision of the Assessing Officer. Thus the addition of Rs. 63,740/- is hereby confirmed. Therefore appeal on this ground is dismissed." (2.6) Aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue was raised by Revenue in statements recorded during and after search conducted under section 132 of I. T. Act and causing vexation and harassment to the assessee; additions were also made on these issues. He further submitted that the issue as to whether addition can be made in a search assessment in the absence of any incriminating material is now well settled in favour of the assessee by the order of the Hon'ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell (P.) Ltd (2023) 149 taxmann.com 399 (SC)/(2023) 293 Taxman 141 (SC)/(2023) 454 ITR 212 (SC). He furthermore submitted that the Lucknow Bench of ITAT in the case of Smt. Shashi Agarwal (2024) 167 taxmann.com 687 (Lucknow Trib.), considered aforesaid decision of Hon'ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd (supra) and decided the issue in favour of the assessee relying on the same. He still furthermore submitted that in the present appeal, the additions made by the Assessing Officer are not based on any incriminating documents found in the course of search. Relying on the aforesaid cases of Abhisar Buildwell (P.) Ltd (supra), and Smt. Shashi Agarwal (supra), he contended that the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elying on Abhisar Buildwell (P.) Ltd (supra), on the issue whether additions can be made in a search assessment in the absence of any incriminating material found during search. The relevant portion of the order of Smt. Shashi Agarwal vs. DCIT (supra) is reproduced as under: - "(C) We have heard both sides. We have perused materials on record. There is no dispute regarding relevant facts. It is not in dispute that no incriminating materials were found in the course of search u/s 132 of the IT Act in respect of the various additions made by the Assessing Officer. Further it is also not in dispute that no assessment proceedings were pending in the cases of the assessee at the time of search conducted on 08/07/2016 in the case of the assessee, u/s 132 of the IT Act. Further, as no assessment proceedings were pending at the time of search & seizure operation u/s 132 of the Act on 08/07/2016, the case of the assessee falls in the category of unabated/completed assessments within the meaning of orders passed by Hon'ble Supreme Court in the cases of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra) and within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra), the Hon'ble Supreme Court held that in respect of the completed/unabated assessments, no additions can be made in assessment order passed u/s 153A or passed u/s 153C of the IT Act in respect of which incriminating materials were not found in the course of search action u/s 132A of the Act; although Hon'ble Supreme Court held that the completed/unabated assessments can be reopened by the Assessing Officer in exercise of powers u/s 147/148 of the IT Act subject to fulfillment of the conditions as envisaged/mentioned u/s 147/148 of the IT Act. Thus, although the powers of the Assessing Officer u/s 147/148 of the IT Act were saved by Hon'ble Supreme Court in the cases of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra), subject to fulfillment of conditions envisaged u/s 147/148 of the IT Act; it has been categorically held that in respect of completed/unabated assessments, no additions can be made u/s 153A or under section 153C of the Act if incriminating material was not found / unearthed during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and in the case of CIT vs. Kabul Chawla (supra) which was approved by Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax vs. Abhisar Buildwell (supra). In view of the foregoing, and having regard to the relevant facts and circumstances of the present case before us, and further, as representatives of both sides are in agreement with this, we are of the view that the issue in dispute is squarely covered in favour of the assessee by the orders of Hon'ble Supreme Court in Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra) and by the aforesaid instruction No. 1 of 2023 of CBDT, which is binding on Revenue authorities. Accordingly, we direct the Assessing Officer to delete the additions made amounting to a total of Rs. 2,24,81,900/- for assessment year 2015-16 and addition amounting to Rs. 44,25,000/- for assessment year 2016-17. (C.2.2) Since we have directed that the aforesaid additions be deleted, the other issues regarding merits of the additions made in the aforesaid tw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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