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TMI Blog2016 (6) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... Incometax Act, 1961, in 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 Rs.63,30,000/- 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e office of these Group share scripts worth Rs. 11,63,75,000/- issued by different companies by these Group were found. Out of these scripts it was found that a large number of shares have been allotted in the name of various companies controlled and managed by outsiders viz. Shri Rajesh. Kumar Jajodia and Shri Sandip Kumar Singhi. In the course of post search enquiry launched in connection. with ascertaining the source of the share capital contributed by these outside companies, it was gathered 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:- Balaji Trade Links (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was revealed that the aforesaid four persons deposited substantial cash in their respective bank accounts and these four persons were 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 four persons. 3. Since huge cash from. these four accounts had traveled to your company which was ultimately used to purchase the shares of the UIC; Group (which were seized) and identity, 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 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney received from these four persons have been invested in buying the shares of Rajesh Jajodia group companies and the UlC Group Companies. 6. Name the companies where your companies have made investment? A. We have made investment in various companies including Rajesh. Jajodia (Nos. 1-7) and the UIC group (Nos. B-11). 1. Target Merchandise (P) Ltd. 2. Sigma Dealcom. (P) Ltd. 3. Sunshine Consultancy 4. Neelqiri Commercial (P) Ltd. 5. Orbital Suppliers (P) Ltd. 6. Sagar Trackon (P) Ltd. 7. Nikhar Merchandise (P) Ltd. 8. UIC Wires Ltd 9. UIC Holdings (P) Ltd. 10. UIC Industries Ltd. 11. UlC Finance (P) Ltd. 7. When were these investments made and have you received share certificates from these companies? A. We have made these investments in the Fin. Year 1999-00 & 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies have been issued and debited on the same dates on which cash deposited. I have not even filled cash deposit slips and cheques, these were prepared by other persons and brought to me for my signature. 7) Why cash deposits in your account should not be treated as your money? Same answer for all :- This is not my money and I am speaking the truth. It can be assessed by my financial status. 8) Why cash deposits should not be treated as unexplained and appropriate action is taken under the I T. Act, 1961 to assess the escaped income? Same answer for all :- As stated earlier this is not my money and it is true". However after deposition, the aforesaid four persons were not traceable in spite of the summons issued u/s 131 of the act. The AO after considering the all the facts of the case held that 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. 63.30 lakhs 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 gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been handed over to the AO having jurisdiction over such other person to initiate the action in terms of the aforesaid section. But in the instant case no such procedure has been followed by the authorities. The share certificates found during the search were not handed over to the AO having jurisdiction over the assessee. However the ld. CIT(A) after considering all the facts of the case disregarded the plea of the assessee by observing as under : "I do not find any substance in the claim of the AIR that the shares might have been sold before the search took place in UIC Group but the evidence of the same having been subscribed to by the appellant before the date of search was found during the course of search in the UIC Group. Section 158 of the Act reads as follows: "Undisclosed income 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 hande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion we find that the AO has initiated and completed the assessment proceedings u/s 158BD / 144 of the Act on the basis of documents found at the time of search from the place of UIC group of companies where the search was conducted. However the assessee claimed that there was no undisclosed income of the assessee and the documents which were found at the time of search were duly disclosed in the books of accounts of the assessee and the income thereon was offered to tax. The assessee before us has challenged the validity of the proceedings under section 158BD of the Act on the ground that the in the instant case the satisfaction was to be recorded by the AO of the UIC group where the search was conducted but in the case in hand the satisfaction has been recorded by the AO having jurisdiction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 158BC, in respect of any other person, the conditions precedent wherefor are; (i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) the Assessing Officer has proceed under section 158BC against such other person. The conditions precedent for invoking the provisions of section 158BD, thus, are required to be satisfied before the provisions of the said Chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under section132A of the Act." Form the above, it is clear that the AO of UIC group was to record the satisfaction before initiating the proceeding under section 115BD of the Act. But in the instant case the AO having the jurisdiction over the assessee has recorded the satisfaction which is incorrect as per law. Taking the consistent views in the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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