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TMI Blog2017 (12) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... t of ₹ 3,28,07,000/- received as share application money, share premium an share capital . 2. That the commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting addition of ₹ 1,64,035/- being 0.5% of the amount, paid as commission of lieu of accommodation entry. 3(a) The order of the CIT (A) is erroneous and not tenable in law and on facts, b) The appellant craves leaves to add, alter or amend any/a// of the grounds of appeal before or during the course of the hearing of the appeal. 3. Whereas in the Cross Objections the assessee has raised following grounds:- The Ld. CIT (A) has erred in law and on facts in not quashing the addition of ₹ 3,29,71,035/- u/s 68 of the IT Act. on the ground that the above additions were not based on any incriminating material found in the course of search on the respondent assessee when the original assessment proceedings in the case had not abated as per proviso to section 153 A( 1) of the IT Act. 4. Since the cross objections raised by the assessee goes to the very legality/root of the addition made in the assessment order passed u/s 153A, therefore, at the outset we are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the copy of Panchnama as well as copy of statement recorded u/s 132(4), to verify whether any incriminating documents were found or seized relating to share application money qua the assessment year 2004-05. In response the ld. counsel had submitted the photo copies of Panchnama as well as inventory of material seized or found as well as statement recorded u/s 132(4) of Shri Mahesh Mehta. From the Panchnama he pointed out nothing relating to share application money was found during search. He also drew our attention to various questions and answers in the statement recorded during search and submitted that neither there is any reference of share application money nor anything is mentioned about the assessee company linking with any document seized for the A.Y. 2004-05. In the statement, the disclosure of sum of ₹ 60.80 crore was made in the case of various assessees but nothing has been found or surrendered relating to any assessee nor there do any mention about share application money. Thus, he submitted that the assessee s contention that nothing incriminating has been found in the search relating to the impugned addition for the present assessment year is substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been challenged before the first appellate authority, then the assessee is precluded from raising any such issue by way of Cross Objections. From the grounds raised in the Cross Objections, it can be seen the assessee has raised purely a legal issue with goes to the very root to the addition whether can be made in the assessment made u/s 153A. Such legal issue is ostensibly borne out from the records and does not require any investigation of facts or recording of evidence. Even if it is a new plea taken by the respondent, then if such a plea is purely jurisdictional or a legal ground then same can be raised by the assessee by way of Cross Objections. The respondent can always support the judgment of first appellate authority on any ground even if such ground has not been raised before such authority, however with a caveat that it is purely legal issue and does not require any investigation of facts. Exactly similar issue has been considered by the Hon'ble Delhi High Court in the case of Fast Booking (India) Pvt. Ltd. in ITA No. 334 to 338, 339, 342/2015 vide judgment and order dated 2.9.2015 , wherein their lordships had observed and held as under:- 13. In the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s liberty to the respondent is reserved by Rule 27 of the Tribunal Rules. We have next to consider the powers of the Tribunal while disposing of the appeal. Rule 12, earlier referred to, also lays down that the Tribunal, in deciding an appeal, is not confined to the grounds set forth in the memorandum of appeal or those which the appellant may urge with its leave. It can decide the appeal on any ground provided only that the affected party has an opportunity of being heard on that ground. But it has been laid down in a number of cases that this rule does not enable the Tribunal to raise a ground, or permit the party who has not appealed to raise a ground, which will work adversely to the appellant and result in an enhancement. 15. The Supreme Court in NTPC v. CIT (l998) 229 ITR 383 SC has also explained that the power of the Tribunal in dealing with the appeals under Section 254 of the Act is expressed in the widest possible terms . It was further observed as under: 5. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e merits of the grounds raised, we find from the perusal of material placed on record in the form of panchnama and statement recorded u/s 132(4), there is no reference of any material found or seized relating to share application money received by the assessee nor there is any whisper in the statement recorded on 1.7.2009 of Shri Mahesh Mehta on share application money. In the entire statement whatever material and documents which has been referred, mostly pertains to assessment years 2008-09, 2009- 10 and 2010-11 and nothing pertains to 2004-05. Apart from that, there is no reference at all about share application money received by the assessee in this year. From the perusal of the assessment order also, we find that nowhere the Assessing Officer has mentioned any incriminating document or material found during the course of search so as to remotely suggest that the share application money received by the assessee during the course of A.Y. 2004-05 is either bogus or it was received through any hawala transaction or is by way of accommodation entries. In fact as pointed out by the ld. counsel the Ld. CIT (Appeals) too has given a very categorical finding that no evidence was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra). The decision of this Court in Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd. {supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue's SLP on 7th December, 2015. 11. Thus, following the above aforesaid proposition of law and admitted fact of the case are that there is no incriminating material qua the assessment year for which impugned addition has been made, we hold that such an addition cannot be roped in in the assessment order passed u/s 153A. Accordingly, same is directed to be deleted. So far as the reliance placed by the Learned CIT DR on the judgment of Anil Kumar Bhatia, we find that the Hon'ble High Court itself had clarified that there is no incriminating material was found during the course of search and therefore, no express opinion as to whether the addition can be made u/s 153A was made by their Lordships. The relevant observation in para 23 of the judgment is reproduced here under:- We are not concerned with a case where no incriminating material was found during the search conducted u/s 132 of the Act. We, therefore, express no opinion as to whether Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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