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TMI Blog2018 (12) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... or evidence then the burden is again shifted on the assessee to prove the transaction beyond any doubt. Hence, the discharging of primary burden itself is not enough when AO has made out a case from the bank statements that there is a deposit of equal amount just prior to the transfer of the money by these companies to the assessee then the assessee was required to prove and clear the said doubt about the source of payment made by these share applicant companies. Therefore, we find that this matter requires a thorough and deep investigation of fact and to find about the trail of money as it was deposited in the bank accounts of the share applicant companies just prior to the payment to the assessee. Further the status of the allotment of share to these share applicants is also to be examined in the context of the present holding of the same. It is relevant to verify the holding of the alleged allotment of the shares of the assessee company by all these seven companies and in case the shares were finally transferred back to the existing promoters or share holders of the assessee company or the family members or closed relatives of the promoters of the assessee company then it wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unity of hearing. Disallowance of interest paid on alleged payment of TDS - Held that:- Though TDS is not an income tax levied on the profit of the appellants business nevertheless the interest on delayed payment of TDS is due to a violation of rule for timely payment of TDS and same is compensated to government by interest under mandatory provision of law. However, this could not be said normal incidence of business and therefore, could not be covered U/s 37 of the IT Act - ITA No. 727 & 728/JP/2017, C.O. No. 37 & 38/JP/2017 - - - Dated:- 28-11-2018 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri P.C. Parwal (CA) For the Revenue : Shri Varinder Mehta (CIT-DR) ORDER PER: VIJAY PAL RAO, JM: These two appeals filed by the Revenue and the cross objections filed by the assessee are directed against the two separate orders of the ld. CIT(A)-2, Udaipur dated 24/07/2017 for the A.Ys. 2013-14 and 2014- 15 respectively. 2. First we take up the appeal of the revenue for the A.Y. 2013-14, wherein the revenue has raised following grounds of appeal: 1. Whether on the facts and in the circumstances of the case the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A search and seizure action U/s 132 of the Act was carried out at the business premises of the assessee on 10/10/2014 consequently the Assessing Officer issued notice U/s 153A of the Act on 22/12/2014. In response to the notice issued U/s 153A of the Act, the assessee filed return of income on 21/01/2015 at the same income as declared in the original return of income. On perusal of the audit report annexed with the return of income, the Assessing Officer noted that the assessee company has received share application money and raised share capital with premium. The details of share application money received by the assessee from various parties located at Kolkata are produced by the Assessing Officer at page No. 2 of the assessment order as under: S. No. Name of company Amount of share application F.Y. 2012-13 F.Y. 2013-14 1. Canny Properties Pvt. Ltd. 1000000 2000000 2. Liberal Properties Pvt. Ltd. 2000000 2000000 3. Mahavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to furnish complete details of share application money received from the alleged share applicants and also furnished the details including the share application forms received alongwith the name of the applicants, share allotment register, copies of share certificate issued, copies of complete ITR filed by the companies for last three years to whom shares have been allotted. Since the assessee failed to produce the requisite details and supporting documents, therefore, the Assessing Officer specifically asked the assessee to produce the share applicants for verification of genuineness of the transactions. Thus, the ld CIT-DR has submitted that when the Assessing Officer has conducted a due and proper enquiry to verify the creditworthiness, genuineness of the transactions and assessee failed to prove the claim then the addition made by the Assessing Officer is justified. The ld. CIT(A) accepted the claim of the assessee without examination of the share applicants. He has relied upon the order of the Assessing Officer. 6. On the other hand, the ld AR of the assessee has submitted that the assessee has produced all the supporting evidences which includes the share application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited company at Jaipur has to establish without any doubt that the Kolkata based companies are genuine share applicants of the assessee. In case of the share allotment by a private company, it is an undisputed fact that the shares are allotted only to the known parties to the existing owners of the company and even otherwise a stranger cannot invest in a private limited company held by an individual or family or the share holders of a single family. From perusal of the bank statement of M/s Canny Properties Pvt. Ltd. it is clear that an amount of ₹ 10.00 lacs was deposited just prior to the transfer of the said money to the assessee. These facts are available at page No. 7 of the paper book and the bank statement reveals that there is a deposit of equal amount just prior to the transfer of the said amount of ₹ 10.00 lacs on 25/3/2013. Similarly the bank statement of Liberal Properties Pvt. Ltd. at page 68 of the paper book reveals that ₹ 10.00 lacs was deposited on the same date when the payment of share application money was transferred to the assessee on 21/3/2013. In case of Mahavir Fincon Pvt. Ltd., again it is manifest from the bank statement at page 115 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifted to the assessee to produce further evidence to clear the shadow of bogus transactions. Failure on the part of the assessee to be established the genuineness of the transactions beyond any doubt would amount non-discharge of the burden and consequently it cannot be said that the assessee has proved its claim. The onus of proving the claim primarily lies on the assessee and once the assessee brings the primary evidence on record in support of claim, the burden is shifted on the Assessing Officer to disprove the evidence produced by the assessee. In case, the Assessing Officer has brought on record the counter facts or evidence then the burden is again shifted on the assessee to prove the transaction beyond any doubt. Hence, the discharging of primary burden itself is not enough when the Assessing Officer has made out a case from the bank statements that there is a deposit of equal amount just prior to the transfer of the money by these companies to the assessee then the assessee was required to prove and clear the said doubt about the source of payment made by these share applicant companies. Therefore, we find that this matter requires a thorough and deep investigation of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 253 Sub-section (4): The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the order of the Commissioner (Appeals), has been preferred under sub-section (1) or sub-section (2) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof, within thirty days of the receipt of the notice, file a memorandum of crossobjections, verified in the prescribed manner, against any part of the order of the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in subsection (3).] It is admitted fact that the assessee did not raise this issue before the authorities below, therefore, the scope of sub-section (4) of Section 253 cannot be extended to the scope of filing of the appeal as per sub-section (1) of Section 153 of the Act. There is no dispute that once the C.O. is filed and admitted then the same has to be adjudicated in the manner as an appeal is presented. However, the scope of C.O. cannot be beyond the order of the ld. CIT(A) which is against the party who is filing the C.O.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether in the cross objection the assessee or revenue (AO) can raise an issue, which was not at all a matter of dispute before the assessing officer or before the 1st appellate authority. The provisions of section 253 (4) authorizes the other party to file cross objection against any part of the order of the Commissioner (Appeals). Therefore, it is apparent that the issue must have been decided in the order of the 1st appellate authority, then only the assessee can file a cross objection. In the present case, the assessee himself has offered / 1.5 crores as income of the assessee. It was not agitated before the assessing officer that such income is a capital receipt. It was also not agitated before the commissioner appeals that such income is not chargeable to tax. In the cross objection, assessee has raised that issue. Therefore, apparently the taxability of 1.5 crores as income of the assessee was not at all part of the order of the commissioner appeals. Hence it cannot be considered in cross objection. Hence same cannot be raised in the cross objection filed by the assessee, when it is not disputed before the any of the lower authorities. 21. The income tax act itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal with the right of the assessee under section 253 (4) of the act. Therefore, the reliance placed by the learned authorised representative on that decision is improper for the issue before us. 24. The learned authorised representative has also relied upon the decision of the honourable Bombay High Court in case of B R bamasi versus Commissioner of income tax (1972) (83 ITR 223) (BOM). On careful reading of that decision it says that that the new ground of the appeal would serve only as a weapon of defence against the appeal. In the present case it is not against the appeal of the revenue that assessee is taking a difference but assessee is taking a ground which was not at all matter of dispute before any of the lower authorities. In view of this the above decisions relied upon by the learned authorised representative does not support the case of the assessee. 25. The another decision relied upon by the learned authorised representative is CIT versus Purbanachal Paribahan Goshthi [234 ITR 663] where the honourable court has held that A combined reading of section 253(4) of the Income-tax Act, 1961, and rule 22 of the Income-tax (Appellate Tribunal) Rules, 1963, makes it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing officer allowed the weighted deduction of warehouse charges under section 30 5B (1) (b) (iv) of the act read with rule 6AA of the income tax rules 1962. The Commissioner revised the order under section 263 and withdrew the said deduction. The assessee filed an appeal before the ITAT against the order under section 263 of the income tax act. The tribunal dismiss the appeal of the assessee and confirmed the order of the Commissioner. In the press assessment proceedings the assessee objected to the withdrawal of weighted deduction on several grounds. The learned AO rejected the contention of the assessee and further appeal was preferred by the assessee before the commissioner appeals. The Commissioner allowed the claim of the assessee and therefore the revenue was before the tribunal. Further the tribunal rejected 1 of the contention of the assessee with respect to the disallowance as the assessee did not file any appeal or cross objection but the revenue filed the appeal. Therefore, in that particular case the dispute was before the assessing officer, the learned commissioner appeals and even into 263 proceedings. These are not the facts before us. Before us the amount was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture. 13. The ld AR of the assessee has submitted that the assessee has incurred expenditure for increasing in authorized capital from ₹ 2.00 crores to ₹ 4.75 crores. In consequence thereof, the paid up capital was also increased almost double. The only objection raised by the ld AR against the disallowance is that there was no incriminating material found during the course of search and therefore, the disallowance made by the Assessing Officer is not sustainable. In support of his contention, he has relied upon the various decisions including the decision of this Tribunal in assessee s own case for the A.Y. 2012-13 in ITA No. 477/JP/2018 dated 07/09/2018. 14. On the other hand, the ld. CIT-DR has submitted that these assessment years under consideration were not completed as on the date of search and therefore, the decision of the Tribunal in assessee s own case for the A.Y. 2012-13 is not applicable. 15. Having considered the rival submissions as well as the relevant material on record we find that for the A.Y. 2013-14 it was not pending as on the date of search as the limitation for issuing the notice U/s 143(2) of the Act had expired before the date of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under:- 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. This is a significant departure from the earlier block assessment s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second proviso to sub-section (1) of Section 153A says that such proceedings shall abate . The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition shall abate . Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eating the same as capital in nature. Therefore, the issue of disallowance of expenditure is a debatable one and the disallowance is based on difference of opinion between the assessee and the AO. Hence when the original assessment was not pending as on the date of search then the AO cannot use the proceedings under section 153A to make an addition purely on the basis of difference of opinion. The ld. CIT (A) though accepted the binding precedents in favour of the assessee, however declined to follow the same on the ground that the revenue has not accepted those decisions of the High Courts and filed the SLP before the Hon ble Supreme Court. It is pertinent to note that the ld. CIT (A) is a quasi-judicial authority and is not supposed to function as a taxing authority. In case the department has not accepted the decisions of Hon ble High Courts, then the AO is at liberty to make the addition to keep the issue alive but the Appellate Authority is bound by the decision of Hon ble Jurisdictional High Court so long the same is not reversed by the Hon ble Supreme Court. Hence it was not proper on the part of the ld. CIT (A) to refuse to follow the binding precedent. Accordingly, we set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verse entry of the equal amount passed in the subsequent year and offered for tax, therefore, the addition would be a double tax on the same amount. Since this aspect was not considered by the authorities below, therefore, we direct the Assessing Officer to consider this issue and then decide the same in accordance with the law as well as decision relied upon by the assessee. Needless to say the assessee be given an appropriate opportunity of hearing. 20. Ground No. 3 of the C.O. for the A.Y. 2014-15 is regarding the disallowance of interest paid on alleged payment of TDS. 21. We have heard the ld AR as well as the ld. CIT-DR and considered the relevant material on record. Since the interest on TDS is part and parcel of the income tax, therefore, the same is not an allowable expenditure. The ld. CIT(A) has considered this issue in para 19 to 19.2 of the order as under: 19. I have considered the facts of the case and submission of the appellant. 19.1 It is undisputed fact that the interest is on account of delay in deposit of the tax deducted at source. The same is an infringement of law and the same cannot be termed as normal incident of business. It is because the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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