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TMI Blog2019 (1) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... eal No.98/14-15 passed by the learned Commissioner of Income-tax(Appeals)-23, New Delhi {for short "ld. CIT(A)}, revenue preferred the appeal whereas assessee preferred the Cross Objection challenging the assessment order. 2. Briefly stated facts relevant for the disposal of this appeal are that during search and seizure operation that were conducted on 04.08.2011 in the case of M/s SMC Power Generation Ltd, some incriminating papers were found which indicatedpurchase/sales of milk and milk products outside the books of account. Based on these documents, a director of the assessee company admitted undisclosed income of ₹ 93 lacs in his individual capacity. However, these transactions do not relate to the assessee company. In the present case, the earlier assessment for AY 2007-08 had been completed u/s 143(3) of the Income Tax Act, 1961 (for short hereinafter referred to as "the Act") wherein the source of share capital was examined by the revenue on the basis of evidence filed by the assessee and no adverse view had been taken. However, in the present proceedings u/s 153A of the Act, consequent to the search, for the reasons recorded in the assessment order, the revenue ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent view and that the assessee had discharged its primary onus of establishing the transaction not only once but twice and the conclusions reached by the learned AO in the present assessment to hold that the share premium unexplained does not have any basis. He, therefore, deleted the addition of share capital/premium. Specific finding of the learned CIT(A) is that while in para 4 of the assessment order, the addition proposed was only ₹ 29,70,00,000/-being the share premium received, the addition finally made was ₹ 30,00,00,000/- being the entire share capital which appears to be a mistake and the entry of ₹ 30 crores in the computation part has to be ignored. 6. In so far as the computation of eligible deduction u/s 80IA is concerned, learned CIT(A) held that each expense cannot be allocated to the unit enjoying concessional taxation; this is not mandated by law nor factually liable; that a director is director for the whole of the company and not only for its unit; that it is not necessary that services of the directors are essential to run the business of the eligible unit; that in multi unit companies a unit is managed by the local manager; and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, prayed to dismiss the appeal of the revenue and to uphold the findings of the learned CIT(A). 11. We have gone through the record. There is no dispute that in the search that took place on 4.8.2011 in the case of M/s SMC Power Generation Corporation Ltd. belonging to the assessee group no incriminatory material qua the assessee qua the assessment order was found. Further, it is also an admitted fact that in the assessment proceedings u/s 143(3) vide paragraph 5, learned AO considered the aspect relating to the share capital and did not draw any adverse inference. For the Asstt. Year 2006-07 on similar facts, a coordinate bench of this Tribunal considered the plea of the assessee vide Cross Objection No.457/Del/2015 in the light of the decision of the Hon'ble Apex court in the case of Kabul Chawla (supra) and recorded a finding that in the absence of any incriminatory material that was found during the search qua the assessee qua the assessment order does not open for the revenue to reopen the concluded assessments. With the said observations in ITA No.4798/Del/2015, a coordinate bench of this tribunal allowed the Cross Objection of the assessee and dismissed the appeal of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n bank accounts and issued cheques against such cash deposits. Sh. Goyal further clarifies that cases, wherein the cheques issued were not preceded by cash deposits, were genuine business transactions. The same stand has been repeated in his answer to Q.9 by Sh. Goyal. In his reply to Q.10, Sh. Goyal states that he had submitted detailed list of accommodation entries relating to cash of ₹ 40 crore deposited in various bank accounts. In the entire statement of Sh. Goyal. nowhere name of the appellant company or the SMC / Moolchand / Madhusudan group or any related entity has been mentioned. It is seen from the record that the share capital / premium in the appellant company was subscribed by _M/s GeefceeFinance Ltd. (GFC) through its bank account with Kotak Mahindra Bank; Arya Samaj Road, Karol Bagh bearing no.6l732000004160; and not through its account with FIDFC Bank, Ofd. Rajinder Nagar as mentioned in the said statement of Sh. Goyal. It is further seen that there is no cash deposit preceding the cheques issued by GFC to the appellant from its said account with Kotak Mahindra Bank. There are indeed transfer deposits from M/s Tejasvi, M/s Kartik and M/s Venus, possibly other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.12 28,533.97 It is seen that the share market consistently rose from the year 2000 up to the year 2007. Thereafter, it crashed in 2008 due to the global economic slowdown consequent to the US Sub-Prime Crisis, but again recovered during 2009 & 2010 to the level of 2007. 1 find that the appellant group has raised its share capital / premium during the years 2006-07 and 2009-10, periods when the share market was at its peak and would have facilitated raising capital. It appears that the subsequent market declines in 2008-09 and 2011 discouraged the group from going public and deferring its business expansion plan. It is also relevant that although the share market has recovered from 2012, the Indian economy has not been performing well in the period 2012 to 2014. 3.5 No doubt, appellant group received back control of the shares subscribed by the eventual transfer of such shares to its other group companies. No doubt the appellant company stood benefited by the amount of premium received. But having considered the rival claims, I am of the considered opinion that in the absence of any evidence to indicate that share capital / premium was raised through dubious means or against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital as unexplained in the present reassessment u/s 153A tantamounts to change of opinion not backed by any evidence and, therefore, not legally sustainable. 3.8 In view of the above, the addition of ₹ 80,00,000/- made as unexplained credit u/s 68 is deleted. These grounds of appeal are allowed accordingly." 13. The above finding of the first appellate authority,in the case of M/s MSPL which is another group of company of the assessee, for the AY 2006- 07 were confirmed by a coordinate bench of this Tribunal in ITA No.2544/Del/2015 vide order dated 10.10.2018. In such decision also, it was categorically observed by the Tribunal that in the search nothing incriminatory could be found against that group entity also as such by applying the ratio of the decision in the case of Kabul Chawla (supra), the Tribunal allowed the contentions of the assessee. 14. Referring to the 22 companies enumerated by the learned AO in his order involved in this matter, learned CIT(A) as a matter of fact recorded that the existence of all these companies were doubted by the ld. AO inasmuch as it is only by looking into the data base of these companies, learned AO found that some of the subscr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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