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TMI Blog2019 (5) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri P.M. Jagtap, Vice-President (KZ) And Shri S.S. Viswanethra Ravi, Judicial Member For the Appellant : Shri Somnath Ghosh, Advocate For the Respondent : Shri A.K. Nayak, CIT (D.R.) ORDER PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KOLKATA ZONE):- This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-21, Kolkata dated 27.07.2018 and the solitary issue involved therein relates to the addition of ₹ 15,00,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of share application money received by the assessee during the year under consideration by treating the same as unexplained cash credit under section 68 of the Income Tax Act, 1961. 2. The assessee in the present case is a Company, which belongs to Bhalotia Group. A search and seizure action under section 132 was conducted on 01.12.2015 in the cases belonging to Bhalotia Group including the case of the assessee. In pursuant to the said action, notice under section 153A was issued by the Assessing Officer, in response to which the return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee to the question why the subscribers have paid money for the equities of a closely held company that had little income generation activity and that too at a premium of up to ₹ 90/- per share. (iv) The share subscribers have also failed to reply why they had invested in the equities of the assessee company at a high premium of up to ₹ 90/- per share. (v) No prudent person would put his money at stake in the equities of a closely held company which had little business activity and from which he would get no return. (vi) In such cases, the agreement about real transactions takes place in secret and direct evidence about such direct transaction/agreement would not be available to the department in normal circumstances. (vii) The result of these transactions are designed in a way that unaccounted money or cash was brought in the books of the assessee company either in the form of equities or unsecured loan through multiple layers. (viii] Every single credit entry in the bank accounts of the share subscribers is followed by a corresponding debit entry of equivalent amount on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was not satisfactorily explained by the assessee in terms of section 68 and an addition to that extent was made by him to the total income of the assessee by treating the share application money as unexplained cash credit in the assessment completed under section 153A/143(3) of the Act vide an order dated 27.12.2017. 3. Against the order passed by the Assessing Officer under section 153A/143(3), an appeal was filed by the assessee before the ld. CIT(Appeals) and since the submissions made by the assessee in support of its case that the addition made by the Assessing Officer under section 68 was not sustainable, were not found acceptable by the ld. CIT(Appeals), he proceeded to confirm the addition made by the assessing Officer under section 68, inter alia, for the following reasons given in his impugned order:- I have carefully considered the action of the Ld. AO in making an addition of ₹ 15,00,000/-, as unexplained credit u/s 68 of the Income Tax Act, 1961. After an exhaustive discussion and elaborating the factual and legal matrix, I find that the Ld. AO has held that the claim of the appellant of having raised share application monies was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.12.2015. He contended that the scope of unabated assessment for the year under consideration under section 153A of the Act was confined to assessment of undisclosed income of the assessee as detected on the basis of incriminating material found during the course of search and since there was no incriminating material found during the course of search, which could form the basis of the addition of ₹ 15,00,000/- made by the Assessing Officer by treating the share application money as unexplained cash credit under section 68, the same is not sustainable. In support of this contention, he relied, inter alia, on the decision of the Hon ble Delhi High Court in the case of PCIT vs.- Kurele Paper Mills Pvt. Limited [380 ITR 571] as well as the decision of the Hon ble Calcutta High Court in the case of PCIT vs.- Salasar Stock Broking Limited (ITAT No. 264 of 2016 dated 25.08.2016). 5. The ld. D.R., on the other hand, contended that the Bank accounts found during the course of search revealed the share application money received by the assessee during the year under consideration and since the impugned addition by treating the share application money a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble by the Hon ble Delhi High Court. In the case of Salasar Stock Broking Limited (supra), it was held by the Hon ble Calcutta High Court that incriminating material is pre-requisite before power could have been exercised under section 153A and the Assessing Officer had no jurisdiction under section 153A to reopen the concluded cases when the search and seizure did not disclose any incriminating material. 8. In the present case, the addition of ₹ 15,00,000/- by treating the share application money as unexplained cash credit under section 68 was made by the Assessing Officer in the assessment completed under section 153A of the Act on the basis of Bank account found during the course of search and since the said Bank account as well as the transactions reflected therein were duly disclosed by the assessee in its return of income originally filed for the year under consideration, we find ourselves in agreement with the contention of the ld. Counsel for the assessee that the same cannot be treated as incriminating material found during the course of search. The addition of ₹ 15,00,000/- made by the Assessing Officer under section 68 and confir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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