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TMI Blog2020 (5) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... tive of the fact whether any incriminating material is found during the course of search, the Assessing Officer is empowered to issue warrant and consequential assessment u/s 153A have to be undertaken. Section 153A proceedings were validly undertaken by the revenue authorities. Bogus share application money - The entries in the incriminating documents seized during the search and mentioned in the assessment order are not specifically adjudicated by the Ld. CIT (A). Furthermore, the observations of ld. CIT (A) that the assessee has furnished all the confirmations and details regarding share capital / share premium are not adjudicated in the light of incriminating materials appearing / mentioned in the assessment order. The assessment order clearly states that the assessee failed to prove the identity, genuineness and creditworthiness of the investors. In view of the above discrepancies found in the order of the CIT(A), we deem it fit and proper to set-aside such incomplete and cryptic order of the ld. CIT(A) and restore the matter back to his file to take due cognizance of all the specific evidences mentioned in the assessment order and pass a reasoned and speaking order. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introduction of the capital share/share premium etc. As a result of the said search action on these two premises, the Department seized certain papers such as a document pertaining to Aim Merchants Pvt. Ltd. wherein there are certain entries reflecting the transactions between the assessee and the Aim Merchants Pvt. Ltd.. As per the Revenue, Aim Merchants Pvt. Ltd. paid the money i.e. share capital/share premium to the assessee when the assessee raised the share capital. The Department also seized certain other papers such as copies of the share certificate (other documents page nos.10 to 15 of the assessment order). Based on these papers which are incriminating in nature, the Assessing Officer issued notice u/s 143(2) of the Act to the assessee. Further, the Assessing Officer, after detailed discussion of his order, completed the assessment u/s 143(3) r.w.s. 153A of the Act and made the additions of (i) ₹ 66,30,177/- on account of disallowance of expenses; (ii) ₹ 90,00,000/- on account of share application share premium money; and, (iii) ₹ 3,78,25,000/- on account of undisclosed income and added the same to the total income of the assessee for the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the fact that the A.O. made the addition, based on the incriminating evidence found during the course of search? 6. The appellant craves leave to add, alter, modify, delete, any amend any of the grounds, as per the circumstances of the case. 7. The appellant prays leave to adduce such further evidence to substantiate its case, as the occasion may demand. C.O. No.14/NAG/2015 A.Y. 2007-08 (Assessee) (1) That the order of the Assessing Officer is bad in law and wrong on facts and the learned CIT(A) erred in confirming the action of the AO. (2) That the learned Assessing Officer erred in law and on facts in issuing notice u/s. 153A of the Income Tax Act and the learned C.I.T.(A) has erred in confirming the action of the AO. On the facts and circumstances of the case and in law the action is illegal and the assessment u/s. 153A is bad in law. (3) That the AO erred in law and on facts in disallowing expenses under various heads totalling to ₹ 66,30,177/- and making the addition of same by holding that the same are non genuine and not required for paper transactions and the learned CIT(A) was justified in allowing the expenses and deleting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. DR for the Revenue filed the written submission and prayed for reversal of the order of CIT(A) on this issue relating to the share application money and share premium. 9. Referring to ground no.5, ld. DR for the Revenue mentioned that the CIT(A) erred in deleting the addition of ₹ 3,78,25,000/- ignoring the fact that incriminating material exists in support of the same and the CIT(A) s order is not a speaking order on this issue. Summarily, the ld. DR for the Revenue submitted that all the issues raised in the Revenue s appeal are required to be remanded and fresh adjudication is required by passing a speaking order by the lower authorities. 10. In connection with the Cross Objections filed by the assessee, ld. AR for the assessee submitted the moot issue raising in grounds no.1 and 2 relates to the illegality of the assessment u/s 153A of the Act when there is no incriminating material. It is the submission of the assessee s counsel that the notice should not have been issued when there is no incriminating material. Other cross objections/grounds raised by the assessee in Cross Objections relates to the merits of the additions and disallowances. 11. Arguments o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnesh Mines Pvt. Ltd. ₹ 4,73,18,750/- Which are added to total income as undisclosed income. As discussed in para 7.2 of the assessment order these bogus companies of D P Sarda group are used to route assessee's unaccounted cash. Para 8.12 of the assessment order. The addition is based on page no. 62 and 67 of Item no. 19 of annexure A-2 of the seized documents Declaration offered by the assessee u/s. 132(4) of the 1. T. Act was based on the seized incriminating material. 502/Nag/2014 2006-07 Share Premium ₹ 43,50,000/- Share application money ₹ 21,91,50,000/- The assessment order discusses the seized documents on this issue at paras 7.10 to 7.14. The share application money and the share premium is shown to be received from 40 different bogus entities. The assessment order mentions few such names at para 7.14, viz., Dogma Exim, Advent Commercial, Harmit Garments, Alto Vision Pvt. Ltd, Champion Traders which are proved to be paper companies from the seized documents. 503/Nag/2014 2008-09 Undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion money and premium as non genuine. (page 20 of the CIT (A) order). Ld. CIT (A)'s decision is contrary to the facts mentioned in the assessment order. The entries in the incriminating documents seized during the search and copied in the assessment order are not discussed by Ld. CIT (A). 13. Referring to the above appeal of the Revenue and the Cross Objection filed by the assessee, ld. Counsel for the assessee mentioned that the issues are required to be decided before travelling into the merits of the case. In this regard, ld. Counsel for the assessee brought our attention to the Cross Objection No.14/NAG/2015 (objection no.2) and mentioned that in the absence of seized material incriminating one, the Assessing Officer is not justified in making the assessment u/s 153A of the Act. Further ld. AR submitted that in this kind of completed assessments, AO is prevented from making general additions unsupported in the seized material. Decision of the Tribunal 14. We have heard both the sides on this legal issue as well as on merits regarding the additions made by the Assessing Officer. We have also perused the orders of the Revenue authorities. Further, we find the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice for earlier six years entirely even when there is no incriminating material. Therefore, in case of section 153A of the Act, the legal scenario is that the reopening can be done by the Assessing Officer and the warrant is issued even without having any incriminating material. The Hon ble Rajasthan High Court in the case of Jai Steel India vs. ACIT vide Income Tax Appeal No.53/2011 dated 24.05.2013 has categorically held that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment proceedings also have to be read in context that irresp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized document appears in the bank account in the IDBI bank of Aim Merchants Pvt. Ltd. All the deposits in bank account are through transfer entries. On examination of the bank account it is seen that the address of Aim Merchants Pvt. Ltd. is at Kolkata. However, one of the directors is Krishna Bedi whose address is at Nagpur and he is involved in giving bogus contract bills to the assesses. Another Director Arunkumar Behera is a person of no means. 18. That another relevant nexus of assessee was with one Mr. D.P. Sarda. This Mr. D.P. Sarda was in control of several companies. He is in close association with Gupta group of companies. In fact the name of Aim Merchants Pvt. Ltd. is also found in the seized documents of D P Sarda group amongst the companies used for money laundering. The Gupta Group has received share application monies from these companies. The documents seized in Gupta Group are copies of two share certificates dated 15/01/2007 which is the irrefutable evidence of investment of ₹ 9,00,000/- share application money by Aim Merchants Pvt. Ltd. in Gupta International Industries Ltd. in the previous year pertaining to A.Y. 2007-08. These facts are clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is partly allowed for statistical purposes. ITA Nos.491, 502 503/NAG/2014 (A.Y. 2009-10, 2006-07 2008-09 By Revenue ) C.O. Nos.15, 16 17/NAG/2015 (A.Y. 2009-10, 2006-07 2008-09 By Assessee) 22. Remaining appeals of the Revenue as well as Cross Objections of the assessee : As stated in earlier paragraphs of this order, the identical issues are involved in all the appeals of the Revenue and its Cross Objections of the assessee, therefore, our decision in ITA No.490/NAG/2014 and its C.O. No.14/NAG/2015 for the assessment year 2007-08 shall apply mutatis mutandis to these remaining appeals of the Revenue as well as Cross Objections of the assessee. Accordingly, the remaining appeals of the Revenue in ITA Nos.491, 502 503/NAG/2014 for the assessment years 2009-10, 2006-07 2008-09 are allowed for statistical purposes and the remaining Cross Objections of the assessee in C.O. Nos.15, 16 17/NAG/2015 for the assessment years 2009-10, 2006-07 2008-09 are partly allowed for statistical purposes. 23. To sum up, all the above captioned appeals of the Revenue are allowed for statistical purposes and all the Cross Objections of the assessee are partly allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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