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TMI Blog2021 (10) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... A) which is based on various judicial principles and on the facts of the case cannot be tinkered with without any contrary material or rebuttal by the Department, therefore same is confirmed. - Decided against revenue. - I.T.A. No.4054/DEL/2017 - - - Dated:- 15-9-2021 - Shri Amit Shukla, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Appellant : Ms. Shushma Singh, CIT-DR For the Respondent : Shri Ajay Wadhwa, Adv. ORDER PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the Revenue against the impugned order dated 31.03.2017, passed by Ld. Commissioner of Income Tax (Appeals)-XXX, New Delhi for the quantum of assessment passed u/s. 153A/153C for the Assessment Year 2011-12. In the grounds of appeal, the Revenue has raised following grounds:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing the A.O. to delete the addition made u/s 68 of the I.T. Act on account of unexplained cash credits amounting to ₹ 6,56,85,362/-. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid legal issue are that the original return u/s. 139(1) for the Assessment Year 2011- 12 was filed on 28.09.2011 which was duly processed u/s.143(1). Thereafter a search and seizure action u/s.132 was conducted on various business premises of Prakash Industries Ltd. on 30.10.2012. As per the assessment order, certain documents belonging to the assessee, M/s. Ankit Nivesh and Management Pvt. Ltd. were found and accordingly a satisfaction note u/s 153C was recorded by the Assessing Officer of M/s. Prakash Industries and notice u/s.153A read with Section 153C was issued on 19.09.2014. In response to the said notice same return was filed showing Nil income which was filed earlier. In the assessment order, the Assessing Officer noted that assessee had shown to have received share capital of ₹ 6,02,50,000/ from M/s. Vanshi Farms Pvt. Ltd. 4. Apart from that, Assessing Officer also noted that during the relevant year assessee has made investment with M/s. Prakash Industries Ltd. amounting to ₹ 10,89,64,617/- for stock-in-trade and sold/adjusted stock of ₹ 38,11,08,805/-. However, no addition was made on this point. 5. Thereafter, the Assessing Officer after de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice u/s 153C of the Act, was issued on 09.10.2014 and 12.02.2015, after recording reasons. In the satisfaction recorded by the A.O., certain documents inventoried as Annexure A-2, A-3, A-8, A-7, A-13, A-14, A-28 and A-22 have been considered. (iii) In the assessment proceedings, the A.O. has observed that assessee has received aggregate share application money of ₹ 6,02,50,000/-. The assessee has also traded online into shares of M/s Prakash Industries Ltd. through stock exchange / broker viz M/s Religare Securities Limited which resulting into purchase of stock in trade of shares of ₹ 10,89,64,617/- and sale of stock in trade of shares of ₹ 3,81,08,805/- and closing stock remained of ₹ 6,56,85,362/-. Therefore, the A.O. has asked to explain the source of the share application money and sale of investments. (iv) In the assessment order, the A.O. stated that the share applicants were having no worth for share capital premium, therefore, the identity, creditworthiness genuineness of transactions stands unproved. The A.O. further observed that beside the above, another funds raised by sale proceeds of investments was also not genuine, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order, the description of seized papers, as per Annexure A-15 to A-25, are mentioned and for sake of clarity, same is reproduced as under:- S. No. Annexure number Pages Description (all cheques books of different companies) 1 A-15 1-200 M/s Pareek Overseas Pvt. Limited M/s Evershine Mercantile Pvt. Ltd M/s Sun view Trading investment Pvt Ltd 2. A-16 1 to 140 M/s Tools India Pvt. Ltd M/s Shree Labh Paxmi Capital Services M/s Sanskriti Tie-up Pvt. Ltd 3. A-17 1 to 196 M/s Deo Steel Mines Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Hi-tech Mercantile Pvt. Ltd M/s Vanshi Farms Pvt. Ltd Besides the above, in the satisfaction note dated 19.9.2014, the A.O. has mentioned about relevant seized papers inventorised as A- 2, A-3, A-8, A-13, A-14, A-28 and A-22, which contains, the trial balance, resolution, auditor reports, income tax returns, cheque books and certified copy of resolutions pertaining to the assessee. (vii) In the assessment order, the A.O. stated that from material found during search action u/s 132 of the Act, which contain signed blank cheque book of various companies, at corporate office of M/s Prakash Industries Ltd., Srivan, Bijwasan, that the assessee company is completely controlled by Shri Ved Prakash Agarwal, Chairman of M/s Prakash Industries Ltd. (viii) In the assessment proceedings, the Assessing Officer has stated that the share applicant, was not having any worth for investing in share capital of the assessee, therefore, creditworthiness and genuineness of transactions remained unexplained. Therefore, the Assessing Officer was of the view that the amount of ₹ 6,56,86, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant which is from loan taken from M/s ACG Associated Capsules Pvt. Ltd. is accepted as genuine. However, A.O. took adverse view on the basis of post search enquiries in the case of Prakash group, bank enquiries, all the companies show meager profits, all companies are situated at table place not having any infrastructures, appellant failed to produce the person conducting the operations of these companies and also the statements recorded of various persons, relating to share capital. In this regard, the AR has submitted that the A.O. failed to bring on record any evidence, contrary to the transactions of share application money received and sale of investments, which will show that amount credited in the books for making investment in shares of M/s Prakash Industries Ltd, are unexplained. It has also been submitted by the AR that the statement recorded of various persons, were bald / irrelevant and vague in nature as Shri Ved Prakash Agarwal himself stated wrong fact that capital introduced in the assessment proceedings in the FY 2007-08 while no share capital / premium received by M/s Ankit Nivesh Management Pvt. Ltd. The alleged entry operator himself nowhere admits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was pending at the time of initiation of action u/s 132 of the Act. It is further submitted that the appellant was already assessed u/s 143(1) of the Act and therefore, assessment was not abated. Consequent to the search action u/s 132 of the Act, such assessment has to be made on the basis of incriminating material found during the course of search. If no incriminating material has been found and the A.O. had already taken a view on such particulars of income, during regular assessment proceedings, then it is not open to the A.O. to make any addition in the assessment order u/s 153C/153A of the Act, in absence of any incriminating material found in the search action u/s 132 of the Act. (xvii) In the appellate proceedings, AR has further submitted that the signed Blank cheque books of the promoter group companies, including one of the investor company M/s Ankit Nivesh Management Private Limited, as annexure A-22, were lying for the purpose of payments of statutory dues, fees, taxes, etc. Therefore, it is submitted that these signed blank cheque books, have no bearing / determination on transactions of alleged amount received as share capital / premium in the appellant co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned cash credit u/s 68 of the Act on account of share application money/premium ₹ 6,56,85,362/- Unexplained expenditure on account of brokerage @0.5% : ₹ 3,01,250/- Total : ₹ 6,59,86,612/- Therefore, it is submitted by the appellant that in absence of any incriminating document, no addition can be made u/s 153 A of the Act, when the assessment is not abated. (ii) In the appellate proceedings, for the above grounds, besides giving various arguments and submissions, the appellant has also relied upon the ratio laid down in the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Kabul Chawla 2015, 61 Taxmann.com 412(Del), since no incriminating document was found during search action u/s 132 and also assessment was not abated. (iii) In the appellate proceedings, it is further submitted by the AR that the statements recorded during search action u/s 132 of the Act, cannot be considered as a document found seized. For this argument, the AR also relied upon the ratio laid down in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chawla (supra). Further, any statement recorded of a different person in the case of another search cannot be held to be incriminating material for the purpose of assessment within the scope of Section 153A and Section 153C has held by the Ld. CIT (A) following the decision of Hon ble Jurisdictional High Court. 8. It has been well settled by the Hon ble Supreme Court in case of CIT Vs. Sinhgad Technical Education Society (397 ITR 344) (SC) wherein the Hon ble Apex Court upheld the order of the Tribunal that addition cannot be made for the assessment years for which there are no incriminating documents found during the course of search in the assessments framed u/s 153C. The Hon ble Court upheld the order of the Tribunal in the following manner:- 16) In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The events recorded above further disclose that the issue pertaining to validity of notice under Section 153C of the Act was raised for the first time before the Tribunal and the Tribunal permitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy. The sequitur of the judgment which can be culled out is that, seized incriminating material has to pertain to the assessment year in question and have co-relation, document-wise, with the assessment year. This requirement u/s 153C is essential and becomes a jurisdictional fact. It is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in S. 153A . This judgment of the Hon ble Supreme Court clearly clinches the issue in favour of the assessee in this case. 9. Recently, Hon ble Delhi High Court in case of PCIT Vs. Allied Perfumes P Ltd. (2021 ) 431 ITR 237 (Delhi) held as under:- 13. Upon reading of the aforesaid extracted portion of the impugned order, it is clearly discernable that the ITAT has given a finding of fact that the assessments make no reference to the seized material or any other material for the years under consideration, that was found during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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