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TMI Blog2022 (2) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... r. On the next final hearing on 22.11.2021, DR placed on record before us the paper book. Upon perusal thereof, it has been observed that all these documents are forming part of assessment records before the AO and have already been considered during the appellate proceedings before the Ld. CIT(A). After carefully considering the entirety of facts and principles of law enshrined by various courts including jurisdictional Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] and Index Securities Pvt. Ltd [ 2017 (9) TMI 585 - DELHI HIGH COURT ] and Apex Court in the case of CIT v. Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT ] we are inclined to agree with the view of the Ld. CIT(A)that since the assessment based on the original return of income filed under sec. 139 of the Act was not pending as on the date of search as such, the additions made by the Assessing Officer in the absence of any incriminating material found during the course of search belonging to the assessee for the assessment year under consideration is legally unsustainable. Revenue has not been able to rebut the findings recorded by the ld CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out on 20.01.2014 in the case of M/s apsa Logistics Pvt. Ltd., M/s Mapsa Infra Pvt. Ltd. and in case of Late Shri Pyare Lal Gupta, Mrs. Veena Gupta at D-28, Model Town-2, Delhi. During the course of search operation at the above said premises, certain documents/hard disk were found and seized. 2.1 Despite the fact that in the case of the assessee, no search was conducted u/s 132 of the Act, a notice u/s 153A of the Act dated 28.08.2015 was served on the assessee. The aforesaid notice issued u/s 153A of the Act was objected by the assessee vide its objections dated 26.10.2015 wherein it was contended that since no search was conducted in the case of the assessee as such, notice issued u/s 153A of the Act was without jurisdiction and hence the proceedings initiated vide notice dated 08.09.2015 issued u/s 153A of the Act should be dropped. 2.2 Thereafter, in continuation of the proceedings initiated u/s l53A of the Act, the assessee was served with a notice issued under section 153C of the Act on 23.02.2016. In response thereto, return declaring an income of ₹ 91,59,660 was filed by the assessee on 25.02.2016. Assessment was completed u/s 153C/143(3) of the Act on 31.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate entities, duly assessed to tax and, had subscribed to share-capital by account payee cheques and supported by necessary evidence including their permanent account numbers, confirmations, addresses, etc. iii. All shareholders were not only identifiable companies but also had requisite credit worthiness. Notices sent by the AO to all these shareholders u/s 133(6) of the Act were duly served, which proved the existence of these shareholders. iv. The AO did not discharge onus cast upon him under law by bringing any evidence or material to rebut the evidences furnished by the assessee. v. The AO had grossly erred in relying on the alleged material found from the premises of Shri. S.K. Jain statement of Shri. S.K. Jain and Shri. Arun Khemka in complete violation of the principles of the natural justice without appreciating that no investment was ever made either by Shri. S.K. Jain or Shri. Arun Khemka in the share capital of the assessee company. vi. The AO while making an arbitrary addition of ₹ 8,74,500/- on account of alleged commission paid for providing accommodation entry, did not bring any material to establish that the assessee had incurred such expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther even after making the specific query the AO has failed to identify any incriminating document related or belonging to the assessee which was forwarded by the AO of the searched person. Further from the perusal of documents above it is apparent that all the transactions as specified above have duly been recorded in the books of accounts of the appellant company. Moreover perusal of the order of assessment would show that no adverse inference has been drawn on the basis of any of the seized documents. The only addition made by the AO is on account of alleged unexplained share capital which is not even remotely based on any of the aforesaid seized documents. Hence in absence of any such specific incriminating material, assumption of jurisdiction under section 153C of the Act is not tenable. If the AO had reasons to doubt the genuineness of share capital, then proceeding should have been initiated under appropriate provision of the Income Tax Act. 4.4 In the case under consideration it is an undisputed fact that no incriminating documents has been seized , thus in light of the judgements of Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in 380 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of Principal Commissioner of Income Tax, (Central) 2 vs. Index Securities Pvt. Ltd. reported in [2017] 86 taxmann.com 84. In the aforesaid case, the Hon ble High Court relying on the judgment of the Apex Court in the case of CIT v. Sinhgad Technical Education Society reported in [2017] 397 ITR 344 has held that to justify the assumption of jurisdiction under Section 153C of the Act the documents seized must be incriminating and must relate to each of the AYs whose assessments are sought to be reopened. The relevant para of the aforesaid judgment is as under: 31. As regards the second jurisdictional requirement viz., that the seized documents must be incriminating and must relate to the AYs whose assessments are sought to be reopened, the decision of the Supreme Court in Sinhgad Technical Education Society (supra) settles the issue and holds this to be an essential requirement. The decisions of this Court in RRJ Securities and ARN Infrastructure India Ltd. v. Asstt. CIT [2017] 394 ITR 569/81 taxmann.com 260 (Delhi) also hold that in order to justify the assumption of jurisdiction under Section 153C of the Act the documents seized must be incriminating and mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us share capital/ premium entry through paper companies controlled by me to Mapsa Group in lieu of a certain percentage of commission. In case of bogus unsecured loan commission income is derived out of the TDS deducted as well as the interest earned on the TDS. The client used to give me cash in lieu f which I would provide bogus unsecured loan vide cheques issued through bank accounts of paper companies controlled by me. In the case of bogus share capital share premium entry the client would give me cash in return of which I would give them cheques. Q.11. You are being shown Annexure A which consists a list of thirty paper companies controlled by you from different office premises which were used for the purpose of providing bogus share capital entry as well as bogus unsecured loan. Please confirm the same. A.11. In have gone through annexure A and I confirm that all the companies mentioned in the list are controlled by me and were used to give bogus share capital entry as well as bogus unsecured loan to Mapsa Group. The address of company no. 9 is incorrect though the company is mine. ii. Statement of Sh. Mahesh Gupta u/s 132(4) dated 11.03.2014 (pg 1-5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Companies Act or under any other law which recognizes Mapsa Group of companies or establishes any relationship of the assessee company therewith. c) Sh. Arun Kumar Khemka has later retracted his aforesaid statement dated 20.01.2014 and cannot be relied upon. d) No investment was ever made by Mr S.K. Jain or Mr Arun Kumar Khemka in the form of share capital/ premium of the assessee company. The only sum of money received by the assessee company from Mr Arun Kumar Khemka/ any of his companies was in the form of unsecured loan, which was duly returned by the assessee company through normal banking channels after payment of TDS on interest accrued on such loan from time to time. e) From the statement of Mr Mahesh Gupta dated 11.03.2014 placed at pages 1-5 of the Revenue s paper book, it is clearly evident that: He was not a director of the assessee company during the year under appeal and was not competent to make any statement on behalf of the assessee company. Page 1 of the statement clearly notes that the statement of Mr Mahesh Gupta was recorded on oath on behalf of M/s Mapsa Infra Pvt Ltd, M/s Mapsa Logistics Pvt Ltd, Mapsa Jewels Corpn and not the assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity has been pointed out in the order of Ld. CIT(A) nor any incriminating material has been placed on record by the Ld DR, except the statements of Sh. Arun Kumar Khemka and Mr Mahesh Gupta. As stated above, these statements were already on record before the AO and no adverse inference can be drawn from these statements for various reasons already mentioned in para 12 of this order. The Revenue has not been able to rebut the findings recorded by the ld CIT(A). Hence, we uphold the order of the Ld. CIT(A) on various legal issues raised by the assessee. The Revenue has not even challenged the finding of the Ld CIT(A) in para 4.4 of his appellate order fact that no incriminating documents has been seized . We find absolutely no justification for the AO to initiate proceedings against the assessee and as such the finding of the Ld CIT(A) cannot be held to be erroneous either on facts or in law. Thus, for the reasons stated above and as has been upheld by the Ld CIT(A) in his order which we fully agree, we do not find any merit in the appeal by the Revenue, which is hence dismissed. 16. It will not be out of place to mention here that without prejudice to the legal grounds, we are i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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