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TMI Blog2023 (6) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... Judicial Member For the Assessee : Ms. Gunjan Jain, CA For the Department : Ms. Sarita Kumari, CIT DR ORDER PER YOGESH KUMAR U.S., JM This appeal is filed by the Revenue against the order dated 17/03/2017 passed by the CIT (A)-24, (hereinafter referred to CIT(A) )New Delhi for assessment year 2009-10. 2. The Revenue has raised the following grounds of appeal:- 1. The order of Ld. CIT(A) is not correct in law and on facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 54,59,00,000/- on account of unexplained share capital by holding that the additions other than those based on seized documents cannot be done in the assessment proceedings u/s 153C. 3. On the facts and circumstances of the case, the CIT(A) has erred in relying on the order of Hon ble Delhi High Court in case of M/s RRJ Securities as Sec. 153C does not restrict the assessment to incriminating documents. 3. Brief facts of the case are that, a search and seizure operation u/s 132 of the Income Tax Act was carried out on the Rockland Group of cases on 06.09.2011. The assessee belongs to the Rockland group, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r than those based on seized document cannot be done in the assessment proceeding u/s 153C and erred in relying on the order of the Delhi High Court of M/s R R J Securities as Section 153C of the Act does not restrict the assessment to incriminating documents. 7. On the other hand, the Ld. AR contended that the Ld.CIT (A) rightly observed that the purported incriminating material pertains to Assessment Year 2010-11 and not pertain to Assessment Year 2009-10, in view of the said undisputed fact, the issue is squarely covered by the judgment of the Hon'ble Supreme Court in the case of Hon'ble Supreme Court in the case of CIT IIIPune Vs. Singhad Technical Education Society[2017] 397 ITR 344. Therefore, the substantive addition based on purported incriminating pertaining to Assessment Year 2010-11 cannot found basis of addition in the Assessment Year 2009-10, therefore, submitted that the present appeal filed by the Revenue is devoid of merit. 8. We have heard both the parties and perused the material available on record. The Ld. A.O made addition of Rs. 29.73 crores on protective basis and Rs. 24.27 crore on substantive basis in following manners:- 3.15 In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantive basis, which clearly attracts provisions of penalty proceedings u/s 271(1)(c) of the IT Act. The penalty proceedings u/s 271(1)(c) of the IT Act has been initiated separately. (Addition of Rs. 297334823/- on protective basis) (Addition of Rs. 242744823 on substantive basis). 9. Since an amount of Rs. 29,73,34,823/- has been made protective basis and and a sum of Rs. 24,27,44,823/- has been made on substantive basis a specific query has been raised with the Ld. Assessee's Representative regarding the outcome of addition made on protective basis. The Ld. Assessee's Representative brought to our notice that Rockland Hospital Group moved an application before the Income Tax Settlement Commission ( Ld. Settlement Commission ), and accordingly, the Ld. Settlement Commission vide its order dated 16.10.2015 accepted the contention of Rockland group that a sum of Rs. 8.73 crores were circulated on multiple occasion to introduced share capital. The Ld. Settlement Commission recorded its finding at para 4.2.3 of its order dated 16.10.2015 wherein it also dealt with share capital introduced by the assessee i.e., M/s Lipi Finstock limited. The addition was con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital in RHL is found to be Rs. 82.34 crore. RHL has withdrawn depreciation claim on Inflated cost of hospital building. During present proceedings, we Inquired of the AR as to the purpose of raising such share capital by way of inflated purchases bills/assets. The AR stated that the purpose was to obtain higher finance from banks/financial Institutions. He further added that the applicant is not a defaulter of any financial institutions. Since the necessary verification has been done and found to be satisfactory, the additional amount of Rs. 1.04 crore over and above the amount of Rs. 6.79 crore in accordance with applicant's letter dated 06.10.2015 is directed to be added in their respective individual hands as- under: Considering the above fact that the addition was confirmed in the hands of other Assessees and not on the assessee here in by the settlement Commission, the protective assessment made in the hands of the assessee does not survive. 10. In so far as addition of Rs. 24,27,44,823/- on substantive basis, the said addition has been deleted by the CIT(A) on the ground that the incriminating material found during the search is pertaining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (debt) from Financial Institutions. It would however be noticed that the share capital inflow of A.Y. 2009- 10 is not covered in this admission. There is no other evidence seen in the assessment order which indicates that any incriminating material has been unearthed during the search (including statement of the Directors or third parties), which would show that the additions are based on material unearthed during the search. Of course there is evidence to doubt the genuineness of the equity increase for this year, in the form of local enquiries at Kolkata, Lai Bazar, Post Office and the statements of the purported auditor of the investor companies as well as the Directors of the Investor companies. But the results of these enquiries cannot be said to be material unearthed during search. It appears that the results of these enquiries ( if it were indeed available during the search) were not even confronted to the Directors of the appellant company during the search. The fact that there is evidence of bogus share capital from the period 2006-07 to 2008-09 does not automatically constitute evidence regarding share capital for A.Y. 2009-10. The additions made by A.O., though based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... summarized the legal position in respect of Section 153A of the Act as under: '37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. ii The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the. power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O after examining the seized assets/documents handed over to him. It is only in cases where the seized documents/assets could possibly reflect any undisclosed income of the Assessee for the relevant assessment years, that further enquiry would be warranted in respect of those years. Whilst, it is not necessary for the AO to be satisfied that the assets/documents seized during search of another person reflect undisclosed income of an Assessee before commencing an enquiry under Section 153C of the Act, it would-be impermissible for him to commence such enquiry if it is apparent that the documents/assets in question have no bearing on the income of the Assessee for the relevant assessment years. 37. As expressly indicated under Section 153C of the Act the assessment or reassessment of income of a person other than a searched person would proceed in accordance with the provisions of Section 153A of the Act. The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized. 38. As indicated above, in the present case, the documents seized had no relevance or bearing on the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation Society [2017] 397 ITR 344 (S.C) held as under:- 18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provision of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under the provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Not and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004 05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges there from is discussed in para 10. It was specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X
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