ACIT, CC-13, NEW DELHI V. MINDA CAPITAL PVT. LTD., NEW DELHI

ITA 1854/DEL/2021

AI Insights

The case involves multiple appeals by the Revenue against M/s Minda Capital Pvt. Ltd. concerning the assessment years 2011-12 to 2015-16. The appeals were based on additions made by the Assessing Officer (AO) under various sections of the Income Tax Act, primarily alleging bogus trading in fabrics and unexplained investments. The CIT(A) had deleted these additions, leading to the Revenue's appeal to the Tribunal. The Tribunal examined whether the additions were justified and if the proceedings under Section 153A were valid. The Tribunal concluded that the additions were not supported by incriminating evidence and thus were not sustainable under the law.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36991 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Other Referred Cases: CIT Vs Kabul Chawla, PCIT vs. Abhisar Buildwell (P) Ltd, PCIT vs Jaypee Financial Services Ltd, PCIT Vs. Meeta Gutgutia, CIT vs Singhad Technical Education Society, ACIT vs. Creamy Foods Ltd. & Anr., DCIT vs Sundaram IT Parks Pvt. Ltd., ACIT vs M/s Five Vision Planners Pvt. Ltd., PCIT vs M/s Dreamcity Buildwell Pvt. Ltd., TDI Infrastructure Ltd. vs DCIT, ACIT vs Realtech Construction Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL AGGARWAL
• Assessee Lawyers: BALJEET KAUR
• Keywords: Unexplained expenditure; Document seized; Documents seized; Bogus purchase; Reopening of assessment; Search and seizure; Scheme of amalgamation; Bogus
• Section: 147; 143(3); 132; 153A; 69C; 13; 14A; 20

Judgement Text

"P a g e | 1 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA Nos.1073 to 1076 & 1854/Del/2021 (A.Ys. 2011-12 to 2015-16) DCIT, Central Circle-13, Room No. 247, E-2 ARA Centre, Jhandewalan Extension New Delhi-110055 Vs. M/s Minda Capital Private Limited., House No.A-15, Ashok Vihar, Phase-1, North-West, New Delhi-110052 \u0001थायी लेखा सं./जीआइआर सं./PAN/GIR No.: AABCS7843P Appellant .. Respondent Appellant by : Sh. Salil Aggarwal, Sr. Adv. Sh. Shailesh Gupta, Adv. Respondent by : Ms. Baljeet Kaur, CIT, DR Date of Hearing 11.12.2024 Date of Pronouncement 07.03.2024 O R D E R PER BENCH: These five appeals have been filed by the Revenue against the separate orders of the Ld. CIT(A)-26 passed under Section 153A r.w.s. 143(3) of the Income Tax Act, 1961 for Assessment Years 2011-12 to 2015-16 respectively. P a g e | 2 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) Since all the 05 appeals are inter-connected, hence, the same were heard analogously and being disposed of by this common order for the sake of convenience, by dealing with the facts of the Assessment Year 2011-12. 2. The grounds raised in Assessment Year 2011-12 reads as under:- 1. Whether the Ld. CIT(A) is correct in deleting the addition on account of unexplained investment and on account of brokerage charges @ 2% amounting to Rs.20,00,000/-/- and Rs.4,00,000/-respectively. 2. Whether the Ld. CIT(A) is correct in deleting the addition amounting to Rs. 1,93,20,641/- on account of fabricated bills of purchases and sales and completing ignoring the fact that the same was admitted by Shri Ashok Minda, Director and Controlling person in his statement recorded under oath under Section 132(4) of the IT Act. 3. (a) The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.” 3. The grounds raised in Assessment Year 2012-13 reads as under:- “1. The Ld. CIT(A) has erred in law and on facts in holding the fact that the addition made by the AO on account of the difference in value of sales & purchases and considering cost of arranging sales/purchases entries @ 2% is based on wrong facts presumed by the AO w.r.t. business activities of the appellant company for the year under consideration and is not sustainable. 2. The Ld. CIT(A) has erred in law and on facts in holding the fact that the disallowance of direct expenses made by the AO is based on wrong facts presumed by the AO w.r.t. business activities of the appellant company without bringing any adverse material on record 3. The Ld. CIT(A) has erred in law and on facts in holding that the appellant was not engaged in the business of bogus trading of fabric but was in the business of export of tools& equipment during the year under consideration. 4. The Ld. CIT(A) has erred in law and on facts in deleting the addition which constitutes commission on bogus sale, commission on bogus purchase, difference of sale and purchase and expenditure of bogus trading amounting to total of Rs. 10,05,36,474/- made by the AO under Section 69C as bogus trading in fabric considering it the genuine transactions of business of auto components. P a g e | 3 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) 5. (a)The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.” 4. The grounds raised in Assessment Year 2013-14 reads as under:- “1. Whether the Ld. CIT(A) has erred in law and on facts in holding that the addition made by the AO, on account of the difference in value of sales & purchases and considering cost of arranging sales/purchase entries@2%, is based on wrong facts presumed by the AO w.r.t. business activities of the appellant company for the year under consideration and is not sustainable. 2. The Ld. CIT(A) has erred in law and on facts in holding the fact that the disallowances of the direct expenses made by the AO is based on wrong facts presumed by the AO w.r.t. business activities of the appellant company for the year under consideration and without brining any adverse material on record and is not sustainable. 3. The Ld. CIT(A) has erred in law and on facts in holding that the appellant had not been engaged in the business of bogus trading of fabric as alleged by the AO, but was in the business of export of tools& equipment during the year under consideration. 4. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.6,04,62,890/- made by the AO under Section 69C by treating the bogus transaction of business of fabric as genuine business of auto components. 5. Appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal. 6. (a) The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.” 5. The grounds raised in Assessment Year 2014-15 reads as under:- “1. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs: 132.95 cr. under Section 69C of the IT Act despite the fact that the said amount of Rs. 132 cr. was introduced in M/s Minda Capital Pvt. Ltd. by way of amalgamation. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 68.89 cr. under Section 56(2)(vii) of IT Act despite the fact P a g e | 4 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) that purchase of shares of M/s Whiteline Barter Ltd. were made below the book value of shares. 3. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 39.85 cr. under Section 56(2)(vii) of IT Act despite the fact that purchase of shares of M/s Yojna Management Pvt. Ltd. were made below the book value of shares. 4. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 69.50 lacs made on account of undisclosed investment in the form of share application money by Accredit Financial Consultants Pvt. Ltd. which was merged/amalgamated in the assessee company. 5. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 14.77 cr. made by AO under Section 69C by treating bogus trading of fabric as genuine transaction of business of auto component despite the fact that one of the Director Mr. Ashok Minda of the assessee company has admitted on the oath of not doing any trading in fabric. 6. (a) The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.” 6. The grounds raised in Assessment Year 2015-16 reads as under:- “1. The Ld. CIT(A) has erred in law and on facts in holding the fact that the disallowance of direct expenses made by the AO is based on wrong facts presumed by the AO w.r.t. business activities of the appellant company without bringing any adverse material on record. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of expenditure of bogus trading amounting to total of Rs. 2,18,53,269/- made by the AO under Section 69C. 3. (a) The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.” Assessment Year: 2011-12 7. The brief facts leading to the case are that a search and seizure operation was carried out on the assessee on 18.06.2017 under Section 132 of the Act. Prior to P a g e | 5 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) that a search was conducted in the case of the assessee group on 10.01.2012 and the assessment under Section 153A/143(3) have been completed on 30.3.2014 making addition under Section 14A, thus accepting the trading /book results of the activities of the assessee. In the reassessment made under Sections 147/143(3) on 17.12.2018, as challenge before us the addition on the issue of bogus trading of fabric, relying on the same evidences had been made. Consequent to this search, notice under Section 153A was issued on 18.12.2019 and assessment under Section 153A/143(3) was completed on 30.12.2019 upon making addition of Rs.94,82,057/- on account of difference in purchase and sale of fabric Rs. 3,75,198/- on account of commission for arranging bogus fabric sales Rs. 1,85,557/- on account of commission for arranging bogus fabric purchases and Rs. 1,89,38,664/- on account of disallowance of claimed expenses under Section 69C of the Act. 8. In appeal preferred by the assessee the Ld. CIT(A) by and under the impugned order dated 24.04.2020 has been pleased to allow the appeal partly with the following observations: “5.2.2 It is observed that the assessment order in this case was originally passes u/s 143(3) on 30.3.2014 making addition u/s 14A thus accepting the trading/book results of the activities of the appellant. In the reassessment made u/s 147/143(3) on 17.12.2018, the addition on this issue relying on the same evidences had been made, and repeated in subsequent order passed by the AO u/s 153A which is subject matter of appeal. During the course of appellate proceedings the appellant contended that the bogus trading in fabric was in last two years i.e. FY 2015-16 & 20016-17 only. The statement of the appellant recorded on 18.6.2017 had been extended to earlier years without verifying the activities in other earlier years. It is observed by the CIT(A) while deciding the appeal against order u/s 147 that there is no trading of fabric in the year under consideration. It was observed on the basis of documents submitted by the appellant that the appellant was involved in the P a g e | 6 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) business of export of auto parts and these were genuine business activities as determined in the assessment made u/s 143(3) earlier for this assessment year. These facts are evident from the details of revenue earned and data of sales/purchase submitted by the appellant, which is reproduced as under: It is observed from the above data that there is not any trading of fabric during the year by the appellant. The AO had not brought out on records, any evidences of fabric purchases/sales during the year by the appellant company and treated the genuine sale/purchase of auto components as bogus fabric trading. Similarly, the AO has made the disallowance of expenses on the presumption that these expenses have been made against the bogus transactions of fabric trading without bringing any adverse evidences against the claim of these expenses. Thus, the whole of the addition is based on wrong facts of bogus fabric trading presumed by the AO without examining the real transactions of the appellant during the year under consideration. Accordingly the addition made by P a g e | 7 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) the AO is on wrong facts and is not sustainable. Accordingly, the addition of Rs 2,89,81,476/- made by the AO u/s 69C, by treating genuine transaction of business of auto components as bogus trading of fabric, is hereby deleted and these grounds of appeal are allowed. 6. Ground No 1 & 13 are general in nature and do not require any separate adjudication. 7. The appellant had taken other legal grounds as under: 7.1 Ground No 3 & 4 relate to legal ground raised by the appellant that since no incriminating material had been found during the search and it was a completed assessment, the case of the appellant is covered by the judgement of jurisdictional High Court in the case of CIT Vs Kabul Chawla. 7.2 Ground No 8 In the given facts of the case, the prior approval u/s 153D has not been properly obtained as the SCN issued by the AO, draft order sent for approval by the AO, approval given by the Addl CIT and the final order passed by the AO are of same date i.e. 30-12-2019. 7.3 In view of the decision given in para 5.2.2., wherein the addition made by the AO had been deleted on merit, the adjudication on these legal grounds will be of academic value only. Therefore, these grounds raised by the appellant are not being adjudicated.” 9. Being aggrieved by the said order passed the Ld. CIT(A), Revenue is in appeal before us. 10. At the time of hearing of the matter, the Ld. Senior Counsel Shri Salil Aggarwal relied upon the order of the Ld. CIT(A) deleting the addition on merit, by contending that the order of the Ld. CIT(A) needs to be upheld even on the ground that the assessment so framed is without jurisdiction as the same is a legal ground, which was taken before Ld. CIT(A) as well. However, the same can be taken at any stage of the proceedings even by making application under Rule 27 of I.T. Rules in the appeal preferred by the Revenue. He further submitted that since the assessee had succeeded in the appeal fully on merits, it did not prefer an appeal. However, the Revenue has since filed the instant appeal, the assessee seeks to P a g e | 8 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) support the order of the Ld. CIT(A) as provided in Rule 27 of the ITAT Rules, as such in view of Rule 27 of the ITAT Rules, 1962, the assessee seeks to raise, urge and argue the ground challenging the initiation of proceedings, in an appeal filed by the Revenue and therefore, prayed that assessee be permitted to make its submission in respect of the contention as was being specifically raised in ground Nos. 2 and 3 before the Ld. CIT(A) and was also decided by him in his order and raised the following Additional Grounds:- \"Additional Ground No. 1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining the initiation of proceedings for AY 2011-12, which proceedings were beyond the period of 6 years i.e. AY 2012-13 to 2017-18 as envisaged under Section 153A of the Act and have been initiated by learned AO on mere extrapolation/ estimate without there being any material to reopen the same and the same is also beyond the purview of 4' proviso, Explanation 1 and Explanation 2 of Section 153A of the Act and is liable to be quashed, as such. Additional Ground No. 2 That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in overlooking the basic fact that no incriminating material was found during the course of search and the assessment as contemplated under Section 153A is not a de novo assessment and as such, the additions so made by assessing officer are beyond the scope of assessment under Section 153A of the Act and are liable to be deleted in totality. Additional Ground No. 3 That on the facts and circumstances of the case the approval accorded under Section 153D of the Act (if any) is a mechanical and arbitrary approval without there being any application of mind and also without satisfying the statutory P a g e | 9 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) preconditions of the Act and as such, the assessment so framed is null and void and deserves to be quashed. Additional Ground No. 4 That on the facts and circumstances of the case the impugned assessment order so passed is null and void, and is also in complete violation of CBDT Circular No.19/2019, since no DIN is mentioned in the entire body of assessment order. 10.1 Ld. AR submitted that the assessee deserves relief on legal issue as \"additions so made by AO are beyond the scope of assessment framed as per the provisions of Section 153A of the Act\". He further submitted that the proceedings were beyond the period of 6 years i.e. AY 2012-13 to 2017-18 as envisaged under Section 153A of the Act and have been initiated by AO on mere estimate without there being any material to reopen the same and the same is also beyond the purview of 4th proviso, Explanation 1 and Explanation 2 of Section 153A of the Act and is liable to be quashed and in view of above submissions, he prayed that proceedings under Section 153A of the Act were bad in law and the order of CIT(A) needs be upheld even on the ground of wrongful assumption of jurisdiction on the part of the AO to have framed assessment under Section 153A of the Act. In order to support his aforesaid contention, he relied upon the several judicial pronouncements including the ITAT, Delhi -B- Bench decision dated 28.2.2019 passed in the case of ACIT vs. Creamy Foods Ltd. & Anr. decided vide ITA No. 1176/Del/2015. 12. On the contrary, Ld. CIT(DR) opposed the aforesaid request of the Ld. AR and supported the orders of the AO and filed the submissions which have been reproduced as under:- P a g e | 10 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) P a g e | 11 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) P a g e | 12 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) P a g e | 13 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) P a g e | 14 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) 13. After hearing the rival contentions and perusing the material available on record, we find considerable cogency in the contention of the Ld. AR that in view of the Rule 27 of the Income Tax Act Appellate Tribunal Rules, 1962 and also in P a g e | 15 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) view of the settled position, in our view the Assesssee-Respondent is very much entitled to raise the aforesaid legal grounds at any stage of the proceedings, even though he may not have filed an appeal against such an order. Accordingly, in the interest of justice, we permit to raise the additional grounds raised by the Assessee and are being dealing in the forgoing paragraphs. 14. It is noted that all these appeals filed by the Department are relating to Assessment Years 2011-12 to 2015-16 and as regards Assessment Year 2011-12 is concerned, it involves consideration of two legal issues under Section 153A, as the above cited Assessment Years are beyond the period of 6 years envisaged in block under Section 153A of the Act and also the additions made are not based on any incriminating material unearthed as a result of search. As far as Assessment Years 2012-13 to 2015-16 which involves consideration of a legal issue, as the additions made are not based on any incriminating material unearthed as a result of search. 15. As regards the Additional Ground No. 2 is concerned, additions so made in assessment framed under Section 153A of the Act are beyond the scope of assessment, as the assessment for AY 2011-12 to 2014-15 were final on date of search and additional are not based on any incriminating material. We note that it is a settled position of law that the assessment under Section 153A of the Act can only be made on the basis of incriminating materials unearthed / gathered or found during the course of search with regards to the respective Assessment Year. It is also a well settled principle of law that in the assessments under Section 153A of the Act, additions cannot be made on post search enquiries by investigating team or by enquiries made by the AO during the course of assessment, on the anvil of the Hon’ble Supreme Court decision in the case of PCIT vs. Abhisar Buildwell (P) P a g e | 16 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) Ltd reported in 454 ITR 212 as relied upon by the Ld. Senior counsel Mr. Salil Agarwal appearing for the assessee. He further relied upon the following judgments in support of his arguments: a) PCIT vs Abhisar Buildwell (P) Ltd. (SC) reported in 454 ITR 212 b) Judgment of the High Court of Delhi in the case of CIT vs. Kabul Chawla reported in 380 ITR 573. c) Judgment of High Court of Delhi in the case of PCIT vs Jaypee Financial Services Ltd. reported in 280 Taxman 147. d) Judgment of the High Court of Delhi in the case of PCIT Vs. Meeta Gutgutia reported in 395 ITR 526. e) Judgment of the Supreme Court of India in the case of CIT vs Singhad Technical Education Society reported in 397ITR 344. f) Order of ITAT Delhi in the case of ACIT vs Moon Beverages Ltd. in ITA No. 115 to 118/Del/2018. g) Order of ITAT Delhi in the case of DCIT vs Sundaram IT Parks Pvt. Ltd. in ITA No. 5166/Del/2018. h) Order of ITAT Delhi in the case of ACIT vs M/s Five Vision Planners Pvt. Ltd. in ITA No. 4460/Del/2014. i) Judgment of High Court of Delhi in the case of PCIT vs M/s Dreamcity Buildwell Pvt. Ltd. in ITA No. 1152/2017. j) Order of ITAT Delhi M/s TDI Infrastructure Ltd. vs DCIT in ITA No. 5580, 4409, 4410 and 5072/Del/2012. k) Order of ITAT Delhi ACIT vs Realtech Construction Pvt. Ltd. (ITAT Delhi) in ITA No. 6569/Del/2016. 16. On careful consideration of the assessment order, it is noted that following documents have been referred by the AO in the assessment order, which have been found as a result of search. a) Statement recorded during the course of search and post search of Sh. Ashok Minda, director in the assessment company. The said statements were recorded on 10.6.2017 and 20.12.2017 and have been extracted by AO at pages 4 to 8 and 9 to 10 of the AO’s order. In the said statement Sh. Mindia admitted regarding alleged bogus trading in fabrics in assessee company, whereas it is a matter of record that the assessee company never traded in fabrics during AY 2011-12 to 2015-16, as such, the statement of Sh. Minda had no bearing on the impugned Assessment Years. Further statement perse is also no material unless backed by some seized document P a g e | 17 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) found during the course of search, which is completely absent in the instant case. However, the said statement was the onlybasis of AO for making additions in AY 2011-12 to 2013-14 and 2015-16. b) In so far as AY 2014-15, in addition to above addition on account of alleged bogus trading in fabrics, AO made various other additions which were made on the basis of books of accounts which were final on the date of search and were not based on any incriminating material. 17. We further note that Ld. CIT(A) had allowed the appeal of the assessee on merits, by noting that assessments were already completed under Section 143(3) of the Act for AY 2011-12 to 2015-16 and there was no addition with regard to trading in fabrics in those assessments. Further, all the aforesaid Assessment Years were final on the date of search. Further, there is no trading in fabrics during the instant Assessment Years and as such, addition on account of alleged bogus trading in fabrics is not sustainable in the eyes of law. We further note that Ld. CIT(A) had examined the books of accounts of the assessee company and held that only exports of automobile components were made by the assessee, which has been left by the AO. 18. The findings of the Ld. CIT(A) for AY 2014-15 on the issue of unexplained investment on amalgamation of Rs. 132.95 crores is that the “there is no evidence of any unexplained expenditure made by the assessee company in any of these 13 merged entities during the year under consideration. The appellant had passed the entries in approved SWAP ratio along with liabilities and assets of these merged entities in its balance sheet as per scheme of amalgamation approved by Hon'ble High Court\". P a g e | 18 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) 19. It is further noted that on the issue of under valuation of shares under Section 56(2)(vii) of Rs. 28.89 crores and 39.85 crores, the finding of the Ld. CIT(A) is that \"it is observed that the AO had not understood the correct nature of these transactions. The transactions of shares issued by amalgamating company to amalgamated companies shareholders in approved swap ratio, are not covered under Section 56(2)(viib)\" 20. Apropos issue of Share Capital under Section 68 of Rs. 69.50 lacs, the findings of the Ld. CIT(A) shows that the said share capital was received by amalgamating company in AY 2010-11, as such, addition cannot be made in impugned Assessment Year. 21. Upon careful consideration of the factual matrix and the precedent referred above, in our considered view the additions so made by AO are not based on any incriminating material. However, the AO has merely referred the statements of Sh. Ashok Minda, having no relevance for the impugned Assessment Years and further, additions have been made on the basis of books of accounts which were final on the date of search and no incriminating material was found for any of the impugned Assessment Years. Hence, we do not find any infirmity in the findings of the Ld. CIT(A), thus the same is affirmed. It is further noted that addition to the relief allowed by learned CIT (A) on merits, relief deserves to be given on legal issue as \"additions so made by AO are beyond the scope of assessment framed as per the provisions of Section 153A of the Act\" particularly in view of the judgement passed by the Hon’ble Apex Court in the matter of PCIT Vs. Abhisar Buildwell (supra) & other judgments as relied upon by the Ld. AR. Hence, the Additional Ground no. 2 raised by the Assessee is allowed in the aforesaid manner. P a g e | 19 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) 22. Apropos second legal issue i.e. Additional Ground No. 1 in Rule 27 Application, Learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining the initiation of proceedings for AY 2011-12 is concerned, which proceedings were beyond the period of 6 years i.e. AY 2012-13 to 2017-18 as envisaged under Section 153A of the Act and have been initiated by AO on mere estimate without there being any material to reopen the same and the same is also beyond the purview of 4th proviso, Explanation 1 and Explanation 2 of Section 153A of the Act and is liable to be quashed. It is noted that that there was no material available with the AO to have reopened the assessment for AY 2011-12 under Section 153A of the Act and the same is also beyond the purview of 4th proviso, Explanation 1 and Explanation 2 of Section 153A of the Act. Even though Learned CIT (A) had recorded a finding that the additions made by the AO from AY 2011-12 to 2015-16 is not based on any evidences or incriminating material rather on mere estimates and has deleted the addition on merits, however, while doing so, he should have also held that reopening of assessments for AY 2011-12 is without jurisdiction, as the same is not based on the 4th proviso, Explanation 1 and Explanation 2 of Section 153A of the Act. Our aforesaid view has been fully supported by the ITAT, Delhi -B- Bench decision dated 28.2.2019 passed in the case of ACIT vs. Creamy Foods Ltd. & Anr. decided vide ITA No. 1176/Del/2015, wherein the Tribunal has observed as under:- “13. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that daily milk procurement sheets found and seized during the search proceedings pertains to the period 01.07.2011 to 31.07.2011. This means that the sheets pertain to only 20 days. It is also not in dispute that on the basis of these milk procurement sheets, one of the directors Shri Sandeep Aggarwal admitted to the fact that he is dealing in sale and purchase of milk in his individual capacity. This fact has also been acknowledged by the Assessing Officer. Accordingly, Shri Sandeep Aggarwal offered Rs. 93 lakhs in his return of income for A.Y 2012- 13 and the same has been assessed as such in his hands vide assessment order dated 28.03.2014 framed u/s 143(3) of the Act. P a g e | 20 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) 14. As exhibited elsewhere, total quantity of milk as per documents found during the course of search is 4932805 litres. Quantity of milk shown in the books of account was 3226341 litres which means the unaccounted quantity of milk was 1706464 litres which comes to 35% to the recorded quantity. Applying this ratio, to the quantity of milk sale recorded in the books of account, at 5135335 litres comes to 1797367 litres, which is wrongly taken by the Assessing Officer as 2716162 litres. If the average selling rate per litre as per books of accounts is applied on the unaccounted quantity of milk of 1797367 litres, value comes to Rs. 4,71 crores whereas the same is taken at Rs. 7.11 crores by the Assessing Officer for making addition. 15. If the profit margin of 10.56% is applied on this unaccounted sale, the same comes to Rs. 49 lakhs and the director in his individual capacity has accepted the unaccounted sale and offered Rs. 93 lakhs as his undisclosed income which has been accepted by the Assessing Officer. This means that undisclosed income has been fully covered by disclosure made by the director and, in fact, as mentioned above, it is at a much higher figure than what was supposed to be considered by the assessee. 16. In our considered opinion, the entire unaccounted sales cannot be added because there has to be some purchases and expenses related therewith. Therefore, making addition on the basis of profit margin is more logical and rationale. Moreover, though the daily milk procurement sheets were found but no document was found wherein the revenue can say that the assessee was also making undisclosed purchases. The most important fact which needs to be highlighted is that the Assessing Officer, in his whims and surmises, has considered the extrapolation for only two A.Ys whereas, if he was so confident about the seized documents and income therein, he should have extrapolated for the entire block period of six years. The Assessing Officer did not give any reason for this. 17. Considering the facts of the case in totality, we are of the considered opinion that the CIT(A) rightly deleted the additions made by the Assessing Officer but erred in sustaining the addition of Rs. 7,86,337/- which, In our considered opinion, on facts discussed hereinabove, needs to be deleted also. 18. In the result, the appeals of the Revenue in ITA Nos. 1176 and 1177/DEL/20154 are dismissed and that of the assessee in ITA No. 971/DEL/2015 is allowed.” 23. Upon careful consideration of the factual matrix and the precedent relied by the Ld. AR, in our considered view there is no material of whatsoever nature was found during the course of search in respect of trading in fabrics in respect of AY 2011-12, as such, the reopening of assessments under Section 153A of the Act is without jurisdiction and deserves to be quashed, as such. We hold and direct accordingly and allow the Additional Ground No. 1 raised by the Assessee. Since we have decided the aforesaid Additional legal issues in favour of the assessee and P a g e | 21 ITA Nos. 1073 to 1076, 1854/Del/2021 M/s Minda Capital Pvt. Ltd (2011-12 to 2015-16) against the Revenue, hence, there is no need to adjudicate the other additional grounds raised by the Assessee. 24. Taking into consideration that the identical issue involved in all the remaining 04 appeals, thus, this order will apply mutatis mutandis to the remaining 4 appeals. 25. In the result, all the 05 appeals of the Revenue are dismissed with the above observations. Order pronounced in the open court on 07.03.2025 Sd/- (Renu Jauhri) Sd/- (Madhumita Roy ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 07.03.2025 PS: Rohit Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "