M/s. Sindhu Holdings Ltd., New Delhi V. ACIT, New Delhi

CO 122/DEL/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3472 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 22-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Opportunity of being heard; Earning of tax free income; Question of law; Deemed dividend; Procedural lapse; Scheme of amalgamation; Onus to prove
• Section: 143(3); 142(1); 153A; 14A; 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B: DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.NOS.449, 450 & 451/DEL./2016 ASSESSMENT YEARS 2007-08, 2009-2010, 2010-2011 THE ACIT, CENTRAL CIRCLE - 17, ROOM NO.101, HALL NO.1, 1 ST FLOOR, ARA CENTRE, E-2, JHANDEWALAN EXTENSION NEW DELHI. VS. M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., 129, TRANSPORT CENTRE, PUNJABI BAGH, NEW DELHI 110035 PAN AAACG4168N (APPELLANT) (RESPONDENT) C.O.NO.163, 164 & 165/DEL./2016 ARISING OUT OF ITA.NOS.449, 450/DEL./2016 ASSESSMENT YEARS 2007-2008, 2009-2010 & 2010-2011 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., 129, TRANSPORT CENTRE, PUNJABI BAGH, NEW DELHI 110035 PAN AAACG4168N VS., THE ACIT, CENTRAL CIRCLE - 17, ROOM NO.103, HALL NO.1, 1 ST FLOOR, ARA CENTRE, E-2, JHANDEWALAN EXTENSION, NEW DELHI. (CROSS OBJECTOR) (RESPONDENT) ITA.NOS.446 & 447/DEL./2016 ASSESSMENT YEARS 2008-2009 & 2010-2011 THE ACIT, CENTRAL CIRCLE - 17, ROOM NO.101, HALL NO.1, 1 ST FLOOR, ARA CENTRE, E-2, JHANDEWALAN EXTENSION NEW DELHI. VS. M/S. SINDHU HOLDINGS LTD., 17, VASANT ENCLAVE, RAO TULA RAO RAM MARG, NEW DELHI PIN 110 057. PAN AAACS2545P (APPELLANT) (RESPONDENT) 2 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. C.O.NOS.121 & 122/DEL./2016 ARISING OUT OF ITA.NOS.449 & 447/DEL./2016 ASSESSMENT YEARS 2008-2009 & 2010-2011 M/S. SINDHU HOLDINGS LTD., 17, VASANT ENCLAVE, RAO TULA RAO RAM MARG, NEW DELHI PIN 110 057. PAN AAACS2545P VS., THE ACIT, CENTRAL CIRCLE - 17, ROOM NO.103, HALL NO.1, 1 ST FLOOR, ARA CENTRE, E-2, JHANDEWALAN EXTENSION, NEW DELHI. (CROSS OBJECTOR) (RESPONDENT) FOR REVENUE : MS. RACHNA SINGH, CIT - D.R. FOR CROSS-OBJECTOR : SHRI SAJJAN KUMAR TULSIYAN, ADVOCATE MS. NISHA RACHH, C.A., SHRI KARAN KUMAR, C.A. DATE OF HEARING : 07.12.2017 DATE OF PRONOUNCEMENT : 0 5 .01.2018 ORDER PER BHAVNESH SAINI, J.M. THIS ORDER SHALL DISPOSE OF ALL THE ABOVE DEPARTM ENTAL APPEALS AND CROSS OBJECTIONS FILED IN THE CASE OF T WO DIFFERENT ASSESSEES OF THE SAME GROUP. SINCE ISSUES ARE IDENT ICAL AND ARE RELATED TO GROUP CONCERNS, THEREFORE, ALL APPEALS A RE DECIDED TOGETHER. 3 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE DEP ARTMENTAL APPEALS AS WELL AS CROSS OBJECTIONS BY ASSESSEE ARE DECIDED AS UNDER. ITA.NO.449/DEL./2016 & CO.NO.163/DEL./2016 (A.Y. 2007-2008) : 3. THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECT ION BY ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF T HE LD. CIT(A)-27, NEW DELHI, DATED 09.11.2015, FOR THE A.Y. 2007-2008 . 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT SEARCH, SEIZURE AND SURVEY OPERATION UNDER SECTION 132/133A OF THE I.T. ACT WERE CONDUCTED ON 12 TH APRIL, 2012 IN THE CASE OF THE ASSESSEE ALONG WITH OTHER CASES OF ARYAN SANIK GROUP AT VARIOUS RESIDEN TIAL AND BUSINESS PREMISES. IN PURSUANCE TO NOTICE UNDER SECTION 153A OF THE ACT ISSUED ON 23 RD OCTOBER, 2003, ASSESSEE FILED RETURN OF INCOME. TH E A.O. AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S .153A OF THE I.T. ACT ON 30 TH MARCH, 2015. THE A.O. MADE ADDITION OF RS.3.35 CRO RES OF UNEXPLAINED SHARE APPLICATION MONEY UNDER SECTIO N 68 OF THE I.T. 4 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. ACT, WHICH WAS CHALLENGED BEFORE LD. CIT(A). THE A. O. NOTED THAT ASSESSEE HAS RECEIVED AMOUNT OF RS.3.35 CRORES AS S HARE APPLICATION MONEY IN ASSESSMENT YEAR UNDER APPEAL FROM 07 PARTI ES NAMELY (1) M/S. REWARD VINIMAY PVT. LTD., (2) M/S. SUVIDHA STO CK BROKING SERVICES PVT. LTD., (3) M/S.ELGIN SALES PROMOTION P VT. LTD., (4) M/S. OLEANDER MANUFACTURERS & CREDIT PVT. LTD., (5) M/S. ECHOLAC VINIMAY PVT. LTD., (6) M/S. SIMPRO VANIJYA PVT. LTD., AND ( 7) M/S. GALORE SUPPLIERS PVT. LTD., THE A.O. NOTED THAT ASSESSEE H AS FILED NAME OF THE PARTIES, ADDRESSES OF THE PARTIES, PAN OF THE P ARTIES, BANK STATEMENT OF THE PARTIES (EXCEPT OF PARTY NO.2), CO NFIRMATION OF ALL PARTIES, ITR OF ALL PARTIES, BUT COPY OF AUDITED AC COUNTS OF THE PARTIES ARE NOT FILED. THE A.O. ACCORDINGLY, TREATED THE SA ME AS UNEXPLAINED UNDER SECTION 68 OF THE I.T. ACT, 1961 AND MADE THE ADDITION ACCORDINGLY. 5. THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT A SSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM THE ABOVE PARTIES WHICH WAS SUPPORTED BY ALL THE ABOVE DOCUMENTARY EVIDENCE S AND SOURCE OF THE SAME IS EXPLAINED. THE ASSESSEE CANNOT BE AS KED TO PROVE 5 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. SOURCE OF THE SOURCE. SINCE THE ASSESSEE FURNISHED COMPLETE DETAILS OF ALL THE SHARE APPLICANT COMPANIES, THEREFORE, IN ITIAL BURDEN UPON ASSESSEE HAS BEEN DISCHARGED TO PROVE THE CONDITION S OF SECTION 68 OF THE I.T. ACT. THE ASSESSEE ALSO EXPLAINED THAT I N SOME OF THE CASES, THERE WAS CHANGE IN THE NAME AND SUMMON UNDER SECTI ON 131 HAVE BEEN RECEIVED BY THEM AND DULY COMPLIED. THE ASSESS EE RELIED UPON SEVERAL DECISIONS IN SUPPORT OF THE CONTENTION THAT ASSESSEE PROVED GENUINE SHARE APPLICATION MONEY. 6. THE LD. CIT(A) NOTED THAT A.O. HAS MADE ADDITIO N DUE TO REASON OF NON-SUBMISSION OF BANK STATEMENT OF M/S. SUVIDHA STOCK BROKING SERVICES PVT. LTD., AND IN OTHER CASES SINC E NO AUDITED ACCOUNTS ARE FILED, THEREFORE, ADDITION WAS MADE. L D. CIT(A) ON THE BASIS OF THE MATERIAL ON RECORD FOUND THAT ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE S HARE APPLICANTS, BY SUBMITTING THE ABOVE DOCUMENTARY EVIDENCE. THE I NVESTORS ARE CORPORATE ENTITIES AND THEIR ACCOUNTS ARE IN PUBLIC DOMAIN ON THE PORTAL OF REGISTRAR OF COMPANIES, MINISTRY OF CORPO RATE AFFAIRS. THE LD. CIT(A), THEREFORE, FOUND THAT NON-SUBMISSION OF THE AUDITED 6 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. ACCOUNTS OF INVESTOR COMPANIES, IS NOT SUFFICIENT T O MAKE THE ADDITION UNDER SECTION 68 OF THE I.T. ACT. FURTHER, THE ASSE SSEE CANNOT BE ASKED TO PROVE SOURCE OF THE SOURCE. LD. CIT(A) ALS O FOUND THAT IN THE CASE OF 02 PARTIES, AMOUNTS HAVE BEEN RETURNED IN S UBSEQUENT YEAR. THE LD. CIT(A) ACCORDINGLY, DELETED THE ADDITION. T HE DEPARTMENT IN APPEAL CHALLENGED THE ORDER OF LD. CIT(A) IN DELETI NG ADDITION OF RS.3.35 CRORES UNDER SECTION 68 OF THE I.T. ACT. 7. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O. AND RELIED UPON THE FOLLOWING DECISIONS : (I) CIT VS. NIPUN BUILDERS & DEVELOPERS (P.) LTD., (2013) 30 TAXMAN.COM 292. (II) CIT VS. NOVA PROMOTERS FINLEASE (P.) LTD., (20 12) 18 TAXMAN.COM 217. (III) CIT VS. N.R. PORTFOLIO PVT. LTD., (2013) 29 T AXMAN.COM 291. (IV) CIT VS. FOCUS EXPORTS (P.) LTD., (2014) 51 TAX MAN.COM 46 8. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSE SSEE, REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND SUBMITTED THAT ENTRY IN THE BOOKS OF ACCOUNT CANNOT BE TREATED BE RECOVERED DURING THE SEARCH. IN THIS CASE, NOTHING WAS FOUND AGAINST 7 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. THE ASSESSEE DURING THE COURSE OF SEARCH. THE A.O. DID NOT MAKE ANY ENQUIRY ON THE DOCUMENTS FILED BY ASSESSEE. THE A.O . WITHOUT CONDUCTING ANY ENQUIRY, MADE THE ADDITION. THEREFOR E, LD. CIT(A), CORRECTLY DELETED THE ADDITION. HE HAS ALSO SUBMITT ED THAT CIT(A) HAS EXAMINED THE BALANCE-SHEET OF THE INVESTOR COMPANY ALSO. THERE WERE NO ADVERSE MATERIAL FOUND DURING THE COURSE OF SEAR CH TO PROVE THAT SHARE APPLICATION MONEY WAS BOGUS. HE HAS RELIED UP ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION P. LTD., 159 ITR 78 AND OTHER DECISIONS IN THE WRITTEN SUBMISSIONS. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. DURING THE COURSE OF SEARCH NOT HING WAS FOUND AGAINST THE ASSESSEE AS REGARDS THE SHARE APPLICATI ON MONEY RECEIVED BY ASSESSEE FROM VARIOUS INVESTOR COMPANIES. THE A. O. FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE FOUND THAT ASSESSE E-COMPANY HAS RECEIVED FRESH SHARE APPLICATION MONEY OF THE IMPUG NED AMOUNT FROM THE ABOVE PARTIES. THE A.O. ASKED THE ASSESSEE TO P ROVE THE GENUINENESS OF THE TRANSACTION IN THE MATTER WITH S UPPORTING 8 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. DOCUMENTS. THE ASSESSEE FILED NAMES OF THE INVESTOR S, ADDRESSES OF THE INVESTORS, PAN OF THE INVESTORS, BANK STATEMENT S OF THE INVESTORS EXCEPT IN ONE CASE, CONFIRMATION OF THE INVESTORS A LONG WITH ACKNOWLEDGMENT OF FILING OF I.T. RETURN. THE INVEST ORS ARE THEREFORE, ASSESSED WITH THE INCOME TAX DEPARTMENT. THE A.O. D ID NOT MAKE ANY FURTHER ENQUIRY IN THE MATTER AND JUST DISBELIE VED THE EXPLANATION OF ASSESSEE BECAUSE THE BALANCE SHEET O F THE INVESTORS HAVE NOT BEEN FILED. THE A.O. NOTED THAT THERE WERE HIGH VALUE TRANSACTIONS CONDUCTED BY THE INVESTOR COMPANIES. I T MAY BE NOTED HERE THAT A.O. DID NOT DISPUTE THE IDENTITY OF THE INVESTOR COMPANIES AND MERELY ON ACCOUNT OF LOW INCOME DECLARED BY THE INVESTOR COMPANY, WAS OF THE VIEW THAT THEIR CREDITWORTHINES S IS NOT EXPLAINED. THE A.O. ON THE ONE HAND HAS MENTIONED IN THE ASSES SMENT ORDER THAT BANK ACCOUNT OF THE INVESTOR COMPANY REVEAL TH AT THERE ARE HIGH VALUE TRANSACTIONS CARRIED OUT THROUGH THE BANK. TH EREFORE, CREDITWORTHINESS OF THE INVESTOR COMPANY SHOULD NOT HAVE BEEN DOUBTED. THE A.O. DID NOT FOUND IF ANY CASH HAVE BE EN DEPOSITED IN THE ACCOUNTS OF THE INVESTOR BEFORE MAKING INVESTME NT IN ASSESSEE COMPANY. THE ASSESSEE PRODUCED SUFFICIENT EVIDENCE BEFORE A.O. TO 9 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. DISCHARGE THE INITIAL ONUS UPON IT TO PROVE THE IDE NTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. FURTHER, THE A.O. DID NOT MAKE ANY INVESTIGATION ON THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE. THE A.O. DID N OT ASK FOR THE PRODUCTION OF THE INVESTOR COMPANY FOR THEIR EXAMIN ATION. THE ASSESSEE ALSO EXPLAINED BEFORE LD. CIT(A) THAT IN S OME CASES THERE IS CHANGE IN THEIR NAME AND ADDRESS WHICH HAVE BEEN AP PRECIATED BY THE LD. CIT(A). NO ENQUIRY HAVE BEEN MADE DIRECTLY OR INDIRECTLY BY THE A.O. ON THE DOCUMENTARY EVIDENCES FILED BY ASSE SSEE AT ASSESSMENT STAGE. SINCE NO ADVERSE MATERIAL WAS FOU ND DURING THE COURSE OF SEARCH TO PROVE THAT SHARE APPLICATION MO NEY RECEIVED BY ASSESSEE WAS BOGUS OR WAS AN ARRANGED AFFAIR OF THE ASSESSEE, THE A.O. WAS NOT JUSTIFIED IN MAKING THE ADDITION UNDER SECTION 68 OF THE I.T. ACT AGAINST THE ASSESSEE. WE MAY REFER TO FOLL OWING DECISIONS IN SUPPORT OF OUR FINDINGS. 9.1. DECISION OF THE HONBLE SUPREME COURT CIT VS LOVELY EXPORTS P.LTD. [2008] 216 CTR 0195 IN WHICH IT WAS HELD AS UNDER : 10 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME S ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PRO CEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW , BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSE E COMPANY. 9.2. DECISION OF DELHI HIGH COURT IN THE CASE OF C IT VS KAMDHENU STEEL & ALLOYS LTD. & ORS. 361 ITR 0220 (D ELHI) IN WHICH IT WAS HELD AS UNDER : ONCE ADEQUATE EVIDENCE/MATERIAL IS GIVEN, WHICH WO ULD PRIMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVI NG THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTER IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED THAT IT HAS CREATED EVIDENCE, THE REVENUE IS SUPPOSED TO MAKE THOROUGH PROBE BEFORE IT COULD NAIL THE ASSESSEE AND FASTEN THE AS SESSEE WITH SUCH A LIABILITY UNDER S.68; AO FAILED TO CARRY HIS SUSPICION TO 11 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. LOGICAL CONCLUSION BY FURTHER INVESTIGATION AND THE REFORE ADDITION UNDER S.68 WAS NOT SUSTAINABLE. 9.3. JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS VRINDAVAN FARMS P.LTD. ETC. IN ITA NO.71/2015 DATED 12.08.2015 (DELHI) IN WHICH IT WAS HELD AS UNDER : T HE SOLE BASIS FOR THE REVENUE TO DOUBT THEIR CREDITWORTHINESS WAS THE LOW INCOME AS REFLECTED IN THEIR RETURN OF INCOME. IT WAS OBSERVED BY THE ITAT THAT THE AO HAD NOT UNDERTAKEN ANY INVESTIGATION OF THE VERACIT Y OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE DEPARTMENT AL APPEAL WAS DISMISSED BY THE HONBLE HIGH COURT. 9.4. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. LAXMAN INDUSTRIAL RESOURCES PVT. LTD., ITA.NO.169 O F 2017 DATED 14 TH MARCH, 2017, IN WHICH IT WAS HELD AS UNDER : THE CIT(A) TOOK NOTE OF THE MATERIAL FILED BY THE ASSESSEE AND PROVIDED OPPORTUNITY TO THE AO IN REMAND PROCEEDING S. THE AO MERELY OBJECTED TO THE MATERIAL FURNISHED BUT DID N OT UNDERTAKE ANY VERIFICATION. THE CIT(A) DELETED THE ADDITION BY RELYING UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS PVT.LTD. (SUPRA) AND JUDGEMENT OF DELHI HIG H COURT IN THE 12 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. CASE OF CIT VS DIVINE LEASING & FINANCE LTD. [2008] 299 ITR 268. THE ITAT CONFIRMED THE OPINION OF THE LD.CIT(A). H ONBLE HIGH COURT IN VIEW OF THE ABOVE FINDINGS NOTED THAT THE ASSESSEE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. THE A SSESSEE PROVIDED DETAILS OF SHARE APPLICANTS I.E. COPY OF T HE PAN, ASSESSMENT PARTICULARS, MODE OF AMOUNT INVESTED THR OUGH BANKING CHANNEL, COPY OF RESOLUTION AND COPIES OF T HE BALANCE SHEET. THE AO FAILED TO CONDUCT ANY SCRUTINY OF TH E DOCUMENT, THE DEPARTMENTAL APPEAL WAS ACCORDINGLY DISMISSED. 9.5. DECISION OF HONBLE SUPREME COURT IN THE CASE OF EARTHMETAL ELECTRICAL PVT. LTD., VS. CIT DATED 30 TH JULY, 2010 IN SLP.NO.21073 OF 1999, IN WHICH IT WAS HELD AS UNDER : WE HAVE EXAMINED THE POSITION, WE FIND THAT THE SH AREHOLDERS ARE GENUINE PARTIES. THEY ARE NOT BOGUS AND FICTIT IOUS THEREFORE, THE IMPUGNED ORDER IS SET ASIDE. 13 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 9.6. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. DIVINE LEASING & FINANCE LTD., 299 ITR 268, IN WHIC H IT WAS HELD AS UNDER : NO ADVERSE INFERENCE SHOULD BE DRAWN IF SHAREHOLDE RS FAILED TO RESPOND TO THE NOTICE BY A.O. 9.7. DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD., (201 3) 356 ITR 65, IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEALS, THAT IF THE ASSESSEE HAD R ECEIVED SUBSCRIPTIONS TO THE PUBLIC OR RIGHTS ISSUE THROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAR EHOLDERS, NO ADDITION COULD BE MADE UNDER SECTION 68 OF THE INCO ME-TAX ACT, 1961, IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EV IDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR F ICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRE SENTED THE COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. IT W AS NOBODY'S CASE THAT THE NON-RESIDENT INDIAN COMPANY WAS A BOGUS OR NON-EXISTENT COMPANY OR THAT THE AMOUNT SU BSCRIBED BY 14 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. THE COMPANY BY WAY OF SHARE SUBSCRIPTION WAS IN FAC T THE MONEY OF THE ASSESSEE. THE ASSESSEE HAD ESTABLISHED THE I DENTITY OF THE INVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AN D THAT THE TRANSACTION WAS GENUINE. THOUGH THE ASSESSEE'S CONT ENTION WAS THAT THE CREDITWORTHINESS OF THE CREDITOR WAS ALSO ESTABLISHED, IN THIS CASE, THE ESTABLISHMENT OF THE IDENTITY OF THE INVESTOR ALONE WAS TO BE SEEN. THUS, THE ADDITION WAS RIGHTLY DELE TED. CIT V. LOVELY EXPORTS P. LTD. [2009] 319ITR (ST.) 5 (SC) A PPLIED. 9.8. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. (I) DWARAKADHISH INVESTMENT P. LTD., (ITA.NO. 911 O F 2010) AND (II) DWARKADHISH CAPITAL P. LTD., (ITA.NO.913 OF 2010) ( 2011) 330 ITR 298 (DEL.) (HC), IN WHICH IT WAS HELD AS UNDER : IN ANY MATTER, THE ONUS OF PROOF IS NOT A STATIC O NE. THOUGH IN SECTION 68 OF THE INCOME TAX ACT, 1961, THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSES YET ONCE HE PROVES THE IDENTIT Y OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISHING THE IR PAN NUMBER OR INCOME-TAX ASSESSMENT NUMBER AND SHOWS THE GENUI NENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT 15 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANTS COULD NOT BE FOUND AT TH E ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE THE RIGHT TO I NVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERS ON. MOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PRO VE THE 'SOURCE OF SOURCE'. THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF FINANCING AND TRADING OF SHARES. FOR THE ASSESSM ENT YEAR 2001-02 ON SCRUTINY OF ACCOUNTS, THE ASSESSING OFFI CER FOUND AN ADDITION OF RS.71,75,000 IN THE SHARE CAPITAL OF TH E ASSESSEE. THE ASSESSING OFFICER SOUGHT AN EXPLANATION OF THE ASSE SSEE ABOUT THIS ADDITION IN THE SHARE CAPITAL. THE ASSESSEE OF FERED A DETAILED EXPLANATION. HOWEVER, ACCORDING TO THE ASSESSING OF FICER, THE ASSESSEE FAILED TO EXPLAIN THE ADDITION OF SHARE AP PLICATION MONEY FROM FIVE OF ITS SUBSCRIBERS. ACCORDINGLY, T HE ASSESSING OFFICER MADE AN ADDITION OF RS.35,50,000/- WITH THE AID OF SECTION 68 OF THE ACT, 1961 ON ACCOUNT OF UNEXPLAIN ED CASH CREDITS APPEARING IN THE BOOKS OF THE ASSESSEE. HOWEVER, IN APPEAL, THE 16 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. COMMISSIONER OF INCOME-TAX (APPEALS) DELETED THE AD DITION ON THE GROUND THAT THE ASSESSEE HAD PROVED THE EXISTENCE O F THE SHAREHOLDERS AND THE GENUINENESS OF THE TRANSACTION . THE INCOME-TAX APPELLATE TRIBUNAL CONFIRMED THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS) AS IT WAS ALSO OF THE OPINION THAT THE ASSESSEE HAD BEEN ABLE TO PROVE TH E IDENTITY OF THE SHARE APPLICANTS AND THE SHARE APPLICATION MONE Y HAD BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEALS, THAT THE DELET ION OF ADDITION WAS JUSTIFIED. 9.9. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. WINSTRAL PETROCHEMICALS P. LTD., 330 ITR 603, IN WH ICH IT WAS HELD AS UNDER : DISMISSING THE APPEAL, THAT IT HAD NOT BEEN DISPUT ED THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSE E-COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NORMAL BAN KING CHANNELS. ADMITTEDLY, COPIES OF APPLICATION FOR AL LOTMENT OF SHARES WERE ALSO PROVIDED TO THE ASSESSING OFFICER. SINCE THE 17 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. APPLICANT COMPANIES WERE DULY INCORPORATED, WERE IS SUED PAN CARDS AND HAD BANK ACCOUNTS FROM WHICH MONEY WAS TR ANSFERRED TO THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUES, TH EY COULD NOT BE SAID TO BE NON-EXISTENT, EVEN IF THEY, AFTER SUB MITTING THE SHARE APPLICATIONS HAD CHANGED THEIR ADDRESSES OR HAD STO PPED FUNCTIONING. THEREFORE, THE COMMISSIONER (APPEALS) AND THE TRIBUNAL WERE JUSTIFIED IN HOLDING THAT THE GENUINE NESS OF THE TRANSACTIONS HAD BEEN DULY ESTABLISHED BY THE ASSES SEE. 9.10. DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VALUE CAPITAL SERVICES PVT. LTD., (2008) 307 ITR 33 4 (DEL.) (HC), IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEAL, THAT THE ADDITIONAL BURDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLICANT S DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTME NT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSE SSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME O F THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW AROSE. 18 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 10. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF MATERIAL ON RECORD, IT IS CLEAR THAT ASSESSEE PRODUCED SUFFICIE NT DOCUMENTARY EVIDENCES BEFORE A.O. TO PROVE THE INGREDIENTS OF S ECTION 68 OF THE I.T. ACT. THE A.O. HOWEVER, DID NOT MAKE ANY FURTHER ENQ UIRY ON THE DOCUMENTS FILED BY THE ASSESSEE. THE A.O. THUS, FAI LED TO CONDUCT ANY ENQUIRY AND SCRUTINY OF THE DOCUMENTS AT ASSESSMENT STAGE AND MERELY SUSPECTED THE TRANSACTION BETWEEN INVESTOR C OMPANIES AND ASSESSEE BECAUSE THE INVESTORS COMPANY WERE FROM KO LKATA. THE A.O. THUS, DID NOT PERFORM HIS DUTIES AT THE ASSESSMENT STAGE SO AS TO MAKE ADDITION AGAINST THE ASSESSEE. THE A.O. DID NO T BRING ANY EVIDENCE ON RECORD THAT THE INVESTMENTS MADE BY THE INVESTOR COMPANIES WERE ACTUALLY EMANATED FROM THE COFFERS O F THE ASSESSEE COMPANY SO AS TO ENABLE IT TO BE TREATED AS UNDISCL OSED INCOME OF THE ASSESSEE. THE A.O. CANNOT ASK THE ASSESSEE TO PROVE SOURCE OF THE SOURCE. THEREFORE, THE FACTS AND CIRCUMSTANCES CLEA RLY PROVED THAT ASSESSEE DISCHARGED INITIAL ONUS TO PROVE IDENTITY OF THE INVESTOR COMPANIES, THEIR CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTION IN THE MATTER. THE LD. CIT(A) ON PROPER APPRECIATION OF EVIDENCE BEFORE HIM, CORRECTLY DELETED THE ADDITION . NO INTERFERENCE IS 19 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. CALLED FOR IN THE MATTER. THE LD. CIT(A) CORRECTLY DELETED THE ADDITION OF RS.3.35 CRORES UNDER SECTION 68 OF THE I.T. ACT. THE DECISIONS RELIED UPON BY THE LD. D.R. WOULD NOT SUPPORT THE CASE OF THE REVENUE IN VIEW OF THE FACT THAT NO ENQUIRY HAVE BEEN TAKEN BY A.O. IN THIS CASE TO DISPUTE THE DOCUMENTARY EVIDENCES FILED BY THE A SSESSEE. THE DEPARTMENTAL APPEAL HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 11. THE ASSESSEE IN THE CROSS-OBJECTIONS HAS RAISE D SEVERAL GROUNDS. GROUND NOS. 2, 3 AND 4 ARE RAISED IN SUPPO RT OF THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.3. 35 CRORES UNDER SECTION 68 OF THE I.T. ACT. SINCE WE HAVE DISMISSED THE DEPARTMENTAL APPEAL ON THIS ISSUE, THEREFORE, NO FURTHER FINDING S ARE REQUIRED ON THE GROUND NOS. 2, 3 AND 4 OF THE CROSS OBJECTIONS. 12. ON GROUND NO.1 OF THE CROSS-OBJECTION, THE ASS ESSEE SUBMITTED THAT THE ASSESSMENT ORDER PASSED BY THE A .O. AND SUBSEQUENTLY THE DEPARTMENTAL APPEAL ARE BAD IN LAW AND VOID ABINITIO AS THE SAME HAVE BEEN FRAMED BY THE REVENU E DEPARTMENT ON A MERGED ENTITY, WHICH IS NO LONGER IN EXISTENCE . 20 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 13. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE ASSESSEE COMPANY M/S. GARUDA IMAGING AND DIAGNOSTIC S PVT. LTD., M/S. SINDHU HOLDINGS LTD., AND OTHER COMPANIES HAVE MERGED WITH M/S. BHANDARI CONSULTANCY AND FINANCE LTD., VIDE JU DGMENT DATED 19 TH JANUARY, 2011 PASSED BY THE HONBLE DELHI HIGH COU RT IN A SCHEME OF AMALGAMATION PURSUANT TO SECTION 391 AND 394 AND OTHER RELEVANT PROVISIONS OF THE COMPANIES ACT. COPY OF T HE JUDGMENT DATED 19 TH JANUARY, 2011 IS FILED AT PAGE-75 OF THE PAPER BOO K. HE HAS REFERRED TO PB-116 OF THE PAPER BOOK WHICH IS JUDGM ENT OF THE HONBLE DELHI HIGH COURT DATED 19 TH JANUARY, 2011 IN WHICH THE ASSESSEE COMPANY MERGED WITH M/S. BHANDARI CONSULTANCY AND F INANCE LTD., FROM THE APPOINTED DATE I.E., 1 ST APRIL, 2009. HE HAS SUBMITTED THAT A.O. PASSED THE ASSESSMENT ORDER ON 30 TH MARCH, 2015 ON A NON- EXISTING ASSESSEE COMPANY. HE HAS ALSO SUBMITTED TH AT ON THE DATE OF SEARCH ON 12 TH APRIL, 2012, ON THE DATE OF ISSUE OF NOTICE UNDER SECTION 153A OF THE I.T. ACT ON 23 RD OCTOBER, 2013, AND ALSO ON THE DATE OF ISSUE OF NOTICE UNDER SECTION 142(1) AND 14 3(2) OF THE I.T. ACT, AND RESULTANT ASSESSMENT ORDER PASSED UNDER SECTION 153A/143(3) ON 30 TH MARCH, 2015 ON A NON-EXISTING ENTITY, IS VOID ABIN ITIO AND BAD 21 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. IN LAW. THE A.O. PASSED THE ASSESSMENT ORDER IN THE NAME OF NON- EXISTING COMPANY (ASSESSEE). HE HAS THEREFORE, SUBM ITTED THAT NOTICES ISSUED AND ASSESSMENT FRAMED ON A NON-EXIST ING ENTITY WERE ILLEGAL, NULL AND VOID. IN SUPPORT OF HIS CONTENTIO N, HE HAS RELIED UPON THE SEVERAL DECISIONS OF THE TRIBUNAL AND OTHERS. 14. ON THE OTHER HAND, LD. D.R. RELIED UPON THE OR DER OF THE A.O. 15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE ASSESSEE HAS FILED JUDGMENT OF THE HONBLE DELHI HIGH COURT DATED 19 TH JANUARY, 2011, ACCORDING TO WHICH, ASSESSEE-COMPANY HAS MERGED WITH M/S. BHANDARI CONSULTANCY AND FINANCE LTD., IN THE SCHEME OF AMALGAMATION PURSUANT TO SECTIONS 391 AND 394 OF TH E COMPANIES ACT VIDE COMPANY PETITION 283/10 AND COMPANY APPLIC ATION NO.74 OF 2010. THE APPOINTED DATE IS 1 ST APRIL, 2009. THE SEARCH IS HOWEVER, CONDUCTED ON 12 TH APRIL, 2012 AND ON THE DATE OF SEARCH I.E., ON 12 TH APRIL, 2012, THE ASSESSEE-COMPANY DID NOT EXIST BECAUSE IT HAS ALREADY MERGED WITH M/S. BHANDARI CONSULTANCY AND F INANCE LTD. NOTICE UNDER SECTION 153A WAS ISSUED ON 23 RD OCTOBER, 2013 AND ON 22 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. THAT DATE ALSO THE ASSESSEE COMPANY DID NOT EXIST A S IT HAS ALREADY MERGED WITH THE ABOVE COMPANY. THE A.O. PASSED THE ASSESSMENT ORDER UNDER SECTION 153A/143(3) ON 30 TH MARCH, 2015 IN THE NAME OF ASSESSEE-COMPANY WHICH WOULD NOT BE IN EXISTENCE AS PER LAW. THE ABOVE JUDGMENT OF THE HONBLE DELHI HIGH COURT CLEA RLY SUPPORT THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT ASSESSEE CEASED TO EXIST ON THE APPOINTED DATE I.E., 01.04.2 009. THE DEPARTMENT CAME TO KNOW LATER ON ABOUT MERGER OF TH E ASSESSEE- COMPANY WITH TRANSFEREE COMPANY WHICH WOULD NOT MAK E ANY DIFFERENCE. EVEN ON THE DATE OF SEARCH AND ISSUE OF NOTICE UNDER SECTION 153A AGAINST THE ASSESSEE, THE ASSESSEE-COM PANY DID NOT EXIST. THEREFORE, ISSUE OF NOTICE UNDER SECTION 153 A ITSELF WAS VOID ABINITIO AND BAD IN LAW. THE HONBLE DELHI HIGH COU RT IN THE CASE OF BDR BUILDERS & DEVELOPERS PVT. LTD., 397 ITR 529 HE LD THAT WHEN ASSESSEE COMPANY CEASES TO EXIST FROM APPOINTED DAT E, WAS NOT LIABLE FOR ASSESSMENT UNDER SECTION 153A OF THE I.T. ACT. THE ASSESSMENT UNDER SECTION 153A IS VOID ABINITIO. THE HONBLE DE LHI HIGH COURT SIMILARLY IN THE CASE OF MARUTI SUZUKI LTD., 397 IT R 681 HELD THAT ASSESSMENT ORDER IN THE NAME OF AMALGAMATING COMPAN Y IS NOT A 23 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. PROCEDURAL IRREGULARITY. ASSESSMENT ORDER IN THE NA ME OF NON- EXISTING AMALGAMATING COMPANY UNTENABLE. CONSIDERIN G THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF J UDGMENT OF THE HONBLE DELHI HIGH COURT DATED 19 TH JANUARY, 2011, WE ARE OF THE VIEW THAT ASSESSMENT FRAMED AGAINST THE ASSESSEE UN DER SECTION 143(3)/153A IS BAD IN LAW AND VOID ABINITIO. RESULT ANTLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE A SSESSMENT ORDER. IN THE RESULT, GROUND NO.1 OF CROSS OBJECTION OF AS SESSEE IS ALLOWED. 16. ON GROUND NO.5 OF THE CROSS OBJECTION, ASSESSE E SUBMITTED THAT SINCE NO INCRIMINATING MATERIAL WAS DISCOVERED DURING THE COURSE OF SEARCH UNDER SECTION 132 AND ORIGINAL ASS ESSMENT HAD BEEN COMPLETED, IN TERMS OF THE RATIO OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA 380 ITR 5 73, NO ADDITION WAS WARRANTED IN ASSESSMENT UNDER SECTION 143(3) R. W.S. 153A OF THE I.T. ACT. 17. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE AR E OF THE VIEW THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF 24 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAB UL CHAWLA (SUPRA) IN WHICH IT WAS HELD AS UNDER : COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY AS SESSING OFFICER WHILE MAKING ASSESSMENT UNDER SECTION 153A ONLY ON BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURI NG COURSE OF SEARCH WHICH WAS NOT PRODUCED OR NOT ALREADY DISCLO SED OR MADE KNOWN IN COURSE OF ORIGINAL ASSESSMENT. 17.1. SIMILAR VIEW WAS TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. MEETA GUT GUTIA 395 ITR 526 IN WHICH IT WAS HELD AS UNDER : 69. WHAT WEIGHED WITH THE COURT IN THE ABOVE DECISI ON WAS THE HABITUAL CONCEALING OF INCOME AND INDULGING IN CLANDE STINE OPERATIONS AND THAT A PERSON INDULGING IN SUCH ACT IVITIES CAN HARDLY BE ACCEPTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG. THESE FACTORS ARE ABSENT IN THE PRESENT CASE. THERE WAS N O JUSTIFICATION AT ALL FOR THE AO TO PROCEED ON SURMISES AND ESTIMATES WITHO UT THERE BEING ANY INCRIMINATING MATERIAL QUA THE AY FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRANCHISEE COMMISSION. 25 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 70. THE ABOVE DISTINGUISHING FACTORS IN DAYAWANTI GUPTA (SUPRA), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POS ITION IN KABUL CHAWLA (SUPRA) WHICH HAS BEEN FOLLOWED NOT ONLY BY THIS CO URT IN ITS SUBSEQUENT DECISIONS BUT ALSO BY SEVERAL OTHER HIGH COURTS. 71. FOR ALL OF THE AFOREMENTIONED REASONS, THE COURT IS OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT THE INV OCATION OF SECTION 153A BY THE REVENUE FOR THE AYS 2000-01 TO 2003-04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMINATING MATER IAL QUA EACH OF THOSE AYS. CONCLUSION 72. TO CONCLUDE : (I) QUESTION (I) IS ANSWERED IN THE NEGATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT IS HELD THAT I N THE FACTS AND CIRCUMSTANCES, THE REVENUE WAS NOT JUSTIFIED IN INVO KING SECTION 153 A OF THE ACT AGAINST THE ASSESSEE IN RELATION TO AY S 2000-01 TO AYS 2003-04. 17.2. IT IS NOT IN DISPUTE THAT ON THE DATE OF SEA RCH, ASSESSMENT FOR ASSESSMENT YEAR UNDER APPEAL UNDER SECTION 143( 3) DATED 26 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 30.10.2009 ALREADY STOOD COMPLETED. IT IS ALSO NOT IN DISPUTE THAT NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEA RCH, NO ADDITION COULD BE MADE TO THE INCOME ALREADY ASSESSED. THE A .O. MADE ADDITION UNDER SECTION 68 OF THE ACT ON THE BASIS O F THE ENTRIES RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. T HEREFORE, ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE JUDG MENTS OF THE HONBLE DELHI HIGH COURT. THE A.O. THUS, CANNOT MAK E ANY ADDITION INCLUDING UNDER SECTION 68 OF THE I.T. ACT AGAINST THE ASSESSEE. ON THIS GROUND ALSO, WE SET ASIDE THE ORDERS OF THE AU THORITIES BELOW AND DELETE THE ENTIRE ADDITION. IN THE RESULT, GROUND N O.5 OF THE CROSS OBJECTION IS ALLOWED. 17.3. NO OTHER POINT HAVE BEEN ARGUED OR PRESSED B Y THE PARTIES. 18. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSE D AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ITA.NO.450/DEL./2016 & CO.NO.164/DEL./2016 (A.Y. 20 09-2010) : 19. THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJEC TIONS BY ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF T HE LD. CIT(A)-27, NEW DELHI, DATED 09.11.2015, FOR THE A.Y. 2009-2010 . 27 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 20. IN THE DEPARTMENTAL APPEAL, ON GROUND NOS. 1, 2 AND 4, THE REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.4.50 CRORES ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY UNDE R SECTION 68 OF THE I.T. ACT, 1961. THIS ISSUE IS SAME AS HAS BEEN DECIDED ABOVE IN A.Y. 2007-2008. THEREFORE, FOLLOWING THE ORDER FOR A.Y. 2007-2008 (SUPRA), WE DISMISS GROUND NOS. 1, 2 AND 4 OF THE R EVENUE. 21. ON GROUND NO.3, THE REVENUE CHALLENGED THE R EDUCTION OF ADDITION OF RS.7,85,336 ON ACCOUNT OF DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D OF THE I.T. ACT TO RS.86,792. 22. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING THE YEAR ASSESSEE HAD EARNED DIVIDEND INCOME ONLY ON SOME IN VESTMENTS. ASSESSEE HAD INVESTED IN SHARES BY UNLISTED COMPANI ES AND THE CAPITAL GAIN, IRRESPECTIVE OF THE NATURE OF GAINS, IS TAXABLE UNDER I.T. ACT. FURTHER, IT IS ALSO WORTHWHILE TO MENTION THAT INVESTMENTS WERE MADE IN GROUP COMPANIES FOR THE DUAL PURPOSES I.E., CONTROL OVER MANAGEMENT OF COMPANIES AND BUSINESS GROWTH. EARNIN G DIVIDEND WAS NEVER THE OBJECTIVES OF THE INVESTMENT GROUP CO MPANIES. FOR CALCULATING THE AVERAGE INVESTMENTS, FOR THE PURPOS E OF RULE 8D, TOTAL 28 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. INVESTMENTS HAS BEEN CONSIDERED INSTEAD OF INVESTME NTS ATTRIBUTABLE TO EXEMPT INCOME. IT WAS SUBMITTED THAT AS PER CLAU SE (III) OF RULE 8D, ONLY INVESTMENTS WHICH ARE ATTRIBUTABLE TO EXEM PTED INCOME MUST BE CONSIDERED FOR CALCULATING AVERAGE INVESTME NTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAD CLAI MED THAT ASSESSEE HAD NOT INCURRED ANY EXPENDITURE FOR EARNI NG ANY EXEMPT INCOME (ALTHOUGH ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME). THE ASSESSEE CHALLENGED THE ACTION OF THE A.O. IN EXERC ISING THE POWERS FOR MAKING ASSESSMENT AS DENOVO ASSESSMENT RATHER T HAN MAKING ASSESSMENT ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND. THE YEAR UNDER APPEAL IS NOT DUE FOR REGULAR ASSESSMENT ON T HE DATE OF SEARCH AND EVEN NO INCRIMINATING DOCUMENTS CALLING FOR DIS ALLOWANCE UNDER SECTION 14A WERE UNEARTHED DURING THE SEARCH. THE A .O. HAD NOT RECORDED ANY SATISFACTION AND MECHANICALLY APPLIED SECTION 14A READ WITH RULE 8D. THE ASSESSEE HAD OFFERED DISALLOWANCE UNDER SECTION 14A AMOUNTING TO RS.96,743, RS.NIL AND RS.NIL IN RE SPECT OF A.YS. 2008-09 TO 2010-2011 RESPECTIVELY. 29 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 23. THE A.O. DID NOT DEAL WITH EXPLANATION OF ASSE SSEE THAT NO EXPENDITURE FOR EARNING EXEMPT INCOME WAS INCURRED. HE HAS STATED THAT ASSESSEE HAD MADE CERTAIN INVESTMENTS IN EQUIT Y SHARES, INCOME ON WHICH I.E., DIVIDEND IS EXEMPT FROM TAX. HE TOOK AVERAGE OF OPENING AND CLOSING AMOUNT OF INVESTMENT AND CALCULATED THE DISALLOWANCE @ % IN ACCORDANCE WITH RULE 8D. THE ASSESSEE DID NO T GIVE DETAILS OF EXPENSES ATTRIBUTABLE FOR EARNING DIVIDEND INCOME A ND DID NOT QUANTIFY DISALLOWANCE UNDER SECTION 14A. THE A.O. A DMITTED THAT DISALLOWANCE OF RS.96,743 HAD BEEN MADE IN THE ITR FILED UNDER SECTION 14A, HOWEVER, NO WORKING HAVE BEEN GIVEN. 23.1. THE ASSESSEE CHALLENGED THE FINDINGS OF THE A.O. BEFORE LD. CIT(A). THE ASSESSEE EXPLAINED THAT NO EXPENDITURE WAS INCURRED IN RESPECT OF EXEMPT INCOME EARNED, IF ANY. THE A.O. D ID NOT RECORD HIS SATISFACTION REGARDING COMPUTATION SUBMITTED BY THE ASSESSEE AS CONTEMPLATED UNDER SECTION 14A(2) OF THE I.T. ACT. NO INCRIMINATING MATERIAL WAS FOUND WITH REGARD TO THIS ISSUE. THE A SSESSEE RELIED UPON SEVERAL DECISIONS IN SUPPORT OF THE CONTENTION THAT ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSEE FURTHER PRAYED THA T IN CASE THE 30 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. ADDITION HAS TO BE MADE, THEN THE CALCULATION SHOUL D BE RESTRICTED TO THE AMOUNT OF INVESTMENT MADE IN THE LISTED COMPANY WHICH WAS EXEMPT. THE ASSESSEE FILED WORKING ACCORDING TO WHI CH, DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D WORKS OUT TO RS .78,393. 23.2. THE LD. CIT(A) ACCEPTED THE CONTENTION OF AS SESSEE AND NOTED THAT IT IS WELL SETTLED THAT A.O. SHOULD FIRS T CONSIDER THE AMOUNT OF EXPENDITURE CLAIMED TO HAVE BEEN INCURRED WHILE EARNING EXEMPT INCOME. IN CASE, HE HAS NOT SATISFIED, THEN, HE SHO ULD REJECT ASSESSEES CONTENTION AND TAKE RECOURSE TO RULE 8D. FURTHER, SECTION 14A COMES INTO PLAY WHERE EXEMPT INCOME HAS BEEN EA RNED DURING THE RELEVANT PERIOD. THE LD. CIT(A) FOUND THAT ASSE SSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING EXEMPT INCOME. THE ASSESSEE HAS AGREED BEFORE LD. CIT(A) THAT IN VIEW OF ITS HA VING EARNED SOME EXEMPT INCOME, AMOUNT ON SUCH INVESTMENT, FROM WHIC H EXEMPT INCOME WAS EARNED, SHOULD BE INCLUDED FOR THE PURPO SE OF COMPUTING DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. I N THE CASE OF INVESTMENT IN PRIVATE LIMITED OR UNLISTED COMPANIES , THE DIVIDEND MAY BE EXEMPT BUT LTCG AND STCG ARISING ON SALE OF SUCH 31 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. INVESTMENTS IS EXEMPT. THE LD. CIT(A), ACCORDINGLY, DELETED THE ADDITION AND RESTRICTED THE ADDITION TO RS.86,792. 24. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE WORKING GIVEN BY THE ASSESSEE HAS NOT BEEN DISPUTED AND FURTHER NO S ATISFACTION AS REQUIRED UNDER SECTION 14A HAVE BEEN RECORDED BY TH E A.O. THAT ASSESSEE DID INCUR ANY EXPENDITURE TO EARN EXEMPT I NCOME. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF METALMAN AUTO LTD., 336 ITR 434 HELD THAT NO EXPENSES INCURRED FO R EARNING EXEMPT INCOME SECTION 14A DO NOT APPLY. THE HONBLE DELHI HIGH COURT IN THE CASE OF I.P. SUPPORT SERVICES INDIA P. LTD., 37 8 ITR 240 HELD THAT NO DISALLOWANCE UNDER SECTION 14A BE MADE IN THE AB SENCE OF SATISFACTION. IN THE CASE OF ABHISHEK INDUSTRIES LT D., 380 ITR 652, THE HONBLE PUNJAB & HARYANA HIGH COURT HELD THAT O NUS IS ON THE A.O. TO RECORD SATISFACTION THAT INTEREST BEARING F UNDS USED FOR INVESTMENT TO EARN TAX FREE INCOME. IN THE PRESENT CASE, THE A.O. DID NOT DEAL WITH CONTENTION OF ASSESSEE IN ASSESSMENT ORDER AND DID NOT RECORD ANY SATISFACTION THAT ASSESSEE DID NOT INCUR ANY EXPENDITURE TO EARN EXEMPT INCOME. THE LD. CIT(A), THEREFORE, C ORRECTLY ALLOWED 32 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. PART RELIEF OF ASSESSEE ON THIS GROUND. GROUND NO.3 FAILS AND IS DISMISSED. 25. ON GROUND NOS.2, 3 AND 5 OF THE CROSS OBJECTIO N, ASSESSEE MERELY RAISED THE SAME POINT IN SUPPORT OF THE ORDE R OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.4.50 CRORES UNDER SE CTION 68 OF THE I.T. ACT AND DELETING THE ADDITION UNDER SECTION 14A REA D WITH RULE 8D OF I.T. RULES. 26. SINCE, WE HAVE DISMISSED DEPARTMENTAL APPEAL O N THESE GROUNDS, THEREFORE, THESE GROUNDS REQUIRE NO FURTHE R FINDING. 27. ON GROUND NOS.1 AND 4 OF THE CROSS OBJECTION, ASSESSEE CHALLENGED THE ORDERS OF THE AUTHORITIES BELOW TO B E BAD IN LAW AND VOID ABINITIO AS THE SAME HAVE BEEN FRAMED BY THE R EVENUE DEPARTMENT ON MERGED ENTITY AND THAT SINCE NO INCRI MINATING MATERIAL WAS DISCOVERED IN THE COURSE OF SEARCH UND ER SECTION 132 OF THE I.T. ACT AND ORIGINAL ASSESSMENT HAD BEEN COMPL ETED, THEREFORE, NO ADDITION CAN BE MADE IN ASSESSMENT ORDER UNDER S ECTION 143A IN VIEW OF DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA). 33 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 28. THESE GROUNDS ARE SAME AS HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN A.Y. 2007-2008 ABOVE. FOLLOWING THE REASONS FOR DECISION, WE SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND QUASH THE ASSESSMENT ORDER UNDER SECTION 153A OF THE I.T. ACT AND DELETE ALL THE ADDITIONS. GROUND NOS. 1 AND 4 OF THE CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED. 29. IN THE RESULT, ITA.NO.450/DEL./2016 OF THE DEP ARTMENT IS DISMISSED AND C.O.NO.164/DEL./2016 OF THE ASSESSEE IS ALLOWED. ITA.NO.451/DEL./2016 & CO.NO.165/DEL./2016 A.Y. 2 010-2011 : 30. THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJEC TIONS BY ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF T HE LD. CIT(A)-27, NEW DELHI, DATED 09.11.2015, FOR THE A.Y. 2010-2011 . 31. IN DEPARTMENTAL APPEAL, THE REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.10.74 CRORES ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY UNDER SECTION 68 OF THE I.T . ACT AND RESTRICTING THE ADDITION UNDER SECTION 14A OF THE I .T. ACT FROM RS.3,82,763 TO RS.1,27,895. 34 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 32. THE ASSESSEE IN THE CROSS OBJECTION HAS SUPPOR TED THE ORDER OF THE LD. CIT(A) IN DELETING ADDITIONS UNDER SECTION 68 AND 14A OF THE I.T. ACT ON GROUND NOS. 2, 3 AND 5 OF THE CR OSS OBJECTION. THE C.O. IS, THEREFORE, FILED IN SUPPORT OF THE ORDER O F THE LD. CIT(A) IN DELETING BOTH THE ADDITIONS. THEREFORE, NO FURTHER FINDING IS REQUIRED ON DISMISSING THE DEPARTMENTAL APPEAL. 33. ON GROUND NOS. 1 AND 4 OF THE CROSS OBJECTION, THE ASSESSEE CHALLENGED THE ORDERS OF THE AUTHORITIES B ELOW TO BE VOID ABINITIO AND BAD IN LAW AS ASSESSMENT HAVE BEEN FRA MED ON MERGED ENTITY AND THAT SINCE NO INCRIMINATING MATERIAL WAS RECOVERED DURING THE COURSE OF SEARCH, THEREFORE, NO ADDITION UNDER SECTION 153A CAN BE MADE IN VIEW OF JUDGMENT OF THE HONBLE DELHI HI GH COURT IN THE CASE OF KABUL CHAWLA (SUPRA). 34. ALL THESE ISSUES IN DEPARTMENTAL APPEAL AND CR OSS OBJECTION ARE SAME AS HAVE BEEN DECIDED IN A.YS. 20 07-2008 AND 2009-2010 ABOVE. FOLLOWING THE REASONS FOR DECISION FOR THE SAME, WE DISMISS THE DEPARTMENTAL AND ALLOW THE CROSS OBJ ECTION. 35 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 35. IN THE RESULT, ITA.NO.451/DEL./2016 OF THE DEP ARTMENT DISMISSED AND C.O.NO.165/DEL./2016 OF THE ASSESSEE ALLOWED. ITA.NO.446/DEL./2016 & C.O.NO.121/DEL./2010 A.Y. 2008-2009 - M/S. SINDHU HOLDINGS LTD., 35. THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJEC TIONS BY ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF T HE LD. CIT(A)-27, NEW DELHI, DATED 09.11.2015, FOR THE A.Y. 2008-2009 . 36. IN DEPARTMENTAL APPEAL ON GROUND NO.1, THE REV ENUE CHALLENGED THE DELETION OF ADDITION OF RS.2,17,000 UNDER SECTION 14A READ WITH RULE 8D OF THE I.T. ACT. ON GROUND NOS. 2 AND 3, THE REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.6 5 LAKHS ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY UNDE R SECTION 68 OF THE I.T. ACT, 1961. 37. IN THE CROSS OBJECTION, ON GROUND NOS. 2 AND 3 , ASSESSEE SUPPORTED THE ORDERS OF THE LD. CIT(A) IN DELETING THE ABOVE ADDITIONS. ON GROUND NOS. 1 AND 5 OF THE CROSS OBJECTION, THE ASSESSEE CHALLENGED THE ORDERS OF THE AUTHORITIES BELOW TO B E BAD IN LAW AND VOID ABINITIO, AS ASSESSMENT HAVE BEEN FRAMED ON ME RGED ENTITY AND 36 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. THAT NO ADDITION CAN BE MADE UNDER SECTION 153A OF THE ACT, IN THE ABSENCE OF RECOVERY OF ANY INCRIMINATING MATERIAL A S PER DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL C HAWLA (SUPRA). 38. ALL THESE ISSUES ARE SIMILAR AS HAVE BEEN DECI DED IN THE CASE OF M/S. GARUDA IMAGING AND DIAGNOSTIC PVT. LTD ., NEW DELHI (SUPRA) IN A.YS. 2007-08, 2009-10 AND 2010-2011. FO LLOWING THE REASONS FOR DECISION OF THE SAME, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE ASSESSMENTS. THE DE PARTMENT APPEAL FAILS ON THESE GROUND. HOWEVER, THE CROSS OB JECTION OF ASSESSEE ARE ALLOWED. 39. IN DEPARTMENTAL APPEAL ON GROUND NO.4, REVENUE CHALLENGED THE DELETION OF ADDITION OF RS.2.70 CROR ES ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE I.T. ACT AND ON GROUND NO.4 OF THE CROSS OBJECTION, ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. 40. THE ASSESSEE CHALLENGED THE ORDER OF THE A .O. IN MAKING ADDITION OF RS.2.70 CRORES. IT WAS SUBMITTED BEFORE LD. CIT(A) THAT IN ORIGINAL ASSESSMENT PROCEEDINGS UNDER SECTION 143(3 ), SIMILAR 37 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. ADDITION WAS MADE BUT RELIEF HAS BEEN GRANTED BY LD . CIT(A) BY DELETING THE ADDITION. IT WAS, THEREFORE, SUBMITTED THAT SINCE SIMILAR ADDITION WAS MADE IN ORIGINAL ASSESSMENT WHICH HAVE BEEN DELETED BY LD. CIT(A), THEREFORE, NO FURTHER ADDITION BE MA DE. LD. CIT(A) FOUND THE CONTENTION OF ASSESSEE TO BE CORRECT THAT SIMILAR ADDITION MADE IN ORIGINAL ASSESSMENT HAS BEEN DELETED BY LD. CIT(A). THEREFORE, THE ADDITION WAS DELETED BECAUSE NO NEW FACTS HAVE BEEN BROUGHT ON RECORD. 41. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE AR E OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. T HE A.O. IN THE ASSESSMENT ORDER ITSELF HAS RECORDED THAT IN THE OR IGINAL ASSESSMENT COMPLETED UNDER SECTION 143(3), ADDITION OF RS.2.70 CRORE UNDER SECTION 2(22)(E) HAVE BEEN MADE BUT ASSESSEE DID NO T PROVIDE ANY INFORMATION, THEREFORE, SAME ADDITION WAS REPEATED IN ASSESSMENT YEAR UNDER APPEAL. SINCE, THIS SIMILAR ADDITION HAS BEEN DELETED BY THE LD. CIT(A) AGAINST THE ORIGINAL ASSESSMENT ORDE R, THEREFORE, THERE WERE NO JUSTIFICATION TO MAKE ADDITION IN PROCEEDIN G UNDER SECTION 153A OF THE I.T. ACT AGAINST THE ASSESSEE. THE DEPA RTMENTAL APPEAL 38 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. HAS NO MERIT AND THE SAME IS DISMISSED. IN THE RESU LT, CROSS OBJECTION OF ASSESSEE HAS BECOME INFRUCTUOUS. 42. IN THE RESULT, ITA.NO.448/DEL./2016 OF THE DEP ARTMENT DISMISSED AND C.O.NO.121/DEL./2016 OF THE ASSESSEE ALLOWED. ITA.NO.447/DEL./2016 & C.O.NO.122/DEL./2016 A.Y. 2010-2011 : 43. THE DEPARTMENTAL APPEAL AS WELL AS CROSS OB JECTIONS BY ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF T HE LD. CIT(A)-27, NEW DELHI, DATED 09.11.2015, FOR THE A.Y. 2010-2011 . 44. IN THE DEPARTMENTAL APPEAL THE REVENUE CHALLEN GED THE DELETION OF ADDITION OF RS.5,96,250 ON ACCOUNT OF D ISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D OF THE I.T. ACT AND I N DELETING ADDITION OF RS.10 CRORES ON ACCOUNT OF UNEXPLAINED SHARE APP LICATION MONEY UNDER SECTION 68 OF THE I.T. ACT. 45. THE ASSESSEE IN THE CROSS OBJECTION HAS RAISED GROUND NOS. 3 AND 4 IN SUPPORT OF THE ORDER OF THE LD. CIT(A) I N DELETING THE ABOVE ADDITIONS. ON GROUND NOS. 1 AND 5 OF THE CROSS OBJE CTION, THE ASSESSEE CHALLENGED THE ORDERS OF THE AUTHORITIES B ELOW TO BE BAD IN 39 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. LAW AND VOID ABINITIO AS ASSESSMENT HAVE BEEN FRAME D BY REVENUE DEPARTMENT ON MERGED ENTITY AND IN MAKING ADDITION UNDER SECTION 153A WITHOUT RECOVERING ANY INCRIMINATING MATERIAL AS PER DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABU L CHAWLA (SUPRA). 46. THIS ISSUE IS SAME AS HAVE BEEN CONSIDERED IN THE CASE OF ASSESSEE FOR A.Y. 2008-2009 (SUPRA). FOLLOWING THE REASONS FOR DECISION FOR THE SAME, WE SET ASIDE THE ORDERS OF T HE AUTHORITIES BELOW AND QUASH THE ASSESSMENT ORDER AND DELETE ALL THE A DDITIONS. 47. ON GROUND NO.2 OF THE CROSS OBJECTION OF THE A SSESSEE, THE ASSESSEE CHALLENGED ADDITION OF RS.98,38,651 ON THE BASIS OF FICTITIOUS PROFIT/LOSS ACCRUING OUT OF CLIENT CODE MODIFICATION FACILITY. 48. IT IS ARGUED ON BEHALF OF THE ASSESSEE THAT NO OPPORTUNITY WERE GIVEN TO THE ASSESSEE AND NO INDEPENDENT FINDI NG HAVE BEEN GIVEN BY THE LD. CIT(A) FOR CONFIRMING THE ADDITION . 49. THE LD. D.R. SUBMITTED THAT NO DETAILS ARE FIL ED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. 40 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. 50. THESE FACTS MAY REQUIRE RECONSIDERATION AT THE LEVEL OF THE LD. CIT(A) BECAUSE NO SPEAKING ORDER HAS BEEN PASSE D BY HIM ON MERITS. HOWEVER, IN VIEW OF THE FACT THAT WE HAVE A LLOWED CROSS OBJECTION OF ASSESSEE ON GROUND NOS. 1 AND 5 OF THE CROSS OBJECTION AND QUASH THE ASSESSMENT ORDER BECAUSE ASSESSMENT H AVE BEEN FRAMED ON MERGED ENTITY AND NO INCRIMINATING MATERI AL WAS FOUND DURING THE COURSE OF SEARCH TO MAKE ADDITION DESPIT E ORIGINAL ASSESSMENTS HAD ALREADY BEEN COMPLETED, THEREFORE, THIS ADDITION, WOULD ALSO STANDS DELETED. THEREFORE, THERE IS NO N EED TO DECIDE THESE GROUNDS SEPARATELY. IN VIEW OF THE FINDINGS GIVEN O N LEGAL ISSUE OF MERGER AND NON-RECOVERY OF ANY INCRIMINATING MATERI AL AGAINST THE REVENUE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS GROUND AND DELETE THE ADDITION. NO INDEPENDENT FIND INGS ARE REQUIRED. 51. IN THE RESULT, ITA.NO.447/DEL./2016 OF THE DEP ARTMENT DISMISSED AND C.O.NO.122/DEL./2016 OF ASSESSEE ALLO WED. 52. TO SUM-UP, ALL DEPARTMENTAL APPEALS ITA.NO.449 , 450, 451/DEL./2016, ITA.NOS.446 AND 447/DEL./2016 ARE DI SMISSED AND 41 ITA.NOS.449, 450, 451/DEL./2016 & C.OS.163, 164 & 1 65/DEL./2016 ITA.NOS.446 & 447/DEL./2016 & C.OS. 121 & 122/DEL./ 2016 M/S. GARUDA IMAGING & DIAGNOSTICS PVT. LTD., AND M/S. SINDHU HOLDINGS LTD., NEW DELHI. ALL CROSS OBJECTIONS OF ASSESSEES C.O.NOS.163, 164 & 164/DEL./2016 AND C.O.NOS.121 AND 122/DEL./2016 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 05 TH JANUARY, 2018 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT B BENCH 6. GUARD FILE //BY ORDER// ASST. REGISTRAR : ITAT : DELHI BENCHES : DELHI.