M/s. L.D. Crystal Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 5/DEL/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2785 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 14-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA RAJ
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Source of fund; Corroborative evidences; Condonation of delay
• Section: 143(3); 142(1); 153A; 133(6); 132; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. SUDHANSHU SRIVASTAVA, JM IT A NO. 2015/DEL/2014 : ASSTT. YEAR : 200 6 - 07 ITA NO. 2016/DEL/2014 : ASSTT. YEAR : 2008 - 09 DCIT, CENTRAL CIRCLE - 5, NEW DELHI VS M/S L. D. CRYSTAL PVT. LTD., TU - 70, PITAM PURA, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A BCL1304J CO NO. 05/DEL/2015 : ASSTT. YEAR : 20 06 - 07 CO NO. 06/DEL/2015 : ASSTT. YEAR : 2008 - 09 M/S L. D. CRYSTAL PVT. LTD., TU - 70, PITAM PURA, NEW DELHI VS DCIT, CENTRAL CIRCLE - 5, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AABCL13 04J ASSESSEE BY : SH. GAUTAM JAIN, CA REVENUE BY : MS. SEEMA RAJ, CIT DR DATE OF HEARING : 11 .0 1 .201 7 DATE OF PRONOUNCE MENT : 23 .03 .201 7 ORDER PER N. K. SAINI, AM : THE SE TWO APPEALS BY THE DEPARTMENT AND THE CROSS OBJECTION S BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 30.01.2014 OF THE LD. CIT(A) - XXXI, NEW DELHI . THE REGISTRY HAS POINTED OUT THAT THE CROSS OBJECTION S FILED BY THE ASSESS EE ARE BELATED BY 3 DAYS. THE ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 2 ASSESSEE FILED THE APPLICATION DATED 11.07.2016 FOR CONDONATION OF DELAY STATING THEREIN THAT THE NOTICE WAS SERVED UPON THE ASSESSEE ON 12.12.2014 AND A S SUCH CROSS OBJECTION S WERE TO BE FILED BY 11.01.2015 WHEREAS THE CROSS OBJECTION HAD BEEN FILED ON 14.01.2015 LEADING TO A DELAY OF 3 DAYS WHICH WAS INADVERTENT AND BONAFIDE. IT WAS FURTHER SUBMITTED THAT THE MEMORANDUM OF APPEAL S BY THE DEPARTMENT WERE MADE AVAILABLE TO THE ASSESSEE ON 13.01.2015 AND THEN THE CROSS OBJECTION WAS FILED BY THE ASSESSEE. A REQUEST HAS BEEN MADE TO CONDONE THE DELAY. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: N. BALAKRISHAN VS M. KRISHANMURTHY (1998) 7 SCC 123 COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS. 167 ITR 471 (SC) 2. THE LD . DR SUBMITTED THAT THE DELAY MAY NOT BE CONDONED. 3. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE VIEW THAT THE DELAY OF 3 DAYS MAY BE CONDONED. IN THE PRESENT CASE, THE ASSESSEE FILED THE CROSS OBJECTION S ON 14.01.2015 AFTER RECE IVING THE MEMO OF APPEAL OF DEPARTMENTAL APPEAL ON 13.01.2015. ACCORDINGLY, THE CROSS OBJECTION S ARE ADMITTED. ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 3 4. FIRST WE WILL DEAL WITH THE APPEAL OF THE DEPARTMENT IN ITA NO. 2015/DEL/2014 AND THE CROSS OBJECTION IN CO NO. 05/DEL/2015 BY THE ASSESSEE FO R THE ASSESSMENT YEAR 2006 - 07. THE GROUNDS RAISED BY THE DEPARTMENT IN ITS APPEAL READ AS UNDER: 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND THE CIRC UMSTANCES OF THE CASE THE LD. CI T(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 1,98,84,400 / - ON ACCOUNT OF SHARE CAPITAL. 3. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 35,70,740/ - ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN. 4 . THE APPELLANT CRAVES LEAVE TO ADD, AME ND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 5 . IN THE CROSS OBJECTION THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN U PHOLDING THE INITIATION OF PROCEEDINGS U/S 153A OF THE ACT AND, FRAMING OF ASSESSMENT U/S 153 A/143(3) OF THE ACT SINCE NO INCRIMINATING MATERIAL WAS FOUND AS A RESULT OF SEARCH CONDUCTED ON THE APPELLANT AND THEREFORE, BOTH THE NOTICE ISSUED AND ASSESSMENT FRAMED WERE WITHOUT JURISDICTION AND, DESERVED TO BE QUASHED AS SUCH. ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 4 2. THAT FOLLOWINGS ADDITIONS MADE BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX ARE PERSE WITHOUT JURISDICTION SINCE THE SAME ARE NOT BASED ON ANY MATERIAL FOUND AS A RESULT OF SE ARCH AS HAS BEEN HELD BY SPECIAL BENCH OF HON'BLE TRIBUNAL IN THE CASE OF M/S ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT REPORTED IN 137 ITD 287 (SB) (MUM): A) ADDITION OF RS.1, 9 8,84,400/ - U/S 68 OF THE ACT; B) ADDITION OF RS.35,70,740/ - ON ACCOUNT OF UNEX PLAINED UNSECURED LOAN U/S 68 OF THE ACT . 6 . FIRSTLY WE WILL DEAL WITH THE CROSS OBJECTION OF THE ASSESSEE. THE GRIEVANCE OF THE ASSESSEE RELATES TO THE UPHOLDING OF THE INITIATION OF THE PROCEEDINGS U/S 153A OF THE INCOME TAX ACT, 1961 (HEREINAFTER RE FERRED TO AS THE ACT) IN THE ABSENCE OF INCRIMINATING MATERIAL. 7 . THE FACTS OF THE CASE IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS INITIATED ON 07.01.2010. THEREAFTER NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 16.12.2010. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE SUBMITTED THAT THE RETURN DECLARING NIL INCOME WAS FILED ON 15.11.2006. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT THE ASSESSEE HAD RECEIVED A SHARE CAPITAL OF RS.1,96,85,400/ - FROM THE FOLLOWING PERSONS: NAME OF THE PERSON/ENTITY PAN AMOUNT ANURADHA AGGARWAL AHOPA9255C 2,75,000/ - LAJJA DEVI ABDPA2161L 23,85,000/ - ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 5 LAXMAN DASS AGGARWAL ACTPA9345H 17,25,000/ - SANJAY BANSAL AMBPB6182B 57,25,000/ - SANJAY BANSAL HUF AAHHS1508L 1 8,00,000/ - ABHINAV GOEL AHMPG7396N 70,000/ - ALANKAR AGENCIES PVT. LTD. AAACA2040F 34,00,000/ - BENCO FINANCE & INVESTMENT PVT. LTD. AABCB9349R 8,00,000/ - BHAGYALUXMI FUITS PVT. LTD. AACCB6957E 3,00,000/ - K M GANDHI EXPORTS PVT. LTD. AAACK4538J 5,55,400 / - KHINOOR OIL MILLS LTD. AABCK6763G 3,00,000/ - PRIME CAPITAL MARKET LTD. AABCP9313M 8,00,000/ - PURI MILK & FOOD LTD. AACCP3666L 1,50,000/ - PURSHOTTAM GARG AAHPG8744N 1,50,000/ - RAPID IMPEX PVT. LTD. AACCR5081P 1,50,000/ - REHKA SHARMA AZXPS4694Q 1,00 ,000/ - ROHTAS KUMAR AGGARWAL AAOPA3934F 1,00,000/ - S K BANSAL AGHPB8689H 2,00,000/ - WARNER MULTIMEDIA LTD. AABCC0225H 7,00,000/ - TOTAL 1,96,85,400/ - 8 . THE AO ALSO NOTICED THAT THE ASSESSEE HAD RECEIVED UNSECURED LOAN S OF RS.35,70,740/ - . HE WAS OF THE VIEW THAT THE ASSESSEE COMPANY ROUTED BACK ITS OWN UNDISCLOSED INCOME TO THE BOOKS OF ACCOUNT S AND FAILED TO FURNISH ANY INFORMATION IN RESPECT OF SHARE CAPITAL AND UNSECURED LOAN S . THEREFORE, THE SHARE APPLICATION MONEY AND SHARE PREMIUM WAS UNACCOUNT ED INCOME OF THE ASSESSEE. HE ACCORDINGLY, MADE THE ADDITION OF RS.1,96,85 ,400/ - (WRONGLY MENTIONED AS RS.198,84,400/ - IN THE GROUNDS OF APPEAL) . THE AO ALSO OBSERVED THAT THE FUNDS IN THE ACCOUNT OF SH. SANJAY BANSAL WERE CREDITED JUST BEFORE THE SAME WAS GIVEN TO THE COMPANY AS UNSECURED ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 6 LOAN . HE FURTHER O BSERVED THAT THE SOURCE OF LOAN IN THE HANDS OF SH. SANJAY BANSAL REQUIRED EXAMINATION. HE, THEREFORE, TO PROTECT THE INTEREST OF REVENUE ADDED RS.35,70,740/ - IN THE HANDS OF THE ASSESSEE ON PROTECTIVE B ASIS. 9 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD FURNISHED THE CONFIRMATION S, COPIES OF ITR , COPIES OF BANK STATEMENT WHICH CONTAINED DETAILS OF TRANSACTION AS WELL AS PAN PARTICULARS . THEREFO RE, THE REMARK THAT THE ASSESSEE DID NOT SUBMIT ANY DOCUMENT WAS CONTRARY TO THE FACTS. IT WAS ALSO SUBMITTED THAT NO ACTION U/S 132 OF THE ACT WAS CARRIED OUT IN THE ASSESSEE S CASE HENCE THE ASSESSMENT FRAMED U/S 153A OF THE ACT WAS BAD IN LAW. 10 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE AO WAS ASKED TO MAKE AVAILABLE THE DOCUMENTS TO SHOW THAT THE PROCEEDINGS U/S 153A OF THE A CT HAD BEEN CORRECTLY INITIATED. IN RESPONSE THE AO FURNISHED THE COPY OF PANCHNAMA EV IDENCING THE SEARCH HAD TAKEN PLACE IN THE CASE OF THE ASSESSEE AND SAME WAS MADE AVAILABLE TO THE ASSESSEE. ACCORDINGLY , THE LEGAL ISSUE WAS DECIDED AGAINST THE ASSESSEE. AS REGARDS TO THE OTHER ISSUES RAISED ON MERIT, THE LD. CIT(A) OBSERVED THAT THE ASS ESSMENT ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 7 FOLDER AS WELL AS THE AO S OBSERVATIONS AT PAGE NOS. 2 & 3 REVEALED THAT THE ASSESSEE HAD SUBMITTED ALL THE NECESSARY DOCUMENTS TO PROVE THE IDENTITY OF THE PERSON (PAN AND ADDRESS), CREDITWORTHINESS OF THE ENTITY (COPIES OF BANK STATEMENTS AND ITR S) AND THE GENUINENESS OF THE TRANSACTION (CONFIRMATION S FROM THE CONCERNED PARTIES). HE, THEREFORE, HELD THAT THE AO CONTRADICT ED HIMSELF AT PARA 4 OF PAGE NO. 3 OF THE ASSESSMENT ORDER. THE LD. CIT(A) DELETED THE ADDITION OF RS.1,96,85,400/ - BY OBSERVING IN PARAS 4.2.6 TO 4.2 .18 WHICH READ AS UNDER: 4.2.6 IN THE CORRESPONDENC E WITH THE ASSESSEE THERE IS NO MENTION OF THE AO HAVING DIRECTED THE APPELLANT TO PRODUCE THE PARTIES FOR VERIFICATION OF GENUINENESS OF THE TRANSACTIONS. I HAVE PERUSED THE ASSESSM ENT FOLDER. THE ORDER SHEET NOTINGS ARE BLANK AND HENCE THERE IS NO EVIDENCE TO SHOW THAT THE AO REQUIRED THE APPELLANT TO PRODUCE THE PARTIES FOR VERIFICATION. FURTHER, THE Q UESTIONNAIRE ISSUED U/S 142(1) ALSO DID NOT REQUIRE THE APPELLANT TO PRODUCE T HE PARTIES FOR VERIFICATION. TH E RELEVANT QUERY IN THE QUESTIONNAIRE IS REPRODUCED BELOW FOR REFERENCE. B ) SHARE CAPITAL OF RS. 10460000 / - AND SHARE APPLICATION MONEY OF RS.9225400/ - HAS BEE N INTRODUCED IN, THE BOOKS OF AC COUNTS OF THE COMPANY IN THE FIRST YEAR OF OPERATION OF THE COMPANY. IN THIS REGARD SUBMIT COMPLETE DETAILS ABOUT THE NAMES AND ADDRESSES OF THE PERSONS CONTRIBUTING TO THE SHARE CAPITAL OF THE COMPANY WITH COMPLETE DETAILS OF SOURCE OF FUNDS INTRODUCED AS SHARE CAPITAL. FURNISH ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 8 COMPLETE AD DRESS OF SH. SANJAY BANSAL AND SH. LACHMAN DAS WHO HAVE SIGNED THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2006 - 07 WITH THEIR PAN AND ASSESSMENT PARTICULARS. 4.2.7 OTHER THAN THE QUESTIONNAI RE REFERRED ABOVE, THERE IS NO OTHER COMMUNICATION WITH TH E APPELLANT SEEKING ANY DETAILS OR ASKING HIM TO PRODUCE ANY PARTIES FOR VERIFICATION. THEREFORE I DO NOT FIND ANY MERIT IN THE REMARK OF THE AO THAT 'NO SUCH DOCUMENTS WERE SUBMITTED NO R ANY OF THE REPRESENTATIVES OF THE ENTITIES MENTIONED AS ABOVE HAD BE EN PRODUCED. 4.2.8 IT IS ALSO NOTED THAT TH E AO MENTIONS THAT ENQUIRIES WERE CONDUCTED BY HIS OFFICE IN RESPECT OF COMPANIES NAMED IN THE ABOVE TABLE WHOSE OFFICES WERE LOCATED IN DELHI. INSPECTOR OF HIS OFFICE SEEMS TO HAVE REPORTED THAT AT THE GIVEN AD DRESSES NO PERSON COULD BE CONTACTED WHO COULD CONFIRM ABOUT THE EXISTENCE OF COMPANIES. EXAMINATION OF THE ASSESSMENT FOLDER DID NOT REVEAL ANY SUCH REPORT OF THE INSPECTOR. THE ASSESSMENT ORDER ALSO DOES NOT MENTION THE PRESENCE OF ANY SUCH REPORT IN A W RITTEN FORM. THE AR HAS ALSO SUBMITTED THAT NO REPORT OF THE INSPECTOR WAS EVER MADE AVAILABLE TO THEM. IT IS ALSO NOTED HERE THAT THE AO MENTIONS ONLY ABOUT NON - AVAILABILITY OF PERSONS WHO COULD BE CONTACTED TO CONFIRM THE EXISTENCE OF THE COMPANIES. HE DOES NOT SAY THAT THE COMPANIES DID NOT EXIST AT THOSE PLACES. IN THE ABSENCE OF ANY REPORT IN THE ASSESSMENT FOLDER AND ALSO DUE TO FAILURE OF AO IN CONFRONTING SUCH REPORT, IF ANY, TO THE APPELLANT, IT WOULD NOT BE POSSIBLE TO TAKE ANY ADVERSE VIEW ON TH E ISSUE BASED ON MERE REMARK OF THE AO WITHOUT ANY SUPPORTING EVIDENCES. ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 9 4.2.9 THE APPELLANT HAD LED ALL THE NECESSARY EVIDENCES IN SUPPORT OF THE AMOUNT RECEIVED TOWARDS SHARE APPLICATION. THE AO HAS NOT TAKEN ANY FURTHER ACTION ON THE SAID SUBMISSIONS. EVEN THOUGH THE AO MENTIONS THAT HE CONDUCTED ENQUIRIES THROUGH THE INSPECTOR, THE SAME IS NOT SUPPORTED BY - ANY MATERIAL ON RECORD. THE INSPECTOR'S ENQUIRY ALSO DOES NOT ESTABLISH ANYTHING CONTRARY TO THE EVIDENCES LED BY THE APPELLANT. IF THE AO HAD ANY D OUBT ABOUT THE GENUINENESS OF THE TRANSACTIONS, HE COULD HAVE RESORTED TO OBTAINING CONFORMATIONS U/S 133(6) OR THROUGH ISSUE OF SUMMONS U/S 131. WITHOUT CARRYING OUT ANY MEANINGFUL AND INDEPENDENT ENQUIRIES, THE AO HAS MADE OBSERVATIONS IN THE ASSESSMENT ORDER WHICH ARE NOT AS PER THE FACTS EMERGING FROM THE ASSESSMENT FOLDERS. 4.2.10 IN FOURTH PARAGRAPH ON PAGE 3 OF THE ASSESSMENT ORDER, IT IS STATED THAT 'NO DETAILS OF DISTINCTIVE NUMBERS OF SHARES ISSUED TO EACH COMPANY/ENTITY ARE FILED. THE DETAILS RE GARDING MEETINGS OF THE DIRECTORS HELD IN RESPECT OF ALLOTMENT OF SHARES AND TRANSFER THEREOF HAVE NOT BEEN SUBMITTED. NO EVIDENCE OF DISPATCH OF SHARES TO THE SHARE HOLDERS IS SUBMITTED. 4.2.11 AS NOTED EARLIER, THIS PARA - 4 ON PAGE 3 OF THE ORDER IS NO T RELEVANT TO THE FACTS OF THE CASE. THE AO HAS NEVER ASKED THE APPELLANT TO PRODUCE ANY DISTINCTIVE NUMBERS OF THE SHARES ISSUED BY THEM OR TO PRODUCE THE BOARD RESOLUTIONS ALLOTTING SUCH SHARES. IN THE ONLY QUERY RAISED DURING THE ASSESSMENT PROCEEDINGS, AS EVIDENCED BY THE QUESTIONNAIRE OF 18/07/2011 (NOTE SHEETS BEING BLANK), THE APPELLANT HAS BEEN ASKED TO SUBMIT COMPLETE DETAILS ABOUT THE NAMES AND ADDRESSES OF THE PERSONS CONTRIBUTING THE SHARE CAPITAL OF THE COMPANY WITH COMPLETE DETAILS OF SOURCE O F FUNDS INTRODUCES AS SHARE CAPITAL.'THE RELEVANT ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 10 QUERY I.E. (B) OF PART III OF THE QUESTIONNAIRE IS REPRODUCED BELOW FOR READY REFERENCE. (THIS QUERY HAS BEEN REPRODUCED BY THE AO AT PA GE 1 OF THE ASSESSMENT ORDER.) SHARE CAPITAL OF RS. L,04,60,000/ - AND SHARE APPL ICATION MONEY OF RS. 92,25,400/ - HAS BEEN, INTRODUCED IN THE BOOKS OF ACCOUNTS OF THE COMPANY IN THE FIRST YEAR OF OPERATION OF THE COMPANY. IN THIS REGARD SUBMIT COMPLETE DETAILS ABOUT THE NAMES AND ADDRESSES OF THE PERSONS CONTRIBUTING TO THE SHARE CAPITAL OF THE COMPANY WITH COMPLETE DETAILS OF SOUR CE OF FUNDS INTRODUCED AS SHARE CAPITAL. FURNISH COMPLETE ADDRESS OF SHRI SANJAY BANSAL AND SHREE LAXMAN DAS WHO HAVE SIGNED THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2006 - 07 WITH THEIR PAN AND ASSESSMEN T PARTICULARS. 4.2.12 THEREFORE I DO NOT FIND THAT THE AO HAS BEEN MENTIONING THE CORRECT FACTS IN THE ASSESSMENT ORDER WHEN HE MAKES THE REMARK THAT THE APPELLANT DID NOT PRODUCE THE DISTINCTIVE NUMBERS OF THE SHARES, BOARD RE SOLUTIONS AND DISPATCH DETAILS. 4.2.13 IN THE LAST PARAGRAPH ON THIS ISSUE AT PAGE - 7 OF HIS ORDER, THE AO MENTIONS THAT RS. L,96,85,400/ - IN SHARE CAPITAL, SHARE APPLICATION MONEY AND SHARE PREMIUM IS UNACCOUNTED INCOME OF THE ASSESSEE COMPANY. HOWEVER, IN THE PRESENT CASE THERE IS NO PREMIUM COMPONENT IN THE SHARE CAPITAL ISSUED BY THE COMPANY. THIS REMARK OF THE AO FURTHER GOES TO SHOW THAT HE HAS COMMITTED MISTAKES DUE TO CUT - AND - PASTE OF PARAGRAPHS TAKEN FROM SOME OF HIS OTHER ORDERS. 4.2.14 TO SUM UP, IT IS NOTIC ED THAT THE AO HAS NOT REFERRED TO ANY SEARCH FINDINGS IN THE APPELLANT'S CASE. NO ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 11 DOCUMENTS HAVE BEEN MENTIONED IN THE ASSESSMENT ORDER THAT GIVE ANY INDICATION THAT THE TRANSACTION INVOLVING SHARE APPLICATION AMOUNT WERE NOT GENUINE. HE HAS I NITIATED PROCEEDINGS U/S 153A BECAUSE OF SEARCH HAVING BEEN CONDUCTED IN THE APPELLANT'S CASE. HOWEVER THERE APPEARS TO BE NO ADVERSE FINDING OF THE SEARCH IN THE APPELLANT'S CASE. THE SHARES HAVE NOT BEEN ISSUED AT A PREMIUM. IN THE TRANS ACTION INVOLVING ENTRY PROVIDERS, THE PRACTICE AS FOUND IN MANY CASES HAS BEEN THAT SHARES HAVE B EEN ISSUED AT A HUGE PREMIUM AN D BOUGHT BACK BY THE PROMOTERS AT THE FACE VALUE. IN THE PRESENT CASE THE SHARES HAVE BEEN ISSUED AT PAR AND NO PREMIUM HAS BEEN CHARGED. 4.2.15 THE ONLY QUESTIONNAIRE ISSUED BY THE AO IS THE ONE DATED 18/07/2011. THE FACTS NARRATED IN THE PREVIOUS PARAGRAPHS SHOW THAT THE APPELLANT LED THE NECESSARY EVIDENCES AS CALLED FOR BY THE AO IN HIS QUESTIONNAIRE. THE APPELLANT HAS ALSO FILED COPIES OF ITR , BANK STATEMENTS AND CONFIRMATION OF ACCOUNTS, ALL OF WHICH CONTAINED PROPER NAME, PAN AND ADDRESS OF THE PARTIES. THE AO HAS MERELY TAKEN THESE DOCUMENTS ON RECORD AND NOT ACTED UPON THEM IN ANY OTHER MANNER. EVEN THOUGH THERE IS A MENTION OF CONDUCTING ENQUIRIES THROUGH THE INSPECTOR, THERE IS NO REPORT, IF. ANY, AVAILABLE OF THE SAID INSPECTOR. THE ASSESSMENT ORDER DOES NOT SAY THAT THE SAID INSPECTOR SUBMITTED ANY REPORT. THE ASSESSMENT ORDER ALSO DOES NOT SPEAK OF AO CONFRONTING THE APPELLANT WITH ADV ERSE REPORT OF THE INSPECTOR, IF ANY. THERE IS NO MENTION OF THE DATES ON WHICH THE ENQUIRIES, WERE CONDUCTED AND WHICH PLACES WERE VISITED BY THE INSPECTOR. WHAT IS THE TIME AT WHICH THE INSPECTOR VISITED THE LOCATION. WHETHER THERE WAS ANY SECOND ATTEMPT MADE TO CHECK THE ADDRESSES. IT IS NOT KNOWN WHO ALL IN THE NEIGHBORHOOD WERE CONTACTED BY HIM NOR IS THERE ANY INFORMATION AS TO WHETHER HE DID ANY ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 12 ENQUIRIES WITH THE POSTAL AUTHORITIES. FURTHER THE ENQUIRY MENTIONED BY THE AO IN THE ASSESSMENT .ORDER AL SO DOES NOT ESTABLISH THAT THE COMPANIES WERE NOT IN EXISTENCE. HE ONLY MENTIONS THAT NO PERSON WAS AVAILABLE AT THE GIVEN ADDRESS TO CONFIRM THE EXISTENCE OF THE COMPANY. IT IS ALSO NOT ASCERTAINABLE AS TO WHY THE .APPELLANT WAS NOT CONFRONTED WITH ANY AD VERSE FINDINGS ABOUT NONEXISTENCE OF PERSONS AT THE GIVEN ADDRESSES ETC. 4.2.16 CAS H DEPOSITS IN ONE OF THE APPLICANT'S CASE AND IMMEDIATE TRANSFER OF FUNDS IN THE BANK STATEMENTS IN OTHERS CANNOT BE TAKEN TO MEAN THAT THESE WERE ENT RY OPERATORS. THE AO H AS ARRIVE D AT SUCH CONCLUSION WITHOUT ANY MATERIAL EVIDENCES ON RECORD. THEREFORE I DO NOT FIND ANY MERIT - IN HOLDING THAT THE APPELLANT HAD NOT DISCHARGED ITS ONUS CAST UPON IT IN PROVIDING THE DETAILS ASKED FOR BY THE AO DURING THE ASSESSMENT PROCEEDINGS. ONCE THE APPELLANT HAD SUBMITTED THE DETAILS AS CALLED FOR, IT WAS FOR THE AO TO HAVE CONDUCTED INDEPENDENT ENQUIRIES, IN CASE HE DOUBTED ANY OF THE TRANSACTIONS, THROUGH ISSUE OF .NOTICES U/S 133(6) OR THROUGH SUMMONS UNDER SECTION 131. HAVING NOT DONE A NY SUCH EXERCISES, THE AO COULD NOT HAVE ARRIVED AT A CONCLUSION THAT THE TRANSACTIONS ENTERED INTO BY THE APPELLANT WERE NOT GENUINE IGNORING THE DOCUMENTARY EVIDENCES. 4.2.17 IT WAS THE AO WHO HAD SOUGHT CERTAIN DOCUMENT'S FROM THE APPELLANT WHICH HAVE BEEN DULY FURNISHED BY THEM. THEREAFTER, THERE IS NOTHING ON RECORD TO HOLD THAT THE TRANSACTIONS ARE NOT GENUINE. THE OBSERVATIONS MADE BY THE AO IN THE ASSESSMEN T ORDER ARE CONTRADICTORY TO EACH OTHER AS NOTED IN THE PREVIOUS PARAGRAPHS. THE ORDER SHEETS IN THE ASSESSMENT FOLDER ALSO DO NO T THROW ANY LIGHT ON THE QUERRIES, IF ANY, RAISED BY THE AO OTHER THAN THE ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 13 ONES RAISED IN THE QUESTIONNAIRE DATED 18/07/2011. THE ASSESSMENT ORDER ALSO DOES NOT GIVE ANY REFERENCE OF THE DATES OR THE ORDER SHEET NOTINGS THROUGH WHICH THE AO REQUIRED THE APPELLANT TO PRODUCE THE PARTIES OR TO LEAD ANY FURTHER EVIDENCES. PARAGRAPHS 2 TO 14 ON PAGES 3 TO 7 OF THE ASSESSMENT ORDER ARE MERE REPRODUCTIONS OF SOME STANDARD PARAGRAPHS WHICH ARE FOUND IN ALMOST ALL THE ASSESSMENT ORDERS PASSED BY THIS AO. AS SUCH THERE IS NOTHING WRONG IN USING STANDARD FORMATS IF THE FACTS OF THE CASE ARE SIMILAR. HOWEVER THE ARGUMENTS AND THE CONTENTS OF THE PARAGRAPHS ARE NOT APPLICABLE TO THE FACTS IN THE PRESENT CASE. IN VIEW OF THIS M ANY OF T HE AO'S REMARK ARE FOUND TO BE BASELESS REMARKS. 4.2.18 IN THE ABOVE BACKGROUND THERE IS NO MERIT IN HOLDING THE AMOUNT OF RS. 1,96,85,400/ - BEING AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE APPELL ANT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT A CT. THEREFORE THE SAME IS DELETED. THE GROUND IS ALLOWED. 11 . AS REGARDS TO THE ADDITION OF RS.35,70,740/ - MADE BY THE AO ON PROTECTIVE BASIS. THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING IN PARAS 4.3.1 TO 4.3.3 OF THE IMPUGNED ORDER AS UNDER: 4.3.1 IN THIS GROUND THE APPELLANT IS AGITATING AG AINST ADDITION OF RS. 35,70,740/ - U/S 68 OF THE ACT ON PROTECTIVE BASIS BEING UNSECURED LOAN RECEIVED FROM SRI SANJAY BANSAL. IN THE ASSESSMENT ORDER THE AO MENTIONS 'SOURCE OF LOANS IN THE HANDS OF SHRI SANJAY BANS AL REQUIRES EXAMINATION' AND PROCEEDS TO TREAT IT AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS. I DO NOT FIND ANY MERIT IN SUCH ADDITION. THE APPELLANT HAS SUBMITTED CONFIRMATIONS , BANK ACCOUNT STATEMENT AND THE RETURN OF IN COME OF SHRI SANJAY BANSAL IN SUPPORT OF THE UNSECURED LOAN RECEIVED FROM HIM. HE IS ALSO THE DIRECTOR OF THE APPELLANT COMPANY. FACTS BEING SO, ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 14 IF THE AO WANTED EXAMINATION OF SOURCE OF LOANS IN THE HANDS OF MR BANSAL, HE WAS WELL WITHIN HIS POWERS TO DO SO. HOWEVER IT CAN'T BE GROUND TO MAKE AN ADDITION THAT TOO ON A PROTECTIVE BASIS IN THE HANDS OF THE APPELLANT. FROM THE AO'S REMARKS IT LOOKS LIKE HE WANTED TO EXAMINE THE SOURCE OF SOURCE WHICH HE IS NOT CALLED FOR IN THE ASSESSMENT PROCEEDINGS OF THE A PPELLANT. 4.3.2 IN THE ASSESSMENT ORDER, THERE IS NO MENTION OF ANY ORDER SHEET NOTING OR ANY LETTER ISSUED BY THE AO REQUIRING ANY OTHER DETAILS OTHER THAN THOSE WHICH WERE CALLED FOR IN THE QUESTIONNAIRE DATED 18/07/2011. THE RELEVANT QUERY IN THE QUEST IONNAIRE DATED 18/07/2011 IS REPRODUCED BELOW. (D) SCHEDULE TO 3 TO THE BALANCE SHEET - DETAILS ABOUT THE UNSECURED LOANS RAISED BY THE COMPANY. PLEASE FURNISH DETAILED COPIES OF ACCOUNTS OF ALL THE PERSONS WITH CONFIRMATION FROM THEM ALONG WITH THEIR COMPL ETE ADDRESS AND PAN. 4.3. 3 THERE IS NO DISPUTE THAT THE APPELLANT HAD LEAD ALL THE NECESSARY EVIDENCES AS REQUIRED BY THE AO. THEREFORE, I DO NOT AGREE WITH THE AO'S ACTION ON THE ISSUE. THE ADDITION OF RS.35,70,740/ - MADE ON A PROTECTIVE BASIS U/S 68 IS H EREBY DELETED. 12. NOW THE DEPARTMENT IS IN APPEAL AGAINST THE DELETION OF ADDITION S MADE BY THE AO AND THE ASSESSEE HAS FILED THE CROSS OBJECTION. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS FRAMED FOR THE A SSESSMENT YEAR 2006 - 07 U/S 143(3) OF THE ACT ON 28.11.2008 AND THEREAFTER A SEARCH TOOK PLACE ON 07.01.2010. IN THE SAID SEARCH NO INCRIMINATING MATERIAL WAS FOUND , THE AO MADE THE IMPUGNED ADDITION ALTHOUGH THE ASSESSMENT WAS FRAMED EARLIER U/S 143(3) OF THE ACT AFTER MAKING THE ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 15 PROPER INQUIRIES (COPY OF THE SAID ASSESSMENT ORDER WAS FURNISHED WHICH IS PLACED ON RECORD). THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PARA 3 OF THE SAID ASSESSMENT ORDER DATED 28.08.2008 WHEREIN THE AO MENTIONED THAT: AFTER H AV ING DISCUSSION WITH ASSESSEE S AR AND NECESSARY VERIFICATION OF DETAILS FILED THE TOTAL INCOME DECLARED BY THE ASSESSEE COMPANY AT RS. NIL IS ACCEPTED. 13. IT WAS SUBMITTED THAT THE AO WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT MADE THE NECESSA RY VERIFICATIONS RELATING TO THE SHARE CAPITAL WHICH WAS DISCLOSED IN THE BOOKS OF ACCOUNTS . IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS NO INCRIMINATING MATERIAL SUGGESTING UNDISCLOSED INCOME WAS FOUND, T HEREFORE, THE ADDITION MA DE WHILE FRAMING THE ASSESSMENT U/S 153A OF THE ACT WAS NOT VALID. AS REGARDS TO THE ASSESSMENT YEAR 2008 - 09 , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RETURN OF INCOME WAS FILED ON 30.09.2008 WHICH WAS PROCESSED U/S 143(1) OF THE ACT AND THE TIM E LIMIT FOR ISSUING THE NOTICE U/S 143(2) OF THE ACT WAS UPTO 30.09.2009. THEREAFTER, IT WAS TO BE PRESUMED THAT THE RETURNED INCOME WAS ACCEPTED BY THE DEPARTMENT. IT WAS POINTED OUT THAT THE SEARCH TOOK PLACE ON 07.01.2010, THEREFORE, NO ASSESSMENT EITHE R FOR THE ASSESSMENT YEAR 2006 - 07 OR 2007 - 08 WAS PENDING ON THE DATE OF SEARCH AND AS SUCH IN THE ABSENCE OF ANY INCRIMINATING MATERIAL THE ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 16 ADDITION S MADE WERE NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CA SE OF CIT VS KABUL CHAWLA REPORTED AT (2016) 380 ITR 573 14 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT PROVE THE CREDITWORTHINESS OF THE SHARE APPLICANT AND THE DEPOSITORS. THEREFORE, THE AO RIGHTLY MADE THE ADDITION AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. IT WAS FURTHER SUBMITTED THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2008 - 09 WAS NOT COMPLETED U/S 143(3) OF THE ACT, SO THE ASSESSMENT WAS NOT ABAT ED. THEREFORE, THE AO RIGHTLY FRAMED THE ASSESSMENT U/S 153A OF THE ACT. 15 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE TIME LIMIT TO FRAME THE ASSESSMENT U/S 143(3) OF THE ACT LAPSED MUCH BEF ORE THE SEARCH WHICH TOOK PLACE ON 07.01.2010 WHILE THE TIME PERIOD TO ISSUE THE NOTICE U/S 143(2) OF THE ACT WAS ONLY UPTO 30.09.2009. IN THE INSTANCE CASE, IT IS AN ADMITTED FACT THAT THE AO WHILE FRAMING THE ASSESSMENT U/S 153A OF THE ACT MADE THE ADDITION WITHOUT ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 17 16. ON A SIMILAR ISSUE THE HON BLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA (SUPRA) HELD AS UNDER: ' ''THE LEGAL POSITION THAT EMERGES ON A PERUSAL OF SECTION 153A AND SECTION 132 OF THE INCOME - TAX ACT, 1961, IS AS UNDER : (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF TH E ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON IN RESPECT OF WHOM SEARCH WAS CONDUCTED REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN W HICH THE SEARCH TAKES PLACE, (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COM PUTED BY THE ASSESSING OFFICERS AS AFRESH EXERCISE. (HI) THE ASSESSING OFFICER WIL L EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE 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 ASSESSMENT YEARS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSE SSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF THE SEIZED MATERIAL (V) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASS ESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 18 MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E., THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS ' TO COMPLETED ASSESSMENT PROCEEDINGS, (VI) IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESS ING OFFICER, (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESS ING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMI NATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 17 . IT HAS FURTHER BEEN HELD THAT O N THE DATE OF THE SEARCH THE ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. ' 18 . SO RESPECTFULLY F OLLOWING THE RATIO LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT, WE ARE OF THE CONFIRMED VIEW THAT THE ADDITION S MADE BY THE AO WHILE FRAMING THE ASSESSMENT U/S 153A OF THE ACT IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARC H WAS NOT VALID. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE SUCCEED. ITA NOS. 2015 & 2016/DEL/2014 CO NO. 05 & 06/DEL/2015 L. D. CRYSTAL PVT. LTD. 19 19. THE FACTS OF THE CASE IN ITA NO. 2016/DEL/2014 FILED BY THE DEPARTMENT AND CO NO. 6/DEL/2015 B Y THE ASSESSEE FOR THE A.Y. 2008 - 09 ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE RELATED TO A.Y. 2006 - 07. THEREFO RE, OUR FINDINGS GIVEN IN THE FO RMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTANDIS. 20 . IN THE RESULT, THE APPEAL S OF THE DEPARTMENT ARE DISMISSED AND THE CROSS OBJECTION S OF THE ASSESSEE ARE ALLOWED. (O RDER PRONOUNCED IN THE COURT ON 23 /0 3 /2017 ) SD/ - SD/ - (SUDHANSHU SRIVASTAVA ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 23 /03 /2017 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR