Sh. Ritesh Kumar, New Delhi V. DCIT, New Delhi

CO 94/DEL/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3144 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 28-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAMITA TRIPATHY
• Keywords: Search and seizure; Salary income; Deemed dividend
• Section: 153A; 263; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4026/DEL/2014 AY: 20 05-06 DCIT, CENTRAL CIRCLE-4, NEW DELHI. VS RAJIV KUMAR, E-1A, MAHARANI BAGH, NEW DELHI. (PAN: AAAPK4569Q) ITA NO. 4028/DEL/2014 AY: 20 05-06 DCIT, CENTRAL CIRCLE-4, NEW DELHI. VS RITA KUMARI, E-1A (E-13), MAHARANI BAGH, NEW DELHI. (PAN: AAIPK4790M) ITA NO. 4029/DEL/2014 AY: 20 05-06 DCIT, CENTRAL CIRCLE-4, NEW DELHI. VS RITESH KUMAR, E-1A (E-13), MAHARANI BAGH, NEW DELHI. (PAN: AEEPG9094C) ITA NO. 4031/DEL/2014 AY: 2005-06 DCIT, CENTRAL CIRCLE-4, NEW DELHI. VS RAVINDER KUMAR, E-1A , MAHARANI BAGH, NEW DELHI. (PAN: AAAPK4245M) ITA NO. 4033/DEL/2014 AY: 2005-06 DCIT, CENTRAL CIRCLE-4, NEW DELHI. VS RAGHAV KUMAR, E-1A (E-13), MAHARANI BAGH, NEW DELHI. (PAN: AKPPK7985B) ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 2 C.O. NO. 92/DEL/2017 (ITA NO. 4028/DEL/2014) AY: 20 05-06 RAJIV KUMAR, E-1A , MAHARANI BAGH, NEW DELHI. VS DCIT, CENTRAL CIRCLE-4, NEW DELHI. C.O. NO. 93/DEL/2017 (IN ITA NO. 4028/DEL/2014) AY: 2005- 06 RITA KUMARI, E-1A (E-13), MAHARANI BAGH, NEW DELHI. VS DCIT, CENTRAL CIRCLE-4, NEW DELHI. C.O. NO. 94/DEL/2017 (IN ITA NO. 4029/DEL/2014) AY: 20 05-06 RITESH KUMAR, E-1A (E-13), MAHARANI BAGH, NEW DELHI. VS DCIT, CENTRAL CIRCLE-4, NEW DELHI. C.O. NO. 95/DEL/2017 (IN ITA NO. 4031/DEL/2014) AY: 20 05-06 RAVINDER KUMAR, E-1A , MAHARANI BAGH, NEW DELHI. VS DCIT, CENTRAL CIRCLE-4, NEW DELHI. C.O. NO. 96/DEL/2017 (IN ITA NO. 4033/DEL/2014) AY: 2005-06 RAGHAV KUMAR, E-1A, MAHARANI BAGH, NEW DELHI. (PAN: AKPPK7985B) VS DCIT, CENTRAL CIRCLE-4, NEW DELHI. APPELLANT BY: SMT. PRAMITA TRIPATHY, CIT DR RESPONDENT BY : SHRI R.S. SINGHVI, CA DATE OF HEARING 06.07.2017 DATE OF PRONOUNCEMENT 30.-8.2017 ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 3 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THESE ARE A GROUP OF FIVE APPEALS FILED BY THE DEPA RTMENT AND THE CORRESPONDING C.O.S FILED BY THE ASSESSEE. SINCE THE ISSUES INVOLVED WERE COMMON, THEY WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. 2. AT THE OUTSET, THE LD. AR SOUGHT TO FILE REVISED GROUNDS FOR THE C.O.S FILED BY THE ASSESSEE WHICH WE ACCEPT AND TAKE ON RECORD. SINCE ALL THE APPEALS AND C.O.S HAVE IDENT ICAL ISSUES, IT WAS AGREED BY BOTH THE PARTIES THAT I.T.A. NO. 4026 /DEL/2014 AND ITS CORRESPONDING C.O. BEARING NO. 92/DEL/2016 WILL BE TAKEN AS THE LEAD CASE. ACCORDINGLY, I.T.A. 4026 AND C.O. 92 ARE TAKEN AS THE LEAD CASE. 3. THE GROUNDS OF APPEAL IN ITA NO.4026/D/2014 ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,51, 78,387/- MADE BY AO ON ACCOUNT OF DERIVED BENEFIT IN TERMS O F SECTION 2(24)(IV) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 3,28, 86,898/- MADE BY AO BEING INCOME OF MINOR ON ACCOUNT OF DER IVED BENEFIT IN TERMS OF SECTION 2(24)(IV) OF THE INCOME TAX ACT, ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 4 1961. 3. THE ORDER OF THE CIT (A) IS ERRONEOUS AND IS NO T TENABLE ON FACTS AND IN LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY/ ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF THE HEARING OF THE APPEAL. 3.1 GROUNDS IN CROSS OBJECTION NO. 92/DEL/2017 AR E AS UNDER:- (I) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE VALID ITY OF NOTICE U/S 153A EVEN THOUGH THE SAME IS BASED ON SEARCH IN THE CASE OF THIRD PARTY AND NOT IN THE CA SE OF ASSESSEE AS NO INCRIMINATING MATERIAL WAS FOUND IN THE CASE OF ASSESSEE. (II) THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE NOTICE U/S 153 A AND CONSEQUENTIAL ASSESSMENT PROCEEDINGS ARE AGAINST THE SCHEME OF THE ACT. (III) THAT EVEN OTHERWISE, THE ASSESSMENT BEING BASED ON MATERIAL FOUND DURING SEARCH AT PREMISES OF THIRD PARTY AND IN ABSENCE OF RECORDING OF ANY SATISFACTION IN TERMS OF PROVIS IONS OF SECTION 153C, THE ASSESSING OFFICER HAS FAILED TO S ATISFY THE JURISDICTIONAL REQUIREMENT AND AS SUCH THE ENTIRE A SSESSMENT IS NULL AND VOID. 3. THAT IN ANY CASE, THE LD. CIT(A) HAS FAILED TO APP RECIATE THAT IN ABSENCE OF ABATEMENT OF REGULAR ASSESSMENT PROCE EDINGS, IT IS NOT OPEN TO ASSUME JURISDICTION U/S 153 A DE HORS ANY INCRIMINATING MATERIAL AS THE SAME IS- IMPERMISSIBL E UNDER THE LAW AND AGAINST THE OBJECT AND SPIRIT OF SECTIO N 153A OF THE ACT. ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 5 4. THAT ORDERS OF LOWER AUTHORITIES ARE ILLEGAL AND WI THOUT JURISDICTION. 4. IT WAS ALSO SUBMITTED BY THE LD. AR THAT THE ISS UE OF VALIDITY OF NOTICE U/S 153A AND THE CONSEQUENTIAL ASSESSMENT WAS GERMANE TO THE ENTIRE ISSUE AND, THEREFORE, THE ASS ESSEE SHOULD BE FIRST ALLOWED AN OPPORTUNITY TO ARGUE ON THE C.O .S TAKING THE LEGAL GROUNDS AND IF IT IS FELT THEREAFTER BY THE B ENCH, THE DEPARTMENTAL APPEALS AND THE ARGUMENTS ON MERIT CAN BE HEARD. 5. THE LD. CIT DR AGREED TO THE PROPOSITION OF THE LD. AR. ACCORDINGLY, WE PROCEED TO HEAR THE C.O.S OF THE AS SESSEE FIRST AND THEREAFTER ARGUMENTS ON MERITS WILL BE HEARD, I F IT IS SO FELT. 6. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND S EIZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT ON 21.01.2011 IN THE M/S DHARAMPAL SATYAPAL GROUP OF C ASES. DURING THE YEAR UNDER CONSIDERATION, THE RETURN OF INCOME IN THE CASE OF SHRI RAJIV KUMAR I.E. THE ASSESSEE IN ITA 4 026 AND CO 92 WAS FILED DECLARING AN INCOME OF RS. 72,85,091/-. THE ASSESSEE HAD INCOME FROM SALARY, HOUSE PROPERTY, INCOME FROM BUSINESS/ PROFESSION, INCOME FROM CAPITAL GAIN AND INCOME FRO M OTHER SOURCES. FURTHER ON 28.4.2004, THE ASSESSEE HAD REC EIVED 1,34,907 SHARES OF M/S DHARAMPAL SATYAPAL LTD. OF R S. 10/- FACE ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 6 VALUE AT THE PRICE OF RS. 10/- PER SHARE FROM M/S GLOBAL LTD., A COMPANY WHERE HIS WIFE WAS A DIRECTOR AND WAS ALSO HOLDING 11.24% OF THE SHARES. THE ASSESSEE WAS ALSO HOLDING 16.27% SHARES OF M/S BABA GLOBAL LTD. THE ASSESSING OFFICE R WAS OF THE OPINION THAT THE BOOK VALUE OF SHARES OF M/S DHARAM PAL SATYAPAL LTD., AS ON THE DATE OF TRANSFER WAS MUCH HIGHER, A ND SINCE THE WIFE OF THE ASSESSEE WAS A DIRECTOR IN M/S BABA GLO BAL LTD, THE BENEFIT OBTAINED BY THE ASSESSEE WAS IN THE NATURE OF INCOME AS DEFINED UNDER SECTION 2(24)(IV) OF THE INCOME TAX A CT. THEREFORE, THE ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE TO EXPL AIN WHY THE BENEFITS OBTAINED BY THE ASSESSEE FROM M/S DHARAMPA L SATYAPAL LTD. AND M/S BABA GLOBAL LTD. NOT BE TREATED AS INC OME U/S 2(24) OF THE ACT. 6.1 IT WAS THE CONTENTION OF THE ASSESSEE THAT TH ERE WAS NO BENEFIT OR PERQUISITE OBTAINED BY THE ASSESSEE OR H IS FAMILY MEMBERS EITHER FROM M/S DHARAMPAL SATYAPAL LTD. OR FROM M/S BABA GLOBAL LTD. IT WAS SUBMITTED BY THE ASSESSEE THAT THE SHARES WHICH WERE INITIALLY HELD IN M/S D.S. FOODS LTD. SHOULD NOT BE TREATED AS INCOME U/S 2(24) OF THE ACT. IT WAS SUBMITTED BY THE ASSESSEE THAT THE SHARES WERE INITIALLY HELD IN M/S D.S. FOODS LTD. WHICH GOT MERGED WITH M/S DHARAMPAL SATY APAL LTD. ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 7 AS PER THE MERGER SCHEME OF M/S D.S. FOODS LTD. APP ROVED BY THE HONBLE DELHI HIGH COURT. IT WAS FURTHER SUBMITTED THAT THE SHARES HELD IN M/S D.S. FOODS LTD. WERE ALSO THE SH ARES IN A CLOSELY HELD COMPANY. SIMILARLY, THE SHARES IN M/S DHARAMPAL SATYAPAL LTD. WERE ALSO SHARES IN A CLOSELY HELD CO MPANY. IT WAS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER THAT TH ESE SHARES WERE NOT FREELY TRANSFERABLE AND THAT THERE WERE SE VERAL RESTRICTIONS IN RELATION TO THESE SHARES. IT WAS A LSO SUBMITTED THAT THERE WAS NO MARKET VALUE OF THESE SHARES AS T HEY WERE OF A CLOSELY HELD COMPANY AND THAT THESE SHARES WERE STI LL HELD BY THE ASSESSEE AND HIS FAMILY MEMBERS AND WERE NOT CAPABL E OF BEING SOLD, MUCH LESS AT THE ALLEGED VALUE OF RS. 123.54 PER SHARE AS COMPUTED BY THE ASSESSING OFFICER. IT WAS ALSO SUB MITTED THAT THESE SHARES HAD BEEN TRANSFERRED AS A MEASURE OF R ESTRUCTURING AND NOT AS A BENEFIT OR PERQUISITE TO ANYBODY. 6.2 THE ASSESSING OFFICER, HOWEVER, DID NOT AGREE TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO ADD RS . 1,51,78,387/- BY CALCULATING THE BENEFIT AT RS. 112 .51 PER SHARE U/S 2(24(IV) OF THE INCOME TAX ACT, 1961. SIMILARL Y, ANOTHER ADDITION OF RS. 3,28,86,898/- WAS MADE BY CLUBBING THE ALLEGED ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 8 BENEFIT RECEIVED FROM SUCH TRANSFER BY THE MINOR DA UGHTER AND SON OF THE ASSESSEE. 6.3 ON A SIMILAR FOOTING, AN ADDITION OF RS. 3,75 ,85,433/- WAS MADE IN THE CASE OF SMT. RITA KUMARI, ANOTHER ASSES SEE IN THIS BUNCH OF APPEALS. 6.4 UNDER SIMILAR CIRCUMSTANCES, ADDITION OF RS. 1,84,92,818/- WAS MADE IN THE CASE OF SHRI RAVINDER KUMAR AND AN OTHER AMOUNT OF RS. 1,90,14,190/- WAS MADE IN THE CASE OF SHRI RAVINDER KUMAR BEING INCOME OF MINOR ON ACCOUNT OF DERIVED BENEFIT IN TERMS OF SECTION 2(24)(IV) AND CLUBBED U/S 64 OF THE ACT. 6.5 FURTHER, THE ASSESSING OFFICER ALSO MADE AN ADDITION OF RS. 1,90,14,190/- IN THE CASE OF SHRI RITESH KUMAR AND OF RS. 1,90,14,190/- IN THE CASE OF SHRI RAGHAV KUMAR UNDE R SIMILAR CIRCUMSTANCES. 6.6 ALL THESE ASSESSEES APPROACHED THE FIRST APPEL LATE AUTHORITY WHO DELETED THE ADDITIONS IN THE CASE OF ALL THE FI VE ASSESSEES BY HOLDING THAT NO BENEFIT U/S 2(24)(IV) CAN BE SAID T O HAVE BEEN OBTAINED BY PURCHASE OF UNQUOTED SHARES AT FACE VAL UE UNDER A BUSINESS RE-ARRANGEMENT BETWEEN THE FAMILY MEMBERS AND ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 9 APPROVED BY THE HON'BLE DELHI HIGH COURT AND COMBIN ED WITH THE FACT THAT THE SHARES COULD NOT BE SOLD TO OUTSIDERS . 6.7 THE LD. CIT(A), HOWEVER, DISMISSED THE ASSESSE ES LEGAL GROUND REGARDING THE VALIDITY OF PROCEEDINGS U/S 15 3A. 7. NOW, BEFORE THE ITAT, THE ASSESSES ARE CHALLEN GING THE VALIDITY OF THE PROCEEDINGS U/S 153A BY WAY OF C.O. S AND ALL THE FIVE APPEALS PREFERRED BY THE DEPARTMENT CHALLENGE THE DELETION BY THE LD. CIT(A). 8. THE LD. AR SUBMITTED THAT WHILE MAKING THE ADD ITIONS, THE ASSESSING OFFICER HAS NOT MADE REFERENCE TO ANY INC RIMINATING MATERIAL FOUND DURING THE SEARCH REGARDING TRANSFER OF SHARES. IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS N OT MADE ANY REFERENCE TO THE PANCHNAMA WHILE COMPLETING THE ASSESSMENT U/S 153A OF THE ACT AND ACCORDINGLY, AS PER THE SETTLED LAW, NO ADDITION U/S 153A COULD HAVE BEEN MADE IN SUCH A CIRCUMSTANCE. IT WAS ALSO SUBMITTED THAT THE RETUR NS OF INCOME HAD ALREADY BEEN FILED PRIOR TO THE DATE OF SEARCH IN ALL THE CASES AND THEY WERE PROCESSED U/S 143(1) OF THE ACT. IT WAS FURTHER SUBMITTED THAT IN THE RELEVANT ASSESSMENT YEAR, THE SHARES WERE ONLY ACQUIRED AND WERE NOT SOLD AND THEREFORE ON TH IS COUNT ALSO, ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 10 NO BENEFIT COULD BE SAID TO HAVE BEEN ACCRUED TO TH E ASSESSEES. LD. AR ALSO EMPHASISED THE FACT THAT THE SHARE TRAN SFERS WERE PURSUANT TO A RESTRUCTURING OF THE FAMILY BUSINESS IN TERMS OF A SCHEME APPROVED BY THE HON'BLE DELHI HIGH COURT. O UR ATTENTION WAS DRAWN TO THE ORDER OF THE HON'BLE DELHI HIGH CO URT APPROVING THE MERGER (PLACED AT PAGES 77-92 OF THE PAPER BOOK) IN SUPPORT OF HIS CONTENTION. LD. AR ALSO REFERRED TO PAGES 93-95 OF THE PAPER BOOK CONTAINING THE MEMORANDUM OF UNDE RSTANDING REACHED BETWEEN FAMILY MEMBERS WHICH MENTIONED THE MANNER OF THE SHARE TRANSFERS IN DETAIL. LD. AR POINTED OUT THAT AS PER THE MEMORANDUM OF UNDERSTANDING, IT WAS EVIDENT THAT TH E MEMORANDUM WAS ENTERED INTO ON 9.1.2003 AND, THEREF ORE, EVEN IF THE CONTENTION OF THE DEPARTMENT WAS TO BE ACCEP TED THAT SOME BENEFIT HAD BEEN DERIVED BY THE ASSESSEES, THE BENE FIT WOULD HAVE ACCRUED IN ASSESSMENT YEAR 2004-05 AND NOT 2005-06 I.E. THE YEAR UNDER APPEAL. LD. AR PLACED RELIANCE ON THE J UDGMENT OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF PR. CIT CENTRAL-I, DELHI VS SHRI MAHESH KUMAR GUPTA IN I.T.A. 810/2016 WHERE IN VIDE JUDGMENT DATED 22.11.2016, THE HON'BLE DELHI HIGH C OURT HAD DISMISSED THE DEPARTMENTS APPEAL ON AN IDENTICAL I SSUE. THE LD. AR RE-EMPHASISED THE FACT THAT ALL THE DOCUMENTS RE LATED TO ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 11 TRANSFER OF SHARES WERE ALREADY ON RECORD AND THAT NO NEW INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH WAS RELIED UPON BY THE ASSESSING OFFICER WHILE MAKING T HE SAID ADDITIONS. 9. IN RESPONSE, THE LD. CIT DR SUBMITTED THAT IN THIS CASE, THE SEARCH WAS CONDUCTED IN THE CASE OF GROUP COMPANIES AND IT WAS A SETTLED LAW THAT MATERIAL FOUND DURING SEARCH IN THE CASE OF THE COMPANY COULD BE USED AGAINST THE DIRECTORS. LD. C IT DR ALSO ARGUED THAT GIVEN THE CIRCUMSTANCES OF THE CASE, BR OAD INTERPRETATION SHOULD BE GIVEN TO THE FACTS OF THE CASE. LD. CIT DR ALSO REFERRED TO THE PROVISIONS OF SECTION 2(24) (IV) AND SUBMITTED THAT UNDER THIS SECTION, EVEN FUTURE BENE FITS ARE COVERED. SHE ALSO REFERRED TO PAGE 4 OF THE ASSESS MENT ORDER AND SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, T HE ASSESSEE HAD COOPERATED IN DETERMINATION OF THE SHARE VALUE AND HAD OFFERED THE VALUE OF RS. 95.67 PER SHARE AS THE BOO K VALUE. SHE ALSO SUBMITTED THAT THE CASE LAWS RELIED UPON BY TH E LD. CIT (A), WHILE DELETING THE ADDITION, WERE FACTUALLY DIFFERE NT AND, THEREFORE, HIS RELIANCE ON THE SAME WAS MISPLACED. ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 12 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREF ULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. IT IS UNDIS PUTED THAT THE TRANSFER OF SHARES WAS DONE IN PURSUANCE TO A RESTR UCTURING OF THE FAMILY BUSINESS AND SCHEME OF RESTRUCTURING WAS DULY APPROVED BY THE HON'BLE DELHI HIGH COURT. THE ORDE R U/S 394 OF THE COMPANIES ACT 1956 WAS PASSED BY THE HON'BLE DE LHI HIGH COURT ON 7.8.2003. IT IS ALSO UNDISPUTED THAT THE SHARES TRANSFERRED WERE AMONGST THE FAMILY MEMBERS OF THE FAMILY HELD COMPANIES AND NO SHARES WERE SOLD TO THE OUTSIDERS. IT IS ALSO UNDISPUTED THAT THE BUYERS/ASSESSEES ARE NOT AT LIB ERTY TO TRANSFER THE SHARES SO ACQUIRED TO THIRD PARTIES OU TSIDE THE FAMILY CONCERN AND IN CASE THESE SHARES ARE REQUIRED TO BE TRANSFERRED, THE SELLERS WOULD HAVE A PRE-EMPTIVE RIGHT TO BUY B ACK THE SAID SHARES. IT IS ALSO UNDISPUTED THAT THE MEMORANDUM OF UNDERSTANDING AS WELL AS THE SANCTION OF SCHEME OF MERGER RELATES BACK TO THE FY 2003-04. 10.1 FURTHER, A PERUSAL OF THE ASSESSMENT ORDERS R EVEAL THAT WHILE MAKING THE IMPUGNED ADDITIONS, THE ASSESSING OFFICER HAS ONLY MENTIONED THE DATE OF SEARCH BUT HAS NOT REFER RED TO ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH WHICH COULD BE THE FOUNDATION OF THESE ADDITIONS. THERE IS NOT EVEN A ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 13 WHISPER OF ANY INCRIMINATING MATERIAL HAVING BEEN F OUND AND RELIED UPON BY THE DEPARTMENT RELATING TO THESE ADD ITIONS ON ACCOUNT OF PERCEIVED BENEFITS U/S 2(24)(IV) OF THE ACT. THERE ARE A PLETHORA OF DECISIONS IN WHICH THE HON'BLE HIGH C OURTS HAVE HELD THAT THERE CAN BE NO VALID ASSESSMENT U/S 153A /153C OF THE ACT IN ABSENCE OF ANY INCRIMINATING MATERIAL. WE FIND THAT THE RELIANCE OF THE LD. AR ON THE JUDGMENT OF THE H ON'BLE DELHI HIGH COURT IN THE CASE OF SHRI MAHESH KUMAR GUPTA ( SUPRA) IS WELL PLACED AND SQUARELY COVERS ON THE ISSUE. IN T HIS CASE, THE ITAT HAD CONCLUDED, BASED UPON THE MATERIAL AVAILAB LE, THAT THE SEARCH AND SEIZURE OPERATIONS HAD NOT YIELDED ANY F RESH MATERIAL WARRANTING ADDITION U/S 153A OF THE ACT AND, THEREF ORE, COULD NOT CLOTHE THE CIT(A) WITH THE AUTHORITY TO ADD THE AMO UNT ON THE BASIS OF A FRESH APPRAISAL OF THE EXISTING MATERIAL THAT FORMED PART OF THE ORIGINAL ASSESSMENT. HON'BLE DELHI HIGH COU RT ADJUDICATED THE ISSUE IN PARA 4 AND 5 OF THE SAID JUDGMENT WHIC H IS BEING REPRODUCED FOR A READY REFERENCE:- 4. THERE IS NO DISPUTE THAT THE SEARCH AND SEIZUR E PROCEEDINGS IN THIS CASE DID NOT RESULT IN ANYTHING , THEREFORE, MATERIAL EITHER IN THE FORM OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS RELATED TO THE ISSUE OF DEEMED DIVI DEND UNDER SECTION 2(22) OF THE ACT. THE AMOUNTS PAID WERE IN FACT ORIGINALLY DECLARED IN THE ASSESSMENT RETURNS OF THE ASSESSEE. THE CIT, THEREFORE, HAD OPPORTUNITY TO EX ERCISE ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 14 HIS POWERS AS IT WERE ON THE BASIS OF RETURNS AS FI LED ORIGINALLY AND VALIDLY UNDER SECTION 263 OF THE ACT . 5. IN THE CIRCUMSTANCES IN THE ABSENCE OF ANY MATE RIAL DISCLOSING THAT THE ISSUE OF DEEMED DIVIDEND HAD BE EN WILFULLY DERIVED OR HAD BEEN DEEMED OR OTHERWISE WI THHELD FROM THE ASSESSMENT AN ADDITION UNDER SECTION 153A WAS WARRANTED - BASED ON THE PROPOSITION TAUGHT BY THIS COURT IN JUDGMENT DATED 28.08.2015 IN ITA 707/2014 TITLED : CIT VS KABUL CHAWLA. THEREFORE, WE CONCUR WITH THE ITATS OPINION IN THIS REGARD. THE SEARCH AND SEIZURE PROC EEDINGS IN SUCH CASES ARE UNDOUBTEDLY MEANT TO BRING TO TAX AMOUNT THAT ARE TO BE DETERMINED ON THE BASIS OF MA TERIALS SEIZED IN THE COURSE OF SUCH SEARCHES; PERMITTING A NYTHING OVER AND ABOVE THAT WOULD VIRTUALLY AMOUNT TO LETTI NG THE REVENUE HAVE A THIRD OR FOURTH OPINION AS IT WERE. SEARCHES - TO QUOTE THE VIEW OF ATTORNEY-GENERAL (NSW) VS QUIN (1990) HCA 21 IN ANOTHER CONTEXT ARE NOT THE KEY WHICH UNLOCKS THE TREASURY OF THE REVENUES JURISDICTION IN REGARD TO MATTERS THAT HAD ATTRACTE D ATTENTION IN THE REGULAR COURSE OF ASSESSMENT. 10.2 IN THE APPEALS BEFORE US, IT IS NOT THE CASE OF THE DEPARTMENT THAT ANY MATERIAL DISCLOSING THE ISSUE O F TRANSFER OF SHARES WAS WITHHELD FROM THE ASSESSMENT AND WAS FOU ND AND SEIZED DURING THE COURSE OF SEARCH. IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT ANY OTHER INCRIMINATING MATERIAL WH ICH COULD POINT OUT TO SUCH TRANSFER OF SHARES WAS UNEARTHED DURING THE COURSE OF SEARCH AND WAS SUBSEQUENTLY RELIED UPON B Y COMPLETING THE ASSESSMENT U/S 153A. IN SUCH A CIRCUMSTANCE, R ESPECTFULLY ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 15 APPLYING THE RATIO OF THE JUDGMENT IN THE CASE OF P R. CIT CENTRAL VS MAHESH KUMAR GUPTA (SUPRA) AS WELL AS OF CIT VS KABUL CHAWLA IN I.T.A. 707/2014 OF THE HON'BLE DELHI HIGH COURT, WE HOLD THAT PROCEEDINGS U/S 153A WERE AGAINST THE SCH EME OF THE ACT IN CASE OF ALL THE ASSESSEES. WE ALSO HOLD THA T THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE VALIDITY OF THE PROCEEDINGS U/S 153A. WE ARE OF THE CONSIDERED OPINION THAT IT WAS NOT OPEN FOR THE ASSESSING OFFICER TO ASSUME JURISDICTION U/S 15 3A DE HORS ANY INCRIMINATING MATERIAL. ACCORDINGLY, WE QUASH THE PROCEEDINGS U/S 153A IN CASE OF ALL THE FIVE ASSESS EES AND ACCORDINGLY ALLOW THE C.O.S OF ALL THE FIVE ASSESSE ES. 10.3 AS THE C.O.S OF THE ASSESSEES HAVE BEEN ALLOW ED, THE DEPARTMENTAL APPEALS CHALLENGING THE DELETION OF TH E IMPUGNED ADDITIONS BECOME IN FRUCTUOUS AND THE SAME ARE DISMISSED AS SUCH. 11. IN THE FINAL RESULT, THE C.O.S OF THE ASSESSE ES ARE ALLOWED AND THE APPEALS OF THE DEPARTMENT ARE DISMISSED. ITA 4028,4029,4033/D/2014 C.O. NOS. 93, 94 & 96/D/2017 & OTHRS ASSESSMENT YEAR 2005-06 16 ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DT. 30TH AUGUST 2017 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR