M/s. Roseberry Mercantile Pvt. Ltd., New Delhi V. ACIT, Meerut

ITA 2995/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0745 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: G C SRIVASTAVA; SUVINAY K DASH S
• Keywords: Search and seizure; Accommodation entries; Assessment record; Capital receipt; Reassessment proceedings
• Section: 153A; 14A; 147; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.2995/DEL/2015 ASSESSMENT YEAR: 2008-09 ROSEBERRY MERCANTILE PVT. LTD., 14D, 14 TH FLOOR, HANSALAYA, 15, BARAKHAMBA ROAD, NEW DELHI. PAN: AABCR3485J VS. ACIT, CENTRAL CIRCLE, BHAINSALI ROAD, MEERUT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.C. SRIVASTAVA & SHRI SUVINAY K. DASH, ADVOCATES REVENUE BY : SHRI S.S. RANA, CIT, DR DATE OF HEARING : 13.09.2018 DATE OF PRONOUNCEMENT : 30.11.2018 ORDER PER R.K. PANDA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 10 TH MARCH, 2015 OF THE CIT(A), MEERUT, RELATING TO ASSESSMENT YEAR 2008-09. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE IS A COMPANY AND DERIVES INCOME FROM INTEREST ON LOANS AND ADVANCES GRANTED BY IT AS AN NBFC AND PROFIT ON SALE OF MUTUAL FUNDS. THE RETURN OF INCOME WAS FIL ED ON 6 TH NOVEMBER, 2008 DECLARING TOTAL INCOME OF RS. NIL. THE RETURN WAS PROCESSED U/S 143(1) ON 8 TH JULY, 2009. ITA NO.2995/DEL/2015 2 SUBSEQUENTLY, THE CASE WAS REOPENED U/S 147 AFTER D ULY RECORDING THE REASONS IN WRITING. IN RESPONSE TO NOTICE U/S 148 OF THE IT A CT DATED 23 RD OCTOBER, 2009, THE ASSESSEE SUBMITTED TO TREAT THE ORIGINAL RETURN AS RETURN FILED IN COMPLIANCE TO NOTICE U/S 148 OF THE IT ACT, 1961. SUBSEQUENTLY, THE ASS ESSING OFFICER COMPLETED THE ASSESSMENT U/S 147/143(3) ON 31 ST DECEMBER, 2009 DETERMINING THE TOTAL INCOME AT RS.73,510/- WHEREIN HE MADE CERTAIN ADDITIONS BY DI SALLOWING STT DEBITED TO P&L ACCOUNT, INCOME-TAX DEBITED, DISALLOWANCE U/S 14A A ND PRELIMINARY EXPENSES. 3. SUBSEQUENTLY, A SEARCH OPERATION U/S 132 OF THE IT ACT, 1961 WAS CARRIED OUT IN THE SUBHARTI GROUP OF CASES ON 12.11.2010. BEING A PART OF THE SEARCH, A SEARCH WAS CARRIED OUT AT THE BANK ACCOUNTS OF THE ASSESSEE SI TUATED AT ORIENTAL BANK OF COMMERCE, SUBHARTI DENTAL COLLEGE BRANCH, SUBHARTIP URAM, MEERUT DURING WHICH CASH OF RS.5,48,50,000/- WAS FOUND AND SEIZED. IN RESPONSE TO NOTICE U/S 153A, THE ASSESSEE FILED THE RETURN DECLARING LOSS OF RS.21,6 19/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE COMPANY HAS ISSUED EQUITY SHARES OF RS.87,12,500/- ON A PREMIUM OF RS.16,55,37,500/- DURING THE YEAR UNDER CONSIDERATION. HE ASKED THE ASSESSEE CO MPANY, VIDE QUESTIONNAIRE DATED 18 TH OCTOBER, 2012 TO FURNISH DETAILS AS TO HOW THE PRE MIUM WAS WORKED OUT BY THE ISSUE MANAGERS, AUDITORS, ETC., AND THE COPIES OF T HE WORKING AND MATERIAL RELIED ON. IN ABSENCE OF ANY COMPLIANCE TO THE STATUTORY NOTICES ISSUED BY THE ASSESSING OFFICER FROM TIME TO TIME TO PROVE THE IDENTITY, CREDIT WOR THINESS AND CAPACITY OF THE SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTIONS, THE ASSESSING OFFICER INVOKED THE ITA NO.2995/DEL/2015 3 PROVISIONS OF SECTION 68 OF THE ACT AND RELYING ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTORS & FINLEASE (P) LTD. (2012) 1 8 TAXMANN.COM 217 (DEL) , MADE AN ADDITION OF RS.17,42,50,000/- TO THE TOTA L INCOME OF THE ASSESSEE. 4. BEFORE THE CIT(A), THE ASSESSEE MADE ELABORATE S UBMISSIONS. IT WAS SUBMITTED THAT THE ISSUES FOR INCREASE IN SHARE CAPITAL WERE EXAMINED IN THE ORIGINAL ASSESSMENT FOR ASSESSMENT YEAR 2008-09 AND NO ADVERSE FINDING WAS GIVEN BY THE ASSESSING OFFICER IN THE ORDER PASSED U/S 143(3). IT WAS SUB MITTED THAT ON THE DATE OF SEARCH, ASSESSMENT FOR ASSESSMENT YEAR 2008-09 WAS NOT PEND ING AND NO INCRIMINATING DOCUMENT RELATING TO THE ISSUE OF INCREASE OF SHARE PREMIUM WAS FOUND OR SEIZED DURING THE SEARCH. THE ASSESSEE SUBMITTED THAT THE DETAILS WHICH WERE CALLED FOR BY THE ASSESSING OFFICER WERE ALSO SUBMITTED BY THE ASSESS EE DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT , IT WAS SUBMITTED THAT NO ADDITION CAN BE MADE. THE DECISION OF THE HON'B LE ALLAHABAD HIGH COURT IN THE CASE OF CIT MEERUT VS. NAV BHARAT DUPLEX LTD. (2013) 35 TA XMANN. 289 WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(A). 5. HOWEVER, THE LD.CIT(A) WAS ALSO NOT SATISFIED WI TH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE AS SESSING OFFICER BY OBSERVING AS UNDER:- 4.4 I HAVE GONE THROUGH THE RIVAL SUBMISSION AS ABOVE. THE ENTIRE ARGUMENT OF THE AR IS PRIMARILY BASED ON THE FACT THAT FIRSTLY, ORIGINAL ASSESSMENT WAS ALREADY ITA NO.2995/DEL/2015 4 ABATED AND SECONDLY, THAT IN THE SEARCH, NO INCRIMI NATING MATERIAL WAS FOUND. HOWEVER, THE AO HAS MENTIONED IN THE VERY FIRST PAR AGRAPH OF THE ASSESSMENT ORDER THAT CASH AMOUNTING TO RS.5,48,50,000/- WAS F OUND AND SEIZED DURING THE SEARCH. IT IS FURTHER SEEN FROM RECORD THAT THE COM PANY HAD SHOWN THE FOLLOWING RETURNED INCOME FOR THE ASSESSMENT YEARS FALLING WI THIN THE BLOCK PERIOD: ASSESSMENT YEAR RETURNED INCOME 2005-06 RS.10,750/- 2006-07 RS. 1,78,975/- 2007-08 RS. 242/- 2008-09 RS.(-) 21,619/- 2009-10 RS. (-) 65,054/- 2010-11 RS. (-) 146/- FROM THE ABOVE DATA, .IT IS OBVIOUS THAT THE ASSESS EE HAS HARDLY ANY BUSINESS. IN THIS SITUATION, SEIZURE OF RS 5,48,50,000/- FROM TH E BANK ACCOUNT OF THE ASSESSEE CONSTITUTES SUFFICIENT INCRIMINATING MATERIAL UPON WHICH THE ENTIRE AFFAIRS OF THE ASSESSEE CAN BE EXAMINED. THIS IS PRECISELY WHAT TH E AO HAS ATTEMPTED TO DO IN THE ASSESSMENT ORDER MADE SUBSEQUENT TO THE SEARCH. 4.5 THE AR HAS RELIED HEAVILY ON THE JUDGMENT GIVEN BY THE ITAT MUMBAI, IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS D CIT CENTRAL CIRCLE 44 (2012) 137 ITD 0026. HOWEVER, THE FACTS OF THE NARRATED CA SE ARE DIFFERENT FROM THE CASE OF THE APPELLANT BECAUSE IN THAT CASE, NO INCRIMINA TING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. ON THE OTHER HAND, IN THIS CA SE, CASH AMOUNTING TO RS. 5,48,50,000/- WAS SEIZED FROM THE BANK ACCOUNT OF T HE ASSESSEE. NEEDLESS TO SAY, THIS FACT WAS NOT AVAILABLE AT THE TIME OF THE ORIG INAL ASSESSMENT. THUS, THE FACT THAT THE ORIGINAL ASSESSMENT HAS ABATED WILL NOT MA KE ANY DIFFERENCE BECAUSE INCRIMINATING MATERIAL WAS INDEED FOUND IN THE FORM OF FDRS IN THIS CASE. IN THE JUDGMENT GIVEN BY THE ITAT MUMBAI, THE HONBLE ITAT HAD REMARKED THAT ASSESSMENT U/S 153A CAN BE MADE ON THE BASIS OF UND ISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 4.6 FROM A CAREFUL STUDY OF THE WRITTEN SUBMISSION MAD E BY THE AR, IT IS SEEN THAT THE APPELLANT HAD NOT BEEN ABLE TO ANSWER THE QUERIES RAISED BY THE AO IN THE ASSESSMENT ORDER. THE BASIC QUESTION WHICH I S TO BE ANSWERED HERE IS - WHY WOULD ANY PRUDENT BUSINESS ESTABLISHMENT INVEST IN THE APPELLANT COMPANY BY PAYING HEAVY PREMIUM? IT IS SEEN FROM RECORD THAT T HE ASSESSEE COMPANY HAS ISSUED EQUITY SHARES OF RS. 87,12,500/- ON A PREMIU M OF RS. 16,55,37,500/- DURING THE YEAR UNDER CONSIDERATION. AS MENTIONED A BOVE, THE APPELLANT COMPANY DID NOT HAVE ANY NET WORTH. IN THIS SITUATION IT SE EMS HIGHLY UNLIKELY THAT THE SHARES OF COMPANY WOULD COMMAND A PREMIUM OF RS. 49 0/- PER EQUITY SHARE. MOREOVER, THE COMPANIES WHO HAVE INVESTED IN THE SH ARES OF THE APPELLANT COMPANY HAVE NOT EARNED ANY INCOME ON THEIR INVESTM ENT. THE ENTIRE SETUP SMACKS OF ACCOMMODATION ENTRIES WHICH HAVE BEEN EXP OSED BY THE SEARCH OPERATION CONDUCTED BY THE INCOME TAX DEPARTMENT. I , THEREFORE AGREE WITH THE ITA NO.2995/DEL/2015 5 CONCLUSION REACHED BY THE AO THAT THERE IS NO SATIS FACTORY EXPLANATION OF MONEY RECEIVED BY THE APPELLANT COMPANY ON ACCOUNT OF SHA RE APPLICATION AND THE SAME HAS BEEN RIGHTLY ADDED BY THE AO. 4.7 THE AR HAS ALSO QUOTED THE JUDGMENT OF HONBLE ALL AHABAD HIGH COURT IN THE CASE OF CIT MEERUT VS NAV BHARAT DUPLEX LTD. AS PER THE AR, IT HAS BEEN HELD IN THIS JUDGMENT THAT ONLY IDENTITY OF THE SHA REHOLDER IS REQUIRED TO BE ESTABLISHED. THE AR HAS FURTHER STATED THAT THE IDE NTITY WAS ESTABLISHED DURING THE COURSE OF ORIGINAL ASSESSMENT. HOWEVER, AS MENTIONE D ABOVE, NEW AND INCRIMINATING EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH AND DURING THE ASSESSMENT MADE SUBSEQUENT TO SEARCH EVEN THE IDENT ITY OF THE SHARE APPLICANTS WERE NOT ESTABLISHED. 4.8 CONSIDERING THE TOTALITY OF FACTS AND ON THE BASIS OF DISCUSSIONS MADE ABOVE, I HAVE COME TO A CONCLUSION THAT ADDITION OF RS. 17 ,42,50,000/- WAS RIGHTY MADE BY THE AO. GROUND OF APPEAL NO.L IS DISMISSED AND A DDITION OF RS. 17,42,50,000/- IS CONFIRMED. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS), MEERUT, ERRED IN LAW AS WELL AS ON FACT IN CONFIRMING THE ADDITION OF RS. 17,42,00,000/-, MADE BY THE A.O., W HICH WAS RECEIVED BY THE APPELLANT COMPANY AS SHARE CAPITAL AND SHARE PREMIU M, BEING CAPITAL RECEIPT, IN THE HAND OF THE APPELLANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS), MEERUT, ERRED IN LAW AS WELL AS ON FACT IN CONFIRMING THE ACTION OF THE A.O. WITHOUT JURISDICTION, OF VISITIN G THE ISSUE OF SHARE CAPITAL, WHICH WAS EXAMINED AND FINALIZED IN THE ASSESSMENT UNDER SECTION 148 OF THE IT ACT 1961. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS), MEERUT, ERRED IN LAW AS WELL AS ON FACT IN CONFIRMING THE ADDITION OF RS.17,42,00,000/-, MADE BY THE A.O., IN AN ASSESSMENT MADE UNDER SECTION 153A OF THE I.T. ACT, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, WHICH WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH UN DER SECTION 132 OF THE I.T. ACT, 1961. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, RA ISE OR DELETE ANY OR ALL GROUNDS OF APPEAL. ITA NO.2995/DEL/2015 6 7. THE LD. COUNSEL FOR THE ASSESSEE, REFERRING TO THE COPY OF THE PANCHNAAMA DATED 4 TH DECEMBER, 2010, COPY OF WHICH IS PLACED AT PAGES 3 -5 OF THE PAPER BOOK, SUBMITTED THAT ONLY THE BANK ACCOUNT OF THE ASSESSEE WAS SEAR CHED AND NO SEARCH AT THE BUSINESS PREMISES OF THE ASSESSEE HAS TAKEN PLACE. REFERRING TO THE ASSESSMENT ORDER PASSED U/S 153A/143(3) OF THE IT ACT, HE SUBMITTED THAT THE AS SESSING OFFICER MADE AN ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY U/S 68 OF THE IT ACT AMOUNTING TO RS.17,42,50,000/- AND NO ADDITION WAS MADE ON ACCOU NT OF SUCH BANK DEPOSIT. HE SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS COMPLETE D U/S 147/143(3) AND NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. REFERRING TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF CIT VS. KABUL CHAWLA, REPORTED IN 380 ITR 573 (DEL) , HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE S AID DECISION HAS HELD THAT JURISDICTION U/S 153A CANNOT BE ASSUMED IN CASE OF A COMPLETED ASSESSMENT ON THE DATE OF SEARCH WHEN NO INCRIMINAT ING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH. RELYING ON VARIOUS OTHER DEC ISIONS INCLUDING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF DCIT VS. MEETA GUTGUTIA REPORTED IN 395 ITR 526, HE SUBMITTED THAT HON'BLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT INVOCATION OF SECTION 153A TO REOPEN CONCLUDED ASSESSMENTS OF ASSESSMENT YEARS EARLIER TO YEAR OF SEARCH WAS NOT JUSTIFIED IN ABSENCE OF INCRIMINA TING MATERIAL FOUND DURING SEARCH QUA EACH ASSESSMENT YEAR. HE SUBMITTED THAT THE ABOVE DECISION OF HON'BLE DELHI HIGH COURT WAS CHALLENGED BY THE REVENUE AND THE SLP HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT AS REPORTED IN 96 TAXMANN.COM 468. H E ALSO RELIED ON THE FOLLOWING DECISIONS:- ITA NO.2995/DEL/2015 7 I) CIT VS SINHGAD TECHNICAL EDUCATION SOCIETY, 397 ITR 344; II) INTAS PHARMACEUTICALS LTD. VS. DCIT IT (SS) A NO. 807TO 809/AHD/2010 AND BATCH OF OTHER APPEALS, ORDER DATED 14.08.2015. III) ACIT VS. GOLDMOHUR DESIGN & APPAREL PARK LTD., 96 T AXMANN.COM 375; IV) CIT VS. SMT. SHAILA AGARWAL, 346 ITR 130 (ALLAHABAD ). 8. HE ACCORDINGLY SUBMITTED THAT IN ABSENCE OF ANY INC RIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH NO ADDITION CAN BE MADE U/S 153A/143(3) IN CASE OF A COMPLETED ASSESSMENT. 9. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, HE SU BMITTED THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 147/143(3 ) ON 31 ST DECEMBER, 2009 AND THE DETAILS WHICH THE ASSESSING OFFICER CALLED FOR DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A/143(3) OF THE IT ACT WERE ALRE ADY ON THE RECORD AS THEY WERE FILED BY THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. THE SAME WERE CONSIDERED BY THE THEN ASSESSING OFFICER AND W ERE ACCEPTED BY HIM. NOW, THERE IS NO NEW MATERIAL FACT AVAILABLE WITH THE ASSESSIN G OFFICER EVEN AFTER THE SEARCH AND SEIZURE ACTION U/S 132 OF THE IT ACT WHICH COULD BE A CAUSE OF MAKING A FRESH ASSESSMENT AND MAKING AN ADDITION ON ACCOUNT OF SHA RE APPLICATION MONEY. THE ASSESSING OFFICER HAS NOT MADE ANY FURTHER INQUIRY AFTER THE SEARCH SO AS TO FIND OUT THAT WHATEVER DETAILS FURNISHED DURING THE COURSE O F ORIGINAL ASSESSMENT PROCEEDINGS/REASSESSMENT PROCEEDINGS WERE INCORRECT OR FALSE. SINCE THE ASSESSEE HAS ESTABLISHED THE IDENTITY AND CREDIT WORTHINESS OF T HE SHARE APPLICANTS AND THE ITA NO.2995/DEL/2015 8 GENUINENESS OF THE TRANSACTION AND THE ASSESSING OF FICER, AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE HAS ACCEPTED SUCH SHARE APPLICATION AND SHARE PREMIUM AS EXPLAINED, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL IN THE POSSESSION OF THE ASSESSING OFFICER, HE CANNOT TAKE A DIFFEREN T VIEW AND PUT THE ASSESSEE TO A FURTHER TEST OF PRODUCING THE SHARE APPLICANTS AFTE R A GAP OF SO MANY YEARS. HE SUBMITTED THAT ALTHOUGH THESE DETAILS WERE AVAILABL E IN THE ASSESSMENT RECORDS OF THE ASSESSEE, THE ASSESSING OFFICER IN THE ORDER PASSED BY HIM HAS NOT AT ALL CONSIDERED THE SAME. EVEN THOUGH THIS WAS BROUGHT TO THE NOTICE O F THE CIT(A), HE HAS ALSO NOT CONSIDERED THE ARGUMENT OF THE ASSESSEE THAT ALL DE TAILS WERE AVAILABLE IN THE ASSESSMENT RECORDS SINCE THESE DETAILS WERE FILED D URING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. HE ACCORDINGLY SUBMITTED T HAT WHEN THE FIXED DEPOSITS SEIZED DURING THE COURSE OF SEARCH FORMED PART OF THE REGU LAR BOOKS OF ACCOUNT AND, THEREFORE, COULD NOT BE CONSTRUED AS INCRIMINATING MATERIAL AN D SINCE NO OTHER INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, THE REFORE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IN THE ABSENCE OF ANY ADV ERSE MATERIAL ESPECIALLY WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3)/147 AC CEPTING THE SHARE CAPITAL AND SHARE PREMIUM. THEREFORE, BOTH LEGALLY AND FACTUAL LY NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. 10. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON TH E ORDER OF THE ASSESSING OFFICER AND CIT(A). HE SUBMITTED THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAS ISSUED EQUITY SHARES OF RS.87,12, 500/- ON PREMIUM OF ITA NO.2995/DEL/2015 9 RS.16,55,37,500. DESPITE BEING GIVEN ADEQUATE OPPO RTUNITY, THE ASSESSEE FAILED TO FURNISH JUSTIFICATION FOR SUCH HUGE PREMIUM. FURTH ER, THE ASSESSEE HAS FAILED TO FURNISH DOCUMENTARY EVIDENCE IN SUPPORT OF IDENTITY AND CRE DIT WORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION. THEREFORE, THE LD. CIT(A) WAS FULLY JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE AS SESSING OFFICER. SO FAR AS THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, NO ADDI TION CAN BE MADE U/S 153A/143(3) IN CASE OF A COMPLETED ASSESSMENT IS CONCERNED, THE LD. DR, REFERRING TO THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAJ KUMARARORA REPORTED IN 367 ITR 517, SUBMITTED THAT THE HON'BLE ALLAHABAD HIGH COURT IN THE SAID DECISION HAS HELD THAT THE ASSESSING OFFICER HAS POWER TO REASSE SSEE RETURNS OF ASSESSEE NOT ONLY FOR UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARC H OPERATION, BUT ALSO WITH REGARD TO MATERIAL AVAILABLE AT THE TIME OF ORIGINAL ASSE SSMENT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. KESARWANI ZARDA BHANDAR SAHSON ALLAHABAD IN ITA NO.270 OF 2014 . 11. SO FAR AS THE DECISION OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) RELIED BY THE LD. COUNSEL IS CONCERNED, HE SUBMITTED THAT THE HON'BLE KERALA HIGH COURT HAS HELD THAT ASSESSMENT PROCEEDINGS GENERATED BY ISSUANCE OF A NOTICE U/S 153A(1)(A) CAN BE CONCLUDE D AGAINST INTEREST OF THE ASSESSEE INCLUDING MAKING ADDITIONS EVEN WITHOUT ANY INCRIMI NATING MATERIAL BEING AVAILABLE AGAINST THE ASSESSEE IN SEARCH U/S 132 ON THE BASIS OF WHICH NOTICE WAS ISSUED U/S ITA NO.2995/DEL/2015 10 153A. THE LD. DR SUBMITTED THAT THE HON'BLE KERALA HIGH COURT, WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE HAS CONSIDERED THE FOLLO WING DECISIONS:- I) CIT VS. KABUL CHAWLA (2016) 380 ITR 573; II) CIT VS. CONTINENTAL WAREHOUSING CORPN. (NHAVA SHEVA ) LTD. (2015) 374 ITR 645 III) PRINCIPAL CIT VS. KURELE PAPER MILLS (P) LTD. (2016 ) 380 ITR 571 (DEL) IV) CIT VS. LANCY CONSTRUCTIONS (2016) 383 ITR 168; V) CIT VS. ST. FRANCIES CLAY DCOR TILES (2016) 240 TA XMAN 168; & VI) CIT V. PROMY KURIAKOSE (2016) 386 ITR 597 (KER.) 11.1 HE ALSO RELIED ON THE FOLLOWING DECISIONS:- I) CIT VS MAF ACADEMY (P) LTD., 361 ITR 258; II) CIT VS. NAVODAYA CASTLE PVT. LTD. (2014) 367 ITR 30 6 (DEL); III) KONARK STRUCTURAL ENGINEERING (P) LTD. VS. DCIT (20 18) 90 TAXMANN.COM 56 (BOM); IV) DRB EXPORTS (P) LTD. VS. CIT (2018) 93 TAXMANN.COM 490 (CAL); V) PREM CASTINGS (P) LTD. VS. CIT (2017) 88 TAXMANN.CO M 189 (ALL); VI) CIT VS. NIPUN BUILDERS & DEVELOPERS (P) LTD. 30 TAX MANN.COM 292; VII) CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. 18 TAXMA NN.COM 217; VIII) CIT VS. ULTRA MODERN EXPORTS (P) LTD. 40 TAXMANN.CO M 458; IX) CIT VS. FROSTAIR (P) LTD. 26 TAXMANN.COM 11; X) CIT VS. N.R. PORTFOLIO PVT. LTD. (2014) 42 TAXMANN. COM 339; XI) CIT VS. EMPIRE BUILTECH (P) LTD. 366 ITR 110; & XII) CIT VS. FOCUS EXPORTS (P) LTD. 51 TAXMANN.COM 46. ITA NO.2995/DEL/2015 11 12. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDER S UBMITTED THAT THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RAJ KUMAR ARORA (SUPRA) IS OF NO HELP TO THE REVENUE FOR THE REASON THAT THE HIGH CO URT HAS ONLY HELD THAT THE ASSESSMENT CAN BE FRAMED U/S 153A EVEN IF NO INCRIM INATING MATERIAL WAS FOUND BASED ON THE MATERIAL EXISTING AT THE TIME OF ORIGINAL AS SESSMENT. THE ASSESSMENT CAN BE OF THE UNDISCLOSED INCOME FOUND DURING THE SEARCH AND OF INCOME BASED ON THE MATERIAL AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT. HE S UBMITTED THAT IT WOULD BE A COMPLETE MISREADING OF THE JUDGMENT OF THE ALLAHABAD HIGH CO URT TO SUGGEST THAT IF AN ISSUE HAS BEEN EXAMINED AT THE TIME OF ORIGINAL ASSESSMENT, I T CAN BE REVISITED OR REVIEWED MERELY BECAUSE SEARCH WAS TAKEN PLACE PARTICULARLY WHEN NO MATERIAL OF ANY KIND IS FOUND TO INDICATE THAT THE INCOME DETERMINED AT THE TIME OF ORIGINAL ASSESSMENT NEEDS TO BE INTERFERED WITH. THIS IS NEITHER THE IMPORT OF THE DECISION OF THE HON'BLE HIGH COURT NOR BY ANY STRETCH OF IMAGINATION CAN SUCH AN INTERPRETATION BE DRAWN FROM THE RATIO OF THE SAID DECISION. HE SUBMITTED THAT THE ARGUMENT OF THE LD. DR THAT WHETHER THERE BE ANY MATERIAL OR NOT, THE SEARCH BY ITSELF GIVES THE POWER TO THE ASSESSING OFFICER TO REVIEW HIS OWN ORDER IS MISLEADING. HE SUBMITTED THAT IN THE CASE OF RAJ KUMAR ARORA (SUPRA), THERE WAS NO SCRUTINY ASSESSME NT AND THE MATERIAL AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT WAS NOT EXAMINED NO R ANY VIEW FOR OR AGAINST THE ASSESSEE WAS TAKEN BY THE ASSESSING OFFICER WHILE M AKING THE ORIGINAL ASSESSMENT. FURTHER, THE REVENUE CANNOT RELY ON THE SAME SET OF MATERIAL FOR ARRIVING AT TWO CONTRARY FINDINGS AT TWO DIFFERENT POINTS OF TIME W HILE THE LEVEL OF AUTHORITY TAKING THE DECISIONS IS SAME. REFERRING TO THE DECISION OF TH E AHMEDABAD BENCH OF THE TRIBUNAL ITA NO.2995/DEL/2015 12 IN THE CASE OF INTAS PHARMACEUTICALS LTD. VS. DCIT IN IT (SS)A NO. 807/AHD/ 2010 , HE SUBMITTED THAT THE TRIBUNAL HAS CONSIDERED THE DECI SION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RAJ KUMAR ARORA (SUPRA) AND HE LD THAT THE SAID DECISION DEALS WITH THE SCOPE OF SECTION 153A AND NOT THAT OF ASSUMPTIO N OF JURISDICTION WHICH STANDS ON A DIFFERENT FOOTING. HE REITERATED THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF MEETA GUTGUTIA (SUPRA) HAS HELD THAT REOPENING OF COMPLET ED ASSESSMENT WAS NOT JUSTIFIED IN THE ABSENCE OF INCRIMINATING MATERIAL AND THE SLP F ILED BY THE REVENUE HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT ON THE QUEST ION OF LAW RAISED BY THE REVENUE. HE SUBMITTED THAT ALTHOUGH THE DISMISSAL O F SLP MAY NOT AMOUNT TO LAYING DOWN OF A LAW, BUT, THE FACT REMAINS THAT THE HON'B LE SUPREME COURT DID NOT FIND ANY INFIRMITY IN THE VIEW TAKEN BY THE DELHI HIGH COURT THAT IN THE ABSENCE OF INCRIMINATING MATERIAL THE CONCLUDED ASSESSMENT CAN NOT BE REOPENED U/S 153A. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ORIGINAL ASSESSMENT IN THE INSTANT CASE WAS COMPLETED U/S 147/143(3) OF THE IT ACT ON 31 ST DECEMBER, 2009 DETERMINING THE TOTAL INCOME AT RS.73,510/-. A SEARCH U/S 132 OF THE IT ACT WAS CONDUCTED IN THE CASE OF BANK ACCOUNT OF THE ASSESSEE ON 12.11.2010. WE FIN D DURING THE SAID SEARCH, AN AMOUNT OF RS.5,48,50,000/- WAS FOUND IN THE BANK AC COUNT OF THE ASSESSEE WHICH WAS SEIZED. SINCE THE ASSESSEE DID NOT FILE THE REQUIS ITE DETAILS AS CALLED FOR BY THE ASSESSING OFFICER TO SUBSTANTIATE THE IDENTITY AND CREDIT WORTHINESS OF THE SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTIONS, THE ASSESSING OFFICER MADE ADDITION OF ITA NO.2995/DEL/2015 13 RS.17,42,50,000/- BEING THE SHARE CAPITAL OF RS.87, 12,500/- AND SHARE PREMIUM OF RS.16,55,37,500/- RECEIVED BY THE ASSESSEE DURING T HE IMPUGNED ASSESSMENT YEAR. ALTHOUGH IT WAS SUBMITTED BEFORE THE CIT(A) THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE ASSESSING OFFIC ER IN THE ASSESSMENT COMPLETED U/S 147/143(3) HAS ACCEPTED SUCH SHARE CAPITAL AND SHAR E PREMIUM AND NO CONTRARY MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OR A FTER POST SEARCH INQUIRY, THE LD.CIT(A) SUSTAINED THE ADDITION MADE BY THE ASSESS ING OFFICER, THE REASONS FOR WHICH HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAG RAPHS. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, NO ADDITION U/S 153A/143(3) C AN BE MADE IN THE CASE OF A COMPLETED ASSESSMENT. ALTHOUGH HE RELIED ON VARIOU S DECISIONS OF THE HON'BLE DELHI HIGH COURT AND THAT OF THE COORDINATE BENCHES OF TH E TRIBUNAL, HOWEVER, WE FIND THE ISSUE STANDS DECIDED AGAINST THE ASSESSEE BY THE DE CISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR ARORA (SUPRA ) WHEREIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER HAS POWER TO REASSESS RETURNS OF THE ASSESSEE NOT ONLY FOR UNDISCLOSED INCOME FOUND DURING THE SEARCH OPERATIO N, BUT ALSO WITH REGARD TO MATERIAL AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT. SIMI LAR VIEW HAS BEEN TAKEN BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. KESARWANI ZARDA BHANDAR SAHSON, ALLAHABAD (SUPRA) WHEREIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER HAS POWER TO REASSESS RETURNS OF THE ASSESSEE NOT ONLY FOR UNDISCLOSED INCOME FOUND DURING SEARCH OPERATION, BUT ALSO WITH REGARD TO MATERIAL AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT. IN VIEW OF THE BINDING DECISIONS OF THE JURISDICTIONAL HIGH COURT, WE ARE ITA NO.2995/DEL/2015 14 UNABLE TO ACCEPT THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE INITIATION OF PROCEEDING U/S 153A ARE NOT VALID. THEREFORE, THE LEGAL GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 14. NOW, COMING TO THE MERIT OF THE CASE, IT IS AN ADMI TTED FACT THAT IN THE ORDER PASSED U/S 147/143(3) ON 31 ST DECEMBER, 2009, THE ASSESSING OFFICER HAD EXAMINED THE ISSUE OF SHARE PREMIUM AND SHARE APPLICATION MO NEY. ON THE BASIS OF VARIOUS DETAILS FILED BY THE ASSESSEE AS REQUIRED BY THE AS SESSING OFFICER, NO ADDITION WAS MADE AND THE ISSUE OF SHARE PREMIUM WAS ACCEPTED WI THOUT MAKING ANY ADDITION. WE FIND, THE ASSESSING OFFICER AT PARA 3 OF THE ASSESS MENT ORDER PASSED U/S 147/143(3) HAS MENTIONED AS UNDER:- DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE EAR NED INCOME FROM INTEREST ON LOANS AND ADVANCES GRANTED BY IT AS AN NBFC AND PRO FIT ON SALE OF MUTUAL FUNDS. APART FROM THAT DURING THE PREVIOUS YEAR THE ASSESS EES AUTHORIZED SHARE CAPITAL INCREASED BY RS.88 LAKHS AND ISSUED SHARE CAPITAL L IABILITY INCREASED BY RS.17.42 CRORES (INCLUDING PREMIUM). 15. DURING THE COURSE OF SEARCH, NO INCRIMINATING D OCUMENTS WERE FOUND SO AS TO PROVE THAT THE DOCUMENTS FILED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS ARE FALSE OR UNTRUE. A PERUSAL OF THE PANCHNAMA APPEARING ON PAGES 3-5 OF THE PAPER BOOK SHOWS THAT NO SEARCH WAS CONDUCTED AT THE BUSI NESS PREMISES OF THE ASSESSEE AND THE WARRANT WAS ISSUED ONLY IN THE NAME OF BANK ACC OUNT OF THE ASSESSEE MAINTAINED WITH ORIENTAL BANK OF COMMERCE FROM WHERE THE FIXED DEPOSITS WERE SEIZED. THESE FIXED DEPOSITS FORMING PART OF THE REGULAR BOOKS OF ACCOUNT, IN OUR OPINION, CANNOT BE ITA NO.2995/DEL/2015 15 HELD AS INCRIMINATING MATERIAL. THE ORIGINAL ASSES SMENT RECORDS WERE VERY MUCH AVAILABLE WITH THE ASSESSING OFFICER. ALTHOUGH THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER, HOWEVER, IT WAS THE DUTY OF THE ASSESSING OFFICER TO GO THROUGH THE PAST RECORDS OF THE ASSESSEE BEFORE MAKING ANY ADDI TION IN THE EX PARTE ORDER THAT TOO PASSED U/S 153A/143(3). ALTHOUGH THE ASSESSEE SUB MITTED BEFORE THE CIT(A) THAT THE ISSUE OF SHARE PREMIUM WAS EXAMINED BY THE ASSESSIN G OFFICER DURING THE ASSESSMENT PROCEEDINGS U/S 147/143(3) HOWEVER, WE FIND THE LD .CIT(A) FOR REASONS BEST KNOWN TO HIM, CLOSED HIS EYES AND SUSTAINED THE ADDITION MAD E BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES, WE FIND MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE REVENUE CANNOT RELY ON THE SAME SET OF MATERIAL FOR ARRIVING AT TWO CONTRARY FINDINGS AT TWO DIFFERENT POINTS OF TIME WHILE THE LEVEL OF AUTHORITY TAKING THE DECISION REMAINS THE SAME. IN OUR OPINION, WHEN THE ASSESSE E DURING THE COURSE OF REASSESSMENT PROCEEDINGS HAD FILED THE REQUISITE DE TAILS SUCH AS THE COPIES OF SHARE APPLICATIONS, BANK STATEMENTS INCLUDING DETAILS OF ALLOTMENT, PREMIUM CHARGE, ETC., AND NOTHING ADVERSE WAS FOUND DURING THE COURSE OF SEAR CH PROCEEDINGS AND CONSIDERING THE FACT THAT NOTHING ADVERSE DURING POST SEARCH IN QUIRIES WAS FOUND TO NEGATE THE DOCUMENTS ALREADY FILED AT THE TIME OF THE REASSESS MENT PROCEEDINGS, THE PRESENT ASSESSING OFFICER, ON THE SAME SET OF MATERIAL CANN OT TAKE A DIFFERENT VIEW THAN THE VIEW ALREADY TAKEN BY HIS PREDECESSOR AT THE TIME O F ORIGINAL ASSESSMENT MERELY BECAUSE A SEARCH HAS TAKEN PLACE. IN VIEW OF THE AB OVE DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AS SESSING OFFICER AND SUSTAINED BY ITA NO.2995/DEL/2015 16 THE CIT(A) IS NOT JUSTIFIED. ACCORDINGLY, THE ASSE SSING OFFICER IS DIRECTED TO DELETE THE ADDITION MADE BY HIM U/S 68 OF THE IT ACT. THE GRO UNDS OF APPEAL RAISED BY THE ASSESSEE ON MERIT ARE ACCORDINGLY, ALLOWED. 16. IN THE RESULT, THE APPEAL FILED BY THE AS SESSEE IS PARTLY ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 3 0.11.2018. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PAND A) JUDICIAL MEMBER ACCOUNTANT MEMFBER DATED: 30 TH NOVEMBER, 2018 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI