M/s Brahmaputra Finlease (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 3332/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2737 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 26-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: SSH GAUTAM JAIN; PIYUSH KUMAR KAMAL S
• Keywords: Unexplained cash credit; Bogus Share capital; Search and seizure; Loose papers; Document seized; Principle of natural justice; Source of fund; Question of law; Block assessment; Documents seized; Reassessment proceedings
• Section: 143(3); 142(1); 133A; 153A; 260A; 68; 148; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A , NEW DELHI BEFORE SH. O.P. KANT , ACCOUNTANT M EMBER AND SH. K.N. CHARY , JUDICIAL MEMBER ITA NO. 3332 /DE L/ 2017 ASSESSMENT YEAR: 2007 - 08 M/S. BRAHMAPUTRA FINLEASE (P) LTD., BRAHMAPUTRA HOUSE, A - 7, NH - 8, MAHIPALPUR CROSSING, MAHIPALPUR, NEW DELHI VS. DCIT, CENTRAL CIRCLE - 17, NEW DELHI PAN : AAACK3691G ( APPELLANT ) (RESPONDENT) APPELLANT BY S/SH. GAUTAM JAIN & PIYUSH KUMAR KAMAL, ADVOCATES RESPONDENT BY SMT. APARNA KARAN, CIT(DR) DATE OF HEARING 21.12.2017 DATE OF PRONOUNCEMENT 29.12.2017 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 27/03/2017 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 35, NEW DELHI [ IN SHORT LD. CIT - (A) ] IN RELATION TO ASSESSMENT YEAR 2007 - 08. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 35, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE INITIATION OF PROCEEDINGS U/S 153A OF THE ACT AND, FRAMING OF ASSESSMENT U/S 153A/143(3) OF THE ACT SINCE NO INCRIMINATING MATERIAL WAS FOUND AS A RESULT OF SEARCH CONDUCTED ON THE APPELLANT AND 2 ITA NO. 3332/DEL/2017 THEREFORE, BOTH THE NOTICE ISSUED AND, ASSESSMENT FRAMED WERE WITHOUT JURISDICTION AND, DESERVED TO BE QUASHED AS SUCH. 1.1 THAT ADDITION MADE AND UPHELD OF RS. 55,00,000/ - IS WITHOUT JURISDICTION SINCE IT IS NOT BASED ON ANY MATERIAL FOUND AS A RESULT OF SEARCH ON THE APPELLANT, AS HAS BEEN ALSO HELD BY THE JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 380 ITR 573. 2 THAT THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING AN ADDITION MADE BY LEARNED DEPUTY COMMISSIONER OF INCOME OF RS. 55,00,000/ - (RS. 5,50,000/ - + RS. 49,50,000/ - ) ON ACCOUNT OF FOLLOWING SUMS RECEIVED FROM THE SHAREHOLDERS AS SHARE CAPITAL AND S HARE PREMIUM AND ERRONEOUSLY HELD AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE ACT PARTICULARLY WHEN NO INCRIMINATING MATERIAL EITHER IN THE SHAPE OF UNEXPLAINED CASH OR INVESTMENT OR DOCUMENT HAD BEEN DETECTED AS A RESULT OF SEARCH ON THE APPELLANT COMPANY OR EVEN GATHERED IN THE INSTANT ASSESSMENT PROCEEDINGS: SR. NO. NAME OF THE COMPANY NO OF SHARES NOMINAL VALUE OF SHARE (RS) PREMIUM PAID (RS) AMOUNT (RS) I) EDWARD SUPPLY PVT. LTD. 10,000 1,00,000 9,00,000 10,00,000 II) JAISHREE PROPERTIED AND EXPORTS PVT. LTD. 10,000 1,00,000 9,00,000 10,00,000 III) KATHLEEN VYAPAR PVT. LTD. 25,000 2,50,000 22,50,000 25,00,000 IV) WELTEX MERCANTILE PVT. LTD. 10,000 1,00,000 900,000 10,00,000 TOTAL 5,50,000/ - 49,50,000/ - 55,00,000/ - 2.1 THAT WHILE SUSTAINING THE AFORESAID ADDITION THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS COMPLETELY OVERLOOKED THAT THERE WAS NO ADVERSE MATERIAL BROUGHT ON RECORD BY THE LEARNED ASSESSING OFFICER TO ASSUME THAT CREDITS BY WAY OF SHARE CAPITAL REP RESENTS UNEXPLAINED CASH CREDIT AND, BURDEN WHICH LAY UPON THE ASSESSEE IN TERMS OF SECTION 68 OF THE ACT HAD NOT BEEN DISCHARGED. 2.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT ONCE THE AFORESAID SHARE APPLICANT H AD DULY CONFIRMED THE INVESTMENT MADE, HE COULD NOT HAVE UPHELD THE ADDITION ON ARBITRARY GROUNDS AND THAT TOO WITHOUT BRINGING ANY 3 ITA NO. 3332/DEL/2017 EVIDENCE OR EVEN ALLEGING THAT AFORESAID CREDITS BY WAY OF SHARE CAPITAL EMANATED FROM THE SOURCE OF FUNDS PROVIDED BY THE A PPELLANT COMPANY. 2.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT ALL THE SHAREHOLDERS WERE CORPORATE ENTITIES, DULY ASSESSED TO TAX AND, HAD SUBSCRIBED TO SHARE - CAPITAL BY ACCOUNT PAYEE CHEQUES AND SUPPORTED BY NEC ESSARY DOCUMENTS AND THEREFORE, ONCE ALL SUCH SHAREHOLDERS WERE IDENTIFIABLE COMPANIES, SHARE CAPITAL RECEIVED COULD NOT IN LAW OR ON FACT BE BROUGHT TO TAX U/S 68 OF THE ACT. 2.4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECI ATE THAT MERE NON - COMPLIANCE OF SUMMONS BY THE SHARE APPLICANTS OR NON PRODUCTION OF THE SHARE APPLICANTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, COULD NOT BE A GROUND TO DENOMINATE A GENUINE TRANSACTION AS AN UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 2.5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO FAILED TO APPRECIATE THAT APPELLANT HAD PLACED ON RECORD VOLUMINOUS EVIDENCES IN THE SHAPE OF AUDITED FINANCIAL STATEMENT, ANNUAL RETURNS, ORDERS OF ASSESSMENT OF THE SHARE APP LICANT TO DISCHARGE THE BURDEN WITH REGARD TO BOTH GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND THEREFORE, THERE IN ABSENCE OF ANY WHISPER TO REBUT THE SAID EVIDENCE, THE CREDITS COULD NOT ARBITRARILY BE REGARDED AS UNEX PLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 3 THAT BOTH THE AUTHORITIES BELOW HAVE FRAMED THE IMPUGNED ORDER WITHOUT GRANTING SUFFICIENT PROPER OPPORTUNITY TO THE APPELLANT COMPANY AND THEREFORE THE SAME ARE CONTRARY TO PRINCIPLE OF NATURAL JUSTICE A ND HENCE VITIATED. 4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234A, U/S 234B, U/S 234C AND U/S 234D OF THE ACT WHICH ARE NOT LEVIABLE ON THE FACTS AND CIRCUMST ANCES OF THE CASE OF THE APPELLANT COMPANY. IT IS THEREFORE, PRAYED THAT, IT BE HELD THAT ASSESSMENT MADE BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BE QUASHED AND, FURTHER 4 ITA NO. 3332/DEL/2017 ADDITIONS SO UPHELD BY TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALONGWITH INTEREST LEVIED BE DELETED AND APPEAL OF THE APPELLANT COMPANY BE ALLOWED. 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT FOR THE YEAR UNDER CONSIDERATION , THE ASSESSEE FILED RETURN OF INCOME ON 09/10 /2007 DECLARING N IL INCOME. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) WAS COMPLETED ON 24 /11/2009 AT TOTAL INCOME OF RS. 1,87, 890/ - . T HE ASSESSING OFFICER IN THE IMPUGNED ASSESSM ENT ORDER , HOWEVER , HAS NOT RECORDED THE FACT THAT ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. SUBSEQUENT TO COMPLETION OF THE ASSESSMENT, A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE, INCLUDING AT THE PREMISES OF THE ASSOCIATED CONCERN S, I.E. BRAHMAPUTRA GROUP . CONSEQUENT TO THE SEARCH ACTI ON, A NOTICE UNDER SECTION 15 3A OF THE ACT W AS ISSUED ON 02/02/2012 ASKING THE ASSESSEE TO FILE TH E RETURN OF INCOME. IN RESPONSE, THE ASSESSEE REPLIED THAT THE ORIGINAL RETURN FILED MIGHT BE TREATED TO HAVE FILED IN RESPONSE TO THE NOTICE UNDER SECTION 15 3A OF THE ACT. THE ASSESSEE ALSO FILED A LET TER ON 10/05/2012 OBJECTING ISSUE OF NOTICE UNDER SECTION 153 A OF THE ACT , WHICH WAS DISPOSED OFF BY THE ASSESSING OFFICER ON 31/01/2013. THE ASSESSING OFFICER ISSUED STATUTORY NOTICES UNDER SECTION 143(2) AND SECTION 142(1) OF THE ACT AND COMMENCED RE - AS SESSMENT PROCEEDINGS. THE ASSESSING OFFICER R ELYING ON THE STATEMENT OF THE D IRECTOR OF THE COMPANY SH . S AMPAT SHARMA , WHICH WAS RECORDED UNDER SECTION 132(4) OF THE ACT DURING SEARCH AT HIS RESIDENTIAL PREMISES ON 28/09/2010 , AND ENQUIRIES CONDUCTED BY T HE INVESTIGATION WING OF INCOME - TAX DEPARTMENT, KOLKATA , CONCLUDED THAT FOLLOWING COMPANIES, WHO INVESTED IN SHARE CAPITAL OF THE ASSESSEE COMPANY , WERE MERELY PAPER COMPANIES AND THEY HAD NO ACTUAL BUSINESS ACTIVITY AND 5 ITA NO. 3332/DEL/2017 ACCORDINGLY SHARE CAPITAL/SHARE APP LICATION MONEY /SHARE PREMIUM AMOUNTING TO RS.55, 00, 000 / - WAS HELD AS UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE AS PER PROVISIONS OF SECTION 68 OF THE ACT: SI. NO. NAME AND ADDRESS OF THE COMPANY NO. OF SHARES NOMINAL VALUE OF SHARES (RS.) PREMIUM PAID PER SHARE (RS.) DATED OF ALLOTMENT 1. M/S EDDWARD SUPPLY PVT. LTD., 302, MANGALAM, 24, HEMANTA BASU SARANI, 3 RD FLOOR, ROOM NO. 302, KOLKATA - 700 001 10000 1,00,000 (RS. 10 PER SHARE) 9,00,000 (RS 90 PER SHARE) 31.03.2007 2. M/S JAISHREE PROPERTIES AND EXPORTS PVT. LTD., 9/12, LAI BAZAR STREET, BLOCK E - , 2 ND FLOOR, KOLKATA - 700 001 10,000 1,00,000 (RS. 10 PER SHARE) 9,00,000 (RS. 90 PER SHARE) 31.03.2007 3. M/S KATHLEEN VYAPAR PVT. LTD,, 1, RAJ BALLAB SAHA LANE, HOWARH - 711101 25,000 2,50,000 (RS. 10 PER SHARE) 22,50,000 (RS. 90 PER SHARE) 31.03.2007 4. M/S WELTAX MERCANTILE PVT. LTD., 1, RAJ BALLAB SAHA LANE, HOWARH - 711101 10,000 1,00,000 (RS. 10 PER SHARE) 9,00,000 (RS. 90 PER SHARE) 31.03.2007 2.1 A GGRIEVED , THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT - ( A ) AND CHALLENGED THE PROCEEDING UNDER SECTION 153A OF THE ACT , BOTH ON THE GROUND OF VALIDITY OF REASSESSMENT PROCEEDINGS AS WELL AS ON THE MERIT OF THE ADDITION. THE LD. CIT - ( A ) REJECTED THE CONTENTION OF THE ASSESSEE BOTH ON THE LEGAL GROUND AS WELL AS ON THE GROUND OF MERIT. ACCORDING TO THE LD. CIT - ( A ), DURING THE SEARCH AND SEIZURE ACTION CARRIED OUT ON THE BRAHMAPUTRA G ROUP OF CASES INCLUDING THE ASSESSEE ON 28/09/2010, VA RIOUS BOOKS OF ACCOUNTS AND DOCUMENTS BELONGING TO THE ASSESSEE WERE DETECTED AS INCRIMINATING MATERIAL AND SEIZED AND THEREAFTER NOTICE UNDER SECTION WITH 153A OF THE ACT HAS BEEN ISSUED RIGHTLY. 6 ITA NO. 3332/DEL/2017 3. IN THE GROUNDS RAISED BEFORE US, THE ASSESSEE CHALLENGE D THE ORDER OF THE LD. CIT - (A) BOTH ON LEGAL GROUND AS WELL AS MERIT. WE FIRST TAKE UP THE GROUND OF THE ASSESSEE CHALLENGING THE VALIDITY OF A DDITIONS MADE UNDER SECTION 15 3A OF THE ACT. 4. IN THE GROUND NOS. 1 AND 1.1 THE ASSESSEE HAS CHALLENGED JURISDI CTION IN MAKING THE ADDITION WITHOUT ANY INCRIMINATING MATERIAL. 4.1 BEFORE US, THE LD. COUNSEL FILED A PAPER BOOK ALONGWITH ADDITIONAL PAPER - BOOK RUNNING INTO PAGES 1 TO 450. HE REFERRED VARIOUS PAGES OF THE PAPER BOOK AND SUBMITTED THAT IN THE CASE OF TH E ASSESSEE , NO ADDITION COULD HAVE BEEN MADE IN TERMS OF SECTION 153A OF THE ACT AS QUA THE ASSESSMENT YEAR UNDER CONSIDERATION BOTH THE CONDITIONS OF NON - ABATEMENT OF ASSESSMENT AS WELL AS ABSENCE OF INCRIMINATING MATERIAL ARE FULFILLED AS HELD BY THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VERSUS KABUL CHAWLA REPORTED IN 380 ITR 573. 4.2 AS FAR AS THE CONDITION THAT IT WAS THE CASE OF NON - ABATEMENT I.E. COMPLETED ASSESSMENT, HE DRAWN OUR ATTENTION TO PAGE 105A OF THE PAPER BOOK, WHICH IS A COPY OF THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT FOR THE YEAR UNDER CONSIDERATION PASSED BY THE ASSESSING OFFICER ON 24/11/2009. ACCORDINGLY , HE SUBMITTED THAT ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS ALREADY COMPLETED FOR THE YEAR UNDER CONSIDERATION BEFORE THE DATE OF SUCH WHICH WAS CARRIED ON 28/09/2010 , THEREFORE, THE ASSESSMENT WAS NOT ABATED IN THE CASE . 4.3 AS REGARD TO SECOND CONDITION RELATED TO INCRIMINATING MATERIAL, THE LD. COUNSEL REFERRED TO THE IMPUGNED ASSESSMENT ORDER AND SUBMITTED THAT THERE IS NO REFERENCE OF ANY INCRIMINATING MATERIAL IN THE ASSESSMENT ORDER, WHICH WAS FOUND DURING THE COURSE OF SEARCH AT TH E PREMISES OF THE ASSESSEE. 4.4 THE LD. COUNSEL SUBMITTED THAT ONLY REFERENCE OF FIVE ITEMS OF SEIZED DOCUMENT FOUND FROM THE PREMISES A - 7, MAHIPALPUR, NEW DELHI 7 ITA NO. 3332/DEL/2017 HAS BEEN MADE IN THE IMPUGNED ASSESSMENT ORDER. HE FURTHER SUBMITTED THAT ADDITION ON THE BA SIS OF ITEM NO. ( II ) TO ( V ) HAS BEEN MADE IN OTHER CASES OF THE BRAHMAPUTRA G ROUP AND ITEM NO. (I) IS NOT RELATED TO ANY OF THE PARTIES FROM WHOM SHARE CAPITAL HAS BEEN INVESTED IN THE ASSESSEE COMPANY. ACCORDING TO THE LD. COUNSEL , THERE WAS NO INCRIMIN ATING MATERIAL QUA THE ADDITION MADE FOR SHARE CAPITAL OF RS. 55 LACS. 4.4.1 HE FURTHER REFERRED THAT STATEMENT OF SH. SAMPAT SHARMA RECORDED ON 28/09/2010 AT HIS RESIDENTIAL PREMISES UNDER SECTION 132(4) OF THE ACT HAS BEEN MADE BASIS FOR THE ADDITION UNDER DISPUTE. HE REFERRED TO VARIOUS QUESTIONS ASKED BY THE A UTHORIZED O FFICER AND THE REPLY GIVEN BY SH. SAMPAT SHARMA . THE AR GUMENT S OF THE COUNSEL ON THE ISSUE OF STATEMENT OF SH . S AMPAT SHRAMA U/S 132(4) ARE SUMMARIZED AS UNDER: ( A ) THE LD. COUNSEL SUBMITTED THAT IT COULD BE MANIFESTED FROM THE STATEMENT OF SH. SAMPAT SHARMA THAT HE PROVIDED ALL THE INFORMATION TO THE EXTENT IT WAS WITHIN HIS KNOWLEDGE AND STATED OF PROVIDING THE SPECIFIC INFORMATION SUBSEQUENTLY BUT SH . SAMPAT SH A RMA NOWHERE ADMITTED THAT THE SHARE CAPITAL INVESTED IN THE COMPANY WAS IN THE NATURE OF UNDISCLOSED INCOME. THERE WAS NO REFERENCE OF ANY INCRIMINATIN G MATERIAL IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT AND THUS THE STATEMENT COULD NOT HAVE BEEN MADE BASIS FOR MAKING ADDITION IN ASSESSMENT UNDER SECTION 153A OF THE ACT. ( B ) THE STATEMENT WAS RECORDED AT THE RESIDEN TIAL PREMISES OF SH. SAMPA T SH ARMA , AND NOT AT THE PREMISES OF THE ASSESSEE COMPANY AND THEREFORE , IT CANNOT BE TERMED AS MATERIAL FOUND DURING THE COURSE OF SEARCH ON THE ASSESSEE. ( C ) THE STATEMENTS RECORDED UNDER SECTION 132(4) OF THE ACT DO NOT THEMSELVES CONSTITUTE ANY INCRIMINATING MATERIAL. IN SUPPORT OF THE 8 ITA NO. 3332/DEL/2017 PROPOSITION, THE LD. COUNSEL RELIED ON THE DECISIONS OF THE HON BLE DELHI HIGH COURT IN THE CASE OF P RINCIPAL CIT VERSUS BEST INFRASTRUCTURE (INDIA) PRIVATE LIMITED IN ITA NO. 13 OF 2017 AND COMMISSIONER OF INCOME T AX VERSUS HARJEEV AGGARWAL , (2016) 290 CTR 263 (DELHI). 4.4.2 IN VIEW OF THE ARGUMENTS, THE LD. COUNSEL SUBMITTED THAT SINCE FOR THE YEAR UNDER CONSIDERATION ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS ALREADY COMPLETED, NO ADDITION COULD BE MADE FOR UNDISCLOSED SHARE CAPITAL IN ABSENCE OF ANY INCRIMINATING MATERIAL QUA THE ADDITION MADE. 4.4.3 ON THE ISSUE OF MERIT OF THE ADDITION, HE MADE DETAILED ARGUMENTS AND SUBMITTED THAT ALL THE INFORMATION SATISFYING THE REQUIREMENT OF SECTION 68 OF THE ACT W AS SUBMITTED BEFORE THE ASSESSING OFFICER AND T HE ASSESSEE DISCHARGED ITS ONUS , BUT THE LOWER AUTHORITIES HAVE IGNORED THE INFORMATION SUPPLI ED BY THE ASSESSEE AND ADDITION WAS MADE ON THE BASIS OF THE REPORT OF THE INVESTIGATION WING, KOLKATA THAT THE PAR TIES WERE NOT FOUND AT THEIR ADDRESSES . 4. 5 ON THE CONTRARY, LD. CIT ( DR ) SUBMITTED THAT ADDITION IN DISPUTE HAS BEEN MADE ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. SHE REFERRED TO PAGE 5 OF THE ASSESSMENT ORDER AND SUB MITTED THAT ALONGWITH THE SEARCH PROCEEDING UNDER SECTION 132 OF THE ACT AT THE PREMISES OF THE ASSESSEE , A SURVEY UNDER SECTION 133A OF THE ACT WAS ALSO CARRIED OUT AT THE PREMISES OF SH. M . L . AGGARWAL, CHARTERED A CCOUNTANT LOCATED AT N - 5, AZADPUR, COMME RCIAL C OMPLEX NEW DELHI AND DOCUMENTS INCLUDING BLANK SIGNED SHARE TRANSFER FORM, BLANK SIGNED MONEY RECEIPTS FOR TRANSFER OF SHARES, B LANK SIGNED POWER OF ATTORNEY, MEMORANDUM AND A RTICLES OF ASSOCIATION WITH SOME ROC PAPERS AND COPY OF BANK STATEMENTS ETC . IN RELATION TO ONE OF THE SHARE APPLICANT S, I.E. , EDWARD SUPPLY P . LTD . WERE IMPOUNDED FROM HIS PREMISES. THE LD. CIT ( DR ) SUBMITTED THAT THE SURVEY PROCEEDINGS AT THE 9 ITA NO. 3332/DEL/2017 PREMISES OF MR . M . L . AGGARWAL WAS PART OF THE SEARCH PROCEEDING AT THE PREMISES OF T HE ASSESSEE AND THE MATERIAL IMPOUNDED WAS IN THE NATURE OF INCRIMINATING MATERIAL AND THEREFORE THE CONDITION OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IS SATISFIED. 4. 5.1 LD. CIT (DR) ALSO REFERRED TO I TEM NO.(I), WHICH IS MENTIONED ON PAGE 6 OF THE ASSESSMENT ORDER, SEIZED FROM THE PREMISES OF THE ASSESSEE LOCATED AT A - 7, MAHIPALPUR, NEW DELHI , AND SUBMITTED THAT THE DOCUMENT REFLECTED ACCOMMODATION ENTRY IN RESPECT OF SHARE CAPITAL AND THUS, IT WAS IN THE NATURE OF INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH. 4. 5.2 SHE ALSO SUBMITTED THAT THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT WAS IN THE NATURE OF INCRIMINATING MATERIAL AND , THEREFORE , THE ASSESSING OFFICER WAS JUSTIFIED IN MA KING ADDITION UNDER SECTION 15 3A OF THE ACT. IN SUPPORT OF HER CONTENTION, SHE RELIED ON THE DECISION OF THE HON BLE SUPR EME COURT IN THE CASE OF VIDEO M ASTER VS. JCIT, (2015) 66 TAXMANN.COM 361 (SC). 4. 5.3 ACCORDING TO THE LD. CIT ( DR ) , CASE OF THE ASSESSEE IS NOT COVERED BY THE DECIS ION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) . SHE ALSO FILED WRITTEN SUBMISSIONS IN SUPPORT OF THE ADDITION ON MERIT AND SUBMITTED THAT ADDITION MIGHT BE SUSTAINED. 4.6 IN REJOINDER , THE LD. COUNSEL SUBMITTED THAT IN THE CASE OF VIDEO M ASTER (SUPRA) STATEMENTS WERE CORROBORATED BY VARIOUS LOOSE SHEETS FOUND AT THE PREMISES OF THE ASSESSEE. HE SUBMITTED THAT IN THE CASE IN HAND , THE DIRECTOR IN HIS STATEMENT HAS NOT MENTIONED ANYTHING WHICH COULD BE TERMED AS INCRIMINATING AND NO MATERIAL QUA THE ADDITION MUCH LESS THE C ORROBORATING MATERIAL WAS FOUND , AND THUS TH E RATIO OF THE DECISION OF THE VIDEO M ASTER (SUPRA) COULD NOT BE IMPORTED IN THE FACTS OF THE INSTANT CASE . 10 ITA NO. 3332/DEL/2017 4.7 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. MAIN ISSUE IN DISPUTE IN THE GROUNDS RAISED BEFORE US IS WHETHER ANY ADDITION COULD HAVE BEEN MADE UNDER SECTION 15 3A OF THE ACT IN THE CASE OF THE ASSESSEE. IN THE CASE OF KAB UL CHAWLA (SUPRA) RELIED UPON BY THE LD. COUNSEL OF THE ASSESSEE, THE HON BLE HIGH COURT OF DELHI IN PARA - 37 OF THE DECISION HAS SUMMARIZED THE LEGAL POSITION AS UNDER: SUMMARY OF THE LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEAR CH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONL Y ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A 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 AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NO T MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS 11 ITA NO. 3332/DEL/2017 WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR 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 SEP ARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BAS IS OF SOME INCRIMINATING 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 ORIGINA L ASSESSMENT. (EMPHASIS SUPPLIED EXTERNALLY) 4.7.1 IN VIEW OF THE LEGAL POSITION SUMMARIZED ABOVE, THE HON BLE HIGH COURT IN PARA - 38 OF THE DECISION HELD THAT IN THE CASE , ON THE DATE OF SEARCH , IF THE ASS ESSMENT ALREADY STOOD COMPLETED, THEB IN ABSENCE OF INCRIMINATING MATERIAL, NO ADDITION COULD HAVE BEEN MADE. THE RELEVANT PARAGRAPH OF THE DECISION IS REPRODUCED AS UNDER: CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002 - 03, 2005 - 06 AND 2006 - 07.ON THE DATE OF THE SEARCH THE SAID ASSESSM ENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 12 ITA NO. 3332/DEL/2017 4.7.2 IN VIEW OF ABOVE DECISION, WE ARE REQUIRED TO EXAMINE THE TWO CONDITIONS. THE FIRST COND ITION IS WHETHER FOR THE YEAR UNDER CONSIDERATION , THE ASSESSMENT STOOD COMPLETED BEFORE THE DATE OF SEARCH OR NOT. THE SECOND CONDITION IS THAT WHETHER ANY INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF THE SEARCH QUA THE ADDITION MADE, WHICH WAS N OT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 4.8 AS REGARD THE FIRST CONDITION, THE LD. COUNSEL HAS ALREADY REFERRED TO PAGE 105A OF THE PAPER BOOK, WHICH IS A COPY OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT ON 24/11/2009. SINCE IN T HE CASE OF THE ASSESSEE SEARCH WAS CARRIED OUT ON 28/09/2010, THUS , IT IS UNDISPUTED THAT ASSESSME NT WAS COMPLETED PRIOR TO THE DATE OF SEARCH. 4.9 NOW REGARDING TH E SECOND CONDITION, THE LD. CIT( DR ) HAS MENTIONED THAT DOCUMENTS IMPOUNDED FROM THE PREMISES OF SH. M . L . AGGARWAL , CHARTERED A CCOUNTANT , DURING THE COURSE OF SURVEY PROCEEDING ARE INCRIMINA TING MATERIAL FOUND DURING THE COURSE OF SEARCH. WE DO NOT AGREE WITH THE CONTENTION OF THE LD. CIT ( DR ) THAT THESE MATERIALS LIKE BLANK SHARES TRANSFER FORMS ETC COULD BE TERMED AS FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE ASSESSEE. THE SUR VEY PROCEEDINGS CARR IED OUT AT THE PREMISES OF THE C HARTERED A CCOUNTANTS , ML AGGARWAL ARE SEPARATE FROM THE SEARCH PROCEEDINGS CARRIED OUT AT THE PREMISES OF THE ASSESSEE. THERE IS NO CONCEPT OF GROUP OF ASSESSE E IN INCOME - TAX ASSESSMENTS. EACH ASSESSEE IS TREATED SEPARATELY. IF ANY MATERIAL IS FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF ONE ASSESSEE, IT CAN BE USED AGAINST ANOTHER AS SESSEE EITHER UNDER SECTION 15 3C OR UNDER SECTION 148 OF THE ACT DEPENDING ON MATERIAL BELONGING TO OR PERTAINING TO THAT ANOTHER ASSESSEE BUT IT CANNOT BE TERMED AS MATERIAL FOUND DURING THE COURSE OF THE SEARCH OF ANOTHER ASSESSEE FOR MA KING ADDITION UNDER SECTION 15 3A OF THE ACT. IF ANY MATERIAL 13 ITA NO. 3332/DEL/2017 IMPOUNDED DURING THE COURSE THE SURVEY AT THE PREMISES OF ONE ASSESSEE AND FOUND TO BE BELONGING TO OR RELATED TO ANOTHER AS SESSEE , THEN ACTION MAY BE TAKEN IN TERMS OF SECTION 148 OF THE ACT DEPENDING ON THE MATERIAL FOUND BUT THAT MATERIAL CANNOT BE TREATED AS PART OF THE SEARCH CARRIED OUT AT THE PREMISES OF THE ANOTHER ASSESSEE. FURTHER , THE ASSESSING OFFICER IN THE IMPUGNED ORDER HAS NOT BROUGHT ON RECORD WHAT WAS INCRIMINATING IN THE SAID MATERIAL IMPOUNDED FROM THE PREMISES OF SH. M.L. AGRAWAL. IN VIEW OF OUR DISCUSSION, WE REJEC T THE ABOVE CONTENTION S OF THE LD. CIT( DR ) THAT ANY INCRIMINATING MATERIAL QUA THE ADDITION WAS FOUND DURING THE COURSE OF THE SEARCH ACTION UNDER SECTION 132 OF THE ACT. 4.10 ANOTHER ARGUMENT, MADE BY THE LD. CI T (DR) IN SUPPORT OF HER CLAIM OF INCRI MINATING MATERIAL WAS THAT THE I TEM NO.(I) MENTIONED ON PAGE 6 OF THE ASSESSMENT ORDER , WAS INCRIMINATING IN NATURE AS IT CONTAINED DETAIL OF ACCOMMODATION ENTRY. FOR HAVING CLARITY ON THE ISSUE RAISED BY THE LD. CIT ( DR ) , WE MAY LIKE TO REPRODUCE THE RELEVANT PART OF THE ASSESSMENT ORDER AS UNDER: APART FROM, DURING THE COURSE OF SEARCH OPERATION IN BRAHMAPUTRA GROUP OF CASES, CARRIED OUT AT PREMISES A - 7, MAHIPALPUR, NEW DELHI, THE FOLLOWING INCRIMINATING DOCUMENTS WERE INTER ALIA SEIZED BY PARTY BA - 5 I. PAGE NO. 23 OF ANNEXURE A - 6 (A DIARY RELATING TO F.Y. 2009 - 10) - ON THE BACK SIDE \ OF THIS PAGE RECORDING IS MADE IN THE NAME OF SHRI SHYAM TREXIM & FINCOM P. LTD. AGAINST WHICH RS. 50 LAKHS IS WRITTEN. II. PAGE NO. 1 OF ANNEXURE A - 7 - ON THIS PAGE A RECORDING OF FUNDS MENTIONING DEBIT AS WELL AS CREDIT OF RS. 25 LAKHS IN THE NAME OF MURARI LAI AGGARWAL DATED 31.05.2008 AND FURTHER COMMENTS OF THE PAYMENT OF SAME AMOUNT BY CASH TO MURARI L AL AGGARWAL (MLA) IS MADE 14 ITA NO. 3332/DEL/2017 III. THE BACK SIDE OF THE ABOVE PAGE 1 OF ANNEXURE A - 7 MENTIONS THAT SARAT AGGARWAL WAS PAID WITH CASH OF RS. 30 LAKHS BRING BACK EQUAL AMOUNT IN OTHER FORM. THE DATE OF NOTING IS 04.06.2008. IV. PAGE 1 OF ANNEXURE A - 10 - IT CONTAINS A HAND WRITTE N EXTRACT OF CASH BOOK CONTAINING ENTRY OF RS. 5 LAKHS IN THE MAIN OF M.L. AGGARWAL. IT ALSO SHOWS AS DEBIT OF RS. 3 LAKHS IN THE NAME OF SARAT AGGARWAL. THE ENTRIES ARE FOR THE DATE 28.05.2008, THE DATE OF WRITING OF THIS PAGE. V. PAGE NO. 4 OF ABOVE ANN EXURE A - 10 CONTAINS RECORD OF 30 LAKHS IN THE NAME MR. A SINGHAL AND M.L. AGGARWALA DIVIDING INTO RS. 25 LAKHS AND 5 LAKHS RESPECTIVELY. ON THIS PAGE THE NAME OF SUDARSHAN CASTING P. LTD. IS ALSO WRITTEN. DURING THE COURSE OF SEARCH AND POST SEARCH INVES TIGATION, THE ASSESSEES OF THIS GROUP HAVE NOT BEEN ABLE TO EXPLAIN THE ABOVE ENTRIES SATISFACTORILY. THOUGH THESE ENTRIES ARE TO BE DEALT WITH IN RELEVANT CASES BUT THIS ALSO PROVES THE FACT THAT THIS GROUP IS ENGAGED IN BRING BACK THEIR UNACCOUNTED/UNDIS CLOSED INCOME IN THE GUISE OF SHARE CAPITAL/SHARE APPLICATION MONEY. 4.11 W E FIND THAT THE I TEM NO. (I) CONTAINS RECORDING IN THE NAME OF SHRI SHYAM TREXIM & FINCOM P VT. LTD . THE ASSESSING OFFICER HAS NOWHERE BROUGHT ON RECORD HOW THE SAID RECORDING ON THE PAGE RELATES TO THE ADDITION IN QUESTION OF SHARE CAPITAL. THE LD. CIT ( DR ) ALSO COULD NOT EXPLAIN AS HOW THE SAID RECORDING WAS RELATED TO THE ADDITION IN QUESTION MAD E IN RESPECT OF ALLEGED UNEXPLAINED SHARE CAPITAL. SHE ONLY STATED THAT SAID RECORDING ON THE PAGE REFLECTED ACCOMMODATION ENTRY OBTAINED BY THE BRAHMAPUTRA G ROUP AND BUT NO DOCUMENTARY EVIDENCE REGARD ING THE CLAIM THAT THE DOCUMENT WAS INCRIMINATING QUA THE AD DITION , ARE FILED . IN RESPECT OF THE I TEMS NO. ( II ) TO ( V ) , THE LD. COUNSEL HAS SUBMITTED THAT ADDITIONS IN RESPECT OF THE AMOUNTS MENTIONED IN THE DOCUMENT HAS BEEN MADE IN THE CASE OF ANOTHER C OMPANY NAMELY M/S BRAHMAPUTRA 15 ITA NO. 3332/DEL/2017 I NFRASTRUCTURE LTD IN ASSESSMENT YEAR 2009 - 10. THIS FACT WAS NOT CONTROVERTED BY LD. CIT( DR ). T HUS , WE FIND THAT NO INCRIMINATING MATERIAL QUA THE ADDITION MADE IS FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE . ACCORDINGLY , ABOVE CONTENTION OF LD. CIT (DR) ARE REJECTED. SHE ALSO SUBMITTED THAT DURING THE COURSE OF SEARCH , HARD DISK S OF COMPUTERS AND OTHERS MATERIAL WERE ALSO SEIZED WHICH CONTAINED INCRIMINATING MATERIAL. THE LD. CIT( A) FAILED TO SUBSTANTIATE THE CLAIM EITHER BY THE IMPUGNED ASSESSMENT ORDER OR THROUGH ANY OTHER DOCUMENTARY EVIDENCE. IN THE ASSESSMENT ORDER, THERE IS NO MENTION THAT ANY INCRIMINATING MATERIAL IS FOUND IN HARD DISK ETC. THUS, THIS CONTENTION OF LD. CIT( A) IS ALSO REJECTED. 4.12 THE NEXT ARGUMENT OF THE LD. CIT(DR) IS THAT THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT OF SRI SAMPAT SHRAMA IS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. WE HAVE OBSERVED THAT SAID STATEMENT OF SH. S AMPAT SHARMA WAS RECORDED AT HIS RESIDENTIAL PREMISES DURING SEARCH PROCEEDING CARRIED OUT SEPARATELY. IN OUR OPINION, THE STATEMENT OF SH. SAMPAT SHARMA WAS NOT RECORDED IN SEARCH PROCEEDING OF THE ASSESSEE AND THUS , IT CANNOT BE CONSIDERED AS INCRIMINATI NG MATERIAL FOUND DURING THE COURSE OF THE SEARCH OF THE ASSESSEE. 4.13 WITHOUT PREJUDICE TO OUR OBSERVATION, WE DO NOT FIND ANY MENTION OF ANY INCRIMINATING MATERIAL IN THE STATEMENT OF SH. SAMPAT SHRAMA RECORDED UNDER SECTION 132(4) OF THE ACT. THE LD. COUNSEL DRAWN OUR ATTENTION TO COPY OF THE STAT EMENT AVAILABLE ON PAGE 427 TO 450 OF THE PAPER BOOK AND E NGLISH TRANSLATION OF THE SAME AVAILABLE ON PAGES 420 TO 426 OF THE PAPER BOOK. IN RESPONSE TO QUESTION NO. 6 , REGARDING DETAIL S OF THE BANK ACCOUNTS, SH. SHARMA STATED THAT HE DID NOT REMEMBER THE BANK ACCOUNT NUMBERS AND ALL THE PASS BOOKS OF THE ACCOUNTS WERE KEP T IN THE OFFICE OF BRAHMAPUTRA INFRA P ROJECTS LTD. IN 16 ITA NO. 3332/DEL/2017 RESPONSE TO QUESTION N O. 8 , HE EXPL AINED WHERE THE BOOKS WERE KEPT . THE DOCUMENTS REFER RED IN QUESTION NO. 20 TO 25 ARE ADMITTEDL Y NOT BELONGING TO THE ASSESSEE . THE QUESTION NO. 26 RELATES TO INVESTMENT BY SH . SHARMA . ON PERUSAL OF THE ENTIRE STATEMENT OF SH. SAMPAT SHRAMA, W E DO NOT FIND ANY MENTION OF ANY INCRIMINATING MATERIAL QUA THE AD DITION MADE. 4.14 FURTHER , IN THE CASE OF BEST INFRASTRUCTURE (INDIA) PRIVATE L IMITED (SUPRA) THE QUESTION OF LAW FRAMED IS AS UNDER: DID THE ITAT FALL INTO ERROR IN HOLDING THAT THE ADDITIONS MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961, ON ACCOUNT OF THE STATEMENTS MADE BY THE ASSESSEE S DIRECTORS IN THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT WERE NOT JUSTIFIED ? 4.15 I N THE SA ID CASE, A SEARCH WAS CONDUCTED IN CA SE OF MR. TARUN GOYAL AND BEST GROUP C OMPANIES. DURING THE COURSE OF SEARCH , SH TARUN GOEL ADMITTED OF HAVING PROVIDED ACCOMMODATION ENTRY TO THE BEST GROUP COMPANIES. THE D IRECTOR OF THE B EST GROUP OF COMPANIES, SH ANU AG GARWAL ALSO SURRENDERED RS. 8 CRORE DURING THE COURSE OF SEARCH AGAINST SHARE CAPI TAL AND SHARE PREMIUM. ANOTHER D IRECTOR, SH. HARJIT SINGH IN HIS STATEMENT ALSO CONCURRED WITH THE STATEMENT OF SH. ANU AGGARWAL. IN THE CASE, THE LEARNE D CIT - ( A ) HELD THAT EVIDE NCE DOES NOT MEAN ONLY DOCUMENTARY EVIDENCE AND THE STATEMENT UNDER SECTION 132(4) OF THE ACT IS AN IMPORTANT EVIDENCE COLLECTED AS A RESULT OF SEARCH AND SEIZURE OPERATION AND THUS , THE ADDITION OF SHARE CAPITAL WAS BASED ON EVIDENCE GATHE RED DURING THE SEARCH. HOWEVER , THE TRIBUNAL HELD THAT NO INCRIMINATING MATERIAL FOR EACH OF THE ASSESSMENT YEAR OTHER THAN THE YEAR OF SEARCH , TO JUSTIFY THE ASSUMPTION OF JURISDICTION UNDER SECTION 153 A OF THE ACT. THE HON BLE HIGH COURT, AFTER CONSIDERI NG THE ARGUMENTS OF BOTH PARTIES ON THE ISSUE WHETHER STATEMENT UNDER SECTION 132(4) OF THE ACT CONSTITUTE INCRIMINATING MATERIAL , HELD AS UNDER: 17 ITA NO. 3332/DEL/2017 38. FIFTHLY, STATEMENTS RECORDED UNDER SECTION 132(4) OF THE ACT DO NOT BY THEMSELVES CONSTITUTE INCRIMINATING MATERIAL AS HAS BEEN EXPLAINED BY THIS COURT IN COMMISSIONER OF INCOME TAX VS. HARJEEV AGGARWAL (SUPRA). LASTLY, AS ALREADY POINTED OUT HEREINBEFORE, THE FACTS IN THE PRESENT CASE ARE DIFFERENT FROM THE FACTS IN SMT. DAYAWANTI GUPTA VS. CIT (SUPRA) WHERE THE ADMISSION BY THE ASSESSEES THEMSELVES ON CRITICAL ASPECTS, OF FAILURE TO MAINTAINED ACCOUNTS AND ADMISSION THAT THE SEIZED DOCUMENTS REFLECTED TRA NSACTIONS OF UNACCOUNTED SALES AND PURCHASES, IS NON - EXISTENT IN THE PRESENT CASE. IN THE SAID CASE, THERE WAS A FACTUAL FINDING TO THE EFFECT THAT THE ASSESSEE WERE HABITUAL OFFENDERS, INDULGING IN CLANDESTINE OPERATIONS WHEREAS THERE IS NOTHING IN THE PR ESENT CASE, WHATSOEVER, TO SUGGEST THAT ANY STATEMENT MADE BY MR. ANU AGGARWAL OR MR. HARJEET SINGH CONTAINED ANY SUCH ADMISSION. 39. FOR ALL THE AFOREMENTIONED REASONS, THE COURT IS OF THE VIEW THAT THE ITAT WAS FULLY JUSTIFIED IN CONCLUDING THAT THE AS SUMPTION OF JURISDICTION UNDER SECTION 153A OF THE ACT QUA THE ASSESSEE HEREIN WAS NOT JUSTIFIED IN LAW. 4.16 IN THE CASE OF HARJEEV AGGARWAL (SUPRA), THE HON BL E HIGH COURT OBSERVED AS UNDER: 19 IN VIEW OF THE SETTLED LEGAL POSITION, THE FIRST AND FOREMOST ISSUE TO BE ADDRESSED IS WHETHER A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT WOULD BY ITSELF BE SUFFICIENT TO ASSESS THE INCOME, AS DISCLOSED BY THE ASSESSEE IN ITS STATEMENT, UNDER THE PROVISIONS OF CHAPTER XIV B OF THE ACT. 20. IN OUR VIEW, A PLAIN READING OF SECTION 158BB (1) OF THE ACT DOES NOT CONTEMPLATE COMPUTING OF UNDISCLOSED INCOME SOLELY ON THE BASIS OF A STATEMENT RECORDED DURING THE SEARCH. THE WORKS EVIDENCE FOUND AS A RESULT OF SEARCH WOULD NOT TAKEN WITHIN ITS SWEEP STATE MENTS RECORDED DURING SEARCH AND SEIZURE OPERATIONS. HOWEVER, THE STATEMENTS RECORDED WOULD CERTAINLY CONSTITUTE INFORMATION AND IF SUCH INFORMATION IS RELATABLE TO THE EVIDENCE OR MATERIAL FOUND DURING SEARCH, THE SAME COULD CERTAINLY BE USED IN EVIDENCE IN ANY PROCEEDINGS UNDER THE ACT AS EXPRESSLY MANDATED BY VIRTUE OF THE EXPLANATION TO SECTION 132(4) OF THE ACT. HOWEVER, SUCH STATEMENTS ON A STANDALONE BASIS WITHOUT REFERENCE TO ANY OTHER MATERIAL DISCOVERED DURING SEARCH AND 18 ITA NO. 3332/DEL/2017 SEIZURE OPERATIONS WOULD N OT EMPOWER THE ASSESSING OFFICER TO MAKE A BLOCK ASSESSMENT MERELY BECAUSE ANY ADMISSION WAS MADE BY THE ASSESSEE DURING SEARCH OPERATION. 4.17 THE HON BLE HIGH COURT IN THE ABOVE CASE FURTHER NOTED THAT THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT MAY BE USED FOR MAKING THE ASSESSMENT BUT ONLY TO THE EXTENT IT IS RELATABLE TO THE INCRIMINATING EVIDENCE/MATERIAL UNEARTHED OR FOUND DURING THE COURSE OF SEARCH. THE HON BLE HIGH COURT ALSO CITED THE DECISION OF CIT VS. SH. RAMDAS M OTOR TRANSPORT, ( 1999) 238 ITR 177 OF HON BLE ANDHRA PRADESH HIGH COURT , WHERE IT IS EXPLAINED THAT IN CASE NO UNACCOUNTED DOCUMENTS OR INCRIMINATING MATERIAL IS FOUND , THE POWERS UNDER SECTION 132(4) OF THE ACT CANNOT BE INVOKED. 4.18 FURTHER , AS FAR AS THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF VIDEO M A STER ( SUPRA), IS CONCERNED, WE AGREE WITH THE ARGUMENT OF THE LD. COUNSEL THAT IN SAID CASE CERTAIN OTHER MATERIALS LIKE LOOSE PAPERS AND VOUCHERS WERE FOUND WHICH CORROBORATED THE STATEMENT AND IN THOSE CIRCUMSTANCES IT WAS HELD THAT IT COULD NOT BE SAID THAT ADDITION WAS BASED ON NO EVIDENCE. THE RELEVANT FINDING OF THE HON B LE SUPREME COURT IS REPRODUCED AS UNDER: 3. IN THE SECOND ROUND, THE ASSESSMENT ORDER DATED MARCH 29, 2000, GAVE DETAILED REASONS FOR ARRIVING AT THE CONCLUSION THAT THE FIGURES STATED IN THE STATEMENT RECORDED WERE CORROBORATED, IN PARTICULAR, BY VARIOU S LOOSE SHEETS FOUND AT THE PREMISES OF THE ASSESSEE AS WELL AS VOUCHERS, SOME OF WHICH RELATED TO THE TWO FILMS IN QUESTION. IN AN APPEAL FILED TO THE TRIBUNAL, THE TRIBUNAL FRAMED THREE ISSUES, TWO OF WHICH WERE UNNECESSARY FOR THE REASON THAT THE STATEM ENT RECORDED ON AUGUST 25, 1995, WAS SAID TO BE RELEVANT BUT NOT CONCLUSIVE. THEREFORE, WHETHER THE STATEMENT WAS MADE UNDER DURESS AND WHETHER IT WAS RETRACTED LAWFULLY WOULD HAVE NO RELEVANCE AT THIS STAGE. HOWEVER, THE TRIBUNAL WENT INTO THESE ISSUES AS WELL AND ULTIMATELY, FOUND THAT THE STATEMENT COULD BE USED AS EVIDENCE. 19 ITA NO. 3332/DEL/2017 FURTHER, IT EXAMINED OTHER CORROBORATIVE EVIDENCE REFERRED TO IN THE ASSESSMENT ORDER AND ARRIVED AT A FINDING THAT THE ADDED INCOME WOULD BE INCOME WHICH CAN BE ADDED UNDER SECTION 158BC FOR THE BLOCK ASSESSMENT PERIOD IN QUESTION. IN AN APPEAL FILED UNDER SECTION 260A TO THE BOMBAY HIGH COURT, THE HIGH COURT FOUND, AFTER NARRATING THE FACTS, THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. 4. WE ARE OF THE VIEW, IN ACCORDANCE WITH THE V IEW OF THE HIGH COURT, THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. FURTHER, THOUGH IT WAS VEHEMENTLY ARGUED BY SHRI DEVANSH A. MOHTA, LEARNED COUNSEL APPEARING FOR THE ASSESSEE, THAT THIS WAS A CASE BOTH OF PERVERSITY AND OF THERE BEING NO EVIDENCE AT ALL. WE FIND THAT NOT ONLY ARE THE FINDINGS OF FACT RECORDED IN SOME DETAIL BUT THAT IT IS NOT POSSIBLE TO SAY THAT THIS IS A CASE OF NO EVIDENCE AT ALL INASMUCH AS EVIDENCE IN THE FORM OF THE STATEMENT MADE BY THE ASSESSEE HIMSELF AND OTHER CORROBORATIVE MATE RIAL ARE THERE ON RECORD. 4.19 W E FIND THAT IN THE CASE OF BEST INFRASTRUCTURE (INDIA) PRIVATE LIMITED (SUPRA), DESPITE THE ADMISSION OF ACCOMMODATION ENTRY IN STATEMENTS UNDER SECTION 132(4) OF THE ACT, THE COURT HELD THAT THE STATEMENT DO NOT CONSTITUT E AS INCRIMINATING MATERIAL. IN THE INSTANT CASE, NEITHER IS THERE ANY STATEMENT OF A NY ACCOMMODATION ENTRY OPERATOR CLAIMING THAT ANY ENTRY WAS NOT PROVIDED NOR ANY DIRECTOR HAS ADMITTED THAT ASSESSEE OBTAINED ACCOMMODATION ENTRY. THUS, THE CASE OF THE AS SESSEE IS ON BETTER FOOTING THEN THE CASE OF BEST INFRASTRUCTURE (I) P. LTD (SUPRA). IN SUCH FACTS AND CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF BEST INFRASTRUCTURE ( INDIA) PRIVATE LIMITED ( SUPRA) , WE DO NOT HAVE ANY HESITATION TO HOLD THAT THE STATEMENT UNDER SECTION 132(4) OF SH. SAMPAT SHARMA CANNOT BE TREATED AS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN THE RESULT, WE HOLD THAT ADDITION OF SHARE CAPITAL IN THE YEAR UNDER CONSIDERATION HAS BEEN MADE WITHOUT RELYING ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 20 ITA NO. 3332/DEL/2017 4.20 IN VIEW OF THE ABOVE FINDING, BOTH THE CONDITIONS AS COMPLETED ASSESS MENT AND NO INCRIMINATING MATERIAL, HAVE B EEN SATISFIED IN THE CASE, THUS, NO ADDITION COULD HAVE BEEN MADE IN THE INSTANT ASSESSMENT YEAR IN VIEW OF THE FINDING OF THE HON BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA). THE GROUND S NO. 1 AND 1.1 OF APPEAL ARE ACCORDINGLY ALLOWED. 5. SINCE WE HAVE ALREADY HELD THAT NO ADDITION COULD HAVE BEEN MADE IN THE CASE OF THE ASSESSEE, THE OTHER ARGUMENTS ON GROUNDS OF MERIT ARE RENDERED ONLY ACADEMIC AND THEREFORE , THOSE GROUNDS ARE DISMISSED AS INFRUCTUOU S. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED PARTLY. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 2 9 T H D E C . , 2 0 1 7 S D / - S D / - ( K.N. CHARY ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 9 T H D E C E M B E R , 2 0 1 7 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI