DCIT, Alwar V. M/S MISTY MEADOWS PVT. LTD., NEW DELHI

ITA 422/JPR/2012

• Counselvise Citation: 42223114 RSA 2012
• Duration Of Justice: 2 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 02-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Unexplained cash credit; Additional evidence; Reassessment proceedings
• Section: 153A; 148; 132; 144; 15; 68

Judgement Text

ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 422/JP/2012 ASSESSMENT YEAR: 2003-04 PAN : AAACM 9605 N THE DCIT VS. M/S. MISTY MEADOWS (P) LTD. CENTRAL CIRCLE SHOP NO. 4/36, DDA MARKET ALWAR DAKSHIN PURI EXTN. NEW DELHI (APPELLANT) (RESPONDENT) C.O. NO.68/JP/2012 (ARISING OUT OF ITA NO. 422/JP/2012) ASSESSMENT YEAR: 2003-04 PAN : AAACM 9605 N M/S. MISTY MEADOWS (P) LTD. VS. THE DCIT SHOP NO. 4/36, DDA MARKET CENTRAL CIRCLE DAKSHIN PURI EXTN. NEW DELHI ALWAR (APPELLANT) (RESPONDENT) ASSESSEE BY : DR RAKESH GUPTA DEPARTMENT BY: SHRI A.K.KHANDELWAL DATE OF HEARING: 25-09-2014 DATE OF PRONOUNCEMENT: 19-12-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS O BJECTION FILED BY THE ASSESSE, AGAINST THE ORDER OF THE LD. CIT(A), CENTR AL JAIPUR DATED 28-02- 2012 FOR THE ASSESSMENT YEAR 2003-04. ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 2 2.1 THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), CENTRAL, JAIPUR HAS ERRED IN LAW AS WELL AS FACTS IN DELETING ADDITION U/S 68 OF RS. 1,05,00,00 0/- OUT OF THE ADDITION OF RS. 1,15,00,000/- MADE ON ACCOUNT OF U NEXPLAINED SHARE CAPITAL INTRODUCED IN THE NAMES OF VARIOUS CO MPANIES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), CENTRAL, JAIPUR HAS ERRED IN LAW AS WELL AS FACTS IN DELETING ADDITION OF RS. 14,01,765/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS. 3.1 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN IT S CROSS OBJECTION. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) CENTRAL (HEREIN REFERRED TO AS CIT ( A)) WAS NOT CORRECT IN CONFIRMING THE ADDITIONS MADE BY THE AO IN RESPECT OF SHARE APPLICATION MONEY DEPOSITED WITH THE APPEL LANT COMPANY BY M/S. A.K. FABRIC (P) LTD. , M/S. B.P. BU ILDTECH (P) LTD. AND M/S. B.P. INFOTECH (P) LTD. (HEREINAFTER R EFERRED TO AS SHARE APPLICANT COMPANIES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW' LD. CIT(A) WAS NOT CORRECT IN CONFIRMING THE ADDIT IONS MADE BY THE A.OS' IN RESPECT OF SHARE APPLICATION MONEY DEP OSITED WITH THE APPELLANT COMPANY BY THE SHARE APPLICANT COMPAN IES' MERELY ON THE GROUND THAT PERMANENT ACCOUNT NUMBERS (PANS) OF THESE SHARE APPLICANTS WERE NOT AVAILABLE WITH THE APPELLANT COMPANY AT THE TIME OF ASSESSMENT PROCEED INGS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND' IN LAW LD. CIT(A) WAS NOT CORRECT IN CONFIRMING THE ADDIT IONS MADE BY THE A.OS' IN RESPECT OF SHARE APPLICATION MONEY DEP OSITED WITH THE APPELLANT COMPANY BY THE SHARE APPLICANT COMPAN IES , MERELY ON THE GROUND THAT THE PAID UP SHARE CAPITAL OF THESE SHARE APPLICANT COMPANIES DID NOT PROVE THEIR ADEQU ATE CREDITWORTHINESS ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 3 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT (A) WAS NOT CORRECT IN CONFIRMING THE ADDIT IONS IN RESPECT OF SHARE APPLICATION MONEY DEPOSITED WITH T HE APPELLANT COMPANY BY THE SHARE APPLICANT COMPANIES WHEN THE I DENTITY OF SHARE APPELLANT, ITS CREDIT WORTHINESS AND GENUINEN ESS OF TRANSACTION WAS PROVED BEFORE HIM AND THE APPELLANT HAD DISCHARGED THE ONUS CASE BY LAW ON IT. 5. WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEAL, TH E LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITIONS MADE BY THE AOS' IN RESPECT OF SHARE APPL ICATION MONEY DEPOSITED BY THE AFORESAID SHARE APPLICANT CO MPANIES IN THE APPELLANT COMPANYS HANDS, WHEREAS THE ADDITION S, IF ANY, SHOULD HAVE BEEN MADE IN THE HANDS OF THE AFORESAID SHARE APPELLANT COMPANIES. 4.1 AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASS ESSEE FILED AN APPLICATION TO SUPPORT THE ORDER OF THE LD. CIT(A) UNDER RULE 27 OF THE INCOME-TAX APPELLATE TRIBUNAL RULES, 1963 BY WAY OF FOLLOWING GROUND. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER AND HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION OF RS.1,15,00,000/-- ON ACCOUNT OF SHARE CAPITAL AND RS14,01,765/- ON ACCOUNT OF UNEXPLAINED CASH CREDI T INTER ALIA ON THE GROUND THAT NO INCRIMINATING MATERIAL HAS BEEN FOUND AS A RESULT OF SEARCH' FOR MAKING THE IMPUGNED ADDITIONS AND THEREFORE LD. CIT(A) OUGHT TO HAVE DELETED THE SAME ON THIS GROUND ITSELF. 4.2 THE LD. DR IS HEARD ON THE ISSUE OF RULE 27 OF THE INCOME-TAX APPELLATE TRIBUNAL RULES, 1963. ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 4 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE RAISED BY THE ASSESS EE IN SUPPORT OF LD. CIT(A)S ORDER U/S 27 OF THE ITAT RULES, THE SAME I S ADMITTED INASMUCH AS THE ISSUE IS PURELY LEGAL IN NATURE AND WAS RAISED BY THE ASSESSEE BY WAY OF GROUND NO. 2 AND 3 IN FORM NO. 35 FILED BEFORE THE LD. CIT(A). 5.1 BRIEF FACTS OF THE CASE ARE - THE ASSESSEE IS R EGULARLY ASSESSED TO INCOME TAX AND ENGAGED IN THE BUSINESS OF DEVELOPME NT OF REAL ESTATE AND SHARE CAPITAL. A SEARCH OPERATION WAS CONDUCTED ON 17-09-2008 IN ASSESSEES PREMISES ALONG WITH THE SEARCHES CONDUCTED ON KAMD HENU GROUP OF CASES. NOTICE U/S 153A OF THE ACT WAS ISSUED ON 20-01-2010 TO FILE THE RETURN OF INCOME. IN COMPLIANCE THERETO, THE ASSESSEE FILED T HE RETURN ON 30-03-2010 DECLARING AN INCOME OF RS. 1,22,320/-, ACCORDING T O THE AO, THE ASSESSES RESPONSE TO NOTICES WAS GENERAL IN NATURE AND SOME VERY SPECIFIC AND CRUCIAL QUERIES WERE NOT REPLIED. SINCE THE PROPER DETAILS WERE NOT FILED BY THE ASSESSEE AND REPLY TO VARIOUS QUERIES REMAINED MATE RIALLY UN-COMPLIED WITH, THE ASSESSMENT WAS FRAMED U/S 144 READ WITH SECTION 153A OF THE ACT I.E. BEST JUDGMENT ASSESSMENT. THE AO FRAMED THE ASSESSM ENT AT RS. 3,62,00,330/- WHICH INCLUDES THE AMOUNTS RECEIV ED BY ASSESSE TOWARDS SHARE APPLICATIONS AND ARE AGITATED BEFORE US. ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 5 5.2 THE ASSESSEE PREFERRED FIRST APPEAL WHERE THE A SSESSEE RAISED FOLLOWING ISSUES. (I) VALIDITY OF SECTION 144 R.W.S. 153A ASSESSME NT. (II) ADDITIONS MADE BEING NOT BASED ON INCRIMINAT ING MATERIAL OR EVIDENCE FOUND DURING THE COURSE OF SEA RCH. (III) DENIAL OF ADJOURNMENTS AND CONSEQUENT FRAMIN G OF ASSESSMENT U/S 144 ACT. (IV) MERITS OF THE ADDITIONS. 5.3 IN FIRST APPEAL, SINCE THE ASSESSMENT WAS FRAME D U/S 144, THE ASSESSEE FILED ADDITIONAL EVIDENCE; SINCE ON THE SIMILAR FAC TS AND CIRCUMSTANCES AS IN ASSESSMENT YEAR 2006-07 THE ADDITIONAL EVIDENCE WAS ADMITTED, IT WAS ADMITTED IN THIS YEAR ALSO. THE SAME WAS FORWARDED TO THE AO FOR REMAND REPORT WHICH WAS DULY FILED. LD. CIT(A) INTER ALIA GRANTED SUBSTANTIAL RELIEF TO ASSESSEE ON VARIOUS ISSUES INCLUDING PART RELIEF IN RESPECT OF ADDITIONS ON ACCOUNT OF SHARE APPLICATION MONEY. 5.4 BOTH THE PARTIES ARE AGGRIEVED IN RESPECT OF OR DER ON SHARE APPLICATION MONEYS, REVENUE IS AGGRIEVED ON RELIEF OF RS. 1,05, 00,000/- AND RS. 14,01,765/- AND ASSESSEE BY WAY OF C.O IN RESPECT O F ADDITION RETAINED IN RESPECT OF SHARE APPLICATION MONEY RECEIVED FROM M /S. A.K. FABRIC (P) LTD. , M/S. B.P. BUILDTECH (P) LTD. AND M/S. B.P. INFOTE CH (P) LTD. ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 6 5.5 THE RELEVANT OBSERVATION OF LD. CIT(A) WHILE DE CIDING THE SHARE APPLICATION ADDITIONS ARE AS UNDER:- 10.5.7 IN VIEW OF THE FOREGOING, THE ADDITION OF THE SHARE CAPITAL OF VARIOUS SHARE APPLICANT COMPANIES IS HEREBY DELETED EXCEPT IN THE CASE OF M/S. A.K. FABRICS (P) LTD., M/S. B.P. BUILDTECH (P) LTD. AND M/S. B.P. INFOTECH (P) LTD. WHO DID NOT EVEN HAVE THE PAN AT THE RELEVANT POINT OF TIME , IS DELETED. A.R. ARGUED THAT IN THE CASE OF AFORESAID THREE COM PANIES, THE PAN DETAILS WERE FURNISHED THAT IN RESPECT OF M/S. A.K. FABRICS (P) LTD , PAN WAS NOT AVAILABLE WHILE EVEN SUBMITTI NG ADDITIONAL EVIDENCE BEFORE THE UNDERSIGNED. MOREOVE R IN THE REMAINING TWO CASES, THE SUBMISSION OF THE PAN AT T HE TIME OF APPELLATE PROCEEDINGS BEFORE ME WHICH WAS CONDUCTED IN FINANCIAL YEAR 2011-12 ONLY INFERS THAT THE PAN HAV E BEEN ALLOTTED TO THESE COMPANIES QUITE LATER ON AND ACCO RDINGLY THESE THREE COMPANIES DID NOT HAVE ADEQUATE CREDITW ORTHINESS IN THE RELEVANT PERIOD OF FINANCIAL YEAR 2002-03. T HE INFERENCE OF NON-ADEQUATE CREDITWORTHINESS IS FURTHER FORTIFI ED FROM THE FACT THAT THE PAID UP SHARE CAPITAL OF M/S. A.K. FA BRICS (P) LTD. IS ONLY RS. 30,000/- AND M/S. B.P. BUILDTECH (P) LT D. AND M/S. B.P. INFOTECH (P) LTD. IS ONLY RS. 1.00 LAKHS EACH. IN VIEW OF THEE FACTS AND CIRCUMSTANCES, IT IS HELD THAT NOT O NLY THE APPELLANT HAS FAILED TO PROVE THE CREDITWORTHINESS OF THESE 3 COMPANIES BUT EVEN OTHERWISE THESE COMPANIES DID NO T HAVE ENOUGH CREDITWORTHINESS SO AS TO JUSTIFY THE SHARE CAPITAL INVESTMENT AMOUNTING TO RS. 4 LAKHS, RS. 4 LAKHS AN D RS. 2 LAKHS RESPECTIVELY. THEREFORE, ADDITION TO THE EXTENT OF RS. 10 LAKHS IS SUSTAINED AND REMAINING ADDITION OF RS 1,05,00,000/ - IS DELETED. . 13.4 I HAVE CONSIDERED THE SUBMISSION OF LD. AR AND HAVE PERUSED THE REMAND REPORT OF AO AND OTHER MATERIAL ON RECORD. IT IS SEEN THAT THE THEN AO HAS NOT EVEN MENTIONED IN THE ASSESSMENT ORDER AS TO WHICH WERE THE SEVEN ENT RIES AND THEREAFTER WHICH WERE THE FIVE ENTRIES WHICH HAVE A LREADY BEEN DEAL IN PARA 3.7 OF THE ASSESSMENT ORDER BY THE AO. MOREOVER, ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 7 NO ANY FURTHER DETAILS / SUPPORTING HAVE BEEN MENTI ONED IN THE ORDER BEFORE DRAWING ADVERSE INFERENCE. ON THE OTHE R HAND, A.R. HAS STATED THAT ANY ENTRY IN RESPECT OF SMT. SHAKUNTALA DEVI IS NOT ANYWHERE FINDING PLACE IN THE BANK ACCO UNT OF THE APPELLANT COMPANY. THE PRESENT AO IN THE REMAND REP ORT HAS NOT COMMENTED ADVERSELY ON THE SUBMISSION OF A.R. ACCORDINGLY, ADDITION OF RS. 5,0,850/- SO MADE, TRE ATING THE AMOUNT RECEIVED FROM SMT.SHAKUNTALA DEVI AS UNEXPLA INED IS HEREBY DELETED. AS REGAREDS ADDITION IN RESPECT OF SHARE APPLICATION MONEY OF RS. 9 LAKHS (TRANSACTION SHOWN AS OF RS. 9,00,915/- INCLUDING DD CHARGES) OF M/S. NIKHIL BUI LDERS AND PROMOTERS (P) LTD. IS CONCERNED, AS THE APPELLANT H AS FILED CONFIRMATION, COMPLETE DETAILS OF THE COMPANY INCLU DING CIN, DATE OF INCORPORATION (3.6,1987) INDICATING THE COM PANY BEING IN EXISTENCE FOR ABOUT 22 YEARS ETC. AND COMPANY IS HAVING PAID UP CAPITAL OF RS. 25 LAKHS AND NON-FURNISHING OF TH E BANK ACCOUNT OF THE SHARE HOLDING COMPANY BEING VALIDLY EXPLAINED BY THE A.R. DUE TO THE FACT THAT THE APPELLANT COMP ANY HAS ALREADY LOST TOUCH WITH THESE SHARE HOLDINGS COMPAN IES 5-6 YEARS BACK AND IN VIEW OF THE DISCUSSION MADE IN TH E EARLIER PARAGRAPHS IN RESPECT OF VARIOUS SHARE HOLDING APP LICANT COMPANIES INCLUDING THIS COMPANY, THE ADDITION SO M ADE BY AO IN RESPECT OF THIS AMOUNT IS ALSO HEREBY DELETED. 5.6 THE FIRST OBSERVATION DEALS WITH GROUND RAISED BY ASSESSEE AS WELL AS REVENUE AND THE SECOND ONE IS REVENUES 2 ND GROUND . ADVERTING TO ASSESSEE'S APPEAL SINCE THE ISSUE OF JURISDICTION IS INVOLVED, THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE'S BUSINESS PRE MISES WAS SEARCHED ALONG WITH KAM DHENU GROUP OF CASES ON 17-09-2008. DURING THE COURSE OF SEARCH NEITHER ANY INCRIMINATING MATERIAL WAS FOUND NOR AN Y SURRENDER OF UNDISCLOSED INCOME WAS MADE. REGULAR ASSESSMENT HAV ING BECOME FINAL BY THE DATE OF SEARCH I.E. 17-09-2008 WAS NOT ABATED. IT HAS BEEN HELD BY VARIOUS ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 8 JUDICIAL PRONOUNCEMENTS THAT NO ADDITION CAN BE MAD E IN THE SEARCH ASSESSMENT U/S 153A WHICH IS UNABETED UNLESS THE AD DITION IS SUPPORTED BY SOME INCRIMINATING MATERIALS FOUND DURING THE COURS E OF SEARCH. RELIANCE IN THIS BEHALF IS PLACED AS UNDER:- (I) CIT VS. MURLI AGRO PRODUCTS LTD. IN ITA NO. 36 OF 2009 , DATE OF ORDER 29-10-2010. (BOMBAY HIGH COURT) (II) CIT VS. JAYABEN RATILAL SORATHIA 914 OF 2012, DATE OF ORDER 02-07-2013 (GUJARAT HIGH COURT) (III) JAI STEEL INDIA VS ACIT, 259 CTR 281 (RAJAST HAN HIGH COURT) IN ALL THESE CASES, IT HAS BEEN SQUARELY HELD THAT IN CASE OF ASSESSMENT REMAINING UNABATED BECOMES FINAL AND NO ADDITION CA N BE MADE IN SEARCH ASSESSMENT UNLESS SOME INCRIMINATING MATERIAL IN TH AT BEHALF WAS FOUND AND IS RELIED ON BY AO. RELIANCE IS PLACED ON PLETHORA OF OTHER CASES WHOSE COPIES ARE FURNISHED ALONG WITH CASE LAW PAPER BOOK S. 5.7 THE LD. DR ON THE OTHER HAND CONTENDS THAT ORIGINAL RETURN FOR AY 2003-04 WAS PROCESSED U/S 143(1) WHICH DOES NOT AMO UNT TO AN ASSESSMENT. SINCE THERE WAS NO ASSESSMENT IT CANNOT BE HELD THA T ORIGINAL ASSESSMENT HAS NOT ABATED. BESIDES A PLAIN READING OF SECTION 132 OF THE ACT PROVIDES THAT CONSEQUENT TO ISSUE OF NOTICE TO FILE RETURN U/S 15 3A, AO SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH SIX ASSESSMENT Y EARS PRECEDING THE DATE OF ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 9 SEARCH. THE USE OF WORD SHALL MAKES IT VERY CLEA R THAT CONSEQUENT UPON SEARCH, THE AO HAS PLENARY POWERS TO REASSESS THE E NTIRE ASSESSMENT MADE IN THE CASE OF THE ASSESSEE WHETHER INCRIMINATING MATE RIAL WAS FOUND OR NOT. FROM THE PLAIN LANGUAGE OF SECTION 153A ITSELF, AS WELL AS FROM THE MEMORANDUM TO FINANCE ACT 2003, IT IS CLEAR THAT TH E AO NEEDS TO ISSUE NOTICES U/S 153A OF SIX YEARS MANDATORILY ONCE THE SEARCH IS CONDUCTED, AS THE WORD USED EVERYWHERE IS 'SHALL'. SUBSEQUENTLY, SCOPE OF AN EXCEPTION HAS BEEN BROUGHT. THE FINANCE ACT 2012, HAS INSERTE D THIRD PROVISO TO SECTION 153A (1) OF THE ACT, EMPOWERING THE CENTRAL GOVERNMENT TO MAKE RULE IN RESPECT OF THE ASSESSMENT YEAR EXCEPT IN CA SE WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED, SPECIFY THE CLASS OR CL ASSES OF CASES IN WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NO TICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEA RS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN W HICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. IF NO INCRIMINATING MATERIA L IS GATHERED DURING THE SEARCH, AND THE AO IS BARRED TO CONSIDER ISSUES/ MA TERIAL NOT RELATED TO SEARCH, ISSUING NOTICES U/S 153A OF THE I.T. ACT WO ULD NOT SERVE ANY USEFUL PURPOSE AS IT WOULD AMOUNT TO MANDATORILY ACCEPTING RETURNED INCOME WHILE MAKING ASSESSMENT OR REASSESSMENT. THUS ONCE THE AS SESSMENT / REASSESSMENT FOR ALL THE AYS IS REQUIRED TO BE MADE IRRESPECTIVE OF SEIZED ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 10 MATERIAL RELATING TO THAT YEAR BEING RECOVERED DURI NG THE COURSE OF SEARCH OR NOT, IT AUTOMATICALLY MEANS THAT IN ASSESSMENT THE AO IS REQUIRED TO CONSIDER ALL THE MATERIAL. HAVING REQUIRED TO CONDUCT MANDAT ORY ASSESSMENT / REASSESSMENT PROCEEDINGS U/S 153A OF THE I.T. ACT A ND THEN NOT BEING ABLE TO ASSESS THE INCOME FOR THE YEARS FOR WHICH NO INCRIM INATING MATERIAL HAS BEEN RECOVERED DURING THE SEARCH, CANNOT BE THE PURPOSE OF LEGISLATION AS IT WILL RENDER THE ENTIRE PROCEEDINGS U/S 153A OF THE I.T. ACT REDUNDANT FOR SUCH YEARS. HON'BLE DELHI HIGH COURT IN PARA 21 OF THE SHRI ANIL BHATIA JUDGMENT HAS OBSERVED THAT:- 'BUT IN CASES WHERE THE ASSESSMENT OR REASSESSM ENT PROCEEDINGS HOVE ALREADY EVEN COMPLETED AND ASSESSMENT ORDERS HOVE BEEN PA SSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS ORE SUBSISTING AT THE TIME WHEN THE SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY AB ATEMENT SINCE NO PROCEEDINGS ARE PENDING. IN THIS LATER SITUATION, THE ASSESSING OF FICER WILL REOPEN THE ASSESSMENTS OR REASSESSMENT ALREADY MADE (WITHOUT HAVING THE NE ED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT CONDITIONS OF SECTIONS 14 7, 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION I N THE ORDERS PASSED U/S 153A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME THAT ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND ASSESSED AS THE TOTAL INCOME .. ..UNDER SECTION 153A, THERE IS NO ROOM FOR MULT IPLE ASSESSMENT ORDERS IN RESPECT OF ANY OF THE SIX ASSESSMENT YEARS UNDER CO NSIDERATION THAT IS BECAUSE THE AO HAS TO DETERMINED NOT MERELY THE UNDISCLOSED INCOME OF THE ASSESSEE BUT ALSO THE TOTAL INCOME OF THE ASSESSEE IN WHOSE CASE A SEARCH OR R EQUISITION HAS BEEN INITIATED.. IN THIS CASE THE HON'BLE DELHI HIGH COURT HAS NOT ADDRESSED THE ISSUE THAT WHEN NO INCRIMINATING MATERIAL RELATING TO ANY YEAR IS FOUND, WHETHER THE ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 11 PROVISION OF SECTION 153A CAN BE INVOKED OR NOT, AS IT WAS NOT RAISED BEFORE THE HON'BLE DELHI HIGH COURT. HOWEVER THE RATIO LAI D DOWN BY THE HON'BLE DELHI HIGH COURT MAKES IT VERY CLEAR THAT IN THE AS SESSMENT PROCEEDINGS U/S 153A OF THE I.T. ACT ENTIRE MATERIAL CAN BE CONSIDE RED. REGARDING THE ISSUE WHETHER NOTICE U/S 1534 OF THE I.T. ACT COULD HAVE BEEN ISSUED IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, NOT DECIDED BY THE HON'BLE DELHI HIGH COURT . THE CLEAR CUT LANGUAGE OF THE ACT, THE LANGUAGE OF MEMORANDUM TO FINANCE ACT 2003 AND POSITION REITERATED IN MEMO RANDUM EXPLAINING THE 3RD PROVISO BY WAY OF FINANCE ACT2012, MADE IT VERY CLEAR THAT ISSUE OF NOTICE U/S 153A IS MANDATORY, IRRESPECTIVE OF ANY I NCRIMINATING MATERIAL GATHERED DURING THE COURSE OF SEARCH ONCE THE SEARC H HAS BEEN CONDUCTED IN A CASE. 5.8 LD DR THUS PLEADS THAT:- A) ONCE SEARCH IS CONDUCTED IN A CASE, THE PROCEEDI NGS U/S 153A FOR ALL SIX ASSESSMENT YEARS ARE AUTOMATIC AND MANDATORY, IRRESPECTIVE OF WHETHER ANY INCRIMINATING MATERIAL IS GATHERED OR N OT. B) THE SCOPE OF ASSESSMENT/REASSESSMENT U/S 153A IS WIDE ENOUGH TO COVER ENTIRE RELEVANT MATERIAL AND NOT THE MATERIAL GATHERED DURING THE COURSE OF SEARCH ONLY . ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 12 FURTHER RELIANCE IS PLACED ON THE KARNATAKA HIGH CO URT JUDGMENT IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY VS. DCIT, (IT A NO. 38/2014) DATED 25-07-2014. 5.9 APROPOS MERIT OF THE CASE, THE LD. DR RELIED O N THE ORDER OF THE AO FOR THE PROPOSITION THAT ASSESSE FAILED TO DULY DISCHAR GE BURDEN CAST ON IT BY SEC. 68. THE AO DURING 153A ASSESSMENT IN ORDER TO FURT HER VERIFY THE EVIDENCE FILED BY THE ASSESSEE ISSUED NOTICES ON THE SHARE A PPLICANTS TO FILE CONFIRMATIONS. IT WAS FOUND THAT THESE COMPANIES WE RE NOT IN EXISTENCE AT THEIR GIVEN ADDRESS. THE CONFIRMATIONS FILED BY THE ASSESSEE WERE OLD CONFIRMATIONS DATED 31-03-2003. SINCE NOTICES RETUR NED UNSERVED, THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICAN TS COULD NOT BE VERIFIED WHICH LEFT A SHADOW ALSO ON THE GENUINENESS OF THE TRANSACTIONS. CONSEQUENTLY AO HAS RIGHTLY MADE THE ADDITIONS IN Q UESTION. AOS ORDER IS RELIED ON. 5.10 LD. COUNSEL FOR THE ASSESSEE SHRI RAKESH GUPTA CONTENDS THAT IT HAS NOT BEEN DISPUTED THAT NO INCRIMINATING MATERIAL WH ATSOEVER WAS FOUND DURING THE COURSE OF SEARCH SUGGESTING IN ANY MANNE R THAT SHARE APPLICATION MONEYS WERE DOUBTFUL. IT HAS ALSO NOT BEEN DISPUTED THAT CONFIRMATIONS IN RESPECT OF SHARE APPLICATION MONEY AS ORIGINALLY R ECEIVED BY THE ASSESSEE WERE PRODUCED BEFORE THE LD. AO. IGNORING THE COPIO US EVIDENCE FILED BY THE ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 13 ASSESSE, LD. AO AFTER A GAP OF 07 YEARS WANTED THE ASSESSE TO FILE NEW CONFIRMATIONS AND COPIES OF THE BANK ACCOUNTS FROM THE SHARE APPLICANTS. LOOKING AT THE LONG GAP OF 7 YEARS IT WAS HUMANLY N OT POSSIBLE FOR ASSESSE TO COMPLY. IN THESE CIRCUMSTANCES LD. AO WAS REQUIRED TO CONSIDER THE EVIDENCE AVAILABLE ON RECORD. IT IS VERY UNJUSTIFIED THAT LD . AO IGNORED THE ENTIRE EVIDENCE ONLY BECAUSE ASSESSE COULD NOT WITH THE DI RECTION WHICH WAS BEYOND ITS CONTROL AFTER A GAP OF SEVEN YEARS. THUS THE ADDITIONS MADE WERE UNTENABLE IN AS MUCH AS THE OTHER MATERIAL IN THE F ORM OF CONTEMPORANEOUS CONFIRMATIONS, I.T. RECORD OF SHARE APPLICANT, SHAR E APPLICATIONS AND ALLOTMENT RECORD, ROC RECORD DEMONSTRATING THE EXIS TENCE OF COMPANIES AND THE FACT THAT ALL THE TRANSACTIONS WERE THROUGH BAN KING CHANNELS DEMONSTRATED THE DISCHARGE OF INITIAL ONUS BY THE A SSESSEE. THE LD. CIT(A) HAS RECORDED CLEAR FINDINGS OF FACTS THAT ALL THE RELEVANT EVIDENCE IN RESPECT OF SHARE APPLICANTS IS DULY SUPPORTED BY VALID CON TEMPORANEOUS CONFIRMATIONS ALONG WITH MATERIAL DATA OF SHARE APP LICANTS, GIR NO. AND VARIOUS OTHER EVIDENCES HAVE BEEN FILED; COPIES THE REOF ARE PLACED ON THE PAPER BOOK. ALL THIS PUT TOGETHER ESTABLISHES THAT INITIAL ONUS AS CAST BY SEC. 68 ON THE ASSESSE IS DULY DISCHARGED. LD. CIT(A) WH ILE HOLDING SO HAS RELIED ON VARIOUS JUDICIAL PRECEDENTS INCLUDING: ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 14 (I) CIT V UJALA DYEING AND PRINTING MILLS 328 ITR 437 (GUJ.) (II) CIT VS. DWARKADHISH INVESTMENT (P) LTD. , 194 TAXMA N 43 (DEL.) (III) CIT VS. LOVELY EXPORTS (P) LTD. 216 CTR 195 (SC) (IV) BARKHA SYNTHETICS LTD. VS. ACIT, 197 CTR 432 (RAJ.) (V) CIT VS. SMC GLOBAL SHARE BORKERS 288 ITR 345 (D EL.) IT IS PLEADED THAT ALL THE DETAILS OF EACH AND EVER Y SHARE APPLICANTS ARE LISTED BY THE LD. CIT(A) IN HIS DETAILED ORDER AS WELL AS PLACED ON THE PAPER BOOK. SECTION 68 OF THE ACT, CASTS INITIAL ONUS ON THE AS SESSEE TO PROVE THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS COUPLED WITH CR EDITWORTHINESS. ALL THE SHARE APPLICANTS ARE THE COMPANIES DULY INCORPORATE D AND FOUND TO BE ALIVE IN THE ROC RECORD. THE AMOUNTS WERE RECEIVED THROUG H BANKING CHANNELS SUPPORTED BY VALID CONTEMPORANEOUS CONFIRMATIONS AN D THE ALLOTMENT OF SHARES ARE DULY CORROBORATED BY APPLICATIONS. THERE FORE, THERE IS NO MERIT IN THE FINDINGS OF THE LD. AO THAT THE ASSESSEE HAS FA ILED TO DISCHARGE THE INITIAL ONUS. THE ADDITIONS ARE NOT BASED ON PROPER ANALYSI S OF THE EVIDENCE AND MATERIAL AVAILABLE ON RECORD BUT ONLY ON INSISTENCE THAT ASSESSEE FAILED TO FURNISH THE FRESH CONFIRMATIONS AND APPLICANTS BANK STATEMENTS OF THE RELEVANT PERIOD AFTER A LONG GAP OF 07 YEARS. THE LAW REQUIRES THAT ASSESSEE'S ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 15 INITIAL DISCHARGE OF ONUS CAN BE QUESTIONED BY REBU TTING THE SAME BY EFFECTIVE COUNTER. IN THIS CASE, THE REBUTTAL OF TH E AO IS BASED ONLY ON HYPOTHETICAL ASSUMPTIONS AND PRESUMPTIONS. IT HAS B EEN IGNORED THAT MANY OF THE SHARE APPLICANTS MAY HAVE MOVED FROM THE PLA CE, SOLD THE SHARES MAY NOT BE WILLING TO COME FORWARD AFTER SUCH A LONG PE RIOD OF 7 YEARS. THIS AMOUNTS TO ASKING THE ASSESSE TO SURMOUNT AN IMPOSS IBILITY WHICH IS NOT PERCEIVED BY THE LAW. IN CONSIDERATION OF SUFFICIEN T MATERIAL AVAILABLE ON RECORD, SUPPORTING CASE LAWS, FACTS AND CIRCUMSTANC ES LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION. 6.1 APROPOS THE AMOUNT RETAINED BY THE LD. CIT(A), RAISED IN CO, IN CASES OF FOLLOWING COMPANIES. (I) M/S. A.K. FABRICS (P) LTD., (II) M/S. B.P. BUILDTECH (P) LTD. (III) AND M/S. B.P. INFOTECH (P) LTD. 6.2 LD. COUNSEL CONTENDS THAT IT HAS BEEN HELD BY L D. CIT(A) THAT ASSESSE FAILED TO DISCHARGE ITS INITIAL ONUS U/S 68 AS THE PAN NOS. HAVE BEEN ALLOTTED TO THESE COMPANIES SUBSEQUENTLY AND THEIR PAID UP S HARE CAPITAL WAS LOW. IT IS PLEADED THAT LD. CIT(A)S OBSERVATIONS ARE SELF- CONTRADICTORY AND SUPPORT ASSESSEES CONTENTIONS. THE FACT THAT THESE COMPANI ES WERE GIVEN PAN / GIR NOS. SUBSEQUENTLY RATHER PROVES THEIR EXISTENCE AT LATER PERIOD WHICH WAS THE ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 16 OBJECTION OF AO. BESIDES IN ASSESSES CONFIRMATION R ELEVANT DETAILS ARE MENTIONED. ONCE THEY ARE FOUND TO BE IN EXISTENCE; SHARE APPLICATIONS ARE CONFIRMED AND THE MONEYS ARE RECEIVED THROUGH BANKI NG CHANNELS, ASSESSEES INITIAL BURDEN IN TERMS OF SEC 68 STANDS DISCHARGED. CONSEQUENTLY, THERE IS NO JUSTIFICATION IN HOLDING THAT ASSESSE F AILED TO DISCHARGE BURDEN FOR THIS DEFICIENCY WHICH CUMULATIVELY SUPPORTS ASSESSE ES DISCHARGE OF BURDEN THUS REASONS GIVEN BY THE LD. CIT(A) IN THIS BEHALF TO SUSTAIN PART OF THE ADDITION IN RESPECT OF ABOVE NAMED 3 APPLICANTS IS NOT TENABLE. 7.1 APROPOS SECOND ISSUE THAT THESE COMPANIES HAD L OW PAID UP SHARE CAPITAL, IT IS VEHEMENTLY ARGUED THAT IT HAS NO BEA RING ON THE ASSESSEE DISCHARGE OF BURDEN. AS LONG AS THEY ARE FOUND TO B E IN EXISTENCE WITH PAN AND THEY HAVE CONFIRMED THE SHARE APPLICATIONS BY C ONTEMPORANEOUS AFFIRMATION, LOW PAID UP SHARE CAPITAL DOES NOT MIL ITATE ON THE ISSUE OF DISCHARGE OF BURDEN. BESIDES ASSESSE CANNOT ASK THE PROSPECTIVE SHARE APPLICANT ABOUT THEIR PAID UP SHARE CAPITAL. 7.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSE CLAIMS TO HAVE DIS CHARGED ITS ONUS IN TERMS OF SEC. 68 BY FILING: I. CONTEMPORANEOUS CONFIRMATIONS FROM SHARE APPLICANTS . II. SHARE APPLICANTS IT RECORD. ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 17 III. APPLICATION AMOUNTS ARE RECEIVED BY WAY OF A/C PAYE E CHEQUES. IV. COMPANY RECORD ABOUT SHARE APPLICATIONS AND ALLOTME NTS. V. ROC RECORD SHOWING THAT COMPANIES ARE LIVE. THIS ENTIRE EVIDENCE HAS BEEN DISCARDED BY LD. AO O N THE REASONS THAT ASSESSE COULD NOT PRODUCE NEW CONFIRMATIONS AND THE POSTAL NOTICES RETURNED UN SERVED, THIS ACCORDING TO LD. AO AMOUNTED TO CON CLUSIVE PROOF THAT SHARE APPLICANTS WERE NOT GENUINE. IN OUR CONSIDERED VIEW THE ISSUES OF INITIAL DISCHARGE OF ASSESSES BURDEN CANNOT BE DECIDED IN S UCH A CLOCK AND DAGGER MANNER WITH NARROW PERCEPTION. A QUASI-JUDICIAL AUT HORITY HAS TO WEIGH THE ENTIRE EVIDENCE AVAILABLE ON RECORD. THE COPIOUS EV IDENCE CANNOT BE SUMMARILY DISCARDED MERELY BECAUSE ASSESSE COULD NO T FULFILL THE SEEMINGLY DIFFICULT IF NOT IMPOSSIBLE CONDITIONS. WE FIND MER IT IN THE ARGUMENTS OF LD. COUNSEL FOR THE ASSESSEE THAT AFTER A PERIOD 7 YEAR S IT WAS NOT POSSIBLE TO PROCURE BANK STATEMENTS OF EARLIER PERIODS FROM THE SHARE APPLICANTS. WE ARE OF THE VIEW THAT THE ISSUE HAS RIGHTLY BEEN CONSIDE RED BY THE LD. CIT(A) ON THE MATERIAL AVAILABLE ON RECORD. HON'BLE DELHI HI GH COURT IN THE CASE OF CIT VS. DWARKADHISH INVESTMENT (P) LTD. (SUPRA) HAS LAID DOWN THE PARAMETER TO DESCRIBE THE SCOPE OF INITIAL ONUS CAS T ON THE ASSESSE IN TERMS OF SEC 68. THE MATERIAL AVAILABLE ON RECORD BY AND LAR GE MATCHES WITH THE FACTS OF DWARKADHISH JUDGMENT. REBUTTAL OF LD. AO IN TER MS OF SECTION 68 HAS TO ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 18 BE EFFECTIVE AND MEANINGFUL AND NOT TO CALL ON THE ASSESSE TO COMPLY WITH DIFFICULT AND NEARLY IMPOSSIBLE COMPLIANCE. THUS LO OKING TO THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THA T THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS IN TERMS OF SECTION 68 OF THE ACT WHICH HAS NOT BEEN EFFECTIVELY REBUTTED BY LD. AO IN MEANINGFUL T ERMS. RESPECTFULLY FOLLOWING THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF BARKHA SYNTHETICS, HONBLE DELHI HIGH COURT JUDGMENT IN TH E CASES OF DWARKADHEESH INVESTMENTS AND SMC SHARE BROKERS WE H OLD THAT THE ASSESSE DISCHARGED ITS ONUS AS CAST BY SEC 68 QUA THESE SHA RE APPLICATIONS. THEREFORE, THE ADDITIONS WERE RIGHTLY DELETED BY THE LD. CIT(A ). 8.1 APROPOS ADDITION RETAINED BY THE LD. CIT(A) IN RESPECT OF M/S. A.K. FABRICS (P) LTD., M/S. B.P. BUILDTECH (P) LTD. AND M/S. B.P. INFOTECH (P) LTD. THE SAME EVIDENCE HAS BEEN FILED BY THE ASSESSE. LD . CIT(A) HAS DRAWN AN ADVERSE INFERENCE FROM THE FACT THAT IN HIS VIEW TH ESE APPLICANT COMPANIES WERE GIVEN PAN SUBSEQUENTLY AND THEIR PAID UP SHARE CAPITAL IS LOW. FOLLOWING OUR ORDER ON REVENUE APPEAL, WE ARE OF TH E VIEW THAT EARLIER CONFIRMATIONS, TRANSACTIONS BEING THROUGH BANKING C HANNELS, COMPANY SHARE RECORD, ROC RECORD ETC. CUMULATIVELY DEMONSTRATE TH AT THE ASSESSEE HAD DISCHARGED ITS INITIAL ONUS IN TERMS OF DECISION OF HON'BLE RAJASTHAN HIGH COURT IN BARKHA SYNTHETICS, DELHI HIGH COURT IN THE CASE OF CIT VS. ITA NO. 422/JP/2012 DCIT VS. M/S. MISTY MEADOWS (P) LTD.. NEW DELHI 19 DWARKADHISH INVESTMENT (P) LTD. (SUPRA) AND OTHER C ASE LAWS MENTIONED ABOVE. IN VIEW THEREOF, WE HOLD THAT NO ADDITION CA N BE MADE IN RESPECT OF THESE THREE APPLICANTS ALSO. 9.1 SINCE WE HAVE DELETED ENTIRE ADDITION IN RESPEC T OF SHARE APPLICATION MONEY ON MERITS, THEREFORE, WE DO NOT ADVERT TO THE LEGAL ISSUES RAISED BY THE ASSESSEE BY RELYING ON LEGAL ISSUE UNDER RULE 27 OF INCOME TAX APPELLATE TRIBUNAL RULES. 10.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED AND THAT OF THE C.O. OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 -12-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 19 TH DEC 2014 *MISHRA COPY FORWARDED TO:- 1. THE DCIT, CENTRAL CIRCLE, ALWAR 2. M/S. MISTY MEADOWS (P) LTD., NEW DELHI 3. THE LD. CIT(A) 4. THE LD. CIT BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 422/JP/2012) AR ITAT, JAIPUR