Moon Beverages Ltd, New Delhi V. ACIT, Central Circle-15, New Delhi

ITA 7374/DEL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5850 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Keywords: Unexplained cash credit; Bogus Share capital; Document seized; Share purchase agreement; Source of fund; Fair market value; Accommodation entries; Assessment record; Block assessment; Onus to prove; Documents seized
• Section: 143(3); 153A; 133(6); 32; 147; 131; 68; 56; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.7374/DEL/2017 ASSESSMENT YEAR : 2013-14 MOON BEVERAGES LTD., 25, BAZAR LANE, BANGALI MARKET, NEW DELHI. VS. ACIT, CENTRAL CIRCLE- 15, NEW DELHI. PAN : AAACM1635J (APPELLANT) (RESPONDENT) ITA NO.7567/DEL/2017 ASSESSMENT YEAR : 2013-14 HINDUSTAN AQUA LTD., 25, BAZAR LANE, BANGALI MARKET, NEW DELHI. VS. ACIT, CENTRAL CIRCLE- 15, NEW DELHI. PAN : AAACH3298J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAUTAM JAIN, ADV. SHRI LALIT MOHAN, ADV. DEPARTMENT BY : MS. SHEFALI SWAROOP, CIT-DR DATE OF HEARING : 03-04-2018 DATE OF PRONOUNCEMENT : 07-06-2018 O R D E R PER R. K. PANDA, AM : THE ABOVE TWO APPEALS FILED BY THE RESPECTIVE ASSES SEES ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT(A)- XXVI, NE W DELHI RELATING TO ASSESSMENT YEAR 2013-14. SINCE IDENTICAL GROUNDS H AVE BEEN TAKEN BY THE 2 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 RESPECTIVE ASSESSEES IN THEIR APPEALS, THEREFORE, F OR THE SAKE OF CONVENIENCE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.7374/DEL/2017 (MOON BEVERAGES LTD.) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE COMPANY IS ONE OF THE GROUP COMPANIES OF MMG (MM AGGARWAL) GROUP AND IS E NGAGED IN THE BUSINESS OF PREPARATION, MANUFACTURING, PACKING AND SALE OF SOFT DRINKS ON THE BASIS OF CONCENTRATE AND OTHER RAW MATERIAL PROCURE D FROM COCA COLA IN THE CAPACITY OF BOTTLER AND DISTRIBUTOR OF COCA COLA PR OCURE IN INDIA. IN ADDITION, THE MMG GROUP HAS BUSINESS INTERESTS IN SEVERAL SEG MENTS LIKE CHARTERING AND LEASING OF VESSELS TO ONGC AND OTHER COMPANIES, REA L ESTATE, EDUCATION AND HOSPITALITY ETC.. A SEARCH & SEIZURE OPERATION U/S 132 OF THE I.T. ACT, 1961 WAS CARRIED OUT ON 28.03.2015 IN THE CASE OF M.M. AGGAR WAL GROUP OF CASES. THE CASE OF THE ASSESSEE WAS ALSO COVERED IN THE SAID S EARCH. DURING THE COURSE OF SEARCH CARRIED OUT AT THE DIFFERENT PREMISE LOCATED IN INDIA IN M.M. AGGARWAL GROUP OF CASES, DOCUMENTS AND DATA STORAGE DEVICES, ETC. BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED. IN RESPONSE TO NOT ICE U/S 153A OF THE I.T. ACT, 1961 ISSUED TO THE ASSESSEE ON 10.05.2016, THE ASSE SSEE FILED THE RETURN OF INCOME ON 29.06.2016 DECLARING A TOTAL INCOME OF RS .7,42,51,690/-. 3 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RAISED SHARE CAPITAL OF RS.11,85,00,000/- FROM SUPERIOR INDUSTRIAL ENTERPRISES LTD. ON ACCOUNT OF ISSUE OF 3,16,000 SHARES OF RS.10/- EACH WITH PREMIUM OF RS.365/-. HE OBSERVED THAT DURING THE COURSE OF PRE-SEARCH ENQUIRIES, IT WAS GATHERED THAT THE ASSE SSEE GROUP HAD RECEIVED SUBSTANTIAL AMOUNT OF SHARE CAPITAL FROM VARIOUS NO N-DESCRIPT AND SHELL COMPANIES WHICH DID NOT HAVE ANY FACTUAL IDENTITY A ND CREDITWORTHINESS. IT WAS ALSO GATHERED THAT THE INVESTMENT BY SUCH ENTITIES WITH THE ASSESSEE GROUP WAS MAINLY IN THE FORM OF SHARE CAPITAL WHICH WAS SUBSC RIBED AT AN ABNORMALLY HIGH PREMIUM WHICH LACKED GENUINENESS ON THEIR PART TO H AVE AGREED TO SUBSCRIBE AT SUCH PREMIUM WITHOUT HAVING RECEIVED ANY RETURN EIT HER IN THE FORM OF DIVIDENDS OR APPRECIATION IN THE VALUE OF THEIR INV ESTMENT TILL DATE. HE OBSERVED THAT SEARCH ACTION FURTHER ESTABLISHED BEYOND DOUBT THAT THE ASSESSEE COMPANY LIKE OTHER GROUP COMPANIES HAD RECEIVED THE IMPUGNE D SHARE CAPITAL FROM VARIOUS NON-DESCRIPT AND SHELL ENTITIES/COMPANIES W HICH GROSSLY LACKED CREDITWORTHINESS AND WERE IN THE NATURE OF ACCOMMOD ATION ENTRIES TO CONVERT THE UNDISCLOSED INCOME OF THE ASSESSEE GROUP HAVING BEE N RECEIVED IN THE FORM OF SUCH SHARE CAPITAL FROM THE STATED ENTITIES/COMPANI ES. HE FURTHER OBSERVED THAT SEARCH ACTION REVEALED THE MODUS OPERANDI OF THE AS SESSEE GROUP FOR CONVERTING THEIR UNDISCLOSED INCOME THROUGH THE AID OF VARIOUS PERSONNEL/EMPLOYEES WHO 4 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 CATEGORICALLY ADMITTED HAVING AIDED THE GROUP IN SU CH MISDEMEANOR BY FACILITATING THE PROCESS OF CREATING VARIOUS BOGUS COMPANIES WITHIN THE GROUP AND HAVING RECEIVED SHARE CAPITAL FROM SUCH OUTSIDE NON-DESCRIPT/SHELL COMPANIES AND THEREAFTER MAKING THE SAME AVAILABLE IN THE OPERATING COMPANIES OF THE GROUP THROUGH A LAYERED STRUCTURE AS PER THE INSTRUCTIONS OF THE PROMOTER AND HIS OTHER EMPLOYEES/OFFICE BEARERS. THE ASSESS ING OFFICER ANALYZED THE TAX RETURNS FROM THE INCOME-TAX DATA BASE AND REFERRED TO THE ENQUIRIES CONDUCTED ON DELHI AND KOLKATA BASED COMPANIES. HE ALSO REFE RRED TO THE STATEMENT OF SHRI NARENDER KUMAR JAIN, WHO IS CLOSE CONFIDENT AN D ASSOCIATE OF THE PROMOTER OF THE MMG GROUP SHRI SANJEEV AGRAWAL AND THEIR CA, SHRI ASHWANI VERMA, THE STATEMENT OF SHRI NARINDER KUMAR GARG WHO IS DI RECTOR OF M/S NORTH DELHI BEVERAGES PVT. LTD., THE STATEMENT OF SHRI SANJEEV AGGARWAL, WHO IS DIRECTOR- CUM-PROMOTER OF MM GROUP COMPANIES, THE STATEMENT O F SHRI KRISHAN KUMAR BAJAJ, GENERAL MANAGER-FINANCE OF THE ASSESSEE COMP ANY. HE FURTHER REFERRED TO THE STATEMENT OF VARIOUS OTHER PERSONS, THE ENQU IRIES CONDUCTED U/S 133(6) OF THE I.T. ACT AND THE SUMMONS ISSUED TO VARIOUS DIRE CTORS OF THE NON-DESCRIPT COMPANIES U/S 131 OF THE I.T. ACT WHICH WERE EITHER RETURNED BACK OR DELIVERED BUT THERE WAS NO RESPONSE OR ONLY PART COMPLIANCE. ULTIMATELY THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE FA ILED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE PARTIES WHE REFROM FUNDS WERE RECEIVED 5 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 BY THE INVESTOR OF THE ASSESSEE WHO ARE ALSO GROUP COMPANIES OF THE ASSESSEE GROUP. SINCE THE ASSESSEE HAS RECEIVED AN AMOUNT O F RS.11,85,00,000/- TOWARDS SHARE CAPITAL AND SHARE PREMIUM AND THE ASSESSEE CO ULD NOT DISCHARGE THE BURDEN CAST ON IT TO THE SATISFACTION OF THE ASSESS ING OFFICER, HE TREATED THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT A S THE INCOME OF THE ASSESSEE FOR THE RELEVANT PERIOD UNDER CONSIDERATION. 3. BEFORE THE LD. CIT(A), THE ASSESSEE APART FROM C HALLENGING THE ADDITION ON MERIT CHALLENGED THE ASSUMPTION OF JURISDICTION U/S 153A OF THE I.T. ACT. IT WAS SUBMITTED THAT THE ORIGINAL RETURN WAS FILED ON 29. 08.2013 DECLARING AN INCOME OF RS.7,42,51,690/- WHICH WAS PROCESSED U/S 143(1) ON 18.04.2014. THE SEARCH U/S 132 WAS CONDUCTED IN THIS CASE ON 28.03.2015 AN D NOTICE U/S 153A WAS ISSUED ON 10.05.2016. IT WAS ARGUED THAT NO INCRIM INATING MATERIAL WAS DETECTED AS A RESULT OF SEARCH AND THE ADDITION WAS MADE ON THE BASIS OF POST-SEARCH ENQUIRIES AND STATEMENTS RECORDED U/S 132(4) OF THE I.T. ACT. RELYING ON VARIOUS DECISIONS, IT WAS ARGUED THAT SINCE NO ASSESSMENT W AS PENDING ON THE DATE OF SEARCH AND THE ADDITION HAS BEEN MADE ON THE BASIS OF POST-SEARCH ENQUIRIES AND STATEMENTS RECORDED U/S 132(4) ON VARIOUS PERSONS, THEREFORE, THE ASSESSING OFFICER HAS NO POWER TO ASSUME JURISDICTION UNDER T HE PROVISIONS OF SECTION 153A OF THE I.T. ACT. 6 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 4. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, IT WAS SUBMITTED THAT THE ASSESSEE HAD FILED FULL DETAILS ON ACCOUNT OF THE S UM RECEIVED FROM M/S SUPERIOR INDUSTRIAL ENTERPRISES LTD. TOWARDS SHARE CAPITAL A ND SHARE PREMIUM. IT WAS SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE COMPL ETE ADDRESS AND PAN NUMBER OF THE INVESTOR COMPANY ALONG WITH THE DISTINCTIVE NUMBER OF SHARE CERTIFICATES, THE VARIOUS CHEQUES ISSUED ON DIFFERENT DATES WITH THE NAME OF THE BANK, THE NAME AND ADDRESS OF THE DIRECTORS AS ON 31.03.2013, THE COMPLETE COPY OF THE INCOME TAX RETURN FOR ASSESSMENT YEAR 2013-14, COPY OF FORM NO.2 OF MOON BEVERAGES LTD. FILED WITH ROC AS RETURN OF ALLOTME NT, COPY OF BOARD RESOLUTION OF THE ASSESSEE COMPANY AND VARIOUS OTHE R DETAILS TO SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR COMPA NIES AND THE GENUINENESS OF THE TRANSACTIONS. THEREFORE, ADDITION CANNOT BE MA DE U/S 68 OF THE I.T. ACT. IT WAS ACCORDINGLY ARGUED THAT THE ADDITION MADE BY TH E ASSESSING OFFICER SHOULD BE DELETED. 5. HOWEVER, THE LD. CIT(A) WAS NOT SATISFIED WITH T HE ARGUMENTS ADVANCED BY THE ASSESSEE. SO FAR AS THE LEGAL GROUND CHALLE NGING THE VALIDITY OF ASSUMPTION OF JURISDICTION U/S 153A IS CONCERNED, H E DISMISSED THE GROUND RAISED BY THE ASSESSEE BY OBSERVING AS UNDER :- I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. AR., ASSESSMENT ORDER AND CASES LAW CITED BY HIM. I HAVE ALSO PERUSED THE ASS ESSMENT ORDER AND FIND THAT THE A.O. PROCEEDED TO FRAME ASSESSMENT U/S 153A AFTER T HE SEARCH ON APPELLANT GROUP ON 28.03.2015 AND ON RECEIPT OF APPRAISAL REPORT FROM THE DI (INVESTIGATION) THAT THE 7 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 APPELLANT COMPANY HAS RECEIVED AN UNEXPLAINED CREDI T IN ITS BOOKS U/S 68 OF THE IT ACT. THE BASIS OF ADDITION AS TAKEN BY THE A.O. WAS STAT EMENT RECORDED OF SHRI SANJEEV AGARWAL DURING THE COURSE OF SEARCH WHEREIN HE HAS SURRENDERED AN AMOUNT OF RS.88.52 CRORE OUT OF WHICH A SUM OF RS. 30.78 CROR ES WERE REFERRED TO FOR THE ASSESSMENT YEAR 2008-09 AND REST OF AMOUNT WAS NON DESCRIPTIVE AND VAGUE AND WAS SURRENDERED SUBJECT TO CROSS CHECKING OF THE FACTS AND TO EXPLAIN AFTER ACCESS TO THE BOOKS OF ACCOUNTS. THE SAID STATEMENT WAS RETRACTED BY SAID SHRI SANJEEV AGARWAL ON 18.05.2015 WITHIN TWO MONTHS FROM THE DATE OF ORIGI NAL STATEMENT. THOUGH THE APPELLANT HAS STATED TO HAVE RECORDED ALL THE TRANS ACTIONS UNDER APPEAL IN ITS BOOKS OF ACCOUNT AND OFFERED ALL THE NECESSARY AND RELEVANT PROOF THEREOF AS SUCH. SINCE THE ASSESSMENT PROCEEDINGS WERE PENDING AT THE TIME OF SEARCH AND WAS ABATED, THE LEGAL GROUND OBJECTED AS SUCH BY THE APPELLANT WAS NOT VA LID AS SUCH THE SAME IS BOUND TO BE REJECTED. THESE BEING PRIMARY AND BASIC THE LEGA L GROUND GOING TO THE ROOT OF THE ASSESSMENT, IT IS NECESSARY TO EXAMINE THE NATURE O F INCRIMINATION MATERIAL CONFERRING UPON THE AO NECESSARY JURISDICTION U/S 153A TO UTIL IZE SUCH MATERIAL ARISING CONSEQUENT TO THE SEARCH OPERATION. THE MATERIAL SO FOUND AND SEIZED AND THEREAFTER RELIED UPON AND UTILIZED THEREON IN THE ASSESSMENT OF THE ASSESSEE LEADING THE AO TO CONCLUDE THAT THE SHARE APPLICATION / CAPITAL RECEI VED BY THE APPELLANT ARE UNEXPLAINED. BUT, IT IS UNDISPUTED FACT THAT THE DEPARTMENT FOUN D INFORMATION IN RESPECT OF THE SHARE CERTIFICATES AND THE COUNTERFOILS THEREOF AND OTHER SIGNIFICANT RELATED MATERIAL DURING THE COURSE OF SEARCH OPERATIONS THAT UPON COLLATING WITH THE INFORMATION RECEIVED BY THE DEPARTMENT LEAD TO SPECIFIC INPUTS IN RESPECT O F DOUBTFUL NATURE ON GENUINENESS OF THE EQUITY INFUSED IN THE COMPANIES OF THE GROUP. T HE MATERIAL SO GATHERED IS PRIMA FACIE INCRIMINATING IN ITS NATURE AND SUBSTANCE SO AS TO ATTRACT THE PROVISIONS OF S. 153A OF THE ACT IN THE CASE OF THE APPELLANT. THE O VERALL SCHEMA THAT EMERGES THERE FROM INDICATES THAT THERE WAS PRIMA FACIE MATERIAL AVAILABLE IN THIS REGARD TO ENABLE THE AO TO INITIATE PROCEEDINGS U1S 153A. THE ASSESS EE CONTENTIONS IN THIS REGARD AS UNDER- A) IN RESPECT OF SHARE CERTIFICATE FOUND DURING THE COURSE OF SEARCH IN RESPECT OF COMPANIES MENTIONED AT SERIAL NO 1 & 2 I T HAS ALSO BEEN SUBMITTED THAT COMPANIES JA BUILDERS LTD AND JPM AU TOMOBILES LTD WAS ALSO ASSESSED WITH THE ACIT, CENTRAL CIRCLE -13 , NEW DELHI AND THE ORDER HAVE ALSO BEEN PASSED AT THE SAME TIME. I N THE ORDER PASSED IN THE CASE OF JA BUILDERS LTD AND JPM AUTOMOBILES LTD NO ADDITION TOWARDS SHARE CAPITAL HAVE BEEN MADE. AS SUCH THE A PPELLANT CONTENDED THAT SAME ASSESSING OFFICER WHILE PASSING THE ORDER AT THE SAME TIME IN RESPECT OF SAME ISSUE HAS FORMED TWO D IFFERENT VIEWS. B) THE SHARES CERTIFICATES FOUND IN RESPECT OF COMP ANIES MENTIONED AT SERIAL NO 3 TO 5 IS RELATED TO INVESTMENTS MADE BY GROUP CONCERNS OF JPM GROUP AND DOES NOT PERTAIN TO OUTSIDERS THESE MERIT EXAMINATION OF THE CASE UNDER 153A OF T HE I T ACT 1961. THE AVAILABILITY OF SUCH DOCUMENTS RAISES VALID DOUBTS ON THE GENUIN ENESS OF THE TRANSACTIONS INVOLVED HEREIN. THE ISSUE OF EXISTENCE OF INCRIMINATING MAT ERIAL HAS TO BE CONSIDERED IN TOTALITY. THE ASSESSEE CANNOT HIDE BEHIND SEIZURE O R NON SEIZURE OF DOCUMENTS. THE 8 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 SAME HAS TO BE CONSTRUED WITH THE TRADE PRACTICES A ND THE EXPECTED ACTION ON PART OF AN INDEPENDENT ENTITY IN NORMAL CIRCUMSTANCES. ANY SUCH ENTITY WILL SURELY EXPECT DUE RETURNS OR CAPITAL APPRECIATION IN DUE COURSE. THE INVESTOR IS SURPRISINGLY BEREFT OF INTEREST IN THE MATTER. THE AO AND THIS APPELLATE F ORUM TOO HAVE TO CONSTRUE THE INCRIMINATING MATERIAL IN A HARMONIOUS FASHION. HON 'BLE DELHI HIGH COURT HAS ALSO REITERATED IN MANY RULINGS THAT ACTION U/S 153A IS BOUND TO BE INITIATED IN SUCH SITUATIONS. THEREFORE, THIS ACTION OF THE AO IS IN TUNE WITH JUDGMENT OF HON'BLE DELHI HIGH COURT IN CIT (C)-III VS. KABUL CHAWLA (DELHI) [2015] 61 TAXMAN.COM 412 (DELHI), 234 TAXMAN 30. THE SAME IS FURTHER STRENGT HENED BY THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF DAYAWANTI GUPTA VS CIT IN 'ITA NOS 357,358.359/2015 AND OTHER' DATED 27/10/2016. HAVIN G CONSIDERED THE DETAILED AND BELABOURED SUBMISSIONS OF THE LD AR AND THE MATERIA L ON RECORD, I AM DRAWN TO THE CONCLUSION THAT THE ACTION OF THE AO DOES NOT GO AT VARIANCE WITH THE PROVISIONS OF LAW AND THE AVAILABLE JURISPRUDENCE IN THIS MATTER IN SO FAR AS INVOKING THE PROCEEDINGS PER SECTION 153A IS CONCERNED. THE AO W AS WELL WITHIN HIS POWERS TO INVOKE SECTION 153A OF THE ACT ON PRIMA FACIE FINDI NG ABOUT INFORMATION THAT SURFACED DURING THE SEARCH. BASIS ABOVE DISCUSSIONS, THESE G ROUNDS OF APPEAL ARE NOT SUSTAINABLE. THE GROUND NO. 4 (A) AND 4 (B) ARE THE REFORE DISMISSED. 6. SO FAR AS THE ADDITION ON MERIT IS CONCERNED, LD . CIT(A) ALSO DISMISSED THE SAID GROUND BY OBSERVING AS UNDER :- B. AS FAR AS THE MERITS OF THE CASE ARE CONCERNED, I HAVE GONE THROUGH THE ASSESSMENT ORDER PASSED BY AND A.O. AND VERIFIED TH E MATERIAL PLACED ON PAPER BOOK AND WAS PART OF THE ASSESSMENT RECORDS ALSO. THE SU MMON WAS ISSUED BUT THE SAME WAS NOT DELIVERED ALSO THE FOLLOWING INFORMATION AN D DOCUMENTS WERE REQUISITIONED BY ISSUING NOTICE U/S 133(6) OF THE ACT I) RELEVANT EXTRACTS STATEMENTS OF BANK ACCOUNT STA TEMENT OF THE INVESTORS SHOWING PAYMENTS MADE TOWARDS SHARE APPLICATION MON EY. II) COPIES OF ALLOTMENT LETTERS. III) SHARE APPLICATION FORM DULY FILLED BY THE IN VESTOR COMPANIES. IV) CONFIRMATION IN RESPECT OF ALLOTMENT OF EQUIT Y SHARES TO THE INVESTORS. V) COPY OF PAN CARD OF THE INVESTOR COMPANIES. VI) MEMORANDUM & ARTICLES OF ASSOCIATION OF THE I NVESTOR COMPANIES CLEARLY DEPICTING THEIR CORPORATE IDENTITY NUMBER. VII) COPIES OF SHARE CERTIFICATES ISSUED BY THE A SSESSEE COMPANY. VIII) A CHART SHOWING DETAILS OF DIRECTOR OF THE I NVESTOR COMPANIES. IX) A CHART SHOWING DETAILS OF SHAREHOLDERS OF TH E INVESTOR COMPANIES. I) COPIES OF THE ACKNOWLEDGEMENT OF THE INCOME TAX RETURN FILED FOR AY 2009-10 BY THE INVESTOR COMPANIES ALONG WITH THEIR AUDITED FINANCIALS FOR THE YEAR ENDED 31ST MARCH 2009. 9 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 B1. IT IS REQUIRED TO REFER TO HERE THE SECTION 68 AS AMENDED FROM AY 2013-14 ONWARDS. THE SECTION CONFERS ENHANCED ONUS ON THE I NVESTING ENTITY IN THE ASSESSEE BY VIRTUE OF THE PROVISO. THIS READS AS UNDER- 'CASH CREDITS. 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLA NATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE C HARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR: PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM S O CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESS EE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS- (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE N ATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSIN G OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY:' THE APPELLANT HAS NEITHER PRODUCED THE INVESTOR NOR ARRANGED TO PROVIDE THE REQUISITE INFORMATION AND DOCUMENTS DIRECTLY FROM IT AS SUCH FAILED TO SUBSTANTIATE ITS CONTENTION. THE ONUS TO PROVE ITS CONTENTIONS HAS N OT BEEN DISCHARGED BY THE ASSESSEE APPELLANT. CONCEPT OF ONUS IS DYNAMIC NO DOUBT, BUT THE ASSESSEE IS REQUIRED TO FIRST DISCHARGE THE ONUS CAST UPON BY WAY OF INFORMATION IN POSSESSION OF THE DEPARTMENT BASED ON THE SEIZURE OF SUCH DOCUMENTS THAT CREATE PRIMA FACIE BASIS FOR THE AO TO ARRIVE AT HIS CONCLUSIONS. THE ASSESSEE HAS PRESENT ED A WHOLE SERIES OF JURISPRUDENCE WITHOUT SUBSTANTIVELY DISCHARGING ITS ONUS. SUCH ON US DOES NOT SHIFT BACK BY THE MERE ACT OF THE ASSESSEE IN PLAINLY DENYING THE IMPUTATI ONS WITHOUT REALLY OFFERING CORROBORATIVE DATA OR ANY SUBSTANTIVE CONTENTIONS T O ESTABLISH ITS CASE TO REBUT THE IMPUTATION. THE APPELLANT FAILS ON THIS COUNT AS TH E PRIMARY ONUS IS YET NOT DISCHARGED. I FIND NO SUBSTANTIVE BASIS TO ACCEPT T HE CONTENTIONS OF THE ASSESSEE. THE ADDITION IN THIS REGARD IS HAS TO BE CONFIRMED AS T HE AVAILABLE JURISPRUDENCE IS CLEARLY DISTINGUISHABLE ON THE FACTS OF THE CASE. ACCORDING LY THE ADDITION MADE BY A.O. U/S 68 OF THE ACT [AS APPLICABLE FOR A Y 2013-14 ONWARDS] IS SUSTAINABLE. 7. THE LD. CIT(A) FURTHER OBSERVED THAT EFFECT FROM ASSESSMENT YEAR 2013-14 ONWARDS, THE PROVISIONS OF SECTION 56(2)(VIIB) ARE ATTRACTED TO THE CASE OF THE ASSESSEE. HE OBSERVED THAT THE SHARE PREMIUM CHARG ED BY THE ASSESSEE CLEARLY FALLS WITHIN THE MISCHIEF OF THIS SECTION IN ABSENC E OF ASSESSEE FURNISHING A 10 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 RELIABLE AND ROBUST BASIS OF VALUATION OF SUCH EQUI TY SHARES AS PER RULE 11UA(1)CB OF THE I.T. ACT. THE RELEVANT OBSERVATIO N OF THE LD. CIT(A READS AS UNDER :- C. THERE IS ANOTHER ASPECT TO SUCH TRANSACTIONS WI TH EFFECT FROM AY 2013-14 ONWARDS. IN THIS REGARD, IT IS ALSO PERTINENT TO RE FER TO SECTION 56 (2) VII B, WHICH READS AS UNDER: '56. (1) INCOME OF EVERY KIND WHICH IS NOT TO BE EX CLUDED FROM THE TOTAL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME -TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCES', IF IT IS NOT CHAR GEABLE TO INCOME-TAX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14, ITE MS A TO E. (2) IN PARTICULAR, AND WITHOUT PREJUDICE TO THE GEN ERALITY OF THE PROVISIONS OF SUB-SECTION (1), THE FOLLOWING INCOME S, SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'INCOME FRO M OTHER SOURCES', NAMELY:- -------- (VIIB) WHERE A COMPANY, NOT BEING A COMPANY IN WHIC H THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON BEING A RESIDENT, ANY CONSIDERATION FOR ISSU E OF SHARES THAT EXCEEDS THE FACE VALUE OF SUCH SHARES, THE AGGREGAT E CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES: PROVIDED THAT THIS CLAUSE SHALL NOT APPLY WHERE THE CONSIDERATION FOR ISSUE OF SHARES IS RECEIVED- (I) BY A VENTURE CAPIT AL UNDERTAKING FROM A VENTURE CAPITAL COMPANY OR A VENTURE CAPITAL FUND; OR (II) BY A COMPANY FROM A CLASS OR CLASSES OF PERSONS AS MAY B E NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS BEHALF. EXPLANATION.-FOR THE PURPOSES OF THIS CLAUSE,- (A) THE FAIR MARKET VALUE OF THE SHARES SHALL BE TH E VALUE- (I) AS MAY BE DETERMINED IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED93; OR (II) AS MAY BE SUBSTANTIATED BY THE COMPANY TO T HE SATISFACTION OF THE ASSESSING OFFICER, BASED ON THE VALUE, ON THE DATE OF ISSUE OF SHARES, OF ITS ASSETS, INCLUDING INTANGIBLE ASSETS BEING GOODW ILL, KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHIS ES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, WH ICHEVER IS HIGHER; (B) 'VENTURE CAPITAL COMPANY', 'VENTURE CAPITAL FUN D' AND 'VENTURE CAPITAL UNDERTAKING' SHALL HAVE THE MEANINGS RESPEC TIVELY ASSIGNED TO THEM IN CLAUSE (A), CLAUSE (B) AND CLAUSE (C) OF 94 [EXPLANATION] TO CLAUSE (23FB) OF SECTION 1O;]' [EMPHASIS SUPPLIED] C1. THE SHARE PREMIUM CHARGED BY THE APPELLANT CLEA RLY FALLS WITHIN THE MISCHIEF OF THIS SECTION IN ABSENCE OF ASSESSEE FURNISHING A RELIABLE AND ROBUST BASIS OF VALUATION OF SUCH EQUITY. THE RELEVANT RULE IN THIS REGARD IS RULE 11 A(1) CB. THE ASSESSEE IS IN CLEAR MISCHIEF OF THE SAME, HENCE TH E PREMIUM CHARGED BY THE ASSESSEE IS TO BE SUBJECTED TO THE PROVISIONS OF SECTION 56 (2) VIIB READ WITH RULE 11UA (1)CB. IT 11 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 IS BOUNDEN ON THE ASSESSEE TO FURNISH RELIABLE VALU ATION DETERMINING SUCH SHARE PREMIUM AS IN ITS CASE FOR THE AY 2013-14, FROM A Q UALIFIED VALUER. THE ASSESSEE HAS NOT DONE THE SAME, NOR HAS ANY SUBMISSION FILED BEF ORE ME IN THIS REGARD. THE SHARE PREMIUM SO CHARGED FOR THIS YEAR FALLS IN CLEAR MIS CHIEF OF THE PROVISIONS OF LAW AS DISCUSSED ABOVE. THE SAME PREMIA ARE, THEREFORE, TO BE BROUGHT TO TAX. AS THE ADDITION IN CASE OF THE ASSESSEE HAS BEEN UPHELD FOR THIS PE RIOD, THE ADDITION HERE ABOVE WILL GET SUBSUMED IN THE QUANTUM ADDED BY THE AO U/S 68, HOWEVER, IN CASE OF ANY ALTERATIONS IN INCOME COMPUTATIONS LATER ON, THE PR OVISIONS AS DISCUSSED ABOVE SHALL GET INVOKED. THE AO IS DIRECTED TO MAKE A NOTE OF T HE SAME IN THE FILE ALSO. 8. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S :- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-26, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE INI TIATION 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 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. 11,85,00, 000- IS WITHOUT JURISDICTION SINCE IT IS NOT BASED ON ANY MATERIAL FOUND AS A RE SULT OF SEARCH ON THE APPELLANT, AS HAVE BEEN ALSO HELD BY THE JUDGMENTS OF HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 380 ITR 573 AND PR. CI T VS. MEETA GUTGUTIA REPORTED IN 395 ITR 526. 1.2 THAT FINDING OFF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT IT IS A CASE OF ABATED ASSESSMENT IS FACTUALLY INCORRECT AN D, THUS IN ABSENCE OF JURISDICTION THE ACTION IS ENTIRELY VITIATED. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING AN ADDITION MADE BY LEAR NED DEPUTY COMMISSIONER OF INCOME OF RS. 11,85,00,000/- (RS. 31,60,000/- + RS. 11,53,40,000/-) ON ACCOUNT OF SUM RECEIVED FROM M/S SUPERIOR INDUSTRIAL ENTERPRIS ES LTD. AS SHARE CAPITAL AND SHARE PREMIUM AND ERRONEOUSLY HELD AS UNEXPLAINED C ASH 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 A SSESSMENT PROCEEDINGS: 2.1 THAT WHILE SUSTAINING THE AFORESAID ADDITION TH E 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 REPRESENTS UNEXPLAINED CASH CREDIT AN D, 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 (AP PEALS) HAS FAILED TO APPRECIATE THAT ONCE THE AFORESAID SHARE HOLDER HAD DULY CONFIRMED THE INVESTMENT MADE, HE COULD NOT HAVE UPHELD THE ADDITION ON ARBI TRARY GROUNDS AND THAT TOO 12 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 WITHOUT BRINGING ANY EVIDENCE OR EVEN ALLEGING THAT AFORESAID CREDITS BY WAY OF SHARE CAPITAL EMANATED FROM THE SOURCE OF FUNDS PROVIDED BY THE APPELLANT COMPANY. 2.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT THE SHAREHOLDER WAS A CORPORATE ENT ITY, DULY ASSESSED TO TAX AND, HAD SUBSCRIBED TO SHARE-CAPITAL THROUGH BANKING CHANNEL S AND SUPPORTED BY NECESSARY DOCUMENTS, 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 (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT APPELLANT HAD PLACED ON RECORD VOLU MINOUS EVIDENCES TO DISCHARGE THE BURDEN WITH REGARD TO BOTH GENUINENESS OF THE T RANSACTIONS AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND THEREFORE, IN ABSENCE O F ANY WHISPER TO REBUT THE SAID EVIDENCE, THE CREDITS COULD NOT ARBITRARILY BE REGA RDED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 2.5 THAT RELIANCE PLACED ON SECTION 56(2)(VII)(B) O F THE ACT AND, VARIOUS JUDGMENTS TO BRING TO TAX A CREDIT DULY RECORDED AND, EXPLAIN ED IS BASED ON COMPLETE MISCONCEPTION AND, THUS UNSUSTAINABLE. 2.6 THAT VARIOUS ADVERSE FINDINGS BY THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) TO SUSTAIN THE ADDITION IS FACTUALLY INCO RRECT, CONTRARY TO RECORD AND ARE NOT BASED ON PROPER APPRECIATION OF LAW AND THEREFORE, UNTENABLE. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF INTEREST UNDE R SECTION 234A, U/S 234B, U/S 234C AND U/S 234D OF THE ACT WHICH ARE NOT LEVIABLE ON T HE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT COMPANY. IT IS THEREFORE, PRAYED THAT, IT BE HELD THAT ASSE SSMENT MADE BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) BE QUASHED AND, FURTHER ADDITION SO UPHEL D BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALONG WITH INTEREST LEVIED BE DELETED AND APPEAL OF THE APPELLANT COMPANY BE ALLOWED. 9. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET STRON GLY OBJECTED TO THE ORDER OF THE LD. CIT(A) DISMISSING THE APPEAL OF THE ASSESSE E. SO FAR AS GROUND RELATING TO THE VALIDITY OF ASSUMPTION OF JURISDICTION U/S 1 53A IS CONCERNED, HE SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) IS ILLEGAL AND BEYOND THE SCOPE OF PROVISIONS OF SE CTION 153A/143(3) OF THE I.T. ACT. HE SUBMITTED THAT ON THE DATE OF SEARCH ON 28 .03.2015 NO INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF THE ADDITION MADE BY THE ASSESSING OFFICER AND 13 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 THE ASSESSMENT WAS NOT PENDING. NEITHER THE ASSESS ING OFFICER NOR THE LD. CIT(A) HAS REFERRED TO ANY INCRIMINATING MATERIAL F OUND AS A RESULT OF SEARCH WHILE MAKING/SUSTAINING THE ADDITION. HE SUBMITTED THAT THE SUM OFFERED BY MR. SANJEEV AGGARWAL IN HIS STATEMENT RECORDED U/S 132( 4) AMOUNTING TO RS.88.52 CRORES COMPRISED OF TWO COMPONENTS I.E. PERTAINING TO ASSESSMENT YEAR 2008-09 RS.30.78 CRORES AND BALANCE RS.57.74 CRORES. H E SUBMITTED THAT SHRI SANJEEV AGGARWAL HAS RETRACTED FROM HIS STATEMENT R EGARDING SURRENDER OF INCOME TO THE EXTENT OF 30.78 CRORES PERTAINING TO ASSESSMENT YEAR 2008-09 WHICH IS EVIDENT FROM PAGES 30 TO 35 OF THE PAPER B OOK. 9.1 REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMAPUTRA FINLEASE (P) LTD. VS. DCIT VIDE ITA NO. 332/DEL/2017 ORDER DATED 29.12.2017 FOR ASSESSMENT YEAR 2007-08, THE DECISIO N OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BEST INFRASTRUCTU RE (INDIA) (P) LTD. REPORTED IN 397 ITR 82 AND THE DECISION OF THE HONBLE DELHI HI GH COURT IN THE CASE OF CIT VS. HARJEEV AGGARWAL REPORTED IN 290 CTR 263, HE SU BMITTED THAT THE STATEMENTS RECORDED U/S 133(4) DO NOT BY THEMSELVES CONSTITUTE INCRIMINATING MATERIAL. 10. REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 380 ITR 573, THE D ECISION IN THE CASE OF PR.CIT VS. MEETA GUTGUTIA REPORTED IN 395 ITR 526 A ND VARIOUS OTHER DECISIONS, 14 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 HE SUBMITTED THAT IN ABSENCE OF ANY INCRIMINATING M ATERIAL FOUND AS A RESULT OF SEARCH, ASSUMPTION OF JURISDICTION U/S 153A IS NOT IN ACCORDANCE WITH LAW. HE ALSO RELIED ON THE FOLLOWING DECISIONS :- (I) PR.CIT VS. LATA JAIN, 384 ITR 543. (II) 211 TAXMAN 61 (DEL) CIT V. CHETAN DAS LAXHMAN DAS. (III) 352 ITR 493 (DEL) CIT VS. ANIL KUMAR BHATIA. (IV) 380 ITR 571 (DEL) CIT VS. KURELE PAPER MILLS P. LTD. DATED 06.07.2015. (V) 241 TAXMAN 440 (DEL) CIT VS. MGF AUTOMOBILES L TD. (VI) ITA NO.634/2015 PR. CIT VS. SMT. KUSUM GUPTA. (VII) W.P. (C) 8721/2014 & CM NO.20052/2014 PRAVEE N KUMAR JOLLY. (VIII) IT APPEAL NO.810/2016 PR. CIT VS. MAHESH KU MAR. (IX) IT APPEAL NOS.61 & 62/2017 PR. CIT VS. RAM AV TAR VERMA. (X) 397 ITR 82 PR. CIT VS. BEST INFRASTRUCTURE (IN DIA) (P) LTD. 11. SO FAR AS MERIT OF THE CASE IS CONCERNED, HE SU BMITTED THAT THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR HAS RECEIVED AN AMOUNT OF RS.11,85,00,000/- ON ACCOUNT OF ISSUE OF 3,16,000 SHARES OF RS.10/- WITH A PREMIUM OF RS.365 EACH FROM M/S SUPERIOR INDUSTRIAL ENTERPRISES LTD.. THE ASSESSEE HAD GIVEN DETAILS OF THE SAID COMPANY SUCH AS COMPLETE ADDRESS WITH PAN NUMBERS, LIST OF DIRECTORS, DISTINCT CHEQUES NUMBERS OF DIFFERENT DA TES FOR PURCHASE OF SHARES, COPY OF CONFIRMATION OF THE INVESTOR COMPANY, THEIR BANK STATEMENT, COPY OF 15 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 ANNUAL RETURN OF THE SAID COMPANY, LIST OF SHAREHOL DERS OF THE INVESTOR COMPANY, COPY OF COMPANY MASTER DATA OF THE INVESTOR COMPANY AND VARIOUS OTHER DETAILS TO SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS O F THE INVESTOR COMPANY AND THE GENUINENESS OF THE TRANSACTION. 12. REFERRING TO THE COPY OF THE ASSESSMENT ORDER I N THE CASE OF M/S SUPERIOR INDUSTRIAL ENTERPRISES LTD., COPY OF WHICH IS PLACE D AT PAGE 33 AND 34 OF THE PAPER BOOK, HE SUBMITTED THAT THE ASSESSING OFFICER IN THE ORDER PASSED U/S 143(3) ON 15.03.2016 HAS ASSESSED THE INCOME OF THA T COMPANY AT RS.29,90,617/-. REFERRING TO PAGES 187 TO 349 OF T HE PAPER BOOK, LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE COPY OF NOTICES ISSUED BY THE ASSESSING OFFICER ON VARIOUS DATES AND REPLIES FILED BY M/S SUPERIOR INDUSTRIAL ENTERPRISES LTD. DURING THE COURSE OF AS SESSMENT PROCEEDINGS. HE SUBMITTED THAT DURING 143(3) ASSESSMENT PROCEEDING IN THE CASE OF M/S SUPERIOR INDUSTRIAL ENTERPRISES LTD., THE ASSESSING OFFICER OF THE SAID COMPANY HAD ISSUED NOTICE U/S 133(6) TO VARIOUS PERSONS WHO HAD PURCHASED SHARES IN THE SAID COMPANY. THEREFORE, ONCE THE RETURN OF THE SAID IN VESTOR COMPANY HAS BEEN ACCEPTED AND NO ADDITION HAS BEEN MADE ON ACCOUNT I SSUE OF SHARE CAPITAL BY THAT COMPANY, ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE COMPANY ON ACCOUNT OF PURCHASE OF SHARES BY M/S SUPERIOR INDUS TRIAL ENTERPRISES LTD. IN THE 16 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 ASSESSEE COMPANY. RELYING ON VARIOUS DECISIONS, HE SUBMITTED THAT SOURCE OF SOURCE CANNOT BE A BASIS TO MAKE THE ADDITION. 13. HE SUBMITTED THAT THE BURDEN OF THE ASSESSEE WA S DISCHARGED SINCE THE INVESTOR IS A LISTED GROUP COMPANY AND COPY OF AUDI TED FINANCIAL STATEMENT, ACKNOWLEDGEMENT OF RETURN OF INCOME, CONFIRMATIONS OF INVESTOR, BANK STATEMENTS, MEMORANDUM OF ARTICLE OR ASSOCIATION WE RE FILED. FURTHER, ASSESSMENT WAS COMPLETED U/S 143(3) IN THE CASE OF THE SAID INVESTOR COMPANY. THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE MONEY RECEIVED AS SHARE CAPITAL AND SHARE PREMIUM HAS ORIGINATED FROM THE C OFFERS OF THE ASSESSEE COMPANY. 14. REFERRING TO VARIOUS DECISIONS, HE SUBMITTED TH AT NON-PRODUCTION OF SHAREHOLDER/DIRECTOR BY THE ASSESSEE CANNOT BE A GR OUND FOR MAKING ADDITION U/S 68 IF ASSESSEE DISCHARGED THE INITIAL ONUS CAST ON IT. HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT ESTABLISHED THAT THE PART ICULARS FURNISHED BY THE ASSESSEE ARE FALSE ESPECIALLY WHEN NO ENQUIRIES WER E MADE EITHER FROM THE SHAREHOLDER BY ISSUING NOTICE U/S 133(6) OR ENQUIRY FROM THE ASSESSING OFFICER OF THE INVESTOR COMPANY OR BANKER OF INVESTOR OR RE GISTRAR OF COMPANY. 15. REFERRING TO PAGE 59K OF THE PAPER BOOK, HE SUB MITTED THAT THE ASSESSEE HAD REQUESTED SPECIFIC DATE FOR PRODUCTION IN RESPE CT OF GENERAL QUESTIONNAIRE DATED 16.08.2016, COPY OF WHICH IS PLACED AT PAGE 5 96 OF THE PAPER BOOK, AND, 17 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 THEREAFTER, FILED REPLY DATED 21.11.2016, COPY OF W HICH IS AVAILABLE AT PAGE 60 AND 61 OF THE PAPER BOOK. HOWEVER, NO ENQUIRY WAS CONDUCTED FROM THE SHAREHOLDER AND ALSO NO SHOW-CAUSE NOTICE ISSUED TO THE ASSESSEE. 16. SO FAR AS THE ALLEGATION OF THE ASSESSING OFFIC ER THAT THE INVESTOR COMPANY HAD LOW INCOME IS CONCERNED, HE SUBMITTED T HAT LOW INCOME OF SHAREHOLDER IS NOT A RELEVANT CONSIDERATION AND ONL Y NET WORTH IS RELEVANT TO DETERMINE THE CREDITWORTHINESS OF THE SHAREHOLDER. HE SUBMITTED THAT SINCE THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) IN THE CAS E OF THE INVESTOR COMPANY WHICH IS A GROUP COMPANY AND A LISTED COMPANY, THER EFORE, THE ASSESSING OFFICER, WITHOUT MAKING PROPER ENQUIRY COULD NOT HA VE MADE ADDITION ON FLIMSY GROUND. HE SUBMITTED THAT THE ASSESSEE COMPANY HAS ALSO MADE INVESTMENT OF RS.4,30,00,000/- IN M/S SUPERIOR INDUSTRIAL ENTERPR ISES LTD. AND THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION ON ACCOUNT OF THI S. THIS CLEARLY ESTABLISHES THAT M/S SUPERIOR INDUSTRIAL ENTERPRISES LTD. IS NO T A NON-DESCRIPT OR NON- EXISTENT OR PAPER COMPANY. IN VIEW OF THE ABOVE, H E SUBMITTED THAT THE ADDITION IS UNCALLED FOR. 17. SO FAR AS THE ORDER OF THE LD. CIT(A) INVOKING THE PROVISIONS OF SECTION 56(2)(VIIB) READ WITH RULE 11UA(1)(CB) IS CONCERNED , HE SUBMITTED THAT THE LD. CIT(A) WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESS EE HELD THAT THE SHARE PREMIUM CHARGED BY THE ASSESSEE FALLS WITHIN THE MI SCHIEF OF THE SAID 18 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 PROVISIONS. HE SUBMITTED THAT THE LD. CIT(A) CANNO T SUSTAIN AN ADDITION ON THE BASIS OF NEW SOURCE OF INCOME WHICH WAS NOT THERE I N THE ASSESSMENT ORDER. IN ANY CASE HE SUBMITTED THAT THE BOOK VALUE OF THE SH ARES IS MUCH MORE THAN THE SHARE PREMIUM CHARGED BY THE COMPANY. HE ACCORDING LY SUBMITTED THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL, NO ADDITION COULD HAVE BEEN MADE BY DISTURBING A COMPLETED ASSESSMENT. FURTHER, THE AS SESSEE HAS DISCHARGED THE INITIAL BURDEN CAST ON IT BY FURNISHING SUFFICIENT DETAILS TO PROVE THE IDENTITY AND CAPACITY OF THE INVESTOR COMPANY AND GENUINENESS OF THE TRANSACTION. SINCE THE INVESTOR COMPANY HAS BEEN ASSESSED U/S 143(3) AND S INCE THE INVESTMENT OF THE ASSESSEE IN THE INVESTOR COMPANY HAS ALSO NOT BEEN DOUBTED BY THE ASSESSING OFFICER, THEREFORE, UNDER THE FACTS AND CIRCUMSTANC ES OF THE CASE NO ADDITION IS SUSTAINABLE LEGALLY AND FACTUALLY. 18. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). SHE SUBMITTED THAT THE A.O. HAS EXTENSIVELY AND EXH AUSTIVELY PROVED THAT IDENTITIES AND CREDITWORTHINESS OF SUCH PARTIES & G ENUINENESS OF TRANSACTIONS REGARDING AMOUNT OF RS.11.85 CRORES AS SHARE CAPITA L & SHARE APPLICATION MONEY PAID TO THE ASSESSEE COMPANY BY SEVERAL ENTITIES/FI RMS/COMPANIES ARE BOGUS, NON-EXISTENT PAPER ENTITIES HAVING NO WORTHY BUSINE SS TO ADVANCE SUCH SHARE CAPITAL & SHARE APPLICATION MONEY. THUS SAID ASSES SEE COMPANY HAS MISERABLY 19 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 FAILED TO PROVE ALL THREE INGREDIENTS REQUIRED FOR PROVISION OF SECTION 68 OF I. T .ACT, 1961. 19. REFERRING TO THE DECISION IN THE CASE OF CIT VS . MAF ACADEMY (P.) LTD. REPORTED IN 361 ITR 258, SHE SUBMITTED THAT THE HON 'BLE DELHI HIGH COURT IN THE SAID CASE HAS HELD THAT WHERE ASSESSEE, A PRIVATE L IMITED COMPANY, SOLD ITS SHARES TO UNRELATED PARTIES AT A HUGE PREMIUM AND THEREUPO N WITHIN SHORT SPAN OF TIME THOSE SHARES WERE PURCHASED BACK EVEN AT A LOSS, SH ARE TRANSACTIONS IN QUESTION WERE TO BE REGARDED AS BOGUS AND, THUS, AMOUNT RECE IVED FROM SAID TRANSACTIONS WAS TO BE ADDED TO ASSESEE'S TAXABLE INCOME UNDER S ECTION 68 OF THE I.T. ACT. 20. REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAVODAYA CASTLE PVT. LTD. REPORTED IN 367 ITR 306, SHE SUBMITTED THAT THE HON'BLE HIGH COURT REMITTED THE MATTER BACK TO THE TRIBUNAL FOR FRESH ADJUDICATION SINCE THE ASSESSEE WAS UNABLE TO PRODU CE THE DIRECTORS AND THE PRINCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPANIES AND ALSO THAT AS PER THE INFORMATION AND DETAILS COLLECTED BY THE ASSESSING OFFICER FROM THE CONCERNED BANK, THE ASSESSING OFFICER HAD GENUINE CONCERNS AB OUT IDENTITY AND CREDITWORTHINESS OF SHAREHOLDERS AS WELL AS GENUINE NESS OF THE TRANSACTIONS. SHE SUBMITTED THAT THE SLP FILED BY THE ASSESSEE WAS DI SMISSED BY THE HONBLE SUPREME COURT. 20 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 21. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KONARK STRUCTURAL ENGINEERING (P.) LTD. VS. DCIT REPORTED IN 90 TAXMANN.COM 56, SHE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID DECISION HAS HELD THAT WHERE ASSESSEE-COMPANY RECEIVED CERTA IN AMOUNT AS SHARE CAPITAL FROM VARIOUS SHAREHOLDERS, IN VIEW OF FACT THAT SUM MONS SERVED TO SHAREHOLDERS UNDER SECTION 131 WERE UNSERVED WITH REMARK THAT AD DRESSEES WERE NOT AVAILABLE AND MOREOVER THOSE SHAREHOLDERS WERE FIRST TIME ASS ESSEES AND WERE NOT EARNING ENOUGH INCOME TO MAKE DEPOSITS IN QUESTION, IMPUGNE D ADDITION MADE BY AO UNDER SEC. 68, WAS TO BE CONFIRMED. 22. REFERRING TO THE DECISION IN THE CASE OF PREM C ASTINGS (P.) LTD. VS. CIT REPORTED IN 88 TAXMANN.COM 189, SHE SUBMITTED THAT THE HON'BLE HIGH COURT HAS HELD THAT WHERE ASSESSEE COMPANY HAD RECEIVED SHARE CAPITAL FROM VARIOUS CONTRIBUTORS AND ADMITTED THAT ALLEGED INVESTORS WE RE CLOSE FRIENDS AND BUSINESS ASSOCIATES OF ITS DIRECTORS, BURDEN WAS UPON ASSESS EE TO DISCLOSE TRUE AND CORRECT DETAILS OF SAID INVESTORS AND SINCE IDENTITY OF ALL EGED INVESTORS WAS NEVER ESTABLISHED ADDITIONS MADE UNDER SECTION 68 WAS JUS TIFIED 23. REFERRING TO THE DECISION IN THE CASE OF CIT VS . NIPUN BUILDERS & DEVELOPERS (P.) LTD. REPORTED IN 350 ITR 407, SHE S UBMITTED THAT THE HON'BLE DELHI HIGH COURT HAS HELD THAT WHERE ASSESSEE FAILE D TO PROVE IDENTITY AND 21 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 CAPACITY OF SUBSCRIBER COMPANIES TO PAY SHARE APPLI CATION MONEY, AMOUNT SO RECEIVED WAS LIABLE TO BE TAXED UNDER SECTION 68. 24. REFERRING TO THE DECISION IN THE CASE OF CIT VS . NOVA PROMOTERS & FINLEASE (P) LTD. REPORTED IN 342 ITR 169, SHE SUBM ITTED THAT THE HON'BLE DELHI HIGH COURT HAS HELD THAT AMOUNT RECEIVED BY ASSESSE E FROM ACCOMMODATION ENTRY PROVIDERS IN GARB OF SHARE APPLICATION MONEY, WAS TO BE ADDED TO ITS TAXABLE INCOME UNDER SECTION 68. 25. REFERRING TO THE DECISION IN THE CASE OF CIT VS . ULTRA MODERN EXPORTS (P.) LTD. REPORTED IN 40 TAXMANN.COM 458, SHE SUBMITTED HON'BLE DELHI HIGH COURT HAS HELD THAT WHERE IN ORDER TO ASCERTAIN GENUINENE SS OF ASSESSEE'S CLAIM RELATING TO RECEIPT OF SHARE APPLICATION MONEY, ASSESSING OF FICER SENT NOTICES TO SHARE APPLICANTS WHICH WERE RETURNED UNSERVED, HOWEVER, A SSESSEE STILL MANAGED TO SECURE DOCUMENTS SUCH AS THEIR INCOME TAX RETURNS A S WELL AS BANK ACCOUNT PARTICULARS, IN SUCH CIRCUMSTANCES, ASSESSING OFFIC ER WAS JUSTIFIED IN DRAWING ADVERSE INFERENCE AND ADDING AMOUNT IN QUESTION TO ASSESSEE'S TAXABLE INCOME UNDER SECTION 68. 26. REFERRING TO THE DECISION IN THE CASE OF CIT VS . FROSTAIR (P.) LTD. REPORTED IN 26 TAXMANN.COM 11, SHE SUBMITTED THAT THE HON'BL E DELHI HIGH COURT HAS HELD THAT WHERE DETAILS FURNISHED BY ASSESSEE ABOUT SHARE APPLICANTS WERE INCORRECT, ADDITION UNDER SECTION 68 WAS PROPER. 22 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 27. REFERRING TO THE DECISION IN THE CASE OF CIT VS . N R PORTFOLIO PVT. LTD. REPORTED IN 29 TAXMANN.COM 291, SHE SUBMITTED THAT THE HON'BLE DELHI HIGH COURT HAS HELD THAT IF AO DOUBTS THE DOCUMENTS PROD UCED BY ASSESSEE, THE ONUS SHIFTS ON ASSESSEE TO FURTHER SUBSTANTIATE THE FACT S OR PRODUCE THE SHARE APPLICANT IN ASSESSMENT PROCEEDING. 28. REFERRING TO THE DECISION IN THE CASE OF CIT VS . EMPIRE BUILTECH (P.) LTD. REPORTED IN 366 ITR 110, SHE SUBMITTED THAT THE HON 'BLE DELHI HIGH COURT HAS HELD THAT U/S 68 IT IS NOT SUFFICIENT FOR ASSESSEE TO MERELY DISCLOSE ADDRESS AND IDENTITIES OF SHAREHOLDERS; IT HAS TO SHOW GENUINEN ESS OF SUCH INDIVIDUALS OR ENTITIES. SHE ALSO RELIED ON THE FOLLOWING DECISIO NS :- (I) CIT VS. FOCUS EXPORTS (P.) LTD., 51 TAXMANN.CO M 46 (DELHI). (II) PCIT VS. BIKRAM SINGH, ITA NO.55/2017 (DELHI) . (III) RICK LUNSFORD TRADE & INVESTMENT LTD. VS. CI T, 385 ITR 399 (CAL). 29. REFERRING TO THE DECISION IN THE CASE OF RICK L UNSFORD TRADE & INVESTMENT LTD. VS. CIT [2016-TIOL-207-SC-ITJ (SUPR EME COURT), SHE SUBMITTED THAT THE HON'BLE SUPREME COURT HAS DISMIS SED THE SLP UPHOLDING THE DECISION OF THE HONBLE HIGH COURT THAT IT IS OPEN TO THE REVENUE DEPARTMENT TO MAKE ADDITION ON ACCOUNT OF ALLEGED SHARE CAPITAL U /S 68, WHERE THE ASSESSEE COMPANY HAS FAILED TO SHOW GENUINENESS OF ITS SHARE HOLDERS. A.O. HAS 23 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 CATEGORICALLY AFTER MAKING NECESSARY INQUIRES & AFT ER TAKING INTO CONSIDERATION OF INVESTIGATION REPORTS & SEARCH & SEIZURE MATERIA LS MADE THE ADDITION. 30. THE LD. DR SUMMARIZED THE FINDING OF THE ASSESS ING OFFICER AND SUBMITTED THAT : I. SUCH ENTITIES WHO HAVE INVESTED ARE PAPER-EXISTI NG ONLY WITHOUT PHYSICAL EXISTENCE II. SUCH ENTITIES WERE NEVER PRODUCED FOR EXAMINATI ON BY A.O III. SUCH ENTITIES HAVE NO WORTHY BUSINESS TO ADVAN CE SUCH INVESTMENT IV. SUCH ENTITIES HAVE NO PROPER IDENTITY OF EXISTE NCE WITHOUT ANY CREDITWORTHINESS V. SUCH ENTITIES ONLY INDULGED TO PROVIDE ACCOMMODA TION ENTRIES OF UNACCOUNTED/UNDISCLOSED MONEY ROUTED THROUGH BANKIN G CHANNELL CREATION OF PAN & FILING OF INCOME TAX RETURNS ETC. , THUS DOIN G ONLY NON-GENUINE TRANSACTION / BOGUS TRANSACTION VI. SIGNIFICANT DEFICIENCIES/DISCREPANCIES HAVE BE EN ESTABLISHED BY SAID A.O. TO PROVE IDENTITY AS NON-EXISTENT/BOGUS ONLY PAPER ENT ITIES / CREDITWORTHINESS IS ABSENT DUE TO NEGLIGIBLE/LOSS INCOME OF SUCH ENTITI ES / GENUINENESS OF TRANSACTION IS ONLY SHAM/NON-GENUINE. 31. REFERRING TO THE ORDER OF THE LD. CIT(A), SHE S UBMITTED THAT THE LD. CIT(A) HAS CORRECTLY IN FACT & IN LAW HAS DISMISSED THE AP PEAL OF ASSESSEE HOLDING THAT ASSESSEE HAS FAILED TO PROVE IDENTITY, CREDITWORTHI NESS & GENUINENESS OF TRANSACTION & BURDEN OF PROVING SUCH INGREDIENTS OF PROVISION OF SECTION 68 OF 24 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 I.T. ACT WAS NEVER DISCHARGED FROM ASSESSEE DUE TO UTTER FAILURE TO PRODUCE SUBSTANTIVE CORROBORATIVE EVIDENCE TO PROVE SUCH. HE HAS CATEGORICALLY HELD THAT ASSESSEE HAS NOT DONE A RELIABLE & ROBUST VALUATION OF SHARE PREMIUM CHARGES STRICTLY AS PER RULE 11 UA(L)CB R.W.S. 56(2)(VIIB) & LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE WHICH IS JUSTIFIED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 32. SO FAR AS ASSESSEE COMPANY'S GROUNDS OF APPEAL REGARDING 'NO INCRIMINATING MATERIAL IS AVAILABLE' SHE FILED THE WRITTEN SYNOPSIS AND SUBMITTED THAT IT HAS NO MERIT ON FACTS & LAW FOR FOLLOWING R EASONS: I. PROVISION OF SECTION 153A OF LT. ACT 1961 INSERT ED W.E.F 01.06.2003 IS AN OVERRIDING ( NOTWITHSTANDING) PROVISION IF SEARCH & SEIZURE IS CONDUCTED AFTER SAID DATE OF INSERTION & IN THIS CASE SEARCH & SEIZ URE WAS CONDUCTED AT ASSESSEEE'S BUSINESS/DIFFERENT PREMISES COVERED UNDER SECTION 1 32 OF THE I.T. ACT 1961 WHEREIN DOCUMENTS/DATA STORAGE DEVICES ETC. WERE FOUND & SE IZED & ON EXAMINATION & FURTHER INVESTIGATION ON SUCH SEIZED DETAILS/INFORMATION IT WAS FOUND REGARDING BOGUS/NON- EXISTENT ENTITIES WHO HAD ADVANCED INVESTMENT IN AS SESSEE' COMPANY PROVING THAT IDENTITY OF SUCH ENTITIES IS NOT ESTABLISHED, GENUI NENESS OF TRANSACTION HAS BEEN FOUND TO BE NON-GENUINE & CREDITWORTHINESS WAS NEVER PROV ED & SUCH ENTITIES WERE ONLY EXISTING ON PAPER WITHOUT ANY PHYSICAL PRESENC E AS NONE OF SUCH ENTITIES WAS PRODUCED BEFORE THE SAID A.O. BEING OF BOGUS EXISTE NCE AND AS SUCH THESE DETAILS/ INFORMATION SEIZED WHICH PROVE BOGUS EXISTENCE / NO N-GENUINE TRANSACTION HAVING NO CREDITWORTHINESS OF SUCH PARTIES CAN BE TREATED AS INCRIMINATING EVIDENCE AGAINST THE SAID ASSESSEE PROVING ROUTING OF UNDISC LOSED/UNACCOUNTED MONEY CIRCULATED THROUGH BOGUS SHARE CAPITAL & SHARE PREM IUM INVESTED BY BOGUS ENTITIES & SO RATIOS IN KABUL CHAWLA CASE OF DELHI HIGH COURT IN 380 ITR 573 & MEETA GUTGUTIA 25 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 REPORTED IN 395 ITR 526 ARE NOT APPLICABLE IN THIS CASE BEING DISTINGUSHABLE AS IN THIS CASE INCRIMINATING MATERIALS IN TERMS OF NAME & ADDRESSES, AMOUNTS OF ACCOMMODATION ENTRIES ETC. WHICH IN INQUIRY BY THE A.O. DURING ASSESSMENT PROCEEDINGS ULTIMATELY PROVED BOGUS / NON-GENUINE & PAPER-ENTITIES ETC. II. AS SEARCH & SEIZURE HAS BEEN CONDUCTED IN THIS CASE, QUESTION OF ASSESSMENT UNDER OTHER SECTIONS LIKE 147 / 148 DOES NOT ARISE AT ALL BEING PROHIBITED UNDER SECTION 153A BEING OVERRIDING SECTION UNDER I.T. ACT ON THE BASIS OF MATERIALS FOUND & SEIZED U/S 132 OF I.T. ACT 1961. III. BARE & PLAIN READING OF PROVISIONS OF SECTION 153A OF I.T. ACT 1961 DOES NOT DIRECTLY STATE ANY WORD LIKE 'INCRIMINATING MATERIA L' IN SAID SECTION, HOWEVER WITHOUT PREJUDICE, SPIRIT OF SAID PROVISION MAY INDICATE MA TERIALS FOUND & SEIZED DURING SEARCH UNDER SECTION 132 WHICH WOULD BE UTILIZED AS BASIC INFORMATION FOR SUCH ASSESSMENT U/S. 153A & IF ON FURTHER INQUIRY/INVESTIGATION BY A.O. DURING ASSESSMENT PROCEEDINGS ON SUCH SEIZED MATERIALS, UNACCOUNTED/U NDISCLOSED INCOME HAS BEEN FOUND & ESTABLISHED FOR SAID ASSESSMENT. THE A.O. I N THE SAID CASE RELIED ON SEIZED DOCUMENTS/INFORMATION ON PRIMA-FACIE BOGUS SHARE CA PITAL & SHARE PREMIUM (VALUATION OF WHICH NOT AS PER PROVISION OF INCOME TAX ACT 1961 AS STATED BY LD CIT(A) IN APPEAL ORDER) AND AFTER CONDUCTING FURTHE R INQUIRY/INVESTIGATION ON SAID SEIZED MATERIALS/INFORMATION THE A.O. FINALLY ESTAB LISHED BOGUS/ ACCOMMODATION ENTRIES IN TERMS OF SHARE CAPITAL & SHARE PREMIUM A S ASSESSEE MISERABLY FAILED TO PROVE IDENTITY OF SUCH ENTITIES , GENUINENESS OF TR ANSACTION FOUND TO BE NON- GENUINE & CREDITWORTHINESS WHICH WAS NEVER PROVED A S SUCH ENTITIES WERE ONLY EXISTING ON PAPER WITHOUT ANY PHYSICAL PRESENCE AS NONE OF SUCH ENTITIES WERE PRODUCED BEFORE SAID A.O. FOR EXAMINATION BEING BOG US/PAPER IN EXISTENCE. IV. IN LEGAL PARLANCE, INCRIMINATING MATERIAL MEAN S MATERIALS WHICH ARE USED FOR WRONGFUL / ILLEGAL ACT IN VIOLATION OF ANY LAW IN E XISTENCE. IN THIS CASE THE ASSESSEE COMPANY INDULGED IN PRACTICE OF AVOIDING GENUINE TA X BY ROUTING UNDISCLOSED/UNACCOUNTED TAXABLE INCOME THROUGH BOGU S SHARE CAPITAL & SHARE PREMIUM INVESTMENT BY NON- EXISTENT ENTITIES HAVING NO CREDITWORTHINESS BY NON- 26 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 GENUINE TRANSACTION THUS FALLING UNDER SECTION 68 O F INCOME TAX ACT 1961. THE BASIC INFORMATION/MATERIALS OBTAINED BY SEIZURE WHICH WER E INQUIRED/INVESTIGATED FURTHER TO ESTABLISH BY A.O. THAT IDENTITY OF SUCH ENTITIES IS NOT ESTABLISHED, GENUINENESS OF TRANSACTION HAS BEEN FOUND TO BE NON-GENUINE & CRED ITWORTHINESS WAS NEVER PROVED & SUCH ENTITIES WERE ONLY EXISTING WITHOUT A NY PHYSICAL PRESENCE AS NONE OF SUCH ENTITIES WAS PRODUCED BEFORE SAID A.O. BEING B OGUS EXISTENCE. V. HAD THERE BEEN NO SEARCH & SEIZURE OF SUCH PAPER - DOCUMENTS FROM SAID ASSESSEE, THEN A.O. COULD NOT HAVE OBTAINED BASIS I NFORMATION/DETAILS THAT ULTIMATELY, ON FURTHER INQUIRY/INVESTIGATION BY A.O., DURING AS SESSMENT PROCEEDINGS, RESULTED TO ESTABLISH BOGUS SHARE CAPITAL/SHARE PREMIUM MONEY A S ACCOMMODATION ENTRIES ONLY FOR ROUTING TAXABLE UNDISCLOSED/UNACCOUNTED INCOME IN A WRONGFUL MANNER. VI. IT IS THE WISDOM OF LEGISLATION THAT NO WORD/C ONCEPT 'INCRIMINATING MATERIAL' IS DIRECTLY INCORPORATED IN PROVISION OF SECTION 153A OF I.T. ACT 1961, ALTHOUGH SPIRIT OF SAID PROVISION OF SECTION 153A INDICATE THAT SEARCH & SEIZURE ACTION U/S 132 HAS BEEN DONE IN THE CASE OF ASSESSEE & PANCHNAMA HAS BEEN D RAWN FOR SAID ASSESSEE & THAT CERTAIN MATERIALS/INFORMATION HAVE BEEN FOUND/SEIZE D DUE TO SUCH SEARCH & THAT SUCH FOUND/SEIZED MATERIALS/INFORMATION HAVE BEEN UTILIZ ED FOR PURPOSE OF ASSESSMENT U/S 153A WHEREIN A.O. HAS FOUND OR ESTABLISHED UNDISCLO SED/UNACCOUNTED TAXABLE INCOME ON FURTHER INQUIRY/INVESTIGATION ON SUCH FOUND/SEIZ ED MATERIALS/INFORMATION & THUS SUCH FOUND & SEIZED MATERIALS/INFORMATION IS TERMED AS 'INCRIMINATING MATERIALS/INFORMATION' AGAINST ASSESSEE. MOREOVER A .O. IS PROHIBITED TO TAKE ANY ACTION U/S 147/148 OF LT. ACT 1961 IN CASE SEARCH & SEIZURE U/S 132 HAS BEEN DONE IN THE CASE OF ASSESSEE & CERTAIN MATERIALS/INFORMATIO N HAVE BEEN FOUND/SEIZED IN SAID ASSESSEE'S CASE & ASSESSMENT U/S 153A IS MANDATED. MOREOVER, AS ON DATE SAID PROVISION U/S 153A IS VALID LAW UNDER INCOME TAX AC T 1961. VII. ANY MATERIAL/INFORMATION FOUND / SEIZED U/S 1 32 OF LT. ACT 1961 IS 'INCRIMINATING MATERIAL' IF ON FURTHER INQUIRY/INVE STIGATION BY A.O., CERTAIN UNDISCLOSED/UNEXPLAINED TAXABLE INCOME IS FOUND / E STABLISHED ULTIMATELY IN ASSESSMENT U/S 153A OF LT. ACT 1961. 27 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 33. SHE ACCORDINGLY SUBMITTED THAT CONSIDERING ALL FACTS AND THE CITED CASE LAWS, THE APPEAL OF ASSESSEE DESERVES TO BE DISMISS ED SINCE THE GROUNDS OF APPEAL ARE DEVOID OF ANY MERIT. 34. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER B OOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER ON THE BASIS OF VARIOUS ENQUIRIES CONDUCTED AND STATEMENT RECORDED OF VARIOUS PERSONS U/S 132(4) AN D 131 MADE ADDITION OF RS.11,85,00,000/- IN THE HANDS OF THE ASSESSEE U/S 68 OF THE I.T. ACT ON THE GROUND THAT THE ASSESSEE FAILED TO SUBSTANTIATE WIT H COGENT EVIDENCE TO HIS SATISFACTION REGARDING THE IDENTITY AND CREDITWORTH INESS OF THE INVESTOR AND THE GENUINENESS OF THE TRANSACTION. ACCORDING TO THE A SSESSING OFFICER, SINCE THE ASSESSEE COULD NOT PRODUCE THE INVESTOR COMPANY AND SINCE ITS RETURNED INCOME IS MEAGER CONSIDERING THE HUGE INVESTMENT MADE BY I T IN THE SHARES OF THE ASSESSEE COMPANY WITH HUGE PREMIUM, THEREFORE, THE PROVISIONS OF SECTION 68 ARE CLEARLY ATTRACTED. WE FIND, IN APPEAL, LD. CIT (A) UPHELD THE ACTION OF THE ASSESSING OFFICER ON MERIT, THE REASONS FOR WHICH H AVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPH. HE HAS ALSO DISMISSED THE GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF ASSUMPTION OF JURISDICTION U/S 153A IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE 28 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 REASONS FOR WHICH HAVE ALREADY BEEN REPRODUCED IN T HE PRECEDING PARAGRAPHS. LD. CIT(A) ALTERNATIVELY ALSO HELD THAT THE ADDITIO N IS SUSTAINABLE ON ACCOUNT OF MISCHIEF OF PROVISIONS OF SECTION 56(2)(VIIB) READ WITH RULE 11UA(1)CB, THE REASONS FOR WHICH HAVE ALREADY BEEN REPRODUCED IN T HE PRECEDING PARAGRAPH. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE THAT THE ORIGINAL RETURN WAS FILED ON 12.09.2013 DECLARING INCOME AT RS.7,42,51, 693/- WHICH WAS ASSESSED U/S 143(1) ON 18.04.2014. THE NOTICE U/S 143(2) WA S NOT ISSUED BEFORE THE PRESCRIBED TIME LIMIT AND, THEREFORE, THE ASSESSMEN T ON THE DATE OF SEARCH WAS NOT PENDING. SINCE THE ADDITION MADE BY THE ASSESS ING OFFICER IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND ADDITION HAS BEEN MADE ON THE BASIS OF POST-SEARCH ENQUIRY AND O N THE BASIS OF STATEMENTS RECORDED U/S 132(4) OF THE I.T. ACT, THEREFORE, THE SAME CANNOT CONSTITUTE INCRIMINATING MATERIAL SO AS TO ENABLE THE ASSESSIN G OFFICER TO ASSUME JURISDICTION U/S 153A OF THE I.T. ACT. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE INVESTMENT OF RS.4,34,00, 000/- MADE BY THE ASSESSEE COMPANY IN M/S SUPERIOR INDUSTRIAL ENTERPRISES LTD. HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER AND THE SAME HAS BEEN ACCEPTE D IN THE ORDER PASSED U/S 143(3) FOR THE IMPUGNED ASSESSMENT YEAR. FURTHER, THE ASSESSMENT OF M/S SUPERIOR INDUSTRIAL ENTERPRISES LTD. WAS COMPLETED U/S 143(3) ON 15.03.2016 BY THE ITO, WARD-24(4), NEW DELHI WHEREIN THE ASSESSIN G OFFICER AFTER VERIFYING 29 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 THE DETAILS FILED BY THE ASSESSEE HAS ACCEPTED THE INVESTMENT MADE BY THE SAID COMPANY TOWARDS PURCHASE OF SHARES IN THE ASSESSEE COMPANY. 35. BEFORE DECIDING THE ISSUE ON MERIT, WE WOULD FI RST LIKE TO DECIDE THE LEGAL GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALID ITY OF THE ASSUMPTION OF JURISDICTION U/S 153A IN ABSENCE OF ANY INCRIMINATI NG MATERIAL FOUND DURING THE COURSE OF SEARCH WHEN THE ASSESSMENT WAS NOT PENDIN G AS PER GROUND OF APPEAL NO.1 TO 1.2. IT IS AN ADMITTED FACT THAT THE ORIGI NAL RETURN OF INCOME WAS FILED ON 12.09.2013 WHICH WAS ACCEPTED U/S 143(1) VIDE INTIM ATION DATED 18.04.2014. THE PERIOD FOR ISSUE OF NOTICE U/S 143(2) EXPIRES O N 30.09.2014 I.E. THE NOTICE U/S 143(2) COULD NOT HAVE BEEN SERVED ON THE ASSESS EE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. THEREFORE, IN ABSENCE OF ISSUE OF ANY NOTICE U/S 14 3(2) AND SINCE NO OTHER PROCEEDINGS ARE PENDING, THEREFORE, IT HAD ATTAINED THE FINALITY MUCH PRIOR TO THE DATE OF SEARCH ON 28.03.2015. UNDER THESE CIRCUMST ANCES, THE FINDING OF THE LD. CIT(A) THAT THE ASSESSMENT PROCEEDINGS WERE PENDING AT THE TIME OF SEARCH AND WAS ABATED IS FACTUALLY INCORRECT. 36. WE FIND THE LD. CIT(A) AT PARA 5 PAGE 11 OF HIS ORDER HAS OBSERVED AS UNDER :- THE BASIS OF ADDITION AS TAKEN BY THE A.O. WAS STA TEMENT RECORDED OF SHRI SANJEEV AGARWAL DURING THE COURSE OF SEARCH WHEREIN HE HAS SURRENDERED AN AMOUNT OF RS.88.52 CRORE OUT OF WHICH A SUM OF RS. 30.78 CROR ES WERE REFERRED TO FOR THE ASSESSMENT YEAR 2008-09 AND REST OF AMOUNT WAS NON DESCRIPTIVE AND VAGUE AND WAS 30 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 SURRENDERED SUBJECT TO CROSS CHECKING OF THE FACTS AND TO EXPLAIN AFTER ACCESS TO THE BOOKS OF ACCOUNTS. THE SAID STATEMENT WAS RETRACTED BY SAID SHRI SANJEEV AGARWAL ON 18.05.2015 WITHIN TWO MONTHS FROM THE DATE OF ORIGI NAL STATEMENT. THOUGH THE APPELLANT HAS STATED TO HAVE RECORDED ALL THE TRANS ACTIONS UNDER APPEAL IN ITS BOOKS OF ACCOUNT AND OFFERED ALL THE NECESSARY AND RELEVANT PROOF THEREOF AS SUCH. SINCE THE ASSESSMENT PROCEEDINGS WERE PENDING AT THE TIME OF SEARCH AND WAS ABATED, THE LEGAL GROUND OBJECTED AS SUCH BY THE APPELLANT WAS NOT VA LID AS SUCH THE SAME IS BOUND TO BE REJECTED. 37. WE FURTHER FIND FROM THE ORDER OF THE LD. CIT(A ) THAT THERE WAS NO SURRENDER OF INCOME FOR THE IMPUGNED ASSESSMENT YEA R AND THE SURRENDER WAS ONLY FOR THE ASSESSMENT YEAR 2008-09 WHICH TOO WAS RETRACTED WITHIN TWO MONTHS. HE HAS ALSO OBSERVED THAT THE STATEMENT WA S NON DESCRIPTIVE AND VAGUE AND SUBJECT TO CROSS CHECKING OF FACT TO BE EXPLAIN ED AFTER ACCESS TO BOOKS OF ACCOUNTS. WE, THEREFORE, FIND MERIT IN THE SUBMISS IONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ADDITION MADE BY THE ASSESSING OF FICER U/S 68 OF THE I.T. ACT IS NOT BASED ON ANY INCRIMINATING MATERIAL AND IS BASE D ON STATEMENTS RECORDED DURING SEARCH U/S 132(4) AND POST-SEARCH ENQUIRIES. 38. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BEST INFRASTRUCTURE (INDIA) (P) LTD. REPORTED IN 397 ITR 82 HAS HELD TH AT STATEMENTS RECORDED U/S 132(4) OF THE I.T. ACT DO NOT BY THEMSELVES CONSTIT UTE INCRIMINATING MATERIAL. THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT READS AS UNDER :- 38. FIFTHLY, STATEMENTS RECORDED UNDER SECTION 132 (4) OF THE ACT OF THE ACT DO NOT BY THEMSELVES CONSTITUTE INCRIMINATING MATERIAL AS HAS BEEN EXPLAINED BY THIS COURT IN COMMISSIONER OF INCOME TAX V. HARJEEV AGGARWAL ( SUPRA). LASTLY, AS ALREADY POINTED OUT HEREINBEFORE, THE FACTS IN THE PRESENT CASE ARE DIFFERENT FROM THE FACTS 31 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 IN SMT. DAYAWANTI GUPTA V. CIT (SUPRA) WHERE THE AD MISSION BY THE ASSESSEES THEMSELVES ON CRITICAL ASPECTS, OF FAILURE TO MAINT AIN ACCOUNTS AND ADMISSION THAT THE SEIZED DOCUMENTS REFLECTED TRANSACTIONS OF UNACCOUN TED SALES AND PURCHASES, IS NON- EXISTENT IN THE PRESENT CASE. IN THE SAID CASE, THE RE WAS A FACTUAL FINDING TO THE EFFECT THAT THE ASSESSEES WERE HABITUAL OFFENDERS, INDULGI NG IN CLANDESTINE OPERATIONS WHEREAS THERE IS NOTHING IN THE PRESENT CASE, WHATS OEVER, TO SUGGEST THAT ANY STATEMENT MADE BY MR. ANU AGGARWAL OR MR. HARJEET S INGH CONTAINED ANY SUCH ADMISSION. 39. FOR ALL THE AFOREMENTIONED REASONS, THE COURT I S OF THE VIEW THAT THE ITAT WAS FULLY JUSTIFIED IN CONCLUDING THAT THE ASSUMPTION O F JURISDICTION UNDER SECTION 153A OF THE ACT QUA THE ASSESSEES HEREIN WAS NOT JUSTIFIED IN LAW. 39. WE FIND THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. HARJEEV AGGARWAL REPORTED IN 290 CTR 263 HAS OBSERVED AS UN DER :- 23. IT IS ALSO NECESSARY TO MENTION THAT THE AFORE SAID INTERPRETATION OF SECTION 132(4) OF THE ACT MUST BE READ WITH THE EXPLANATION TO SECTION 132(4) OF THE ACT WHICH EXPRESSLY PROVIDES THAT THE SCOPE OF EXAMINATION UN DER SECTION 132(4) OF THE ACT IS NOT LIMITED ONLY TO THE BOOKS OF ACCOUNTS OR OTHER ASSETS OR MATERIAL FOUND DURING THE SEARCH. HOWEVER, IN THE CONTEXT OF SECTION 158BB(1) OF THE ACT WHICH EXPRESSLY RESTRICTS THE COMPUTATION OF UNDISCLOSED INCOME TO THE EVIDENCE FOUND DURING SEARCH, THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT CAN FORM A BASIS FOR A BLOCK ASSESSMENT ONLY IF SUCH STATEMENT RELATES TO ANY IN CRIMINATING EVIDENCE OF UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANNOT BE THE SO LE BASIS FOR MAKING A BLOCK ASSESSMENT. 40. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CA SE OF BRAHMAPUTRA FINLEASE (P) LTD. VIDE ITA NO.3332/DEL/2017 ORDER D ATED 29.12.2017, FOLLOWING THE ABOVE DECISION OF THE HONBLE DELHI HIGH COURT, HAS OBSERVED AS UNDER :- 4.19 WE FIND THAT IN THE CASE OF BEST INFRASTRUCTU RE (INDIA) PRIVATE LIMITED (SUPRA), DESPITE THE ADMISSION OF ACCOMMODATION ENTRY IN STA TEMENTS UNDER SECTION 132(4) OF THE ACT, THE COURT HELD THAT THE STATEMENT DO NOT C ONSTITUTE AS INCRIMINATING MATERIAL. IN THE INSTANT CASE, NEITHER IS THERE ANY STATEMENT OF ANY ACCOMMODATION ENTRY OPERATOR CLAIMING THAT ANY ENTRY WAS NOT PROVIDED N OR ANY DIRECTOR HAS ADMITTED THAT ASSESSEE OBTAINED ACCOMMODATION ENTRY. THUS, THE CA SE OF THE ASSESSEE IS ON BETTER FOOTING THEN THE CASE OF BEST INFRASTRUCTURE (I) P. LTD (SUPRA). IN SUCH FACTS AND 32 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF BEST INFRASTRUCTURE (INDIA) PRIVATE LIM ITED (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 D URING THE COURSE OF SEARCH. IN THE RESULT, WE HOLD THAT ADDITION OF SHARE CAPITAL IN T HE YEAR UNDER CONSIDERATION HAS BEEN MADE WITHOUT RELYING ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 41. IN THE LIGHT OF THE ABOVE DECISIONS, STATEMENTS RECORDED U/S 132(4) OF THE I.T. ACT, 1961 CANNOT CONSTITUTE AS INCRIMINATING M ATERIAL. 42. AS MENTIONED EARLIER, THE ADDITION OF RS.11,85, 00,000/- WAS NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL BUT IS BASE D ON STATEMENTS RECORDED DURING THE SEARCH U/S 132(4) AND POST-SEARCH ENQUIR IES. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT COMPLETED ASSESSMENTS CANNOT BE DISTURBED U/S 153A IN ABSENCE OF ANY INCRIMINATING MATERIAL. 43. THE HONBLE DELHI HIGH COURT IN THE CASE OF KAB UL CHAWLA REPORTED IN 380 ITR 573 HAS HELD THAT THE COMPLETED ASSESSMENT CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT U /S 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL FOUND ON OR DURING T HE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALR EADY DISCLOSED OR NOT KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. FOLLOWING TH E ABOVE DECISION, THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ME ETA GUTGUTIA REPORTED IN 395 ITR 526 HAS TAKEN A SIMILAR VIEW AND HAS HELD THAT ONCE THE ASSESSMENT HAS 33 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 ATTAINED FINALITY FOR A PARTICULAR YEAR I.E. IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN PROCEEDINGS U/S 153A OF THE I. T. ACT. THIS OF COURSE WOULD NOT APPLY IF INCRIMINATING MATERIALS ARE GATHERED I N THE COURSE OF SEARCH OR DURING THE PROCEEDINGS U/S 153A WHICH ARE CONTRARY TO AND/OR NOR DISCLOSED DURING THE REGULAR ASSESSMENT PROCEEDINGS. 44. THE HONBLE DELHI HIGH COURT AGAIN IN THE CASE OF PR.CIT VS. LATA JAIN REPORTED IN 384 ITR 543 HAS HELD THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH, ASSUMPTION OF JURISDIC TION U/S 153A WAS NOT IN ACCORDANCE WITH LAW. THE VARIOUS OTHER DECISIONS R ELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORTS HIS CASE. THE HONB LE SUPREME COURT IN THE CASE OF CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY REPO RTED IN 397 ITR 344 HAS UPHELD THE DECISION OF HONBLE BOMBAY HIGH COURT WH EREIN THE HON'BLE HIGH COURT HAD UPHELD THE DECISION OF THE TRIBUNAL HOLDI NG THAT THE INCRIMINATING MATERIAL WHICH WAS SEIZED HAS TO PERTAIN TO THE ASS ESSMENT YEARS IN QUESTION AND IT IS AN UNDISPUTED FACT THAT THE DOCUMENTS WHICH W ERE SEIZED DID NOT ESTABLISH ANY CO-RELATION, DOCUMENT-WISE, WITH THESE FOUR ASS ESSMENT YEARS. 45. SINCE IN THE INSTANT CASE ADDITION OF RS.11,85, 00,000/- WAS MADE ON THE BASIS OF STATEMENTS RECORDED U/S 132(4) AND POST-SE ARCH ENQUIRY AND NO INCRIMINATING MATERIAL WAS FOUND/SEIZED DURING THE COURSE OF SEARCH, THEREFORE, FOLLOWING THE DECISIONS CITED (SUPRA), WE HOLD THAT NO ADDITION COULD HAVE BEEN 34 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 MADE U/S 153A SINCE THE ASSESSMENT WAS NOT ABATED I N THE INSTANT CASE. IN VIEW OF THE ABOVE, WE HOLD THAT THE LD. CIT(A) WAS NOT J USTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ASSUMING JURISDI CTION U/S 153A OF THE I.T. ACT. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSI NG OFFICER AND UPHELD BY THE LD. CIT(A) IN THE 153A ASSESSMENT PROCEEDINGS B EING VOID AB-INITIO ARE DELETED. 46. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUN D, ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE ON MERIT ARE NOT ADJUD ICATED BEING ACADEMIC IN NATURE. 47. THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. ITA NO.7567/DEL/2017 (HINDUSTAN AQUA LTD.) : 48. GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL A RE AS UNDER :- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-26, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE INI TIATION 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 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. 13,10,00, 000/- IS WITHOUT JURISDICTION SINCE IT IS NOT BASED ON ANY MATERIAL FOUND AS A RE SULT OF SEARCH ON THE APPELLANT, AS HAVE BEEN ALSO HELD BY THE JUDGMENTS OF HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 380 ITR 573 AND PR. CI T VS. MEETA GUTGUTIA REPORTED IN 395 ITR 526. 1.2 THAT FINDING OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) THAT IT IS A CASE OF ABATED ASSESSMENT IS ALSO FACTUALLY INCORRE CT AND, THUS IN ABSENCE OF JURISDICTION THE ACTION IS ENTIRELY VITIATED. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING AN ADDITION MADE BY LEAR NED DEPUTY COMMISSIONER OF INCOME OF RS. 13,10,00,000/- (RS. 3,27,50,000/- + R S. 9,82,50,000/-) ON ACCOUNT OF 35 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 SUM RECEIVED FROM M/S SUPERIOR INDUSTRIAL ENTERPRIS ES LTD. AS SHARE CAPITAL AND SHARE PREMIUM AND ERRONEOUSLY HELD AS UNEXPLAINED C ASH 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 A SSESSMENT PROCEEDINGS. 2.1 THAT WHILE SUSTAINING THE AFORESAID ADDITION TH E 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 REPRESENTS UNEXPLAINED CASH CREDIT AN D, 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 (AP PEALS) HAS FAILED TO APPRECIATE THAT ONCE THE AFORESAID SHARE HOLDER HAD DULY CONFIRMED THE INVESTMENT MADE, HE COULD NOT HAVE UPHELD THE ADDITION ON ARBI TRARY GROUNDS AND THAT TOO WITHOUT BRINGING ANY EVIDENCE OR EVEN ALLEGING THAT AFORESAID CREDITS BY WAY OF SHARE CAPITAL EMANATED FROM THE SOURCE OF FUNDS PROVIDED BY THE APPELLANT COMPANY. 2.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT THE SHAREHOLDER WAS A CORPORATE ENT ITY, DULY ASSESSED TO TAX AND, HAD SUBSCRIBED TO SHARE-CAPITAL THROUGH BANKING CHANNEL S AND SUPPORTED BY NECESSARY DOCUMENTS, 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 (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT APPELLANT HAD PLACED ON RECORD VOLU MINOUS EVIDENCES TO DISCHARGE THE BURDEN WITH REGARD TO BOTH GENUINENESS OF THE T RANSACTIONS AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND THEREFORE, IN ABSENCE O F ANY WHISPER TO REBUT THE SAID EVIDENCE, THE CREDITS COULD NOT ARBITRARILY BE REGA RDED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 2.5 THAT RELIANCE PLACED ON SECTION 56(2)(VII)(B) O F THE ACT AND, VARIOUS JUDGMENTS WITHOUT OPPORTUNITY TO BRING TO TAX A CREDIT DULY R ECORDED AND, EXPLAINED IS BASED ON COMPLETE MISCONCEPTION AND, THUS UNSUSTAINABLE. 2.6 THAT VARIOUS ADVERSE FINDINGS BY THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) TO SUSTAIN THE ADDITION IS FACTUALLY INCO RRECT, CONTRARY TO RECORD AND ARE NOT BASED ON PROPER APPRECIATION OF LAW AND THEREFORE, UNTENABLE. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF INTEREST UNDE R SECTION 234A, U/S 234B, U/S 234C AND U/S 234D OF THE ACT WHICH ARE NOT LEVIABLE ON T HE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT COMPANY. IT IS THEREFORE, PRAYED THAT, IT BE HELD THAT ASSE SSMENT MADE BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) BE QUASHED AND, FURTHER ADDITION SO UPHEL D BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALONG WITH INTEREST LEVIED BE DELETED AND APPEAL OF THE APPELLANT COMPANY BE ALLOWED. 36 ITA NO.7374/DEL/2017 ITA NO.7567/DEL/2017 49. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS RAISED BY THE ASSESSEE IN THE INSTANT CASE ARE IDENTICAL TO GROUNDS RAISED IN ITA NO.7374/DEL/2017. WE HAVE ALREADY DECIDED THE ISSUE AND THE APPEAL FILED BY THE ASSESSEE HAS BEEN ALLOWED. FOLLOWING SIMILAR REASONING, THE APPEAL F ILED BY THE ASSESSEE IS ALLOWED. 50. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE SPECTIVE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07 TH JUNE, 2018. SD/- SD/- (BEENA A. PILLAI) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07-06-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI