M/S.GEETANJALI SPACE PRIVATE LIMITED, MUMBAI V. DY. CIT CC-1(1), MUMBAI

ITA 782/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1735 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 12-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Principle of natural justice; Maximum Marginal Rate; Question of law; Valuation report; Accommodation entries; Assessment record; Block assessment; Capital receipt; Onus to prove; Documents seized; Reassessment proceedings; Set aside
• Section: 143(3); 142(1); 80HHC; 133A; 153A; 234B; 133(6); 201; 274; 143(2); 32; 131; 132; 10; 139; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.782/M/2019 ASSESSMENT YEAR: 2010-11 M/S. GEETANJALI SPACE PVT. LTD., B-47, SHAKTI DHARA SOCIETY, COLONY ROAD, BAPU NAGAR, AHMEDABAD, GUJARAT 382 350 PAN: AADCG2733L VS. DY. CIT CC-1(1), ROOM NO.903, 9 TH FLOOR, PRATISHTHA BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) ITA NO.1969/M/2019 ASSESSMENT YEAR: 2010-11 DY. CIT, CENTRAL CIRCLE -1(1), ROOM NO.903, 9 TH FLOOR, PRATISHTHA BHAVAN, OLD C.G.O. BLDG. (ANNEXE) M.K. ROAD, MUMBAI - 400020 VS. M/S. GEETANJALI SPACE PVT. LTD., B-47, SHAKTI DHARA SOCIETY, COLONY ROAD, BAPU NAGAR, AHMEDABAD, GUJARAT 382 350 PAN: AADCG2733L (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DILIP LAKHANI, A.R. SHRI JASH DAVDA, A.R. REVENUE BY : SHRI RAHUL RAMAN, D.R. DATE OF HEARING : 30.04.2019 DATE OF PRONOUNCEMENT : 31.05.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE HAVE BEEN PREFERRED AGAINST TH E ORDER ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 2 DATED 28.01.2019 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELL ANT PRAYS THAT THE LEARNED COMMR. OF INCOME TAX (APPEALS) HAS ERRED IN PARTLY ALLOWING T HE GROUND RAISED BY THE APPELLANT CHALLENGING THE ADDITIONS MADE AMOUNTING TO RS. 30,23,00,000/- IN THE ORDER PASSED U/S 143(3) R.W.S. 153A. THE APPELLANT PRAYS THAT THE ORDER PASSED BY LD. CO MMR. OF INCOME TAX (APPEALS) CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER AND PARTLY C ONFIRMING THE ADDITIONS MADE BY CONCLUDING THAT INCRIMINATING MATERIAL WAS FOUND DURING THE CO URSE OF SEARCH IN RESPECT OF GSD TRADING & FINANCIAL SERVICES PVT. LTD. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APP ELLANT PRAYS THAT, DURING THE COURSE OF SEARCH NO INCREMENTING MATERIAL IS FOUND OR SEIZED IN CONN ECTION WITH THE INVESTMENT IN SHARE CAPITAL OF THE COMPANY BY GSD TRADING & FINANCIAL SERVICES PVT . LTD. THE CONCLUSION OF LEARNED COMMR. OF INCOME TAX (APPEALS) THAT IN RESPECT OF GSD TRAD ING & FINANCIAL SERVICES PVT. LTD. INCRIMINATING MATERIAL WAS FOUND IS ERRONEOUS AND C ONTRARY TO THE FACTS OF THE CASE. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APP ELLANT PRAYS THAT IN THE ORDER PASSED BY LD. COMMR. OF INCOME TAX (APPEALS) THAT THERE IS A REFE RENCE TO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN RESPECT OF THE TRANSACTION OF INVESTMENT BY GSD TRADING & FINANCIAL SERVICES PVT. LTD., IS BAD IN LAW. IN VIEW OF THIS THE APPELLANT PRAYS THAT THE ORDER PASSED BY LD. COMMR. OF INCOME TAX (APPEALS) BY INVOKING THE PROV ISIONS OF SECTION 153A AND CONFIRMING THE ADDITIONS MADE OF RS. 7,91,00,0007- IS NOT JUSTIFIE D AND BE DELETED. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELL ANT PRAYS THAT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS THE COMPLETE INFORMATION ABO UT THE SHARE CAPITAL RECEIVED FROM GSD TRADING & FINANCIAL PVT. LTD. AMOUNTING TO RS. 7,91 ,00,0007- WAS SUBMITTED AND THE LD. ASSESSING OFFICER HAS PASSED THE ORDER U/S 143(3) A ND HAS ACCEPTED THE CLAIM OF THE APPELLANT AFTER DUE VERIFICATION. NO NEW MATERIAL IS FOUND DU RING THE COURSE OF SEARCH AS REGARDS THE SHARE CAPITAL ISSUED BY THE APPELLANT. IN VIEW OF THIS TH E APPELLANT PRAYS THAT THAT THE ORDER PASSED BY LD. COMMR. OF INCOME TAX (APPEALS) BY INVOKING THE PROVISIONS OF SECTION 153A AND MAKING ADDITION OF RS.7,91,00,0007- MAY BE CANCELLED. 5. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APP ELLANT PRAYS THAT THE INVOCATION OF THE PROVISIONS OF SECTION 153A AND MAKING ADDITION WHIL E PASSING THE ORDER U7S. 143(3) RWS 153A AMOUNTING TO RS. 7,91,00,0007- IN RESPECT OF INVEST MENTS MADE BY GSD TRADING & FINANCIAL PVT. LTD. IN THE SHARE CAPITAL OF THE COMPANY BE DELETED . WITHOUT PREJUDICE TO GROUNDS 1 TO 5: 6. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. COMMR. OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.7,91,00,000/- U/ S 68 OF INCOME TAX ACT, 1961 IN RESPECT OF THE INVESTMENT BY GSD TRADING & FINANCIAL PVT. LTD. IN THE SHARE CAPITAL OF THE APPDANT COMPANY. THE APPELLANT PRAYS THAT THE LD. COMMR. OF INCOME T AX (APPEALS) HAS ERRONEOUSLY CONCLUDED THAT THE PROVISIONS OF SECTION 68 ARE APPLICABLE TO THE AMOUNT RECEIVED BY THE APPELLANT AS SHARE CAPITAL. THE APPELLANT PRAYS THAT THE ADDITION MADE BY THE LD. COMMR. OF INCOME TAX (APPEALS) MAY BE DELETED. 7. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE AP PELLANT PRAYS THAT THE LD. COMMR. OF INCOME TAX (APPEALS) HAS RELIED UPON THE STATEMENT OF MR. RAJESH DAFTARY WITHOUT CORRECTLY INTERPRETING THE ANSWERS GIVEN BY HIM AND ALSO WITHOUT GIVING OP PORTUNITY OF CROSS EXAMINATION. THE ORDER PASSED BY THE LD. COMMR. OF INCOME TAX (APPEALS) IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND THE APPELLANT PRAYS THAT THE ADDITION MADE BY THE L D. COMMR. OF INCOME TAX (APPEALS) AMOUNTING TO RS.7,91,00,000/- MAY BE DELETED. 8. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND O N ERRONEOUS ASSUMPTIONS THE LD. COMMR. OF INCOME TAX (APPEALS) HAS ERRED IN CONCLUDING THAT T HE APPELLANT HAS FAILED TO PROVE THE CREDIT WORTHINESS OF THE INVESTORS AS WELL AS GENUINENESS OF THE TRANSACTIONS. THE LD. COMMR. OF ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 3 INCOME TAX (APPEALS) HAS IGNORED THE EVIDENCES, PRO OF AND THE MATERIAL PRODUCED BEFORE HIM. THE APPELLANT PRAYS THAT ADDITION MADE BY THE LD. C OMMR. OF INCOME TAX (APPEALS), AMOUNTING TO RS.7,91,00,000/-, BASED ON SUCH ERRONEOUS CONCLU SION MAY BE DELETED. 9. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE A PPELLANT PRAYS THAT THE APPELLANT WITH THE EVIDENCES AND EXPLANATION HAS ESTABLISHED THE IDENT ITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS AND THE CLAIM OF THE APPELLANT MAY BE ACCEPTED AND ADDITION MADE BY THE LD. COMMR. OF INCOME TAX (APPEALS) BY INVOKING THE PROV ISIONS OF SECTION 68, AMOUNTING TO RS.7,91,00,000/- MAY BE DELETED. 10. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE AP PELLANT PRAYS THAT THE AMOUNT RECEIVED TOWARDS SHARE CAPITAL IS IN THE NATURE OF CAPITAL R ECEIPT AND THE PROVISIONS OF SECTION 68 CANNOT BE INVOKED WHILE COMPUTING THE TOTAL INCOME OF THE APP ELLANT. THE APPELLANT PRAYS THAT THE ADDITION MADE BY THE LD. COMMR. OF INCOME TAX (APPEALS) BY I NVOKING THE PROVISIONS OF SECTION 68 AMOUNTING TO RS.7,91,00,000/- MAY BE DELETED. 11. THE LD. COMMR. OF INCOME TAX (APPEALS) HAS ERRE D IN CONFIRMING THE LEVY OF INTEREST U/S 234B. THE APPELLANT DENIES THE LIABILITY OF PAYMENT OF INTEREST U/S 234B. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMIT THAT LEVY OF INTEREST U/S 234B IS NOT JUSTIFIED AND BE DELETED. 12. THE APPELLANT CRAVES LEAVE TO ADD / WITHDRAW OR AMEND ANY GROUND(S) OF APPEAL AT THE TIME OF HEARING. 3. WHEREAS THE GROUND RAISED BY THE REVENUE IS AS UNDER: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT(A) WAS RIGHT IN GIVING RELIEF TO THE EXTENT OF RS.22.32 CRORES BEING ADDIT IONS MADE U/S. 68 OF I.T. ACT, 1961, THOUGH THE CREDITWORTHINESS AND GENUINENESS OF THE PARTIES FROM WHOM SHARE APPLICATION MONEY WAS RECEIVED WERE NOT PROVED. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PV T. LTD. COMPANY AND IS CARRYING ON THE BUSINESS OF REAL EST ATE DEVELOPMENT. THE ASSESSEE FILED ORIGINAL RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT ON 15.10.2010. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY N OTICE UNDER SECTION 143(2) OF THE ACT DATED 26.08.2011 WAS ISS UED AND DULY SERVED UPON THE ASSESSEE AND THEREAFTER THE ASSESS MENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER D ATED 18.03.2013. DURING THE FINANCIAL YEAR, THE ASSESSE E HAD ISSUED 2418400 EQUITY SHARES OF FACE VALUE OF RS.10/- AT A PREMIUM OF RS.115/- TO 16 ENTITIES AND RS.2,41,84,000/- WERE CREDITED TO THE SHARE CAPITAL ACCOUNT AND RS. 27,81,16,000/- WE RE CREDITED TO SHARE PREMIUM ACCOUNT WHICH WERE REFLECTED IN TH E BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2010. DURING THE ASSESSMENT PROCEEDINGS, THE AO RAISED VARIOUS QUERIES QUA THE SHARE CAPITAL ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 4 ISSUE WHICH WERE RESPONDED TO BY THE ASSESSEE . TH E AO ALSO ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO ALL THE 16 PARTIES WHO SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE WHICH WERE COMPLIED WITH BY THE SAID PARTIES BY FIL ING THE COMPLETE DETAILS CONFIRMING THE INVESTMENTS BY GIV ING COPY OF PAN NUMBER, BANK STATEMENTS, ITRS AND FINANCIAL ST ATEMENT ETC. THE AO HAD ENQUIRED ABOUT THE BASIS OF ISSUE OF SHARES AT PREMIUM , THE SHAREHOLDINGS PATTERN AS ON 31.3.2010 AND ALSO THE STATUS OF SHAREHOLDINGS AS ON THE DATE OF ISSU E OF NOTICE U/S 142(1) OF THE ACT. AFTER REVIEW OF ALL THE MATERIAL S , THE AO HAD PASSED THE ASSESSMENT ORDER U/S 143(3) ACCEPTING TH E CONTENTIONS AND CLAIMS OF THE ASSESSEE. A SEARCH AC TION UNDER SECTION 132 OF THE ACT WAS CONDUCTED AT THE OFFICE PREMISES OF THE ASSESSEE SITUATED AT B/47, SHAKTI DHARA SOCIETY COLONY ROAD, BAPU NAGAR, AHMEDABAD. THE SEARCH COMMENCED ON 28.01.2015 WHICH WAS FINALLY CONCLUDED ON 27.03.20 15. THEREAFTER, NOTICE UNDER SECTION 153A OF THE ACT WA S ISSUED ON 28.07.2016 WHICH WAS SERVED ON THE ASSESSEE ON 05.0 8.2016. THE ASSESSEE COMPLIED WITH THE SAID NOTICE BY FILIN G A RETURN OF INCOME ON 26.08.2016 DECLARING AN INCOME OF RS.20,8 53/- WHICH WAS SIMILAR TO THE INCOME DECLARED IN THE RET URN FILED UNDER SECTION 139(1) OF THE ACT. DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WITH REGARD TO ISSUE OF SHAR E CAPITAL OR INVESTORS WAS FOUND OR SEIZED AS IS CLEAR FROM THE COPIES OF PANCHNAMAS PLACED AT PAGE NOS.20-21 AND 22-25 OF T HE PAPER BOOK RESPECTIVELY. IN THESE PANCHNAMAS THERE WAS N O REFERENCE TO FINDING OF ANY MATERIAL RELATING TO SHARE CAPIT AL/INVESTORS AND ON PAGE NO.24 THERE IS A REFERENCE TO CERTAIN LOOSE PAPERS. HOWEVER, NONE OF THEM WERE INCRIMINATING AND RELATI NG TO THE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 5 ISSUE OF SHARE CAPITAL. THE AO ON THE BASIS OF SEA RCH OPERATION OBSERVED THAT ASSESSEE HAD ISSUED THE SHARE CAPITAL CONSISTING OF 24,18,400 EQUITY SHARES OF FACE VALUE OF RS.10/ - AT RS.115/- TO 16 PARTIES. THE AO ALSO NOTED THAT IN THE SAME YEAR, THE ASSESSEE ALLOTTED 14,77,600 SHARES TO GAJIPARA FAMI LY/PATEL FAMILY AT PAR. THE AO NOTED THAT IN THE IMMEDIATEL Y SUCCEEDING ASSESSMENT YEAR I.E. 2011-12, THE EQUITY SHARES ISS UED AT A PREMIUM WERE PURCHASED BY TWO COMPANIES M/S. SHEENA THJI ORGANISER P. LTD. & M/S. SHANTAM STOCK TRADING PVT. LTD. WHICH WERE UNDER THE CONTROL BY GAJIPARA FAMILY AT A PALT RY SUM OF RS.5/- PER SHARE. THUS THE AO FOUND THAT THE SHARE WAS INITIALLY ISSUED TO 16 PARTIES AT A PREMIUM OF RS. 115/- PER SHARE AND THEREAFTER BOUGHT BACK BY TWO COMPANIES BELONGI NG TO THE PROMOTERS AT A VERY SMALL SUM OF RS.5 PER SHARE. TH US THE AO CAME TO THE CONCLUSION THAT PROMOTER GROUP HAS PLOU GHED BACK ITS UNDISCLOSED INCOME IN THE COMPANY AND HAS ALSO ENSURED TO KEEP CONTROL OF THE BUYERS COMPANIES ENTIRELY WITHI N THE GROUP COMPANY. THE AO ALSO NOTED THAT AFTER SEARCH, A SU RVEY ACTION UNDER SECTION 133A OF THE ACT WAS CONDUCTED IN THE CASE OF M/S. GSD TRADING AND FINANCIAL SERVICES PVT LTD, ARIHANT SHRAMJIVI SOCIETY, DHEBAR ROAD, OPP. ANDH MAHILA VIKASGAR, RAJ KOT, GUJRAT AND DETAILED STATEMENT OF SHRI RAJESH DAFTARY, PRES ENT DIRECTOR OF THE COMPANY WAS RECORDED. THE AO NOTED THAT DURING THE COURSE OF SURVEY SHRI RAJESH DAFTARY COULD NOT JUSTIFY THE INVESTMENTS IN ASSESSEE COMPANY AT SUCH A HIGH PRE MIUM OF RS.115/- PER SHARE AND THUS CAME TO THE CONCLUSION THAT SHRI RAJESH DAFTARY AND SHRI PRAKASH BAGRECHA THE ERSTWH ILE DIRECTOR OF THE COMPANY WAS ENGAGED IN THE ACTIVITY OF PROVI DING ACCOMMODATION ENTRIES IN THE GARB OF SHARE CAPITAL/ SHARE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 6 PREMIUM AND UNSECURED LOANS THROUGH A NUMBER OF COM PANIES. THE AO, CONCLUDED THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS AND CREDITWORTHINESS OF THE SUBSCRIBERS /INVESTORS SATISFACTORILY AND ISSUED A SHOW CAUSE NOTICE CALLI NG UPON THE ASSESSEE TO FURNISH COMPLETE DETAILS OF SHARE HOLDI NGS IN ALL THESE ASSESSMENT YEARS AS MENTIONED IN THE NOTICE S HOWING DETAILS OF ALLOTMENT, RATE OF ALLOTMENT, NUMBER OF SHARES ALLOTTED, COMPLETE NAMES AND ADDRESSES OF THE SHAREHOLDERS AL ONG WITH RATES AT WHICH SHARE WERE ALLOTTED TO THE SHAREHOLDERS/INVESTORS. THEREAFTER, THE ASSESSEE F ILED VARIOUS REPLIES ON 14.11.2016, 28.11.2016, 03.12.2016 REPLY ING ALL QUERIES RAISED BY THE AO. BEFORE THE AO IT WAS ALSO CONTENDED THAT AS NO INCRIMINATING MATERIAL REGARDING THE ISS UE OF SHARES WAS FOUND , NO ADDITION CAN BE MADE IN THE CASE OF COMPLETED ASSESSMENTS. THE AO DID NOT DEAL WITH THIS ISSUE IN THE ASSESSMENT ORDER. BESIDES THE AO HAS NOT ISSUED A S INGLE NOTICE OR LETTER TO ANY OF THE 16 PARTIES DURING 153A PRO CEEDINGS. THE AO AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS AND REPLIES OF THE ASSESSEE FOUND THE SAME TO BE NOT ACCEPTABLE . ACCORDING TO THE AO, THE ASSESSEE HAS FAILED TO PROVE THE GEN UINENESS AND CREDITWORTHINESS OF 16 PARTIES FROM WHOM THE ASSESS EE HAD RAISED RS.30,23,00,000/- BY WAY OF SHARE CAPITAL AN D SHARE PREMIUM, THE DETAILS WHEREOF ARE GIVEN ON PAGE NO. 14 TO 17 OF THE ASSESSMENT ORDER. ACCORDING TO THE AO THE ASSE SSEE HAS FAILED TO PROVE AS TO HOW THE SHARES WERE ISSUED AT A PREMIUM OF RS.115/- PER SHARE WHEN THE COMPANY WAS NOT HAVING ANY SUBSTANTIAL BUSINESS TO JUSTIFY THE CHARGING OF PRE MIUM AND ULTIMATELY THE ENTIRE AMOUNT OF RS.30,23,00,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CRE DIT UNDER ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 7 SECTION 68 OF THE ACT BY FRAMING ASSESSMENT UNDER S ECTION 143(3) READ WITH SECTION 153A VIDE ORDER DATED 27.1 2.2016. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITIO N TO THE TUNE OF RS.22,32,00,000/- BY HOLDING THAT THE ADDITION CAN NOT BE MADE DE HORS INCRIMINATING MATERIAL SEIZED DURING THE Y EAR QUA SAID SHARE CAPITAL/SHARE PREMIUM RAISED BY THE ASSESSEE FROM 15 PARTIES WHILE THE LD. CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF RS.7,91,00,000/- BY TREATING THE STATEMENT OF SH RI RAJESH DAFTARY AS INCRIMINATING MATERIAL WITH RESPECT TO I NVESTMENT MADE BY M/S. GSD TRADING AND FINANCIAL SERVICES PVT . LTD. BY OBSERVING AND HOLDING AS UNDER: 17.6 I HAVE NOTED THAT THE AO HAD NOT BROUGHT ANY NEW MATERIAL ON RECORD AS A CONSEQUENCE OF THE SEARCH OPERATION REGARDING THE V ALUATION OF SHARES OR THE CHANGE IN SHARE-HOLDING, OVER AND ABOVE WHAT HAD AL READY BEEN PLACED BY THE APPELLANT COMPANY BEFORE THE AO IN THE ORIGINAL ASS ESSMENT PROCEEDING CONCLUDED BEFORE THE SEARCH OPERATION. SINCE, THE DETAILS OF THE CHANGE IN SHAREHOLDING WERE ALREADY PART OF THE ASSESSMENT RECORD AND HAD BEEN DULY VERIFIED BY THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS, BEFORE THE SEARCH OPERATION WAS CONDUCTED ON THE APPELLANT COMPANY, THE SAME CAN'T BE CONSTRUED AS AN INCRIMINATING MATERIAL FOR THE PURPOSES OF ASSESSMENT U/S 153A OF THE ACT. PRESENT CASE, A NON-ABATED ASSESSMENT 18.0 IN THIS CASE, A SEARCH AND SEIZURE OPERATION W AS CONDUCTED U/S 132 OF THE ACT AT THE OFFICE PREMISES OF THE APPELLANT COMPANY SIT UATED AT B/47, SHAKTI DHARA SOCIETY, THAKKARBAPA NAGAR, AHMEDABAD ON 28.01.2015 . THE APPELLANT HAD FILED THE ORIGINAL RETURN OF INCOME U/S 139(1) OF THE ACT ON 15.10.2010, DECLARING A TOTAL INCOME OF RS. 20.850/-. THE CASE WAS PICKED UP FOR SCRUTINY AND AN ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED ON 18.03.201 3 ON 3,88,650/-. 18.1 THUS, BEFORE THE SEARCH OPERATION WAS CONDUCTE D ON THE APPELLANT COMPANY ON 28,01.2015, THE ASSESSMENT ORDER FOR THE CURRENT ASSTT. YEAR VIZ. A.Y. 2010-11 WAS ALREADY COMPLETED BY THE AO. HENCE, THE ASSESSM ENT IN THE PRESENT CASE WAS ALREADY COMPLETED AND CONCLUDED, AS ON THE DATE OF THE SEARCH AND IN THE ABSENCE OF ANY PENDENCY, IT DIDN'T ABATE. NO INCRIMINATING MATERIAL FOUND DURING SEARCH OPERA TION ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 8 19.0 IN THIS CASE, THE SEARCH OPERATION WAS CONDUCTED BY THE DDI T(INV.) UNIT -IV(2), THANE ON THE APPELLANT COMPANY ON 28 TH JANUARY, 2015. THE PREMISES OF THE APPELLANT COMPANY, NAMELY B/47, SHAKTI DHARA SOCIET Y, THAKKARBAPA NAGAR, AHMEDABAD WAS ALSO COVERED VIDE WARRANT NO. PN/ ADD L.DIT/ INV/ KALYAN/ 240/05.01.2015. 19.1 DURING THE COURSE OF SEARCH OPERATION, NO INCR IMINATING MATERIAL RELATING TO THE SHARE CAPITAL / SHARE PREMIUM RAISED FROM VARIO US PARTIES WERE FOUND / SEIZED. THE APPELLANT COMPANY HAD BEEN CATEGORICAL IN STATI NG THAT DURING THE COURSE OF SEARCH NO DOCUMENT WAS FOUND INDICATING THE NON-GEN UINE NATURE OF THE SHARE CAPITAL / SHARE PREMIUM. TO BUTTRESS THIS ARGUMENT, THE COPIES OF THE PANCHNAMA DATED 28'' JANUARY, 2015 HAD ALSO BEEN FILED BY THE APPELLANT COMPANY, WHICH ARE PLACED AT PAGE 254 TO 256 OF THE PAPER BOOK (PART-1 ) FILED DURING THE COURSE OF THE APPELLATE PROCEEDINGS. 19.2 I HAVE GONE THROUGH THE VARIOUS PANCHNAMAS DRA WN IN THE NAME OF THE APPELLANT COMPANY, LIST OF THE BOOKS OF ACCOUNTS AN D OTHER MATERIAL SEIZED DURING THE COURSE OF THE SEARCH OPERATION. I AM CONSTRAINE D TO NOTE THAT THERE IS NO REFERENCE TO THE SHARE CAPITAL/SHARE PREMIUM IN ANY OF THE SAID SEIZED DOCUMENTS. THIS PARTICULAR OBSERVATION IS FURTHER REINFORCED B Y THE FACT THAT EVEN IN THE SHOW- CAUSE NOTICE DATED 23.11.2016 ISSUED BY THE ASSESSI NG OFFICER, DURING THE COURSE OF PROCEEDINGS U/S. 153A OF THE ACT, THERE IS NO REFER ENCE TO ANY SEIZED MATERIAL IN RELATION TO THE ISSUANCE OF SHARES. EVEN THE ASSESS MENT ORDER PASSED BY THE AO U/S 153A R.W.S. 143(3) OF THE ACT DOESN'T REFER TO ANY INCRIMINATING MATERIAL FOUND / SEIZED, DURING THE COURSE OF SEARCH OPERATION. THE SE FACTS CLEARLY SHOW THAT THE CONTENTION OF THE APPELLANT THAT NO INCRIMINATING M ATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION CONDUCTED ON THE APPELLA NT COMPANY IS TRUE. 19.3 THE APPELLANT COMPANY HAD VEHEMENTLY CONTENDED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 153A OF THE ACT, VIDE L ETTER DATED 14IH NOVEMBER, 2016, IN PARA 4, IT HAD BEEN CLEARLY STATED BY THE APPELLANT BEFORE THE AO THAT DURING THE COURSE OF SEARCH OPERATION U/S. 132 OF T HE ACT, NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOUND REGARDING THE SUBSCRIPTION OF SHARE CAPITAL / SHARE PREMIUM. THUS, THE ISSUE OF NO INCRIMINATING MATERI AL BEING FOUND DURING THE COURSE OF SEARCH OPERATION HAD BEEN DULY BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER, BUT WHILE PASSING THE ASSESSMENT ORDER U/S 153A R.W.S. 143(3) OF THE ACT, THE SAID CONTENTION OF THE APPELLANT HAD BEEN IGNOR ED BY THE AO AND HAD NOT BEEN REBUTTED AT ALL. IT HAD ALSO BEEN VEHEMENTLY ARGUED THAT IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 153A OF THE ACT, THERE IS NOT A WHISPER ABOUT ANY MATERIAL BEING FOUND OR SEIZED DURING THE COURSE OF SEARCH I N RELATION TO THE SHARE CAPITAL / SHARE PREMIUM. 19.4 IN THESE FACTS AND CIRCUMSTANCES, THE APPELLAN T COMPANY HAD CONTENDED THAT IN THE CASE OF A COMPLETED ASSESSMENT, THE ASSESSIN G OFFICER CAN MAKE ADDITION U/S. 153A R.W.S. 143(3) OF THE ACT, BY ONLY RELYING UPON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HENCE, IF NO INCRIMINA TING MATERIAL HAD BEEN FOUND AS A RESULT OF THE SEARCH OPERATION CONDUCTED U/S 132 OF THE ACT, THE CONCLUSIONS DRAWN AND THE DECISIONS MADE IN THE ORIGINAL ASSESSMENT O RDER NEEDS TO BE ENDORSED. IT HAS ALSO BEEN STATED BY THE APPELLANT COMPANY THAT THE ASSESSING OFFICER CANNOT ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 9 REVIEW HIS OWN JUDGMENT IN PROCEEDINGS U/S. 153A OF THE ACT, UNLESS AND UNTIL THERE IS AN INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. SCOPE OF SECTION 153 A - JUDICIAL VIEW 20.0 FOR THE PREPOSITION THAT WHILE FRAMING AN ASSE SSMENT ORDER U/S 153A OF THE ACT IN THE CASE OF A COMPLETED ASSESSMENT, THE AO C AN ONLY RELY UPON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH, THE APPELLANT COMPANY HAD RELIED ON 18 CASE LAWS. THESE CASE LAWS HAD BEE N FILED IN A COMPILATION TITLED 'PAPER BOOK OF CASE LAWS' CONTAINING PAGES 1 TO 259 . THE DETAILS OF THE CASE LAWS RELIED UPON BY THE APPELLANT COMPANY ARE TABULATED, AS UNDER:- SR. CASE LAW CITATION COURTS PAGE NO. NO. 1. AMEETA MEHRA VS 395 ITR 185(2017) DELHI HIGH 1-13 ADDITIONAL DIRECTOR OF COURT INCOME-TAX 2. ANIL MAHAVIR GUPTA 182TTJ265 MUMBAI 14-39 V/S ASST. (2017) ITAT COMMISSIONER OF , INCOME-TAX 3. BALASORE ALLOYS LTS. ITA MUMBAI 40-56 V/S ASST. NO.1166/621/667/ ITAT COMMISSIONER OF MUM/2015 INCOME-TAX 4. COMMISSIONER OF 374 ITR 645 BOMBAY 57-84 INCOME-TAX-II, THANE HIGH COURT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. 5. M/S DALWALA ITA NO. 5932 TO MUMBAI 85-99 ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 10 SECURITIES LTD. V/S DY. 5934/M/2009 ITAT COMMISSIONER OF INCOME-TAX 6. COMMISSIONER OF IT A NO. 1709 OF BOMBAY 100-115 INCOME-TAX-20 VS SHRI 2014(2017) HIGH COURT DEEPAK KUMAR AGARWAL 7 PCIT VS DESAI CONSTRUCTION PRIVATE LIMITED 387 ITR 552 (201 7) GUJRAT HIGH 116-122 COURT 8. GURINAERS INGHBAWA VSASST. COMMR, OF INCOME 150ITD40 MUMBAI IT AT 123-129 9. JAI LOKENATH OIL EXTRACTIONS (P) LTD VS DEPUTY COMMR. OF INCOME-TAX, CENTRAL CIRCLE - XXVII, KOLKATA 83 TAXMANN.COM 369(2017) KOLKATA ITAT 130-138 10. ASST. COMMR. OF INCOME VS JAYENDRA P. JHAVERI. 65SOT118 MUMBAI ITAT 139-146 11. COMMR. OF INCOME- TAX VS KABUL CHAWLA 380ITR573 DELHI HIGH COURT 147-159 12. PCIT VS MEETA GUTGUTIA 395 ITR 526(2017) DELHI HIGH CONN 160-186 13. PCIT - 18 VS MS. LATA JAIN 384 ITR 543 (201 7) DELHI HIGH COURT 187-188 ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 11 14. COMMR. OF INCOME- TAX VS. MURLIAGRO PRODUCTS LTD. 49 TAXMANN.COM 172 BOMBAY HIGH COURT 189-194 15. NIKKI AGARWAL VS. ASST. COMMISSIONER OF INCOME TAX ITA NO.879/M/2011 MUMBAI ITAT 195-212 16. PCIT-4 VS. SAUMYA CONSTRUCTION (P) LTD. 387 ITR 529 (2017) GUJRAT HIGH COURT 213-227 17. SMT. YAMINI AGARWAL VS. DEPUTY COMMR. OF INCOME-TAX, CENTRAL CIRCLE-3(3), KOLKATA 83 TAXMANN.COM 209 (2017) KOLKATA ITAT 228-240 18. DAYAWANTI VS. COMMISSIONER OF INCOME-TAX 84 TAXMANN.COM 296 SUPREME COURT 241-259 20.1 IT IS PERTINENT TO NOTE HERE THAT THE SECTION 153A(1) OF THE ACT STARTS WITH A NON-OBSTANTE CLAUSE AND DISREGARDS THE NORMAL PROVI SIONS OF THE ASSESSMENT PRESCRIBED UNDER THE ACT IN THE CASE OF A SEARCH OP ERATION CARRIED OUT U/S 132 OF THE ACT. BY VIRTUE OF CLAUSE (A) OF SECTION 153A(1) , THE AO IS REQUIRED TO ISSUE NOTICE REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE SIX ASSESSMENT YEARS PRIOR TO DATE OF SEARCH. THE FURTHER CONSEQUENCES OF A SE ARCH CARRIED OUT U/S 132 ARE MENTIONED IN CLAUSE {B), WHEREBY THE A.O. IS REQUIR ED TO ASSESS OR REASSESS THE TOTAL INCOME OF THOSE SIX YEARS. AS SUCH, THE AO HAS NO O PTION BUT TO MAKE AN ASSESSMENT IN RESPECT OF ALL THE CONCERNED SIX YEAR S. HE HAS TO BRING THE PROCEEDINGS TO A LOGICAL CONCLUSION BY MAKING AN AS SESSMENT OF THE RETURNS FILED FOR ALL THE SIX YEARS. 20.2 HAVING SAID SO, THE NEXT QUESTION, WHICH NEEDS TO BE ADDRESSED IS - WHAT ISSUES CAN BE TAKEN UP FOR ASSESSMENT U/S 153A OF THE ACT, IN A CASE WHERE AT THE TIME OF THE SEARCH OPERATION, THE ORIGINAL ASSESSMENT WAS A LREADY COMPLETED, 20.3 IN SUCH A SCENARIO, THE SECOND PROVISO TO SECT ION 153A(1) SPECIFIES THAT ANY ASSESSMENT OR REASSESSMENT FALLING WITH THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 1 32 OR REQUISITION OF BOOKS UNDER SECTION 132A AS THE CASE MAY BE, SHALL ABATE. IN TH IS REGARD, THE RELEVANT PROVISO IS REPRODUCED BELOW:- S. 153A. '.......PROVIDED FURTHER THAT ASSESSMENT O R REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS AND FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN THIS SUBSECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 12 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE'. 20.4 FURTHER, IN PARA 65.5 OF THE CBDT CIRCULAR NO. 7/2003 DATED 05.09.2003 GIVING EXPLANATORY NOTES ON THE PROVISIONS RELATING TO DIRECT TAXES IN THE FINANCE ACT, 2003, THE CBDT HAS CLARIFIED AS UNDER: - '65.5 THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THESE SIX ASSESSMENT YEARS. ASSESSMENT O R REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS VENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE, SHALL ABATE. IT IS CLARIFIED THAT THE ANNEA L REVISION OR RECTIFICATION PROCEEDINGS PENDING ON THE DATE OF IN ITIATION OF SEARCH UNDER SECTION 132 OR REQUISITION SHALL NOT ABATE. S AVE AS OTHERWISE PROVIDED IN THE PROPOSED SECTION 153A, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A. IT IS ALSO CLARIFIED THAT ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A SHALL BE SUBJECT TO INTEREST, PENALTY AND PROSECUTION, IF AP PLICABLE. IN THE ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN AS SESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR.' 20.5 THE WORD 'ABATE' MEANS TO STOP OR TO PUT AN EN D. THE OBJECTOF THE ABOVE PROVISO IS CLEARLY TO ELIMINATE THE MULTIPLICITY OF ASSESSMENT OR REASSESSMENT PROCEEDINGS, WHICH ARE PENDING ON THE DATE OF SEARC H OR REQUISITION OF RECORDS, AS THE CASE MAY BE, AND WHICH ARE NOW REQUIRED TO B E UNDERTAKEN AFRESH IN VIEW OF SECTION 153A OF THE ACT. 20.6 THE WORD 'PENDING' OCCURRING IN THE SECOND PRO VISO TO SECTION 153A OF THE ACT, IS ALSO SIGNIFICANT. IT IS QUALIFIED BY TH E WORDS 'ON THE DATE OF INITIATION OF THE SEARCH', WHICH MAKES IT CLEAR THAT ON INITIATION OF THE PROCEEDINGS U/S. 153A, IT IS ONLY THE ASSESSMENT/RE ASSESSMENT PROCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCTING SEARCH UNDER SECTION 132 OR MAKING REQUISITION UNDER SECTION 132AOF THE ACT, STANDS ABATED. AS A COROLLA RY, THE ASSESSMENTS / REASSESSMENTS ALREADY COMPLETED AND F ALLING WITHIN THE SIX YEARS PERIOD REFERRED TO IN SECTION 153A OF THE ACT ARE T O BE CONSIDERED FINAL AND CANNOT BE ALTERED. 20.7 THE SPECIAL BENCH OF HON'BLE MUMBAI 1TAT IN TH E CASE OF ALL CARGO GLOBAL LOGISTICS LTD VS DCIT(2012) 147 TTJ 0513 (SB) : (20 12) 74 DTK 0089 (SB) : (2012) 137 JTD 0287 (SB) : (2012) 18 ITR 0106 (SB) HAS OBSERVED AS UNDER: '52. THE PROVISION COMES INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURN ISH THE RETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE WORD USED IS 'SHALL' ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 13 AND, THUS, THERE IS NO OPTION BUT TO ISSUE SUCH A N OTICE. THEREAFTER HE HAS TO ASSESS OR REASSESS TOTAL INCOME OF THESE SIX YEARS. IN THIS RESPECT ALSO, THE WORD USED IS 'SHALL' AND, THEREFORE, THE AO HAS NO OPTION BUT TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. THE P ENDING PROCEEDINGS SHALL ABATE. THIS MEANS THAT OUT OF SIX YEARS, IF ANY ASS ESSMENT OR REASSESSMENT IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, IT SHALL ABATE. IN OTHER WORDS PENDING PROCEEDINGS WILL NOT BE PROCEEDED WITH THER EAFTER. 20.8 IT HAS BEEN CATEGORICALLY OBSERVED IN THE ABOV E MENTIONED JUDGMENT THAT ONLY THE PENDING PROCEEDINGS, AS ON THE DATE OF SEA RCH SHALL ABATE MEANING THEREBY THAT THE COMPLETED PROCEEDINGS ATTAINS FINA LITY. 20.9 THE NEXT QUESTION WHICH NEEDS TO BE ANSWERED I S - WHAT IS THE SCOPE OF ASSESSMENT/ REASSESSMENT UNDER THE PROVISIONS OF SE CTION 153AOF THE ACT FOR THE ASSESSMENTS/REASSESSMENTS WHICH HAVE ABATED AND THO SE WHICH HAVE ATTAINED FINALITY ? 20.10 THE USE OF THE PHRASE 'SO FAR AS MAY BE'IN SECTION 153A{L)(A) IMPLIES THAT ALL THE PROVISIONS OF THE ACT AS CONTAINED UNDER CH APTER XIV PRESCRIBING THE PROCEDURE FOR ASSESSMENT OR UNDER ANY OTHER CHAPTER OF THE ACT WITH RESPECT TO THE RETURN OF INCOME FILED U/S. 139 SHALL BE APPLIC ABLE TO THE RETURNS FILED PURSUANT TO NOTICE ISSUED U/S. 153A/153C OF THE ACT . THE APPLICABILITY OF THOSE PROVISIONS WHICH ARE INCONSISTENT WITH THE PROVISIO NS OF SECTION 153A ARE RESTRICTED BY THE USE OF THE PHRASE 'SO FAR AS MAY BE'. 20.11 AS SUCH, FOR THE ASSESSMENTS PROCEEDINGS WHIC H ARE ABATED, THE AO GETS ALL THE POWERS PRESCRIBED UNDER THE LAW, AS IF THE ASSE SSMENT IS BEING MADE FOR THE FIRST TIME. THUS, IF THE ASSESSMENT IS MADE FOR THE FIRST TIME, ALL THE PROVISIONS OF ASSESSMENT, RELEVANT FOR MAKING OF AN ASSESSMENT U/ S. 143(3) SHALL BE APPLICABLE. IN THE CASE OF RE-ASSESSMENT, THE PRINCIPLES PERTAI NING TO ASSESSMENT U/S 147/148 OF THE ACT SHALL BECOME APPLICABLE. 20.12 AS FAR AS THE ASSESSMENTS/REASSESSMENTS, WHIC H DO NOT ABATE OR WHICH HAVE ATTAINED FINALITY, THE PRINCIPLE OF TIME BARRING RU LE COMES INTO PLAY. THE ASSESSEE ACQUIRES A RIGHT AS TO THE FINALITY OF PROCEEDINGS. QUIETUS OF THE COMPLETED ASSESSMENTS CAN BE DISTURBED, ONLY IN A CASE, WHERE INCRIMINATING SEIZED MATERIAL IS FOUND, DURING THE COURSE OF THE SEARCH OPERATION U/S 132 OF THE ACT. FURTHER, AS OBSERVED ABOVE, THE OBJECTIVE BEHIND THE SECOND PRO VISO TO SECTION 153A(1) IS TO ELIMINATE MULTIPLICITY OF PROCEEDINGS. IN SUCH CASE S, IT IS ONLY THE SEIZED MATERIAL AND UNDISCLOSED INCOME EMANATING OUT OF THE SEARCH PROCEEDINGS, WHICH IS RELEVANT FOR THE PURPOSE OF ASSESSMENT. 20.13 THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CJT VS. CONTINENTAL WAREHOUSING CORPORATION [374 ITR 645], HAS HELD THAT WHEN THE ASSESSMENT HAS ATTAINED FINALITY, THEN THE AO WHILE PASSING THE IN DEPENDENT ASSESSMENT ORDER U/S 153A OF THE ACT CAN'T DISTURB THE ASSESSMENT / REAS SESSMENT ORDER WHICH HAS ATTAINED FINALITY, UNLESS THE MATERIALS GATHERED IN THE COURSE OF THE PROCEEDINGS U/S 132 OF THE ACT ESTABLISH THAT THE RELIEFS GRANT ED UNDER THE FINALIZED ASSESSMENT/REASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF SEARCH OPERATION. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 14 20.14 IN THE CASE REFERRED, SUPRA, THE HON'BLE BOMBAY HIGH COURT HAS UPHELD THE FOLLOWING OBSERVATIONS OF HON'BLE ITAT:- 'I. ON A PLAIN READING OF SECTION 153A OF THE INCOME-TA X ACT, IT BECOMES CLEAR THAT ON INITIATION OF THE PROCEEDINGS UNDER S ECTION 153A, IT IS ONLY THE ASSESSMENT / REASSESSMENT PROCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCTING SEARCH UNDER SECTION 132 OR MAKING REQUI SITION UNDER SECTION 132A OF THE ACT STAND ABATED AND NOT THE ASSESSMENT S/REASSESSMENTS ALREADY FINALIZED FOR THOSE ASSESSMENT YEARS COVERE D UNDER SECTION 153A OF THE ACT. II. BY A CIRCULAR NO. 8 OF 2003 DATED 18-9-2003 (SE E 263 JTR (ST) 61 AT 107) THE CBDT HAS CLARIFIED THAT ON INITIATION O F PROCEEDINGS UNDER SECTION 153A, THE PROCEEDINGS PENDING IN APPEAL, RE VISION OR RECTIFICATION PROCEEDINGS AGAINST FINALISED ASSESSMENT/ REASSESSM ENT SHALL NOT ABATE. IT IS ONLY BECAUSE, THE FINALISED ASSESSMENTS/REASSESS MENTS DO NOT ABATE, THE APPEAL REVISION OR RECTIFICATION PENDING AGAINST FI NALISED ASSESSMENT/REASSESSMENTS WOULD NOT ABATE. III. THEREFORE, THE ARGUMENT OF THE REVENUE, THAT O N INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE ASSESSMENTS/REA SSESSMENTS FINALISED FOR THE ASSESSMENT YEARS COVERED UNDER SECTION 153A OF THE INCOME-TAX ACT STAND ABATED CANNOT BE ACCEPTED. SIMILARLY ON A NNULMENT OF ASSESSMENT MADE UNDER SECTION 153A(1) WHAT STANDS R EVIVED IS THE PENDING ASSESSMENT/REASSESSMENT PROCEEDINGS WHICH S TOOD ABATED AS PER SECTION 153A(1).' 20.15 A SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE BOMBAY HIGH COURT (NAGPUR BENCH) IN CASE OF MURLI AGRO PRODUCTS LTD VS. CIT 49 TAXMAN.COM 172IN ITA NO 36 OF 2009, WHEREIN IT HAS BEEN HELD THAT ON INITIATION OF PROCEEDINGS U/S. 153A, IT IS ONLY THE ASSESSMENT PR OCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCTING SEARCH U/S. 132 OR MAKING REQUISITION U/S. 132A OF THE ACT THAT STAND ABATED AND NOT THE ASSESSMENTS A LREADY FINALIZED. THE RELEVANT EXCERPTS OF THE JUDGMENT ARE REPRODUCED HE REUNDER:- '9. WHAT SECTION 153A CONTEMPLATES IS THAT, NOTWITH STANDING THE REGULAR PROVISIONS FOR ASSESSMENT/ REASSESSMENT CON TAINED IN THE IT ACT, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A ON OR AFTER 31/5/2003 IN TH E CASE OF ANY PERSON, THE ASSESSING OFFICER SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME WITHIN TH E TIME STIPULATED THEREIN, IN RESPECT OF SIX ASSESSMENT YEARS IMMEDIA TELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE AND THEREAFTER ASS ESS OR REASSESS THE TOTAL INCOME FOR THOSE ASSESSMENT YEARS. THE SECOND PROVISO TO SECTION 153A PROVIDES FOR ABATEMENT OF ASSESSMENT/REASSESSM ENT PROCEEDINGS WHICH ARE PENDING ON THE DATE OF SEARCH/REQUISITION . SECTION 153A(2) PROVIDES THAT WHEN THE ASSESSMENT MADE UNDER SECTIO N 153A(1) IS ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 15 ANNULLED, THE ASSESSMENT OR REASSESSMENT THAT STOOD ABATED SHALL STAND REVIVED. 10. THUS ON A PLAIN READING OF SECTION 153A OF THE INCOME-TAX ACT, IT BECOMES CLEAR THAT ON INITIATION OF PROCEEDINGS UND ER SECTION 153A, IT IS ONLY THE ASSESSMENT/REASSESSMENT PROCEEDINGS THA T ARE PENDING ON THE DATE OF CONDUCTING SEARCH UNDER SECTION 132 OR MAKING REQUISITION UNDER SECTION 132A OF THE ACT STAND ABATED AND NOT THE ASSESSMENT/REASSESSMENTS ALREADY FINALIZED FOR THOS E ASSESSMENT YEARS COVERED UNDER SECTION 153A OF THE ACT. BY A CIRCULA R NO.8 OF 2003 DATED 18-9-2003 (SEE 263 ITR (ST) 61 AT 107) THE CB DT HAS CLARIFIED THAT ON INITIATION OF PROCEEDINGS UNDER SECTION 153 A, THE PROCEEDINGS PENDING IN APPEAL, REVISION OR RECTIFICATION PROCEE DINGS AGAINST FINALIZED ASSESSMENT/REASSESSMENT SHALL NOT ABATE. IT IS ONLY BECAUSE, THE FINALIZED ASSESSMENTS/REASSESSMENTS DO NOT ABAT E, THE APPEAL, REVISION OR RECTIFICATION PENDING AGAINST FINALIZED ASSESSMENTS/REASSESSMENTS WOULD NOT ABATE. THEREFOR E, THE ARGUMENT OF THE REVENUE, THAT ON INITIATION OF PROCEEDINGS U NDER SECTION 153A, THE ASSESSMENTS/REASSESSMENTS FINALIZED FOR THE ASS ESSMENT YEARS COVERED UNDER SECTION 153A OF THE INCOME-TAX ACT ST AND ABATED CANNOT BE ACCEPTED. SIMILARLY ON ANNULMENT OF ASSESSMENT M ADE UNDER SECTION 153A(1) WHAT STANDS REVIVED IS THE PENDING ASSESSME NT/REASSESSMENT PROCEEDINGS WHICH STOOD ABATED AS PER SECTION 153A( 1). 11. IN THE PRESENT CASE, AS CONTENDED BY SHRI MANI, LEARNED COUNSEL FOR THE ASSESSEE, THE ASSESSMENT FOR THE ASSESSMENT YEA R 1998-99 WAS FINALIZED ON 29-12-2000 AND SEARCH WAS CONDUCTED TH EREAFTER ON 3-12- 2003. THEREFORE, IN THE FACTS OF THE PRESENT CASE, INITIATION OF PROCEEDINGS UNDER SECTION 153A WOULD NOT AFFECT THE ASSESSMENT FINALIZED ON 29-12- 2000. 12. ONCE IT IS HELD THAT THE ASSESSMENT FINALIZED O N 29.12.2000 HAS ATTAINED FINALITY, THEN THE DEDUCTION ALLOWED UNDER SECTION 80HHC OF THE INCOME-TAX ACT AS WELL AS THE LOSS COMPUTED UNDER T HE ASSESSMENT DATED 29-12-2000 WOULD ATTAIN FINALITY. IN SUCH A CASE, T HE A.O. WHILE PASSING THE INDEPENDENT ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTION 143(3) OF THE IT. ACT COULD NOT HAVE DISTURBED THE ASSESSMENT/REASSESSMENT ORDER WHICH HAS ATTAINED FI NALITY, UNLESS THE MATERIALS GATHERED IN THE COURSE OF THE PROCEEDINGS UNDER SECTION 153A OF THE INCOME-TAX ACT ESTABLISH THAT THE RELIEFS GRANT ED UNDER THE FINALIZED ASSESSMENT/REASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153A PROCEEDINGS. 13. IN THE PRESENT CASE, THERE IS NOTHING ON RECOR D TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH O R DURING THE 153A PROCEEDINGS WHICH WOULD SHOW THAT THE RELIEF UNDER SECTION 80 HHC WAS ERRONEOUS. IN SUCH A CASE, THE A.O. WHILE PASSING T HE ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTION 143(3) COULD N OT HAVE DISTURBED THE ASSESSMENT ORDER FINALISED ON 29.12.2000 RELATING T O SECTION 80 HHC ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 16 DEDUCTION AND CONSEQUENTLY THE C.I.T. COU LD NOT HAVE INVOKED JURISDICTION UNDER SECTION 263 OF THE ACT.' 20.16 IN THE ABOVE MENTIONED JUDGMENT, THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT NO ADDITION CAN BE MADE IN RESPECT OF ASS ESSMENTS WHICH HAVE BECOME FINAL, IF NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH. IT HAS BEEN HELD THAT ONCE THE ORIGINAL ASS ESSMENT HAS ATTAINED FINALITY, THEN THE ASSESSING OFFICER WHILE PASSING THE ASSESS MENT ORDER U/S. 153A R.W.S. 143{3) CANNOT DISTURB THE ASSESSMENT/ REASSE SSMENT ORDER WHICH HAD ATTAINED FINALITY, UNLESS THE MATERIAL GATHERED DUR ING THE COURSE OF THE SEARCH PROCEEDINGS ESTABLISHES SOMETHING CONTRARY TO IT. I F THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY INCRIMINATING MATERIAL WAS UNEA RTHED DURING THE SEARCH, THE AO, WHILE PASSING ORDER U/S. 153A R.W.S. 143(3) CAN NOT DISTURB THE ORIGINAL ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT. 20.17 ON THIS ISSUE THE SPECIAL BENCH OF HON'BLE MU MBAI HAT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD VS DCJT(2012) 147 TTJ 05 13 (SB) : (2012) 74 DTR 0089 (SB) : (2012) 137 ITD 0287 (SB) : (2012) 18 IT R 0106 (SB) HAS ALSO OBSERVED AS UNDER:- '58. THUS, QUESTION NO.L BEFORE US IS ANSWERED AS UNDER: A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS T HE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A F OR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT H AS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON T HE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELE VANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH.' 20.18 THE HON'BLE MUMBAI TRIBUNAL IN THE CASE OF GURUPRERANA ENTERPRISES V. ACIT (57 DTR 465), HAS HELD THAT ONLY THE ASSESSMENTS PENDING BEFORE T HE AO FOR COMPLETION SHALL ABATE U/S. 153A AND THE ISSUES DECIDED IN THE ASSESSMENT CANNOT BE RECONSIDERED AND RE-ADJUDICATED, UNLESS T HERE IS SOME FRESH MATERIAL FOUND DURING THE COURSE OF SEARCH IN RELATION TO SU CH POINTS. 20.19 THE HON'BLE AHMEDABAD TRIBUNAL IN THE CASE OF MEGHMANI ORGANICS LTD. VS. DCIT (129 TTJ 255)[2010], HAS HELD THAT WHERE THERE ARE NO PENDING ASSESSMENTS AS ON THE DATE OF THE SEARCH THEN THE C OMPLETED ASSESSMENT SHALL RULE THE FIELD AND THE INCOME ASSESSED THERE UNDER CANNO T BE DISTURBED. 20.20 THE VISAKHAPATNAM BENCH OF THE TRIBUNAL, IN T HE CASE OF KGR EXPORTS VS. JCIT (ITA NO. 494/V/2007), HAS HELD AS UNDER :- 'SINCE SECTION 153A OVERRIDES PROVISIONS OF SECTION 147 AND 148, CAN IT BE THE INTENTION OF THE LEGISLATURE TO GIVE ENORMOUS P OWERS ON THE ASSESSING OFFICER FOR OPENING A COMPLETED ASSESSMENT TIME AND AGAIN? IN OUR ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 17 OPINION, THE LEGAL RESTRICTIONS AND CONDITIONS PRES CRIBED FOR REOPENING THE ASSESSMENT STILL APPLIES TO THE CASES REOPENED U/S 153A. THE INTENTION OF THE LEGISLATURE COULD NOT HAVE BEEN OT HERWISE LEST IT SHOULD LEAD TO UNNECESSARY HARASSMENT UPON THE ASSESSEES. THOUGH THE COMPLETED ASSESSMENTS CAN BE REOPENED UNDER SECTION 153, THE ISSUES WHICH HAVE ALREADY BEEN CONCLUDED IN THE EARLIER AS SESSMENTS SHOULD NOT BE SUBJECT MATTER OF REASSESSMENT UNLESS SOME I NCRIMINATING MATERIAL CONCERNING THOSE ISSUES WERE FOUND DURING THE COURSE OF SEARCH. OTHERWISE, IN THE CONCLUDED ASSESSMENTS WHICH HAVE BEEN REOPENED U/S 153A, THE ASSESSING OFFICER SHOULD RES TRICT HIMSELF WITH THE ADDITIONS ARISING OUT OF THE INCRIMINATING MATE RIALS FOUND DURING THE COURSE OF SEARCH.' 20.21 IN THE CASE OF VIRAJ FORGINGS LTD. VS. DOT [ITA NO. 1948/M/2008] AND VIRAJ IMPOEXPO LTD. VS. DOT IN [ITA NO. 1949/M/2008 ], THE HON'BLE MUMBAI HAT HAS HELD AS FOLLOWS:- '4.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE LEGAL DISPUTE RAISED IN THIS GROUND IS WHETHER ISSUES CONSIDERED AND DECIDED IN THE REGULAR ASSESSMENT CA N BE RECONSIDERED IN AN ASSESSMENT PROCEEDINGS INITIATED UNDER SECTIO N 153A, IN CASE OF SEARCH, THE AO UNDER SECTION 153A IS EMPOWERED TO I SSUE NOTICES TO THE SEARCHED PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. FURTHER THE SECOND PROVISO TO SECTION 153A ALSO PROVIDES THAT A SSESSMENT OR RE- ASSESSMENT RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO ABOVE PENDING ON T HE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITIO N UNDER SECTION 132A AS THE CASE MAY BE SHALL ABATE. NORMALLY, THE ASSESSMENTS WHICH ARE PENDING IN APPEAL OR IN REVISION CANNOT BE SAID TO BE COMPLETE AND THEREFORE ASSESSMENT/RE-ASSESSMENT PENDING IN APPEA L/REVISION COULD ALSO TO BE CONSIDERED AS PENDING ON THE DATE OF SEA RCH BUT THE CBDT IN THE CIRCULAR NO.7 OF 2003 DATED 5.9.2003 HAS CLARIF IED THAT APPEAL, REVISION OR RECTIFICATION PROCEEDINGS PENDING ON TH E DATE OF INITIATION OF SEARCH UNDER SECTION 132 WILL NOT ABATE. IN OTHE R WORDS, ONLY THE ASSESSMENTS PENDING BEFORE THE ASSESSING OFFICER FO R COMPLETION SHALL ABATE. IN THIS CASE THERE IS NO DISPUTE THAT ON THE DATE OF SEARCH, THE ASSESSMENT IN THE CASE OF ASSESSEE HAD ALREADY BEEN COMPLETED BY THE AO AND IN TERMS OF THE CIRCULAR OF THE CBDT, THE RE GULAR ASSESSMENT MADE IN CASE OF THE ASSESSEE WILL NOT ABATE. THEREF ORE IN OUR VIEW THE POINTS/ ISSUES DECIDED IN THE ASSESSMENT CANNOT BE RE-CONSIDERED IN THE PROCEEDINGS UNDER SECTION 153A UNLESS THERE IS SOME FRESH MATERIAL FOUND DURING THE COURSE OF SEARCH IN RELATION TO SU CH POINTS/ISSUES.' ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 18 20.22 THE DELHI TRIBUNAL IN THE CASE OF SANJAY AGGARWAL V, DOT (47 TAXMANN.COM 210) HAS AFTER CONSIDERING THE DECISION OF ALL CARGO GLOBAL LOGISTICS LTD. HELD, AS UNDER:- 'IN VIEW OF PROVISIONS OF SECTION 153A, IN RESPECT OF ASSESSMENT YEARS FOR WHICH ORIGINAL ASSESSMENTS HAVE ALREADY BEEN CO MPLETED ON DATE OF SEARCH, TOTAL INCOME SHALL BE DETERMINED BY RESTRIC TING ADDITIONS ONLY TO THOSE WHICH FLOW FROM INCRIMINATING MATERIAL FOU ND DURING COURSE OF SEARCH; SO FAR AS ASSESSMENTS PENDING ON DATE OF SE ARCH ARE CONCERNED, THOSE ASSESSMENTS WOULD ABATE IN TERMS O F SECOND PROVISO TO SECTION 153A(1) AND TOTAL INCOME SHALL BE COMPUT ED AFRESH UNINFLUENCED BY FACT WHETHER OR NOT THERE IS ANY IN CRIMINATING MATERIAL FOUND IN COURSE OF SEARCH.' 20.23 THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RRJ SECURITIES [2016] 380 ITR 612, HAS CLEARLY HELD THAT IN THE ABSENCE OF ANY INCRIMI NATING MATERIAL, THE CONCLUDED ASSESSMENTS COULD NOT BE INTERFERED U /S. 153A OF THE ACT. IN THE FACTS OF THAT CASE, IT WAS HELD THAT THE DOCUMENTS SEIZED HAVE NO REFERENCE TO THE INCOME OF THE ASSESSEE FOR RELEVANT ASSESSMENT YEAR AND, THUS, THE AO HAS NO JURISDICTION TO MAKE THE RE-ASSESSMENT U/S. 153A. 20.24 THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. LAIA JAIN (ITA 274 AND 276 OF 2016), CONSIDERING THE RATIO LAID DOWN IN THE CASE OF CIT VS. KABUL CHAWLA [2016] 380 ITR 573, HAS HELD THAT SECT ION 153A ASSESSMENT CANNOT BE MADE FOR THE ASSESSMENT YEARS IN WHICH INCRIMINA TING MATERIAL IS NOT RECOVERED EVEN THOUGH INCRIMINATING MATERIAL MAY BE RECOVERED FOR OTHER YEARS IN THE BLOCK OF 6 YEARS. 20.25 THE HON'BLE KOLKATA TRIBUNAL IN THE CASE OF LMJ INTERNATIONAL LTD. VS. DCIT (119 TTJ 214) HAS OBSERVED AS UNDER: 'WHERE NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEAR S CANNOT BE DISTURBED; ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROCEEDING UNDER S. 153C WHEN NO INDISCRIMINATING DOCUMENTS WE RE FOUND IN RESPECT OF THE DISALLOWED AMOUNTS IN THE SEARCH PROCEEDINGS '. 20.26 IN CASE OF MGF AUTOMOBILES LTD. VS. ACIT (ITA NO.4212/DEL/2011), THE HON'BLE DELHI IT AT OBSERVED AS UNDER:- 'THERE ARE THREE POSSIBLE CIRCUMSTANCES THAT EMERGE ON THE DATE OF INITIATION OF SEARCH U/S 132(1): (A) PROCEEDINGS AR E PENDING; (B) PROCEEDINGS ARE NOT PENDING BUT SOME INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH INDICATING UNDISCLOSED INCOME AND/ OR ASSETS AND (C) PROCEEDINGS ARE NOT PENDING AND NO INCRIMINATING MA TERIAL HAS BEEN FOUND. IN CIRCUMSTANCE (A), SINCE THE PROCEEDINGS A RE PENDING, THEY ARE ABATED AND THE AO GETS A FREE HAND TO MAKE THE ASSE SSMENT. IN CIRCUMSTANCE (B), THERE IS NO QUESTION OF ABATEMENT AS THE PROCEEDINGS ARE NOT PENDING AND THE AO HAS TO PASS AN ASSESSMEN T ORDER U/S 153A TO ASSESS THE UNDISCLOSED INCOME. IN CIRCUMSTANCE (C), THE AO HAS TO PASS AN ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 19 ASSESSMENT ORDER THOUGH AS THERE IS NO INCRIMINATIN G MATERIAL NO INCOME CAN BE ASSESSED. ON FACTS, AS THE ASSESSMENTS WERE COMPLETED AND THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEAR CH, THE AO WAS NOT ENTITLED TO MAKE ANY ADDITION.' 20.27 IN THE CASE OF GURUINDER SINGH BAWA V DCIT, (2012) (28 TAXMANN.COM 328), THE HON'BLE MUMBAI IT AT HAS HELD THAT WHERE IN SEA RCH ASSESSMENT UNDER SECTION 15 3A, ALL ASSESSMENTS PERTAINING TO SIX IM MEDIATELY PRECEDING ASSESSMENT YEARS WERE COMPLETE, THE AO CAN'T MAKE A NY ADDITION THERE-UNDER, UNLESS THERE IS ANY INCRIMINATING MATERIAL RECOVERE D DURING SEARCH. 20.28 THE HON'BLE DELHI HIGH COURT IN A RECENT DECI SION IN THE CASE OF PR. CIT VS. MEETA GUTGUTIA [2017-TIOL-1000HC-DEL-IT], HAS AFFIRMED THE VIEW THAT NO ADDITION CAN BE MADE FOR A PARTICULAR ASSESSMENT YEAR WITHOUT THERE BEING AN INCRIMINATING MATERIAL THAT RELATES TO THE SAID ASS ESSMENT YEAR WHICH WOULD JUSTIFY SUCH AN ADDITION. THE HON'BLE SUPREME COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME-TAX, CENTRAL IT, NEW DELHI V S. MEETA GUTGUTIA [2018] 96 TAXMANN.COM 468 (SC) HAS DISMISSED THE SLP IN THE CASE AND THUS UPHELD THE DECISION OF HON'BLE DELHI HIGH COURT THA T INVOCATION OF SECTION 153A TO RE-OPEN CONCLUDED ASSESSMENTS OF ASSESSMENT YEAR S EARLIER TO YEAR OF SEARCH WAS NOT JUSTIFIED IN ABSENCE OF INCRIMINATING MATER IAL FOUND DURING SEARCH QUA EACH SUCH EARLIER ASSESSMENT YEAR. 20.29 THE MEMORANDUM EXPLAINING THE PROVISIONS OF F INANCE BILL 2003, STATED I THAT THE THEN EXISTING PROVISIONS CONTAINED IN CHAP TER XIVB RELATING TO BLOCK ASSESSMENT PRESCRIBING SINGLE ASSESSMENT OF UNDISCL OSED INCOME FOR BLOCK PERIOD, WERE INTRODUCED FOR AVOIDANCE OF DISPUTES, EARLY FI NALIZATION OF SUCH , ASSESSMENTS AND REDUCTION IN MULTIPLICITY OF PROCEE DINGS. HOWEVER, THERE WERE PARALLEL PROCEEDINGS CARRIED ON NAMELY REGULAR ASSESSMENT PROCEEDINGS AS WELL AS BLOCK ASSESSMENTS FOR UNDISCLOSED INCOME RESULTI NG INTO MULTIPLICITY OF PROCEEDINGS. IN ORDER TO RECTIFY TH IS ANOMALY, A SCHEME OF SINGLE ASSESSMENT WAS INTRODUCED BY INSERTING SECTION 153A TO SECTION 153D IN THE IT ACT. 20.30 THE PURPOSE BEHIND THE INTRODUCTION OF SECTIO N 153A/153C OF THE ACT WILL GET DEFEATED, IF THE AO IS ALLOWED TO ASSESS/REASSE SS THE TOTAL INCOME AGAIN IN RESPECT OF COMPLETED ASSESSMENTS, IN CONTRADICTION WITH THE SECOND PROVISO, EXCEPT FOR THE UNDISCLOSED INCOME ON THE BASIS OF I NCRIMINATING MATERIAL. IF THE VIEW OF THE A.O. IS ACCEPTED THEN THE SAME WILL NOT ONLY MULTIPLY ASSESSMENT PROCEEDINGS, BUT WILL ALSO MULTIPLY THE APPELLATE P ROCEEDINGS AND CREATE FICTITIOUS DEMANDS. 20.31 IN VIEW OF THE AFORESAID DETAILED DISCUSSION AND JUDICIAL PRECEDENTS, I AM OF THE VIEW THAT ASSESSMENTS WHICH ARE COMPLETED U/S 143(3) DO NOT ABATE. FURTHER, PROCEEDINGS U/S 153A OF THE ACT DOE S NOT EMPOWER THE AO TO RE-ADJUDICATE THE SAME ISSUES AGAIN, UNLESS FRES H INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH. THE ASSESSING AUTHORITY CANNOT DISTURB THE ASSESSMENT ORDER WHICH HAS ATTAINED FIN ALITY, UNLESS THE MATERIAL ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 20 GATHERED DURING THE COURSE OF SEARCH, ESTABLISHES T HAT THE INCOME COMPUTED IN THE FINALISED ASSESSMENT WAS NOT IN ACCORDANCE W ITH THE FACTS UNEARTHED DURING THE COURSE OF SEARCH. 20.32 TO CONCLUDE, IN THE CASE OF COMPLETED ASSESSM ENTS, WHERE NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE O F SEARCH, THE ASSESSMENT U/S. 153AOF THE ACT IS TO BE MADE ON ORIGINALLY ASS ESSED INCOME AND NO ADDITION OR DISALLOWANCE CAN BE MADE DE HORS THE INCRIMINATING EVIDENCES RECOVERED DURING THE COURSE OF SEARCH. WHOLE SHARE CAPITAL ADDED BY GENERALIZING THE STATE MENT OF MR. RAIESH DAFTRV 21.0 THE AO HAD IN PARA 3.6 OF THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT ARRIVED AT CERTAIN CONCLUSIONS AND SINCE, T HE SAME GOES TO THE ROOT OF THE MATTER, IT IS REPRODUCED HEREUNDER:- '3.6.......THE SURVEY U/S 133A CONDUCTED AT ONE OF SUCH ALLOTTEES, I.E. M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD., WHE REIN DETAILED STATEMENT MR. RAJESH DAFTARY WAS RECORDED, PROVED T HAT THEY WERE ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES IN THE GARB OF SHARE CAPITAL/ SHARE PREMIUM AND UNSECURED LOAN ETC. THROUGH A NUMBER OF COMPANIES. SUCH COMPANIES NEED NOT BE DIRECTLY OWNED BY SUCH ACCOMMODATION ENTRY PROVIDER S, AS MANY A TIMES THEY KEEP BENAMIDARS AT THE FRONT WHILE MANAG E WHOLE THEIR AFFAIRS PERSONALLY' 21.1 THE ABOVE OBSERVATIONS OF THE AO CLEARLY REVEA LS THAT THE AO HAD IN HIS POSSESSION ONLY THE STATEMENT OF SHRI RAJESH DAFTAR Y AND THAT ALSO IN RELATION TO ONE OF THE SHARE ALLOTTEE COMPANY NAMELY, M/S GS D TRADING & FINANCIAL SERVICES PVT. LTD.. THOUGH THE STATEMENT OF SHRI RA JESH DAFTARY RELATE TO ONLY ONE OF THE SHARE SUBSCRIBER, NAMELY M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD., BUT THE A.O. HAD GENERALIZED THE STATEME NT TO ALL THE SHARE SUBSCRIBERS AND HELD THE ENTIRE SHARE CAPITAL TO BE BOGUS IN THE PROCEEDINGS U/S 153A OF THE ACT. 21.2 THUS, THE AO HAD WITHOUT BRINGING ANY MATERIAL ON RECORD CONCLUDED IN A VAGUE AND GENERALIZED MANNER IN PARA 3.6 OF THE ASS ESSMENT ORDER PASSED U/S 153A OF THE ACT THAT THE ENTIRE SHARE CAPITAL IS IN THE NATURE OF ACCOMMODATION ENTRIES, WHICH IS BOTH FACTUALLY AND LEGALLY WRONG. I AM OF THE CONSIDERED OPINION THAT THESE CONCLUSIONS DRAWN BY THE AO ARE PURELY BASED ON CONJECTURES AND SURMISES AND ARE NOT BASED ON ANY C OGENT MATERIAL OR TANGIBLE EVIDENCE ON RECORD. 21.3 ANOTHER VAGUE AND UNSUBSTANTIATED OBSERVATION MADE BY THE AO IS THAT THE INVESTING COMPANIES NEED NOT BE DIRECTLY OWNED BY SUCH ACCOMMODATION ENTRY PROVIDERS, AS MANY A TIMES THEY KEEP BENAMIDA RS AT THE FRONT. THE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 21 ASSESSMENT ORDER FAILS TO THROW ANY LIGHT ON SEVERA L VITAL QUERIES VIZ. WHICH COMPANIES ARE BENAMI CONCERNS AND WHO ARE THE BENAM IDARS ? WHO ARE THE DUMMY OWNERS OF SUCH COMPANIES ? WHAT IS THE EVIDEN CE ON RECORD TO HOLD THEM TO BE DUMMY ? WHO ARE THE REAL OWNERS OF THE S AID BENAMI COMPANIES ? 21.4 FURTHER, THE AO HAD IN PARA 1.8 OF THE SHOW-CA USE NOTICE ISSUED TO THE APPELLANT COMPANY STATED THAT SHRI. PRAKASH BAGRECH A WAS ALSO ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES, WI THOUT BRINGING ANY MATERIAL ON RECORD. THERE IS NO WHISPER IN THE ASSE SSMENT ORDER THAT ANY STATEMENT OF SHRI PRAKASH BAGRECHA WAS EVER RECORDE D. THE ASSESSMENT ORDER IS ABSOLUTELY SILENT ON THE ISSUE AS HOW AND WHY SH RI PRAKASH BAGRECHA SHOULD BE TREATED AS AN ENTRY OPERATOR. IT ALSO NEEDS TO B E EMPHASIZED HERE THAT THE ASSESSMENT ORDER HAD MISERABLY FAILED TO BRING ON R ECORD THE DETAILS OF ALLEGED ENTRY OPERATING CONCERNS RUN BY SHRI PRAKASH BAGREC HA. FURTHER, IT IS ALSO NOT CLEAR AS TO WHICH ARE THE ALLEGED ENTRY OPERATING C ONCERNS RUN BY SHRI PRAKASH BAGRECHA, WHO HAD INVESTED IN THE SHARE CAPITAL / S HARE PREMIUM OF THE APPELLANT COMPANY. 21.5 MERE SUSPICION, HOWEVER STRONG OR PROBABLE IT MAYBE, IS NO EFFECTIVE SUBSTITUTE FOR THE LEGAL PROOF REQUIRED TO SUBSTANT IATE A CHARGE, WHICH THE LEARNED AO HAS FAILED TO FURNISH. THERE IS A LONG M ENTAL DISTANCE BETWEEN 'MAY BE TRUE' AND 'MUST BE TRUE' AND THIS BASIC AND GOLDEN RULE HELPS TO MAINTAIN THE VITAL DISTANCE BETWEEN CONJECTURES AND SURE CONCLUSIONS TO BE ARRIVED AT, ON THE TOUCHSTONE OF A DISPASSIONATE JU DICIAL ENQUIRY BASED UPON A COMPLETE AND COMPREHENSIVE APPRECIATION OF ALL FEAT URES OF THE CASE, AS WELL AS THE QUALITY AND CREDIBILITY OF EVIDENCE BROUGHT ON RECORD. RELIANCE IS PLACED ON ASHISH BATHAM V. STATE OF MP, AIR 2002 SC 3206. 21.6 THE ACT OF RAISING OF PRESUMPTION ITSELF DOES NOT AMOUNT TO PROOF. PRESUMPTION HOWEVER STRONG, CANNOT TAKE THE PLACE O F EVIDENCE. RELIANCE IS PLACED ON THE DECISIONS OF POOJA BHATT 66 TTJ (MUM) 817& D. M. KAMANI (HUF) 65 TTJ (PAT) 504.LT IS WELL SETTLED BY THE HON'BLE SUPREME COURT IN MORE THAN ONE DECISION THAT COURTS HAVE TO BE WATCH FUL AND AVOID THE DANGER OF SUSPICION TO TAKE PLACE OF LEGAL PROOF FOR SOME TIME, UNCONSCIOUSLY IT MAY HAPPEN TO BE A SHORT STEP BETWEEN MORAL CERTAINTY A ND LEGAL PROOF. IN THIS REGARD, REFERENCE MAY BE MADE TO THE JUDGMENT IN TH E CASE OF NARENDRA SINGH V. STATE OFMP, 2004 SCC 1893. 21.7 IT IS WELL SETTLED PROPOSITION OF LAW THAT THE COURT SHOULD SAFEGUARD ITSELF AGAINST THE DANGER OF BASING ITS CONCLUSIONS ON SUS PICIONS, HOWSOEVER STRONG THEY MAY BE. IT IS EQUALLY WELL SETTLED THAT THE CO URTS DECISION MUST REST NOT UPON SUSPICION BUT UPON LEGAL GROUNDS ESTABLISHED B Y LEGAL TESTIMONY. MERE SUSPICION, HOWEVER STRONG, CANNOT TAKE THE PLACE OF PROOF. RELIANCE IS PLACED UPON STATE V. GULZARI LAL TANDON AIR 1979 S.C. 1382 AND JA, NA IDU V. STATE OF MAHARASHTRA AIR 1979 S.C, 1537. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 22 21.8 THE ABOVE STATED PRINCIPLES OF THE INDIAN EVID ENCE ACT ARE EQUALLY APPLICABLE AND HAVE BEEN APPLIED WITH FULL FORCE IN INCOME-TAX PROCEEDINGS. THE HON'BLE SUPREME COURT IN CHUHARMAL V. CIT [1988] 172-ITR-250 STATED:- 'WHAT WAS MEANT BY SAYING THAT THE EVIDENCE ACT DID NOT APPLY TO PROCEEDINGS UNDER THE INCOME-TAX ACT, 1961, WAS THA T THE RIGOUR OF THE RULES OF EVIDENCE CONTAINED IN THE EVIDENCE ACT WAS NOT APPLICABLE; BUT THAT DID NOT MEAN THAT WHEN THE TAXING AUTHORITIES WERE DESIROUS OF INVOKING THE PRINCIPLES OF THE EVIDENCE ACT IN PROC EEDINGS BEFORE THEM, THEY WERE PREVENTED FROM DOING SO.' 21.9 IT IS SETTLED LAW THAT SUSPICION, HOWSOEVER, S TRONG CANNOT TAKE THE PLACE OF LEGAL PROOF, AS HAS BEEN HELD BY THE HON'BLE SUPREM E COURT IN THE CASE OF UMACHARAN SHAW AND BROS. V. CIT [1959] 37-ITR-271. FURTHER RELIANCE IS PLACED UPON: KRISHNAND V. STATE OFMADHYA PRADESH:AIR 1977 SC 796 JAYADAYAL PODDAR V. MST. BIBI HAZRA: AIR 1974 SC 17 1 CIT V. K MAHIM UDMA[2000] 158 CTR (KER.) 100 : [200 0] 242 ITR133(KER.) DHAKESHWARI COTTON MILLS LTD. V. CIT [1954] 26 ITR 775 (SC) OMAR SALAY MOHAMED SAIL V. CIT [1959] 37 ITR 151 (S C) ASSTT. CIT V. JINDAL SAW PIPES LTD. [2008] 118 TTJ 228 : [2008] 11 DTR (DELHI) (TRI.) 281 21.10 THE HON'BLE SUPREME COURT IN DHAKESHWARI COTTON MILLS V. CIT [1954] 26 ITR 775 AT 782 OBSERVED: 'AS REGARDS THE SECOND CONTENTION, WE ARE IN ENTIRE AGREEMENT WITH THE LEARNED SOLICITOR-GENERAL WHEN HE SAYS THAT THE INC OME TAX OFFICER IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADIN GS, AND THAT HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPT ED AS EVIDENCE IN A COURT OF LAW, BUT THERE THE AGREEMENT ENDS; BECAUSE IT IS EQUALLY CLEAR THAT IN MAKING THE ASSESSMENT UNDER SUB-SECTION (3) OF S ECTION 23 OF THE ACT, THE INCOME TAX OFFICER IS NOT ENTITLED TO MAKE A PU RE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL THERE MUST BE SOMETHING MORE THAN BARE SUSPICION TO SUPPO RT THE ASSESSMENT UNDER SECTION 23(3). THE RULE OF LAW ON THIS SUBJEC T HAS, IN OUR OPINION, BEEN FAIRLY AND RIGHTLY STATED BY THE LAHORE HIGH C OURT IN THE CASE OF SETH GURMUKH SINGH V. COMMISSIONER OF INCOME-TAX, PUNJAB.' 21.11 THE PUNJAB & HARYANA HIGH COURT IN C/T V. ANUPAM KAPOOR [2008] 299 ITR 1 79DID NOT BELIEVE ON THE ALLEGATION: 'A CHEQUE HAD BEEN TAKEN BY THELIENEFICIARY I.E. BY PAYING CASH EQUIVALENT TO THE CHEQUE AMOUNT AND THE PREMIUM THEREON'. THE HON'BLE COURT AT PAGE 182 OBSERVED: THERE WAS NO MATERIAL BEFORE THE ASSESSING OFFICER, WHICH COULD HAVE LED TO A CONCLUSION THAT THE TRANS ACTION WAS, SIMPLICITER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE R EVENUE. NO SUCH PRESUMPTION COULD BE DRAWN BY THE ASSESSING OFFICER , MERELY ON SURMISES AND CONJECTURES'. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 23 21.12 THE HON'BLE SUPREME COURT IN PARIMISETTI SEETHARAMATNMA V. CIT [1965] 57-ITR-532 AT 536-537 OBSERVED: - 'BY SECTIONS 3 AND 4, THE INDIAN INCOME-TAX ACT, 19 22, IMPOSES A GENERAL LIABILITY TO TAX UPON ALL INCOME. BUT THE ACT DOES NOT PROVIDE THAT WHATEVER IS RECEIVED BY A PERSON MUST BE REGARDED A S INCOME LIABLE TO TAX. IN ALL CASES, IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, TH E BURDEN LIES UPON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION. WHERE HOWEVER A RECEIPT IS OF THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE, BECAUSE I T FALLS WITHIN AN EXEMPTION PROVIDED BY THE ACT, LIES UPON THE ASSESS EE. NO CONFESSION / SURRENDER OF INCOME 22.0 A SURVEY HAS BEEN CONDUCTED ON M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD. AND STATEMENT OF RAJESH DAFTARY WAS RECOR DED ON 28.01.2015. THOUGH THE AO HAD RELIED VERY HEAVILY ON THE STATEMENT OF SHRI RAJESH DAFTARY, BUT A PERUSAL OF THE STATEMENT OF SHRI RAJESH DAFTARY REV EALS THAT THERE IS NO CONFESSION IN THE SAID STATEMENT FOR PROVIDING ANY ACCOMMODATI ON ENTRY TO THE APPELLANT COMPANY. THUS, ACCORDING TO THE APPELLANT COMPANY, THE CONTENTION OF THE AO IN THE ASSESSMENT ORDER THAT SHRI RAJESH DAFTARY HA D PROVIDED ACCOMMODATION ENTRIES IS FACTUALLY INCORRECT. 22.1 I HAVE ALSO NOTED THAT AS PER THE DATA FROM TH E ROC WEBSITE, IT IS CLEAR THAT SHRI. RAJESH DAFTARY WAS APPOINTED AS DIRECTOR ON 2 4.06.2011 AFTER THE RECEIPT OF SHARE APPLICATION MONEY FROM M/S GSD TRADING & FINA NCIAL SERVICES PVT. LTD. ON 28.02.2010 & 31.03.2010. IN FACT, THE ENTIRE SHA RE CAPITAL AND SHARE PREMIUM HAD BEEN RAISED BY THE APPELLANT COMPANY BEFORE 31. 03.2010 AND SHRI. RAJESH DAFTARY HAD BECOME A DIRECTOR M/S GSD TRADING & FIN ANCIAL SERVICES PVT. LTD. ONLY LATER ON. HENCE, IT HAD BEEN CONTENDED THAT TH E STATEMENT OF SHRI RAJESH DAFTARY HAD NO EVIDENTIARY VALUE IN RELATION TO INV ESTMENTS MADE BY THE VARIOUS SUBSCRIBERS INCLUDING M/S GSD TRADING & FINANCIAL S ERVICES PVT. LTD.. 22.2 FURTHER, IT IS STATED THAT NOWHERE IN THE STAT EMENT OF SHRI RAJESH DAFTARY RELIED UPON BY THE AO IT HAD BEEN STATED BY HIM THA T CHEQUE HAD BEEN GIVEN BY THE SHAREHOLDERS FOR SUBSCRIBING THE SHARE CAPITAL/ PREMIUM, IN EXCHANGE OF UNACCOUNTED CASH. THUS, THERE IS NO CONFESSION BY S HRI RAJESH DAFTARY IN HIS STATEMENT RECORDED, DURING THE COURSE OF THE SURVEY OPERATION. ALSO, I HAVE NOTED THAT, THERE IS NEITHER ANY CONFESSION NOR ANY SURRE NDER OF INCOME BY THE APPELLANT COMPANY ON THE ISSUE OF SHARE CAPITAL / SHARE PREMI UM. 22.3 IN-FACT, I AM CONSTRAINED TO NOTE THAT NO 132( 4) STATEMENT IS ON RECORD, WHEREIN THE APPELLANT COMPANY HAD BEEN CONFRONTED A BOUT THE ALLEGED SHARE CAPITAL / SHARE PREMIUM. THUS, DURING THE COURSE OF THE SEARCH OPERATION CONDUCTED U/S 132 OF THE ACT, THE APPELLANT COMPANY / DIRECTORS / PROMOTERS HAD NOT BEEN CONFRONTED AT ALL WITH ANY MATERIAL WHATSO EVER REGARDING THE SO CALLED BOGUS SHARE CAPITAL / SHARE PREMIUM. COMPLETE DETAILS FURNISHED IN THE PROCEEDINGS U/S 1 53A OF THE ACT ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 24 23.0 DURING THE COURSE OF THE ASSESSMENT PROCEEDING S U/S 153A OF THE ACT, THE APPELLANT COMPANY WAS ASKED TO PROVE THE IDENTITY A ND CREDIT WORTHINESS OF THE SUBSCRIBERS AND THE GENUINENESS OF THE TRANSACTION. THE APPELLANT COMPANY WAS ALSO SHOW CAUSED AS TO WHY THE AMOUNT RECEIVED AS S HARE CAPITAL AND SHARE PREMIUM SHOULD NOT TO BE ADDED BACK TO THE TOTAL IN COME, AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 23.1 DURING THE 153A PROCEEDINGS, THE APPELLANT COM PANY HAD AGAIN FURNISHED LEDGER ACCOUNT CONFIRMATION AND BANK STATEMENT OF A LL THE PARTIES IN WHICH PAYMENTS MADE TO THE APPELLANT COMPANY ON ACCOUNT O F SHARE CAPITAL / SHARE PREMIUM ARE FULLY REFLECTED. THE APPELLANT COMPANY HAD ALSO FURNISHED TO THE AO, COPIES OF THE INCOME TAX RETURN, AUDITOR'S REPO RT, BALANCE SHEET, PROFIT & LOSS ACCOUNT ALONGWITH SCHEDULES ETC. THE FINANCIAL S OF ALL THE SUBSCRIBERS REFLECTED THE INVESTMENT MADE BY THEM IN THE APPELL ANT COMPANY. THE APPELLANT COMPANY HAD ALSO SUBMITTED THAT ALL THE PAYMENTS WE RE MADE THROUGH BANKING CHANNELS. FURTHER, IT WAS STATED THAT THERE WERE NO CASH DEPOSITS APPEARING IN THE BANK STATEMENTS OF THE SHARE SUBSCRIBERS, IMMEDIATE LY BEFORE THE PAYMENTS HAD BEEN MADE TO THE APPELLANT COMPANY. FURTHER, THE PA RTIES HAVE SUBSTANTIAL NET WORTH, TAXABLE INCOME AND HIGH BANK BALANCES. 23.2 TO SUMMARIZE, IT WAS STATED THAT BY SUBMITTING THE ABOVE DOCUMENTATION, THE APPELLANT COMPANY HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF THE SUBSCRIBERS AND GENUINENESS OF TH E TRANSACTION IN THE PROCEEDINGS U/S 153A OF THE ACT. THEREFORE, IT WAS SUBMITTED BY THE APPELLANT COMPANY THAT NO ADDITION U/S 68 OF THE ACT IS WARRA NTED. 23.3 THE ABOVE SUBMISSIONS MADE IN THE PROCEEDINGS U/S 153A OF THE ACT BEFORE THE AO WERE ALSO MADE BY THE APPELLANT COMPANY DURI NG THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE THE UNDERSIGNED. NO INVESTIGATION / ENQUIRIES CONDUCTED BY AO U/S 15 3A OF THE ACT 24.0 THE APPELLANT COMPANY HAD ALSO CONTENDED THAT IF THE AO HAD ANY DOUBT ABOUT THE GENUINENESS OF THE SHARE CAPITAL / SHARE PREMIUM, HE SHOULD HAVE ISSUED FRESH NOTICES U/S 131/133(6) OF THE ACT FOR INVESTI GATION AND VERIFICATION OF THE SAME. I HAVE TAKEN NOTE OF THE FACT THAT DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THE AO HAD HELD THE SHARE C APITAL / SHARE PREMIUM TO BE GENUINE, AFTER DUE VERIFICATION AND ENQUIRY CONDUCT ED U/S 133(6) OF THE ACT. 24.1 NOW, IF THE AO WANTS TO CHANGE HIS OPINION ON THE ISSUE, THE LEAST HE COULD HAVE DONE IN THE PROCEEDINGS U/S 153A OF THE ACT IS TO EXAMINE THE SHARE SUBSCRIBERS U/S 131 / 133(6) OF THE ACT FOR SATISFY ING HIMSELF ABOUT THE NATURE AND SOURCE OF THE CREDITS, AS ENVISAGED IN THE PROVISIO NS OF SECTION 68 OF THE ACT. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL IN RELATI ON TO THE SHARE CAPITAL / SHARE PREMIUM AND FURTHER, IN THE ABSENCE OF ANY ENQUIRY / INVESTIGATION BY THE AO, IT IS WRONG ON THE PART OF THE AO TO HOLD THE ENTIRE S HARE CAPITAL AS BOGUS IN A PROCEEDING U/S 153A OF THE ACT, OVERLOOKING THE FAC T THAT IT IS A CASE OF COMPLETED ASSESSMENT, WHEREIN THE SHARE CAPITAL / S HARE PREMIUM HAD ALREADY BEEN HELD TO BE GENUINE. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 25 24.2 ACCORDING TO THE APPELLANT, THE AO HAS FAILED TO INVESTIGATE THE ISSUE OF SHARE CAPITAL DURING THE COURSE OF ASSESSMENT PROCE EDINGS U/S 153A OF THE ACT AND HAS ADDED THE ENTIRE SHARE CAPITAL AND SHARE PR EMIUM IN A ROUTINE MANNER WITHOUT MAKING ANY EFFORT TO BRING ANY MATERIAL EVI DENCE ON RECORD. 24.3 IT IS THE AO'S DUTY TO ESTABLISH WITH EVIDENCE S THAT THE FACTS STATED BY THE APPELLANT ARE NOT CORRECT, SINCE THE LAW OF BURDEN IS CANONIZED IN COMMON LAW DOCTRINE 'INCUMBITPROBATIO QUI DICIT NON QUI NEGAT', I.E. BURDEN LIES UPON ONE WHO ALLEGES AND NOT UPON ONE WHO DENY THE EXISTENCE OF THE FACT. NEVERTHELESS, THE A.O. APART FROM RAISING SUSPICION S ABOUT THE CREDIT WORTHINESS OF THE PARTIES BASED ON PURE ASSUMPTIONS HAS NOT BROUGHT ON RECORD ANY MATERIAL TO JUSTIFY SUCH SUSPICIONS AND ASSUMPT IONS. IN THE INSTANT CASE, THE A.O. DID NOT CARRY ANY OF HIS DOUBTS TO A LOGIC AL CONCLUSION BY CONVERTING THEM INTO HARD FACTS ON THE BASIS OF EVIDENCES DURI NG THE ASSESSMENT PROCEEDINGS. 24.4 I HAVE ALSO TAKEN NOTE OF THE FACT THAT THERE WAS ENOUGH TIME LEFT FOR COMPLETING ASSESSMENT BUT THE ASSESSING OFFICER HAD PASSED THE ORDER WITHOUT INVESTIGATING IN TO THE FACTS THE APPELLANT'S CASE. THE ASSESSING OFFICER HAD POWERS TO ISSUE SUMMONS TO PARTIES U/S 131 OF THE A CT OR COULD HAVE CALLED FOR INFORMATION U/S 133(6) OF THE ACT. INSTEAD OF DOING THESE EXERCISES, THE AO HAD PASSED THE ORDER WITH A PRE-DETERMINED MIND SET AND MADE THE ADDITION OF THE ENTIRE SHARE CAPITAL WITHOUT MAKING ANY ENQUIRI ES. 24.5 THE HON. SUPREME COURT IN THE CASE OF CIT V. ORISSA CORPORATION P. LTD. 159 JTR 78 HAD HELD, AS UNDER:- 'HELD, THAT IN THIS CASE THE RESPONDENT HAD GIVEN T HE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE K NOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME TAX ASS ESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENU E, APART FROM ISSUING NOTICES U/S 131 AT THE INSTANCE OF THE RESPONDENT, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOU RCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY -WE RE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSUE THE SO CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION TH AT THE RESPONDENT HAD DISCHARGED THE BURDEN THAT LAY ON IT, THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION WAS BASED ON SOME EVIDENCE ON WHICH A CO NCLUSION CAN BE ARRIVED AT, NO QUESTION OF LAW AS SUCH AROSE. THE H IGH COURT WAS RIGHT IN REFUSING TO STATE A CASE.' 24.6 THE DECISION OF HON. BOMBAY HIGH COURT IN THE CASE OF CIT V. CREATIVE WORLD TELEFILM LTD. - 333 ITR 100 (BOMBAY HIGH COURTJBWG RELEVANT IS REPRODUCED HERE-UNDER:- 'HELD, DISMISSING THE APPEAL OF REVENUE THAT THERE WAS NO DISPUTE THAT THE ASSESSEE HAD GIVEN THE DETAILS OF NAMES AND ADDRESS ES OF THE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 26 SHAREHOLDERS, THEIR PAN/GIR NUMBERS AND HAD ALSO GI VEN THE CHEQUE NUMBERS, NAME OF THE BANKERS. THE ASSESSING OFFICER OUGHT TO HAVE FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT D ETAILS OR FROM THEIR BANKERS SO AS TO REACH THE SHAREHOLDERS. THUS, THE VIEW TAKEN BY THE TRIBUNAL COULD NOT BE FAULTED.' 24.7 IT HAS ALSO BEEN CONTENDED BY THE APPELLANT COMPANY THAT THE AO HAD IN THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT NOT MAD E ANY REFERENCE TO THE VITAL FACT THAT NOTICES U/S 133(6) OF THE ACT WERE ISSUED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND IN RESPONSE TO SUCH NOTI CES DETAILED REPLIES HAD BEEN RECEIVED FROM ALL THE SHARE SUBSCRIBERS. FURTHER, T HE APPELLANT HAD CONTENDED THAT THE AO HAD FAILED TO STATE IN THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT, THE VITAL FACT THAT THE SHARE CAPITAL / SHARE PREMIUM H AD BEEN HELD GENUINE BY THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THUS, IT HA D BEEN CONTENDED THAT THE ASSESSMENT ORDER PASSED BY THE AO IS BASED ON THE A PPRECIATION OF WRONG FACTS. SURVEY CONDUCTED U/S 133A ON M/S. GSD TRADING & FIN ANCIAL SERVICES PVT. LTD. 25.0 I HAVE NOTED THAT THE INV. WING HAD CONDUCTED THE SURVEY OPERATION ONLY ON ONE OF THE SHARE SUBSCRIBER VIZ. M/S. GSD TRADING & FINANCIAL SERVICES PVT. LTD. IN PARA 3.6 OF THE ASSESSMENT ORDER PASSED BY THE A SSESSING OFFICER U/S 153A OF THE ACT, IT HAD BEEN CLEARLY STATED THAT A SURVEY U /S. 133A OF ACT HAD BEEN CONDUCTED AT ONE OF THE SHARE ALLOTTEE NAMELY, M/S. GSD TRADING & FINANCIAL SERVICES PVT. LTD.. IT WAS DURING THE COURSE OF THI S SURVEY OPERATION THAT A DETAILED STATEMENT OF MR. RAJESH DAFTARY WAS RECORD ED. THOUGH, THE STATEMENT OF MR. RAJESH DAFTARY WAS RECORDED SPECIFICALLY IN REL ATION TO THE INVESTMENT MADE BY M/S. GSD TRADING & FINANCIAL SERVICES PVT. LTD., IT IS NOTED THAT THE ASSESSING OFFICER HAS GENERALIZED THE STATEMENT OF MR. RAJESH DAFTARY FOR ALL THE SHARE SUBSCRIBERS. ANALYSIS OF THE STATEMENT OF SHRI RAIESH DAFTARY 26.0 THE APPELLANT COMPANY HAD CONTENDED THAT THE O NLY GROUND ON WHICH THE ASSESSING OFFICER HAD MADE THE ADDITION OF THE ENTI RE SHARE CAPITAL IS THE STATEMENT OF ONE MR. RAJESH DAFTARY RECORDED U/S. 1 31(1A) OF THE ACT ON 28 TH JANUARY, 2015 AT RAJKOT. IT HAD ALSO BEEN CONTENDED THAT IN THE STATEMENT OF MR. RAJESH DAFTARY, THERE WAS NOT A SINGLE PIECE OF EVI DENCE TO PROVE THAT THE ENTIRE SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT C OMPANY WAS NOT GENUINE. FURTHER, IT IS CONTENDED THAT MR. RAJESH DAFTARY HA D NEVER ADMITTED THAT HE IS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. 26.1 IT IS ALSO STATED BY THE APPELLANT COMPANY THA T MR. RAJESH DAFTARY HAS CLEARLY STATED IN REPLY TO Q.NO.27 THAT THE TRANSAC TION OF INVESTMENT IN M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD., WAS DONE BY MR, PRAKASH BAGHRECHA, WHO WAS THE DIRECTOR OF THE APPELLANT COMPANY, AT T HE RELEVANT POINT OF TIME. IT HAD BEEN CONTENDED BY THE APPELLANT COMPANY THAT ST ATEMENT OF MR. RAJESH DAFTARY DOES NOT HAVE ANY EVIDENTIARY VALUE, AS HE WAS NOT THE DIRECTOR OF THE APPELLANT COMPANY AT THE TIME WHEN THE IMPUGNED SHA RES WERE SUBSCRIBED AT PREMIUM. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 27 26.2 ON THESE CONTENTIONS, 1 HAVE NOTED THAT AS PER THE TABLE NO. 2 ON THE PAGE 3 OF THE ASSESSMENT ORDER, THE SHARE CAPITAL / PREMIU M HAD BEEN INTRODUCED ON 31.12.2009, 28.02.2010 AND 31.03.2010 I.E. THE SHAR E CAPITAL HAD BEEN INTRODUCED DURING THE CURRENT ASSTT. YEAR UNDER CONSIDERATION VIZ. A.Y. 2010-11. HOWEVER, AS PER THE MATERIAL ON RECORD, MR. RAJESH DAFTARY H AD BECOME THE DIRECTOR OF THE M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD., ON 24.06.2011. THUS, THE CLAIM OF THE APPELLANT THAT IT WAS MR. PRAKASH BAGHRECHA, WHO WAS CONTROLLING THE AFFAIRS OF THE APPELLANT COMPANY AT THE TIME OF SUB SCRIPTION OF THE SHARE CAPITAL IN THE APPELLANT COMPANY, APPEARS TO BE FACTUALLY, CORRECT. IT NEEDS TO BE EMPHASIZED HERE THAT THERE IS NO STATEMENT OF SHRI PRAKASH BAGRECHA, WHICH IS PART OF THE MATERIAL ON RECORD. 26.3 I HAVE TAKEN COGNIZANCE OF THE FACT THAT THE A PPELLANT COMPANY HAD MADE, A WITHOUT PREJUDICE CONTENTION THAT EVEN IF IT IS ASS UMED THAT STATEMENT OF MR. RAJESH DAFTARY HAD ANY EVIDENTIARY VALUE, THEN ALSO HE WAS THE DIRECTOR OF ONLY ONE COMPANY NAMELY M/S GSD TRADING & FINANCIAL SERV ICES PVT. LTD. THUS, ACCORDING TO THE APPELLANT, IF THE STATEMENT OF MR. RAJESH DAFTARY IS TO BE CONSIDERED AS INCRIMINATING, THEN IT SHOULD BE REST RICTED TO THE INVESTMENT MADE BY M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD. O NLY AND THE STATEMENT OF MR. RAJESH DAFTARY SHOULD NOT BE GENERALISED ON CON JECTURES AND SURMISES TO COVER ALL THE SHAREHOLDERS. 26.4 I HAVE GONE THROUGH THE STATEMENT OF MR. RAJES H DAFTARY, A COPY OF WHICH HAD BEEN FILED DURING THE COURSE OF APPELLATE PROCE EDINGS. THE STATEMENT OF MR. RAJESH DAFTARY HAD BEEN RECORDED U/S. 131(1A) OF TH E ACT ON 28.01.2015 AT M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD., 'ARIHAN T', SHRAMJIVI SOCIETY, DHEBAR ROAD, OPP. ANDHMAHLLA VIKAS GRUH, DHEBAR ROAD, RAJK OT. THE RELEVANT PORTION OF THE STATEMENT OF MR. RAJESH DAF TARY IS REPRODUCED HEREUNDER;- 'Q2 PLEASE MENTION THE NAME OF BUSINESS CONCERNS IN WHICH YOU AND YOUR FAMILY MEMBERS ARE INTERESTED. ANS. SIR, THE LIST OF BUSINESS CONCERNS IN WHICH M E AND MY FAMILY MEMBERS HAVE INTEREST: SR. NO. NAME OF BUSINESS CONCERN NAME OF THE FAMILY MEMBER RELATION 1. D.S. INTEGRATED FINSEC PVT, LTD, SELF AND ILA RAJESH DAFTARY, AND AMI RAJESH DAFTARY WIFE AND DAUGHTER 2. SAMVEDN BUILDERS PVT LTD. S ELF AND ILA RAJESH DAFTARY SELT AND WIFE 3. GSD TRADING & FINANCIAL SERVICES PVT. LTD. SELF, ILA R. DAFTARY SELF AND WIFE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 28 4. ARIHANT SOFTWARE PVT. LTD. SELF SELF 5. ARIHANT ENTERPRISE SELF SELF 6. AMI INVESTMENT ILA R. DAFTARY WIFE 7. RAJESH J. DAFTARY HUF KARTA SELF Q.3 PLEASE MENTION THE NAME OF BUSINESS CONCERNS WH ICH ARE CONTROLLED BY YOU. ANS. THE ONLY CONCERNS CONTROLLED BY ME OR MY FAMIL Y MEMBERS ARE AS UNDER: SR. NO. NAME OF BUSINESS CONCERN NAME OF THE FAMILY MEMBER RELATION 1. D.S. INTEGRATED FINSEC PVT. LTD. SELF AND ILA RAJESH DAFTARY, AND AMI RAJESH DAFTARY WIFE AND DAUGHTER 2. SAMVEDN BUILDERS PVT. LTD. SELF AND ILA RAJESH DAFTARY SELT AND WIFE 3. GSD TRADING & FINANCIAL SERVICES PVT. LTD. SELF, ILA R. DAFTARY SELF AND WIFE 4. ARIHANT SOFTWARE PVT. LTD. SELF SELF 5. ARIHANT ENTERPRISE SELF SELF 6. AMI INVESTMENT ILA R. DAFTARY WIFE 7. RAJESH J. DAFTARY HUF KARTA SELF 26.5 AS PER THE REPLY TO Q. NO, 2 & 3, IT IS EVIDEN T THAT OUT OF THE ABOVE- MENTIONED SEVERAL ENTITIES, THERE IS ONLY ONE COMPA NY, NAMELY M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD., WHICH HAD S UBSCRIBED TO THE SHARE CAPITAL OF THE APPELLANT COMPANY. IN THIS REGARD, R EFERENCE MAY ALSO BE MADE TO THE VARIOUS BUSINESS ACTIVITIES CARRIED OUT BY T HE GROUP COMPANIES OF MR. RAJESH DAFTARY, WHICH ALSO REFERS TO ONLY ONE OF TH E SHARE SUBSCRIBER NAMELY M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD. THE RELEVANT Q.NO.6 & 7 AND THE ANSWER TO THE SAME IS REPRODUCED, HEREUNDER :- *Q.6KINDTY MENTION THE BUSINESS ACTIVITIES BEING CA RRIED OUT BY YOUR GROUP COMPANIES AND CONCERNS OF YOUR FAMILY. ANS. SIR, IN THIS REGARD I WOULD LIKE TO STATE THAT : ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 29 SR. NO. NAME OF THE COMPANY BRIEF OF BUSINESS ACTIVITY 1. M/S. D. S. INTEGRATED FINSEC PVT. LTD. THIS COMPANY WAS PURCHASED FROM A PARTY FROM AHMEDABAD, THE NAME OF CONTACT PERSON NAMED CHAVDA, WHO IS A CA. I DON'T REMEMBER EXACT DETAILS OF CONCERNED PERSON. THE COMPANY IS NBFC AND INTO THE BUSINESS OF FINANCE. THE BOOKS OF ACCOUNTS ARE BEING MAINTAINED AT OUR OFFICE AT ARIHANT, SHARAMJIVI SOCIETY, OPP. ANDHMAHILAVIKASGRUH, DHEBAR ROAD, RAJKOT. 2. M/S. SAMVEDNA BUILDERS PVT. LTD. THIS COMPANY WAS PURCHASED FROM A PARTY FROM AHMEDABAD, THE NAME OF CONTACT PERSON NAMED CHAVDA, WHO IS A CA. I DON'T REMEMBER EXACT DETAILS OF CONCERNED PERSON. THE COMPANY IS ENGAGED IN THE BUSINESS OF BUILDING AND CONSTRUCTION. THE BOOKS OF ACCOUNTS ARE BEING MAINTAINED AT OUR OFFICE AT SURVEY NO. 65, VAGUDAD ROAD, VAJDIVAD, KALAWADROAD, RAJKOT. 3. M/S. GSD TRADING & FINANCIAL SERVICES PVT. LTD. THIS COMPANY WAS PURCHASED FROM A PARTY FROM AHMEDABAD, THE NAME OF CONTACT PERSON NAMED CHAVDA, WHO IS A CA. I DON'T REMEMBER EXACT DETAILS OF CONCERNED PERSON. THE COMPANY IS NBFC AND INTO THE BUSINESS OF FINANCE. THE BOOKS OF ACCOUNTS ARE BEING MAINTAINED AT OUR OFFICE AT FF-83, SAMRUDDHI BHAVAN, OPP. BOMBAY PETROL PUMP, GONDAL ROAD, RAJKOT-360002 ANDARIHANT, SHARAMJIVI SOCIETY, OPP. ANDHMAHILAVIKASGRUH, DHEBARROAD, RAJKOT. 4. M/S. ARIHANT SOFTWARE PVT. LTD. THIS IS A FAMILY PROMOTED COMPANY. IT WAS INCORPORATED IN THE YEAR 2004. THIS COMPANY IS NOT ENGAGED IN ANY BUSINESS AT PRESENT. IT HAS ONLY INTEREST INCOME. THE BOOKS OF ACCOUNTS ARE BEING MAINTAINED AT OUR OFFICE AT 9TH FLOOR, OPP. RADIO STATION, ADINATH TOWERS, RAJKOT. Q.7 PLEASE STATE THE NAMES OF THE COMPANY/CONCERN W HICH ARE BEING RUN FROM THIS BUSINESS PREMISES I.E. 'ARIHANT' SHRAMJIVI SOC IETY, DEBAR ROAD OPP. ANDHMAHILA VIKAS GRUH, RAJKOT. ANS. THE FOLLOWING COMPANIES/CONCERNS ARE BEING RUN FROM THE ABOVE BUSINESS PREMISE: ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 30 (1) M/S. D.S. INTEGRATED FINSEC PVT. LTD. (2) M/S. GSD TRADING & FINANCIAL SERVICES PVT. LTD. (3) M/S. SAMVEDNA BUILDERS PVT. LTD. (4) M/S. ARIHANT SOFTWARE PVT. LTD. (5) M/S. ARIHANT ENTERPRISE, PROP. RAJESHBHAIJ. DAF TARY (6)M/S. AMEE INVESTMENT, PROP. ILABEN RAJESHBHAI DA FTARY RECORDING OF THE STATEMENT IS ADJOURNED FOR LUNCH BREAK. RECORDING O F THE STATEMENT RESUMED ON 28-01-2015 AT 3:30 P.M.' 26.6 A PERUSAL OF THE REPLY TO Q. NO. 6 & 7 OF ABOV E STATEMENT REVEALS THAT M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD., HAD BEE N PURCHASED BY MR. RAJESH DAFTARY THROUGH A PARTY FROM AHMEDABAD. THE QUESTIO N NO. 24, 25 AND 26 ARE DIRECTLY RELATED TO THE APPELLANT COMPANY AND BEING IMPORTANT ARE REPRODUCED ALONG-WITH THE RELEVANT REPLIES, HEREUNDER.:- 'Q.24 PLEASE FURNISH DETAILS OF INVESTMENT BY YOUR COMPANY IN GEETANJALI SPACE PVT LTD. ANS. SIR, I DO NOT HAVE COMPLETE DETAILS AT THE MOM ENT. THOUGH THE COMPANY M/S. GSD TRADING & FINANCIAL SERVICES PVT L TD HAD INVESTMENT WAS MAD WHEN I WAS NOT DIRECTOR OF THE COMPANY. THI S INVESTMENT WAS SOLD IN THE FINANCIAL YEAR 2010-11. AT THAT TIME AL SO, SH. PRAKASH BAGRECHA WAS THE DIRECTOR OF THE COMPANY. THIS INVE STMENT WAS SOLD IN THE FINANCIAL YEAR 2010-11.AT THAT TIME ALSO SH. PR AKASH BAGRECHA WAS \ THE DIRECTOR OF THE COMPANY. I DO NOT HAVE RECORDS AS REGARDS SALE OF THESE SHARES AT THIS MOMENT. I WILL CONTACT MR. PRAKASH B AGRECHA AND SUBMIT THE REQUIRED DETAILS LATER. Q.25. THE AMOUNT OF RS. 7.91 CRORES IS A B IG AMOUNT. IT DOES NOT APPEAR TO BE CREDIBLE THAT YOU DON'T KNOW THE SALE OF SECURITIES WHICH WERE PURCHASED FOR RS. 7.91 CRORES. ANS. SIR, THIS TRANSACTION WAS DONE WHEN MR. PRAKAS H BAGRECHA WAS I DIRECTOR OF THE COMPANY AND WHEN HE CONTROLLED AFFA IRS OF THE COMPANY. I WILL CONTACT MR. PRAKASH BAGRECHA AND SUBMIT THE RE QUIRED DETAILS IN THIS REGARD LATER. Q26. A CHART AS UNDER IS PREPARED AS UNDER, OF INVE STMENTS MADE IN GEETANJALI SPACE PVT LTD ON THE BASIS OF RECORDS OF YOUR OFFICE. F.Y. 2009-2010 A.Y. 2010-2011 DATE CORRESPONDING RECEIVED PA YMENT/INV AMOUNT IMMEDIATE RECEIPT IN KOTAK MAHINDRA BANK ON ACCOUNT OF CHEQUE ISSUED BY AMOUNT ESTMENT MADE IN FAVOUR OF ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 31 23.02.2010 JASMINE VINTRADE LTD 9790000 23.02.2010 GEETANJALI SPACE PVT LTD 4350000 24.02.2010 DAFFODIL COMMOTRADE PVT LTD 10000000 24.02.2010 GEETANJALI SPACE PVT LTD 10000000 25.02.2010 FANTASTIC VINCOM PVT LTD 10000000 25.02.2010 GEETANJALI SPACE PVT LTD 10000000 03.03.2010 SATYAM IN VESTMENT MANAGEMENT PVT LTD 8000000 04.03.2010 JASMINE VINTRADE PVT LTD 4500000 04.03.2010 GEETANJALI SPACE PVT LTD 9650000 05.03.2010 JASMINE VINTRADE PVT LTD 1550000 05.03.2010 GEETANJALI SPACE PVT LTD 1550000 08.03.2010 FANTASTIC VINCOM PVT LTD 10000000 08.03.2010 GEETANJALI SPACE PVT LTD 5000000 09.03.2010 GEETANJALI SPACE PVT LTD 5000000 11.03.2010 JASMINE VINTRADE PVT LTD 4000000 11.03.2010 GEETANJALI SPACE PVT LTD 4000000 17.03.2010 DAFOODILCOMMOTRADE PVTLTD 5000000 ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 32 17.03.2010 GEETANJALI SPACE PVT LTD 5000000 19.03.2010 DAFFODIL COMMOTRADE PVT LTD 5000000 19.03.2010 GEETANJALI SPACE PVT LTD 5000000 22.03.2010 DAMODAR TIE UP PVT LTD 5000000 22.03.2010 GEETANJALI SPACE PVT LTD 5000000 23.03.2010 DAFFODIL COMMOTRADE PVT LTD 5000000 - . 23.03.2010 GEETANJALI SPACE PVT LTD 4450000 25.03.2010 DAMODAR TIE UP PVT LTD 4000000 25.03.2010 GEETANJALI SPACE PVT LTD 3000000 29.03.2010 DAMODAR TIE UP PVTLTD 4900000 29.03.2010 GEETANJALI SPACE PVT LTD 2100000 29.03.2010 DAMODAR TIE UP PVT LTD 10100000 31.03.2010 GEETANJALI SPACE PVT LTD 5000000 23.02.2010 JASMINE VINTRADE LTD 9790000 23.02.2010 GEETANJALI SPACE PVT LTD 4350000 ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 33 PLEASE GO THROUGH THE SAME AND EXPLAIN THE ABOVE EN TRIES. ANS. SIR, THIS TRANSACTION WAS DONE WHEN MR. PRAKAS H BAGRECHA WAS DIRECTOR OF THE COMPANY AND WHEN HE CONTROLLED AFFAIRS OF THE C OMPANY. I WILL CONTACT MR. PRAKASH BAGRECHA AND SUBMIT THE REQUIRED DETAILS IN THIS PLATER'. 26.7 IN REPLY TO THE QUERY ON INVESTMENT MADE BY M/ S GSD TRADING & FINANCIAL SERVICES PVT. LTD. IN THE APPELLANT COMPA NY, IT IS CLEARLY STATED BY SHRI. RAJESH DAFTARY THAT HE DOES NOT HAVE THE COMP LETE DETAILS. IN FACT, SHRI. RAJESH DAFTARY HAD FAILED TO SUBMIT ANY DETAILS REGARDING THE INVE STMENT MADE IN THE APPELLANT COMPANY. HE HAS SHIFTED THE ENTIRE O NUS ON MR. PRAKASH BAGHRECHA BY CLAIMING THAT THESE TRANSACTIONS WERE DONE BY HI M AND HE CONTROLLED THE AFFAIRS OF THE COMPANY. A PERUSAL OF THE CHART REPRODUCED IN Q. NO. 26 CLEARLY REVEALS THAT MR. RAJESH DAFTARY HAD BEEN DULY CONFRONTED WI TH THE ADVERSE MATERIAL THAT CHEQUES HAD BEEN RECEIVED BY M/S GSD TRADING & FINA NCIAL SERVICES PVT. LTD. AND THE AMOUNTS WERE IMMEDIATELY TRANSFERRED TO THE APPELLANT COMPANY. 26.8 I HAVE GONE THROUGH THE STATEMENT OF MR. RAJES H DAFTARY AND NOTED THAT IT IS ONLY ABOUT ONE SHAREHOLDER, NAMELY M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD., ABOUT WHICH SHRI. RAJESH DAFTARY HAD BEEN QUE STIONED AND HE HAD FAILED TO SUBMIT ANY PLAUSIBLE EXPLANATION ABOUT THE SOURCE O F INVESTMENT MADE IN THE APPELLANT COMPANY. NO DOCUMENTARY EVIDENCE HAD BEEN FURNISHED BY SHRI. RAJESH DAFTARY IN RELATION TO THE INVESTMENT MADE B Y M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD. HENCE, THE STATEMENT O F MR. RAJESH DAFTARY IN RELATION TO M/S GSD TRADING & FINANCIAL SERVICES PV T. LTD. IS CONSIDERED AS AN INCRIMINATING MATERIAL FOR THE PURPOSE OF MAKING AN ASSESSMENT U/S 153A OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER IS EMPOWERE D TO CONSIDER THE SAME IN THE PROCEEDINGS U/S. 153A OF THE ACT. 26.9 IN THE CASE OF COMMISSIONER OF INCOME-TAX, THICHUR VS. ST. FRANCIS CLAY DECOR TILES [2016] 70 TAXMANN.COM 234 (KERALA), THE HON'BLE KERALA HIGH COURT HAS HELD THAT NEITHER UNDER SECTION 132 OR UN DER SECTION 153A, PHRASEOLOGY 'INCRIMINATING' IS USED BY PARLIAMENT, THEREFORE, A NY MATERIAL UNEARTHED DURING SEARCH OPERATIONS OR ANY STATEMENT MADE DURING COUR SE OF SEARCH BY ASSESSEE IS A VALUABLE PIECE OF EVIDENCE IN ORDER TO INVOKE SECTI ON 153AOFTHEACT. 26.10 IN THE CASE OF B. KISHORE KUMAR VS CIT, 234 TAXMAN 771(SC), THE HON'BLE SUPREME COURT HAS DISMISSED THE SLP AGAINST HIGH COURT'S ORDER, WHEREIN IT WAS HELD THAT SINCE ASSESSEE HIMSELF HAD STATED IN SWORN STATEMENT DURING SEARCH AND SEIZURE ABOUT HIS UNDISCLOSED INC OME, TAX WAS TO BE LEVIED ON BASIS OF ADMISSION WITHOUT SCRUTINIZING DOCUMENTS. FURTHER, IT WAS HELD THAT IT IS NOT THE CASE OF THE ASSESSEE THAT THE ADMISSION MADE BY HIM WAS INCORRECT OR THERE IS A MISTAKE. WHEN THERE IS A CLEAR AND CATEG ORICAL ADMISSION OF THE UNDISCLOSED INCOME BY THE ASSESSEE HIMSELF, THERE I S NO NECESSITY TO SCRUTINIZE THE DOCUMENTS. 26.11 IN THE CASE OF DAYAWANTI THROUGH'SMT SUNITA GUPTA &ANR VS. CIT &ANR. (2016) 290 CTR 0361 (DEL) : (2016) 143 DTR 02 09 (DEL) : (2017) 390 ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 34 ITR 0496 (DELHI), THE HONTDLE DELHI HIGH COURT HAD HELD THAT WHEN STATEMENTS WERE MADE UNDER OATH AND WERE PART OF RE CORD AND CONTINUED TO BE SO, THEIR PROBATIVE VALUE IS UNDENIABLE; HENCE ASSE SSEE'S ARGUMENT THAT THEY COULD NOT BE ACTED UPON OR GIVEN ANY WEIGHT IS INSU BSTANTIAL AND MERITLESS. THE RELEVANT PORTION OF THE SAID JUDGMENT IS REPROD UCED HEREUNDER:- '20. THE LYNCHPIN OF THE ASSESSEE'S SUBMISSIONS ON THIS ASPECT IS ALSO THAT THE STATEMENTS WERE NOT RECORDED DURING THE SEARCH BUT LATER AND THAT THEY CANNOT BE CONSIDERED OF ANY VALUE. THIS COURT IS UN -PERSUADED WITH THE SUBMISSION. THE SEARCH WAS CONDUCTED ON 22-03-2006. VARIOUS MATERIALS: DOCUMENTS, AGREEMENTS, INVOICES AND STATEMENTS IN T HE FORM OF ACCOUNTS AND CALCULATIONS WERE SEIZED. ON 18 APRIL 2006 AND 3 MAY 2006, THE ASSESSEE'S SONS (INCLUDING ONE OF THE APPELLANTS, A BHAY GUPTA) RECORDED STATEMENTS UNDER OATH; THE ASSESSEE TOO MADE HER ST ATEMENT UNDER OATH, ADMITTING THAT THOUGH RETURNS WERE FILED OSTENSIBLY ON HER BEHALF, SHE WAS NOT IN CONTROL OF THE BUSINESS. SHE AND ALL OTHER F AMILY MEMBERS MADE SHORT STATEMENTS AND ENDORSED THE STATEMENTS UNDER OATH, OF THOSE WHO ELABORATED THE TRADING AND BUSINESS OPERATIONS RELA TING TO CLANDESTINE INCOME. THESE STATEMENTS UNDER OATH WERE PART OF TH E RECORD AND CONTINUED TO BE SO. THEY WERE NEVER EXPLAINED IN AN Y REASONABLE MANNER. THEIR PROBATIVE VALUE IS UNDENIABLE; THE OCCASION F OR MAKING THEM AROSE BECAUSE OF THE SEARCH AND SEIZURE THAT OCCURRED AND THE SEIZURE OF VARIOUS DOCUMENTS, ETC. THAT POINTED TO UNDECLARED INCOME. IN THESE CIRCUMSTANCES, THE ASSESSEE'S ARGUMENT THAT THEY CO ULD NOT BE ACTED UPON OR GIVEN ANY WEIGHT IS INSUBSTANTIAL AND MERITLESS. THIS COURT ALSO NOTICES THAT THE DECISION IN CIT VS. ANIL BHATIA 352 ITR 49 3 (DEL) WHICH HELD THAT SUCH STATEMENTS ARE RELEVANT, THOUGH NOTICED, HAS N OT BEEN DOUBTED IN ANY LATER DECISION, INCLUDING KABUL CHAWLA, WHICH IS TH E MAINSTAY OF THE ASSESSEE'S CASE. CONSEQUENTLY THE FIRST QUESTION OF LAW IS ANSWERED AGAINST THE ASSESSEE AND IN THE REVENUE'S FAVOUR.' 26.12 TO CONCLUDE, IT IS HELD THAT THE STATEMENT OF SHRI. RAJESH DAFTARY IS TO BE CONSIDERED AS INCRIMINATING ONLY WITH RESPECT TO TH E INVESTMENT MADE BY M/S GSD TRADING & FINANCIAL SERVICES PVT. LTD. AS FAR A S THE OTHER SHAREHOLDERS ARE CONCERNED, SINCE THERE IS NO REFERENCE TO THEM IN T HE SAID STATEMENT OF MR. RAJESH DAFTARY, THE SAME CANNOT BE TREATED_AS INCRIMINATIN G FOR OTHER SHAREHOLDERS. ACCORDINGLY, THE GROUND NOS. 1 TO 4 OF THE PRESENT APPEAL RAISING JURIS DIE TIONAL ISSUE RELATING TO THE SCOPE OF SECTION 153A OF THE ACT IN A CASE OF COMPLETED ASSESSMENT IS PARTLY ALLOWED. 6. NOW THE ASSESSEE IS IN APPEAL BEFORE US CHALLENG ING THE ORDER OF LD. CIT(A) BOTH ON LEGAL ISSUE CHALLENGING THE JURISDICTION OF THE AO TO MAKE ADDITION QUA SHARE C APITAL AND SHARE PREMIUM DE HORS INCRIMINATING MATERIALS FOUND DURING THE SEARCH AS WELL AS ON MERIT WHEREAS THE REVENUE HAS ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 35 CHALLENGED ONLY THE ISSUE ON MERIT AND NO JURISDICT IONAL ISSUE WAS RAISED IN REVENUES APPEAL. 7. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE THE BEN CH THAT THE ISSUE OF SHARE CAPITAL OF ISSUING 2418400 EQUI TY SHARES WHEREBY THE ASSESSEE RAISED RS.30,23,00,000/- FROM 16 ENTITIES TO WHOM THE SHARES WERE ISSUED AT A FACE VALUE OF R S.10/- EACH AT A PREMIUM OF RS.115/- COMPRISING RS.2,41,84,000/ - AS SHARE CAPITAL AND RS.27,81,16,000/- SHARE PREMIUM ACCOUNT WAS EXAMINED THOROUGHLY IN THE ORIGINAL ASSESSMENT PROC EEDINGS BY CALLING UPON THE ASSESSEE TO SUBMIT THE VARIOUS DET AILS SUCH AS SHARE APPLICATION FORM, BANK STATEMENTS, ITRS, CONF IRMATIONS, PANS AND FINANCIAL STATEMENTS WHICH WERE DULY SUBMI TTED BEFORE THE AO AND AO AFTER EXAMINING ALL THESE DETA ILS AND ALSO AFTER CARRYING OUT INDEPENDENT VERIFICATIONS BY ISS UING NOTICE UNDER SECTION 133(6) OF THE ACT TO 16 PARTIES FRAME D THE ASSESSMENT BY ACCEPTING THE SHARE CAPITAL/SHARE PRE MIUM AS GENUINE. THE LD. A.R. ALSO REFERRED TO THE REPLY F ILED BY THE M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. A COPY OF WHICH IS FILED AT PAGE NO.15 OF THE PAPER BOOK. THE LD. A.R . SUBMITTED THAT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SAID INVESTOR STOOD EXAMINED BY THE AO IN THE ORIGINAL A SSESSMENT PROCEEDINGS WHICH CULMINATED IN FRAMING THE ORDER U NDER SECTION 143(3) OF THE ACT DATED 18.03.2013. THE LD . A.R. SUBMITTED THAT ON THE DATE OF SEARCH THE ASSESSMENT HAS ALREADY ATTAINED FINALITY AND THUS HAS NOT ABATED ON THE D ATE OF SEARCH. THEREFORE, ANY ADDITION TO BE MADE IN THE ASSESSMEN T FRAMED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT HAS TO BE ON THE BASIS OF INCRIMINATING MATERIAL AS FOUND AND SEIZED DURING THE COURSE OF SEARCH AND NOT OTHERWISE. THE LD. A.R. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 36 VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A) ON THI S GROUND THAT LD. CIT(A) HAS ACCEPTED THIS LEGAL ISSUE THAT ANY ADDITION IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) READ WIT H SECTION 153A CAN ONLY BE MADE ON THE BASIS OF INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF SEARCH AND THUS DELETED THE ADDITION TO THE EXTENT OF RS.22,32,00,000/-, HOWEVER, STRONG LY OPPOSED THE ORDER OF LD. CIT(A) IN TREATING THE STATEMENT O F SHRI RAJESH DAFTARY RECORDED DURING THE COURSE OF SURVEY PROCEE DINGS ON OATH THAT THE SAID STATEMENT CONSTITUTED AN INCRIMI NATING MATERIAL. THE LD. A.R. CONTENDED THAT THE AO HAS M ADE THE ADDITION IN RESPECT OF ENTIRE SHARE CAPITAL RECEIPT IN THE ASSESSMENT PROCEEDINGS BY SOLELY RELYING ON THE STA TEMENT OF SHRI RAJESH DAFTARY TAKEN IN SURVEY PROCEEDINGS UND ER SECTION 133A OF THE ACT WHICH WAS DELETED BY LD. CIT(A) TO THE EXTENT OF RS.22,32,00,000/- IN RESPECT OF 15 INVESTORS AND TH US THE LD. CIT(A) HAS ERRED IN CONSIDERING THE STATEMENT OF SH RI RAJESH DAFTARY TO BE AN INCRIMINATING MATERIAL IN RESPECT OF INVESTMENT MADE BY M/S. GSD TRADING AND FINANCIAL SERVICES PVT . LTD. AMOUNTING TO RS. 7,91,00,000/-. THE LD. A.R. ARGUED THAT IN THE STATEMENT OF SHRI RAJESH DAFTARY THERE IS NO REFERE NCE TO THE SEARCH WHICH WAS CARRIED OUT ON THE ASSESSEE AND HE NEVER ADMITTED THAT HE WAS ENGAGED IN THE BUSINESS OF PRO VIDING ACCOMMODATION ENTRIES. THE LD. A.R. ARGUED THAT SH RI RAJESH DAFTARY HAS ONLY STATED IN ANSWER TO THE QUESTION N O.2 & 3 THAT HE HAD CONTROL OVER M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. WHEN THE INVESTMENT WAS MADE AND THEREAFT ER IN REPLY TO QUESTION NO.11 HE STATED THAT SHARE HOLDING IN M /S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. HE GOT CO NTROL OF THE COMPANY ONLY ON 28.05.2010 WHEREAS THE TRANSACTION OF ISSUE OF ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 37 SHARES HAD TAKEN PLACE ON 28.02.2010 AND 31.03.2010 . THE LD. A.R. FURTHER REFERRED TO THE STATEMENT SPECIFICALLY QUERY NO.24 OF THE STATEMENT IN REPLY TO WHICH SHRI RAJESH DAFTARY HAS STATED THAT M/S. GSD TRADING AND FINANCIAL SERVICES PVT. L TD. HAD MADE INVESTMENTS IN THE ASSESSEE COMPANY WHEN HE WA S NOT A DIRECTOR/SHAREHOLDER OF THE COMPANY AND AT THAT TIM E SHRI PRAKASH BARECHA WAS THE DIRECTOR AND SHAREHOLDER OF THE COMPANY. THUS THE LD. COUNSEL SUBMITTED THAT IT IS PROVED BEYOND DOUBT THAT STATEMENT OF SHRI RAJESH DAFTARY CAN NOT HAVE ANY EVIDENTIARY VALUE SO FAR AS THE INVESTMEN T BY M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. IS CON CERNED. THE LD. COUNSEL THEREAFTER REFERRED TO THE QUESTION NO. 26 IN WHICH A CHART SHOWING INVESTMENTS IN THE ASSESSEE COMPANY I S TABULATED WHICH INCLUDES DATE OF INVESTMENTS, CORRESPONDING R ECEIPT IN KOTAK MAHINDRA BANK AND INVESTMENT AMOUNT ETC. THE LD. A.R. SPECIFICALLY REFERRED TO PAGE NO.66 OF THE PAPER BO OK WHICH CONTAINS THE DETAILS OF INVESTMENTS MADE BY M/S. GS D TRADING AND FINANCIAL SERVICES PVT. LTD. AND THE SAID PAYME NT DETAILS WITH THE INVESTMENT CHART PROVIDED IN THE STATEMENT IN QUESTION NO.26. THE LD. COUNSEL CONTENDED THAT THERE IS NOT HING IN THE STATEMENT OF SHRI RAJESH DAFTARY WHICH COULD BE CON STRUED AS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE LD. COUNSEL DREW THE ATTENTION TO THE BENCH TO PAGE NO.64 TO 83 THE DOCUMENTS IN THE FORM OF APPLICATION FOR ALLOTM ENT OF EQUITY SHARES, PAYMENT DETAILS, COPIES OF BANK STATEMENTS, AUDITED ANNUAL ACCOUNTS, MEMORANDUM OF ARTICLE OF ASSOCIATI ON AND ITR OF M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD . AND ALSO THE DETAILS OF THE BANK ACCOUNT FROM WHERE THE PAYM ENTS WERE MADE. THE LD. A.R. ALSO SUBMITTED THAT IN A.Y. 201 0-11 THE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 38 CASE OF THE INVESTOR M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. WAS COMPLETED UNDER SECTION 143(3) AND TH E INVESTOR HAD A NET WORTH OF RS.23.55 CRORES AND INVESTMENTS OF RS.321.77 CRORES WHICH CLEARLY PROVED THE GENUINENE SS OF THE TRANSACTION. THE LD. A.R. FINALLY SUMMING UP HIS A RGUMENTS SUBMITTED THAT THERE IS NO EVIDENCE/MATERIAL IN T HE POSSESSION OF THE AO WHICH IS CONTRARY TO THE MATERIAL PRODUCE D THE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS OR DURING THE P ROCEEDINGS UNDER SECTION 153A OF THE ACT. FINALLY, THE LD. A. R. SUBMITTED BEFORE THE BENCH THAT THE ADDITION AS SUSTAINED BY LD. CIT(A) TO THE TUNE OF RS.7,91,00,000/- QUA INVESTMENT MADE BY M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. IS WRONG A ND AGAINST THE FACTS ON RECORD AND ALSO AGAINST THE DECISION O F THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTA L WAREHOUSE CORPORATION LTD. 374 ITR 645 WHEREIN IT H AS BEEN HELD THAT IF THERE IS NO INCRIMINATING MATERIAL FOU ND DURING THE COURSE OF SEARCH IN RESPECT OF UNACCOUNTED INCOME T HEN FOR COMPLETED ASSESSMENTS NO ADDITION CAN BE MADE IN TH E ORDER FRAMED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. THE LD COUNSEL CONTENDED THAT IN THE PRESENT CASE A LSO SINCE THERE IS NO INCRIMINATING MATERIAL SEIZED BY THE SE ARCH PARTY DURING THE COURSE OF SEARCH IN RESPECT OF THE INVES TMENTS BY M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. A ND WHATEVER WAS FOUND WAS ONLY THE FORM OF SHARE APPLICATION F ORM, COPY OF BANK ACCOUNT, COPY OF AUDITED FINANCIAL STATEMENT, COPY OF MEMORANDUM OF ARTICLE OF ASSOCIATION, COPY OF ITRS ETC. AND THEREFORE ARE IN NO WAY CAN BE CONSIDERED AS INCRIM INATING MATERIAL. THE LD. A.R., THEREFORE, PRAYED THAT THE ADDITION RS.7,91,00,000/- MAY KINDLY BE DELETED ON THE GROUN D THAT ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 39 THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH QUA THE SAID INVESTMENT. 8. THE LD. D.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF AO AND LD. CIT(A) TO THE EXTENT THAT ADDITION WA S MADE RIGHTLY ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH AND ALSO ON THE BASIS OF STATEMENT OR SHRI RAJESH DAFTA RY WHO WAS A DIRECTOR, SHAREHOLDER IN THE INVESTOR COMPANY THAT HE WAS NOT A DIRECTOR/SHAREHOLDER ON THE DATE OF INVESTMENT IN T HE ASSESSEE COMPANY AND ONLY TAKEN OVER THE COMPANY ON 28.05.2 010 WHEREAS THE TRANSACTION OF ISSUE OF SHARES HAD TAKE N PLACE ON 28.02.2010 AND 31.03.2010. THE LD. D.R. STRESSED U PON THE STATEMENT OF SHRI RAJESH DAFTARY WHO DENIED TO HAVE ANY KNOWLEDGE OF THE INVESTMENTS MADE BY THE M/S. GSD T RADING AND FINANCIAL SERVICES PVT. LTD. IN THE ASSESSEE CO MPANY BY CITING THE REASON THAT HE WAS NOT A DIRECTOR OR SHA REHOLDER ON THE DATE OF INVESTMENT. THE LD. D.R. RELIED HEAVIL Y ON THE ORDER OF AUTHORITIES BELOW TO EMPHASIZE HIS ARGUMENTS THA T THE STATEMENT OF SHRI RAJESH DAFTARY WAS A SUFFICIENT A ND INCRIMINATING MATERIAL AND JUSTIFYING THE ADDITIO N IN THE HANDS OF THE ASSESSEE. FINALLY, THE LD. D.R. SUBMITTED B EFORE THE BENCH THAT ORDER OF LD. CIT(A) DESERVED TO BE AFFIR MED ON THE ISSUE OF UPHOLDING OF RS.7,91,00,000/- ADDITION QUA INVESTMENT BY M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD . AS THE SAME IS BASED UPON INCRIMINATING MATERIAL AND THE A PPEAL OF THE ASSESSEE DESERVES DISMISSAL. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IM PUGNED ORDER AND DECISIONS CITED BY THE LD. A.R. THE UNDI SPUTED FACTS ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 40 ARE THAT DURING THE YEAR THE ASSESSEE RAISED SHARE CAPITAL OF RS.30,23,00,000/- COMPRISING RS.2,41,84,000/- TOWAR DS SHARE CAPITAL AND RS.27,81,16,000/- QUA SHARE PREMIUM WHI CH THE ASSESSEE RAISED BY ISSUING 24,84,400 EQUITY SHARES OF FACE VALUE OF RS.10/- AT A PREMIUM OF RS.115/- FROM 16 PARTIE S. THE CASE OF THE ASSESSEE WAS DONE UNDER SCRUTINY AND THE ORD ER WAS PASSED UNDER SECTION 143(3) DATED 18.03.2013. DURI NG THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THE AO RAISED SPECIFIC QUERIES ON THIS ISSUE OF SHARE CAPITAL W HICH WAS RESPONDED TO BY THE ASSESSEE BY FILING THE NECESSAR Y DETAILS SUCH AS SHARE APPLICATION FORMS, BANK STATEMENTS, ITRS ,CONFIRMATIONS ALONG WITH BANK AND FINANCIAL STATEM ENTS OF THE INVESTORS. THE ASSESSEE HAD ALSO JUSTIFIED THE ISSU E OF SHARES AT PREMIUM BY SUBMITTING VALUATION REPORT AND THE DETA ILS OF SHAREHOLDINGS WERE ALSO PRODUCED. THE AO HAD ALSO VERIFIED THE SAID INVESTMENTS BY ISSUING NOTICE UNDER SECTION 1 33(6) TO 16 PARTIES WHO CONFIRMED THE INVESTMENTS AND FILED ALL THE NECESSARY DETAILS AS CALLED FOR BY THE AO. THEREAF TER, THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) ACCEPTIN G THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE I NVESTORS. THEREAFTER, A SEARCH WAS CONDUCTED ON THE ASSESSEE UNDER SECTION 132 OF THE ACT ON 28.01.2015 WHICH WAS CONC LUDED ON 27.03.2015. WE HAVE EXAMINED THE COPIES OF PANCHNA MAS, COPIES WHEREOF ARE PLACED AT PAGE NO.20 TO 21 AND 2 2 TO 25 AND FIND THAT THERE IS NOTHING INCRIMINATING ABOUT THE INVESTMENTS/ISSUE OF SHARE CAPITAL RAISED BY THE AS SESSEE FOUND BY THE SEARCH PARTY DURING THE COURSE OF SEARCH. W E NOTE THAT THERE ARE SOME LOOSE PAPERS FOUND AND SEIZED DURIN G THE COURSE OF SEARCH BUT NONE OF THEM WERE INCRIMINATING IN NA TURE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 41 RELATING TO THE ISSUE OF SHARE CAPITAL. EVEN IN TH E ORDER FRAMED UNDER SECTION 153A READ WITH SECTION 143(3), THERE IS NO WHISPER ABOUT THE MATERIAL FOUND DURING THE COURSE OF SEARC H OR ANY REFERENCE THERETO WHILE MAKING THE ADDITION. IN TH IS CASE, WE OBSERVE THAT THE ASSESSMENT PROCEEDINGS WERE ALREAD Y COMPLETED VIDE ORDER DATED 18.03.2013 PASSED UNDER SECTION 143(3) AND THE ASSESSMENT HAS NOT ABATED ON THE DA TE OF SEARCH AND ANY ADDITION COULD ONLY BE MADE ON THE BASIS O F INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE LD. CIT(A) HAS DELETED THE ADDITION TO THE EXTENT O F RS.22,32,00,000/- ON THE GROUND THAT THERE IS NO IN CRIMINATING MATERIAL QUA THE SAID ISSUE OF SHARE CAPITAL FOUND DURING THE COURSE OF SEARCH AND THE SAME WAS DELETED BY FOLLOW ING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. CONTINENTAL WAREHOUSE CORPORATION LTD. 374 ITR 645 AND MURALI AGRO PRODUCTS LTD. VS. CIT 49 TAXMANN.COM 17 2 NAGPUR BENCH. HOWEVER, THE LD. CIT(A) SUSTAINED THE ADDIT ION TO THE EXTENT OF RS.7,91,00,000/- BY HOLDING THAT THE STAT EMENT OF SHRI RAJESH DAFTARY WHICH IS ONLY IN RESPECT OF INVESTME NT MADE BY ONE SHAREHOLDER M/S. GSD TRADING AND FINANCIAL SERV ICES PVT. LTD. TREATED AS INCRIMINATING MATERIAL ON THE GROUN D THAT HE HAS FAILED TO SUBMIT ANY PLAUSIBLE EXPLANATION ABOUT TH E INVESTMENT MADE IN THE ASSESSEE COMPANY AND NO DOCUMENTARY EVI DENCE WAS FURNISHED BY THE SAID PERSON IN RELATION TO THE INVESTMENT MADE BY M/S. GSD TRADING AND FINANCIAL SERVICES PVT . LTD. WE OBSERVE THAT INVESTIGATION WING OF THE DEPARTMENT C ONDUCTED A SURVEY OPERATION ON M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. AND DURING THE COURSE OF SUCH SURVEY A DE TAILED STATEMENT OF SHRI RAJESH DAFTARY WAS RECORDED IN RE LATION TO THE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 42 INVESTMENT MADE BY M/S. GSD TRADING AND FINANCIAL S ERVICES PVT. LTD. UNDER SECTION 131(IA) OF THE ACT ON 28.01 .2015. WE HAVE CAREFULLY PERUSED THE STATEMENT OF SHRI RAJESH DAFTARY AND FIND THAT NOWHERE SHRI RAJESH DAFTARY HAS STATED AN YTHING ABOUT THE INVESTMENT BY M/S. GSD TRADING AND FINANC IAL SERVICES PVT. LTD. IN THE ASSESSEE COMPANY. HE HAS ONLY STATED THAT THE INVESTMENT WAS MADE PRIOR TO TAKING OVER THE SAID COMPANY AS DIRECTOR/SHAREHOLDER ON 28.05.2010 WHEN SHRI PRAKASH BAGRECHA WAS DIRECTOR/SHAREHOLDER OF THE SAID COMPANY. WE FURTHER FIND THAT IT WAS NEVER ADMITTE D BY SHRI RAJESH DAFTARY THAT HE OR THE INVESTOR COMPANY M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. IS EVER EN GAGED IN PROVIDING ACCOMMODATION ENTRIES. IN OUR OPINION, T HE STATEMENT OF SHRI RAJESH DAFTARY RECORDED DURING THE COURSE O F SURVEY IS NOT AND CAN NOT BE TREATED AS INCRIMINATING MATERIA L QUA THE INVESTMENT IN SHARES OF THE ASSESSEE COMPANY BY M/S . GSD TRADING AND FINANCIAL SERVICES PVT. LTD. IN THE STA TEMENT OF MR RAJESH DAFTARY THERE IS NOTHING CONTRARY TO THE EVI DENCES PRODUCED BY THE ASSESSEE DURING THE ORIGINAL ASSESS MENT PROCEEDINGS OR DURING PROCEEDINGS U/S 153A OF THE A CT. THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IS THAT ANY ADDITION IN THE ASSESSMENTS ABATED ON THE DATE OF SEARCH CA N NOT BE MADE DE HORS THE INCRIMINATING MATERIALS/EVIDENCES FOUND DURING THE SEARCH. WE ARE THEREFORE NOT IN AGREEME NT WITH THE CONCLUSION DRAWN BY LD. CIT(A) THAT THE STATEMENT O F SHRI RAJESH DAFTARY IS AN INCRIMINATING MATERIAL AND ACC ORDINGLY THE ORDER OF LD. CIT(A) IS SET ASIDE ON THIS ISSUE AND AO IS DIRECTED TO DELETE THE ADDITION. THE LEGAL ISSUE RAISED IN GROUND NO 1 TO 5 BY THE ASSESSEE IS ALLOWED. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 43 10. EVEN THE ASSESSEE HAS A VERY STRONG CASE EVEN ON MERIT WHICH HAS BEEN CHALLENGED BY THE ASSESSEE IN GROUND NO.6 TO 10. WE FIND FROM THE PERUSAL OF THE ORDER OF AO TH AT ASSESSEE WAS NOT PROVIDED THE OPPORTUNITY OF CROSS EXAMINATI ON OF SHRI RAJESH DAFTARY AND RELIED ON THE STATEMENT OF SHRI RAJESH DAFTARY IN THE BACK OF THE ASSESSEE TO MAKE THE ADD ITION BY IGNORING THE FACT THAT THE SAID INVESTMENT BY M/S. GSD TRADING AND FINANCIAL SERVICES PVT. LTD. STOOD VERIFIED DUR ING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. MOREOVER, SHRI RAJESH DAFTARY HAS NOWHERE ADMITTED THAT TRANSACTION ENTER ED INTO WITH THE ASSESSEE COMPANY ARE NOT GENUINE. SHRI RAJESH DAFTARY HAS ONLY STATED THAT AT THE TIME OF MAKING THE INVESTME NT IN THE ASSESSEE COMPANY HE WAS NOT DIRECTOR AND SHAREHOLDE R OF THE INVESTOR I.E. M/S. GSD TRADING AND FINANCIAL SERVIC ES PVT. LTD. WE FURTHER FIND THAT THE ASSESSEE HAS SUBMITTED ALL THE PROOF, DOCUMENTS AND EVIDENCES IN RESPECT OF SAID INVESTME NT IN THE ORIGINAL ASSESSMENT PROCEEDINGS AS WELL AS THE PROC EEDINGS UNDER SECTION 153A OF THE ACT IN THE FORM OF SHARE APPLICATION, BANK STATEMENT, AUDITED FINANCIAL STATEMENT AND MEM ORANDUM AND ARTICLE OF ASSOCIATION, ITRS, NAME OF THE BANK FROM WHERE THE PAYMENTS WERE MADE. THE SAID INVESTMENTS WERE D ULY REFLECTED IN THE BOOKS OF GSD TRADING AND FINANCIAL SERVICES PVT. AND WERE ALSO SHOWN IN THE SCHEDULE OF INVESTM ENTS FORMING PART OF THE BALANCE SHEET AS ON 31.3.2010. LTD THE AO ALSO VERIFIED THE SAID TRANSACTIONS BY ISSUING NOTI CE UNDER SECTION 133(6) OF THE ACT TO THE SAID PARTY WHICH W AS REPLIED BY THE INVESTOR CONFIRMING THE INVESTMENT AND BY FILIN G ALL THE NECESSARY DETAILS AND THUS THE AO ACCEPTED THE GENU INENESS AND CREDITWORTHINESS OF THE TRANSACTIONS IN THE ORI GINAL ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 44 ASSESSMENT PROCEEDINGS. WE FIND MERIT IN THE SUBMI SSIONS OF THE LD. A.R. THAT AMENDMENT IN SECTION 68 COVERING THE SHARE CAPITAL IS APPLICABLE FROM A.Y. 2013-14 AND IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION. THE CASE OF THE ASS ESSEE IS SUPPORTED BY THE VARIOUS DECISIONS OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF PR. CIT VS APEAK INFOTECH 88 TA XMANN.COM 695 (BOM) AND CIT VS GAGANDEEP INFRASTRUCTURE (P) LT D.80 TAXMANN.COM 272(BOM) .WE, THEREFORE, ARE OF THE VIE W THAT ASSESSEE HAS SATISFIED THREE TESTS OF CAPACITY , ID ENTITY AND GENUINENESS OF THE INVESTOR AND HAS A VERY STRONG CASE AND NO ADDITION IS CALLED FOR. 11. THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.1969/M/2019 (REVENUES APPEAL) 12. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.22,32,00,000/- BY LD. CIT(A) AS M ADE BY THE AO IN RESPECT OF SHARE CAPITAL ISSUED BY THE ASSESS EE FROM 15 SHAREHOLDER ON THE GROUND THAT GENUINENESS AND CREDITWORTHINESS OF THE PARTIES WERE NOT PROVED. T HE FACTS OF THE CASE HAVE BEEN DISCUSSED IN THE ASSESSEES APPEAL. THE ORDER OF LD. CIT(A) DELETING THE ADDITION HAS ALSO BEEN REPR ODUCED HEREINABOVE. THEREFORE, FOR THE SAKE OF BREVITY WE ARE RELYING ON THE FACTS AND THE OPERATIVE PART OF LD. CIT(A) WHIC H HAS BEEN REPRODUCED ABOVE IN THE ASSESSEES APPEAL. 13. THE LD. D.R. WHILE ARGUING THE REVENUES APPEA L SUBMITTED BEFORE THE BENCH THAT LD. CIT(A) HAS WRONGLY DELETE D THE ADDITION OF RS.22,32,00,000/- AS MADE BY THE AO IN RESPECT OF 15 SHAREHOLDERS WHOSE CREDITWORTHINESS AND GENUINEN ESS WERE ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 45 NOT PROVED. THE LD. D.R. WHILE REFERRING TO THE BU Y BACK OF THESE SHARES IN THE SUBSEQUENT FINANCIAL YEAR SUBMITTED T HAT THE SAID SHARES WERE BOUGHT BACK AT A VERY SMALL AMOUNT OF R S. 5/- PER SHARE AND THEREFORE IT IS CLEAR THAT THE OWN UNACCO UNTED MONEY HAS BEEN ROUTED TO CHANNELIZE THE SAME INTO THE BUS INESS OF THE ASSESSEE. THE LD. D.R. SUBMITTED THAT IT IS VERY S TRANGE THAT THE SHARE ISSUED AT A PREMIUM OF RS.115/- OF FACE VALUE OF RS.10/- WERE BOUGHT BACK AT RS.5/-. THE MERE FILING OF THE DOCUMENTS OF THE INVESTORS AND CONFIRMATIONS OF THE INVESTMENTS FROM THE INVESTORS DO NOT PROVE THE GENUINENESS AND CREDITWO RTHINESS OF THE INVESTORS. THE LD. D.R. ARGUED THAT THOUGH THE AO ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT WHICH WERE RESPONDED BY THE INVESTORS BY FILING THE NECESSARY DETAILS BUT T HE FACT REMAINS THAT THE WHOLE ARRANGEMENT IN WHICH THE SHARES WERE ISSUED TO 16 PARTIES AND WERE BOUGHT BACK IN SUBSEQUENT YEAR IS SHROUDED WITH DOUBTS AND SUSPICION THAT WHOLE ARRAN GEMENT WAS STRUCTURED IN ORDER TO PLOUGH BACK THE UNACCOU NTED MONEY INTO THE BUSINESS OF THE ASSESSEE. THE LD. D.R. RE LIED ON A SERIES OF DECISIONS IN DEFENSE OF HIS ARGUMENTS NAMELY CIT VS. MARKET PVT. LTD. (2015) 56 TAXMANN.COM 206 DELHI, ITO EXIM VS. FINLEASE PVT. LTD. 4778/DEL/2013 A.Y. 2006-07 ORDER DATED 08.03.2019, P.R. SECURITIES LTD. VS. DCIT IN ITA NO.4978/DEL/2014 A.Y. 2005-06 ORDER DATED 23.08.201 8. FINALLY, THE LD. D.R. PRAYED BEFORE THE BENCH THAT SINCE THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE INVESTORS AND THUS THE ORDE R OF LD. CIT(A) MAY TO BE SET ASIDE AND ORDER OF AO MAY KIN DLY BE RESTORED. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 46 14. THE LD. A.R., ON THE OTHER HAND, SUBMITTED THAT THE LD. CIT(A) DELETED THE ADDITION ON JURISDICTIONAL AND L EGAL ISSUE UNDER SECTION 153A OF THE ACT ON THE GROUND THAT NO ADDITION COULD BE MADE IN RESPECT OF SHARE CAPITAL DE HORS T HE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE LD. A.R. SUBMITTED THAT THIS LEGAL ASPECT/JURISDICT IONAL ISSUE HAS NOT BEEN CHALLENGED BY THE DEPARTMENT SO FAR AS IN VESTMENTS MADE BY 15 INVESTORS ARE CONCERNED QUA ABSENCE OF INCRIMINATING MATERIAL DURING SEARCH. THE LD. A.R. SUBMITTED THAT ONCE IT IS ESTABLISHED THAT THERE IS NO INCRIM INATING MATERIAL NO ADDITION CAN BE MADE WHILE PASSING THE ORDER UND ER SECTION 153A OF THE ACT AND NOTHING WOULD SURVIVE THEREAFTE R AND THEREFORE THE GROUND RAISED BY THE REVENUE IS INFR UCTUOUS. WITHOUT PREJUDICE THE LD. A.R. SUBMITTED THAT DURIN G THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FILED ALL THE NECESSARY EVIDENCES ABOUT THE IDENTITIES OF THE INV ESTORS, THEIR CONFIRMATIONS AND FINANCIAL STATEMENTS, ROC RETURNS , APPLICATION FORMS, ITRS TO SUBSTANTIATE THE GENUINE NESS OF THESE TRANSACTIONS AND CREDITWORTHINESS OF THE INVESTING ENTITIES DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AS WELL AS PROCEEDINGS UNDER SECTION 153 OF THE ACT. THE LD. A.R. SUBMITTED THAT IN THE ORIGINAL ASSESSMENT PROCEEDIN GS, THE AO EVEN ISSUED NOTICES UNDER SECTION 133(6) TO ALL 16 PARTIES AND CALLED UPON THEM TO FILE DETAILS OF THE INVESTMENTS MADE AND SOURCE THEREOF WHICH WERE DULY RESPONDED WITH ALL T HE NECESSARY DETAILS BEFORE THE AO. THE AO ONLY AFTER EXAMINATI ON OF ALL THESE DETAILS ACCEPTED THE INVESTMENTS AND NO ADDITION WA S MADE. THUS IT WAS PROVED THAT ALL THE THREE INGREDIENTS O F SECTION 68 IDENTITY, GENUINENESS AND CREDITWORTHINESS WERE PRO VED. ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 47 COUNTERING THE ALLEGATION OF LD. D.R. THAT THESE SH ARES WERE BOUGHT BACK IN THE SUBSEQUENT YEAR AT A VERY SMALL AMOUNT, THE LD. A.R. SUBMITTED THAT ANY SUBSEQUENT EVENT CAN NO T BE EXTRAPOLATED INTO THE CURRENT YEAR TO MAKE THE ADDI TION. IN DEFENCE OF HIS ARGUMENT THE LD. A.R. RELIED ON THE DECISION OF CHARTERED MOTORS PVT. LTD., AHMEDABAD VS. ACIT ITSS(A)/26/AHD/2012 A.Y. 2008-09 ORDER DATED 28.08. 2014 WHEREIN IT HAS BEEN HELD THAT THE SUBSEQUENT BUY BA CK CAN NOT BE GROUND FOR MAKING ADDITION FOR ISSUE OF SHARES I N EARLIER YEARS. THE LD. A.R. ALSO DISTINGUISHED THE FACTS O F THE CASE AS RELIED UPON BY THE LD. D.R. AND SUBMITTED THAT THE RATIO OF THESE DECISIONS IS NOT APPLICABLE TO THE ASSESSEES CASE. EVEN THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF PR. CIT VS NRA IRON & STEEL (P) LTD. ITA NO.29855/ 2018 DATE D 05.03.2019 DOES NOT APPLY AS IN THAT CASE UPON ENQUIRY BY THE AO NOBODY RESPONDED AND IN SOME CASES NOTICES ISSUE D WERE RETURNED UNSERVED WHEREAS IN THE PRESENT CASE THE PARTIES FILED THEIR CONFIRMATIONS ALONG WITH OTHER EVIDENCES TO P ROVE THE INVESTMENTS IN THE ASSESSEE COMPANY. THE LD. A.R. RELIED ON A SERIES OF DECISIONS, MENTIONED BELOW, IN SUPPORT OF HIS CONTENTIONS BY SUBMITTING THAT NO ADDITION CAN BE M ADE UNDER SECTION 68 OF THE ACT IN THE HANDS OF THE ASSESSEE IF THE ASSESSEE HAS SUBMITTED ALL THE DETAILS REGARDING THE GENUINE NESS AND CREDITWORTHINESS OF THE SHAREHOLDER IF THE ASSESSEE HAS GIVEN NAMES AND ADDRESSES OF THE SHAREHOLDER TO THE AO. T HE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS IN DEFENSE OF H IS ARGUMENTS:- 1. SLP REJECTED BY SUPREME COURT ON LOVELY EXPORTS PVT. LTD. 319 ITR 5 299 ITR 268 2. SLP REJECTED BY SUPREME COURT ON CHAIN HOUSE INT ERNATIONAL (P) LTD. 103 TAXMANN.COM 435 & 98 TAXMANN.COM 47 3. PRINCIPAL COMMISSIONER OF INCOME TAX, PANJI V/S PARADISE INLAND SHIPPING (P.) LTD 84 TAXMANN.COM 58 4. COMMR. OF INCOME TAX V/S CREATIVE WORLD TELEFILM S LTD. 333 ITR 100 ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 48 5. COMMR. OF INCOME TAX V/S OASIS HOSPITALITIES PRI VATE LIMITED 333 ITR 119 6. COMMR. OF INCOME TAX V/S GANGOUR INVESTMENT LTD. 335 ITR 359 7. COMMR. OF INCOME TAX V/S SIRI RAM SYAL HYDRO POW ER PRIVATE LIMITED 196TAXMAN 441 8. COMRNR. OF INCOME TAX V/S HLT FINANCE PVT. LTD. 12 TAXMANN.COM 247 9. COMMR, OF INCOME TAX, CENTRAL-ILL VS ANSHIKA CON SULTANTS (P) LTD. 62 TAXMANN.COM 192 10.COMMR. OF INCOME TAX V/S STL EXTRUSION P. LTD. 3 33 ITR 269 11. COMMR. OF INCOME TAX V/S GP INTERNATIONAL LIMIT ED 325 ITR 25 12. ASST. COMMR. OF INCOME TAX V/S VENKATESHWAR IS PAT (P) LTD 319 ITR 393 13. COMMR. OF INCOME TAX VS FAIR FINVEST LTD. 44 TAXMANN.COM 356 14. COMMR. OF INCOME TAX, BHOPAL (M.P.) VS. PEOPLES GENERAL H OSPITAL LTD. 35 TAXMANN.COM 444 15. COMMR. OF INCOME TAX, CHENNAI VS. PRANAV FOUN DATIONS LTD. 51 TAXMANN.COM 198 16. PRINCIPLE CORNMR. OF INCOME TAX - 8 VS. SOFTLIN E CREATIONS (P.) LTD. 81 TAXMANN.CORN 269 17. M/S BABA BHOOTHNATH TRADE & COMMERCE V/S ITO IT A NO 1494/KOL/2017 18. ASSTT. COMMR. OF INCOME TAX, CENTRAL CIRCLE 13 VS ADAMINE CONSTRUCTION (P) LTD. 87 TAXMANN.COM 216 19. FLOURISH BUILDERS & DEVELOPERS PVT LTD V/S DY. CIT 3342/DEL/2015 20. JAYNEER INFRAPOWER & MULTIVENTURES P LTD V/S DY CIT 103 TAXMANN.COM 118 21. ASSTT. COMMR. OF INCOME TAX VS BAHUBALI DYES LTD. 55 TAXMANN.COM 357 22. BHARTI SYNTEX LTD. VS DEPUTY COMMR. OF INCOME TAX 19TAXMANN.COM 361 23. ASSTT. COMMR. OF INCOME TAX VS. HITKARNI PRAK ASHAN LTD. 15 TAXMANN.COM 316 24. JADAU JEWELLERS AND MANUFACTURERS (P.) LTD. VS. ASSTT. COMMR. OF INCOME TAX CENTRAL CIRCLE - 2 JAIPUR 83 TAXMANN.COM 249 25. INCOME TAX OFFICER 13(2)(3) AAYA KAR BHAVAN, MUMBAI VS. SHREEDHAM CONSTRUCTION PVT. LTD. ITA NO 3754/M/2017 ITA NO 3755/M/2017 ITA NO 3756/M/2017 26. SHALIMAR BUILDCON (P.) LTD. VS. INCOM E TAX OFFICER, WARD-2(2), JAIPUR 128 ITD 396 27. DEPUTY COMMISSIONER OF INCOME TAX, 1(2) RA IPUR VS. RCP INFRATECH (P.) LTD., 95 TAXMANN.CORN 163 28. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CI RCLE-IX, NEW DELHI VS. RAVNET SOLUTIONS (P.) LTD. 93 TAXMANN.CORN 59 30. ITO V/S WIZ -TECH SOLUTIONS PVT LTD. ITA NO. 1 162 THE LD. A.R. ALSO ARGUED THAT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE OF INVESTMENT AS HAS BEEN HELD IN THE FOLLOWING CASES: 1. PCIT VS. VEEDHATA TOWER PVT. LTD. ITA NO.819 OF 201 5(BOM) 2. S. HASTIMAL VS. CIT 49 ITR 273(MAD) 3. TOLARAM DAGA VS. CIT 59 ITR 632(ASSAM) ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 49 THE LD. A.R. FURTHER CONTENDED THAT PROVISO TO SEC TION 68 AS INTRODUCED W.E.F. 01.04.2013 IS NOT APPLICABLE R ETROSPECTIVELY AND THUS DOES NOT APPLY TO THE YEAR UNDER CONSIDERA TION AS HAS BEEN HELD IN THE FOLLOWING DECISIONS NAMELY PRINCIP AL COMMR. OF INCOME TAX VS. APEAK INFOTECH 88 TAXMANN.COM 695(BOM ) AND COMMR. OF INCOME TAX - 1 VS. GAGANDEEP INF RASTRUCTURE (P.) LTD. 80TAXMANN.COM 272(BOM) THE LD. A.R. FINALLY PRAYED BEFORE THE BENCH THAT T HE APPEAL OF THE REVENUE MAY PRIMARILY BE DISMISSED ON THE GROUN D THAT THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE O N LEGAL ISSUE OF ADDITIONS OF RS.22,31,00,000/- NOT BASED UPON AN Y INCRIMINATING MATERIAL WHICH WAS NOT CHALLENGED BY THE REVENUE BEFORE THIS HONBLE FORUM. WITHOUT PREJUDICE, THE LD. A.R. SUBMITTED THAT EVEN ON MERIT THE APPEAL OF THE REVE NUE DESERVED TO BE DISMISSED AS THE ASSESSEE HAS PROVED ALL THREE INGREDIENTS AS HAVE BEEN SUBMITTED ABOVE. 15. AFTER HEARING BOTH THE PARTIES, PERUSING THE MA TERIAL ON RECORD AND CAREFULLY ANALYZING THE RATIO LAID DOWN IN VARIOUS DECISIONS RELIED ON AND REFERRED TO BY BOTH THE PAR TIES, WE OBSERVE THAT IN THIS CASE THE LD. CIT(A) HAS DELETE D THE ADDITIONS ON JURISDICTIONAL AND LEGAL ISSUE BY HOLDING THAT N O ADDITION CAN BE MADE IN AN ASSESSMENT FRAMED UNDER SECTION 143(3 ) READ WITH SECTION 143A OF THE ACT DE HORS THE INCRIMINAT ING MATERIAL FOUND DURING THE COURSE OF SEARCH AS THE ASSESSMENT HAS ALREADY BEEN ATTAINED FINALITY ON THE DATE OF SEARC H. WE FIND MERIT IN THE ARGUMENT OF THE LD. A.R. THAT SINCE TH E REVENUE HAS NOT CHALLENGED THE JURISDICTIONAL ISSUE, THE APPEAL ON MERIT BECOMES INFRUCTUOUS. EVEN ON MERIT, THE ASSESSEE H AS A VERY ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 50 STRONG CASE IN ITS FAVOUR AS THE ASSESSEE HAS FILED ALL THE EVIDENCES IN THE FORM OF SHARE APPLICATION FORM, BA NK STATEMENTS OF THE INVESTOR, AUDITED ANNUAL STATEMEN T CONFIRMATIONS, PAN ETC. BEFORE THE AO AND EVEN THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT BY THE AO IN ORDER TO CARRY OUT THE VERIFICATION INDEPENDENTLY WERE DULY RESPONDED BY THE PARTIES AND FILED ALL THE NECESSARY EVIDENCES T O THE SATISFACTION OF THE AO ALONG WITH CONFIRMATION. EV EN IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) THE AO HAS E XAMINED THESE DETAILS IN GREAT DEPTH THE SHARES BOUGHT IN THE SUBSEQUENT YEAR AND ACCEPTED THESE INVESTMENTS IN T HE ASSESSMENT FRAMED UNDER SECTION 143(3) VIDE ORDER D ATED 18.03.2013. EVEN IN THE PROCEEDINGS UNDER SECTION 153A THE ASSESSEE HAS FILED ALL THE NECESSARY EVIDENCES BEFO RE THE AUTHORITIES BELOW. UNDER THESE CIRCUMSTANCES, WE H OLD THAT ON LEGAL GROUND AS WELL AS ON MERITS APPEAL OF THE REV ENUE IS LIABLE TO BE DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.05.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 31.05.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT ITA NO.782/M/2019 & ITA NO.1969/M/2019 M/S. GEETANJALI SPACE PVT. LTD. 51 THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.