Shri Rathi Steel Ltd., New Delhi V. ACIT, Central Circle-16, New Delhi

ITA 7971/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4659 (ITAT-DELHI)
• Duration Of Justice: 5 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: 2009-2010
• Appeal Filed On: 14-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOYAL
• Keywords: Search and seizure; Document seized; Accommodation entries; Block assessment; Documents seized; Set aside
• Section: 143(3); 153A; 143(1); 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NOS.7971 & 7972/DEL/2018 ASSESSMENT YEARS: 2009-10 & 2011-12 SHRI RATHI STEEL LTD., J-1/202, DDA FLATS, KALKAJI, NEW DELHI. 110 019. PAN: AAACS4554L VS ACIT, CENTRAL CIRCLE-16, NEW DELHI. ITA NOS.7973 & 7974/DEL/2018 ASSESSMENT YEARS: 2009-10 & 2011-12 SHRI RATHI STEEL (DAKSHIN) LTD., J-1/202, DDA FLATS, KALKAJI, NEW DELHI. 110 019. PAN: AAACB1192M ACIT, CENTRAL CIRCLE-16, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE REVENUE BY : SHRI SANJAY GOYAL, CIT, DR DATE OF HEARING : 27.03.2019 DATE OF PRONOUNCEMENT : 31.05.2019 ORDER PER R.K. PANDA, AM: ITA NO.7971/DEL/2018 FILED BY THE ASSESSEE IS DIREC TED AGAINST THE ORDER DATED 3RD OCTOBER, 2018 OF THE CIT(A)-26, NEW DELHI, RELA TING TO ASSESSMENT YEAR 2009-10. ITA NOS.7971 TO 7974/DEL/2018 2 ITA NOS.7972 & 7974/DEL/2018 FILED BY THE RESPECTIV E ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 5 TH OCTOBER, 2018 OF THE CIT(A)-26, NEW DELHI, RELATIN G TO ASSESSMENT YEAR 2011-12. ITA NO.7973/DEL/2018 FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 5 TH OCTOBER, 2018 OF THE CIT(A)-26, NEW DELHI, RELATIN G TO ASSESSMENT YEAR 2009-10. 2. SINCE IDENTICAL GROUNDS ARE INVOLVED IN ALL THES E APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.7971/DEL/2018 (A.Y. 2009-10) SHRI RATHI ST EEL LTD . 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TMT BARS HAVING A MANUFACTURING FACILITY AT GHAZIABAD. IT FILED ITS RETURN OF INCOME ON 28 TH SEPTEMBER, 2009 DECLARING TOTAL INCOME OF RS.1,72,95,890/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) ON 29 TH DECEMBER, 2011 DETERMINING THE TOTAL INCOME AT RS. 1,74,70,890/- WHEREIN HE MADE AN ADDITION OF RS.1,75,000/- BEING FEES PAID TO THE ROC FOR INCREASE IN AUTHORIZED SHARE CAPITAL. A SEARCH AND SEIZURE ACTION U/S 132 OF THE IT ACT WAS CONDUCTED IN THE DIFFERENT BUSINESS AND RESIDENTIAL PREMISES OF RATHI GROUP OF CASES ON 20 TH JANUARY, 2015. THE CASE OF THE ASSESSEE COMPANY W AS ALSO COVERED AS ONE OF THE GROUP COMPANIES AND VARIOUS INCRIMINATING PAPERS/DO CUMENTS WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION I N THIS CASE. IN RESPONSE TO NOTICE U/S 153A OF THE IT ACT, 1961, THE ASSESSEE FILED ITS RE TURN OF INCOME FOR THE IMPUGNED ITA NOS.7971 TO 7974/DEL/2018 3 ASSESSMENT YEAR ON 22 ND APRIL, 2016 DECLARING TOTAL INCOME OF RS.1,71,16,9 22/-. THE ASSESSING OFFICER ISSUED STATUTORY NOTICES U/S 142( 1) AND 143(2) TO WHICH THE ASSESSEE COMPLIED BY FILING REQUISITE DETAILS FROM TIME TO T IME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED FROM THE BALANCE SHEET OF THE ASSESSEE THAT THE ASSESSEE COMPANY HAS RAISED SHARE CAPITAL INCLUDING SHARE PREMIUM OF RS.6 CRORES FROM THREE COMPANIES, THE DETAILS OF WHICH ARE AS UNDER:- SL.NO. NAME OF THE INVESTING COMPANY NO. OF SHARES ALLOTTED FACE VALUE/ PREMIUM TOTAL INVESTMENT IN RS. 1. M/S MURLI MANOHAR TRADE (P) LTD. 80000 10/15 2,00,00,000/- 2. M/S RADHEY TRADELINK (P) LTD. 60000 10/15 1,50,00,000/- 3. M/S NEELKANTH TRADELINK (P) LTD. 100000 10/15 2,50,00,000 TOTAL 600,00,000/- 4. HE ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS O F THE ABOVE COMPANIES ALONG WITH STATEMENTS OF ACCOUNTS, COPY OF RETURN AND AUD IT REPORT FOR THE RELEVANT PREVIOUS YEAR, MINUTE BOOKS AND RELEVANT BANK STATEMENT WITH BANK BOOK OF THE INVESTING COMPANIES TO SUBSTANTIATE THEIR CLAIM OF INVESTMENT , SO THAT THE EXISTENCE, GENUINENESS AND CREDIT WORTHINESS OF THE INVESTING COMPANY CAN BE EXAMINED. HE ALSO ASKED THE ASSESSEE TO INFORM THE DIRECTORS TO PRODUCE THEIR P ERSONAL PROFIT & LOSS ACCOUNT OR INCOME & EXPENDITURE ACCOUNT, BALANCE SHEET AND PER SONAL BANK STATEMENT FOR THE RELEVANT YEAR. THE ASSESSEE FILED VARIOUS DETAILS SUCH AS: A) ASSESSMENT PARTICULARS INCLUDING PAN AND WARD/CIRC LE WHERE ASSESSED TO INCOME TAX (INCOME TAX RETURN) ITA NOS.7971 TO 7974/DEL/2018 4 B) COPY OF LEDGER ACCOUNT OF THE INVESTOR COMPANIES I N THE BOOKS OF ASSESSEE FOR THE RELEVANT YEAR UNDER CONSIDERATION C) COPY OF BANK STATEMENT OF INVESTOR COMPANIES D) COPY OF AUDITED FINANCIAL STATEMENTS OF INVESTOR C OMPANIES E) CONFIRMATIONS PROVIDED BY INVESTOR COMPANIES. 5. ON THE BASIS OF THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE ESTABLISHING THE IDENTITY AND CREDIT WORTHINESS OF THE INVESTOR COMP ANIES AND THE GENUINENESS OF THE TRANSACTIONS, IT WAS ARGUED THAT THE ASSESSEE HAS D ISCHARGED THE ONUS COAST ON IT. RELYING ON VARIOUS DECISIONS, IT WAS SUBMITTED THAT NO ADDITION IS CALLED FOR. 6. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT THE ASSESSEE COMPANY H AD RAISED SHARE CAPITAL INCLUDING SHARE PREMIUM OF RS.6 CRORES AND THE SHARE CAPITAL WAS RAISED AT A PREMIUM OF RS.15 FOR SHARE OF FACE VALUE OF RS.10/-. FURTHER, THE C OMPANIES WHICH INVESTED IN THE SHARES OF THE ASSESSEE COMPANY AT SUCH A HIGH RATE WERE HA RDLY HAVING ANY BUSINESS ACTIVITIES OF THEIR OWN. THE EARNING OF THESE COMPANIES WERE SO MEAGER THAT IT IS HIGHLY IMPROBABLE THAT THESE COMPANIES HAD THEIR OWN FUNDS TO INVEST IN THE ASSESSEE COMPANY. TO TESTIFY THE AVAILABILITY OF THE SHARE CAPITAL AVAILABLE WITH THE COMPANIES WHO INVESTED IN THE INVESTING COMPANIES, HE MADE IN QUIRIES BY ISSUING SUMMONS THROUGH THE DIRECTORATE OF INCOME-TAX (INV.). THE ASSESSING OFFICER NOTED THAT PROVISIONS OF SECTION 68 HAVE BEEN AMENDED BY FINAN CE ACT, 2012 W.E.F. 01.04.2013 WHEREBY THE ONUS IS ON THE ASSESSEE TO PROVE THE SO URCE OF SOURCE IN THE CASE OF THE ITA NOS.7971 TO 7974/DEL/2018 5 RECEIPT OF SHARE SUBSCRIPTION TO THE SATISFACTION O F THE ASSESSING OFFICER. HE REFERRED TO THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNA L IN THE CASE OF M/S SUBHLAKSHMI VANIJYA PVT. LTD. VS. CIT (2015) 60 TAXMANN.COM 60 WHEREIN THE TRIBUNAL HAS HELD THAT THE AMENDMENT TO SECTION 68 OF THE ACT IS CLAR IFICATORY AND, HENCE, RETROSPECTIVE. ACCORDING TO THE ASSESSING OFFICER, THE PROVISIONS OF SECTION 68 OF THE ACT CASTS ONUS ON THE ASSESSEE TO SATISFY ALL THE INGREDIENTS OF S ECTION 68 TO ESTABLISH THE IDENTITY AS WELL AS CREDIT WORTHINESS OF THE CREDITORS AND TO E STABLISH THE GENUINENESS OF THE TRANSACTION. THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSING OFFICER CANNOT VERIFY THE SOURCE OF THE SOURCE WAS REJECTED BY THE ASSESSING OFFICER. RELYING ON VARIOUS DECISIONS INCLUDING THE DECISION OF THE HON'BLE DEL HI HIGH COURT IN THE CASE OF CIT VS. NIPUN BUILDERS & DEVELOPERS PVT. LTD. AND CIT VS. N .R. PORTFOLIO PVT. LTD. AND PLETHORA OF OTHER DECISIONS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF TRANSACTIONS AS WELL AS CREDIT W ORTHINESS OF THE INVESTING COMPANIES AS WELL AS INVESTORS OF THE INVESTING COMPANIES. H E, ACCORDINGLY MADE ADDITION OF RS.6 CRORES TO THE TOTAL INCOME OF THE ASSESSEE UND ER THE PROVISIONS OF SECTION 68 OF THE IT ACT. 7. IN APPEAL, THE LD.CIT(A), AFTER CONSIDERING THE REMAND REPORT OF THE A.O. AND REJOINDER OF THE ASSESSEE TO SUCH REMAND REPORT, UP HELD THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.6 CRORES TO THE TO TAL INCOME OF THE ASSESSEE U/S 68 OF THE IT ACT, 1961. ITA NOS.7971 TO 7974/DEL/2018 6 7.1. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN UPHOLDING ADDITION OF RS.6,00,00,000/-MADE B Y THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME- TAX ACT, 1961 (THE ACT) , NOT APPRECIATING THAT THE APPELLANT HAS RIGHTLY DISCHARGED THE PRIMARY ONUS B Y PROVING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE ENTITIES BY SUBMITTING PLETHORA OF EVIDENCES. 1.1 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE AFORESAID ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER DE-HORS ANY MATERIAL FOUND/ SEIZED DURING T HE COURSE OF SEARCH IN THE PREMISES OF THE APPELLANT AND IS NOT SUSTAINABLE IN LAW. 1.2 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS)ER RED ON FACTS AND IN LAW ON CONFIRMING THE ADDITION WHICH WAS MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION UNIT OF INCOME TAX DEPARTMENT WITHOUT EVEN AN IOTA OF EVIDENCE OR ADVERSE DOCUMENT IN CONTEXT TO THE SAME. 1.3 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE APPELLANT HAD SUBM ITTED ALL THE RELEVANT INFORMATION AND DOCUMENTS TO PROVE THE IDENTITY, GE NUINENESS AND CREDITWORTHINESS OF SHARE APPLICANTS. 1.4 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN HOLDING THAT INFORMATION RECEIVED INPURSUANT TO THE REMAND REPORT IS DEFICIENT IN ESTABLISHING THE CAPACITY OF THE INVESTOR AND GENUI NENESS OF THE SHARE CAPITAL SUBSCRIPTION TRANSACTIONS. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 8. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, REFERRING TO PAGES 23 TO 31 OF THE PAPER BOOK, SUBMITTED THAT THE ASSESSEE HAD ALREADY BEEN ASSESSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT VIDE ORDER DATED 29 TH DECEMBER, 2011 I.E., MUCH PRIOR TO THE DATE OF SEARCH DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.1,74,70,890/- WHEREIN HE HAD MADE ADDITION OF RS.1,75,000/- ON AC COUNT OF FEES PAID TO ROC FOR INCREASE IN AUTHORIZED SHARE CAPITAL. HE SUBMITTED THAT IN THE INSTANT CASE, THE ITA NOS.7971 TO 7974/DEL/2018 7 ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN THE ORDER PASSED U/S 153A/143(3) ONLY ON THE BASIS OF THE BALANCE SHEET FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT ON THE BASIS OF ANY INCRIMINATI NG MATERIAL FOUND DURING THE COURSE OF SEARCH CONDUCTED ON THE ASSESSEE. REFERRING TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 380 ITR 573, HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, NO ADDITION CAN BE MADE IN AN ORDER PASSED U/S 153A. REFERRING TO THE DECIS ION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF DCIT VS. MEETA GUTGUTIA REPORTED IN 395 ITR 526 , HE SUBMITTED THAT THE HON'BLE HIGH COURT HAS REITERATED THE SETTLED POSIT ION OF LAW THAT THE ASSESSING OFFICER CANNOT PROCEED TO MAKE AN ASSESSMENT U/S 153A WITHO UT THERE BEING ANY INCRIMINATING MATERIAL QUA THE ASSESSMENT YEAR FOR WHICH THE ASSESSING OFFICER WANTS TO MAKE ASSESSMENT. HE SUBMITTED THAT THE SLP FILED BY THE ASSESSEE AGAINST THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF MEETA GUTGU TIA WAS DISMISSED BY THE HON'BLE SUPREME COURT. 9. REFERRING TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY, VIDE CIVIL APP EAL NO.11080 OF 2017, ORDER DATED 29 TH AUGUST, 2017, HE SUBMITTED THAT AN ISSUE HAD ARISEN AS TO WHETHE R THE ASSESSING OFFICER IS ENTITLED TO MAKE ADDITION WITH OUT THERE BEING ANY INCRIMINATING MATERIAL RELATING TO THE ASSESSMENT YEAR IN CASE OF SEARCH IN RESPECT OF ASSESSMENT YEAR WHICH HAS NOT ABATED. HE SUBMITTED THAT THE HON'BLE SUPREME COURT UPHELD THE ORDER OF THE HIGH COURT CONFIRMING THE ORDER OF THE ITAT QUASHING THE ASSESSMENT MAKING ITA NOS.7971 TO 7974/DEL/2018 8 THE ADDITION IN RESPECT OF THE YEAR WHICH WAS WITHI N THE BLOCK YEAR, BUT, THERE WAS NO INCRIMINATING MATERIAL PERTAINING TO THIS ASSESSMEN T YEAR. HE ALSO RELIED ON THE FOLLOWING DECISIONS AND SUBMITTED THAT WHERE THE AD DITION MADE BY THE ASSESSING OFFICER IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, NO ADDITION CAN BE MADE BY THE ASSESSING OFFICER IN THE ORDER PASSED U/S 153A:- I) PCIT VS. RSA DIGI PRINTS 2017(9) TMI 530; II) PCIT VS. M/S SALASAR STOCK BROKING LIMITED 20167(8 ) TMI 1131 ; III) PR. CIT VS. BEST INFRASTRUCTURE (INDIA) PVT. LTD. 2017 397 ITR 82; IV) PR. CIT VS. BABA GLOBAL LTD., 2017 (2) TMI 346 V) PR. CIT VS. DHARAMPAL PREMCHAND LTD. 2017 (8) TMI 958 VI) CIT VS. JAKSON ENGINEERS LTD., 2015 TMI 1523; VII) ACIT VS. SAMEER GUPTA (ITA NO.514,515/DEL/2017); VIII) SHARP MINT LTD. VS. DCIT (ITA NO.3623/DEL/200; IX) MOON BEVERAGES LTD. AND HINDUSTAN AQUA LTD. VS. AC IT (ITA NO.7374/DEL/2017 & 7567/DEL/2017). 10. HE ACCORDINGLY SUBMITTED THAT NO ADDITION IN TH E INSTANT CASE CAN BE MADE SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COUR SE OF SEARCH. 11. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, H E SUBMITTED THAT THE ASSESSEE HAS FILED FULL PARTICULARS GIVING THE PAN AND ASSESSMEN T PARTICULARS OF THE INVESTOR COMPANIES, THEIR BANK STATEMENTS, COPY OF AUDITED F INANCIAL STATEMENTS, CONFIRMATIONS PROVIDED BY THE INVESTOR COMPANIES AND COPY OF LEDG ER ACCOUNT OF THE INVESTOR ITA NOS.7971 TO 7974/DEL/2018 9 COMPANIES IN THE BOOKS OF THE ASSESSEE FOR THE RELE VANT YEAR UNDER CONSIDERATION. EVEN DURING REMAND PROCEEDINGS, SUMMONS WERE ISSUED TO THE INVESTORS OF THE OF THE INVESTING COMPANIES AND THE INVESTORS OF THE INVEST ING COMPANIES HAVE ALSO FILED THE REQUISITE DETAILS. THUS, THE ASSESSEE, IN THE INST ANT CASE, HAS NOT ONLY PROVED THE SOURCE, BUT ALSO THE SOURCE OF THE SOURCE. THE ASS ESSEE HAS DISCHARGED THE ONUS CAST ON IT IN TERMS OF SECTION 68 OF THE ACT. REFERRING TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT VS. M/S GOODVIEW TRADING PVT. LTD. 2016 (12) T MI 617, HE SUBMITTED THAT UNDER IDENTICAL CIRCUMSTANCES THE HON'BLE DELHI HIGH COURT HAS DISMISSED THE APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF THE TRIBUNAL WHERE THE TRIBUNAL HAS DELETED THE ADDITION OF AN AMOUNT OF R S.25,00,96,500/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE IT ACT. HE ACCORDI NGLY SUBMITTED THAT BOTH LEGALLY AND FACTUALLY, NO ADDITION CAN BE MADE IN THE INSTANT C ASE. 12. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED O N THE ORDER OF THE CIT(A) AND ALSO REFERRED TO THE FOLLOWING DECISIONS:- I) PCIT VS. NRA IRON AND STEEL (2019) 103 TAXMANN.COM 48 (SC); II) NDR PROMOTERS PVT. LTD. (2019-TIOL-172-HC-DEL-IT) III) PREM CASTINGS (P) LTD. VS. CIT (2017) 88 TAXMANN.CO M 189 (ALL); IV) PREM CASTINGS (P) LTD. VS. CIT 2018-TIOL-274-SC-IT; V) CIT VS. MAF ACADEMY (P) LTD., 361 ITR 258 (DEL); VI) CIT VS. NAVODAYA CASTLE PVT. LTD. (2014) 367 ITR 30 6 (DEL); VII) KONARK STRUCTURAL ENGINEERING (P) LTD. VS. DCIT (20 18) 96 TAXMANN.COM 255 (SC); ITA NOS.7971 TO 7974/DEL/2018 10 VIII) KONARK STRUCTURAL ENGINEERING (P) LTD. VS. DCIT (20 18) 90 TAXMANN.COM 56 (BOM);] IX) PRATHAM TELECOM INDIA PVT. LTD. VS. DCIT (2018-TIOL -1983-HC-MUM- IT); X) JJ DEVELOPMENT PVT. LTD. VS. CIT (2018-TIOL-395-SC- IT); XI) DRB EXPORTS (P) LTD. VS. CIT (2018) 93 TAXMANN.COM 490 (CAL); XII) CIT VS. NIPUN BUILDERS & DEVELOPERS (P) LTD., 30 TA XMANN.COM 292; XIII) CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD., 18 TAXM ANN.COM 217; XIV) CIT VS. ULTRA MODERN EXPORTS (P) LTD., 40 TAXMANN.C OM 458; XV) CIT VS. FROSTAIR (P) LTD., 26 TAXMANN.COM 11; XVI) CIT VS NR PORTFOLIO PVT. LTD. (2014) 42 TAXMANN.COM 339; XVII) CIT VS. EMPIRE BUILTECH (P) LTD., 366 ITR 110; XVIII) CIT VS. FOCUS EXPORTS (P) LTD., 51 TAXMANN.COM 46 ( DEL); XIX) PCIT VS. BIKRAM SINGH (2017) 85 TAXMANN.COM 104 (DE L); XX) RICK LUNSFORD TRADE & INVESTMENT LTD. VS. CIT (2016 ) 385 ITR 399 (CAL); XXI) RICK LUNSFORD TRADE & INVESTMENT LTD. VS. CIT [2016 -TIOL-207-SC-IT (SC)]; XXII) M/S SYNERGY FINLEASE PVT. LTD., ITA NO.4778/DEL/201 3, A.Y. 2006-07, ORDER DATED 08.03.2019. ITA NOS.7971 TO 7974/DEL/2018 11 13. HE SUBMITTED THAT THE FACTS OF THE CASE OF ASSE SSEE ARE IDENTICAL TO THE FACTS OF JUDGEMENT DELIVERED BY HON'BLE SUPREME COURT IN PCIT VS. NRA IRON AND STEEL [2019] 103 TAXMANN.COM 48 DATED 05.03.2019 , AND JUDGEMENT DELIVERED BY HON'BLE DELHI HIGH COURT IN NDR PROMOTERS PVT. LTD. (2019-TIOL-172-HC-DEL-IT). THE ENQUIRIES CARRIED OUT DURING SEARCH REVEALED THAT T HESE INVESTOR COMPANIES WERE NOT EVEN FOUND EXISTING AT THEIR REGISTERED ADDRESS AND ALL THESE COMPANIES WERE CONTROLLED BY ONE OR TWO PERSONS AND THE DIRECTORS WERE ONLY N AME LENDERS. THERE IS A CATEGORICAL ADMISSION BY THE PERSON CONTROLLING THE INVESTOR CO MPANIES THAT CASH WAS ACCEPTED BY HIM BEFORE ISSUING CHEQUES TO BENEFICIARIES FOR INV ESTING IN THOSE BENEFICIARY COMPANIES IN THE FORM OF SHARE APPLICATION MONEY AN D IN TURN HE RECEIVED COMMISSION OF 0.5% ON TOTAL AMOUNT. HE HAS ALSO ADMITTED THAT HE WAS REGULARLY PROVIDING SUCH ACCOMMODATION ENTRIES FROM NUMBER OF YEARS. FURTHER , DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE DIRECTORS FAILED TO APP EAR BEFORE AO WITH THE RELEVANT BOOKS OF ACCOUNTS AND DOCUMENTS EVEN ON BEING PROVI DED SUCH OPPORTUNITY TWICE. HE SUBMITTED THAT ALL THE INVESTOR COMPANIES, WHO HAD PURCHASED SHARES OF ASSESSEE COMPANIES AT HUGE PREMIUM, INVESTING SEVERAL CRORES OF RUPEES IN THE SHARE CAPITAL AND PREMIUM PAID TO ASSESSEE COMPANIES WERE THEMSELVES RETURNING ABSOLUTELY MEAGER INCOME IN ITRS FILED BY THEM. HE ACCORDINGLY SUBMIT TED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) SHOU LD BE SUSTAINED. 14. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE ITA NOS.7971 TO 7974/DEL/2018 12 HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BE FORE US. WE FIND THE ORIGINAL ASSESSMENT IN THE INSTANT CASE WAS COMPLETED U/S 14 3(3) OF THE ACT VIDE ORDER DATED 29 TH DECEMBER, 2011 ASSESSING THE TOTAL INCOME AT RS.1, 74,70,890/- AS AGAINST THE RETURNED INCOME OF RS.1,72,95,890/- WHEREIN ADDITIO N OF RS.1,75,000/- WAS MADE ON ACCOUNT OF ROC FEES PAID FOR INCREASE ON AUTHORIZED SHARE CAPITAL. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 20 TH JANUARY, 2015. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 153A/143(3) ON 30 TH DECEMBER, 2016 DETERMINING THE TOTAL INCOME AT RS. 7,71,16,920/- WHEREIN HE HAS MADE ADDITION OF RS.6 CRORES U/S 68 OF THE IT ACT O N ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED BY THE ASSESSEE DURING THE YEAR FR OM THREE COMPANIES, THE DETAILS OF WHICH ARE GIVEN AT PARA 3 OF THIS ORDER. IT IS AN ADMITTED FACT THAT THE ADDITION OF RS.6 CRORES MADE BY THE ASSESSING OFFICER IS NOT BASED O N ANY INCRIMINATING MATERIAL, BUT, ON THE BASIS OF THE BALANCE SHEET FILED BY THE ASSE SSEE ACCORDING TO WHICH THE ASSESSEE HAS RAISED SHARE CAPITAL INCLUDING SHARE PREMIUM OF RS.6 CRORES. UNDER THE ABOVE FACTUAL CIRCUMSTANCE, IT HAS TO BE SEEN AS TO WHETH ER THE ADDITION OF RS.6 CRORES MADE BY THE ASSESSING OFFICER VIDE ORDER PASSED U/S 153A /143(3) OF THE IT ACT CAN BE SUSTAINED IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 15. AS MENTIONED EARLIER, THE ADDITION OF RS.6 CROR ES MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCREASE IN THE SHARE CAPITAL/SHARE P REMIUM IS BASED ON THE BALANCE SHEET FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSME NT PROCEEDINGS AND NOWHERE FROM THE ASSESSMENT ORDER OR OF THE ORDER OF THE CIT(A) IT COMES OUT THAT THE SAID ADDITION IS ITA NOS.7971 TO 7974/DEL/2018 13 BASED ON INCRIMINATING MATERIAL FOUND DURING THE CO URSE OF SEARCH. EVEN THE LD. DR ALSO COULD NOT POINT OUT THAT THE ADDITION IS BASED ON ANY INCRIMINATING MATERIAL. THE HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWL A (SUPRA) WHILE DECIDING AN IDENTICAL ISSUE HAS OBSERVED AS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDI NG THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEAR S. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUG HT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATE RIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMP LETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EA CH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXIST ING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURS E OF ORIGINAL ASSESSMENT. ITA NOS.7971 TO 7974/DEL/2018 14 CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005-06 AND 2006-07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEA RCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 16. THE HON'BLE DELHI HIGH COURT IN THE CASE OF MEE TA GUTGUTIA (SUPRA) HAS AGAIN HELD THAT THE ASSESSING OFFICER CANNOT PROCEED TO M AKE AN ASSESSMENT U/S 153A WITHOUT THERE BEING ANY INCRIMINATING MATERIAL QUA THE ASSESSMENT YEAR FOR WHICH THE ASSESSING OFFICER WANTS TO MAKE ASSESSMENT. IT IS P ERTINENT TO MENTION HERE THAT THE SLP FILED BY THE REVENUE AGAINST THE ORDER OF THE H ON'BLE DELHI HIGH COURT IN THE ABOVE DECISION WAS DISMISSED BY HON'BLE SUPREME COU RT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIGH COURT IN THE CASE O F PR. CIT VS. BEST INFRASTRUCTURE (INDIA) PVT. LTD.(SUPRA); PR. CIT VS. BABA GLOBAL L TD. .(SUPRA); PR. CIT VS. DHARAMPAL PREMCHAND LTD. (SUPRA); AND CIT VS. JAKSON ENGINEER S LTD. (SUPRA) BY FOLLOWING ITS EARLIER DECISION IN THE CASE OF KABUL CHAWLA (SUPRA ). THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORTS THE CASE OF THE ASSESSEE. 17. WE FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MOON BEVERAGES LTD. AND HINDUSTAN AQUA LTD. VS. ACIT, ITA NO.7374/ DEL/2017 & 7567/DEL/2017 , ORDER DATED 7 TH JUNE, 2018, HAS DECIDED AN IDENTICAL ISSUE AND HEL D AS UNDER:- 35. BEFORE DECIDING THE ISSUE ON MERIT, WE WOULD F IRST LIKE TO DECIDE THE LEGAL GROUND RAISED BY THE ASSESSEE CHALLENGING THE VALID ITY OF THE ASSUMPTION OF JURISDICTION U/S 153A IN ABSENCE OF ANY INCRIMINATI NG MATERIAL FOUND DURING THE COURSE OF SEARCH WHEN THE ASSESSMENT WAS NOT PENDIN G AS PER GROUND OF APPEAL ITA NOS.7971 TO 7974/DEL/2018 15 NO.1 TO 1.2. IT IS AN ADMITTED FACT THAT THE ORIGIN AL RETURN OF INCOME WAS FILED ON 12.09.2013 WHICH WAS ACCEPTED U/S 143(1) VIDE INTIM ATION DATED 18.04.2014. THE PERIOD FOR ISSUE OF NOTICE U/S 143(2) EXPIRES ON 30 .09.2014 I.E. THE NOTICE U/S 143(2) COULD NOT HAVE BEEN SERVED ON THE ASSESSEE A FTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RET URN IS FURNISHED. THEREFORE, IN ABSENCE OF ISSUE OF ANY NOTICE U/S 143(2) AND SINCE NO OTHER PROCEEDINGS ARE PENDING, THEREFORE, IT HAD ATTAINED THE FINALITY MU CH PRIOR TO THE DATE OF SEARCH ON 28.03.2015. UNDER THESE CIRCUMSTANCES, THE FINDING OF THE LD. CIT(A) THAT THE ASSESSMENT PROCEEDINGS WERE PENDING AT THE TIME OF SEARCH AND WAS ABATED IS FACTUALLY INCORRECT. 36. WE FIND THE LD. CIT(A) AT PARA 5 PAGE 11 OF HIS ORDER HAS OBSERVED AS UNDER :- 'THE BASIS OF ADDITION AS TAKEN BY THE A.O. WAS STA TEMENT RECORDED OF SHRI SANJEEV AGARWAL DURING THE COURSE OF SEARCH WHEREIN HE HAS SURRENDERED AN AMOUNT OF RS.88.52 CRORE OUT OF WHICH A SUM OF RS. 30.78 CRORES WERE REFERRED TO FOR THE ASSESSMENT YEAR 2008-09 AND REST OF AMOUNT WAS NON DESCRIPTIVE AND VAGUE AND WAS SURRENDERED SUBJECT TO CROSS CHECKIN G OF THE FACTS AND TO EXPLAIN AFTER ACCESS TO THE BOOKS OF ACCOUNTS. THE SAID STA TEMENT WAS RETRACTED BY SAID SHRI SANJEEV AGARWAL ON 18.05.2015 WITHIN TWO MONTH S FROM THE DATE OF ORIGINAL STATEMENT. THOUGH THE APPELLANT HAS STATED TO HAVE RECORDED ALL THE TRANSACTIONS UNDER APPEAL IN ITS BOOKS OF ACCOUNT AND OFFERED AL L THE NECESSARY AND RELEVANT PROOF THEREOF AS SUCH. SINCE THE ASSESSMENT PROCEED INGS WERE PENDING AT THE TIME OF SEARCH AND WAS ABATED, THE LEGAL GROUND OBJECTED AS SUCH BY THE APPELLANT WAS NOT VALID AS SUCH THE SAME IS BOUND TO BE REJECTED. ' 37. WE FURTHER FIND FROM THE ORDER OF THE LD. CIT(A ) THAT THERE WAS NO SURRENDER OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR AND THE SURRENDER WAS ONLY FOR THE ASSESSMENT YEAR 2008-09 WHICH TOO WAS RETRACTED WIT HIN TWO MONTHS. HE HAS ALSO OBSERVED THAT THE STATEMENT WAS NON DESCRIPTIVE AND VAGUE AND SUBJECT TO CROSS CHECKING OF FACT TO BE EXPLAINED AFTER ACCESS TO BO OKS OF ACCOUNTS. WE, THEREFORE, FIND MERIT IN THE SUBMISSIONS OF THE LD. COUNSEL FO R THE ASSESSEE THAT THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT IS NOT BASED ON ANY INCRIMINATING MATERIAL AND IS BASED ON STATEMENTS R ECORDED DURING SEARCH U/S 132(4) AND POST-SEARCH ENQUIRIES. 38. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. BEST INFRASTRUCTURE (INDIA) (P) LTD . REPORTED IN 397 ITR 82 HAS HELD THAT STATEMENTS R ECORDED U/S 132(4) OF THE I.T. ACT DO NOT BY THEMSELVES CONSTITUTE INCRIMINATING MATE RIAL. THE RELEVANT OBSERVATION OF THE HON'BLE HIGH COURT READ S AS UNDER :- '38. FIFTHLY, STATEMENTS RECORDED UNDER SECTION 132 (4) OF THE ACT OF THE ACT DO NOT BY THEMSELVES CONSTITUTE INCRIMINATING MATERIAL AS HAS BEEN EXPLAINED BY THIS COURT IN COMMISSIONER OF INCOME TAX V. HARJEEV AGGARWAL (SUPRA). LASTLY, AS ALREADY POINTED OUT HEREINBEFORE, THE FACTS IN THE PRESENT CASE ARE DIFFERENT FROM THE FACTS IN SMT. DAYAWANTI GUPTA V. CIT (SUPRA) WHERE THE ADMISSION BY THE ITA NOS.7971 TO 7974/DEL/2018 16 ASSESSEES THEMSELVES ON CRITICAL ASPECTS, OF FAILUR E TO MAINTAIN ACCOUNTS AND ADMISSION THAT THE SEIZED DOCUMENTS REFLECTED TRANS ACTIONS OF UNACCOUNTED SALES AND PURCHASES, IS NON- EXISTENT IN THE PRESENT CASE . IN THE SAID CASE, THERE WAS A FACTUAL FINDING TO THE EFFECT THAT THE ASSESSEES WE RE HABITUAL OFFENDERS, INDULGING IN CLANDESTINE OPERATIONS WHEREAS THERE IS NOTHING IN THE PRESENT CASE, WHATSOEVER, TO SUGGEST THAT ANY STATEMENT MADE BY M R. ANU AGGARWAL OR MR. HARJEET SINGH CONTAINED ANY SUCH ADMISSION. 39. FOR ALL THE AFOREMENTIONED REASONS, THE COURT I S OF THE VIEW THAT THE ITAT WAS FULLY JUSTIFIED IN CONCLUDING THAT THE ASSUMPTI ON OF JURISDICTION UNDER SECTION 153A OF THE ACT QUA THE ASSESSEES HEREIN WAS NOT JUSTIF IED IN LAW.' 39. WE FIND THE HON'BLE DELHI HIGH COURT IN THE CAS E OF CIT VS. HARJEEV AGGARWAL REPORTED IN 290 CTR 263 HAS OBSERVED AS UNDER :- '23. IT IS ALSO NECESSARY TO MENTION THAT THE AFORE SAID INTERPRETATION OF SECTION 132(4) OF THE ACT MUST BE READ WITH THE EXPLANATION TO SECTION 132(4) OF THE ACT WHICH EXPRESSLY PROVIDES THAT THE SCOPE OF EXAMINAT ION UNDER SECTION 132(4) OF THE ACT IS NOT LIMITED ONLY TO THE BOOKS OF ACCOUNT S OR OTHER ASSETS OR MATERIAL FOUND DURING THE SEARCH. HOWEVER, IN THE CONTEXT OF SECTION 158BB(1) OF THE ACT WHICH EXPRESSLY RESTRICTS THE COMPUTATION OF UNDISC LOSED INCOME TO THE EVIDENCE FOUND DURING SEARCH, THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT CAN FORM A BASIS FOR A BLOCK ASSESSMENT ONLY IF SUCH ST ATEMENT RELATES TO ANY INCRIMINATING EVIDENCE OF UNDISCLOSED INCOME UNEART HED DURING SEARCH AND CANNOT BE THE SOLE BASIS FOR MAKING A BLOCK ASSESSM ENT.' 40. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CA SE OF BRAHMAPUTRA FINLEASE (P) LTD. VIDE ITA NO.3332/DEL/2017 ORDER DATED 29.1 2.2017, FOLLOWING THE ABOVE DECISION OF THE HON'BLE DELHI HIGH COURT, HAS OBSERVED AS UNDER :- '4.19 WE FIND THAT IN THE CASE OF BEST INFRASTRUCTU RE (INDIA) PRIVATE LIMITED (SUPRA), DESPITE THE ADMISSION OF ACCOMMODATION ENT RY IN STATEMENTS UNDER SECTION 132(4) OF THE ACT, THE COURT HELD THAT THE STATEMENT DO N OT CONSTITUTE AS INCRIMINATING MATERIAL. IN THE INSTAN T CASE, NEITHER IS THERE ANY STATEMENT OF ANY ACCOMMODATION ENTRY OPERATOR CLAIM ING THAT ANY ENTRY WAS NOT PROVIDED NOR ANY DIRECTOR HAS ADMITTED THAT ASSESSE E OBTAINED ACCOMMODATION ENTRY. THUS, THE CASE OF THE ASSESSEE IS ON BETTER FOOTING THEN THE CASE OF BEST INFRASTRUCTURE (I) P. LTD (SUPRA). IN SUCH FACTS AN D CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF BEST INFRASTRUCTURE (INDIA) PRIVATE LIMITED (SUPRA), WE DO NOT HAVE ANY HESITATION TO HOLD THAT THE STATEMENT UNDER SECTION 132(4) OF SH. SAMPAT SHARMA CANNOT BE TREATED AS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN THE RESULT, WE HOLD THAT ADDITION OF SHARE CAPITAL IN THE YEAR UNDER CONSIDERATION HAS BEEN MADE WITHOUT RELYING ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH.' ITA NOS.7971 TO 7974/DEL/2018 17 41. IN THE LIGHT OF THE ABOVE DECISIONS, STATEMENTS RECORDED U/S 132(4) OF THE I.T. ACT , 1961 CANNOT CONSTITUTE AS INCRIMINATING MATERIAL. 42. AS MENTIONED EARLIER, THE ADDITION OF RS.11,85, 00,000/- WAS NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL BUT IS BASED ON STATEMENTS RECORDED DURING THE SEARCH U/S 132(4) AND POST-SEARCH ENQUIRIES. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT COMPLETED ASSESSMENTS CANNOT BE DIST URBED U/S 153A IN ABSENCE OF ANY INCRIMINATING MATERIAL. 43. THE HON'BLE DELHI HIGH COURT IN THE CASE OF KAB UL CHAWLA REPORTED IN 380 ITR 573 HAS HELD THAT THE COMPLETED ASSESSMENT CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT U/S 1 53A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL FOUND ON OR DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALR EADY DISCLOSED OR NOT KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. FOLLOWING THE ABOVE DECISION, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MEETA GUTGUTIA REPORTED IN 395 ITR 526 HAS TAKEN A SIMILAR VIEW AND HAS HELD THAT ONCE THE ASSESSMENT ATTAINED FINALITY FOR A PARTICULAR YEAR I.E. IT IS NOT PENDI NG THEN THE SAME CANNOT BE SUBJECT TO TAX IN PROCEEDINGS U/S 153 A OF THE I.T. ACT . THIS OF COURSE WOULD NOT APPLY IF INCRIMINATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING THE PROCEEDINGS U/S 153A WHICH ARE CONTRARY TO AND/OR N OR DISCLOSED DURING THE REGULAR ASSESSMENT PROCEEDINGS. 44. THE HON'BLE DELHI HIGH COURT AGAIN IN THE CASE OF PR.CIT VS. LATA JAIN REPORTED IN 384 ITR 543 HAS HELD THAT IN ABSENCE O F ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH, ASSUMPTION OF JURISDICTION U/S 153A WAS NOT IN ACCORDANCE WITH LAW. THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORTS HIS CASE. THE HON'BL E SUPREME COURT IN THE CASE OF CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY REPORTED IN 397 ITR 344 HAS UPHELD THE DECISION OF HON'BLE BOMBAY HIGH COURT WH EREIN THE HON'BLE HIGH COURT HAD UPHELD THE DECISION OF THE TRIBUNAL HOLDI NG THAT THE INCRIMINATING MATERIAL WHICH WAS SEIZED HAS TO PERTAIN TO THE ASS ESSMENT YEARS IN QUESTION AND IT IS AN UNDISPUTED FACT THAT THE DOCUMENTS WHICH W ERE SEIZED DID NOT ESTABLISH ANY CO-RELATION, DOCUMENT-WISE, WITH THESE FOUR ASS ESSMENT YEARS. 45. SINCE IN THE INSTANT CASE ADDITION OF RS.11,85, 00,000/- WAS MADE ON THE BASIS OF STATEMENTS RECORDED U/S 132(4) AND POST-SEARCH E NQUIRY AND NO INCRIMINATING MATERIAL WAS FOUND/SEIZED DURING THE COURSE OF SEAR CH, THEREFORE, FOLLOWING THE DECISIONS CITED (SUPRA), WE HOLD THAT NO ADDITION C OULD HAVE BEEN MADE U/S 153A SINCE THE ASSESSMENT WAS NOT ABATED IN THE INSTANT CASE. IN VIEW OF THE ABOVE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOL DING THE ACTION OF THE ASSESSING OFFICER IN ASSUMING JURISDICTION U/S 153 A OF THE I.T. ACT . ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER AND UPHELD B Y THE LD. CIT(A) IN THE 153A ASSESSMENT PROCEEDINGS BEING VOID AB-INITIO ARE DEL ETED. ITA NOS.7971 TO 7974/DEL/2018 18 46. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUN D, ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE ON MERIT ARE NOT ADJUDICAT ED BEING ACADEMIC IN NATURE. 18. SINCE THE ADDITION IN THE INSTANT CASE WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, BUT, ON THE BASIS OF BALANCE SHEET FILED BY THE ASSESSEE IN THE RETURN OF INCOME, THEREFORE, RE SPECTFULLY FOLLOWING THE DECISIONS CITED (SUPRA) WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE IT ACT ON ACCOUNT OF INCREASE IN SHARE CAPITAL WHICH H AS BEEN UPHELD BY THE CIT(A) IS NOT JUSTIFIED. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION. 19. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUN D, THE ADDITION ON MERIT IS NOT BEING ADJUDICATED BEING ACADEMIC IN NATURE. 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.7972/DEL/2018, A.Y. 2011-12 (SHRI RATHI STEE L LTD.) 21. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN UPHOLDING ADDITION OF RS.1,76,20,000/-MADE B Y THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME- TAX ACT, 1961 (THE ACT) , NOT APPRECIATING THAT THE APPELLANT HAS RIGHTLY DISCHARGED THE PRIMARY ONUS B Y PROVING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE ENTITIES BY SUBMITTING PLETHORA OF EVIDENCES. 1.1 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE AFORESAID ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER DE-HORS ANY MATERIAL FOUND/ SEIZED DURING T HE COURSE OF SEARCH IN THE PREMISES OF THE APPELLANT AND IS NOT SUSTAINABLE IN LAW. 1.2 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS)ER RED ON FACTS AND IN LAW ON CONFIRMING THE ADDITION WHICH WAS MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION UNIT OF INCOME TAX DEPARTMENT WITHOUT EVEN AN IOTA OF EVIDENCE OR ADVERSE DOCUMENT IN CONTEXT TO THE SAME. ITA NOS.7971 TO 7974/DEL/2018 19 1.3 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE APPELLANT HAD SUBM ITTED ALL THE RELEVANT INFORMATION AND DOCUMENTS TO PROVE THE IDENTITY, GE NUINENESS AND CREDITWORTHINESS OF SHARE APPLICANTS. 1.4 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN HOLDING THAT INFORMATION RECEIVED IN PURSUANT TO TH E REMAND REPORT IS DEFICIENT IN ESTABLISHING THE CAPACITY OF THE INVESTOR AND GENUI NENESS OF THE SHARE CAPITAL SUBSCRIPTION TRANSACTIONS. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 22. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUNDS ARE IDENTICAL TO GROUNDS RAISED IN ITA NO.7971/DEL/2018. WE HAVE ALREADY DE CIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN ALLOWED. FOLLOWIN G SIMILAR REASONINGS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.7973/DEL/2018, A.Y. 2009-10 (SHRI RATHI STEE L (DAKSHIN) LTD.) 23. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN UPHOLDING ADDITION OF RS.4,00,00,000/-MADE B Y THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME- TAX ACT, 1961 (THE ACT) , NOT APPRECIATING THAT THE APPELLANT HAS RIGHTLY DISCHARGED THE PRIMARY ONUS B Y PROVING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE ENTITIES BY SUBMITTING PLETHORA OF EVIDENCES. 1.1 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE AFORESAID ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER DE-HORS ANY MATERIAL FOUND/ SEIZED DURING T HE COURSE OF SEARCH IN THE PREMISES OF THE APPELLANT AND IS NOT SUSTAINABLE IN LAW. 1.2 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS)ER RED ON FACTS AND IN LAW ON CONFIRMING THE ADDITION WHICH WAS MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION UNIT OF INCOME TAX DEPARTMENT WITHOUT EVEN AN IOTA OF EVIDENCE OR ADVERSE DOCUMENT IN CONTEXT TO THE SAME. 1.3 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE APPELLANT HAD SUBM ITTED ALL THE RELEVANT ITA NOS.7971 TO 7974/DEL/2018 20 INFORMATION AND DOCUMENTS TO PROVE THE IDENTITY, GE NUINENESS AND CREDITWORTHINESS OF SHARE APPLICANTS. 1.4 THAT THE COMMISSIONER OF INCOME-TAX (APPEA LS) ERRED ON FACTS AND IN LAW IN HOLDING THAT INFORMATION RECEIVED IN PURSUAN T TO THE REMAND REPORT IS DEFICIENT IN ESTABLISHING THE CAPACITY OF THE INVES TOR AND GENUINENESS OF THE SHARE CAPITAL SUBSCRIPTION TRANSACTIONS. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 24. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUNDS ARE IDENTICAL TO GROUNDS OF APPEAL IN ITA NO.7971/DEL/2018. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN ALLOWED. FOLLOWING SIMILAR REASONINGS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.7974/DEL/2018, A.Y. 2011-12 (SHRI RATHI STEE L (DAKSHIN) LTD.) 25. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN UPHOLDING ADDITION OF RS.50,00,000/-MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME- TAX ACT, 1961 (THE ACT) , NOT APPRECIATING THAT THE APPELLANT HAS RIGHTLY DISCHARGED THE PRIMARY ONUS B Y PROVING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE ENTITIES BY SUBMITTING PLETHORA OF EVIDENCES. 1.1 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE AFORESAID ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER DE-HORS ANY MATERIAL FOUND/ SEIZED DURING T HE COURSE OF SEARCH IN THE PREMISES OF THE APPELLANT AND IS NOT SUSTAINABLE IN LAW. 1.2 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS)ER RED ON FACTS AND IN LAW ON CONFIRMING THE ADDITION WHICH WAS MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION UNIT OF INCOME TAX DEPARTMENT WITHOUT EVEN AN IOTA OF EVIDENCE OR ADVERSE DOCUMENT IN CONTEXT TO THE SAME. 1.3 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE APPELLANT HAD SUBM ITTED ALL THE RELEVANT INFORMATION AND DOCUMENTS TO PROVE THE IDENTITY, GE NUINENESS AND CREDITWORTHINESS OF SHARE APPLICANTS. ITA NOS.7971 TO 7974/DEL/2018 21 1.4 THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN HOLDING THAT INFORMATION RECEIVED IN PURSUANT TO TH E REMAND REPORT IS DEFICIENT IN ESTABLISHING THE CAPACITY OF THE INVESTOR AND GENUI NENESS OF THE SHARE CAPITAL SUBSCRIPTION TRANSACTIONS. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 26. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUNDS ARE IDENTICAL TO GROUNDS OF APPEAL IN ITA NO.7971/DEL/2018. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN ALLOWED. FOLLOWING SIMILAR REASONINGS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 27. IN THE RESULT, ALL THE APPEALS FILED BY T HE ASSESSEE ARE ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 3 1.05.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER AC COUNTANT MEMFBER DATED: 31 ST MAY, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI