The DCIT, Centra Circle-1, Vadodara V. M/s. Bansidhar Lease And Finance Pvt. Ltd, Godhra

ITSSA 29/AHD/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2664 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-08-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Set aside
• Section: 132; 153A; 158BD

Judgement Text

IT(SS)A No.29/Ahd/2020 Assessment Year: 2010-11 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER IT(SS)A No.29/Ahd/2020 Assessment Year: 2010-11 Dy. Commissioner of Income Tax vs. M/s. Bansidhar Lease & Finance Central Circle-1, Pvt. Ltd., Vadodara Deep Complex, Kalal Darwaja, Godhra – 389 001. [PAN – AAACB 6265 D] (Appellant) (Respondent) Assessee by : None Revenue by : Shri Vijay Kumar Jaiswal, CIT DR Date of hearing : 31.08.2022 Date of pronouncement : 28.09.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the Revenue against the order dated 26.11.2019 passed by the CIT(A)-12, Ahmedabad for the Assessment Year 2010-11. 2. The Revenue has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs.3,54,50,000/- on account of undisclosed Income in the form of investment in the share capital without appreciating the fact involved in this case that the assessee could not explain the source and creditworthiness of investors. 2. On the facts and m the circumstances of the case and in law, the Id. ClT(A) has erred in deleting the addition of Rs.3,54,50,000/- on account of undisclosed income in the form of investment in the share capital, when the Ld. CIT(A) has found and observed that "it is true that the subscription of shares of the appellant company at huge premium (of Rs.90 per share) defies commercial/investment prudence".(Emphasis is supplied at para no.13.18 of appellate order). 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in relying on various decisions of the Hon'ble Court including the decision of Hon'ble High Court of Gujarat in the case of Pr. CIT Vs Saumya Construction IT(SS)A No.29/Ahd/2020 Assessment Year: 2010-11 Page 2 of 5 Pvt. Ltd., when the facts involved in this case are distinguishable for the reason that all the referred decisions cover the situation where assessment for a particular year was completed. However, in the instant case no assessment for A.Y. 2010-11 was completed. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.!53A has to be confined to the incriminating malarial found during the course of search u/s.132(1) of the Act, even though, there is no Such stipulation in sec 153A of the Act. 5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income m respect of each assessment year falling within six assessment years and to assess or re- assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 6. On the facts and in the circumstances of the case and in law, the Id. CIT(A)] has erred in not appreciating that while compilation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a result of search of requisition of books of accounts, there is no such stipulation in sec. 153A and sec. 158BI specifically states that the provisions of Chapter XlV-B, under which sec. 158BB falls, would not be applied where a search was initiated u/s.132 after 31/5/2003. 7. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s.132 is conducted in the case of the assessee, and that if the interpretation of the Id.CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 8. It is, therefore, prayed that the order the Ld. CIT(A)-12, Ahmedabad may be set aside and that of the AO may be restored to the above extent.” 3. A Search action under Section 132 of the Income Tax Act, 1961 was carried out in the Dhanjimama Group of cases including the case of the assessee on 03.07.2012. Consequent to the search action, proceedings under Section 153A of the Act were initiated. The assessee filed his return of income for A.Y. 2010-11 on 29.12.2014 showing total income of Rs.6,51,650/-. The assessee is a NBFC company and engaged in providing financial service. The Assessing Officer observed that the IT(SS)A No.29/Ahd/2020 Assessment Year: 2010-11 Page 3 of 5 assessee company issued shares on 22.03.2010 with face value of Rs.10/- each on a premium of Rs.90/- per equity share. The Assessing Officer called for details for which assessee has provided the details but the Assessing officer pointed out the discrepancy in the details filed by the assessee thereby stating that the assessee is delaying part filing the proper details. After giving due opportunities the Assessing Officer made addition of Rs.3,54,50,000/- as undisclosed income of the assessee since the nature and source of investment along with creditworthiness of the investor company was not satisfactory explained by the assessee and he investors. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 5. At the time of hearing none appeared on behalf of the assessee despite giving notice which was duly served upon the assessee. Therefore, we are proceeding on the basis of the submissions made by the assessee before the Assessing Officer and before the CIT(A). 6. Ld. DR submitted that the CIT(A) erred in deleting the addition of Rs.3,54,50,000/- on account of undisclosed income in the form of investment in the share capital without appreciating the fact that the assessee could not explain the source and credit worthiness of the investors. Ld. DR further submitted that the CIT(A) observed that the subscription of shares of the assessee company was at huge premium of Rs.90/- per share defies commercial/investment prudence, yet the CIT(A) has deleted the addition. The Ld. DR further submitted that the decision of the Hon’ble Gujarat High Court in the case of PCIT vs. Soumya Construction Pvt. Ltd. are distinguishable for the reason that in the instant case no assessment for A.Y. 2010-11 was completed. The Ld. DR further submitted that the CIT(A) has erred in holding that any addition during the assessment under Section 153A of the Act has to be complied when incriminating material was found during the course of search under Section 132(1) of the Act. The Ld. DR submitted that computation of undisclosed income of the Block Period under Section 158BD has to be made on the basis of evidence found as a result of search or requisition of books of account, but there is no such requirement under Section 153A and Section 158BB of the Act. The provisions of IT(SS)A No.29/Ahd/2020 Assessment Year: 2010-11 Page 4 of 5 Chapter XIV under which section 158BB will not be applicable where a search was initiated under Section 132 of the Act after 31.05.2003. If the interpretation of the CIT(A) is accepted, it will not be possible to assess such income under section 153A proceedings by any other parallel proceedings. Thus, the Ld. DR relied upon the assessment order and prayed that the additions be confirmed. 7. We have heard the Ld. DR and perused all the material available on record. From the perusal of the assessment order and the observations made by the Assessing Officer related to search and seizure operation. It is undisputed fact that no incriminating material was found in assessee’s case during the search. The Hon’ble Gujarat High Court in the case of PCIT vs. Soumya Construction (Tax Appeal No. 24 of 2016 order dated 14.03.2016) has categorically held that the assessment cannot go beyond incriminating material if the same is under Section 153A of the Act. Ld. DR tried to distinguish the facts of assessee’s case with that of Soumya Construction, but the basic principle of assessing the assessee under Section 153A remains/depends upon the search related material. Therefore, the arguments of the Ld. DR are rejected. The CIT(A) has categorically given finding that the assessee has placed evidence related to identity and creditworthiness of the share applicants and the genuineness of the transactions and in the remand proceedings the Assessing Officer has not found any discrepancies in the said evidences. Thus, on merit also, the assessee has proved the case and, therefore, the CIT(A) has rightly allowed the appeal and deleted the addition. There is no need to interfere with the finding of the CIT(A) and hence appeal of the Revenue is dismissed. 8. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open Court on this 28 th day of September, 2022. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 28 th day of September, 2022 PBN/* IT(SS)A No.29/Ahd/2020 Assessment Year: 2010-11 Page 5 of 5 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad