E-City Projects Lucknow Pvt Ltd, Cuttack V. ACIT, Central Circle, Cuttack

ITSSA 3/CTK/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3653 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 15-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Assessee Lawyers: S K TULSIYAN
• Keywords: Unexplained cash credit; Revision of order; Income from undisclosed sources; Search and seizure; Loose papers; Principle of natural justice; Opportunity of cross examination; Source of fund; Application of stay; Question of law; Third party statement; Accommodation entries; Block assessment; Onus to prove; Bogus loan; Documents seized; Reassessment proceedings
• Section: 143(3); 142(1); 153A; 133(6); 147; 68; 148; 263; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE S/ SHRI N.S.SAINI, AM & PAV AN KUMAR GADALE, JM IT (SS) A NO. 0 3 / CTK /20 1 8 STAY APPLICATION NO. 0 9 /CTK/2018 (ARISING OUT OF IT(SS)A NO. 0 3 /CTK/2018) ASSESSMENT YEAR : 20 13 - 201 4 ) E - CITY PROJECTS LUCKNOW PVT. LTD., SAI ENCLAVE, SATI CHAURA CHOWK,CUTTACK VS. ACIT, CENTRAL CIRCLE, CUTTACK PAN NO. : AA BCE 4000 A APPELLANT ) .. RESPONDENT ) ASSESSEE BY : SHRI S.K.TULSIY AN, AR REVENUE BY : SHRI PIYUSH KOLHE , CITDR DATE OF HEARING : 2 0 / 0 3 /201 8 DATE OF PRONOUNCEMENT 22 / 0 3 /201 8 O R D E R PER SHRI N.S.SAINI , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A ) - 2 , BHUBANESWAR DATED 1 3.11.2017 . 2 . THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ASSESSMENT MADE U/S. 153A OF THE ACT IN SPITE OF THE FAC T THAT NO INCRIMINATING DOCUMENTS WHATSOEVER WAS FOUND/ SEIZED DURING SEARCH OPERATION U/S, 132 OF THE ACT WHICH IS SINE QUA NON FOR MAKING THE ASSESSMENT U/S. 153A OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEAL S) ERRED IN SUSTAINING THE ADDITION OF RS. 3,06,00,000 / - IN THE HANDS OF THE ASSESSEE U/ S 68 OF THE ACT WHICH WAS A PART OF RS. 11,17,20,000 ALREADY TAXED U/S 68 IN THE HANDS OF UNIWORTH AGENCIES PVT. LTD, LOAN CREDITOR THUS LEADING TO DOUBLE ADDITION OF THE SAME INCOME. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN FACTS AND IN LAW AS UNSUSTAINABLE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 2 EVIDENCES/STATEMENTS COLLECTED WITHOUT THE KNOWLEDGE OR INTIMATION TO THE ASSESSEE WERE RELIED UPON; NO OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED TO THE ASSESSEE WHICH IS IN DEFIANCE OF THE SETTLED PRINCIPLES OF JUSTICE BASED ON JUDICIAL JUDGMENT OF THE APEX COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS CCE. 4. THAT THE LEARNED CIT(A) ERRED IN RELYING UPON THE STATEMENT OF THIRD PARTIES WITHOUT PROVIDING COPY OF THE SAID STATEMENT AND WITHOUT ACCORDING OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT ALTHOUGH THE IMPUGNED STATEMENTS COULD NOT HAVE BEEN RELIED UPON IN PROCEEDINGS U/S 153A OF THE ACT WHEN NO INCR IMINATING DOCUMENT WAS FOUND IN THE COURSE OF SEARCH. 5. THAT THE ORDER OF THE LD. CIT(A) BEING NOT BASED ON THE FACTS OF THE CASE OF THE APPELLANT AND BEING CONTRARY TO LAW, SHOULD HENCE BE QUASHED AND THE APPELLANT COMPANY BE GIVEN SUCH RELIEF OR RELI EFS AS PRAYED FOR. 6. THAT THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND/OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS 3. THE FACTS AND ISSUE INVOLVED IN ALL THE GROUNDS OF APPEAL ARE COMMON, HENCE, THEY ARE DISPOSED OF TOGETHER AS FOLLOWS : - 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY . I T DERIVES INCOME FROM BUSINESS OF REAL ESTATE DEVELOPMENT AND FILED RETURN OF INCOME DECLARING NIL INCOME FOR THE ASSESSMENT YEAR 201 3 - 201 4 ON 1.10.2013 . A SEARCH AND SEIZURE OPERATION U/S.132 OF THE I.T.ACT, 1961 WAS CONDUCTED ON 06.08.2014 IN CASE OF THE ASSESSEE AND OTHER ENTITIES OF THE GROUP. THEREAFTER NOTICE U/S.153A OF THE ACT WAS ISSUED ON 29.04.2015. IN RESPONSE TO THE SAME, THE ASSESSEE FILED RETURN OF INCOM E ON 10.08.2015 DISCLOSING THE TOTAL INCOME OF RS. NIL. ACCORDINGLY, NOTICE U/S.142(1) AND NOTICE U/S 143(2) OF THE INCOME TAX ACT WERE ISSUED AND DULY SERVED ON THE ASSESSEE. ON EXAMINATION OF THE SEIZED TALLY ACCOUNTS OF THE ASSESSEE, THE AO IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 3 FOUND THAT T HE COMPANY HAD CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS.9.98 CRORES AS UNSECURED LOAN FROM KOLKATA BASED COMPANY UNIWORTH AGENCIES PVT. LTD. D URING THE ASSESSMENT YEARS OF 2012 - 13 AND 2013 - 14. HE OBSERVED THAT THE ASSESSEE PURCHASED LAND AND DEVELOPED IT D URING THIS PREVIOUS YEAR OUT OF THE LOAN AMOUNT ALLEGEDLY RECEIVED BY THE ASSESSEE. THE LOANS WERE CLAIMED TO HAVE BEEN RECEIVED AS UNDER : - IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 4 5. THE AO OBSERVE D THAT IN SIMILAR CIRCUMSTANCES OF PROVIDING ENTRY AS SHARE CAPITAL/UNSECURED LOAN, ENQUIRIES WE RE CONDUCTED ON THOSE COMPANIES IN KOLKATA BY THE INVESTIGATION WING OF THE DEPARTMENT AND IT WAS FOUND THAT UNACCOUNTED INCOME OF REAL BENEFICIARY WERE ROUTED THROUGH THE KOLKATA BASED SHELL COMPANIES AND BROUGHT BACK IN BOOKS IN GUISE OF SHARE CAPITAL/LO AN. 6. UNIWORTH AGENCIES PVT. LTD. FROM WHOM THE LOANS WERE ALLEGEDLY RECEIVED BY THE ASSESSEE WAS FOUND TO BE ONE OF SUCH COMPANIES ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AND MANAGED BY ONE PERSON NAMELY MR. RAJ KUMAR THARAD. 7. AFTER THE SEARCH OPER ATION DURING WHICH ABOVE BOGUS LOAN TRANSACTIONS WERE DETECTED, THE ASSESSEE, IN ORDER TO SAVE THE SITUATION, HAS SHOW N REPAYMENT OF THE ABOVE LOAN TO UNIWORTH DURING THE F.Y.2014 - 15. THE AO OBSERVED THAT SUBSEQUENT REPAYMENT OF THE LOAN DOES NOT MAKE THE INITIAL TRANSACTION GENUINE . HE OBSERVED THAT IN ORDER TO VERIFY THE GENUINENESS OF THE LOAN AND SUBSEQUENT REPAYMENT, ENQUIRY WAS CONDUCTED IN SEVERAL BANKS BY CALLING FOR CORRESPONDING FLOW OF FUND AND IT WAS FOUND THAT A NUMBER OF PAPER COMPANIES DETECT ED BY THE INVESTIGATION WING OF KOLKATA AND A SHARE BROKER WHO WAS FOUND TO BE INVOLVED IN SUCH TRANSACTION WERE ALSO FOUND TO BE PART OF FUND FLOW OF LOAN ARRANGEMENT AND REPAYMENT THROUGH BANKS. THE NAMES OF SUCH COMPANIES AND PERSON WHICH ARE PART OF TH E CHAIN THROUGH WHICH THE AMOUNT REPAID BY THE ASSESSEE WAS ROUTED ARE AS UNDER: IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 5 1. BHIMA AGENCIES PVT LTD, 2. TOPLINE INVESTMENT CONSULTANT PVT LTD. 3. DALMIA INVESTMENT DEVELOPMENT LTD. 4. BLACKBERRY PROJECTS PVT LTD. 5. PANGHAT TEXTILE PVT LTD. 6. DREAM COMMODEAL PVT LTD AND 7. ASHOK KUMAR KAYAN (SHARE BROKER) 8. THE AO FURTHER OBSERVED THAT THE PROFIT AND LOSS ACCOUNT , BALANCE SHEET OF MOST OF THESE COMPANIES AS PER THE ABOVE LISTED CONCERN WERE ANALYSED AND FOUND THAT NO BUSINESS IS BEING RUN BY THEM. THEY ARE ONLY INVOLVED IN RECEIVING INVESTMENT FROM CERTAIN SIMILAR COMPANIES AND MAKING INVESTMENT AS SHARE CAPITAL IN OTHER COMPANIES. THERE IS NO NORMAL BUSINESS RATIONALE INVOLVED IN SUCH TRANSACTIONS. HE FURTHER OBSERVED THAT I N THE ABOVE CONTEXT ASSE SSEE WAS REQUESTED TO SHOW CAUSE AS TO WHY THE SAID AMOUNT CLAIMED TO HAVE RECEIVED DURING THE A.YRS. 2012 - 13 (RS.6,67,00,000/ - ) AND 2013 - 14 (RS.3,06,00,000/ - ) SHOULD NOT BE TREATED AS NOT GENUINE AND THUS UNEXPLAINED. IN REPLY TO THE SHOW CAUSE NOTICE, TH E ASSESSEE CONTENDED AS UNDER : - 6.4 ASSESSEE IN HIS SUBMISSION SUBMITTED AS UNDER: (A) 'THE ASSESSEE IS A PRIVATE LIMITED COMPANY INCORPORATED IN THE YEAR 2003 HAVING REGISTERED OFFICE AT C/O:B.P. SHUKLA, D - 2227, INDIRA NAGAR, LUCKNOW, UTTARPRADESH - 226016. THERE WAS NO BUSINESS ACTIVITY IN THE COMPANY TILL DATE. IN THE YEAR 2008 THE COMPANY WAS ABLE TO GET A PIECE OF LAND FROM CDA CUTTACK FOR WHICH 10% E MD DEPOSIT OF RS. 2,12,85,000/ - HAS BEEN MADE OUT OF BORROWING FROM M/S E - CITY REAL ESTATE PVT. LTD. EFFORTS WE RE MADE TO MOBILIZE FUNDS FROM VARIOUS PARTIES, OUT OF WHICH RS. 10 CRORE WAS RAISED FROM ONE M/S. UNIWORTH AGENCIES PVT. LTD. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 6 (B) THE SEARCH PROCEEDING U/S 132 WAS NOT PROPER IN THE EYE OF LAW, AS NEITHER THE SEARCH WARRANT WAS EXECUTED ON ANY OF THE REPRESEN TATIVE OF THE ASSESSEE NOR THE REGISTERED OFFICE OF THE ASSESSEE COMPANY WAS NOT COVERED IN SEARCH PROCEEDING. NAMES OF ELEVEN ASSESSEE (11) HAS BEEN SERIALLY NOTED IN THE SINGLE PANCHNAMMA DRAWN AGAINST THE PREMISES SAI BHAWAN CUTTACK, WHERE IN THE NAME O F THE ASSESSEE COMPANY NOTED. (C) IN COURSE OF SEARCH NEITHER ANY SEIZED MATERIALS HAS BEEN IDENTIFIED AND SEIZED FROM THE ASSESSEE COMPANY NOR ANY SEPARATE INDEPENDENT PANCHNAMA HAS BEEN DRAWN. IN ABSENCE OF ANY INCREMENTING MATERIAL NO ASSESSMENT CAN BE MADE U/S 153(A) OR 153(C). M/S.UNIWORTH AGENCIES PVT. LTD. HAS ITS OWN FUNDS OF RS.11.17 CRORE IN ITS HANDS, MUCH BEFORE THE INVESTMENT WITH ASSESSEE COMPANY. THESE FUNDS HAS BEEN RAISED IN THE HANDS OF UNIWORTH AGENCIES PVT. LTD., IN THE FINANCIAL YEAR 2008 - 09. THE SAID AMOUNT HAS BEEN ASSESSED AS INCOME IN THE HANDS OF UNIWORTH AGENCIES PVT. LTD. IN THE F.Y. 2008 - 09 VIDE A SPEAKING ORDER PASSED U/S 263/148/144. WHEN OUT OF THE SAID INCOME OF F.Y 2008 - 09 UNIWORTH AGENCIES PVT LTD. MADE INVESTMENT WITH ASSESS EE COMPANY IN THE YEAR 2011 - 12, THE SAID MONEY CANNOT BE TAXED IN THE HANDS OF ASSESSEE COMPANY AGAIN . NO FRESH FUND HAS BEEN INTRODUCED IN THE HANDS OF UNIWORTH AGENCIES PVT. LTD. THIS IS ALSO CLEAR FROM THE FOLLOWING TABLE. 2008 - 09 2009 - 10 2010 - 11 2011 - 12 2012 - 13 SHARE CAPITAL/PREMIUM 11,18,20,000 11,18,20,000 11,18,20,000 11,18,20,000 11,18,20,000 INVESTMENT 11,20,75,000 11,14,80,000 11,99,38,000 3,75,58,000 36,58,000 (D) THE IDENTITY OF THE INVESTOR COMPANY NAMELY UNIWORTH AGENCIES PVT. LTD. HAS B EEN ESTABLISHED, GENUINENESS OF THE TRANSACTION HAS BEEN PROVED AS ALL THE TRANSACTIONS ARE THROUGH BANK. EVEN THE DETAIL SOURCE OF INVESTMENT IN THE HANDS OF UNIWORTH AGENCY PVT. LTD., HAS BEEN EXPLAINED WITH IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 7 DOCUMENTARY EVIDENCES. CREDIT WORTHINESS HAS B EEN ESTABLISHED AND HENCE THE ASSESSEE HAS DISCHARGED ITS ONUS ON THE TRANSACTIONS. (E) THE ALLEGED STATEMENT RECORDED FROM MR. GARG & THARAD WAS NOT A VOLUNTARY STATEMENT AND MERELY GOT SIGNED FROM THEM ON PRESSURE. STATEMENT WAS SELF CONTRADICTORY. (F) T HE ASSESSEE COMPANY HAS NEITHER STARTED ANY BUSINESS NOR A SINGLE RUPEE OF REVENUE IS THERE AND HENCE QUESTION OF UNACCOUNTED MONEY IN THE HANDS OF ASSESSEE DOES NOT ARISE AT ALL. SIMILARLY IN THE ENTIRE SGBL GROUP NEITHER ANY INCREMENTING DOCUMENT WAS FOU ND NOR WAS ANY SOURCE TRESSES LEADING TO UNACCOUNTED GENERATION OF CASH. HENCE THE ALLEGATION THAT THE RECEIPT IS UNACCOUNTED MONEY OF ASSESSEE ROUTED THROUGH KOLKATA COMPANY IS COMPLETELY BASELESS.' 9. THE AO AFTER CONSIDERING THE ABOVE SUBMISSIONS OF TH E ASSESSEE OBSERVED THAT N O WHERE BEFORE ISSUANCE OF THIS SHOW CAUSE, ASSESSEE HAD RAISED SUCH TYPE OF OBJECTION REGARDING VALIDITY OF SEARCH. SO THE STANCE OF THE ASSESSEE IN THIS REGARD IS REJECTED. FURTHER THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSM ENT IN THE CASE OF THE ALLEGED LOAN CREDITOR UNIWORTH WAS MADE FOR THE A.Y.2009 - 10(FY 20 0 8 - 09) IN WHICH THE ADDITION U/S 68 WAS MAD E BY THE ASSESSING OFFICER IS NOT AT ALL RELEVANT FOR FOLLOWING REASONS : - (A) THE ENQUIRY MADE BY THE INVESTIGATION WING OF KOLKATA SUBSEQUENTLY HAD REVEALED THAT UNIWORTH WAS A PAPER COMPANY PROVIDING ACCOMMODATION ENTRIES IN REGARD TO UNACCOUNTED INCOME OF DIFFERENT BENEFICIARIES. (B) THE MONEY ALLEGEDLY RECEIVED BY THE ASSESESE FROM THAT PERSON DURING THE RELEVANT PREVIOUS YEAR 2011 - 12 CANNOT BE LINKED TO THE ASSESSED INCOME OF UNIWORTH FOR THE F.Y.2008 - 09. AS IT WAS FOUND OUT BY THE INVESTIGATION WING, UNIWORTH WAS ROUTING OTHERS' IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 8 UNACCOUNTED MONEY THROUGH HIS BANK ACCOUNT FOR ALL THE YEARS. (C) THE PROMOTERS OF THE ASSESS EE COMPANY TOOK CONTROL OF UNIWORTH BY ACQUIRING SHARES OF THAT COMPANY JUST PRIOR TO THE ALLEGED LOAN TRANSACTIONS AND THE WHOLE CIRCUMSTANTIAL EVIDENCE AND PREPONDERANCE OF PROBABILITY VERY CLEARLY INDICATE THAT THE ASSESSEE HAS ROUTED HIS UNACCOUNTED MO NEY THROUGH UNIWORTH FOR MAKING INVESTMENT IN REAL ESTATE BUSINESS. 10. THE AO FURTHER OBSERVED THAT THE SUBMISSION OF THE ASSESSEE THAT THERE WAS NO EVIDENCE REGARDING ACTUAL GENERATION OF UNACCOUNTED MONEY BY THE ASSESSEE IS NOT VALID BECAUSE IT IS WELL SETTLED IN LAW THAT IT IS NOT NECESSARY FOR THE ASSESSING OFFICER TO FIND OUT THE ACTUAL GENERATION OF UNACCOUNTED INCOME FOR TREATING SHAM LOAN TRANSACTIONS AS UNEXPLAINED CASH CREDIT IN T HE HANDS OF THE ASSE S SEE WHEN SUFFICIENT CIRCUMSTANTIAL EVIDENCES CLEARLY INDICATES THAT THE TRANSACTIONS SHOWN IN THE BOOKS ARE BOGUS. THE AO FURTHER OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE THE DIRECTORS OF THE ALLEGED CREDITOR UNIWORTH AGENCY PVT LTD FOR EXAMINATION. THE ASSESSEE WAS INTIMATED OF THE FACT THAT, UN IWORTH AGENCY PVT LTD WAS ONE OF SUCH COMPANIES WHO WERE FOUND TO BE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES BY WAY OF SHARE CAPITAL/LOAN/ADVANCES ETC. ASSESSEE ALTHOUGH PRODUCED ALL THE DOCUMENTARY EVIDENCE IN SUPPORT OF SUCH ADVANCE FAILED TO PRODUCE THE DIRECTORS OF THIS COMPANY FOR EXAMINATION. THE NATURE OF FINANCIAL TRANSACTION BETWEEN THE ASSESESEE AND UNIWORTH IS AKIN TO ALL TYPE OF SUCH TRANSACTION IN THE CASE OF ACCOMMODATION ENTRY PROVIDERS. IN ALL SUCH TYPE OF TRANSACTION ACCOMMODATION ENTRY IS PROVIDED BY COMPANIES HAVING ALL IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 9 THE PROPER DETAILS IN COMPLIANCE TO THE ROC AND THE BANK ACCOUNT IS USED TO CONDUIT THE FUND WITHOUT ANY JUSTIFICATION OF TRANSFER OF SUCH HUGE SUM. ALL THESE COMPANIES HAVE NO RECOGNISABLE REAL BUSINESS AND THEIR BALANC E SHEET SHOW HUGE SHARE CAPITAL AND EQUIVALENT AMOUNT OF INVESTMENTS. THE ACTIVITY OF SUCH SHARE HOLDERS AND INVESTMENT COMPANIES ARE ALL OF SAME NATURE. 11. THE AO FURTHER OBSERVED THAT T HIS IS THE COMMON MODUS OPERANDI OF KOLKATA BASED SHELL COMPANIES. H ERE, UNACCOUNTED CASH IS ROUTED THROUGH SEVERAL LAYERS TO REACH THE INTENDED BENEFICIARY. THIS IS EXPLAINED AT LENGTH BY THE STATEMENT OF TWO SUCH ENTRY OPERATORS VIZ. RAJ KUMAR THARAD AND PRADEEP GARG, WHO ARE BASED IN KOLKATA. RELEVANT PART OF THE STATEM ENT OF THOSE TWO PERSONS ARE REPRODUCED BELOW : RAJ KUMAR THARAD : 'Q.6 WHAT WORK IS DONE BY MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT.LTD. ANS. SIR, ACTUALLY THEY ALL ARE JAMAKHARCHI COMPANIES. MYSELF IS THE DIRECTOR IN ABOVE COMPANIES AS DISCUSSE D IN QUESTION NO. 5. SIR, BESIDE MYSELF, ALL OTHERS ARE THE DUMMY DIRECTORS. THEY ALL ARE WORKING AS PER MY INSTRUCTIONS. I AM THE MAIN PERSON WHO IS ACTUALLY CONTROLLING AND MANAGING ALL THE COMPANIES Q.8 PLEASE EXPLAIN THE SOURCE OF FUNDS USED FOR RAISIN G SHARE CAPITAL IN YOUR COMPANIES ? ANS. SOURCE OF FUND FOR ENHANCING SHARE CAPITAL IS UNACCOUNTED MONEY OF BENEFICIARIES. I USED TO GET CASH FROM BENEFICIARIES FIRST, THEN I HAND IT OVER TO PEOPLE FOR DEPOSITING THE CASH IN VARIOUS ACCOUNTS AND THEN TRA NSFERRING IT TO MY COMPANIES THROUGH CHEQUES. I USED TO DEPOSIT THE CHEQUES IN MY COMPANIES FOR RAISING SHARE CAPITAL. FINALLY, I USED TO SELL THESE COMPANIES TO BENEFICIARIES IN LIEU OF COMMISSION. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 10 Q.10 PLEASE EXPLAIN TO WHOM YOU HAVE SOLD COMPANY OF MIDA S CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD. AND WHAT WAS THE MODUS OPERANDI? ANS; - THESE COMPANIES WERE TAKEN OVER BY ONE MR. SUNIL GUPTA OF CUTTACK, ODISHA. THE COMPANIES WERE TRANSFERRED BY WAY OF SHARE TRANSFER TO SH. SUNIL GUPTA AND HIS GROUP CO MPANIES. SH. SUNIL GUPTA APPROACHED ME IN 2010 AND HANDED ME CASH. THIS CASH WAS HA NDED OVER TO SEVERAL OF MY DUMMY CONCERNS. THE MONEY AFTER TRAVELLING THROUGH SEVERAL OF MY COMPANIES CONTROLLED BY MY GOT DEPOSITED INTO THE BOOKS OF SGBL (INDIA ) LTD AND OTHER GROUP COMPANIES CONTROLLED BY S UNIL GUPTA Q. 11 . PLEASE PROVIDE THE DETAILS OF MONEY TRAIL USED TO IN DEPOSITING CASH AND ROUTING IT BACK TO COMPANIES LIKE MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD ? ANS; I WILL PROVIDE IT LATER ON. HOWE VER, THE CASH WAS DEPOSITED IN VARIOUS CONCERNS WHICH AFTER TRAVELLING SEVERAL LAYERS REACHED COMPANIES LIKE SIGNET VINIMAY PVT. LTD, SCOPE VYAPAAR PVT. LTD., SANKALP VINCOM PVT. LTD., ETC. SUBSEQUENTLY, THE MONEY WAS TRANSFERRED TO MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD.' PRADEEP GARG : 'Q.6 WHAT WORK IS DONE BY MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT.LTD. ANS. SIR, ACTUALLY THEY ALL ARE JAMAKHARCHI COMPANIES. I HAVE SIGNED ALL THE PAPERS AS PER DIRECTION OF RAJ KUMARTHARAD. Q.8 PLEASE EXPLAIN THE SOURCE OF FUNDS USED FOR RAISING SHARE CAPITAL IN YOUR COMPANIES ? ANS. SOURCE OF FUND FOR ENHANCING SHARE CAPITAL IS UNACCOUNTED MONEY OF BENEFICIARIES, WE USED TO GET CASH FROM BENEFICIARIES FIRST, THEN WE HAND IT OVER TO PEOPLE FOR DEPOSITING THE CASH IN VARIOUS ACCOUNTS AND THEN TRANSFERRING IT TO MY COMPANIES THROUGH CHEQUES. WE USED TO DEPOSIT THE CHEQUES IN MY COMPANIES FOR RAISING SHARE CAPITAL. FINALLY, RAJ KUMAR THARAD USED TO SELL THESE COMPANIES TO BENEFICIARIES IN LIEU OF C OMMISSION. Q.10 PLEASE EXPLAIN TO WHOM YOU HAVE SOLD COMPANY OF MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD. AND WHAT WAS THE MODUS OPERANDI? IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 11 ANS; - THESE COMPANIES WERE TAKEN OVER BY ONE MR. SUNIL GUPTA OF CUTTACK, ODISHA. THE COMPANIES WERE TRAN SFERRED BY WAY OF SHARE TRANSFER TO SH. SUNIL GUPTA AND HIS GROUP COMPANIES. SH. SUNIL GUPTA APPROACHED ME IN 2010 AND HANDED ME CASH. THIS CASH WAS HANDED OVER TO SEVERAL OF MY DUMMY CONCERNS. THE MONEY AFTER TRAVELLING THROUGH SEVERAL OF MY COMPANIES CON TROLLED BY MY GOT DEPOSITED INTO THE BOOKS OF SGBL (INDIA ) LTD AND OTHER GROUP COMPANIES CONTROLLED BY SUNIL GUPTA . Q.11. PLEASE PROVIDE THE DETAILS OF MONEY TRAIL USED TO IN DEPOSITING CASH AND ROUTING IT BACK TO COMPANIES LIKE MIDAS CAPITAL PVT. LTD AN D UNIWORTH AGENCIES PVT. LTD ? ANS: I WILL PROVIDE IT LATER ON. HOWEVER, THE CASH WAS DEPOSITED IN VARIOUS CONCERNS WHICH AFTER TRAVELLING SEVERAL LAYERS REACHED COMPANIES LIKE SINGNET VINIMAY PVT. LTD, SCOPE VYAPAAR PVT. LTD., SANKALP VINCOM PVT. LTD., E TC. SUBSEQUENTLY, THE MONEY WAS TRANSFERRED TO MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD.' 12. THE AO OBSERVED THAT THIS WAS THE MODE TO BRING THE UNACCOUNTED INCOME BACK INTO THE BOOKS OF THE ASSESSEE GROUP. THEY ALSO EXPLAINED THE PROCESS OF ALLOTMENT OF SHARES AT A PREMIUM, WHICH IS DONE ONLY AS PER THE REQUIREMENT OF THE BENEFICIARY COMPANY TO BRING HIS UNACCOUNTED FUNDS AND HAS NO RATIONALE TO THE BUSINESS OF THE COMPANY. ALTHOUGH ASSESSEE HAS CLAIMED TO HAVE AVAILED LOAN/ADVANCE FROM UNIW ORTH AGENCY, THE NATURE OF SUCH TRANSACTION REMAINS UNEXPLAINED. THIS IS SPECIFICALLY IN THE BACK GROUND THAT IN THE CASE OF THIS GROUP WHERE THE SEARCH ASSESSMENT IS BEING MADE, ALL THE SISTER COMPANIES WERE FOUND TO HAVE RECEIVED SHARE CAPITAL ALONG WITH PREMIUM FROM ACCOMMODATION ENTRY PROVIDERS OF KOLKATA. NECESSARY ACTION HAS BEEN TAKEN IN THE RESPECTIVE ASSESSMENT. IN THIS BACKGROUND OF FACTS AND CIRCUMSTANCES DISCUSSED ABOVE, IT IS IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 12 REASONABLY CONCLUDED THAT THE CLAIMED TRANSACTION OF CASH CREDIT IN T HE BANK ACCOUNT OF THE ASSESSEE ARE NOT GENUINE. 13. THE AO FURTHER OBSERVED THAT U NDER SECTION 68 THE ONUS IS ON THE ASSESSEE TO PROVE THE THREE INGREDIENTS, I.E. IDENTITY AND CREDITWORTHINESS OF THE PERSON FROM WHOM THE MONEY WAS TAKEN AND THE GENUINENES S OF THE TRANSACTION. WHENEVER A SUM IS CREDITED IN THE BOOKS OF THE ASSESSEE, THE ONUS LIES ON THE ASSESSEE COMPANY TO PROVE THESE THREE CRITERIA. IN THIS CASE EVIDENCE IS ON RECORDS IN THE SHAPE OF INCOME TAX RETURNS ROC DETAILS AND RELEVANT PORTIONS OF THE BANK STATEMENT, SUBMITTED DURING THE COURSE OF SCRUTINY ASSESSMENT. APART FROM THIS INDEPENDENT ENQUIRY WAS CONDUCTED IN THE B ANK AND MCA (MINISTRY OF CORPORATE AFFAIRS) SITE ABOUT THE COMPANIES INVOLVED IN THE TRANSACTION OF SOURCING FUND TO THE ASSESS EE AND CHANNELIZATION OF FUND AFTER DISBURSEMENT. IT WAS FOUND THAT ALL OF THESE COMPANIES HAD VERY MEAGER AND INSIGNIFICANT INCOME AND ACCOMMODATION ENTRY COMPANIES AS NAMED BY MR . RAJ KUMAR GARG AND MR. THARAD IN THEIR STATEMENT. IT IS ALSO ON RECORD THA T IN MOST OF THE CASES, THE AMOUNTS WERE DEPOSITED IN THE ACCOUNT EITHER ON THE SAME DAY OR A DAY BEFORE THE ISSUE OF CHEQUE TO THE ASSESSEE. THE FACT THAT THESE COMPANIES WERE COMPLYING WITH ROC FORMALITIES DOES NOT ADD ANY CREDIBILITY OR EVIDENTIARY VALU E. IN ANY CASE, IT DOES NOT IPSO FACTO PROVE THAT THE TRANSACTIONS ARE GENUINE. THE MERE FACT THAT THE TRANSACTIONS WERE ENTERED INTO BY WAY OF ACCOUNT PAYEE CHEQUES IS ALSO NOT CONCLUSIVE AND CANNOT BE HELD TO BE SACROSANCT. THE TRANSACTIONS THOUGH IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 13 APPARE NT WERE HELD TO BE NOT REAL ONE. MAY BE THE MONEY CAME BY WAY OF BANK CHEQUES AND PAID THROUGH THE PROCESS OF BANKING TRANSACTION BUT THAT ITSELF IS OF NO CONSEQUENCE. THE SAME VIEW HAD BEEN ADOPTED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF THE CIT KS DURGA PRASAD MORE (1971) 82 ITR 540 AND STATED THAT. - 'IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT, THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECI TAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHERWISE I T WILL BE VERY EASY TO MAKE SELF - SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT ON ASSESSEE WHO WANTS TO EVADE TAX IS TO HA VE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN T HE DOOR WILL B E LEFT WIDE OPEN TO EVADE TAX . A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT, CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS.' 14. HE FURTHER OBSERVED THAT S ECTION 68 PERMITS THE ASSESSING OFFICER TO ADD THE CREDIT APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IF THE LATTER OFFERS NO EXPLANATION REGARDING THE NATURE AND SOURCE OF THE CREDIT OR THE EXPLANATION OFFERED IS NOT SATISFACTORY. WHERE AN ASSESSEE FAILS T O PROVE SATISFACTORILY THE SOURCE AND NATURE OF CERTAIN AMOUNT OF CREDIT DURING THE ACCOUNTING YEAR, THE INCOME - TAX OFFICER IS ENTITLED TO DRAW THE INFERENCE THAT THE RECEIPT S ARE OF AN ASSESSABLE NATURE. THIS VIEW WAS ADOPTED IN THE CASE OF A. GOVINDARAJU LU MUDALIAR V. CIT [1958] 34 1TR 807. THE ASSESSEE COMPANY WAS GIVEN OPPORTUNITY TO PRODUCE THE DIRECTORS OF THE SUBSCRIBER COMPANIES IN ORDER TO EXAMINE THEM ON OATH. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 14 15. THE AO OBSERVED THAT IN CASE OF SUMATI DAYAL V. CIT [1995] SUPP. (2) SCC 453 THE HON 'BLE APEX COURT HELD THAT: '...IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION AND IF A RECEIPT IS IN THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE BECAUSE IT FALLS WITHIN EXEMPTION PROVIDED BY THE ACT LIES UPON THE ASSESSEE. BUT, IN VIEW OF SECTION 68 OF THE ACT, WHERE, ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR THE SAME MAY BE CHARGED TO INCOME TAX AS TH E INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY IN SUCH A CASE THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., THE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT, THE SAID EVIDENCE BEING UNREBUTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME.' [EMPHASIS SUPPLIED] (P, 456) 16. AFTER GOING THROUGH T HE DECISIONS OF HONBLE COURTS AND TRI BUNALS AS FURNISHED BY THE ASSESSEE , THE AO OBSERVED THE SAID CITATIONS ARE NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT ASSESSEE. THE AO, THEREFORE, IN THE LIGHT OF THE FACTS OF THE CASE AND AFORESAID EXPOSITION OF THE LEGAL POSITION, WITH REGARD TO THE IDENTITY AND CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS, WAS OF THE OPINION THAT THE CREDIT OF RS. 3,06,00,000 / - SHOW N AS ADVANCE AND CREDITED IN THE BOOKS OF THE ASSESSEE COMPANY IS UNEXPLAINED AND ADDED TO THE RETURNED INCOME OF THE ASSESSEE U/S.68 OF THE ACT. 17. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 18 . BEFORE US, THE AR OF THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS, WHICH READS AS UNDER : - IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 15 THE FOLLOWING COMBINED SUBMISSION IS BEING MADE BEFORE YO UR HONOURS FOR THE A.YS 2012 - 13 AND 2013 - 14 AS THE ISSUE INVOLVED IN BOTH THE APPEALS IS IDENTICAL. THE SAID COMBINED SUBMISSION IS MADE AGAINST THE ASSESSMENT ORDERS DATED 28/12/2016 FOR THE A.Y.S 2012 - AND 2013 - 14 PASSED BY THE LD. ASSESSING OFFICER (A. O.) U/S 153A OF THE INCOME TAX ACT, 1961 (THE ACT), WHEREIN THE LD. A.O. HAS ASS ES SED AN INCOME OF RS.6,92,00,000/ - AND RS.3,06,00,000/ - RESPECTIVELY AS AGAINST NIL RETURNED INCOME FOR BOTH THE YEARS. THE ADDITION OF RS.6.92 CRORES AND RS.3.06 CRORES HAS BEEN MADE BY THE ID. A.O. U/S 68 OF THE ACT BY ALLEGING THAT THE INVESTMENT MADE BY UNIWORTH AGENCY PRIVATE LIMITED IN THE PROJECT OF THE APPELLANT COMPANY WAS NOT GENUINE. IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] THE LD. CIT( A) HAS VIDE HIS ORDER DATED 13/11/2017 UPHELD THE SAID ADDITIONS BY THE LD. A.O. BEFORE GOING ON TO THE SUBMISSION OF THE APPELLANT, IT IS OF UTMOST RELEVANCE TO FIRSTLY LAY DOWN IN BRIEF, THE FACTS OF THE CASE OF THE APPELLANT RELEVANT TO THE SAID CASE: FACTS OF THE CASE: 1. THE ASSESSEE IS A PRIVATE LIMITED COMPANY INCORPORATED IN THE YEAR 2003 WITH AN OBJECT OF CONSTRUCTION OF RESIDENTIAL/ COMMERCIAL BUILDING APARTMENTS, COMPLEX MALLS ALONG WITH REAL ESTATE DEVELOPMENT FOR IT'S COMMERCIAL EXPLORATION. THE CURRENT REGISTERED OFFICE OF THE ASSESSEE IS AT 'C/O: B. P. SHUKLA, D - 2227JNDIRANAGAR, LUCKNOW, UTTAR PRADESH - 226016'.THE INCOME TAX RETURNS OF THE ASSESSEE COMPANY ARE DULY BEING FILED FROM THIS REGISTERED OFFICE ADDRESS OF LUCKNOW AT JCIT, RANGE - 1, L UCKNOW, WITH PANAABCE4000A. PRIOR TO THIS, DURING THE A.YS 2012 - 13 AND 2013 - 14, BEING THE YEARS UNDER APPEAL BEFORE YOUR HONOURS, THE REGISTERED OFFICE OF THE ASSESSEE COMPANY WAS AT B 53 SECTOR A, MAHANAGAR, LUCKNOW, UTTAR PRADESH - 226001. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 16 THE SAID OFFIC E WAS CHANGED TO THE CURRENT REGISTERED OFFICE AFTER ALL DUE FORMALITIES WITH THE ROC. 2. FOR AY 2012 - 13, THE ASSESSEE HAS FILED THE INCOME TAX RETURN U/S 139(1) ON 30 - 09 - 2012 DECLARING NIL INCOME AND FOR AY 2013 - 14, THE RETURN WAS FILED ON 01 - 10 - 2013 DECL ARING THE NIL INCOME. 3. SUBSEQUENTLY ON 6 TH AUGUST 2014, THERE WAS A SEARCH & SEIZURE PROCEEDING U/S.132 IN CASE OF DIRECTORS FAMILY BY IT INVESTIGATION DEPARTMENT OF ODISHA. IN COURSE OF THE SAID PROCEEDING, ONE PREMISES IN CUTTACK NAMELY SAI BHAWAN, SATI CHOURA CHOWK, CUTTACK - 753008, WAS ALSO COVERED AND THE NAME OF THE ASSESSEE COMPANY WAS NOTED ALONG WITH OTHER 10 NAMES IN THE PANCHANAMA. IN THE SAID SEARCH PREMISES, CERTAIN TALLY ACCOUNTS OF THE REGULAR ACCOUNTS OF THE ASSESSEE COMPANY WERE FOUND. ALL THESE ACCOUNTS WERE VERY MUCH THE REGULAR ACCOUNTS OF THE ASSESSEE, ALL DULY RECORDED AND DISCLOSED AS SUCH IN THE REGULAR RETURNS OF THE ASSESSEE COMPANY. 4. BASING UPON THE SAID PANCHANAMA, PROCEEDING U/S. 153A WAS INITIATED. HERE, PLEASE NOTE THAT THAT THERE WAS NO SEARCH PROCEEDING CONDUCTED AT THE REGISTERED OFFICE OF ASSESSEE COMPANY AT ''C/O: B. P. SHUKLA, D - 2227JNDIRANAGAR, LUCKNOW, UTTAR PRADESH - 226016.' BASING UPON THE SAID PANCHANAMA, PROCEEDING U/S 153A WAS INITIATED AND NOTICE U/S 153A WAS SERV ED ON THE ASSESSEE COMPANY. IN RESPONSE TO SAID NOTICE, THE ASSESSEE FILED THE INCOME TAX RETURN U/S 153A FOR BOTH THE YEARS ON 19/02/2016 DECLARING THE SAME INCOME AS DECLARED IN THE ORIGINAL RETURN OF INCOME. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 17 5. NOTICE U/S 143(2) AND 142(1) WAS SERVED ON THE ASSESSEE COMPANY. THE ASSESSEE COMPLIED WITH THE SAID NOTICES HOWEVER BUT IN PROTEST. THE ASSESSEE ALSO FILED A DETAILED SUBMISSION BEFORE THE LEARNED AO OBJECTING THAT THE SEARCH PROCEEDING WAS NOT AS PER LAW IN THE ABSENCE OF ANY INCRIMINATING SEIZE D MATERIAL FOUND DURING THE COURSE AGAINST THE ASSESSEE, MORE SO, WHEN NO PROCEEDINGS WERE PENDING FOR THE SUBJECT ASSESSMENT YEARS. 6. THE LEARNED AO WAS NOT SATISFIED WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND OPINED THAT PROCEEDINGS U/S 153 A OF THE ACT HAS BEEN RIGHTLY INITIATED IN ITS CASE. HE FURTHER HELD THAT THE ASSESSEE COMPANY IS NOT ABLE TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOANS TAKEN FROM UNIWORTH AGENCIES PVT LTD OF RS.6,92,00,000/ - AND RS.3,06,00,000/ - CREDITED IN THE BOOKS IN AY 2012 - 13 AND AY 2013 - 14 RESPECTIVELY AND ACCORDINGLY ADDED THE SAME TO THE INCOME OF THE ASSESSEE, 7. AGGRIEVED BY THE ORDER ISSUED BY THE LEARNED AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). THE APPEAL OF THE ASSESSEE WAS DI SMISSED BY THE LEARNED CIT(A) VIDE ORDER DATED 13 - 11 - 2017. 8. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE YOUR HONOURS 9. IN VIEW OF THE SAME, THE ASSESSEE HEREBY MAKES THE FOLLOWING SUBMISSION BEFORE YOUR HONOURS SETTING OUT THE FACTS AND THE REASONS WHY THE PROCEEDINGS INITIATED U/S 153A OF THE ACT IS NOT AS PER LAW AND HENCE THE ENTIRE PROCEEDINGS ARE LIABLE TO BE QUASHED. SUBMISSIONS: 1. STATING THE PARTICULAR FACTS OF THE ADDITIONS MADE, IT IS STATED THAT IN TH E YEAR 2008, THE ASSESSEE COMPANY WAS IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 18 ABLE TO GET A PIECE OF LAND FROM THE CUTTACK DEVELOPMENT AUTHORITY (CDA) FOR WHICH A 10% EMD DEPOSIT OF RS.2,12,57,280/ - HAD BEEN MADE. 1.1 THE COST OF THE SAID LAND BEING VERY HIGH, EFFORTS WERE MADE TO MOBILIZE FUNDS FROM VARIOUS PARTIES. THE ASSESSEE COMPANY RAISED A TOTAL SUM OF RS.21,94,75,000 IN FY 2011 - 12. OUT OF THIS, A SUM OF RS.6,92,00,000/ - WAS RECEIVED FROM UNIWORTH AGENCIES (P) LTD. AS ADVANCE FROM CUSTOMER AGAINST DEVELOPMENT OF UPCOMING PROJECTS. THE SAME WAS DULY RECORDED FOR IN THE BOOKS UNDER THE HEAD ADVANCE FROM PROSPECTIVE BUYERS. A SUM OF RS.3,06,00,000/ - WAS RAISED FROM UNIWORTH AGENCIES (P) LTD IN FY 2012 - 13 AND THE SAME WAS ALSO DULY RECORDED IN THE REGULAR BOOKS. HOWEVER, PLEASE NOTE THAT OUT OF THE TOTAL SUM OF RS.6,92,00,000/ - CREDITED AS RECEIVED FROM UNIWORTH AGENCIES, A SUM OF RS.25,00,000/ - WAS ACTUALLY RECEIVED FROM GROWTH AGENCIES PVT LTD WHICH WAS WRONGLY ACCOUNTED FOR IN THE LEDGER OF UNIWORTH AGENCIES (P) LTD. ACCORDINGLY, VIDE JOUR NAL ENTRY DATED 01 - 04 - 2012, THE SAID ENTRY WAS REVERSED. A COPY OF THE JOURNAL ENTRY IS ENCLOSED AT PAGE 109 OF PAPERBOOK FOR AY 2012 - 13. THUS, AS SUCH, A SUM OF RS.6.73 CR WAS RAISED BY THE ASSESSEE IN AY 2012 - 13 AND NOT RS.6.92 CR. THE SAME IS ALSO EVIDE NT FROM PAGE 2 OF THE ASSESSMENT ORDER WHEREIN THE RECEIPTS FROM UNIWORTH AGENCIES (P) LTD HAVE BEEN REPRODUCED. 1.2 THE AMOUNTS SO RAISED BY THE ASSESSEE WERE DEPLOYED FOR ACQUISITION OF THE LAND. AS ON 31 - 03 - 2012, THE VALUE OF THE LAND STOOD AT RS.23, 68 , 59,860/ - AND AS ON 31 - 03 - 2013 THE SAME STOOD IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 19 AT RS.23,69,79,860/ - . THE SAID INVESTMENT IN LAND WAS DULY DISCLOSED AS SUCH IN THE AUDITED ACCOUNTS OF THE ASSESSEE. 2. HOWEVER, IN THE ASSESSEES BUSINESS, INVOLVING CONSTRUCTION OF BUILDINGS, APARTMENTS, ETC, NO PROJECT HAD STARTED AND THUS THERE WAS NO BUSINESS TRANSACTED DURING THE SAID YEARS AND THUS THE ASSESSEE FILED NIL INCOME IN ITS INCOME TAX RETURN FILED FOR THE SAID A.YS 2012 - 13 AND 2013 - 14 ON 30/09/2012 AND 01/10/2013 RESPECTIVELY. 3. IN THE YEAR 20 14, ON 06/08/2014, SEARCH ACTION U/S 132 OF THE ACT WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT OF INCOME TAX, ODISHA, AT CUTTACK IN THE CASE OF SAJJAN KUMAR GUPTA & FAMILY AT THE RESIDENTIAL PREMISES LOCATED OPP RADHA TRAINING COLLEGE, SAHE BJADA BAZAAR, NEEM CHOWK, CUTTACK?'. THE NAMES OF EIGHT INDIVIDUALS OF THE FAMILY WERE COVERED BY THE SAID PANCHNAMA. 3.1 ALSO SEARCH WAS CONDUCTED AT PREMISES SAI BHAWAN, SATI CHOURA CHOWK,CUTTACK, ODISHA - 753008 , IN CASE OF SGBL GROUP & FAMILY. THE SAID PANCHNAMA DATED 06/08/2014 WAS DRAWN IN THE IN THE FOLLOWING 11 NAMES OF THE COMPANIES BELONGING TO THE SAJJAN KUMAR GROUP: I) SGBL AUTOMOBILES (P). LTD (II) SGBL MULTIACT (P) LTD (III SGBL PROPERTIES (P). LTD (IV DIAMOND PLAZA (P).LTD (V E CIT Y PROJECTS (VI SHREE CHAKANAYAN AGRO (VI SHREE (VI OMKARA ASSOCIATES (P). (IX KAMADHENU TRADING CO. ( X ) MIDAS CAPITAL (P) LTD (XI SAI ENCLAVE COPY OF THE SAID PANCHNAMAS ARE ENCLOSED AT PAGES 31 - 44 OF THE PAPERBOOK FOR AY 2012 - 13. IN THE SAID SEARCH PREMISES, CERTAIN TALLY ACCOUNTS ALL FORMING PART OF THE REGULAR ACCOUNTS OF THE ASSESSEE COMPANY WERE FOUND. ALL THESE ACCOUNTS WERE VERY MUCH IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 20 THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE, ALL DUL Y RECORDED AND DISCLOSED AS SUCH IN THE REGULAR BOOKS OF ACCOUNTS AND COVERED IN THE RETURNS FILED U/S 139(1) OF THE ACT. 3.2 AS SEEN FROM ABOVE, ALONG WITH OTHER NAMES, THE NAME OF THE ASSESSEE COMPANY ALSO APPEARED ON THE SAID PANCHNAMA. BASED PURELY UPO N THE SAID PANCHANAMA, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, NOTICE U/S 153A OF THE ACT DATED 29/04/2015 WAS ISSUED ON THE ASSESSEE COMPANY FOR THE A.YS. 2012 - 13 AND 2013 - 14. HOWEVER, IT IS TO BE NOTED HERE THAT NO SEARCH PROCEEDING WAS CONDUCTED A T THE REGISTERED OFFICE OF THE ASSESSEE COMPANY WHICH WAS AT LUCKNOW, BEING D - 2227,INDIRA NAGAR, LUCKNOW, UTTAR PRADESH - 226016 AS HAS BEEN STATED ABOVE. THUS, ON NO BASIS WHATSOEVER, IN AN AUTOMATIC MANNER, WITH AN ABSOLUTE PREDETERMINED AND PREJUDICED MIND, WITHOUT ANY JURISDICTION, IN THE TOTAL ABSENCE OF ANY INCRIMINATING MATERIAL, SOLELY SINCE THE NAME OF THE ASSESSEE COMPANY WAS MENTIONED IN THE PANCHNAMA DRAWN IN THE COURSE OF PROCEEDINGS U/S 132 OF THE ACT, IMPUGNED PROCEEDING U/S 153A OF THE ACT WAS INITIATED ON THE ASSESSEE COMPANY. ASSESSMENT PROCEEDINGS WERE INITIATED AND NOTICE U/S 142(1) OF THE ACT DATED 15/07/2015 FOR THE A.Y.S 2012 - 13 AND 2013 - 14, BEING THE YEARS UNDER APPEAL, WAS DULY SERVED ON THE ASSESSEE ALONG WITH A DETAILED QUESTIONNA IRE. PURSUANT TO THE ABOVE NOTICES, THE ASSESSEE DULY FILED ON 10/08/2015, THE SAME NIL RETURN FILED U/S 139(1) AS ITS IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 21 RETURN U/S 153A OF THE ACT FOR THE A.YS 2012 - 13 AND 2013 - 14. NOTICES U/S 143(2) AND 142(1) DATED 28/10/2015, 01/12/2015 AND 07/04/2016 FO R THE SAID A.Y.S 2012 - 13 AND 2013 - 14 WERE FURTHER ISSUED ON THE ASSESSEE PURSUANT TO WHICH THE ASSESSEE FILED ITS WRITTEN SUBMISSIONS BEFORE THE LD. A.O. ALL THE QUESTIONS RAISED IN THE QUESTIONNAIRE WERE ALL DULY REPLIED TO QUESTION - WISE. THE SAID SUBMISS IONS OF THE ASSESSEE ARE ENCLOSED AT PAGES 58 - 88 OF THE PAPERBOOK OF AY 2012 - 13. FURTHER, THE ASSESSEE ALSO FILED ITS SUBMISSION WHEREIN IT WAS CONTESTED BY THE ASSESSEE THAT THE SEARCH PROCEEDING IN THE CASE OF THE ASSESSEE COMPANY WAS NOT PROPER AND THE SEARCH AND THE ASSESSMENT U/S 153A NOT BEING BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, THE SAID ASSESSMENT PROCEEDINGS WERE INVALID AND ILLEGAL. 4. NOW AT THIS JUNCTURE, BEFORE GOING ON TO THE PARTICULAR DETAILED FACTS OF THE ADDITIONS, IT I S FIRST RELEVANT TO DISCUSS THE SCOPE OF SECTION 153A OF THE ACT. 4.1 FIRSTLY, BEFORE DISCUSSING SPECIFICALLY THE SCOPE AND IMPLICATION OF THE SECTION 153A OF THE ACT, IT WOULD BE OF RELEVANCE TO FIRST MAKE A REFERENCE TO THE PROVISIONS OF SECTION 153A AND THE OBSERVATION OF THE APEX COURT IN A CASE, AS UNDER: THE SECTION 153A OF THE INCOME TAX ACT, 1961, READS AS UNDER: *153A. ASSESSMENT IN CASE OF SEARCH OR REQUISITION. *(1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SEC TION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 22 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHAL L (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 ; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS : PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS **REFERRED TO IN THIS SUB - SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. **(2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUB - SECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB - SECTION (1), SHALL STAND REVIVED IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 23 WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER : PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION ; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSE SSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. THE HONBLE SUPREME COURT IN THE CASE OF PARSHURAM POTTERY WORKS CO. LTD. VS ITO, CIRCLE - 1, WARD A, RAJKOT 106ITR 1 (SC) HAS OBSERVED A S UNDER: - IT HAS BEEN SAID THAT THE TAXES ARE THE PRICE THAT WE PAY FOR CIVILIZATION. IF SO, IT IS ESSENTIAL THAT THOSE WHO ARE ENTRUSTED WITH THE TASK OF CALCULATING AND REALISING THAT PRICE SHOULD FAMILIARISE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL VERSED WITH THE LAW ON THE SUBJECT. ANY REMISSNESS ON THEIR PART CAN ONLY BE AT THE COST OF THE NATIONAL EXCHEQUER AND MUST NECESSARILY RESULT IN LOSS OF REVENUE. AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE M UST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STATE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE THAT AS PER THE PROVISIONS OF ARTICLE 141 OF THE CONSTITUTION OF INDIA, 1949, THE LAW DECLARED BY SUPREME COURT SHALL BE BINDING ON ALL COURTS WITHIN THE TERRITORY OF INDIA AND ACCORDINGLY, I T IS THE LAW OF LAND. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 24 4.2 GOING BRIEFLY INTO THE HISTORY OF THE LEGISLATIONS IN RELATION TO SEARCH PROCEEDINGS AND ASSESSMENTS, IT IS STATED THAT SINCE THE COMMENCEMENT OF THE INCOME TAX ACT, 1961 THERE WAS NO SEPARATE PROCEDURE FOR ASSESSMENT OF SEARCH CA SES. PRIOR TO 31ST MAY 1995 THERE WERE NO SPECIAL PROVISIONS FOR ASSESSMENT OF SEARCH CASES. ASSESSMENTS WERE GOVERNED BY THE REGULAR PROVISION OF THE I.T. ACT AS APPLICABLE TO RELEVANT ASSESSMENT YEAR AS PREVAILING THEN. ASSESSMENTS WERE USED TO BE REOPEN ED HAVING RECOURSE TO THE PROVISION OF SECTION 147 OF THE ACT. HOWEVER A PROVISIONAL ORDER U/S 132(5) USED TO BE PASSED FOR RELEASE OF SEIZED ASSETS. 4.3 THEREAFTER, WITH EFFECT FROM 1ST JUNE 1995, SCHEME OF BLOCK ASSESSMENT IN SECTION 158BC AND 158BD AS P ER CHAPTER XIVB OF THE ACT WAS INTRODUCED. THE MAIN PURPOSE OF INTRODUCING BLOCK ASSESSMENT SCHEME WAS EARLY FINALIZATION OF SEARCH ASSESSMENT AND REDUCTION IN MULTIPLICITY OF PROCEEDINGS. IN THIS SCHEME, THE ASSESSMENT WAS TO BE MADE ON THE BASIS OF SEIZE D DOCUMENTS ONLY. THERE WAS NO SCOPE FOR DISTURBING REGULAR ASSESSMENTS. ALTHOUGH THERE WERE SOME ANALOGIZES AND DIFFERENCES OF OPINION IN SOME OF THE PROVISIONS OF THE SCHEME, HOWEVER, WITHIN THE SPAN OF ABOUT EIGHT YEARS MOST OF THE ANALOGIZES AND DISPUT ES WERE SETTLED BY VARIOUS JUDGMENTS OF HONBLE COURTS AND TRIBUNALS BUT AFTER SETTLING OF MOST OF THE ISSUES, THE GOVERNMENT OF INDIA WITHDREW THIS SCHEME IN RESPECT OF SEARCHES MADE FROM 1ST JUNE 2003 AND INSERTED NEW SECTIONS 153A, 153B, 153C AND 153D I N CHAPTER XIV FOR POST SEARCH ASSESSMENT PURPOSE. IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL 2003, IT WAS OBSERVED THAT THE EXISTING PROVISION (AT THAT TIME) FOR SINGLE ASSESSMENT OF UNDISCLOSED INCOME FOR IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 25 BLOCK PERIOD WERE INTRODUCED FOR AVOIDANCE OF DISPUTES, EARLY FINALIZATION OF SUCH ASSESSMENTS AND REDUCTION IN MULTIPLICITY OF PROCEEDINGS. HOWEVER, SINCE THERE WERE PARALLEL PROCEEDINGS, NAMELY, REGULAR ASSESSMENT PROCEEDINGS AS WELL AS ASSESSMENT OF BLOCK ASSESSMENTS FOR UNDISCLOSED IN COME HAD AMOUNTED TO MULTIPLICITY OF PROCEEDINGS. IN ORDER TO AVOID MULTIPLICITY OF PROCEEDINGS, A SCHEME OF SINGLE ASSESSMENT IN RESPECT OF ASSESSMENT YEARS FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING, SECTION 153 A TO SECTION 153C OF THE ACT WERE PROPOS ED TO BE INTRODUCED. 4.4 THE FINANCE ACT 2012, HAS INSERTED THIRD PROVISO TO SECTION 153A(1) OF THE ACT, EMPOWERING THE CENTRAL GOVERNMENT TO MAKE RULE IN RESPECT OF THE ASSESSMENT YEAR EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED, SPECI FY THE CLASS OR CLASSES OF CASES WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARC H IS CONDUCTED OR REQUISITION IS MADE. MEMORANDUM EXPLAINING THE PROVISIONS OF THE FINANCE BILL 2012 STATES THAT UNDER THE EXISTING PROVISIONS OF SEARCH 153A OF ACT, IT IS MANDATORY TO ISSUE A NOTICE FOR FILING OF TAX RETURNS FOR 6 ASSESSMENT YEARS IMMEDIA TELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A. 5. NOW EXPLAINING THE SPECIFIC PROVISIONS OF THE SECTION 153A OF THE ACT, IT IS STATED THAT FROM THE PLAIN READING OF THE RELEVANT SECTION IT WOULD SUFFICE THAT SECTION 153A WOULD BE APPLICABLE WHERE A SEARCH IS INITIATED UNDER IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 26 SECTION 132 OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A OF THE ACT AFTER 31ST MAY, 2003. THEREFORE, BEFORE INVOKING THE PROVISIONS OF SECTION 153A OF THE ACT IT WOULD BE NECESSARY TO COMPLY WITH THE PROVISIONS CONTAINED UNDER SECTION 132(1) OF THE ACT. ONCE THE WARRANT OF AUTHORIZATION OR REQUISITION IS ISSUED AND SEARCH IS CONDUCTED, PA NCHANAMA IS DRAWN, THE COMPLETED ASSESSMENTS FOR ALL THE RELEVANT YEARS WOULD GET REOPENED IRRESPECTIVE OF WHETHER ANY INCRIMINATING MATERIAL IS FOUND OR NOT IN RELATION TO A PARTICULAR ASSESSMENT YEAR. 5.1 IT IS CLEARLY INSCRIBED IN THE LAW THAT AN ASSESS MENT U/S 153A IS DIFFERENT FROM REGULAR ASSESSMENT. THE SECTION COMES INTO PLAY ONLY WHEN A SEARCH IS INITIATED U/S 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S 132A AFTER 31.5.2003. ALSO TO BE HIGHLIGHTED THAT IT IS DURING THE COURSE OF SEARCH ITSELF, SUCH GENERALLY INCRIMINATING DOCUMENTS OR PAPERS ETC. OR UNACCOUNTED ASSETS ARE FOUND. 5.2 IF THE AO IS ALLOWED TO ASSESS / REASSESS THE TOTAL INCOME FOR ALL SIX ASSESSMENT YEARS AS PER FIRST PROVISO TO SECTION 153A, IN CONTRAD ICTION OF THE SECOND PROVISO, PARTICULARLY WHEN THERE IS NO INCRIMINATING MATERIAL ETC., THEN THE SAME WILL NOT ONLY MULTIPLY ASSESSMENT PROCEEDINGS BUT WILL MULTIPLY EVEN THE APPELLATE PROCEEDINGS. OBVIOUSLY THIS CAN NEVER BE THE INTENTION OF THE LEGISLAT URE. 5.3 THE PROVISION OF SECTION 153A STARTS WITH NON - OBSTANTE CLAUSE WITH REFERENCE TO SECTIONS 139, 147, 148, 149, 151 AND 153. SEC. 153A CONTEMPLATES ISSUE OF NOTICE FOR 6 YEARS PRECEDING THE SEARCH BUT NOT FOR THE YEAR OF SEARCH OR REQUISITION AND THU S NO RETURN IS REQUIRED TO BE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 27 FILED FOR THE YEAR OF SEARCH U/S 153A. ONLY REGULAR RETURN U/S 139 TO BE FILED. FIRST PROVISO IS REITERATION OF THE PROVISION CONTAINING CLAUSE (B) OF SECTION 153A (1) THAT THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME OF E ACH OF THE SIX ASSESSMENT YEARS. THE SECOND PROVISO CONTEMPLATES THAT IF ANY OF THE AFORESAID SIX ASSESSMENTS IS PENDING ON THE DATE OF INITIATION OF THE SEARCH OR REQUISITION, THE SAME SHALL ABATE. 5.4 EXPLAINING THE SECOND PROVISO OF THE SECTION, IT IS S TATED THAT THE SECOND PROVISO PROVIDES THAT IF ON THE DATE OF INITIATION OF SEARCH OR REQUISITION U/S 132 OR U/S 132A, ANY ASSESSMENT / REASSESSMENT PROCEEDING RELATING TO ANY A.Y, FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS, IS INITIATED AND THE SAM E IS PENDING, THEN THE PENDING PROCEEDINGS OF THE REGULAR ASSESSMENT SHALL STAND ABATED AND THE FRESH ASSESSMENT OF THE SAME CAN BE DONE U/S 153 A OF THE ACT. THIS PROVISO IS ENACTED SPECIFICALLY TO AVOID TWO PARALLEL PROCEEDINGS OF ASSESSMENT OF A PARTICU LAR YEAR OF THE SAME PERSON, I.E., ONE AS REGULAR ASSESSMENT AND ANOTHER AS ASSESSMENT U/S 153A OF THE ACT. 5.5 THE WORD ''ABATEMENT IS REFERABLE TO SOMETHING, WHICH IS PENDING ALIVE, OR IS SUBJECT TO DEDUCTION. THE ABATEMENT REFERS TO SUSPENSION OR TERM INATION OF THE PROCEEDINGS EITHER OF THE MAIN ACTION, OR THE PROCEEDINGS ANCILLARY OR COLLATERAL TO IT. THE PROCEEDINGS, WHICH HAVE ALREADY TERMINATED ARE NOT LIABLE FOR ABATEMENT UNLESS STATUTE EXPRESSLY PROVIDES FOR SUCH CONSEQUENCE THEREOF. 5.6 THE WORD PENDING OCCURRING IN THE SECOND PROVISO TO SECTION 153A OF THE ACT, IS ALSO SIGNIFICANT. IT IS QUALIFIED BY THE WORDS ON THE DATE OF INITIATION OF THE SEARCH, AND MAKES IT ABUNDANTLY CLEAR THAT ONLY SUCH ASSESSMENT OR IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 28 REASSESSMENT PROCEEDINGS ARE LIAB LE TO ABATE. IN OTHER WORDS, ASSESSMENTS WHICH ARE NOT PENDING I.E. COMPLETED ASSESSMENTS AS ON THE DATE OF SEARCH WOULD HOLD THEIR BASE AND WOULD NOT ABATE. 5.7 THUS WHAT EMERGES IS THAT ONLY PENDING ASSESSMENTS AS ON THE DATE OF SEARCH SHALL ABATE. THE L EGISLATURE IS CLEAR THAT ANY APPEAL, REVISION OR RECTIFICATION PROCEEDINGS, IF PENDING AS ON THE DATE OF SEARCH SHALL NOT ABATE. ACCORDINGLY, AS FAR AS COMPLETED ASSESSMENTS ARE CONCERNED, THEY DO NOT ABATE AND PENDING APPEALS ETC. IN RESPECT THEREOF CONTI NUE TO EXIST NOTWITHSTANDING THE FACT THAT THE SEARCH HAS BEEN MADE. THUS A COMPLETED ASSESSMENT BECOMES FINAL UNLESS SOME INCRIMINATING MATERIAL IS FOUND IN THE COURSE OF SEARCH. OTHERWISE THE AO WILL BE EMPOWERED TO UNDO WHAT HAS ALREADY BEEN COMPLETED A ND HAS BECOME FINAL. 5.8 IT IS IMPORTANT HERE TO NOTE THAT ALL REASSESSMENT SUCH AS UNDER SECTION 147, 263 ETC. HAVE TO BE MADE WITHIN WELL - DEFINED LIMITS SUBJECT TO SATISFACTION OF PRE - CONDITIONS AND, THEREFORE, SIMILAR LIMITATION MAY HAVE TO BE READ IN T HE INSTANT PROVISION. THEREFORE, MAKING ANY ASSESSMENT WHICH IS ALREADY COMPLETED WILL ALSO REQUIRE THE SATISFACTION OF PRE - CONDITIONS AS CONTEMPLATED IN SECTION 153A, ITS FIRST PROVISO, ITS SECOND PROVISO READ WITH SECTION 132. THE ASSESSMENT U/S 153A DEA LS WITH SEARCH CASES AND THEREFORE, THE CONCEPT OF UNDISCLOSED INCOME U/S 132( 1 )(C) WILL COME INTO PLAY. 5.9 THE SECOND PROVISO TO SECTION 153A IS INTENDED TO AVOID TWO ASSESSMENTS FOR THE SAME YEAR. SECTION 153A DOES NOT AUTHORIZE THE MAKING OF A DE NOVO ASSESSMENT. AN ASSESSMENT U/S 153A IS NOT MEANT TO UNSETTLE THE INCOME SHOWN IN THE REGULAR RETURN IN RESPECT IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 29 OF WHICH THE ASSESSMENT IS COMPLETE. SECTION 153 A DOES NOT LEAD TO A WHOLE EXERCISE OF ASSESSMENT TO BE MADE AFRESH IN RESPECT OF COMPLETED ASSES SMENTS. THEREFORE, IN PROCEEDINGS U/S 153A, NO NEW DISALLOWANCE CAN BE MADE BY THE A.O. WHERE ADMITTEDLY THE REGULAR ASSESSMENTS ARE SHOWN AS COMPLETED ASSESSMENTS ON THE DATE OF INITIATION OF ACTION U/S 132. 5.10 IN RELATION TO THE YEARS WHOSE ASSESSMENT IS COMPLETED, IT IS LAID DOWN BY LAW THAT IN SUCH SITUATIONS OF COMPLETED ASSESSMENTS, ASSESSMENT U/S 153 A OF THE ACT HOWEVER SHALL BE TO THE EXTENT OF INCOME ESCAPING ASSESSMENT WHICH COMES TO THE KNOWLEDGE OF THE AO DURING THE COURSE OF SEARCH WITH REFE RENCE TO THE VALUABLE ARTICLES OR THINGS FOUND OR DOCUMENTS SEIZED DURING THE SEARCH WHICH ARE NOT DISCLOSED IN THE ORIGINAL ASSESSMENT. THE POWER GIVEN BY THE 1ST PROVISO TO ASSESS INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLOSED IN COME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. WHEN NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS CANNOT BE DISTURB ED. ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROCEEDINGS U/S 153A WHEN NO INCRIMINATING DOCUMENTS WERE FOUND IN THE SEARCH PROCEEDINGS. A SEARCH ASSESSMENT UNDER SECTION 153A SHOULD BE EVIDENCE BASED SECTION 153A OF THE ACT IS A SEPARATE AND SPECIAL PROVISION THAT HAS BEEN SPECIALLY ENACTED TO UNDERTAKE SEARCH RELATED ASSESSMENTS. A SEARCH U/S 132 OF THE ACT, IS AUTHORIZED TO UNEARTH UNDISCLOSED ASSETS OR TRANSACTIONS RESULTING IN INCOME WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT OF A PER SON. THEREFORE, A SEARCH PUTS IN MOTION THE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 30 PROCESS OF ASSESSMENT OF THE UNDISCLOSED INCOME OF A TAX PAYER WHICH IS NOT DISCLOSED TO THE DEPARTMENT BEFORE THE DATE OF SEARCH. THUS SECTION 153 A IS LIMITED TO THE ASSESSMENTS OF INCOME WHICH ARE DISCOVERY OF SEARCH. 5.11 THEREFORE, PROPER CONSTRUCTION WOULD BE THAT IN RESPECT OF COMPLETED ASSESSMENTS, THE ASSESSMENT SHALL BE MADE ONLY IF INCRIMINATING DOCUMENTS ETC. ARE FOUND. THEREFORE, THE TERM ASSESS AND REASSESS APPEARING IN SECTION 153(L)(B) MEANS THAT ASSESSMENT SHALL BE MADE IN CASE OF PENDING ASSESSMENTS AND REASSESSMENTS SHALL BE MADE IN RESPECT OF COMPLETED ASSESSMENTS WHERE INCRIMINATING MATERIAL IS FOUND. 6. HAVING UNDERSTOOD THE LEGAL POSITION AS LAID OUT BY THE LAW ITSELF, WE NOW MOVE ON TO AN ALYSE THE POSITION AS LAID OUT BY THE FOLLOWING DECISIONS: COMMISSIONER OF INCOME TAX VS. CONTINENTAL WAREHOUSING CORPORATION, ALL CARGO GLOBAL LOGISTICS LTD.[2015) 374ITR 645 (BOM) UNDER SECTION 153A OF THE INCOME - TAX ACT, 1961, WHICH ENABLES CARRYING O UT OF SEARCH OR EXERCISE OF POWER OF REQUISITION, ASSESSMENT IN FURTHERANCE THEREOF IS CONTEMPLATED. THERE IS A MANDATE TO I SSUE NOTICES UNDER SECTION 153(1 )(A) AND ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSES SMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THUS, THE CRUCIAL WORDS SEARCH AND REQUISITION APPEAR IN THE SUBSTANTIVE PROVISION AND THE PROVISOS. THAT WOULD THROW LIGHT ON THE ISSUE OF APPLICABILITY OF THE PROVISION. TRUE IT IS THAT THE ASSESSMENT WHICH HAS TO BE MADE IN PURSUANCE OF THE NOTICE IS IN RELATION TO THE SIX YEARS. AN ORDER WILL HAVE TO BE MADE IN THAT REGARD. WHILE MAKING THE ORDER, THE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 31 INCOME OR THE RETURN OF INCOME FILED FOR ALL THESE ASSESSMENT YEARS IS TO BE TAKEN INTO ACCOUNT. A REFERENCE WILL HAVE TO BE MADE TO THE INCOME DISCLOSED THEREIN. HOWEVER, THE SCONE OF ENQUIRY THOUGH NOT CONFINED ESSENTIALLY REVOLVES AROUND THE SEARCH OR THE REQUISITION UNDER SECTION 1 32A AS THE CASE MAY B E. THE PROVISION DEALS WITH THOSE CASES WHERE ASSESS M ENT OR REASSESSMENT, IF ANY, RELATING TO THE ASSESSMENT YEARS FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION 153A WERE PENDING. IF THEY WERE PENDING ON THE D ATE OF THE INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING O F REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE, THEY ABATE. IT IS ONLY PENDING PROCEEDINGS THAT WOULD ABATE AND NOT WHERE THERE ARE ORDERS MADE OF ASSESSMENT OR REASSESSMENT AND WHICH A RE IN FORCE ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF THE REQUISITION. HELD, DISMISSING THE APPEALS, (I) THAT THE NOTICE UNDER SECTION 153A WAS FOUNDED ON SEARCH. IF THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH THEN THE TRIBUNAL W AS RIGHT IN HOLDING THAT THE POWER UNDER SECTION 153A BEING NOT EXPECTED TO BE EXERCISED ROUTINELY, SHOULD BE EXERCISED IF THE SEARCH REVEALED ANY INCRIMINATING MATERIAL. IF THAT WAS NOT FOUND THEN IN RELATION TO THE SECOND PHASE OF THREE YEARS, THERE WAS NO WARRANT FOR MAKING AN ORDER WITHIN THE MEANING OF THIS PROVISION. (II) COMMISSIONER OF INCOME TAX VS. KABUL CHAWLA ON 28.08.2015 380 ITR 573 (DEL) (COPY ENCLOSED) THE LEGAL POSITION THAT EMERGES ON A PERUSAL OF SECTION 153 A AND SECTION 132 OF THE INCOME - TAX ACT, 1961, IS AS UNDER: IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 32 (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON IN RESPECT OF WHOM SEARCH WAS CONDUCTED REQUIRING, HIM TO FILE RETURNS FOR SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COMPUTED BY THE ASSESSING OFFICERS AS A FRESH EXERCISE. (III) THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS TH E POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS, THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER P OST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE A SSESSING OFFICER WHICH CAN HE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT AN Y RELEVANCE NR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF THE SEIZED MATERIAL. (V) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 33 ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E., THOSE P ENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. (VI) IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PR ODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. HELD ACCORDINGLY, THAT THE MATTER RELATED TO THE ASSESSMENT YEARS 2002 - 03, 2005 - 06 AND 2006 - 07. ON THE DATE OF THE SEARCH THE ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. PRINCIPAL COMMISSIONER OF INCOME - TAX V. KURELE PAPER MILLS P. LTD. [2016] 380 ITR 571 (DEL) JULY 6, 2015. (COPY ENCLOSED) HELD, DISM ISSING THE APPEAL, THAT THE ORDER OF THE COMMISSIONER (APPEALS) REVEALED THAT THERE WAS A FACTUAL FINDING THAT NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 34 WAS MANIFEST FROM THE ORDER OF THE ASSESSING O FFICER. CONSEQUENTLY, IT WAS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE INCOME - TAX ACT, 1961, FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL. THERE WAS NOTHING TO SHOW THAT THE FACTUAL DETERMINATION WA S PERVERSE. [THE SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT AGAINST THIS JUDGMENT: [2016] 380ITR (ST.) 64 ED.] PR. CIT - 2 V. SALASAR STOCK BROKING LTD. (G.A. NO. 1929 OF 2016/ITAT NO. 264 OF 2016) DATED 24/08/2016 CALCUTT A HIGH COURT . IN THE SAID CASE, THE LEARNED TRIBUNAL WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURISDICTION UNDER SECTION 153 A OF THE INCOME TAX ACT TO REOPEN THE CONCLUDED CASES WHEN THE SEARCH AND SEIZURE DID NOT DISCLOSE ANY INCRIMINATING MA TERIAL. IN TAKING THE AFORESAID VIEW, THE LEARNED TRIBUNAL RELIED UPON A JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT[A] VS. KABUL CHAWLA REPORTED IN 380 ITR 573. THE AGGRIEVED REVENUE APPEALED BEFORE THE HONBLE HIGH COURT. THE HONBLE HIGH COURT DISM ISSED THE APPEAL BY OBSERVING AS UNDER: 'WE ARE IN AGREEMENT WITH THE VIEWS EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE - REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED UNDER SECTIONL53C READ WITH SECTION 153A. IN THE CASE B EFORE US, THE ASSESSING OFFICER HAS MADE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED UNDER SECTION 153C READ WITH SECTION 153A. THE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 35 DI SALLOWANCES MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES.' IN THAT VIEW OF THE MATTER, WE ARE UNABLE TO ADMIT THE APPEAL. THE APPEAL IS, THEREFORE, DISMISSED. SMT. SUNITA BAI VERSUS DY. COMM ISSIONER OF INCOME TAX CENTRAL CIRCLE - 1, BELGAUM2015 (3) TMI397 - ITATPANAJI - TM I WHERE AN ASSESSMENT ORDER HAS ALREADY BEEN PASSED FOR A YEAR OR YEARS WITHIN THE RELEVANT SIX ASSESSMENT YEARS, THEN THE AO IS DUTY BOUND TO REOPEN THOSE PROCEEDINGS AND RE ASSESS THE TOTAL INCOME BUT BY TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY, UNEARTHED DURING THE SEARCH. THE EXPRESSION UNEARTHED DURING THE SEARCH IS QUITE SIGNIFICANT TO DENOTE THAT IN RESPECT OF COMPLETED OR NON - PENDING ASSESSMENT, THE AO ALBEIT DUT Y BOUND TO ASSESS OR REASSESS THE TOTAL INCOME BUT IF THERE IS SCOPE FOR ADDITIONS IN SUCH ASSESSMENT, ON THE BASIS OF INCOME UNEARTHED DURING THE SEARCH , HE CAN MAKE THE ADDITION. IN OTHER WORDS, THE DETERMINATION OF TOTAL INCOME IN RESPECT OF THE AS SESSMENT YEARS FOR WHICH THE ASSESSMENTS ARE ALREADY COMPLETED ON THE DATE OF SEARCH, SHALL NOT BE INFLUENCED BY THE ITEMS OF INCOME OTHER THAN THOSE BASED ON THE MATERIAL UNEARTHED DURING THE COURSE OF SEARCH. HOWEVER, THE SCOPE OF SUCH DETERMINATION OF T OTAL INCOME IS DIFFERENT IN RESPECT OF THE YEARS FOR WHICH THE ASSESSMENTS ARE PENDING VIS - A - VIS THE YEARS FOR WHICH ASSESSMENTS ARE NON - PENDING. THE TOTAL INCOME SHALL BE DETERMINED IN RESPECT OF ASSESSMENT YEAR FOR WHICH ORIGINAL ASSESSMENTS HAVE ALREADY BEEN COMPLETED ON THE DATE OF SEARCH BY RESTRICTING ADDITIONS ONLY TO THOSE WHICH FLOW FROM IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 36 INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IF NO INCRIMINATING MATERIAL IS FOUND IN RESPECT OF SUCH COMPLETED ASSESSMENT, THEN THE TOTAL INCOME IN T HE PROCEEDINGS U/S 153A SHALL BE COMPUTED BY CONSIDERING THE ORIGINALLY DETERMINED INCOME. IF SOME INCRIMINATING MATERIAL IS FOUND IN RESPECT OF SUCH ASSESSMENT YEARS FOR WHICH THE ASSESSMENT IS NOT PENDING, THEN THE TOTAL INCOME WOULD BE DETERMINED BY C ONSIDERING THE ORIGINALLY DETERMINED INCOME PLUS INCOME EMANATING FROM THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN RESPECT OF ASSESSMENT PENDING ON THE DATE OF SEARCH WHICH GOT ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A(I), THE TOTAL INCOME SHALL BE COMPUTED AFRESH UNINFLUENCED BY THE FACT WHETHER OR NOT THERE IS ANY INCRIMINATING MATERIAL. SUNCITY ALLOYS (P) LTD. VS. ACIT [2009] 124 TTJ 674, JODHPUR BENCH OF THE ITAT UPON THE PERUSAL OF SECOND PROVISO BELOW SECTION 153A, IT IS FOUND CLEARLY LAID THAT ASSESSMENT OR REASSESSMENT REFERRED TO IN SECTION 153A THAT ARE PENDING ON THE DATE OF INITIATION OF SEARCH OR MAKING REQUISITION U/S 132A SHALL ABATE. THE STATUTE DOES NOT SAY THAT THE ASSESSMENT OR REASSESSMENTS THAT HAVE ALRE ADY BEEN MADE BEFORE THE DATE AS AFORESAID SHALL ALSO ABATE. IT IS ALSO NOT CORRECT THAT ALL THE PROCEEDINGS OR RETURNS FILED SHALL ALSO ABATE. IN FACT THE ASSESSING AUTHORITY IS THE CUSTODIAN OF ALL SUCH RETURNS INCLUDING THE RETURNS RELATABLE TO PENDING ASSESSMENTS THAT STAND ABATED. SUB - SECTION (2) OF SECTION 153 A MANDATES THAT IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESSMENT MADE U/S . (1) RELATING TO ANY ASSESSMENT YEAR WHICH HAS IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 37 BEEN ABATED UNDER THE SECOND PROVISO TO SECTION 153A SHALL STAND RE VIVED FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE CIT. THUS THE ENTIRE OVERTHROW OR DESTRUCTION OR TERMINATION OF PENDING ASSESSMENTS BEFORE THE ASSESSING AUTHORITY WHO CAN TAKE ORIGINAL COGNIZANCE IS ONLY TO AVOID TWO PARALLEL PROCEEDIN GS OF ASSESSMENT OF A PARTICULAR YEAR OF THE SAME PERSON, I.E., ONE AS REGULAR ASSESSMENT AND ANOTHER AS ASSESSMENT U/S 153A OF THE ACT AND NOT THE WHOLE EXERCISE OF ASSESSMENT TO BE MADE AFRESH IN RESPECT OF COMPLETED ASSESSMENTS. ACIT VS M/S DELHI HO SPITAL SUPPLY PVT LTD (ITA 3996/DEL/2011) 7. KEEPING IN VIEW OF THE AFORESAID FINDINGS GIVEN BY THE LD. CIT(A), WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY HELD THAT IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE SEARCH, AS A RESULT, NO DI SALLOWANCE / ADDITIONS CAN BE MADE IN THE ASSESSMENT U/S. 153A OF THE I.T. ACT. EVEN OTHERWISE, WE FIND FORCE IN THE LD. COUNSELS SUBMISSIONS THAT THE ISSUE IN DISPUTE IS ALSO COVERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT(CENTRAL) - III VS. KABUL CHAWLA IN ITA NO. 707, 709, 713/DEL/2014 WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT IF THE ADDITIONS ARE MADE, BUT NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION, THEN THESE ADDITIONS WERE NOT SUSTAINABL E IN THE EYES OF LAW. IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS RIGHTLY ADJUDICATED THE ISSUE IN DISPUTE AND ACCORDINGLY RIGHTLY DELETED THE ADDITIONS IN DISPUTE. KEEPING IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE LD. CIT(A)'S ORDER WHICH IS A WELL REASONED ORDER AND THEREFORE, THE SAME DOES NOT NEED ANY INTERFERENCE ON OUR PART AND ALSO BY RESPECTFULLY IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 38 FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT(CENTRAL) - III VS. KABUL CHAWLA (SUPRA), WE ARE OF THE VIEW THAT LD . CIT(A) HAS RIGHTLY ITA NO. 3996/DEL/2011 DELETED THE ADDITIONS IN DISPUTE. ACCORDINGLY, THE ISSUES IN DISPUTE ARE DECIDED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. IN A VERY RECENT DECISION OF THE DELHI HIGH COURT IN THE CASE OF PR CIT VS. M EETU GUTGUTIA, ITA NO. 306/2017, ORDER PRONOUNCED ON 25 TH MAY, 201 7 , THE ENTIRE LAW WAS EXPLAINED ON WHETHER CONCLUDED ASSESSMENTS CAN BE REOPENED U/S 153A EVEN IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH IN THE LIGHT OF THE APPARENTLY CONFLICTING VERDICTS IN CIT VS. KABUL CHAWLA 380 ITR 573 (DEL) (SUPRA) AND DAYAWANTI GUPTA V. CIT 390 ITR 496 (DEL). . . HERE, DEROUTING IT WOULD BE OF RELEVANCE TO BRIEFLY QUOTE THE DECISION OF THE DELHI HIGH COURT IN DAYAWANTI GUPTA VS. CIT [390 ITR 496 (DEL)] (COPY ENCLOSED) WHEREIN THE HIGH COURT DEALT WITH THE ISSUE WHETHER AN ASSESSMENT U/S 153A CAN BE MADE EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING S. 132 SEARCH PROCEEDINGS. IN THE SAID CASE IT WAS HELD AS UNDER: (I) THAT THE ASSESSME NT UNDER SECTION 153A WAS NOT ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE VARIOUS SEIZED MATERIALS IN THE FORM OF DOCUMENTS, AGREEMENTS, INVOICES AND STATEMENTS IN THE FORM OF ACCOUNTS AND CALCULATIONS, SINCE THE ASSESSMENT UNDER THE SECTION COULD BE MADE ONLY ON THE BASIS OF THE SEIZED MATERIAL. THE STATEMENTS MADE UNDER OATH BY THE ASSESSEE AND HER FAMILY MEMBERS WERE PART OF THE RECORD AND CONTINUED TO BE SO. THEY WERE NEVER REASONABLY EXPLAINED AND THEIR PROBATIVE VALUE WAS UNDENIABLE. THE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 39 OCCASION FOR MAKING THEM AROSE BECAUSE OF THE SEARCH AND SEIZURE THAT OCCURRED AND THE SEIZURE OF VARIOUS DOCUMENTS POINTED TO THE UNDECLARED INCOME. (II) THAT THE INFERENCES DRAWN IN RESPECT OF UNDECLARED INCOME WERE PREMISED ON THE MATERIALS FOUND AS WE LL AS THE STATEMENTS RECORDED BY THE ASSESSEES. T HERE F ORE, THE A DDITIONS WERE NOT BASELESS. T HE ASSESSING AUTHORITIES IN SUCH CASES HAD TO DRAW INFERENCES, BECAUSE OF THE NATURE OF THE MATERIALS, SINCE THEY COULD BE SCANTY. THE ELEMENT OF GUESS WORK HAD TO HAVE SOME REASONABLE NEXUS WITH THE STATEMENTS RECORDED AND DOCUMENTS SEIZED. THE DIFFERENCES OF OPINION BETWEEN THE COMMISSIONER (APPEALS) ON THE ONE HAND AND THE ASSESSING OFFICER AND THE APPELLATE TRIBUNAL ON THE OTHER HAND COULD NOT BE THE SOLE BASIS FOR DISAGREEMENT WITH WHAT WAS ESSENTIALLY A FACTUAL SURMISE THAT WAS LOGICAL AND PLAUSIBLE. THE FINDINGS OF THE APPELLATE TRIBUNAL DID NOT REVEAL ANY FUNDAMENTAL ERROR CALLING FOR INTERFERENCE. NOW COMING BACK TO THE CASE UNDER REFERENCE IT IS STATED THAT IN THE SAID CASE, AFTER DISCUSSING ELABORATELY THE CASE OF CIT VS. KABUL CHAWLA [380 ITR 573 (DEL)] AS WELL AS SEVERAL OTHER CASES AS REFERRED THEREIN, THE DISTINGUISHING FEATURES OF THE CASE OF DAYAWANTI GUPTA V. CIT [390 ITR 496 (DEL)] WERE SPELT OUT AS UNDER: THERE WAS A CLEAR ADMISSION BY THE ASSESSEE IN DAYAWANTI GUPTA (SUPRA) THAT THEY WERE NOT MAINTAINING REGULAR BOOKS OF ACCOUNTS AND THE TRANSACTIONS WERE NOT RECORDED THEREIN. THERE WAS A CHART PREPARED CONFIRMING THAT THERE HAD BEEN A YEAR - WIS E NON - RECORDING OF TRANSACTIONS. HAVING OBSERVED AS ABOVE, THE HONBLE DELHI HIGH COURT HELD AS UNDER: IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 40 .. BY CONTRAST, THERE IS NO SUCH STATEMENT IN THE PRESENT CASE WHICH CAN BE SAID TO CONSTITUTE AN ADMISSION BY THE ASSESSEE OF A FAILURE TO RECORD ANY TRANSACTION IN THE ACCOUNTS OF THE ASSESSEE FOR THE AYS IN QUESTION (XIV) WHAT WEIGHED WITH THE COURT IN THE ABOVE DECISION WAS THE HABITUAL CONCEALING OF INCOME AND INDULGING IN CLANDESTINE OPERATIONS AND THAT A PERSON INDULGING IN SUCH ACTIVITIES C AN HARDLY BE ACCEPTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG. THESE FACTORS ARE ABSENT IN THE PRESENT CASE. THERE WAS NO JUSTIFICATION AL ALL FOR THE AO TO PROCEED ON SURMISES AND ESTIMATES WITHOUT THERE BEING ANY INCRIMINATING MATERIAL QUA THE AY FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRANCHISEE COMMISSION. (XV) THE ABOVE DISTINGUISHING FACTORS IN DAYAWANTI GU P TA (SU P RA), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POSITION IN KABUL CHAWLA (SUPRA) WHICH HAS BEEN FOLLOWED NOT ONLY BY THIS COURT IN ITS SUBSEQUENT DECISIONS BUT ALSO BY SEVERAL OTHER HIGH COURTS. (XVI) FOR ALL OF THE AFOREMENTIONED REASONS, THE COURT IS OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT THE INVOCATION OF SECTION 153A BY THE REVENUE FOR THE AYS 2000 - 01 TO 2003 - 04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMINATING MATERIAL QUA EACH OF THOSE AYS. IT WOULD BE FURTHER RELEVANT TO NOTE AT THIS JUNCTURE THAT THE HONBLE SUPREME COURT VIDE ITS RECENTLY PRONOUNCED DECISION ON 3 RD OCTOBER, 2017 HAS STAYED THE OPERATION OF THE JUDGEMENT OF THE DELHI HIGH COURT IN DAYAWANTI GUPTA VS. CIT [390 ITR 496 (DEL)] WHEREIN THE HIGH COURT DEALT WITH THE ISSUE WHETHER AN ASSESSMENT U/S 153A CAN BE MADE EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING S. 132 SEAR CH PROCEEDINGS. COPY OF THE DECISION OF IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 41 THE APEX COURT AS RECENTLY PRONOUNCED ON 3 RD OCTOBER, 2017 IS ENCLOSED HEREWITH. THUS, IT STANDS AS AN UNDISPUTED FACT THAT THE DECISION IN THE CASE OF KABUL CHAWLA [380 ITR 573 (DEL)] HOLDS GOOD AND THE DECISION I N THE CASE OF DAYAWANTI GUPTA V. CIT [390 ITR 496 (DEL)] HAS NO OPERATION IN PUBLIC DOMAIN. FURTHER RELIANCE IS PLACED ON THE JUDGMENT OF THE HONBLE PUNE TRIBUNAL IN THE CASE OF SINHGAD TECHNICAL EDUCATION SOCIETY VS. ACIT (2011) 57 DTR 0241. FACTS: SEA RCH AND SEIZURE ASSESSMENT UNDER S. 153C ABSENCE OF INCRIMINATING MATERIAL WHERE NO ASSESSMENT YEAR SPECIFIC INCRIMINATING MATERIAL OR DOCUMENT IS FOUND, ASSESSMENTS OF SUCH ASSESSMENT YEARS CANNOT BE DISTURBED BY INVOKING THE PROVISIONS OF S. 153 C SEARCH AND SEIZURE OPERATION UNDER S. 132 WAS CARRIED OUT IN THE CASE OF N . PRESIDENT OF THE ASSESSEE - SOCIETY AO ISSUED NOTICE UNDER S. 153C TO THE ASSESSEE AFTER RECORDING THE REASONS ON THE BASIS OF LOOSE PAPERS SEIZED FROM N AND EVENTUALLY MADE ASSESSMENT BY DENYING EXEMPTION UNDER S.11 - IMPUGNED REASONS MENTIONED BY THE AO ARE SILENT INSOFAR AS DISCOVERY OF ANY ASSESSMENT YEAR SPECIFIC INCRIMINATING INFORMATION RELATING TO THE ASSESSEE IS CONCERNED - SATISFACTION NOTE RECORDED BY THE AO IS VERY GENERAL ONE - REASO NS RECORDED BY THE AO DO NOT CONTAIN ANYTHING INCRIMINATING FOR THE ASSESSMENT YEARS UPTO 2003 - 04 THERE IS NO MENTION OF ANY DOCUMENT RELATABLE TO FOUR YEARS IN QUESTION AND THUS INCRIMINATING NATURE OF THE SAME IS OUT OJ QUESTION CONCLUDED ASSESSMENTS CAN NOT BE DISTURBED MERELY FOR MAKING ROUTINE ADDITIONS THEREFORE, ORDER PASSED BY THE AO UNDER S. 153C IS BAD IN LAW HELD: IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 42 THE IMPUGNED REASONS MENTIONED BY THE AO ARE SILENT INSOFAR AS ANY ASSESSMENT YEAR - SPECIFIC - INCRIMINATING - INFORMATION OR OTHERS I.E. U NACCOUNTED OR UNDISCLOSED OR HIDDEN INFORMATION TO THE REVENUE BY THE ASSESSEE. THE IMPUGNED SATISFACTION NOTE IS VERY GENERAL ONE FOR SIX YEARS. IT IS SURPRISING TO NOTE THAT THE AO HAS NARRATED SOME INFORMATION AGAINST THE HUF OF N, PRESIDENT OF THE ASSE SSEE - SOCIETY, WHICH IS NOT RELEVANT FOR THE PRESENT ASSESSEE. IN THE PROCESS, THE AO TOTALLY MISSED THE REQUIREMENTS OF THE LAW I.E. ONLY THE ASSESSMENT YEAR WITH THE PENDING ASSESSMENTS AND THE ASSESSMENT YEAR WITH THE ASSESSMENT YEAR SPECIFIC INCRIMINAT ING DOCUMENTS/TRANSACTIONS OR SEIZED ASSET SHOULD ONLY BE REOPENED UNDER THE PROVISIONS OF THE FIRST PROVISO TO S. 153A AND NOT OTHERWISE. THE REASONS RECORDED BY THE AO DO NOT CONTAIN ANYTHING INCRIMINATING FOR THE ASSESSMENT YEARS UPTO 2003 - 04. THERE IS NO MENTION OF ANY DOCUMENT IN THE SAID REASONS RELATABLE TO THE FOUR YEARS IN QUESTION AND THE INCRIMINATING NATURE OF THE SAME IS OUT OF QUESTION. WHERE NO ASSESSMENT YEAR AND ASSESSEE SPECIFIC INCRIMINATING 'MONEY, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS ' IS FOUND, THE ASSESSMENTS FOR ASSESSMENT YEARS CANNOT BE DISTURBED. FURTHER, THE CONCLUDED ASSESSMENTS SHOULD NOT BE DISTURBED MERELY FOR MAKING ROUTINE ADDITIONS, WHICH COULD HAVE BEEN OTHERWISE DONE IN THE REGULAR ASSESSMENT AND OF COURSE, THE PENDING ASSESSMENTS FALL UNDER EXCEPTIONS. KUMAR & CO. (ITA NO. 463/PN/2008, DT. 2ND FEB., 2010) AND IMJ INTERNATIONAL LTD. VS. DV. CIT (2008) 119 TTJ (KOL) 214 : (2008) 14 DTR (KOL)(TRIB) 540 FOLLOWED; KUMAR & CO. (ITA NO. 1 020/PN/2008, DT. 2ND FEB., 2010) DISTINGUISHED. AGGRIEVED THE REVENUE WENT IN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT. THE HONBLE HIGH COURT DISMISSED THE APPEAL OF THE REVENUE AND OBSERVED THAT, THE TRIBUNAL'S CONCLUSION CANNOT BE TERMED AS PERVER SE AND GIVEN THE ABOVE NOTED FACTUAL BACKGROUND. NONE OF THESE APPEALS RAISES ANY SUBSTANTIAL QUESTION OF LAW. THEY ARE ACCORDINGLY DISMISSED. NO COSTS AGGRIEVED WITH THE HIGH COURTS ORDER, THE REVENUE WENT IN APPEAL BEFORE THE HONBLE SUPREME COURT. DI SMISSING THE APPEAL OF THE REVENUE, THE HONBLE APEX COURT VIDE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 43 ORDER DATED 29 - 08 - 2017 REPORTED IN (2017) 397 ITR 344 (SC) HELD THAT, THE ITAT PERMITTED ADDITIONAL GROUND BY GIVING A REASON THAT IT WAS A JURISDICTIONAL ISSUE TAKEN UP ON THE BASIS OF FACTS ALREADY ON THE RECORD AND, THEREFORE, COULD BE RAISED. IN THIS BEHALF, IT WAS NOTED BY THE ITAT THAT AS PER THE PROVISIONS OF SECTION 153C OF THE ACT, INCRIMINATING MATERIAL WHICH WAS SEIZED HAD TO PERTAIN TO THE ASSESSMENT YEARS IN QUESTION AND IT WAS AN UNDISPUTED FACT THAT THE DOCUMENTS WHICH WERE SEIZED DID NOT ESTABLISH ANY CO - RELATION, DOCUMENT - WISE, WITH THESE FOUR ASSESSMENT YEARS. SINCE THIS REQUIREMENT UNDER SECTION 153C OF THE ACT WAS ESSENTIAL FOR ASSESSMENT UNDER THAT PROVISION, IT BECOMES A J URISDICTIONAL FACT. FURTHER IN THE CASE OF TRISHUL HI - TECH INDUSTRIES VS DCIT (IT(SS).A.82,84 - 86/KOL/2011), IT WAS HELD THAT, 12. UPON ASSESSEES APPEAL THE ID. CIT(A) HAS DELETED THE ADDITION BY HOLDING THAT THE MATTER HAS ATTAINED THE FINALITY IN THE REGULAR ASSESSMENT. HE ALSO NOTED THAT NO INCRIMINATING MATERIALS HAVE BEEN FOUND DURING THE SEARCH. THE ID. CIT(A) HAS ALSO REFERRED TO THE DECISION OF ITAT, KOLKATA IN THE CASE OF LMJ INTERNATIONAL 119 TTJ 214. AGAINST THE ABOVE ORDER THE REVENUE IS IN A PPEAL BEFORE US. 13. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PERUSED THE RECORDS. WE HAVE ALREADY HELD IN THE ASSESSEES APPEAL AS ABOVE THAT DEHORS INCRIMINATING MATERIAL NO ASSESSMENT CAN BE DONE U/S 153C OF THE ACT FOR THE ASSESSMENT YEAR FOR WHICH ASSESSMENTS HAVE ALREADY BEEN COMPLETED. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND WE UPHOLD THE SAME. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 44 7. THUS FROM ALL THE ABOVE DECISIONS IT EMERGES THAT IT IS THE ESTABLISHED POSITION OF LAW THAT IN CASES OF SEARCH, WHILE MAKING ASSESSMENTS U/S 153A/153C OF THE ACT, COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE A.O. ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. ISSUES OF ORIGINAL ASSESSMENT WHICH HAVE NO RELATION TO THE SEARCH CANNOT IN ANY WAY FORM BASIS OF ASSESSMENT O F ANY COMPLETED ASSESSMENTS. 8. NOW, APPLYING ALL THE ABOVE TO THE CASE OF THE ASSESSEE COMPANY, IT IS FIRSTLY TO BE ESTABLISHED THAT WHICH ASSESSMENTS STOOD ON THE DATE OF SEARCH BEING 06/08/2014. 9.1 IN CONNECTION TO THE ABOVE, YOUR KIND ATTENTION IS INV ITED TO THE OBSERVATIONS MADE BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE O F VIPIN KHANNA VS CIT 155 ITR 220(PH): - THEREFORE, IN A CASE WHERE A RETURN IS FILED AND IS PROCESSED U/S 143( 1 )(A) OF THE ACT AND NO NOTICE UNDER SUB SECTION (2) OF SEC TION (143) THEREAFTER IS SERVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD OF 12 MONTHS, THE ASSESSMENT PROCEEDING U/S 143 COME TO AN END AND THE MATTER BECOMES FINAL. THUS, ALTHOUGH TECHNICALLY NO ASSESSMENT IS FRAMED IN SUCH A CASE, YET THE PROCEEDINGS FOR ASSESSMENT STAND TERMINATED. IN SIMPLE TERMS, IF THE RETURN OF INCOME IS FILED AND IS PROCESSED U/S 143(1) OF THE ACT AND NOTICE U/S 143(2) OF THE ACT IS NOT SERVED ON THE ASSESSEE WITHIN THE STIPULATED TIME PERIOD, THE ASSESSMENT WOULD BE TERMED A S CONCLUDED ASSESSMENT I.E. NO PROCEEDINGS ARE PENDING. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 45 RELIANCE IS ALSO PLACED ON THE RECENT JUDGMENT OF THE HONBLE ITAT KOLKATA IN THE CASE OF SMT YAMINI AGARWAL VS DCIT (ITA NOS.97 & 98/KOL/2015) PRONOUNCED ON 19 - 04 - 2017 WHEREIN THE ISSUE OF WHETHER THE ASSESSMENT IS PENDING OR CONCLUDED AS ON THE DATE OF SEARCH WAS DISCUSSED IN DETAIL AND IT WAS HELD THAT, WE THEREFORE HOLD THAT THE SCOPE OF THE PROCEEDINGS U/S. 153 A IN RESPECT OF ASSESSMENT YEAR FOR WHICH ASSESSMENT HAVE ALREADY BEEN CONCLUDED A ND WHICH DO NOT ABATE U/S,153A OF THE ACT, THAT THE ASSESSMENT WILL HAVE TO BE CONFINED TO ONLY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. THE NEXT ASPECT TO BE CONSIDERED IS AS TO WHEN RETURNS OF INCOME FILED U/S.139 OF THE ACT ARE SHOWN TO HAVE BEEN ACCEPTED WITHOUT AN INTIMATION U/S. 1 43( 1 ) OF THE ACT OR WITHOUT ANY NOTICE ISSUED U/S. 1 43(2) OF THE ACT WITHIN THE TIME LIMIT CONTEMPLATED BY THE PROVISO THERETO, CAN BE SAID TO BE ASSESSMENT PROCEEDINGS CONCLUDED THAT HAVE NOT ABATED U/S. 1 53A OF THE ACT. SECTION 153A OF THE ACT, USES THE EXPRESSING PENDING ASSESSMENT OR REASSESSMENT'. WHEN A RETURN IS FILED AND WHEN NEITHER AN ACKNOWLEDGEMENT OR INTIMATION U/S,143( 1 )OF THE ACT IS ISSUED NOR A NOTICE U/S,143(2) OF THE ACT IS ISSUED WITHIN THE TIME LIM IT LAID DOWN IN THE PROVISO TO SEC. 1 43(2) OF THE ACT, THE PROCEEDINGS INITIATED BY FILING THE RETURN ARE CLOSED. IN THE PRESENT CASE, THE PERIOD FOR ISSUING THE NOTICE U/S 143(2) ELAPSED. THEREFORE THE PROCESS HAS ATTAINED THE FINALITY WHICH CAN ONLY BE AS SAILED U/S 148 OR 263 OF THE ACT. IT CAN THUS BE CONCLUDED THAT MAKING OF AN ADDITION IN AN ASSESSMENT UNDER SECTION 153A OF THE ACT, WITHOUT THE BACKING OF INCRIMINATING MATERIAL, IS UNSUSTAINABLE EVEN IN A CASE WHERE THE ORIGINAL ASSESSMENT ON THE DATE O F SEARCH STOOD COMPLETED BY ABSENCE OF ISSUE OF INTIMATION UNDER SECTION 143(1) OF THE ACT OR BY NOT ISSUING NOTICE U/S. 143(2) OF THE ACT WITHIN THE TIME LIMIT LAID DOWN IN THE PROVISO TO SEC. 143(2) OF THE ACT, RESULTS IN AN ASSESSMENT PROCEEDINGS AND WH ERE SUCH ASSESSMENT PROCEEDINGS ARE COMPLETED PRIOR TO THE DATE OF SEARCH THEN THEY DO NOT ABATE IN TERMS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT. THE DECISION OF THE ITAT KOLKATA BENCH RENDERED IN THE CASE OF SHRI BISHWANATH GARODIA (SUPRA) ON IDENTICAL FACTS OF THE CASE AS THAT OF THE ASSESSEE IN THE PRESENT CASE, CLEARLY SUPPORTS OUR CONCLUSIONS AS ABOVE. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 46 26. IN THE LIGHT OF THE DISCUSSION ABOVE, OUR CONCLUSION IS THAT IN THE PRESENT CASE, THE ISSUE DEALT WITH BY THE AO IN THE ASSESSMENT ORD ER U/S. 1 53A OF THE ACT, COULD NOT AND OUGHT NOT TO HAVE BEEN EXAMINED BY THE AO IN THE ASSESSMENT PROCEEDINGS U/S,153A OF THE ACT AS THE SAID ISSUE STOOD CONCLUDED WITH THE ASSESSEE''S RETURN OF INCOME BEING ACCEPTED PRIOR TO THE DATE OF SEARCH AND NO NOTI CE HAVIN G BEEN ISSUED U/S. 1 43(2) OF THE ACT WITHIN THE TIME LIMIT LAID DOWN IN THAT SECTION. SUCH ASSESSMENT DID NOT ABATE ON THE DATE OF SEARCH WHICH TOOK PLACE ON 28.3.2008. IN RESPECT OF ASSESSMENTS COMPLETED PRIOR TO THE DATE OF SEARCH THAT HAVE NOT AB ATED, THE SCOPE OF PROCEEDINGS U/S . 153A OF THE ACT HAS TO BE CONFINED ONLY TO MATERIAL FOUND IN THE COURSE OF SEARCH. SINCE NO MATERIAL WHATSOEVER WAS FOUND IN THE COURSE OF SEARCH, THE ADDITIONS MADE BY THE AO IN THE ORDER OF ASSESSMENT FOR BOTH THE ASSES SMENT YEARS COULD NOT HAVE BEEN SUB JECT MATTER OF PROCEEDINGS U/S. 153A OF THE ACT. CONSEQUENTLY, THE SAID VARIOUS ADDITIONS MADE IN THE ORDERS OF ASSESSMENT OUGHT NOT TO HAVE OR COULD NOT BE MADE BY THE AO. GR.NO. 1 RAISED BY THE ASSESSEE IN BOTH THE APPEAL S ARE ACCORDINGLY ALLOWED. 27. IN VIEW OF THE ABOVE CONCLUSIONS, THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS, DO NOT REQUIRE ANY CONSIDERATION. 9.2 THE PROVISO TO SECTION 143(2) OF THE ACT WHICH STIPULATES THE TIME PERIOD FOR ISSUING OF TH E NOTICE U/S 143(2) OF THE ACT READ AS FOLLOWS: PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED.] IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 47 AS SUCH, THE PRESCRIBED TIME LIMI T TO ISSUE NOTICE U/S 143(2) OF THE ACT IS SIX (6) MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. NOW, CONSIDERING THE ABOVE DECISION AND THE SAID PROVISO, THE FACTS OF THE PRESENT CASE ARE DISCUSSED IN PARA 9.3 BELOW. 9.3 IN T HE PRESENT CASE, FOR THE A.Y. 2012 - 13 NO PROCEEDINGS WERE PENDING. IN OTHER WORDS, ASSESSMENT FOR AY 2012 - 13 STOOD CONCLUDED AND THUS UNABATED AS ON THE DATE OF SEARCH I.E 06 - 08 - 2014. FOR THE SAID AY 2012 - 13, THE ASSESSEE FILED THE RETURN OF INCOME ON 30 - 0 9 - 2012. RETURN FOR AY 2012 - 13 WAS PROCESSED ON 16 - 12 - 2013. ADMITTEDLY, NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE COMPANY FOR MAKING ASSESSMENT U/S 143(3) OF THE ACT WITHIN THE TIME PERIOD AS LAID DOWN IN SECTION 143(2) OF THE ACT WHICH WAS 30 - 09 - 2013 FOR AY 2012 - 13. THE SEARCH WAS CONDUCTED ON 06 - 08 - 2014. AS SUCH, ASSESSMENT FOR AY 2012 - 13 STOOD CONCLUDED AS ON THE DATE OF SEARCH AND WAS NOT PENDING AS ON THAT DATE. FOR AY 2013 - 14, THE RETURN WAS PROCESSED ON 25 - 07 - 2014 AND NO NOTICE WAS IS SUED U/S 143(2) OF THE ACT TILL THE DATE OF SEARCH. 10. NOW, ANALYSING THE DOCUMENTS WHOSE REFERENCE IS MADE BY THE LD. A.O. IN HIS ASSESSMENT ORDER, IT IS SEEN THAT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE LD. ASSESSING OFFICER ISSUED A NOTICE TO T HE ASSESSEE COMPANY WHEREIN REFERENCE TO TWO PAGES OF THE SEIZED MATERIAL, SGINDIA - 32 WAS MADE. THE SAID PAGES DO NOT BELONG TO THE ASSESSEE AND THE SAME WAS DULY EXPLAINED IN COURSE OF ASSESSMENT PROCEEDINGS. THE LEARNED AO, ON BEING SATISFIED WITH THE SU BMISSION OF THE ASSESSEE, DID NOT MAKE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 48 ANY ADDITION WITH REGARD TO THESE SEIZED PAGES. FURTHER, THE SAID PAGES ARE ALSO NOT A PART OF THE ASSESSMENT ORDER. 11. FURTHER, A SHOW CAUSE NOTICE WAS SERVED ON THE ASSESSEE DATED 07 - 11 - 2016 WHEREIN IT WAS STATED B Y THE ID. A.O. THAT ON EXAMINATION OF THE SEIZED BOOKS OF THE ASSESSEE IT WAS NOTICED THAT THE ASSESSEE HAD RECEIVED RS.6.67 CRORES IN AY 2012 - 13 AND 3.06 CRORES IN AY 2013 - 14, BROUGHT AS UNSECURED LOAN, FROM A KOLKATA BASED COMPANY UNIWORTH AGENCIES PVT. LTD. DURING THE A.YS 2012 - 13 AND 2013 - 14 AND WHICH WAS SQUARED UP DURING THE A.Y. 2015 - 16. FURTHER, IT WAS MENTIONED THAT ENQUIRIES WERE CONDUCTED BY THE INVESTIGATION WING OF KOLKATA ON CERTAIN KOLKATA BASED SHELL COMPANIES AND IT WAS ALLEGEDLY FOUND TH AT UNACCOUNTED INCOME GENERATED IN CASH WAS ROUTED THROUGH THE SAID COMPANIES AND BROUGHT BACK IN THE BOOKS AS SHARE CAPITAL. THE COMPANY, UNIWORTH AGENCIES PVT LTD., WAS ALLEGEDLY FOUND TO BE ONE OF SUCH COMPANIES ALLEGEDLY PROVIDING ACCOMMODATION ENTRIES AND WAS MANAGED BY A PERSON NAMED MR. RAJ KUMAR THARAD. BASED ON THE SAME, THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN AS TO WHY THE UNSECURED LOAN RECEIVED BY IT DURING THE AY 2012 - 13 (RS.6,67,00,000/ - ) AND A.Y. 2013 - 14 (RS.3,06,00,000/ - ) SHOULD NOT BE TRE ATED AS NOT GENUINE AND THUS UNEXPLAINED. 11.1 PURSUANT TO THE ABOVE SAID SHOW CAUSE DATED 07/11/2016, A DETAILED REPLY WAS FILED BY THE ASSESSEE COMPANY FOR THE A.YS. 2012 - 13 AND 2013 - 14 WHEREIN IT WAS SMUTTED BY THE ASSESSEE THAT THE ASSESSEE HAS AVAILED ADVANCE FROM UNIWORTH AGENCIES PVT. LTD AGAINST DEVELOPMENT OF UPCOMING PROJECTS. THE ENTIRE ADVANCE WAS TAKEN IN THE NORMAL COURSE OF BUSINESS AND THROUGH IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 49 NORMAL BANKING CHANNELS. TO SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS OF THE PARTY AND THE GEN UINENESS OF THE TRANSACTION, THE ASSESSEE FILED THE BANK STATEMENTS AND AUDITED ACCOUNTS OF THE SAID COMPANY. IT WAS ALSO PROVED THAT THE ENTIRE ADVANCE OF RS.9.73 CRORES WAS FUNDED BY UNIWORTH AGENCIES P VT LTD OUT OF OWN FUNDS OF RS.11 ,17,20,000/ - RAISED IN THE EARLIER YEARS. IT WAS POINTED OUT THAT SINCE THE FINANCIAL YEAR 2008 - 09 (A.Y. 2009 - 10), NO FRESH INDUCTION OF CAPITAL WAS MADE IN UNIWORTH AGENCIES PVT. LTD . IT WAS IN THE SAID YEAR (DURING AY 2009 - 10), THAT UNIWORTH AGENCIES PVT. LTD RAISED A SHAR E CAPITAL OF RS. 11 ,17,20,00 0/ - . THIS ENTIRE AMOUNT OF RS.L 1,17,20,000/ - HAS HOWEVER BEEN DULY ASSESSED AS INCOME IN THE HANDS OF UNIWORTH AGENCIES PVT. LTD. VIDE ASSESSMENT ORDER U/S 263/148/144 OF THE ACT DATED 28 - 03 - 2014. A COPY OF THE ORDER IS ENCLOSED AT PAGE 75 - 81 OF PAPERBOOK FOR AY 2012 - 13. THE FACT THAT NO FRESH FUND HAS BEEN INTRODUCED IN THE HANDS OF UNIWORTH AGENCIES PVT. LTD. IS ALSO CLEAR FROM THE FOLLOWING TABLE. 2008 - 09 2009 - 10 2010 - 11 2011 - 12 2012 - 13 SHARE CAPITAL AND SECURITIES PREMIUM 11 ,18,20,000 11,18,20,000 11,18,20,000 1,18,20,000 11,18,20,000 THE AFORESAID FIGURES ABOVE MAKE IT CLEAR THAT NO FRESH INTRODUCTION WAS THERE IN THE HANDS OF UNIWORTH AGENCIES PVT. LTD. FURTHER, A COPY OF THE ANNUAL ACCOUNTS OF UNIWORTH AGENCIES PVT. LTD AS AT 31 - 03 - 2009, 31 - 03 - 2010, 31 - 03 - 2012 AND 31 - 03 - 2013 IS ENCLOSED AT PAGE 89 - 100 OF THE PAPER BOOK FOR AY 2012 - 13. IT IS VERY MUCH EVIDENT FROM THE BALANCE SHEET AS AT 31 - 03 - 2012 AND 31 - 03 - 2013 THAT IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 50 THE ENTIRE ADVANCE TO THE ASSESSEE COMPANY AGAINST DEV ELOPMENT OF THE UPCOMING PROJECTS WAS MADE FROM OWN FUNDS OF THE COMPANY RAISED IN FY 2008 - 09 AND THE ASSESSEE COMPANY HAD NO CONNECTION WHATSOEVER WITH UNIWORTH AGENCIES PVT. LTD IN THAT YEAR. IN VIEW OF ALL THE ABOVE, IT STANDS AMPLY PROVED THAT UNIWORTH AGENCIES PVT. LTD. HAD ITS OWN FUNDS OF RS. 1 1,18,20,000/ - IN ITS BANK ACCOUNTS SINCE THE A.Y.2009 - 10, MUCH BEFORE THE LOAN WAS ADVANCED TO THE ASSESSEE COMPANY IN AY 2012 - 13 AND 2013 - 14. THUS IT IS CONCLUDED THAT THE ADVANCE TO THE ASSESSEE COMPANY WAS VE RY MUCH GIVEN BY UNIWORTH AGENCIES FOR PURPOSES OF DEVELOPMENT PROJECTS OUT OF ITS OWN FUNDS. MORE SO, WHEN THE SHARE CAPITAL RAISED BY UNIWORTH AGENCIES PVT LTD OF RS.11,17,20,000/ - HAD ALREADY BEEN ASSESSED TO TAX AND IT IS EVIDENT FROM THE BALANCE SHEET THAT THE ADVANCE GIVEN TO THE ASSESSEE OF RS.9.73 CR WAS OUT OF OWN FUNDS OF THE SAID COMPANY, THE SAID ADVANCE CANNOT BE ADDED AGAIN IN THE HANDS OF THE ASSESSEE SINCE THE SAME WILL LEAD TO DOUBLE TAXATION. 11.2 FURTHER, THE AO ON PAGE 5 OF HIS ORDER HAS OBSERVED THAT THE PROMOTERS OF THE ASSESSEE COMPANY TOOK CONTROL OF UNIWORTH BY ACQUIRING SHARE OF THAT COMPANY JUST PRIOR TO THE ALLEGED LOAN TRANSACTIONS IN THIS CONNECTION IT IS SUBMITTED THAT THE OBSERVATIONS MADE BY THE LD. ASSESSING OFFICER IS TOT ALLY CONTRARY TO FACTS OF THE CASE. AT NO POINT OF TIME, THE PROMOTERS OF THE ASSESSEE COMPANY ACQUIRED ANY SHARES OF THE SAID COMPANY I.E. UNIWORTH AGENCIES PVT. LTD. AS HAS BEEN AMPLY STATED ABOVE, THE ASSESSEE COMPANY ENTERED IN TO A JOINT VENTURE AGREE MENT ON 01 - 06 - 2011 TO DEVELOP A PROPERTY IN CUTTACK WITH UNIWORTH AGENCIES PVT. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 51 LTD. PURSUANT TO WHICH THE SAID SUM OF RS.9.73 CRORES WAS RECEIVED AS ADVANCE AGAINST SUCH PROPERTY DEVELOPMENT. COPY OF THE SAID AGREEMENT WAS ALSO FURNISHED TO THE LD. ASSES SING OFFICER DURING ASSESSMENT PROCEEDINGS. A COPY OF THE SAME IS AGAIN ENCLOSED AT PAGE 101 - 108 OF THE PAPERBOOK FOR AY 2012 - 13. HOWEVER, DUE TO CERTAIN DELAY IN COMPLETION OF THE PROJECT AND CONTRACTUAL ISSUES WITH M/S UNIWORTH AGENCIES PVT LTD, THE SAID ADVANCE RECEIVED FROM THEM WAS REFUNDED DURING AY 2015 - 16 FURTHER, SINCE THE ADVANCE WAS RECEIVED PURSUANT TO A JOINT VENTURE AGREEMENT I.E. A BUSINESS DEAL AND THE ASSESSEE HAS SUCCESSFULLY PROVED THE IDENTITY OF THE PERSON AND GENUINENESS OF THE TRANSA CTION PROVISIONS OF SECTION 68 CANNOT BE INVOKED. HOWEVER, AS STATED EARLIER ALSO, THE LEARNED AO WAS NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE AND HE ADDED THE SUM OF RS.6.92 CR (SHOULD BE RS.6.67 CR) AND RS.3.06 CR IN AY 2012 - 13 AND 2013 - 14 RESP ECTIVELY. 11.3 HERE, FURTHER NOTE THAT THE LEARNED AO DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS HAD SENT A NOTICE TO M/S UNIWORTH AGENCIES PVT LTD U/S 133(6) OF THE ACT ASKING FOR VARIOUS INFORMATION IN THE CASE OF THE ASSESSEE COMPANY FOR AYS 200 9 - 10 TO 2015 - 16. COPY OF THE NOTICE IS ENCLOSED AT PAGE 110 OF THE PAPER BOOK FOR AY 2012 - 13. M/S UNIWORTH AGENCIES PVT LTD DULY REPLIED TO THE SAME VIDE LETTER DATED 22 - 08 - 2016. COPY OF THE REPLY AND THE COURIER RECEIPT DATED 25 - 08 - 2016 IS ENCLOSED AT PAG E 111 - 165 OF THE PAPER BOOK FOR AY 2012 - 13. AS EVIDENT FROM THE SAID REPLY, M/S UNIWORTH AGENCIES PVT LTD HAD SUBMITTED THE RELEVANT BANK STATEMENTS, LEDGER COPY OF THE ASSESSEE COMPANY IN ITS BOOKS FOR AY 2012 - 13, IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 52 2013 - 14 AND 2015 - 16 AND ALSO THE ITR ACKN OWLEDGMENTS AND AUDITED ACCOUNTS FOR AY 2012 - 13, 2013 - 14 AND 2015 - 16, THUS SUBSTANTIATING ITS IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS WITH THE ASSESSEE COMPANY. HOWEVER, THE ASSESSMENT ORDER IS COMPLETELY SILENT ON THIS POINT FOR REA SONS BEST KNOWN TO THE AO. 11.4 FURTHER, PLEASE NOTE, AS POINTED OUT AT PARA 11 THAT IN MAKING THE IMPUGNED ADDITION OF RS.9.98 CR, THE LEARNED AO HAS RELIED ON SOME ENQUIRIES BY THE INVESTIGATION WING WHICH WERE CONDUCTED BEHIND THE BACK OF THE ASSESSEE C OMPANY AND WERE ALSO SUPPOSEDLY BASED ON CERTAIN THIRD PARTY STATEMENTS WHICH WERE NOT PUT TO THE ASSESSEE FOR CROSS VERIFICATION AND EXAMINATION. AS SUCH, THIS IS DENIAL OF NATURAL JUSTICE TO THE ASSESSEE. THESE ENQUIRIES WERE NOT CONDUCTED IN THE COURSE OF THE SEARCH PROCEEDINGS OR DURING THE ASSESSMENT PROCEEDINGS ON THE ASSESSEE COMPANY. 12. NEXT, IT IS SEEN THAT THE LEARNED AO IN THE ASSESSMENT ORDER HAD ALSO RELIED ON THE STATEMENT OF SOME ALLEGED ENTRY OPERATORS NAMELY RAJ KUMAR THARAD AND PRADEEP GA RG. THE STATEMENTS WERE NEVER PRODUCED BEFORE THE ASSESSEE. THE RELEVANT PARTS OF THE SAID ALLEGED STATEMENTS WERE SIMPLY QUOTED BY THE LD. A.O. IN HIS ORDER. 12.1 IN CONNECTION TO THE ABOVE IT IS SUBMITTED THAT THE ASSSESSEE COMPANY IS TOTALLY UNAWARE OF ANY MR. RAJ KUMAR THARAD AND MR. PRADEEP GARG AND THE CIRCUMSTANCES UNDER WHICH SUCH STATEMENT MAY HAVE BEEN GIVEN BY THEM. THE STATEMENTS WERE NOT RECORDED DURING ANY PROCEEDINGS INITIATED ON THE ASSESSEE. THE SAID STATEMENT WAS NOT FOUND OR RECORDED IN T HE COURSE OF SEARCH AND AS SUCH, IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 53 CANNOT BE TERMED AS AN INCRIMINATING MATERIAL IN THE PRESENT CASE. 12.2 ALLEGEDLY, IN THEIR STATEMENT, THEY HAD STATED THAT THE ASSESSEE COMPANY WAS TAKEN OVER BY MR. SUNIL GUPTA BY WAY OF SHARE TRANSFER TO HIMSELF AND HIS GROUP COMPANIES. THE MONEY FOR THE SAME WAS ALLEGEDLY PROVIDED BY SHRI SUNIL GUPTA AND THE SAME AFTER TRAVELLING THROUGH SEVERAL COMPANIES GOT DEPOSITED IN THE BOOKS OF SGBL (INDIA) LTD. AND OTHER GROUP COMPANIES CONTROLLED BY SHRI SUNIL GUPTA. HOWEVER, HE RE PLEASE NOTE THAT WHEN ASKED ABOUT THE DETAILS OF MONEY TRAIL USED TO IN DEPOSITING CASH AND ROUTING IT BACK TO THE ASSESSEE COMPANY, BOTH RAJ KUMAR THARAD AND PRADEEP GARG HAVE STATED THAT THE SAME WILL BE PROVIDED LATER ON. AS SUCH, IT IS EVIDENT THAT BOTH THESE PERSONS DO NOT POSSESS THE KNOWLEDGE ABOUT THE MONEY TRAIL USED FOR DEPOSITING CASH. AS SUCH, THE ALLEGATION MADE BY THE LEARNED AO THAT THE ASSESSEE HAS INTRODUCED ITS OWN FUNDS IS BASELESS. 12.3 FURTHER, PLEASE NOTE THAT BOTH RAJ KUMAR THARAD AND PRADEEP GARG HAD GIVEN THE SAME, VERBATIM IDENTICAL REPLY VIDE THEIR STATEMENTS WHICH SIMPLY MEANS THAT THAT THE STATEMENTS WERE PRE - PRINTED AND THEY WERE JUST ASKED TO JUST SIGN THE IMPUGNED STATEMENTS. 12.4 FURTHER, PLEASE NOTE THAT AT NO POINT OF TI ME DURING THE COURSE OF ASSESSMENT, THE AO HAD REFERRED TO THE STATEMENTS RECORDED OF RAJ KUMAR THARAD AND PRADEEP GARG IN THE NOTICES ISSUED TO THE ASSESSEE. 12.5 ALSO, OPPORTUNITY TO CROSS EXAMINE THESE PARTIES WAS NOT PROVIDED TO THE ASSESSEE WHICH IS D ENIAL OF NATURAL JUSTICE TO THE ASSESSEE. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 54 IT IS A SETTLED POSITION AS DECIDED IN SEVERAL JUDICIAL PRONOUNCEMENTS, CITED AS UNDER, THAT IF AN AUTHORITY IS RELYING ON THE TESTIMONY OF A WITNESS/DOCUMENT, THE ASSESSEE IS REQUIRED TO BE AFFORDED AN OPPORTUNITY TO CROSS - EXAMINE THE WITNESS/DOCUMENT FAILING WHICH THE TESTIMONY CANNOT BE UTILIZED AGAINST THE ASSESSEE. IF THIS PROCEDURE IS NOT FOLLOWED, THEN THERE WOULD BE A CASE OF DENIAL OF NATURAL JUSTICE TO THE ASSESSEE. TO BUTTRESS THE ABOVE CONTENTION OF THE ASSESSEE, RELIANCE IS PLACED ON THE RECENT JUDGMENT OF THE APEX COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS COMMISSIONER OF CENTRAL EXCISE 2015 281 CTR 241(SC) WHEREIN IT WAS HELD THAT, NOT ALLOWING THE ASSESSEE TO CROSS - EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE W AS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS - EXAMINE, THE ADJUD ICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO S UCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 55 THAT CROSS - EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX - FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE AP PELLANT WANTED TO CROSS - EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. IN THE PRESENT CASE, NO OPPORTUNITY WAS PROVIDED TO THE ASSESSEE TO CROSS EXAMINE THE PERSONS WHO HAD GIVEN THE ALLEGED STATEMENTS AGAINST THE ASSESSEE. AS SU CH, THIS IS A CASE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE HAS BEEN ADVERSELY AFFECTED. FURTHER, THE SAID STATEMENTS WERE NOT FOUND DURING THE COURSE OF SEARCH TO CONSTITUTE THE SAME AS INCRIMINATING DOCUMENT. 13. NOW, B ASED ON ALL THE FACTS OF THE CASE ALL DETAILED ABOVE, IT STANDS PROVED BEYOND DOUBT, THAT THE LEARNED AO WAS NOT IN POSSESSION OF ANY INCRIMINATING MATERIAL, FOUND DURING THE COURSE OF SEARCH. 13.1 THE ENTIRE ADDITION IN BOTH THE YEARS WAS MADE ON ACCOUNT OF ADVANCE RECEIVED FROM UNIWORTH AGENCIES PVT LTD IN THE NORMAL COURSE OF BUSINESS AND WAS DULY ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS AND THE SAME WAS RECEIVED THROUGH NORMAL BANKING CHANNELS. THE SAME IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF, PLEASE REFER PAGE 1 OF THE ASSESSMENT ORDER, WHEREIN THE AO HAS HIMSELF STATED THAT 'ON EXAMINATION OF THE SEIZED TALLY ACCOUNTS OF THE ASSESSEE, IT WAS FOUND THAT THE COMPANY HAD CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS.9.98 CRORES BROUGHT AS UNSECURED L OAN FROM KOLKATA BASED COMPANY UNIWORTH AGENCIES PVT LTD. THUS SIMPLY THE FINDING OF REGULAR BOOKS OF ACCOUNTS AND DOCUMENTS DURING THE COURSE OF SEARCH WITHOUT A SINGLE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 56 INCRIMINATING DOCUMENT IS NOT SUFFICIENT TO VEST JURISDICTION U/S 153A OF THE ACT. I NCRIMINATING MATERIAL REFLECTING SOME UNDISCLOSED INCOME IS NECESSARY FOR THE PURPOSE OF INITIATING ANY PROCEEDING U/S 153 A OF THE ACT. 13.2 FURTHER, HE HAS REFERRED TO SOME ENQUIRIES AND STATEMENTS TAKEN ON OATH BY CERTAIN PARTIES BUT THE SAME TOO CANNOT BE SAID TO BE INCRIMINATING DOCUMENTS AS ALREADY DISCUSSED IN THE PRECEDING PARAS. 14. THUS CONCLUDING OUR SUBMISSION ON THE LEGAL FRONT, IT IS SUBMITTED THAT IN NO SITUATION WHATSOEVER, AS HAS BEEN AMPLY HELD IN A NUMBER OF JUDICIAL PRECEDENTS (DISCUSSED ELABORATELY AT PARA 6 ABOVE) THAT THE LD. AO IS NOT EMPOWERED TO DISTURB THE CONCLUDED ASSESSMENTS AND FRAME FRESH ASSESSMENTS DE - HORS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. AT THE COST OF REPETITION, IT IS A GAIN SUBMITTED BEFORE YO UR HONOURS THAT THE JURISDICTION OF THE AO U/S 153 A OF THE ACT EMANATES FROM DISCOVERY OF INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH. THE POWER OF THE AO TO FRAME ASSESSMENT U/S 153A OF THE ACT IN RESPECT OF CONCLUDED ASSESSMENTS IS LIMITED TO THE EXTENT OF INCOME ESCAPING ASSESSMENT COMING TO HIS KNOWLEDGE DURING THE COURSE OF SEARCH. IN THE GIVEN CASE, AS WOULD BE CLEARLY EVIDENT FROM THE ASSESSMENT ORDER THAT THE ENTIRE ADDITION OF RS.9.98 CR (SHOULD BE RS.9.73 CR) WAS ON ACCOUN T OF ADVANCE RECEIVED AGAINST BOOKING OF SPACE AND THE SAME WAS DULY ACCOUNTED FOR IN THE BOOKS. AS SUCH, THE ADDITION WAS MADE BY THE LEARNED AO ON ITEMS OF REGULAR ASSESSMENT. NO INCRIMINATING MATERIAL WAS FOUND IN COURSE OF SEARCH IN ANY OF THE SUBJECT ASSESSMENT YEARS AND THUS THE ASSESSMENT IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 57 MADE IN THE CASE OF THE ASSESSEE IS ILLEGAL AB INITIO AND THUS LIABLE TO BE QUASHED. 15. WITHOUT PREJUDICE TO THE ABOVE, COMING TO THE MERITS OF THE CASE OF THE ASSESSEE, IT IS SEEN THAT THE IMPUGNED ADDITION OF RS. 9.98 CR WAS MADE U/S 68 OF THE ACT ON THE ALLEGED GROUND THAT THE ASSESSEE WAS NOT ABLE TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSACTION WITH UNIWORTH AGENCIES PVT LTD. 15.1 HERE, IT IS REITERATED THAT THE ASSESSEE HAD DULY P ROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSACTION WITH UNIWORTH AGENCIES PVT LTD. A COPY OF THE AUDITED ACCOUNTS AND THE COPY OF THE AGREEMENT WITH UNIWORTH AGENCIES PVT LTD WAS DULY SUBMITTED BEFORE THE LEARNED AO AND THE LEARNE D CIT(A). FURTHER, UNDISPUTEDLY, THE SOURCE OF ADVANCE TO THE ASSESSEE BY UNIWORTH AGENCIES PVT LTD WAS ITS OWN FUNDS AND MORE SO, THE SAME HAD ALREADY BEEN ASSESSED TO TAX AS EVIDENT FROM THE ASSESSMENT ORDER OF UNIWORTH AGENCIES PVT LTD. FOR AY 2009 - 10 E NCLOSED AT PAGE 76 - 81 OF THE PAPER BOOK FOR AY 2012 - 13 . AS SUCH, THE SAID ADVANCE TO THE ASSESSEE COMPANY, BEING OUT OF OWN FUNDS CANNOT BE ADDED AGAIN IN THE HANDS OF THE ASSESSEE SINCE THE SAME WILL LEAD TO DOUBLE TAXATION OF THE SAME SUM. 15.2 HOWEVER, IGNORING THE ENTIRE SUBMISSIONS OF THE APPELLANT, THE LD. A.O. PASSED THE ASSESSMENT ORDERS FOR THE SAID A.Y.S 2012 - 13 AND 2013 - 14 WHEREIN HE HELD THAT THE CREDIT OF RS.6.92 CR AND RS. 3.06 CR RESPECTIVELY, SHOWN AS ADVANCE AND CREDITED IN THE BOOKS OF THE ASSESSEE WAS UNEXPLAINED AND THUS ADDED THE SAME U/S 68 OF THE ACT. 16. IN CONNECTION TO THE ABOVE IT IS SUBMITTED THAT IN THE ASSESSEES CASE FOR AY 2012 - 13, THERE WERE NO PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. FURTHER, NO IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 58 INCRIMINATING MATERIAL W AS FOUND DURING THE COURSE OF SEARCH AND THE ASSESSMENT WAS MADE ON THE BASIS OF REGULAR BOOKS OF ACCOUNTS. EVEN IN AY 2013 - 14, NO ADDITION CAN BE MADE U/S 68 OF THE ACT FOR THE FOLLOWING REASONS: 1. ENQUIRIES MADE BY THE INVESTIGATION WING, BASED ON STATE MENTS OF CERTAIN PERSONS WERE NOT PROVIDED TO THE ASSESSEE FOR CROSS EXAMINATION. 2. STATEMENT OF RAJ KUMAR THARAD AND PRADEEP GARG WAS NOT PROVIDED TO THE ASSESSEE FOR CROSS EXAMINATION. AS SUCH, THIS IS A CASE OF DENIAL OF NATURAL JUSTICE TO THE ASSESSEE AND HENCE THESE STATEMENTS CANNOT BE USED TO THE DISADVANTAGE OF THE ASSESSEE. MORE SO, THE MONEY TRAIL THAT THE ASSESSEE HAD INTRODUCED ITS OWN FUNDS IN THE GARB OF ADVANCE TAKEN (AS ALLEGED BY THE AO) WAS NOT PROVIDED BY THESE PERSONS IN THEIR STATEMENT S WHICH SIMPLY MEAN THAT THEY THEMSELVES DO NOT HAVE ANY KNOWLEDGE ABOUT THE MONEY TRAIL TO EVEN REMOTELY SUGGEST THAT THE ASSESSEE HAS INTRODUCED ITS OWN FUNDS. 3. THE SOUR CE OF ADVANCE FROM UNI WORTH AGENCIES PVT LTD HAD ALREADY BEEN ASSESSED TO TAX. 4. T HE ASSESSEE HAD DULY SUBSTANTIATED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE ADVANCE RECEIVED FROM UNIWORTH AGENCIES PVT LTD BY SUBMITTING THE NECESSARY DOCUMENTARY EVIDENCES. 5. UNIWORTH AGENCIES PVT LTD HAS ALSO DULY REPLIED TO THE NOTICE ISS UED U/S 133(6) OF THE ACT AND SUBMITTED ALL THE RELEVANT DOCUMENTARY EVIDENCES. 16.1 BASED ON THE FACTS OF THE CASE OF THE ASSESSEE PARTICULAR ATTENTION OF YOUR HONOURS IS INVITED TO THE RECENT JUDGMENT OF THE HONBLE ITAT, DELHI IN THE CASE OF M/S TAKSHIL A DISTRIBUTORS PVT LTD VS A CIT PRONOUNCED ON 01 - IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 59 02 - 2018 WHEREIN THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE CASE OF THE ASSESSEE. THE FACTS OF THE SAID CASE WERE THAT THE ASSESSEE RECEIVED CREDIT OF RS. 1 ,01,00,000 FROM M/S. GOLDEN TECHNOBUILD PVT. LT D. THE ASSESSEE FILED COPIES OF THE ACKNOWLEDGMENTS OF I.T. RETURNS, AUDITED ACCOUNTS, BANK STATEMENTS, ROC CERTIFICATE, PAN OF THE CREDITOR, CONFIRMATION OF THE ACCOUNTS OF THE CREDITOR, COPY OF THE BANK STATEMENT WITH LEDGER ACCOUNT OF THE CREDITOR BEFOR E THE LOWER AUTHORITIES. THE TRIBUNAL ALSO NOTED THAT ADDITION OF THE SIMILAR AMOUNT HAVE ALREADY BEEN MADE BY THE INCOME TAX DEPARTMENT IN REGULAR ASSESSMENT OF THE CREDITOR M/S. GOLDEN TECHNOBUILD PVT. LTD. ACCORDINGLY, IT WAS HELD THAT, WE HAVE CONSIDE RED THE RIVAL SUBMISSIONS. IN THIS CASE, ASSESSEE RECEIVED CREDIT OF RS.1,01,00,000 FROM M /S. GOLDEN TECHNOBUILD PVT. LTD., THE ASSESSEE FILED COPIES OF THE ACKNOWLEDGEMENTS I.T.RETURNS, AUDITED ACCOUNTS, BANK STATEMENTS, ROC CERTIFICATE, PAN OF THE CREDIT OR, CONFIRMATION OF THE ACCOUNTS OF THE CREDITOR, COPY OF THE BANK STATEMENT WITH LEDGER ACCOUNT OF THE CREDITOR BEFORE THE AUTHORITIES BELOW. COPIES OF THE SAME ARE FILED IN THE PAPER BOOK. THE DOCUMENTS FILED ON RECORD HAVE NOT BEEN DISPUTED BY THE AUTHO RITIES BELOW. THE CREDIT HAS BEEN TAKEN THROUGH BANKING CHANNEL AND CREDITOR WAS HAVING SUFFICIENT AMOUNT WITH THEM TO MAKE INVESTMENT IN ASSESSEE - COMPANY. THE ASSESSEE, THEREFORE, DISCHARGED ITS INITIAL ONUS TO PROVE IDENTITY OF THE CREDITOR, CREDITWORTHI NESS OF THE CREDITOR, GENUINENESS OF THE TRANSACTION IN THE MATTER. FURTHER HELD, IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 60 'IT IS ALSO NOTED THAT THE CREDITOR M/S. GOLDEN TECHNOBUILD PVT. LTD., RECEIVED ENTRY FROM OTHER GROUP COMPANY AND THEN GAVE IT TO THE ASSESSEE HOWEVER, NONE OF THESE EVIDE NCES ON RECORD PROVE THAT ASSESSEE RECEIVED ANY BOGUS CREDIT INTO THE MATTER. IF THE CREDITOR HAS RECEIVED SOME ENTRY FROM SOME OTHER PERSON, ASSESSEE COULD NOT BE LIABLE FOR THE SAME. THE ASSESSEE HAS TO EXPLAIN SOURCE OF ITS AMOUNT RECEIVED FROM THE CRED ITOR. IF THE CREDITOR HAS RECEIVED SOME AMOUNT FROM JAIN BROTHERS IT COULD NOT BE LINKED WITH THE ASSESSEE - COMPANY. IN THE GROUP CASE OF M/S. MISSION VERDES ESTATE PVT. LTD. (SUPRA), THE ITAT, DELHI BENCH, CONSIDERED IDENTICAL ISSUE IN WHICH ALSO CREDIT WA S RECEIVED FROM THE SAME CREDITOR M/S. GOLDEN TECHNOBUILD PVT. LTD., WHO IN TURN, HAS TAKEN CREDIT FROM OTHER GROUP COMPANY AND THE TRIBUNAL HAS DELETED THE ADDITION BASED ON THE SIMILAR DOCUMENTS PRODUCED ON RECORD. THE TRIBUNAL ALSO NOTED THAT SINCE ADDI TION OF THE SIMILAR AMOUNT HAVE BEEN MADE BY THE INCOME TAX DEPARTMENT IN RE G ULAR ASSESSMENT OF THE CREDITOR M/S. GOLDEN TECHNOBUILD PVT. LTD., THEREFORE, NO ADDITION COULD BE MADE AGAINST THE ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE FILED A CHART TO DEM ONSTRATE THAT SAME AMOUNT IS ADDED IN THE HANDS OF THE CREDITOR, THEREFORE, IT WOULD AMOUNT TO DOUBLE ADDITION IF THE SAME AMOUNT IS ADDED IN THE HANDS OF THE ASSESSEE - COMPANY. THE A.O. SUSPECTED THE TRANSACTION BETWEEN THE ASSESSEE AND THE CREDITOR BECAUS E THE CREDITOR HAS RECEIVED THE CREDITS FROM COMPANY CONTROLLED BY JAIN BROTHERS BUT IT WOULD NOT PROVE THAT CREDIT RECEIVED BY ASSESSEE WAS NOT GENUINE. A. O. CANNOT ASK THE ASSESSEE TO PROVE THE SOURCE OF THE SOURCE. NONE OF THE STATEMENTS RECORDED DURIN G THE COURSE OF SEARCH AS ARE REFERRED TO IN ASSESSMENT ORDER PROVE THAT IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 61 ASSESSEE HAS RECEIVED ANY ACCOMMODATION ENTRY FROM ANY PERSON DESPITE THE FACT THAT SAME WERE NOT CONFRONTED TO THE ASSESSEE AT ASSESSMENT STAGE. THEREFORE, IT IS PROVED ON RECORD THA T ASSESSEE HAS BEEN ABLE TO EXPLAIN THE IDENTITY OF THE CREDITOR, ITS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 1 ,01,00,000. THUS, IT IS SEEN THAT IN FACTS IDENTICAL TO THE ASSESSEE COMPANY, THE HONBLE ITAT THAT ADDITION HAVING BEEN MADE IN THE HANDS OF THE CREDITOR, ADDITION FOR THE SAME AMOUNT COULD NOT BE MADE IN THE HANDS OF THE ASSESSEE COMPANY. ALSO IT WAS HELD THAT EVIDENCES NOT BE EN DISPUTED OR PROVED WRONG THE ADDITION U/S 68 OF THE ACT WAS NOT SUSTAINABLE. 16.2 FURTHER, IT IS SUBMITTED THAT MERELY REJECTING THE EVIDENCES FILED BY THE APPELLANT DOES NOT ENTITLE THE ASSESSING OFFICER TO MAKE THE ADDITION U/S 68 OF THE INCOME TAX AC T, 1961. SUCH OUTRIGHT REJECTION OF THE EVIDENCES BY THE ASSESSING OFFICER IS TOTALLY CONTRARY TO THE LAW AS LAID DOWN BY APEX COURT IN THE CASE OF CIT VS ORISSA CORPORATION PVT LTD (1986) 159 ITR 0078 WHEREIN IT WAS HELD THAT, 'SEC. 68 OF 1961 ACT WAS INT RODUCED FOR THE FIRST TIME IN THE ACT. THERE WAS NO PROVISION IN 1922 ACT CORRESPONDING TO THIS SECTION. THE SECTION ONLY GIVES STATUTORY RECOGNITION TO THE PRINCIPLE THAT CASH CREDITS WHICH ARE NOT SATISFACTORILY EXPLAINED MIGHT BE ASSESSED AS INCOME. THE CASH CREDIT MIGHT BE ASSESSED EITHER AS BUSINESS PROFITS OR AS INCOME FROM OTHER SOURCES. (PARA 7) IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 62 IT IS NOT IN ALL CASES THAT BY MERE REJECTION OF THE EXPLANATION OF THE ASSESSEE, THE CHARACTER OF A PARTICULAR RECEIPT AS INCOME COULD BE SAID TO HAVE BEEN ESTABLISHED; BUT WHERE THE CIRCUMSTANCES OF THE REJECTION WERE SUCH THAT THE ONLY PROPER INFERENCE WAS THAT THE RECEIPT MUST BE TREATED AS INCOME IN THE HANDS OF THE ASSESSEE, THERE IS NO REASON WHY THE ASSESSING AUTHORITY SHOULD NOT DRAW SUCH AN INFERENC E. SUCH AN INFERENCE IS AN INFERENCE OF FACT AND NOT OF LAW. (PARA 10) THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME - TAX ASSESSEES. THEIR INDEX NUMBER WAS IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER S.131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WER E CREDIT - WORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLOWED LOANS. 1 HERE WAS NO EFFORT MADE TO PURSUE THE SO - CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANY FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION TH AT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUEST ION OF LAW AS SUCH ARISES. IT CANNOT, THEREFORE, BE SAID THAT ANY QUESTION OF LAW AROSE IN THESE CASES. THE HIGH COURT WAS, THEREFORE, RIGHT IN REFUSING TO REFER THE QUESTIONS SOUGHT FOR. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 63 > RECENTLY, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS LA XMAN INDUSTRIAL RESOURCES LTD PRONOUNCED ON 14 - 03 - 2017 HELD THAT, THIS COURT NOTICES THAT THE ASSESSEE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. IT WAS NOT A CASE WHERE THE SHARE APPLICA NTS ARE MERELY PROVIDED CONFIRMATION LETTERS. THEY HAD PROVIDED THEIR PARTICULARS, PAN DETAILS, ASSESSMENT PARTICULARS, MODE OF PAYMENT FOR SHARE APPLICATION MONEY, I.E. THROUGH BANKS, BANK STATEMENTS, CHEQUE NUMBERS IN QUESTION, COPIES OF MINUTES OF RESOL UTIONS AUTHORIZING THE APPLICATIONS, COPIES OF BALANCE SHEETS, PROFIT AND LOSS ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND EVEN BANK STATEMENTS SHOWING THE SOURCE OF PAYMENTS MADE BY THE COMPANIES TO THE ASSESSEE AS WELL AS THEIR MASTER DEBT WITH ROC PAR TICULARS. THE AO STRANGELY FAILED TO CONDUCT ANY SCRUTINY OF DOCUMENTS AND RESTED CONTENT BY PLACIN G RELIANCE MERELY ON A REPORT OF THE INVESTIGATION WINS. THIS REVEALS SPECTACULAR DISREGARD TO AN AOS DUTIES IN THE REMAND PROCEEDINGS WHICH THE REVENUE SEE KS TO INFLICT UPON THE ASSESSEE IN THIS CASE. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL IS DISMISSED. > RECENTLY, THE HONBLE MUMBAI HIGH COURT IN THE CASE OF CIT VS GREEN INFRA LIMITED REPORTED IN [2017] 392 ITR 7 (BOM) HELD THAT : FOR THE ASS ESSMENT YEAR 2011 - 12, THE DEPARTMENT RAISED AN ISSUE BEFORE THE APPELLATE TRIBUNAL THAT THE SHARE PREMIUM OF THE ASSESSEE HAD TO BE CHARGED TO TAX UNDER SECTION 68 OF THE INCOME - TAX ACT, 1961. THE APPELLATE TRIBUNAL EXAMINED THE APPLICABILITY OF SECTION 68 ON THE PARAMETERS OF THE IDENTITY OF THE SUBSCRIBERS TO THE SHARE CAPITAL, GENUINENESS OF THE TRANSACTION AND THE CAPACITY OF THE SUBSCRIBERS TO THE SHARE CAPITAL. IT FOUND THAT THE IDENTITY OF THE SUBSCRIBERS WERE CONFIRMED BY THE ISSUANCE OF NOTICES TO THEM UNDER SECTION 133(6) BY THE ASSESSING OFFICER. IT ALSO HELD THAT THE DEPARTMENT MADE NO GRIEVANCE OF THE IDENTITY OF THE SUBSCRIBERS. SO FAR AS THE GENUINENESS OF THE TRANSACTIONS OF THE SHARE SUBSCRIBERS WAS CONCERNED, IT HELD THAT THE ENTIRE TRANSAC TIONS WERE RECORDED IN THE BOOKS OF ACCOUNT AND SHOWN IN THE FINANCIAL STATEMENTS OF THE ASSESSEE SINCE THE SUBSCRIPTIONS WERE DONE THROUGH BANKS AS EVIDENCED BY BANK STATEMENTS WHICH WERE EXAMINED BY IT. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 64 > AGAIN, THE HONBLE MUMBAI HIGH COURT IN THE CA SE OF CIT VS GAGANDEEP INFRASTRUCTURE PV T LTD LIMITED REPORTED IN [2017] 394 ITR 680 (BOM) HELD THAT : HELD, (I) THAT THE THREE ESSENTIAL TESTS LAID DOWN BY THE COURTS, NAMELY, THE GENUINENESS OF THE TRANSACTIONS, IDENTITY AND THE CAPACITY OF THE INVESTOR S OF THE SHARE APPLICATION MONEY ALONG WITH THE PREMIUM, HAD ALL BEEN EXAMINED BY THE APPELLATE TRIBUNAL AND ON FACTS FOUND SATISFIED. IF THE DEPARTMENT TOOK THE VIEW THAT THE AMOUNT OF SHARE APPLICATION MONEY HAD BEEN RECEIVED FROM BOGUS SHAREHOLDERS, THE N IT WAS FOR THE ASSESSING AUTHORITY TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHOLDERS AND ASSESSING THEM TO TAX. IT DID NOT ENTITLE THE DEPARTMENT TO ADD THE MONEY RECEIVED TO THE ASSESSEES INCOME AS UNEXPLAINED CASH CREDIT. > RELIANCE IS A LSO PLACED ON THE RECENT JUDGMENT OF THE HONBLE ITAT, DELHI PRONOUNCED ON 01 - 01 - 2018 IN THE CASE OF ACIT VS TRN ENERGY PVT LTD (C.O.NO.96/DEL./2 0 16 ARISING OUT OF ITA.NO.453/DEL./2016) CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF MATERIAL ON RECO RD, IT IS CLEAR THAT ASSESSEE - COMPANY PRODUCED SUFFICIENT DOCUMENTARY EVIDENCE BEFORE A.O. TO PROVE THE INGREDIENTS OF SECTION 68 OF THE I.T. ACT. THE A.O. HOWEVER, DID NOT MAKE ANY FURTHER ENQUIRY ON THE DOCUMENTS FILED BY THE ASSESSEE - COMPANY. THE A.O. THUS, FAILED TO CONDUCT ANY ENQUIRY AND SCRUTINY OF THE DOCUMENTS AT ASSESSMENT STAGE AND MERELY SUSPECTED THE TRANSACTION BETWEEN THE INVESTOR COMPANY AND ASSESSEE - COMPANY BECAUSE THE INVESTOR COMPANY WAS FROM KOLKATA. THE A.O. THUS, DID NOT PERFORM HIS D UTIES AT THE ASSESSMENT STAGE SO AS TO MAKE ADDITION AGAINST THE ASSESSEE - COMPANY. NO CASH WAS FOUND DEPOSITED IN THE ACCOUNT OF THE INVESTOR. THEREFORE, THE TOTALITY OF THE FACTS AND CIRCUMSTANCES CLEARLY PROVE THAT ASSESSEE - COMPANY DISCHARGED INITIAL ONU S TO PROVE IDENTITY OF THE INVESTOR COMPANY, ITS CRE D ITWORT H INESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE LD. CIT(A) ON PROPER APPRECIATION OF THE EVIDENCE BEFORE HIM CORRECTLY DELETED THE ADDITION. NO INTERFERENCE IS CALLED FOR IN THE MATTER . THE DECISIONS RELIED UPON BY THE LD. D.R. WOULD NOT SUPPORT THE CASE OF THE REVENUE IN VIEW OF THE FACT THAT NO ENQUIRY HAVE BEEN CONDUCTED BY THE A.O. IN THIS CASE TO DISPUTE THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE - COMPANY. THE DEPARTMENTAL APPE AL HAS NO MERIT AND IS ACCORDINGLY DISMISSED. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 65 THUS IT IS SUBMITTED THAT ONCE THE DOCUMENTARY EVIDENCES ARE SUBMITTED BY THE ASSESSEE, BURDEN SHIFTS TO THE REVENUE AND THEN REVENUE SHOULD BRING ON RECORD MATERIAL FROM WHICH IT COULD BE CONCLUDED THAT THE INVESTMENTS WERE, IN FACT, MADE BY THE ASSESSEE AND NOT BY THE DEPOSITORS. THE FOLLOWING DECISIONS ARE RELEVANT ON THIS POINT: - CIT VS VALUE CAPITAL SERVICES PVT LTD. (2009) 221 CTR 0511 INCOME CASH CREDIT SHARE APPLICATION MONEY CIT(A) ACCEPTED THE EXIS TENCE OF THE APPLICANTS IT IS VERY DIFFICULT FOR THE ASSESSEE TO SHOW THE CREDITWORTHINESS OF STRANGERS REVENUE HAS NOT SHOWN THAT THE APPLICANTS DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT AND THAT SUCH INVESTMENT ACTUALLY EMANATED FROM THE COFFERS OF T HE ASSESSEE COMPANY ADDITION RIGHTLY DELETED BY THE TRIBUNAL NO SUBSTANTIAL QUESTION OF LAW ARISES HELD: CIT (A) HAVING ACCEPTED THE EXISTENCE OF THE SHARE APPLICANTS AND THE REVENUE HAVING NOT SHOWN THAT THE APPLICANTS DID NOT HAVE THE MEANS TO MAKE THE I NVESTMENT AND THAT SUCH INVESTMENT ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE COMPANY, ADDITION WAS RIGHTLY DELETED BY THE TRIBUNAL; NO SUBSTANTIAL QUESTION OF LAW ARISES. CIT VS DWARKADHISH INVESTMENT (P)LTD. (330 ITR 298)(DEL) THOUGH IN SECTION 68 OF THE INCOME - TAX ACT, 1961, THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISHING THEIR PAN NUMBER OR INCOME - TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANSACTI ON BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE. FURTHER, RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE APPELLANT'S CONTENT ION: IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 66 THE DELHI HIGH COURT IN CASE OF COMMISSIONER OF INCOME - TAX V. LOVELY EXPORTS P. LTD.[299 ITR 268] HELD THAT IN THE CASE OF A COMPANY THE FOLLOWING ARE THE PROPOSITIONS OF LAW UNDER SECTION 68. THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDENTITY O F THE CREDITOR/SUBSCRIBER ; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS ; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER ; (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER, ETC., IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATI ON BY THE ASSESSEE ; SLP FILED BY THE REVENUE AGAINST THE AFORESAID JUDGMENT WAS DISMISSED BY THE SUPREME COURT (216 CTR 195) AND IT WAS HELD THAT, IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHO SE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY CIT.V. EXPO GLOBE INDIA LTD (2014)361 ITR 147 (DELHI) 7. THIS COURT HAS CAREFULLY CONSIDERED THE SUBMISSIONS. THE PREVIOUS DISCUSSION, PARTICULARLY THE ORDER OF THE CIT (A), WOULD REVEAL THAT EVEN THOUGH THE ASSESSING OFFICER HAD INITIALLY CONCLUDED ON THE BASIS OF THE MATERIALS MADE AVAILABLE AT THAT STAG E THAT SERVICE OF THE ENTRY PROVIDERS HAD BEEN UTILIZED TO BRING IN CAPITAL, AFTER REMAND THE CIT (A) ELABORATELY TOOK INTO ACCOUNT CONSIDERABLE MATERIAL FURNISHED BY THE ASSESSEE. THESE INCLUDED INCOME TAX RETURNS, BALANCE SHEETS, ROC PARTICULARS AND BANK ACCOUNT STATEMENTS. ON THE BASIS OF THESE, THE CIT (A) HELD THAT THE SHARE APPLICATION MONEY OR THE SOURCE OF THE SHARE APPLICATION MONEY HAD BEEN SATISFACTORILY EXPLAINED. THE ITAT WAS OF THE OPINION THAT NO INTERFERENCE WAS WARRANTED HAVING REGARD TO TH E FACTS OF THIS CASE. THIS COURT IS OF THE OPINION THAT THE ONLY SENTENCE IN PARAGRAPH - 6 OF THE IMPUGNED ORDER THAT AMOUNTS WERE REFUNDED TO THE APPLICANTS ITSELF SHOULD NOT BE A GROUND TO CONCLUDE THAT IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 67 THE FINDINGS RECORDED BY THE LOWER AUTHORITIES ARE NO T ON THE BASIS OF EVIDENCE. THE ENTIRE CONTROVERSY SOUGHT TO BE RAISED IS PURELY FACTUAL. 8. THE COURT IS NOT SATISFIED THAT THE VIEW OF THE TRIBUNAL IS SO UNREASONABLE AS TO WARRANT INTERFERENCE UNDER SECTION 260A. 9. THE APPEAL IS ACCORDINGLY DISMISSED. ' ITO VS. ROSEBERRY MERCANTILE PVT LTD (ITA NO. 2119/KOL/2009) THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S. LOVELY EXPORTS PVT. LTD WOULD BE SQUARELY APPLICABLE TO THE CASE UNDER CONSIDERATION. IN THE PRESENT CASE, THE APPELLANT HAS FURNISHED ALL THE DETAILS RELEVANT TO SHARE CAPITAL CONTRIBUTION BEFORE THE A.O AND ALSO BE FORE ME. THE A.O EXCEPT NOTICING CERTAIN UNUSUAL FEATURES IN FUND FLOW CHAIN COULD NOT ESTABLISH THE LINK BETWEEN THE UNACCOUNTED INCOMES OF THE APPELLANT COMPAN Y AND SHARE CAPITAL CONTRIBUTORS. EVEN OTHERWISE AS HELD BY THE APEX COURT SUCH AMOUNTS CANNOT BE ADDED IN THE HANDS OF THE APPELLANT COMPANY. THE LD. A.R HAS ALSO RELIED ON CERTAIN CASE LAWS WHICH ARE LISTED IN THE SUBMISSIONS. I FIND THE CASES LISTED ARE VERY MUCH RELEVANT TO THE ISSUE ON HAND. THE LD. A.R BROUGHT TO MY NOTICE THAT ON SIMILAR FACTS THE HON'BLE ITAT, KOLKATA BENCH PASSED ORDERS IN FAVOUR OF THE ASSESSEE. HE ALSO FURNISHED COPIES OF ITAT JUDGMENTS IN THE CASE OF DCIT VS. M/S. HOWRAH GASES L TD. (ITA NO. 270/KOL/2009 DT. 23.4.09), ITO V. M/S. YASHURI SECURITIES PVT. LTD (ITA NO. 1276/KOL/2008 D T , 16.10.2008) AND BEAR BULL DISTRIBUTORS (P) LTD. VS. ITO (ITA NO. 1652/KOL/2008 DT, 24.12.2008). I FIND THAT FOLLOWING THE RATIO LAID DOWN BY APEX COU RT IN LOVELY EXPORTS PVT. LTD. (SUPRA), THE HON'BLE ITAT, KOLKATA BENCH ALLOWED THE APPEALS IN FAVOUR OF THE ASSESSEE. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 68 HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING HON'BLE SUPREME COURT DECISION IN THE CASE OF M/S. LO VELY EXPORTS PVT. LTD. AND KOLKATA TRIBUNAL'S DECISIONS / AM TO HOLD THAT THE SHARE CAPITAL/PREMIUM OF RS.24,00,000/ - RECEIVED FROM INVESTORS IS NOT LIABLE TO BE TREATED U/S. 68 AS UNEXPLAINED CREDITS AND TO BE TAXED IN THE HANDS OF THE APPELLANT COMPANY. THE APPELLANTS GROUND IS ALLOWED.' IN VIEW OF THE ABOVE, AND FINDING NO CONTRARY DECISIONS BROUGHT ON RECORD BY THE REVENUE AUTHORITIES, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THE APPEAL OF THE REVENUE IS, THEREF ORE, DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. AGGRIEVED AGAINST THE DECISION OF THE HONBLE ITAT, THE DEPARTMENT WENT IN APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT WHEREIN THE APPEAL OF THE DEPARTMENT WAS DISMISSED AND IT WAS HELD THAT, AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASE OF C.I.T. VS. M/S. LOVELY EXPORTS PVT. LTD. [SUPRA], WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF THE ASSESSEE AND THUS, NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND IS DISMISSED. 16.3 IN VIEW OF THE ABOVE, IT IS REITERATE D THAT THE ADVANCE WAS GIVEN TO THE ASSESSEE COMPANY PURSUANT TO THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE COMPANY AND UNIWORTH AGENCIES PVT LTD DATED 01 - 06 - 2011. THE TRANSACTION WAS ENTERED INTO VIA NORMAL BANKING CHANNELS AND THE SAME WAS DULY REF LECTED IN THE BOOKS OF ACCOUNTS IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 69 OF BOTH THE PARTIES. FURTHER, THE SOURCE OF LOAN OF RS.9.73 CRORES WAS OWN FUNDS OF UNIWORTH AGENCIES PVT LTD WHICH HAD ALREADY BEEN ASSESSED TO TAX. IN SPITE OF ALL THESE FACTUAL BACKGROUND, THE LEARNED AO PROCEEDED ON HIS WHIMS AND FANCIES AND COMPLETED THE IMPUGNED ASSESSMENT BY ADDING A SUM OF RS.6.92 CRORES AND RS.3.06 CR IN AYS 2012 - 13 AND 2013 - 14 RESPECTIVELY TO THE INCOME OF THE APPELLANT U/S 68 OF THE ACT. 17. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) UPHOLD THE ASSESSMENT ORDER PASSED BY THE LEARNED AO ON THE SAME GROUNDS. IN THE APPELLATE ORDER, THE LEARNED CIT(A) HAS CITED THE FOLLOWING TWO JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS HELD THAT IT IS NOT NECESSARY THAT SEARCH O N WHICH IT WAS FOUNDED SHOULD HAVE NECESSARILY YIELDED ANY INCRIMINATING MATERIAL AGAINST ASSESSEE OR THE PERSON TO WHOM SUCH NOTICE U/S,153A( 1 )(A), IS ISSUED. 1. E.N. GOPIKUMAR VS C7T(CENTRAL) (HIGH COURT OF KERELA) PRONOUNCED ON 03 - 10 - 2016. 2. CIT, CENTRAL V S RAJ KUMAR ARORA (HIGH COURT OF ALLAHABAD) PRONOUNCED ON 11 - 07 - 2014. 17.1 IN THIS REGARD, PLEASE NOTE THAT THE ISSUE ON WHETHER AN ASSESSMENT U/S 153A OF THE ACT CAN BE MADE EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING SECTION 132 SEARCH PROCE EDINGS HAD ALREADY BEEN DECIDED BY THE HONBLE APEX COURT IN THE CASE OF DAYAWANTI GUPTA VS. CIT PRONOUNCED ON 3 RD OCTOBER, 2017. THE APEX COURT HAS STAYED THE OPERATION OF THE JUDGEMENT OF THE DELHI HIGH COURT IN DAYAWANTI GUPTA VS. CIT [390 ITR 496 (DEL. ). THE SAID JUDGMENT HAS BEEN DISCUSSED IN THE PRECEDING PARAS. FURTHER, THE APEX COURT IN THE CASE OF SINHGAD TECHNICAL EDUCATION SOCIETY (SUPRA) HAS ALSO HELD THAT WHERE NO IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 70 ASSESSMENT YEAR SPECIFIC INCRIMINATING MATERIAL OR DOCUMENT IS FOUND, ASSESSMEN TS OF SUCH ASSESSMENT YEARS CANNOT BE DISTURBED BY INVOKING THE PROVISIONS OF S. 153C. HENCE, THIS ISSUE HAS ALREADY BEEN DECIDED BY THE HONBLE APEX COURT AND THE SAME WAS ALSO RELIED UPON BY THE ASSESSEE IN THE COURSE OF APPELLATE PROCEEDINGS. HOWEVER, T HE LEARNED CIT(A) HAS COMPLETELY IGNORED THE JUDGMENT OF THE HONBLE APEX COURT, THUS VIOLATING THE PRINCIPLES OF PRECEDENT IN FOLLOWING APEX COURT VERDICT WHICH IS THE LAW UNDER ARTICLE 141 OF THE INDIAN CONSTITUTION. ARTICLE 141 OF THE INDIAN CONSTITUTIO N STATES THAT THE LAW DECLARED BY SUPREME COURT SHALL BE BINDING ON ALL COURTS WITHIN TERRITORY OF INDIA. 17.2 FURTHER, WHEN AN ORDER IS PASSED BY A HIGHER AUTHORITY, THE LOWER AUTHORITY IS BOUND THEREBY KEEPING IN VIEW THE PRINCIPLES OF JUDICIAL DISCIPL INE. THIS ASPECT OF THE MATTER HAS BEEN HIGHLIGHTED BY THIS COURT IN BHOPAL SUGAR INDUSTRIES V. INCOME TAX OFFICER. BHOPAL [AIR 1961 SC 182] IN THE FOLLOWING TERMS: IF A SUBORDINATE TRIBUNAL REFUSES TO CARRY OUT DIRECTIONS GIVEN TO IT BY A SUPERIOR TRIBU NAL IN THE EXERCISE OF ITS APPELLATE POWERS, THE RESULT WILL BE CHAOS IN THE ADMINISTRATION OF JUSTICE AND WE HAVE INDEED FOUND IT VERY DIFFICULT TO APPRECIATE THE PROCESS OF REASONING BY WHICH THE LEARNED JUDICIAL COMMISSIONER WHILE ROUNDLY CONDEMNING THE RESPONDENT FOR REFUSING TO CARRY OUT THE DIRECTIONS OF THE SUPERIOR TRIBUNAL, YET HELD THAT NO MANIFEST INJUSTICE RESULTED FROM SUCH REFUSAL. 17.3 ALSO NOTE THAT THE ABOVE TWO CASE DECISIONS CITED BY THE LEARNED CIT(A) WERE ALSO RELIED UPON BY THE CIT(D R) IN THE CASE OF: 1. DCIT VS ANKUSH SALUJA ITA.NO.2047/DEL./2016 PRONOUNCED ON 07 - 12 - 2017 IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 71 2. M/S EMPIRE REALTECH PVT LTD VS DCIT ITA.NO.3407/DEL./2017 PRONOUNCED ON 21.11.2017 3. ACIT VS SUPERB DEVELOPERS I.T.A.NO. - 52/DEL/2014 PRONOUNCED ON 21 - 04 - 2017 HOWEVER, IN ALL THE ABOVE THREE CASES, THE HONBLE DELHI TRIBUNAL HAS HELD THAT INVOCATION OF SECTION 153A BY THE REVENUE WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HENCE, THE JUDGMENTS CITED BY THE LEAR NED CIT(A) DO NOT HOLD GOOD IN THE PRESENT CASE BY VIRTUE OF THE JUDGMENT ON AN IDENTICAL ISSUE PRONOUNCED BY THE HONBLE SUPREME COURT IN FAVOUR OF THE ASSESSEE. 18. THE LEARNED CIT(A) HAS ALSO ALLEGED IN THE APPELLATE ORDER THAT COPY OF THE STATEMENT OF RAJKUMAR THARAD AND PRADEEP GARG WERE PROVIDED TO THE ASSESSEE BY THE AO. HOWEVER, THE STATEMENT OF THESE PARTIES WERE NEVER PROVIDED TO THE ASSESSEE FOR CROSS EXAMINATION. HENCE, THE PRESENT CASE IS DENIAL OF NATURAL JUSTICE TO THE ASSESSEE. THE ASSESSEE HAS DULY SUBMITTED ALL THE DOCUMENTARY EVIDENCES BEFORE THE LEARNED AO AND LEARNED CIT(A) SUBSTANTIATING THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS AND MORE SO, THE SOURCE OF THE AMOUNT RECEIVED FROM UNIWORTH AGENCIES PVT LTD HAD ALREADY BEEN ASSESSED TO TAX. 19. CONCLUDING THE SUBMISSION OF THE ASSESSEE, BASED ON THE ABOVE DETAILED SUBMISSION OF THE ASSESSEE, IT IS THUS HUMBLY PRAYED BEFORE YOUR HONOURS TO QUASH THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT FOR BOTH THE SUBJECT ASSESSMENT YEARS DE HORS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND MORE SO, WHEN THE ASSESSEE HAD SUCCESSFULLY EXPLAINED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE ADVANCE RECEIVED FROM UNIWORTH AGENCIES PVT L TD. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 72 19 . THE DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF ASSESSING OFFICER AND CIT(A). 2 0 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE , A SEARCH AND SEIZURE OPERAT ION WERE CONDUCTED IN THE CASE OF THE ASSESSEE ON 6.8.2014. IN PURSUANCE TO THE SAID SEARCH, THE IMPUGNED ORDER OF ASSESSMENT WAS PASSED ON 28.12.2016 U/S.153A OF THE ACT. IN THE ASSESSMENT S SO MADE, THE ASSESSING OFFICER ADDED 3.06 CRORES TO THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED MONEY OF RS.9 . 98 CRORES FROM M/S. UNIWORTH AGENCIES PVT LTD ., OUT OF WHICH RS.3.06 CRORES WAS RECEIVED DURIN G THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER ALSO OBSERVED THAT DURING THE POST SEARCH ENQUI RY, STATEMENT OF TWO DIRECTORS OF M/S. UNIWORTH AGENCIES PVT LTD., WERE RECORDED ON 13.11.2014 BY THE INVESTIGATING OFFICER. IN THEIR STATEMENT, TWO DIRE CTORS ADMITTED OF PROVIDING ACCOMMODATION ENTRIES. IN THE ABOVE BACKGROUND, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE TWO DIRECTORS OF M/S. UNIWORTH AGENCIES PVT LTD., BEFORE HIM FOR EXAMINATION BUT THE ASSESSEE FAILED TO PRODUCE TWO DIRECTOR S OF SAID M/S. UNIWORTH AGENCIES PVT LTD BEFORE THE ASSESSING OFFICER AND EXPLAIN THAT THE ENTIRE AMOUNT OF LOAN TAKEN FROM M/S. UNIWORTH AGENCIES PVT LTD WAS ALREADY REPAID BY THE ASSESSEE IN THE FINANCIAL YEAR 2014 - 15 ITSELF. ACCORDING TO THE ASSESSING OFFICER, SUBSEQUENT IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 73 REPAYMENT DOES NOT M AKE INITIAL TRANSACTION GENUINE. THE ASSESSING OFFICER CONCLUDED AS UNDER: ASSESSEE FAILED TO PRODUCE THE DIRECTORS OF THE ALLEGED CREDITOR, UNIWORTH AGENCY PVT LTD FOR EXAMINATION. HE WAS INTIMATED OF THE FACT THA T, UNIWORTH AGENCY PVT LTD WAS ONE OF SUCH COMPANIES WHO WERE FOUND TO BE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES BY WAY OF SHARE CAPITAL/LOAN/ADVANCES ETC. ASSESSEE ALTHOUGH PRODUCED ALL THE DOCUMENTARY EVIDENCE IN SUPPORT OF SUCH ADVANCE FAILED TO PRO DUCE THE DIRECTORS OF THIS COMPANY FOR EXAMINATION. THE NATURE OF FINANCIAL TRANSACTION BETWEEN THE ASSESESEE AND UNIWORTH IS AKIN TO ALL TYPE OF SUCH TRANSACTION IN THE CASE OF ACCOMMODATION ENTRY PROVIDERS. IN ALL SUCH TYPE OF TRANSACTION ACCOMMODATION E NTRY IS PROVIDED BY COMPANIES HAVING ALL THE PROPER DETAILS IN COMPLIANCE TO THE ROC AND THE BANK ACCOUNT IS USED TO CONDUIT THE FUND WITHOUT ANY JUSTIFICATION OF TRANSFER OF SUCH HUGE SUM. ALL THESE COMPANIES HAVE NO RECOGNISABLE REAL BUSINESS AND THEIR B ALANCE SHEET SHOW HUGE SHARE CAPITAL AND EQUIVALENT AMOUNT OF INVESTMENTS. THE ACTIVITY OF SUCH SHARE HOLDERS AND INVESTMENT COMPANIES ARE ALL OF SAME NATURE. THIS IS THE COMMON MODUS OPERANDI OF KOLKATA BASED SHELL COMPANIES. HERE, UNACCOUNTED CASH IS RO UTED THROUGH SEVERAL LAYERS TO REACH THE INTENDED BENEFICIARY. THIS IS EXPLAINED AT LENGTH BY THE STATEMENT OF TWO SUCH ENTRY OPERATORS VIZ RAJ KUMAR THARAD AND PRADEEP GARG, WHO ARE BASED IN KOLKATA. RELEVANT PART OF THE STATEMENT OF THOSE TWO PERSONS A RE REPRODUCED BELOW: RAJ KUMAR THARAD : 'Q.6 WHAT WORK IS DONE BY MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT.LTD. ANS. SIR, ACTUALLY THEY ALL ARE JAMAKHARCHI COMPANIES. MYSELF IS THE DIRECTOR IN ABOVE COMPANIES AS DISCUSSED IN QUESTION NO. 5. SIR, BESIDE MYSELF, ALL OTHERS ARE THE DUMMY DIRECTORS. THEY ALL ARE WORKING AS PER MY INSTRUCTIONS. I AM THE MAIN PERSON WHO IS ACTUALLY CONTROLLING AND MANAGING ALL THE COMPANIES Q.8 PLEASE EXPLAIN THE SOURCE OF FUNDS USED FOR RAISING SHARE CAPITAL IN YOUR C OMPANIES ? ANS. SOURCE OF FUND FOR ENHANCING SHARE CAPITAL IS UNACCOUNTED MONEY OF BENEFICIARIES. I USED TO GET CASH FROM BENEFICIARIES FIRST, THEN I HAND IT OVER TO PEOPLE FOR DEPOSITING THE CASH IN VARIOUS ACCOUNTS AND THEN TRANSFERRING IT TO MY COMPAN IES THROUGH CHEQUES. I USED TO DEPOSIT THE CHEQUES IN MY COMPANIES FOR RAISING SHARE CAPITAL. FINALLY, I USED TO SELL THESE COMPANIES TO BENEFICIARIES IN LIEU OF COMMISSION. IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 74 Q.10 PLEASE EXPLAIN TO WHOM YOU HAVE SOLD COMPANY OF MIDAS CAPITAL PVT. LTD AND U NIWORTH AGENCIES PVT. LTD. AND WHAT WAS THE MODUS OPERANDI? ANS; - THESE COMPANIES WERE TAKEN OVER BY ONE MR. SUNIL GUPTA OF CUTTACK, ODISHA. THE COMPANIES WERE TRANSFERRED BY WAY OF SHARE TRANSFER TO SH. SUNIL GUPTA AND HIS GROUP COMPANIES. SH. SUNIL GUPTA APPROACHED ME IN 2010 AND HANDED ME CASH. THIS CASH WAS HANDED OVER TO SEVERAL OF MY DUMMY CONCERNS. THE MONEY AFTER TRAVELLING THROUGH SEVERAL OF MY COMPANIES CONTROLLED BY MY GOT DEPOSITED INTO THE BOOKS OF SGBL (INDIA ) LTD AND OTHER GROUP COMPANIES CO NTROLLED BY SUNIL GUPTA Q.11. PLEASE PROVIDE THE DETAILS OF MONEY TRAIL USED TO IN DEPOSITING CASH AND ROUTING IT BACK TO COMPANIES LIKE MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD ? ANS; I WILL PROVIDE IT LATER ON. HOWEVER, THE CASH WAS DEPOSI TED IN VARIOUS CONCERNS WHICH AFTER TRAVELLING SEVERAL LAYERS REACHED COMPANIES LIKE SIGNET VINIMAY PVT. LTD, SCOPE VYAPAAR PVT. LTD., SANKALP VINCOM PVT. LTD., ETC. SUBSEQUENTLY, THE MONEY WAS TRANSFERRED TO MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PV T. LTD.' PRADEEP GARG : 'Q.6 WHAT WORK IS DONE BY MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT.LTD. ANS. SIR, ACTUALLY THEY ALL ARE JAMAKHARCHI COMPANIES. I HAVE SIGNED ALL THE PAPERS AS PER DIRECTION OF RAJ KUMARTHARAD. Q.8 PLEASE EXPLAIN THE SOURC E OF FUNDS USED FOR RAISING SHARE CAPITAL IN YOUR COMPANIES ? ANS. SOURCE OF FUND FOR ENHANCING SHARE CAPITAL IS UNACCOUNTED MONEY OF BENEFICIARIES, WE USED TO GET CASH FROM BENEFICIARIES FIRST, THEN WE HAND IT OVER TO PEOPLE FOR DEPOSITING THE CASH IN V ARIOUS ACCOUNTS AND THEN TRANSFERRING IT TO MY COMPANIES THROUGH CHEQUES. WE USED TO DEPOSIT THE CHEQUES IN MY COMPANIES FOR RAISING SHARE CAPITAL. FINALLY, RAJ KUMAR THARAD USED TO SELL THESE COMPANIES TO BENEFICIARIES IN LIEU OF COMMISSION. Q.10 PLEASE EXPLAIN TO WHOM YOU HAVE SOLD COMPANY OF MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD. AND WHAT WAS THE MODUS OPERANDI? ANS; - THESE COMPANIES WERE TAKEN OVER BY ONE MR. SUNIL GUPTA OF CUTTACK, ODISHA. THE COMPANIES WERE TRANSFERRED BY WAY OF SHARE TRANSFER TO SH. SUNIL GUPTA AND HIS GROUP COMPANIES. SH. SUNIL GUPTA APPROACHED ME IN 2010 AND HANDED ME CASH. THIS CASH WAS HANDED OVER TO SEVERAL OF MY DUMMY CONCERNS. THE MONEY AFTER TRAVELLING THROUGH SEVERAL OF MY COMPANIES CONTROLLED BY MY GOT DEPOS ITED INTO IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 75 THE BOOKS OF SGBL (INDIA ) LTD AND OTHER GROUP COMPANIES CONTROLLED BY SUNIL GUPTA. Q.11. PLEASE PROVIDE THE DETAILS OF MONEY TRAIL USED TO IN DEPOSITING CASH AND ROUTING IT BACK TO COMPANIES LIKE MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT . LTD ? ANS: I WILL PROVIDE IT LATER ON. HOWEVER, THE CASH WAS DEPOSITED IN VARIOUS CONCERNS WHICH AFTER TRAVELLING SEVERAL LAYERS REACHED COMPANIES LIKE SINGNET VINIMAY PVT. LTD, SCOPE VYAPAAR PVT. LTD., SANKALP VINCOM PVT. LTD., ETC. SUBSEQUENTLY, THE M ONEY WAS TRANSFERRED TO MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD.' THIS WAS THE MODE TO BRING THE UNACCOUNTED INCOME BACK INTO THE BOOKS OF THE ASSESSEE GROUP. THEY ALSO EXPLAINED THE PROCESS OF ALLOTMENT OF SHARES AT A PREMIUM, WHICH IS DON E ONLY AS PER THE REQUIREMENT OF THE BENEFICIARY COMPANY TO BRING HIS UNACCOUNTED FUNDS AND HAS NO RATIONALE TO THE BUSINESS OF THE COMPANY. ALTHOUGH ASSESSEE HAS CLAIMED TO HAVE AVAILED LOAN/ADVANCE FROM UNIWORTH AGENCY, THE NATURE OF SUCH TRANSACTION RE MAINS UNEXPLAINED. THIS IS SPECIFICALLY IN THE BACK GROUND THAT IN THE CASE OF THIS GROUP WHERE THE SEARCH ASSESSMENT IS BEING MADE, ALL THE SISTER COMPANIES WERE FOUND TO HAVE RECEIVED SHARE CAPITAL ALONGWITH PREMIUM FROM ACCOMMODATION ENTRY PROVIDERS OF KOLKATA. NECESSARY ACTION HAS BEEN TAKEN IN THE RESPECTIVE ASSESSMENT. F. IN THIS BACKGROUND OF FACTS AND CIRCUMSTANCES DISCUSSED ABOVE, IT IS REASONABLY CONCLUDED THAT THE CLAIMED TRANSACTION OF CASH CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE ARE NOT GE NUINE. 2 1 . THE ASSESSIN G OFFICER BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE ADDED RS.3.06 CRORES TO THE INCOME OF THE ASSESSEE. 2 2 . ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: 6.1 IN THESE GR OUNDS THE APPELLANT HAS CONTESTED THAT THE ASSESSING OFFICER HAS WRONGLY MADE ADDITION OF RS. 3,06,00,000/ - . IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS RELIED UPON STATEMENT OF RAJKUMAR THARAD AND PRADEEP GARG WHO TESTIFIED THAT TH E LOANS GIVEN TO THE APPELLANT FROM UNIWORTH AGENCIES PVT LTD ARE OUT OF CASH RECEIVED FROM SRI SUNIL GUPTA, DIRECTOR OF THE APPELLANT COMPANY AND ROUTED THROUGH SEVERAL LAYERS OF SHELL COMPANIES. THE ASSESSING OFFICER ASKED THE APPELLANT TO PRODUCE THE DI RECTORS OF UNIWORTH AGENCIES PVT LTD BEFORE HIM FOR EXAMINATION. THE APPELLANT COULD NOT PRODUCE DIRECTORS OF UNIWORTH AGENCIES PVT LTD. CONSIDERING THESE ASPECTS THE ASSESSING OFFICER HAS HELD THAT THE APPELLANT HAS FAILED TO ESTABLISH GENUINENESS OF THE LOAN TRANSACTIONS AND IDENTITY/CREDITWORTHINESS OF THE CREDITORS. DURING THE COURSE OF THE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 76 APPEAL PROCEEDINGS THE APPELLANT HAS STATED THAT ALL THE LOANS HAVE BEEN ROUTED THROUGH THE BANKING CHANNELS. THE APPELLANT HAS FURTHER STATED THAT UNIWORTH AGENCIES PVT LTD HAD ITS OWN SHARE CAPITAL OF RS.11.17 CRORES AND THE LOAN HAS BEEN GIVEN OUT OF THIS FUND IT IS FURTHER CONTESTED BY THE APPELLANT THAT AN ASSESSMENT HAS BEEN MADE IN THE CASE OF UNIWORTH AGENCIES PVT LTD AND THE SHARE CAPITAL OF RS. 11.17 CRORES HAS BEEN ASSESSED TO TAX IN THE HANDS OF UNIWORTH AGENCIES PVT LTD, FROM WHERE THE LOANS HAVE BEEN GIVEN TO THE APPELLANT. I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. 1 FIND THAT AN. AMOUNT OF RS.3,06,00,000/ - WAS RECEI VED FROM UNIWORTH AGENCIES PVT LTD. THE ONUS TO PROVE BONAFIDES OF THESE TRANSACTIONS AND OF THE CREDITORS CONCERNED IS SQUARELY ON THE APPELLANT. THE ASSESSING OFFICER HAS SPECIFICALLY ASKED THE APPELLANT TO PRODUCE DIRECTORS OF THE PERSONS WHO HAVE GIVEN MONEY TO THE APPELLANT, FOR VERIFICATION OF GENUINENESS OF THE TRANSACTION AND IDENTITY/CREDITWORTHINESS OF THE CREDITORS. THE APPELLANT COULD NOT PRODUCE THE DIRECTORS. THE ASSESSING OFFICER HAS GIVEN A COPY OF STATEMENTS OF ENTRY OPERATORS TO THE APPELL ANT. LACK OF OPPORTUNITY TO CROSS - EXAMINE THE OPERATORS IS NOT FATAL TO THE ADDITION MADE BY THE ASSESSING OFFICER. THE ONUS TO PROVE GENUINENESS OF CREDITS AND IDENTITY/CREDITWORTHINESS OF SUCH CREDITORS RESTS ON THE APPELLANT, WHICH HAS NOT BEEN DISCHARG ED BY THE APPELLANT. FURTHER. UNIWORTH AGENCIES PVT LTD IS ONLY A CONDUIT. THE APPELLANT IS A BENEFICIARY WHO HAS USED THE LOANS FOR ITS BUSINESS OF REAL ESTATE DEVELOPMENT. THE ADDITION OF UNEXPLAINED CREDITS HAS TO BE MADE IN THE HANDS OF THE ULTIMATE B ENEFICIARY. 6.2 IT IS MY CONSIDERED FINDING THAT THE APPELLANT HAS FAILED TO PROVE THE GENUINENESS OF THE CREDITS OF RS.3,06,00,000/ - AND IDENTITY/CREDITWORTHINESS OF THE CREDITORS. THE ADDITION MADE BY THE AO OF RS.3,06,00,000/ - IS CONFIRMED AND THE GRO UND OF APPEAL IS DISMISSED. 23. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED RS.3.06 CRORES DURING THE YEAR UNDER CONSIDERATION FROM M/S. UNIWORTH AGENCIES PVT LTD . THE SAID LOAN WAS ROUTED THROUGH BANKING CHANNEL IS NOT I N DISPUTE. THE IDENTITY OF M/S. UNIWORTH AGENCIES PVT LTD IS ALSO NOT IN DISPUTE AND THEIR DIRECTORS WERE ALSO EXAMINED BY THE INVESTIGATING OFFICER IS ALSO ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED TO THE ASSESSING O FFICER THAT M/S. UNIWORTH AGENCIES PVT LTD HAS SHARE CAPITAL OF RS.11.13 CRORES OUT OF WHICH THE AMOUNT IN QUESTION WAS IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 77 ADVANCED BY THEM TO THE ASSESSEE. THE ASSESSEE ALSO PRODUCED BEFORE THE ASSESSING OFFICER A COPY OF THE ORDER OF ASSESSMENT DATED 28.3. 2014 PASSED IN THE CASE M/S. UNIWORTH AGENCIES PVT LTD U/S.263/148/144 FOR THE ASSESSMENT YEAR 2008 - 09, WHEREIN, THE INCOME OF M/S. UNIWORTH AGENCIES PVT LTD WAS ASSESSED AT RS.11,17,63,553/ - . IN VIEW OF ABOVE, IT WAS CLAIMED BY THE ASSESSEE THAT THE INIT IAL ONUS WHICH WAS UPON THE ASSESSEE TO SHOW THE IDENTITY OF THE CREDITORS, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS WAS DULY DISCHARGED BY THE ASSESSEE. 24. WE FIND THAT IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS PRODUCED ALL THE DOCUMENTARY EVIDENCES IN SUPPORT OF THE TRANSACTION RELATING TO RECEIPT OF RS.3.06 CRORES FROM M/S. UNIWORTH AGENCIES PVT LTD . THE ADVERSE INFERENCE WAS DRAWN ONLY FOR THE FAILURE OF THE ASSESSEE TO PRODUCE THE DIRECTORS OF M/S. UNIWORTH AGENCIES PVT LTD FOR EXAMINATION BEFORE THE ASSESSING OFFICER. WE FIND FORCE IN THE ARGUMENTS OF LD A.R. OF THE ASSESSEE THAT AS THE LOAN AMOUNT WAS ALREADY REPAID IN THE FINANCIAL YEAR 2014 - 15 AND AS THE ASSESSMENT PROCEEDINGS WAS COMMENCED THEREAFTER IN AUGUST, 2015, T HE ASSESSEE HAD NO CONTROL OR INFLUENCE OVER THE DIRECTORS OF M/S. UNIWORTH AGENCIES PVT LTD TO COMPEL THEM TO APPEAR BEFORE THE ASSESSING OFFICER. AS THE FULL DETAILS OF M/S. UNIWORTH AGENCIES PVT LTD WERE PRODUCED TO THE ASSESSING OFFICER, THE ASSESSING OFFICER COULD HAVE EXERCISED THE POWERS AVAILABLE WITH HIM UNDER THE PROVISIONS OF LAW TO COMPEL THE DIRECTORS OF M/S. UNIWORTH AGENCIES IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 78 PVT LTD TO APPEAR BEFORE HIM FOR EXAMINATION. HOWEVER, THE ASSESSING OFFICER CONSIDERED IT APPROPRIATE NOT TO EXERCIS E THE POWERS CONFERRED UPON HIM UNDER THE ACT. THEREFORE, ON THE ABOVE CIRCUMSTANCES, NO ADVERSE INFERENCE AGAINST THE ASSESSEE CAN BE LEGALLY DRAWN BY THE ASSESSING OFFICER. 25. WE FIND THAT THE CIT(A) HAS FOUND THE STATEMENT OF DIRECTORS OF M/S. UNIWORT H AGENCIES PVT LTD., RELIED UPON BY THE ASSESSING OFFICER EVEN THOUGH NO OPPORTUNITY TO CROSS EXAMINE THE DEPONENTS WERE ALLOWED TO THE ASSESSEE. IN VIEW OF ABOVE THE CIT(A) OBSERVED THAT LACK OF OPPORTUNITY TO CROSS EXAMINE THE DEPONENTS IS NOT FATAL TO THE ADDITION MADE BY THE ASSESSING OFFICER. WE FIND THAT THE ABOVE VIEW OF THE CIT(A) IS CONTRARY TO THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF M/S ANDAMAN TIMBER INDUSTRIES VS. CCE, CIVIL APPEAL NO.4228 OF 2006, ORDER DATED 02.09.2015, WHEREIN IT HAS BEEN HELD AS UNDER : - ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS - EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. 26. MOREOVER, WE FIND THAT THE STATEMENT OF THE SAID TWO DIRECTORS ARE QUOTED BY THE ASSESSING OFFICER IN THE OR DER OF ASSESSMENT AND THAT NOWHERE THE NAME OF THE ASSESSEE IS APPEARING IN THE SAID STATEMENT. THE TRANSACTION OF ADVANCING OF LOAN OF RS.3.06 CRORES TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS NOT STATED TO BE IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 79 AN ACCOMMODATION ENTRY. THUS, IN THE CIRCUMSTANCES, WE FIND THAT THOUGH THE ASSESSEE HAS DISCHARGED HIS INITIAL ONUS TO SHOW THE AMOUNT OF RS.3.06 CRORES RECEIVED AS LOAN FROM M/S. UNIWORTH AGENCIES PVT LTD AS GENUINE BY PRODUCING VARIOUS DOCUMENTARY EVIDENCE S BEFORE THE ASSESSING OFF ICER AND THEREAFTER NO INVESTIGATION WAS MADE INDEPENDENTLY BY THE ASSESSING OFFICER AND NO MATERIAL COULD BE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE MONEY WHICH WAS RECEIVED THROUGH BANKING CHANNEL BY THE ASSESSEE FROM M/S. UNIWORTH AG ENCIES PVT LTD EMANATED OUT OF THE COFFERS OF THE ASSESSEE COMPANY. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, ADDITION OF RS.3.06 CRORES MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT IS UNSUSTAINABLE. WE, THE REFORE, DELETE THE ADDITION OF RS.3.06 CRORES AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 27. THE ASSESSEE HAS FILED STAY PETITION FOR STAY OF DEMAND. AS WE HAVE HEARD AND DECIDED THE APPEAL OF THE ASSESSEE, THE STAY PETITION OF THE ASSESSEE HAS BEC OME INFRUCTUOUS AND, ACCORDINGLY, IT IS DISMISSED. 27. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND STAY PETITION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 22 .3. 2018 AT CUTTACK. S D/ - S D/ - ( PAVAN KUMAR GADALE ) (N. S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CUTTACK DATED 22 / 0 3 / 201 8 IT(SS)A NO.0 3 /2018 SA NO. 0 9 /CTK/2018 80 B.K.PARIDA, SENIOR PRIVATE SECRETARY COPY OF THE ORDER FORWARDED TO : BY ORDER, ( SENIOR PRIVATE SECRETARY ) ITAT, CUTTACK 1. THE APPELLANT - E - CITY PROJECTS LUCKNOW PVT. LTD., SAIENCLAVE, SATI CHAURA CHOWK,CUTTACK 2. THE RESPO NDENT - ACIT, CENTRAL CIRCLE, CUTTACK 3. THE CIT(A), 4. CIT 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//