Midas Capital Pvt. Ltd., Cuttack V. ACIT, Central Circle, Cuttack

ITSSA 4/CTK/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3646 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2018
• Assessment Year: 2011-2012
• 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; Income from undisclosed sources; Search and seizure; Document seized; Principle of natural justice; Opportunity of cross examination; Source of fund; Application of stay; Question of law; Accommodation entries; Block assessment; Onus to prove; Documents seized; Reassessment proceedings
• Section: 143(3); 142(1); 153A; 133(6); 147; 68; 148; 263; 132; 12; 10; 11; 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 S . 0 4 & 05 / CTK /20 1 8 STAY APPLICATION NO S . 10 & 11 / CTK/2018 (ARISING OUT OF IT(SS)A NO. 04 & 05 /CTK/2018) ASSESS MENT YEAR S : 2011 - 12 & 2012 - 2013 ) MIDAS CAPITAL P VT LTD., SAI ENCLAVE, SATI CHAURA CHOWK, CUTTACK VS. ACIT, CENTRAL CIRCLE, CUTTACK PAN NO. : AABCM 9180 D APPELLANT ) .. RESPONDENT ) ASSESSEE BY : SHRI S.K.TULSIYAN, AR REVENUE BY : SHRI PIYUSH KO LHE , CITDR DATE OF HEARING : 2 0 / 0 3 /201 8 DATE OF PRONOUNCEMENT 23 / 0 3 /201 8 O R D E R PER SHRI N.S.SAINI , A M : TH ESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER S OF THE CIT( A ) - 2 , BHUBANESWAR BOTH DATED 13.11.2017 . 2 . THE ASSE SSEE HAS TAKEN THE FOLLOWING COMMON 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 FACT THAT NO INCRIMI NATING 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(APPEALS) ERRED IN SUSTA INING THE ADDITION OF RS. 9,94,50,000 (AY 2011 - 12) AND RS.15.00,000 (AY 2012 - 13) IN THE HANDS OF THE ASSESSEE U/ S 68 OF THE ACT WHICH REPRESENTED SALE PROCEEDS RECEIVED AGAINST SALE OF SHARES DONE IN THE NORMAL COURSE OF BUSINESS. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 2 3. THAT ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN FACTS AND IN LAW AS UNSUSTAINABLE 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 ORDER OF THE LEARNED CIT(A) BEING NOT BASED ON THE FACTS OF THE CASE OF THE APPE LLANT AND BEING CONTRARY TO LAW, SHOULD HENCE BE QUASHED AND THE APPELLANT COMPANY BE GIVEN SUCH RELIEF OR RELIEFS AS PRAYED FOR. 5. THAT THE LD CIT(A) ERRED IN RELYING UPON THE STATEMENT OF THIRD PARTIES WITHOUT PROVIDING COPY OF THE SAID STATEMENT AN D 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 INCRIMINATING DOCUMENT WAS FOUND IN THE COURSE OF SEARCH. 6. THAT THE APPELL ANT 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 FA CTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY . I T DERIVES INTEREST INCOME FROM THE ACTIVITY OF LOAN AND DEPOSITS AND FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9,56,200/ - FOR THE ASSESSMENT YEAR 2011 - 12 ON 29.9.2011 AND RS.2,95,840/ - AND MAT OF RS.21,90,641/ - ON 27.9.2012 INCOME FOR THE ASSESSMENT YEAR 201 2 - 2013 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.153 A OF THE ACT WAS ISSUED ON 10 .0 9 .2015 FOR THE ASSESSMENT YEARS 2009 - 2010 TO 2014 - 15 . IN RESPONSE TO THE SAME, THE ASSESSEE FILED RETURN IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 3 OF INCOME ON 19.2.2016 DISCLOSING THE SA M E INCOME AS THAT OF ORIGINAL RETURN FILED ON 29.9.2011 AND 27.9.2012 FOR THE AS SESSMENT YEARS 2011 - 12 AND 2012 - 13. 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 FOUND THAT FOLLOWING AMOUNTS HA VE BEEN CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE . ON FURTHER EXAMINATION, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD INVESTMENTS IN A NUMBER OF KOLKATA BASED COMPANIES AND THE SAME WERE SOLD TO SOME OTHER KOLKATA BASED COMPANIES AND MONEY HAD B EEN RECEIVED IN THE BANK ACCOUNTS OF THE ASSESSEE. THE INVESTMENTS IN SHARE CAPITAL WERE ACQUIRED BY THE ASSESSEE OUT OF CAPITAL INTRODUCTION BY A NUMBER OF KOLKATA BASED COMPANIES AS UNDER: A.Y. 2011 - 12 & 2012 - 13. AXIX BANK DATE NAME OF THE CREDITING C OMPANY AMOUNT(RS.) ; AXIS BANK 910020019769310 07 - 12 - 2010 RUNICHA MERCHANTS PVT LTD (A - R) 3000000 AXIS BANK - 411010200004541 31 - 05 - 2010 SANKALP 2550000 AXIS BANK 910020019769310 03 - 07 - 2010 SANKALP 5000000 ; AXIS BANK - 411010200004541 18 - 05 - 2010 SCOPE V YAPAR, EVENT DEVELOPERS PVT LTD(SH) 5000000 AXIS BANK - 411010200004541 20 - 05 - 2010 SCOPE VYAPAR, EVENT DEVELOPERS PVT LTD(SH) 5000000 AXIS BANK 910020019769310 26 - 07 - 2010 SCOPE VYAPAR, HARMAN HIRE PURCHASE PVT LTD(SH) 5000000 AXIS BANK 910020019769310 02 - 08 - 2010 SCOPE VYAPAR, HARMAN HIRE PURCHASE PVT LTD(SH) 5000000 AXIS SANK 910020019769310 22 - 11 - 2010 SCOPE VYAPARSARWATI VINCOM LTD.(SH) 2000000 AXIS BANK - 411010200004541 08 - 05 - 2010 SCOPE, ALFHA PROPERTIES P LTD(SH) 5000000 AXIS BANK 910020019769310 12 - 11 - 2010 SCOPE, ASTHA INDUSTERIES P LTD(SH) 2000000 AXIS BANK - 411010200004541 05 - 05 - 2010 SIGNET VINIMAY PVT LTD 5000000 AXIS BANK - 411010200004541 09 - 06 - 2010 SIGNET VINIMAY PVT LTD 2500000 AXIS BANK 411010200004541 13 - 05 - 2010 SIGNET VINIMAY PVT LTD 50 00000 IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 4 AXIS BANK 910020019769310 10 - 07 - 2010 SIGNET VINIMAY PVT LTD 5000000 AXIS BANK - 411010200004541 29 - 04 - 2010 SIGNET, COUNTRY WIDE TRADECOM PVT LTD(SH) 4200000 AXIS BANK 910020019769310 25 - 08 - 2010 SIGNET, COUNTRY WIDE TRADECOM PVT LTD(SH) 1800000 AX IS BANK - 411010200004541 23 - 04 - 2010 SIGNET.COUNTRY WIDE TRADECOM PVT LTD(SH) 2000000 AXIS BANK 910020019769310 17 - 07 - 2010 SRIJAN VYAPAR PVT LTD. 5000000 AXIS BANK 910020019769310 29 - 12 - 2010 SRIJAN VYAPAR PVT LTD. 3000000 AXIS BANK - 411010200004541 21 - 04 - 2010 SRIJAN VYAPAR PVT LTD.(APP - P) 5000000 AXIS BANK - 411010200004541 23 - 04 - 2010 SRIJAN VYAPAR PVT LTD.(APP - P) 500000 '1566000: AXIS BANK 910020019769310 11 - 02 - 2011 SRIJAN VYAPAR, CAPLIN MARKETING PVT LTD(SH) AXIS BANK - 411010200004541 26 - 04 - 2010 S RIJAN, TANTIA AGROCHEMICALS PVT LTD(SH) 5000000 AXIS BANK 910020019769310 : 14 - 08 - 2010 WEST LINE, ECONOMY ADVISORY SERVICES PVT LTD(SH) 5000000 AXIS BANK - 411010200004541 17 - 06 - 2010 WINALL VINIMAY PVT LTD (A - R) 1500000 AXIS BANK - 411010200004541 24 - 06 - 2010 WINALI VINIMAY PVT LTD (A - R) 5000000 AXIS BANK - 411010200004541 12 - 06 - 2010 WINALL, ELCTRO COCK FUELS P LTD(SH) 2500000 AXIS BANK - 411010200004541 28 - 05 - 2010 YOG1RAJ 400000 99450000 B.2 FURTHER PAGE 115 OF SEIZED DOCUMENT SGINDIA - 01, LISTS O UT SHARE TRANSFER HAPPENING IN THE CASE OF SHARE HOLDER COMPANIES OF MIDAS CAPITAL PVT LTD. SR.NO. PREVIOUS SHAREHOLDER NO.OF SHARES TRANSFERRED NEW SHAREHOLDER 1. ANSU COMMERCIAL P LTD. 60,000 DIAMOND PLAZA P.LTD. 2. SRIJAN VYPAR PVT LTD. 1,21,000 3. SKM VYAPAR PVT LTD. 1,45,800 4. ASJOUAMA MERCANTILE P. LTD. 1,12,000 JMD INVESTORS P.LTD 5. ALPS VYPAR PVT LTD. 1,40,030 6. BABA TRADELINK PVT LTD. 85,0000 7. DREAM VALLEY SALES PVT LTD. 50,000 SGBL (I) LTD. 8. ANUSHREE TRADELI NK PVT LTD. 1,62,000 SHREE CHAKANAYAN TRADELINK PVT LTD. 9. WINALI VINIMAY PVT LTD. 1,71,000 10. SCOPE VYAPAAR PVT LTD. 17,200 SHREE JAGANNATH INFRACON PVT LTD. 11. SIGNET VINIMAY PVT LTD. 29,000 12. SWARN GANGA TRADING PVT LTD. 1,67,000 13. RUNICHA MERCHANTS PVT LTD. 1,21,500 5. THE ASSESSING OFFICER FOUND THAT A LL THESE SHARE TRANSFERS TOOK PLACE ON A SINGLE DAY. MORE IMPORTANTLY, THE NEW SHAREHOLDERS ARE CONCERN OF A SINGLE GROUP. IT SEEMS THE TRANSACTIONS WERE SYNCHRONIZED. ANOTHER FACT IS THAT THE SHARES TO PR EVIOUS SHARE HOLDERS WERE ISSUED AT FACE VALUE 10 AND PREMIUM RS. 90. HOWEVER, IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 5 THE NEW SHAREHOLDERS PURCHASED THE SHARES OF MIDAS CAPITAL AT NET VALUE RS. 5 PER SHARE. THUS, THE ASSESSEE GROUP WAS ABLE TO GET CONTROL OF MIDAS CAPITAL PVT. LTD BY INFUSING J UST RS.55 LAKHS, THE ASSESSEE GROUP GOT INVESTMENT OF RS.10 CRORES. ON PAGE 101 OF THE SAID SGINDIA - 01, THE NEW SHAREHOLDERS OF MIDAS CAPITAL PVT. LTD HAVE BEEN LISTED. THIS AMOUNT WAS USED TO BRING UNSECURED LOAN IN THE GROUP COMPANIES. THE STATEMENT OF E NTRY OPERATOR IS ANNEXED BELOW, WHEREIN HE DETAILED THE MODUS OPERANDI AS TO HOW THE UNACCOUNTED CASH IS LAUNDERED AND BROUGHT BACK INTO THE BOOKS OF ACCOUNTS AS SHARE CAPITAL. 6. THE TRANSACTIONS HAVE BEEN MADE IN FY 2010 - 11. PAGE 85 OF SGINDIA - 01, LIST O UT THE WORKING OF ACQUISITION OF THE SHARES. PAGE 70 - 83 OF THE SAME DOCUMENT, LIST OUT VARIOUS SHARE ENTRIES OBTAINED AND BANK TRANSACTIONS FOR THE SAME. PAGE 69 IS THE BILL FOR TRANSFER OF SHARES ACCOMPANIED BY SHARE TRANSFER FORM ATTACHED THEREWITH. THE SHARE TRANSFER FORMS ARE INCOMPLETE CONTAINING ONLY THE NAME OF PREVIOUS SHAREHOLDERS AND SIGNATURE OF ONE OF THE DIRECTORS OF THE COMPANY. THIS IS THE COMMON MODUS OPERANDI OF KOLKATA BASED SHELL COMPANIES. HERE, UNACCOUNTED CASH IS ROUTED THROUGH SEVE RAL LAYERS TO REACH THE INTENDED BENEFICIARY. FINALLY, WHEN THE BENEFICIARY SO DESIRES, SHARES OF THE COMPANY GIVING THE ENTRY ARE TRANSFERRED TO HIM AT A DISCOUNT. 7. IT IS OBSERVED BY THE ASSESSING OFFICER THAT T HIS IS EXPLAINED AT LENGTH BY THE STATEME NT OF TWO SUCH ENTRY OPERATORS VIZ; RAJ KUMAR IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 6 THARAD AND PRADEDP GARG, WHO ARE BASED IN KOLKATA AND WHOSE SERVICES HAVE BEEN AVAILED BY THE ASSESSEE GROUP FOR BRINGING BACK ITS UNACCOUNTED INCOME INTO THE BOOKS OF THE ASSESSEE GROUP. RELEVANT PART OF THE STATEMENT 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 C OMPANIES 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 F UNDS USED FOR RAISING 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 A CCOUNTS AND THEN TRANSFERRING 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. 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 GU PTA AND HIS GROUP COMPANIES. 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 SG BL (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 PROVI DE IT LATER ON. HOWEVER, THE CASH WAS DEPOSITED IN VARIOUS CONCERNS WHICH AFTER TRAVELLING SEVERAL LAYERS REACHED IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 7 COMPANIES LIKE SIGNET VINIMAY PVT. LTD, SCOPE VYAPAAR PVT. LTD., SANKALP VINCOM PVT. LTD., ETC. SUBSEQUENTLY, THE MONEY WAS TRANSFERRED TO MID AS 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 RA J 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 BENEFI CIARIES 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 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 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 MONEY WAS TRANSFERRED TO MIDAS CAPITAL PVT. LTD AND UNIWORTH AGENCIES PVT. LTD.' IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 8 8 . THE AO OBSERVED THAT THIS WAS THE MODE TO BRING THE UNACCOUNTED INCOME BACK INTO THE BOOKS OF THE ASSESSEE GROUP. THEY ALSO EXPLA INED 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. 9. FURTHERMORE, THE ASSESSING OFFICER DISCUSSED A T LENGTH ABOUT THE ENQUIRY MADE BY THE INVESTIGATION WING OF KOLKATA AS UNDER: .B.3. ENQUIRY BY THE INVESTIGATION WING OF KOLKATA: ENQUIRY WAS CONDUCTED IN THE CASE OF PAPER COMPANIES PROVIDING ACCOMMODATION ENTRIES IN KOLKATA AND IT WAS FOUND THAT THERE WERE CERTAIN PERSONS WHO ALTHOUGH NOT DIRECTORS OF ANY COMPANY, MANAGE SUCH COMPANIES BY THE WAY OF DUMMY DIRECTORS. THE TERM USED FOR THEM IN THEIR LINE OF TRADE IS ENTRY OPERATOR. STATEMENT OF MR. RAJ KUMAR THARAD, ONE OF THE ENTRY OPERATORS WAS ALSO REC ORDED AND HAD ADMITTED HIS INVOLVEMENT IN SUCH ACTIVITIES. STATEMENT OF CERTAIN DUMMY DIRECTORS WAS ALSO RECORDED AND THEY HAD ADMITTED TO HAVE SIGNED PAPERS AS PER THE DIRECTION OF THE ENTRY OPERATORS. DIRECTOR OF ONE SUCH COMPANIES, SIGNET VINIMAY PVT L TD, HAVING CIN.U51109WB2008PTC127514, MR.ABHISET BASU WAS ALSO RECORDED BY THE INVESTIGATION WING OF KOLKATA. THE COMPANY SIGNET VINIMAY PVT LTD IS ONE OF SUCH COMPANIES WHO HAD SUBSCRIBED TO THE CAPITAL OF M/S MIDAS CAPITAL PVT LTD WITH PREMIUM WAS FOUND TO BE SOLD THE SAME TO ONE OF THE GROUP COMPANIES OF THE ASSESSEE AT DISCOUNT. LATER ON THIS COMPANY WAS CLAIMED TO BE PURCHASER OF THE SHARE CAPITAL INVESTMENT OF IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 9 THIS ASSESSEE COMPANY AT THE PURCHASE VALUE. THE SAME IS CLEAR FROM A LOOK AT THE ABOVE REPR ODUCED DATA TABLES. SIGNET VINIMAY PRIVATE LIMITED CIN; U51109WB2008PTC127514 23/1, PRINCIPAL KHUDIRAM BHOSE ROAD, KOLKATA - 700006 NAME OF SHAREHOLDER TYPE OF SHARE NO.OF SHARE PER SHARE ABHIJIET BASU EQUITY 5000 10/ - PRADIP DEY EQUITY 5000 10/ - AP EX COMMOTRADE P.LTD. EQUITY 300 10/ - SKM TRAVELE PVT LTD. EQUITY 300 10/ - TOTAL: 10600 MR ABHISET BASU WAS ONE OF THE DIRECTORS OF THE ASSESSEE M/S. MIDAS CAPITAL PVT LTD. APART FROM THIS, HE WAS ALSO ONE OF THE DIRECTORS OF WINALL VINIMAY PVT LTD., AND RUNICHA MERCHANTS PVT LTD. WHO ARE AGAIN SHAREHOLDERS AND PURCHASERS OF SHARES OF THIS ASSESSEE COMPANY. STATEMENT OF SRI ABHISEJ BASU, S/O. SRI DULAL NARAYAN BASU, AGED ABOUT 49 YEARS, RESIDENT OF 2, INDRALOK, SODEPUR, NILACHAL APARTMENT, 3 RD FLOOR, FLAT NO. 3B, KOLKATA - 700110, U/S.131 OF THE I.T.ACT, 1961 ON 15.1.2014 AT THE OFFICE CHAMBER OF DY.DIRECTOR OF INCOME TAX (INV) UNIT - IV91), KOLKATA, LOCATED AT 5 TH FLOOR, AAYAKAR BHAVAN, ANNEXE BUILDING, P - 13, CHOWRINGHEE SQUARE, KOLKATA - 69 AT 11.30 AM. I DO SWEAR IN THE NAME OF GOD THAT I SHALL SPEAK THE TRUTH, THE WHOLE TRUTH AND NOTHING BUT THE TRUTH. SD/ - 18.1.2014 OATH ADMINISTERED BY (NAYANJYOTI NATH) DDIT,(INV), U - IV, (1), KOLKATA IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 10 Q.1.PLEASE IDENTIFY YOURSELF. ANS. I AM ABHIS I T BAS U, S/O. SRI DULAL NARAYAN BASU, AGED ABOUT 49 YEARS, RESIDENT OF 2, INDRALOK, SADEPUR, NILACHAL APARTMENT 3 RD FLOOR, FLAT NO.3B, KOLKATA - 7000110. MY PAN IS AFVPB3003Q. Q.2.DO YOU KNOW THE CONSEQUENCES OF GIVING FALSE STATEMENT UNDER OATH? ANS. YES, I KNO W THE CONSEQUENCE OF GIVING FALSE STATEMENTS. Q.3.WHAT IS YOUR SOURCE OF INCOME? ANS. PRESENTLY, I AM AN EMPLOYEE IN THE OFFICE OF SRI RAJ KUMAR THARAD WHO IS AN ACCOMMODATION ENTRY OPERATOR AND PROVIDER LOCATED AT ROOM NO.10, 3 RD FLOOR, BLOCK - B, MERCANT IAL BUILDING, 9/12, LAL BAZAR STREET, KOLKATA - 700001 FOR LAST SIX TO SEVEN YEAR AND GETTING SALARY OF RS.8200/ - FOR SIGNING VARIOUS DOCUMENTS. Q.4.ARE YOU ASSESSED TO TAX, IF YES PLEASE STATE YOUR PAN. ANS. I AM NOT ASSESSED TO TAX, HOWEVER MY PAN IS AFV PB3003Q. Q.6. PLEASE MENTIONS WHICH OF THE COMPANIES/CONCERNS YOU ARE THE DIRECTOR OR PROPRIETOR? ANS. I AM DIRECTOR OF M/S. SCOPE VYAPAR PVT. LTD., SRIJAN VYAPAR PVT. LTD., SANKLAP VINCOM PVT. LTD., ANUSHREE TRADELINK PVT. LTD., SWARN GANGA TRADING PVT. LTD., SKM TRAVELS PVT. LTD. AND MANY MORE COMPANIES BUT NOW I CANNOT REMEMBER. Q.7. HOW YOU HAVE BEEN APPOINTED AS A DIRECTOR OF THOSE ABOVE MENTIONED COMPANIES? ANS. I WAS INTRODUCED TO SRI RAJ KUMAR THARAD BY A COMMON FRIEND OF MINE WHO THEN OFFERED ME THIS JOB OF SIGNING DOCUMENTS AS DUMMY DIRECTOR OR PROPRIETOR AS DUMMY DIRECTOR/PROPRIETOR. Q.12. PLEASE STATE WHAT IS YOUR EXACT ROLE AS A PROPRIETOR/DIRECTOR IN THOSE ABOVE MENTIONED CONCERNS. ANS. BEING A DUMMY DIRECTOR MY ROLE INVOLVES IN SIGNIN G OF ALL THE DOCUMENTS GIVEN BY SHRI RAJ KUMAR THARAD INCLUDING BALANCE SHEET PROFIT AND LOSS ACCOUNT, BANK OPENING FORMS, BANK KYC DOCUMENTS, CHEQUES, RTGS/NEFT FORMS AND OTHER NECESSARY DOCUMENTS. Q.13. HAVE YOU EVER RESIGNED FROM ANY COMPANY/CONCERNS? ANS. NO, I HAVE NOT RESIGNED FROM ANY COMPANIES/CONCERNS. Q.14. WHAT WAS THE SOURCE OF FUND OF THESE CONCERNS? AND WHAT WAS THE MOTIVE FOR FORMATION OF THESE COMPANIES/CONCERNS? IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 11 ANS. I CANT EXPLAIN THE SOURCE OF FUNDS OF ALL THESE CONCERNS. HOWEVER, SR I RAJ KUMAR THARAD, BEING THE ACCOMMODATION ENTRY OPERATOR CAN EXPLAIN THE MOTIVES FOR THE SAME. Q.15. ARE YOU AWARE OF THE BUSINESS ACTIVITIES OF THE COMPANIES IN WHICH YOU ARE ONE OF THE DIRECTORS? ANS. SO FAR MY KNOWLEDGE GOES ALL THE CONCERNS OR COM PANIES DO NOT HAVE ANY ACTUAL BUSINESS ACTIVITY AND ARE USED ONLY FOR PROVIDING, ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES. HOWEVER, SHRI RAJ KUMAR THARAD BEING THE ACCOMMODATION ENTRY OPERATOR WILL BE EXPLAINS THE ACTIVITIES FOR THE SAME. Q.16. DO YOU WANT TO ADD/EDOT/ALTER/DELETE/MODIFY ANY PORTION OF THE STATEMENT DEPOSED ABOVE? ANS. I HAVE GONE THROUGH THE ABOVE STATEMENT AND CONFIRM THAT THE SAME HAS BEEN IDENTIFIED COMPLETELY AND EXACTLY AS PER MY INCOME. I HAVE GIVEN THE STATEMENT VOLUNTARIL Y WITHOUT PRESSURES, FEAR OR COERCION AND WITH FULL SATISFACTION. IN CASE I RETRACT FROM THIS STATEMENT, I WILL BE LIABLE FOR PROSECUTION IN ANY COURT OF UNDER THE PROVISIONS OF INDIAN PENAL CODE. B.4.0N THIS BACKGROUND ASSESSEE WAS REQUIRED TO FURNISH DETAILS OF THE ALLEGED PURCHASER COMPANIES FROM WHOM MONEY WAS CLAIMED TO HAVE BEEN RECEIVED AND CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE. IN RESPONSE TO THE NOTICE, ASSESSEE SUBMITTED COPIES OF SHARE APPLICATION FORMS, ROC DETAILS AND IN SOME CASES IN COME TAX PARTICULARS. IT WAS FOUND THAT ALL OF THESE APPLICANTS ARE INCOME TAX ASSESSES AND HAVE BEEN FILING THEIR INCOME TAX RETURN AND RETURNS AS REQUIRED BY THE REGISTRAR OF COMPANIES. BUT ON EXAMINATION OF THEIR PROFIT AND LOSS ACCOUNT AND BALANCE SHEE T, IT WAS FOUND THAT ALL OF THESE COMPANIES ARE ALMOST IDENTICAL. FOLLOWING BROAD INDICATIONS WERE FOUND WHILE ANALYZING THESE COMPANIES: 01. THESE ARE ALL KOLKATA BASED COMPANIES. 02. ALL HAVE HUGE CAPITAL IN THE ACCOUNTS, INVESTED BY SIMILAR TYPE OF KOLK ATA BASED COMPANIES. 03. MOST OF THE CAPITALS OF THE COMPANIES WERE FOUND TO BE INVESTED IN SIMILAR KOLKATA BASED COMPANIES. 04. AGAINST MULTI CRORES RUPEES OF SHARE CAPITAL AND CORRESPONDING INVESTMENTS, NO COMPANY WAS FOUND TO HAVE DISTRIBUTED ANY DIVID END NOR RECEIVED ANY SUCH AMOUNT. 05. ALL THE COMPANIES DISCLOSE SOME PALTRY AMOUNT IN THOUSANDS AS THEIR INCOME AND NATURE OF SUCH INCOME SOMETIME WAS NOT RELATED TO SHARE CAPITAL INVESTMENT. B.5. ON THESE BROAD INDICATIONS, ASSESSEE WAS REQUIRED TO PROD UCE THE DETAILS OF THE PURCHASER COMPANIES AND LETTERS U/S 133(6) WAS ISSUED IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 12 TO THE CLAIMED PURCHASERS. CASH TRAIL WERE TRACKED ON CALLING FOR OF INFORMATION FROM THE BANKS OF THE ASSESSEE AND ITS ALLEGED CREDITORS COMPANIES. ALTHOUGH A MAJOR PART OF THE R EPLIES WERE RECEIVED, THE REPLIES WERE FOUND TO BE NOT COMPLETE AND RATHER FOUND TO BE STEREOTYPED. ANALYSIS OF THE REPLIES OF THE SAID COMPANIES I N THE CASE OF THE ASSESSEE FOR THE A.Y. 2010 - 11 IS MENTIONED BE LOW: I. RUN1CHA MERCHANTS PVT LTD: MR. ABHISET BASU WAS FOUND TO BE ONE OF THE DIRECTOR OF THIS COMPANY WHO HAD GIVEN STATEMENT BEFORE THE INVESTIGATION WING OF THE DEPARTMENT ADMITTING HIS INVOLVEMENT IN PROVIDING ACCOMMODATION ENTRY. ALTHOUGH THIS ASSESSEE WAS REQUIRED TO SUBMIT THE ITS AUDIT REPORT AND SOURCES OF INVESTMENT, NOTHING SPECIFIC WAS REPLIED EXCEPT THE ACKNOWLEDGEMENT OF IT RETURN AND CORRESPONDING PART OF THE BANK LEDGER INDICATING THE TRANSFER OF MONEY. THIS COMPANY WAS FOUND BY THE INVESTIGATION WING OF THE KOLKATA AS A PAPER COMPANY A ND INVOLVED IN THE BUSINESS PROVIDING ACCOMMODATION ENTRY. II. SRIJAN VYAPAR PVT LTD: NO REPLY WAS SUBMITTED BY THIS COMPANY TO THE LETTER U/S 133(6). ON EXAMINATION OF BANK ACCOUNT IT WAS FOUND THAT THIS COMPANY IS ENGAGED IN FINANCIAL TRANSACTION WITH OTHE R PAPER COMPANIES LIKE WINALL VINIMAY PVT LTD AND CONCORD COMMOTRADE PVT. LTD, WHO HAVE MADE INVESTMENT IN SGBL GROUP OF COMPANIES. BOTH OF THESE COMPANIES HAVE BEEN FOUND BY THE INVESTIGATION WING OF THE KOLKATA AS ENGAGED IN ACCOMMODATION ENTRY BUSINESS. III. SIGNET VINIMAY PVT LTD: ALTHOUGH THIS ASSESSEE WAS REQUIRED TO SUBMIT THE ITS AUDIT REPORT AND SOURCES OF INVESTMENT, NOTHING SPECIFIC WAS REPLIED EXCEPT THE ACKNOWLEDGEMENT OF IT RETURN AND CORRESPONDING PART OF THE BANK LEDGER INDICATING THE TRANS FER OF MONEY. THE DIRECTOR OF THIS COMPANY MR. ABHSET BASU WAS FOUND BY THE INVESTIGATION WING OF THE KOLKATA AS A INVOLVED IN THE BUSINESS PROVIDING ACCOMMODATION ENTRY. MR BASU WAS ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY M/S MIDAS CAPITA! PVT LTD. D ETAIL DISCUSSION HAS BEEN MADE IN THIS ORDER. IV. WINALL VINIMAY PVT LTD: ALTHOUGH THIS ASSESSEE WAS REQUIRED TO SUBMIT THE ITS AUDIT REPORT AND SOURCES OF INVESTMENT, NOTHING SPECIFIC WAS REPLIED EXCEPT THE ACKNOWLEDGEMENT OF IT RETURN AND CORRESPONDING PART OF THE BANK LEDGER INDICATING THE TRANSFER OF MONEY. THIS COMPANY WAS FOUND BY THE INVESTIGATION WING OF THE KOLKATA AS A PAPER COMPANY AND INVOLVED IN THE BUSINESS PROVIDING ACCOMMODATION ENTRY. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 13 C . ON THIS B AC K GR OU N D , ASS E SS EE W A S R EQUIR ED TO P R OD UC E TH E D I R ECTORS OF AL L TH E S H ARE APP L ICA NT COM PANIES AS U ND E R : ' DATED, C U TT A CK T H E 7 TH O F N OVE MB E R , 2 01 6. TO, THE MANAG I NG DI RECT OR , MIDAS CAPITAL (P) . L TD R OO M NO.1 G ' T= F L OOR, 11 PO LL OCK STREET, KO L KATA - 700 001 SIR , SUB : AS S ES S M E NT U/S 1 5 3A/ 1 43(3 ) OF THE I N C OME T AX AC T , 1961 FOR THE A . Y RS . 2009 - 1 0 T02015 - 16 - MATT E R R EG ARD I N G. W ITH R EFE R E N CE TO AB OVE YO U ARE INTIM ATED A SS ESS M E NT U / S 15 3A OF TH E IN CO M E T AX AC T , 1961 WAS I NITIA TE D FO R THE ABOV E ASSESSM E NT Y E AR S S UB SE QUENT TO S E AR C H U /S 132 O F THE INCOM E TA X A CT THAT WA S C ONDU C T E D ON 04/08/201 4 IN Y O UR OFFI CE AND BU S IN ESS PR E MI SE S AT CUTTA C K AND TH E RE SIDENTIAL P RE MI SE S OF THE D I RE C TORS A T CUTTA C K . 1. O N V E RIF IC A T ION O F Y OUR BALANCE SHE E T AS ON 3 1 . 03 . 2014 IT IS N O T ICE D TH A T T H E FOLLOWING AMO UNT I S S T AN DI NG A S S HA RE C APIT AL AND S HA RE P RE M I U M . P AID UP SHARE CAPITAL I R S . 1 , 7 1 , 35 , 3 00 .. _. - J , SHARE P RE M IU M I RS . 8,86 , 10 ,0 0 0 . - ; . . : ,. - -- - - 1 TOTAL I RS. 1 0, 5 7,4 5 ,300 _ Y OU A RE HEREWITH R E Q UESTE D YO U FUR NIS H D ETAI L S SO UR CE OF ABO VE S A ID C AP ITAL AN D SHARE PR E MIU M , ALONG WITH TH E EV ID E N C E S I N S UPP ORT OF IDENTITY & CR EDIT W O R T H I NE S S OF S HA RE HOL DER AND GE NUINE NESS OF TH E TRAN S ACTIO N . ON ANALYSIS OF YOUR INVESTMENT THE ABOVE STATEMENT WAS FOUND TO BE TRUE AND IT HAS BEEN FOUND THAT ALL OF YOUR INVESTMENTS IN KOLKATA BASED COMPANIES WERE FINALLY SOLD TO FOLLOWING COMPANIES ON VARIOUS DATES OF THE FINANCIAL YEAR 201 0 - 11 AND 2011 - 12: I} SIGNET VINIMAY PVT . LTD. II] SCOPE VYAPAR PVT: LTD. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 14 III] SANKALP VINCOM PVT. LTD. IV} WINALI VINIMAY PV T . LTD. V} SRIJAN VYAPAR PVT LTD VI) WESTLINE VII) YOGIRAJ 06. THE SALES PROCEEDS WERE INVESTED IN SISTER COMPANIES OF THE GROUP AS LOAN/ADVANCES AND IN FIXED DEPOSITS IN BANKS . THIS TYPE OF OBSERVATIONS HAVE BEEN FOUND IN OTHER COMPANIES OF YOUR G ROUP AND IT HAS BEEN NOTICED THAT P IL ACCOUNT, BALANCE SHEET AND BANK ACCOUNT OF ALL OF YOUR CLAIMED SHARE HOLDERS WERE ANALYZED AND FOUND THAT NO BUSINESS IS BEING RUN BY THEM . THEY ARE ONLY INVOLVED IN RECEIVING INVESTMENT FROM CERTAIN SIMILA R COMPANIE S AND MAKING INVESTMENT AS SHARE CAPITAL IN OTHER COMPANIES . THERE IS NO NORMAL BUSINESS RATIONALE INVOLVED IN SUCH TRANSACTIONS. IN THE ABOVE CONTEXT YOU ARE REQUESTED TO SHOW CAUSE AS TO WHY THE SALES PROCEEDS CLAIMED TO HAVE BEEN RECEIVED FROM THE SALE S OF SHARES S HOULD NOT BE TREATED AS NOT GENUINE AND THUS ARE UNEXPLAINED. YOUR CASE IS FIXED FOR HEARING ON 11/11/2016 AND YOU ARE REQUESTED TO APPEAR ALONG WITH YOUR EXPLANATION ON ABOVE AND ALL THE BOOKS OF ACCOUNT AND DOCUMENTS IN SUPPORT OF YOUR RET URN OF INCOME. YOU ARE ALSO REQUESTED TO BRING THE DIRECTORS OF THE PURCHASER COMPANIES FOR EXAMINATION AT THIS END. YOUR SINCERE CO - OPERATION IS HIGHLY SOLICITED IN THIS R EGARD . ' D: SUBMISSION OF THE ASSESSEE: ' YOUR HONOR HAS BEEN PLEASED TO ISSUE THE A BOVE CITED NOTICE DIRECTING THE ASSESSEE COMPANY TO FURNISH VARIOUS DETAILS SPECIFIED IN THE NOTICE . IN RESPONSE TO THE SAME THE HUMBLE SUBMISSION OF THE ASSESSEE IS AS FOLLOWS . CAPITA L IN TRODUCTION: YOU R HON O UR , T H E A LL EGE D SHAR E CAPITAL O F R S. 10,57 , 4 5 ,3 0 0 W A S N E ITH E R INTRODUC E D N O R RAI SE D DURING TH E A S SESSM E NT YEAR 2 014 - 15 . E V E N TH E AFOR ESA I D C APITAL WA S NOTINTRODU CE D IN ANY OF THE ASS ESS MENT Y E AR S T A RTING FR O M 2 00 8 - 0 9 O N W ARD S. T H E A S S E S S E E C OMPAN Y I S A NON BACKIN G F I NAN CE C OMP A N Y IN CO RP O RAT E D IN TH E YEAR 19 9 5. A S PER TH E BUSIN E S S REQUIR E M E NT TH E CA PIT A L W A S R A IS ED IN D IFF ERE NT YE AR S. BUT A FT ER 31.03 . 20 0 7 TH E RE W AS N O FURTH ER I NT RO DUCTI O N O F CAP ITAL . THIS FA C T WILL B E C LEAR FROM TH E FOLLOWING TABL E . MIDAS CAPITAL PVT LTD. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 15 DETAILS OF CAPITAL INTR ODUCTION 2014 - 15 17135300 88610000 105745300 0 2013 - 14 17135300 88610000 105745300 0 2012 - 13 17135300 88610000 105745300 0 2011 - 12 17135300 88610000 105745300 0 2010 - 11 17135300 88610000 105745300 0 2009 - 2010 17135300 88610000 105745300 0 2008 - 09 17 135300 88610000 105745300 0 2007 - 08 17135300` 88610000 105745300 0 2006 - 07 17135300 88610000 105745300 0 2005 - 06 12755300 49190000 61945300 21100000 2004 - 05 10645300 30200000 40845300 36050000 2003 - 04 3435300 1360000 4795300 F ROM TH E AFO R ES AI D TABL E I S CL E A R THAT TH E LAT ES T INTR O DU C TI O N O F CA PI TA L W A S DURIN G A . Y 20 0 7 - 0 8 . EV EN T H E S AID INTRODU C T I ON OF CAPIT A L WA S VER IFIE D IN CO UR SE OF SC RUTINY A SSESS M E NT , CO P Y O F A SSES S M E N T O R D E R V I S 1 43 ( 3 ) F O R ASST . Y E AR 2 0 07 - 08 AN D AL S O 2 005 - 06 I S E N C L OSE D H E R EWI TH FO R YO U R KIND P E RU SA L . .SINC E TH E R E WA S NO FR E SH INTR O DU C TI O N O F C A PITAL FR O M 01 . 04 . 200 7 ONWARD S TH E R E QUIR ED D ETA IL S R E LA T ING T O I SS U E O F S HAR E CA PI T AL M AY N O T B E REL E VANT FOR PR ESE N T A S SESS M E NT PR OCEED IN G. B. ALLEGED S J A].IJ J JIENT Y O UR H O N O UR , TH E FA CTS STA TED IN TH E 50 C AL LE D STATE M E NT OF R A J KUMAR TH A RAD A N D PR AD E E P GAR G AR E B A S E L ESS AND BEYOND IMA GI NA TIO N . TH ESE AR E N O T AT ALL C ORR EC T . MORE OV ER BOT H T H E P E R SO NS NAMEL Y RAJ KUMAR T HAR A D A ND PR A D EE P GRA G AR E S TRA NGE R T O TH E CO MPAN Y N AMELY MIDAS C A P I TA L PV T : L T D. BOTH MR. THARAD AND GARG ARE NEITHER ANY STAKE HOLDER/SHARE HOLDER NOR DIRECTOR IN THE ASSESSEE COMPANY. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 16 WE FAIL TO UNDERSTAND UNDER WHAT CAPACITY THEY HAVE GIVEN STATEMENT RELATING TO TRANSACTION OF THE COMPANY. WE REQUEST YOUR HONOUR TO PROVIDE A CERTIFIED COPY OF ENTIRE STATEMENT RECORDED FROM MR. THARAD AND GARG, SO AS TO ENABLE THE ASSESSEE TO FILE ITS REPLAY. ALSO WE REQUEST YOUR HONOUR TO PROVIDE AN OPPORTUNITY OF CONFRONTATION WITH MR. THARAD AND GARG FOR NECESSARY CROSS EXAMINATION BY THE ASSESSEE. NEITHER SUNIL GUPTA HAS. EVER SEEN BOTH MR. THARAD AND GARG NOR ANY CASH WAS GIVEN TO THEM . HOWEVER A BRIEF DETAIL REGARDING TAKE OVER IS SPECIFIED HEAR UNDER . THE ASSESSES COMPANY' MIDAS CAPITAL PVT LTD' IS A NON BANKING FINANCE COMPANY INCORPORATED IN THE YEAR 1995. COPY OF MASTER DATA IS ENCLOSED HEREWITH . SINCE THIS IS A NBFC THE REQUIRED REGISTRATION FROM RESERVE BANK OF INDIA HAS ALSO OBTAINED ON DT . 10/07/2003 . COPY OF RBI REGD. CERTIFICATED ENCLOSED H EREWITH . THE COMPANY WAS CARRYING ON ITS BUSINESS AS PER LAW SINCE IS INCORPORATION . TAKEOVER , ACQUISITION, MERGER ARE VERY COMMON PART OF CORPORATE BUSINESS . VARIOUS STATUTORY AUTHORITIES OF GOVT . OF INDIA ARE DULY REGULATING AFORESAID ACTIVITIES . A DE FINITE PROCEDURE WAS ALSO THERE IN COMPANIES ACT FOR SUCH TAKEOVER , MERGER ETC . AS PER THE SAID PROCEDURE, SCBL CROUP I . E SRINIWAS G UPTA AND FAMILY HAS ACQUIRED THE COMPANY IN THE YEAR 2010 . BESIDE THE OTHER LEGAL PROCESS THERE WAS ALSO ONE NEWS PAPER AD VERTISEMEN T ON 20/04/2010 IN THE FINANCIAL EXPRESS, KOLKATA EDITION AND ALSO IN ONE LOCAL N E W S PAPER ON THE SAME DATE, REGARDING TAKEOVER OF THE COMPANY AND OBJECTIONS IF ANY AR E INVITED FROM INTERESTED PERSONS. EVEN AFTER TAKEOVER THE ORIGINAL PROMOTER D IRECTOR MR . RA; KUMAR FITKORIWALO APPOINTED FROM 06 . 04.1995 IS STILL CONTINUING, AS DIRECTOR IN THE COMPANY. PRAYER IN VIEW OF THE ABOVE PARTICULAR FACTS, THE CERTIFIED COPY OF THE ENTIRE STATEMENT MAY KINDLY BE PROVIDED TO THE ASSESSEE FOR NECESSARY RE P/AY. MORE OVER A COMMON SUBJECTIVE STATEMENT OR A GENERAL REP/AY FROM ASSESSEE MAY NOT BE RELEVANT: FOR ASSESSMENT PROCEEDING U/S 153(A) HENCE ANY TRANSACTION BASED ON ANY INCREMENTING SEIZED MATERIAL MAY KINDLY BE COMMUNICATED TO THE ASSESSEE FOR NECESSA RY COMPLIANCE . ' IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 17 NO SPECIFIC REPLY WAS RECEIVED FROM THE ASSE S SEE EXCEPT SUBMITTING THAT THE S H A RE APPLICATION MONEY WAS RECEIVED FROM THE COMPANIES HAVING GENUINE ROC DETAILS AND THE MONEY HAS BEEN BOTH TRANSFERRED AND RECEIVED THROUGH BANKING CHANNEL . NO DIRECTOR OF THE SHARE PURCHASER COMPANY WAS PRODUCED FOR EXAMINATION. IN THE WRITTEN SUBMISSION , ASSESSEE MENTIONED CITATIONS OF THE HON'BLE COURTS AND TRIBUNALS TO SUBSTANTIATE HIS CLAIM. D. 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 GENUINE. UNDER SECTION 68 THE ONUS IS ON THE ASSESSEE TO PROVE THE THREE INGREDIENTS,I.E . , IDENTITY AND CREDITWORTHINESS OF THE PERSON FROM WHOM THE MONIES WERE TAKEN AND THE GENUINENESS 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. AS TO HOW THE ONUS CAN BE DISCHARGED WOULD DEPEND ON THE FACT S AND CIRCUMSTANCES OF EACH CASE. IT IS EXPECTED OF BOTH THE SIDES - THE ASSESSEE AND THE ASSESSING AUTHORITY TO ADOPT A REASONABLE APPROACH. THIS VIEW HAD BEEN TAKEN IN THE CASE OF CIT V MI5 NIPUN BUILDERS &. DEVELOPERS PVT . LTD. 30 TAXMANN . COM 292 (DELHI )[2013] . THE ASSESSEE WAS A PRIVATE LIMITED COMPANY, WHICH CANNOT ISSUE SHARES IN THE SAME MANNER IN WHICH A PUBLIC LIMITED COMPANY DOES . IT HAS TO GENERALLY DEPEND ON PERSONS KNOWN TO ITS DIRECTORS OR SHAREHOLDERS DIRECTLY OR INDIRECTLY TO BUY ITS SHARES . ONCE THE MONIES ARE RECEIVED AND SHARES ARE ISSUED, IT IS NOT AS IF THE SHARE - SUBSCRIBERS AND THE ASSESSEE - COMPANY LOSE TOUCH WITH EACH OTHER AND BECOME INCOMMUNICADO. CALLS DUE ON THE SHARES HAVE TO BE PAID; IF DIVIDENDS ARE DECLARED , THE WARRANTS HAV E TO BE SENT TO THE SHAREHOLDERS. IT IS CONTINUING RELATIONSHIP. THE ENTIRE TRANSACTION IS PRE - ARRANGED AND THE ASSESSEE COMPANY IS ALSO A PARTY TO THAT . THE SHARE - SUBSCRIBERS IN THE PRESENT CASE HAVE EACH INVESTED SUBSTANTIAL AMOUNTS IN THE ASSESSEE ' S S HARES AS WELL AS IN ITS GROUP COMPANIES. ALL OF THEM ARE THEMSELVES PRIVATE LIMITED COMPANIES. THE ASSESSEE - COMPANY RECEIVED THE SHARE MONEY; WHEN IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 18 THE ASSESSEE WAS REQUESTED TO PRODUCE THE DIRECTORS OF THE SUBSCRIBER COMPANIES, ASSESSEE DID NOT COMPLY . SO FAR AS CREDITWORTHINESS OF THE SHARE SUBSCRIBERS IS CONCERNED, MERE FURNISHING OF THE COPIES OF THE BANK A CCOUNTS OF THE SUBSCRIBERS IS NOT SUFFICIENT TO PROVE THEIR CR E D I TWORTH I NES S . THERE MUST BE SOME POSITIVE EVIDENCE TO S HOW THE NATURE AND SOURCE OF TH E RESOURCES OF THE SHARE SUBSCRIBER H I MSEL F . I F THE ASSESSEE WA S SE RIOUS ENOUGH TO ES T A B L ISH ITS CASE, I T OUGHT TO HAVE PRODUC E D THE PRINCIPAL O F FICER S OF THE SUB S CRIBI NG C OMPANIE S B E F O RE TH E AS S E SSING OFFIC E R SO THAT THEY COULD EXPL A IN THE S OURCES FROM WH I C H T HE S HARE - SUBSCRIPTION WA S MADE. TH A T WOULD ALSO H A VE TAKEN CAR E OF TH E DIFFICULTY OF TH E AS SESSEE IN PR O VING T HE CREDITWORTHINES S OF THE SUB S CRIBER COMP A NI ES. THI S VIEW HAD BE EN TA KEN IN THE CA SE O FCIT V IS M I S NIPUN BUILD E R S & DEVELOPER S PVT . LED . 3 0 TA X M A NN.COM 29 2 ( D E LHI) [201 3 ]. HOW E V E R, THERE WAS NO COMPLI A NCE ON THE PART OF TH E AS SES S E E COMP A N Y I N THIS RESPECT TOO AND C E RTAINLY IT DID NOTHING WORTHWHILE TO DISCHARG E THE ONUS TO PROVE THE C REDITWORTHINE SS OF THE SHAR E APPLICATION MONEY . IT WAS, I N THE A SS E SSEE ' S OWN INTERE S T T O H AV E ACTIVELY PARTICIP A T E D A ND COOPERATED ' IN THE A SSESSMENT PR O C EE DINGS AND COMPLI E D W ITH THE DIRECTION OF THE AO T O PRODUCE TH E PRIN CI PAL OFFICERS OF TH E S UB SC RIB I NG COMPAN IES. M E RE FURNISHING OF THE B A NK STATEMENT S OF T H E SH A RE SUBSCRIBER S W ITHOUT ANY EXPLANATI O N F O R THE DEPOSITS I N TH E ACCO UNT S MAY NOT MEET THE R EQUIREMENTS O F SE CTI O N 68 . THE ASS ESSEE I S A PRI VAT E L IM I T E D C O MPANY . THE SALES CONSID E R A TI O N AGAINST S H ARE WAS R EC EIVED THR O U GH P RIV ATE PLA C EM EN T . E VID ENC E IS ON R E C OR D S I N THE S HAPE OF INCOME TAX R E TURNS A ND B ANK STA T E MENT S OF SOME OF THE PURCHASERS, SUBM ITT ED DURING THE COURS E OF SCR UT I NY A SSESSM E NT , T O S H O W THAT THE SE C OMP A NIE S H A D VE R Y MEAG ER A ND IN S IGNIFIC A NT I N C O M E. IT I S A L S O O N R ECO RD THAT I N MO S T OF TH E C A SES, THE AMOUNT S W ERE DEPOSITED I N TH E A C CO UNT EITHER ON TH E S AME DAY OR A DAY BEFORE TH E ISSUE OF CH E QUE TO THE ASSESSEE. THOUGH TH E ASSESSEE COULD OBTAIN THEIR ROC DETAILS, THE PARTIES COULD NOT BE PRODUCED BEFOR E THE UNDERSIGNED DURING THE ASSESS MENT PROCEEDING FOR REASON S B ES T KNOWN TO THE ASSESSE E C O MPANY. THU S , I T CA NNOT B E SAID TH A T T H E R E WAS STRONG INDI CA TIO N TH A T THE SO - C A L LED PURCHASERS O F SHARE WERE MER E PAPER ENT IT IES AND DID N OT H A VE THE R EQUISITE CAPACIT Y T O A DV A N C E TH E IM P UGNED A MOUNT S. T HE F A CT THAT THE IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 19 COMPANIES W HI C H SUBSCR I BED T O TH E SHAR E S WERE B O RN E ON T HE FILE OF TH E ROC IS AGA I N A NEUTR A L FACT . E VERY COMP ANY I NCORPORATE D UND ER TH E COMP A N I ES A CT , 1 9 56 H A S TO C O MPLY W IT H S T A TUT O R Y FORMALIT I ES . T HAT THE S E CO MP AN I E S WE RE C OMPL Y ING W ITH S U C H F O RM A LITIES DOES N O T A DD A N Y CREDIB I LIT Y O R EVI DENTI A R Y VALUE. IN ANY C A SE , I T DOE S N OT IP SO F AC T O P R OVE TH A T TH E T R A N SAC TI O NS ARE GENUIN E. T H E M E RE F ACT THAT T H E TR A N S ACTI O NS WE R E E NT E RED INTO BY WAY OF ACCOUN T PAYE E CHEQU ES I S A L S O N O T CO N C L US I VE A ND CA NNOT BE H E L D T O B E SAC ROSANC T . THE TRANSACTIONS THOUGH APPARENT WERE HELD TO BE NOT REAL ONE . MAY B E TH E M O NE Y CAM E B Y WAY OF B AN K CH EQ UES AND PAID T H R O U G H T HE P ROC E S S OF B AN KING T R A N SA C T I O N BUT T HA T ITSELF I S O F NO CONSE Q UEN CE . T HE SA ME V IE W HA D BEE N ADO P T ED I N THE C AS E OF : TH E HO N BL E D ELHI H I GH CO URT H AS C ITE D THE CASE O F CLT VS DURQA PRASAD MORE (1971) 82 ITR 540 A ND STATE D T HAT: - ' I T I S TRUE THAT T H E APPARENT MU S T BE C ONSID E RED R EA L U NTIL I T IS S HOWN THAT TH E RE A RE R E A S ONS TO B E L I EVE THAT T HE APPARENT IS NOT TH E REAL. IN A CASE OF T H E PR ESE NT KIND A PARTY WHO R E LIES O N A REC I T A L I N A DEED H A S T O ES T A BL IS H T H E T R U T H O F T HO SE RE C ITALS, OTHERW I SE I T WILL B E VERY EASY TO M AKE SE LF - SERV IN G STA T E M E N TS I N D OCU M E N TS E ITH E R EXEC U TED OR T OKEN BY A PAR TY AND R E L Y ON THO SE RECITAL S . I F ALL THAT A N AS S ES S EE W H O WA NT S TO EVADE T A X IS T O HAVE S OME RE C ITALS MADE IN A D O CUMEN T EI TH ER EXEC UT ED BY HI M OR EXEC UT E D IN HI S FAVOUR TH E N THE DOOR WI LL BE L E FT W ID E O PE N TO E VAD E TAX . A LITTL E PR O BIN G W A S S UFFI C I EN T IN TH E P R ESE N T CASE T O SH O W THAT T H E A PPARE NT W A S N O T TH E R EA L . TH E TA X IN G AUTH O RITI ES W E RE NOT R EQU I RED T O PUT O N B LINK ERS W H I L E LOOK I NG AT THE DOCUMENTS PRO DU C E D BEFORE THE M . TH EY W E RE ENTITL E D TO LOOK INTO THE SURR O UNDING CIRCUM S TANCES T O FI ND O U T T H E R EA LI TY OF TH E R EC I T AL S MADE I N THOS E DO C U ME N TS . ' SECTION 68 PER MIT S TH E ASSE SS ING OFFIC E R TO A DD THE CREDIT A PP EA RING IN THE BOOKS OF ACCO UNT OF T HE ASSES S E E IF T H E L A T TER OF F ERS N O E XP LA N A TION REGAR D ING T H E N A TUR E AND S OURCE OF T H E CRE D IT OR T H E EX P LA N A TI O N O FFE RE D IS N OT SA TI SFAC TOR Y . WHERE AN ASSESSEE FA ILS TO P ROVE S A T IS F AC TOR ILY TH E SO U RC E AND N A TURE O F C E RT A IN A MOUNT O F CREDI T DUR ING THE ACCO UN TING YEA R , TH E IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 20 INCOME - TA X OF F IC E R IS ENTITLED TO DRAW TH E INFER E N C E THAT THE RE CE IPT ARE OF AN ASSES SA BLE N A TU R E. TH I S VI EW WAS A DOPTED IN T H E C ASE O F A . GO V INDARAJULU MU DA LI A R V. C LT (1 95 8 ] 3 4 L T R 807 . TH E ASSE SS EE CO MPAN Y W A S G IV E N OPPORTUN ITY TO P RO DU C E T H E DI REC TOR S OF T H E S UB SC R I BE R CO MPAN IES IN ORD ER T O EXAM IN E TH E M O N OATH . IN TH E CA S E OF SUMATI DAYAL V. C IT [1 99 5] SUPP. (2) SCC 4 5 3 T H E H O N'BL E APEX CO URT H EL D T H A T: ' .. . IN ALL C A SES IN WHIC H A R ECE IPT I S S OU G HT T O B E T AXED AS I N CO M E, THE BU R D E N LIE S O N TH E DEPARTME N T TO PRO VE THAT IT I S WITHIN TH E TAXING PROVISION AND I F A R EC E IP T I S IN THE NATURE O F I N CO M E, T H E B U RD E N OF PR OV ING THAT IT I S N OT T A XA BL E BE C AUS E I T FALL S W I THI N E XE MPTION PRO V I DE D B Y T H E ACT L IE S UPON THE A SSES S EE . BU T , IN VIEW OF S EC T ION 6 8 OF T HE AC T , WHERE , A N Y S UM I S FOU N D CREDI T ED I N T H E BOOKS OF TH E AS S ESSEE FOR AN Y PR E V I OUS YE AR T HE SA M E MAY B E C H ARGE D TO IN CO M E TAX AS THE 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 AO, 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. 11. AFTER GOING THROUGH T HE DECISIONS OF HONBLE COURTS AND TRIB UNALS AS FURNISHED BY THE ASSESSEE, THE A SSESSING OFFICER OBSERVED THE SAID CITATIONS ARE NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT ASSESSEE. THE A SSESSING OFFICER , THEREFORE, IN THE LIGHT OF THE FACTS OF THE CASE AND AFORESAID EXPOSITIO N 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. 9,94,50,000 / - FOR THE ASSESSMENT YEAR 2011 - 12 AND RS. 15 ,00,000/ - FOR THE ASSESSMENT YEAR 2012 - 13 SHOWN AS ADVANCE IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 21 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. 12. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION BY OBSERVING AS UNDER: 8.3 I HAVE CAREFULLY EXAMINED THE ASSES SMENT ORDER AND SUBMISSIONS OF THE APPELLANT. I FIND THAT AN AMOUNT OF RS. 9,94,50,000/ - WAS RECEIVED FROM THE PERSONS MENTIONED ON PAGE - 2 OF THE ASSESSMENT ORDER. THE ONUS TO PROVE BONAFIDES OF THESE TRANSACTIONS AND OF ALL THE PERSONS CONCERNED IS SQUARE LY 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. TH E APPELLANT COULD NOT PRODUCE EVEN A SINGLE PERSON. IT IS ALSO SEEN FROM THE PAGE - 3 OF ASSESSMENT ORDER THAT EARLIER SHARE HOLDERS HAD PURCHASED THE SHARES OF THE APPELLANT AT RS. 100/ - . THESE SHARES HAVE BEEN PURCHASED BY THE GROUP COMPANIES OF THE APPELL ANT FOR RS. 5/ - AND AT A TOTAL CONSIDERATION OF RS. 55,00,000/ - ON 22.05.2010 I.E. IN THE SAME FINANCIAL YEAR. NATURALLY THIS HAS BEEN DONE TO EXERCISE COMPLETE CONTROL OVER THE UNACCOUNTED MONEY OF RS, 9,94,50,000/ - WHICH HAS BEEN ROUTED THROUGH THE BANKI NG CHANNELS. THE ASSESSING OFFICER HAS GIVEN A COPY OF STATEMENTS OF ENTRY OPERATORS TO THE APPELLANT. 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 A ND IDENTITY/CREDITWORTHINESS OF SUCH CREDITORS RESTS ON THE APPELLANT, WHICH HAS NOT BEEN DISCHARGED BY THE APPELLANT. 8.4 SIMILAR CASE HAD COME UP BEFORE HON'BLE HIGH COURT OF JUDICATURE AT BOMBAY IN INCOME TAX APPEAL NO. 18/2017 IN THE CASE OF SANJAYA JAIN, LEGAL HEIR OF SHANTIDEVI JAIN VRS PCIT, NAGPUR. IN THIS CASE THE SHARES PURCHASED AS LOWER RATE AS RS. 5.5 PER SHARE AND RS. 4/ - PER SHARE WERE SOLD AT ASTRONOMICAL SUM OF RS. 486.55 AND RS. 485.65. HON'BLE HIGH COURT HAS DISBELIEVED THIS TRANSACTIO N AND HAS HELD THAT IT IS NOT GENUINE. THE RELEVANT PORTION IS REPRODUCED BELOW: ON HEARING THE LD COUNSEL FOR THE ASSESSEE AND ON A PERUSAL OF THE ORDERS OF THE INCOME TAX AUTHORITIES, IT APPEARS THAT THERE IS NO SCOPE FOR INTERFERENCE WITH THE SAID ORD ERS IN THIS APPEAL. BY REFERRING TO THE AFORESAID FACTS, WHICH ARE NARRATED IN TH E EARLIER PART OF THIS ORDER,, THE AUTHORITIES FOUND THAT THE ASSESSEE HAD MADE INVESTMENT IN TWO UNKNOWN COMPANIES OF WHICH THE IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 22 DETAILS WERE NOT KNOWN TO HER. IT WAS HELD T HAT THE TRANSACTION OF SALE AND PURCHASE OF SHARES OF TWO PENNY STOCK COMPANIES, THE MERGER THE TWO COMPANIES WITH ANOTHER COMPANY, VIZ. KHOOBSURAT LIMITED DID NOT QUALIFY AN INVESTMENT AND RATHER IT WAS AN ADVENTURE IN THE NATURE OF TRADE. IT WAS HELD BY ALL THE AUTHORITIES THAT THE MOTIVE OF THE INVESTMENT AND RATHER IT WAS AN ADVENTURE IN THE NATURE OF TRADE. IT WAS HELD BY ALL THE AUTHORITIES THAT THE MOTIVE OF THE INVESTMENT MADE BY THE ASSESSEE WAS NOT TO DERIVE INCOME BUT TO EARN PROFIT. BOTH THE BRO KERS, I.E. THE BROKER THROUGH WHOM THE ASSESSEE PURCHASED THE SHARES AND THE BROKER THROUGH WHOM THE SHARES WERE SOLD, WERE LOCATED AT KOLKATA AND THE ASSESSEE DID NOT HAVE AN INKLING AS TO WHAT WAS GOING ON IN THE WHOLE TRANSACTION EXCEPT PAYING A SUM OF RS. 65,000/ - IN CASH FOR THE PURCHASE OF SHARES OF THE TWO PENNY STOCK COMPANIES. THE AUTHORITIES FOUND THAT THOUGH THE SHARES WERE PURCHASED BY THE ASSESSEE AT RS. 5.50 PS PER SHARE AND RS.4/ - PER SHARE FROM THE TWO COMPANIES IN THE YEAR 2003, THE ASSESSE E WAS ABLE TO SELL THE SHARES JUST WITHIN A YEARS' TIME AT RS. 486.55 PS AND RS. 485.65 PS PER SHARE. THE BROKER THROUGH WHOM THE SHARES WERE SOLD BY THE ASSESSEE DID NOT RESPOND TO THE ASSESSING OFFICER'S LETTER SEEKING THE NAMES, ADDRESSES AND THE BANK A CCOUNTS OF THE PERSONS THAT HAD PURCHASED THE SHARES SOLD BY THE ASSESSEE. THE AUTHORITIES HAVE RECORDED A CLEAR FINDING OF FACT THAT THE ASSESSEE HAD INDULGED IN A DUBIOUS SHARE TRANSACTION MEANT TO ACCOUNT FOR THE UNDISCLOSED INCOME IN THE GARB OF LONG TERM CAPITAL, GAIN. WHILE SO OBSERVING, THE AUTHORITIES HELD THAT THE ASSESSEE HAD NOT TENDERED COGENT EVIDENCE TO EXPLAIN AS TO HOW THE SHARES IN AN UNKNOWN COMPANY WORTH RS. 5/ - OF A LITTLE KNOWN COMPANY WOULD JUMP FROM RS. 5/ - TO RS.485/ - . THE FINDINGS RECORDED BY THE AUTHORITIES ARE PURE FINDINGS OF FACTS BASED ON A PROPER APPRECIATION OF THE MATERIAL ON RECORD. WHILE RECORDING THE SAID FINDINGS, THE AUTHORITIES HAVE FOLLOWED THE TESTS LAID DOWN BY THE HON'BLE SUPREME COURT AND THIS COURT IN SEVERAL DECISIONS. THE FI NDINGS DO NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. ' 8.5 IT IS MY CONSIDERED FINDING THAT THE APPELLANT HAS FAILED TO PROVE THE GENUINENESS OF THE CREDITS OF RS. 9,94,50,000/ - AND IDENTITY/CREDITWORTHINESS OF THE CREDITORS. THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 9,94,50,000/ - IS CONFIRMED AND THE GROUND OF APPEAL IS D ISMISSED. 13. SIMILARLY, FOR THE ASSESSMENT YEAR 2012 - 13, THE CIT(A) CONFIRMED THE ADDITION OF RS.15,00,000/ - ON THE SAID FINDINGS AS GIVEN IN ASSESSMEN T YEAR 2011 - 12. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 23 14 . BEFORE US, THE AR OF THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS, WHICH READS AS UNDER : - THE FOLLOWING COMBINED SUBMISSION IS BEING MADE BEFORE YOUR HONOURS FOR THE A.YS 20 11 - 12 AND 201 2 - 1 3 AS THE ISSUE INVOLVED IN BOTH THE APPEA LS IS IDENTICAL. THE FOLLOWING SUBMISSION IS MADE AGAINST THE ASSESSMENT ORDER DATED 28.12.2016 FOR THE A.Y. 2011 - 12 AND 2012 - 13 PASSED BY THE AO U/S.153A OF THE I.T.ACT, WHEREIN, THE AO HAS ASSESSED AN INCOME OF RS. 10,04,06,200/ - AND RS.36,90,640/ - (UNDE R MAT PROVISIONS) RESPECRTIVELY, AS AGAINST RETURNED INCOME OF RS.9,56,200/ - AND RS.21,90,640/ - (UNDER MAT PROVISIONS) FOR BOTH THE YEARS. THE ADDITION OF RS. 9,94,00,000/ - AND RS.15,00,000/ - FOR THE SAID A.Y. 2011 - 12 AND 2012 - 13 HAS BEEN MADE BY THE ID. A .O. U/S 68 OF THE ACT BY ALLEGING THAT THE SAID SALE PROCEEDS CREDITED IN THE BOOKS OF THE APPELLANT COMPANY WAS UNEXPLAINED AND THUS NOT GENUINE. IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] THE LD. CIT(A) HAS VIDE HIS ORDER DAT ED 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. TH E ASSESSEE IS A PRIVATE LIMITED COMPANY INCORPORATED IN THE YEAR 1995 HAVING REGISTERED OFFICE AT POLLOCK STREET, KOLKATA - 7000001. 2. FOR AY 20 11 - 12 , THE ASSESSEE HAS FILED THE INCOME TAX RETURN U/S 139(1) ON 2 9 - 09 - 2012 DECLARING THE INCOME OF RS.9,56,200 / - AND FOR A.Y. 2012 - 13, THE RETURN WAS FILED ON 27.9.2012 DECLARING THE INCOME OF RS.2,95,840/ - . IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 24 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 C OURSE 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 TA LLY 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 AND NOTICE U/S.153A FOR BOTH THE YEARS ON 19.2.2016 DECLARING THE SAME INCOME AS DECLARED IN THE ORIGINAL RETURN OF INCOME. 5. NOTICE U/S 143(2) AND 142(1) WAS SERVED ON THE ASSESSEE COMPANY. THE ASSESSEE COM PLIED 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 SEIZED MATERIAL FOUND DURING THE COURSE AGAI NST 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 C ASE.HE FURTHER HELD THAT THE ASSESSEE COMPANY IS NOT ABLE TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE PROCEEDS OF RS.9,94,50,000/ - AND RS.15,00,000/ - ON SALE OF INVESTMENT IN SHARES CREDITED IN THE BOOKS IN A.Y. 2011 - 12 AND A.Y. 2012 - 13 RESPECTIVELY IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 25 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 YOUR GOODSELF . IN VIEW OF THE SAME, THE ASSESSEE HEREBY MAKES THE FOLLOWING SUBMISSION BEF ORE 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 BY THE ASS ESSEE , IT IS STATED THAT SEARCH CONDUCTED ON THE ASSESSEE ON 6.8.2014 WAS CONDUCTED BY THE INESTIGATION 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 TRAINI NG COLLEGE, SAHEBJAA BAZAR, NEEM CHOWN, CUTTACK. THE NAMES OF EIGHT INDIVIDUALS OF THE FAMILY WERE COVERED BY THE SAID PANCHANAMA. THE SAID PANCHANAMA DATED 6.8.2014 WAS DRAWN 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 CITY PROJECTS LUCKNOW P.TD. LUCKNOW (VI SHREE CHAKANAYAN AGRO (VI I) SHREE CHAKANAYAN TRADELINK LIN (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 29 - 42 OF THE PAPERBOOK FOR AY 201 1 - 12. . IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 26 IN THE SAID SEARCH PREMISES, CERTAIN T ALLY ACCOUNTS ALL FORMING PART OF THE REGULAR ACCOUNTS OF THE ASSESSEE COMPANY WERE FOUND. ALL THESE ACCOUNTS WERE VERY MUCH THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE, ALL DULY RECORDED AND DISCLOSED AS SUCH IN THE REGULAR BOOKS OF ACCOUNTS AND COVERED IN THE RETURNS FILED U/S 139(1) OF THE ACT. 1 .2 AS SEEN FROM ABOVE, ALONG WITH OTHER NAMES, THE NAME OF THE ASSESSEE COMPANY ALSO APPEARED ON THE SAID PANCHNAMA. BASED PURELY UPON THE SAID PANCHANAMA, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, NOTICE U /S 153A OF THE ACT WAS INITIATED FOR THE A.Y. 11 - 12 AND 12 - 13, BOTH OF WHICH WERE COMPLETED ASSESSMENT YEARS AND NO PROCEEDINGS WERE PENDING. NOTICE DATED 10.9.2015 U/S.153A OF THE ACT WAS ISSUED TO THE ASSESSEE. PLEASE NOTE THAT THERE WAS NO SEARCH PROCE EDINGS CONDUCTED AT THE REGISTERED OFFICE OF ASSESSEE COMPANY AT ROOM NO.1, G, 1 ST FLOOR, 11, POLLACK ST. KOLKATA - 700001, WEST BENGAL. THE ASSESSEE COMPANY HAS NO OTHER OFFICE. THUS, ON NO BASIS WHATSOEVER, IN AN AUTOMATIC MANNER, WITH AN ABSOLUTE PREDET ERMINED 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 PROCEEDI NG U/S 153A OF THE ACT WAS INITIATED ON THE ASSESSEE COMPANY. ASSESSMENT PROCEEDINGS WERE INITIATED AND NOTICE U/S 142(1) AND 143(2) OF THE ACT FOR THE A.Y. 11 - 12 AND 12 - 13 IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 27 WERE DULY SERVED ON THE APPELLANT ALONGWITH DETAILED QUESTIONNAIRE. IT IS HERE AGA IN MENTIONED BY THE ASSESSEE THAT THE SAID NOTICES CONTAINED NO REFERENCE TO ANY INCRIMINATING SEIZED MATERIAL AND TO NO ADVERSE FINDING IN THE CASE OF THE ASSESSEE WHICH RESULTED OUT OF THE ALLEGED SEARCH CONDUCTED ON THE APPELLANT COMPANY. ALL THE QUEST IONS RAISED IN THE SAID QUESTIONNAIRE RELATED TO MATTERS OF REGULAR ASSESSMENT WHICH WERE ALL DULY COMPLETED AND NO PROCEEDINGS WERE PENDING. THE SAID NOTICES U/S.142(1) OF THE ACT ARE ALSO ENCLOSED FOR YOUR REFERENCE AT PAGES 47 - 49 OF THE PAPER BOOK FOR A.Y. 2011 - 12. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS ALSO HAD DULY 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 153 A NOT BEING BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, THE SAID ASSESSMENT PROCEEDINGS WERE INVALID AND ILLEGAL. 2. NOW AT THIS JUNCTURE, BEFORE GOING ON TO THE PARTICULAR DETAILED FACTS OF THE ADDITIONS, IT IS FIRST RELEVANT TO DISCUSS THE SCOP E OF SECTION 153A OF THE ACT. 2 .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, SECTION 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.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 28 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (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 MA NNER 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 INCOM E 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 AS SESSMENT 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 IN ITIATION 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 AN Y 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.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 29 WITH EFFE CT 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 ASSESSMENT YEAR UNDER THIS SECTION, T HE 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 AS 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 MUST 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, IT IS THE LAW OF LAND. 2 .2 GOING B RIEFLY INTO THE HISTORY OF THE LEGISLATIONS IN RELATION TO SEARCH PROCEEDINGS AND ASSESSMENTS, IT IS IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 30 STATED THAT SINCE THE COMMENCEMENT OF THE INCOME TAX ACT, 1961 THERE WAS NO SEPARATE PROCEDURE FOR ASSESSMENT OF SEARCH CASES. 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 REOPENED HAVING RECOURSE TO THE PROVISI ON OF SECTION 147 OF THE ACT. HOWEVER A PROVISIONAL ORDER U/S 132(5) USED TO BE PASSED FOR RELEASE OF SEIZED ASSETS. 2 .3 THEREAFTER, WITH EFFECT FROM 1ST JUNE 1995, SCHEME OF BLOCK ASSESSMENT IN SECTION 158BC AND 158BD AS PER CHAPTER XIVB OF THE ACT WAS IN TRODUCED. 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 SEIZED DOCUMENTS ONLY. THERE WAS NO SC OPE 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 DISPUTES WERE SETTLED BY VARIOUS JUDGME NTS 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 IN CHAPTER XIV FOR POST SEARCH ASS ESSMENT 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 BLOCK PERIOD WERE INTRODUCED FOR AVOIDANCE OF DISPUTES, EARLY FINA LIZATION OF SUCH ASSESSMENTS AND REDUCTION IN IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 31 MULTIPLICITY OF PROCEEDINGS. HOWEVER, SINCE THERE WERE PARALLEL PROCEEDINGS, NAMELY, REGULAR ASSESSMENT PROCEEDINGS AS WELL AS ASSESSMENT OF BLOCK ASSESSMENTS FOR UNDISCLOSED INCOME 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 PROPOSED TO BE INTRODUCED. 2 .4 THE FINA NCE 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, SPECIFY 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 SEARCH 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 IMMEDIATELY PRECEDING THE ASSESSMENT YEA R RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A. 3 . NOW EXPLAINING THE SPECIFIC PROVISIONS OF THE SECTION 153A OF THE ACT, IT IS STATED THAT FROM THE PLAIN READING OF THE RELEVANT SEC TION IT WOULD SUFFICE THAT SECTION 153A WOULD BE APPLICABLE WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A OF THE ACT AFTER IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 32 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, PANCHANAMA 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. 3 5.1 IT IS CLEARLY INSCRIBED IN THE LAW THAT AN ASSESSMENT 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, SUC H GENERALLY INCRIMINATING DOCUMENTS OR PAPERS ETC. OR UNACCOUNTED ASSETS ARE FOUND. 3 .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 CONTRADICTION OF THE SECOND PROVISO, PA RTICULARLY 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 LEGISLATURE. 3 .3 THE PROVISION OF SECTIO N 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 THUS NO RETURN IS REQUIRED TO BE FI LED 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 IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 33 REASSESS THE TOTAL INCOME OF EACH 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. 3 .4 EXPLAINING THE SECOND PROVISO OF THE SECTION, IT IS STATED THAT THE SECOND PROVISO PR OVIDES 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 SAME IS PENDING, THEN THE PENDING P ROCEEDINGS 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 PARTICULAR YEAR OF THE SAME PERSON, I.E ., ONE AS REGULAR ASSESSMENT AND ANOTHER AS ASSESSMENT U/S 153A OF THE ACT. 3 .5 THE WORD ''ABATEMENT IS REFERABLE TO SOMETHING, WHICH IS PENDING ALIVE, OR IS SUBJECT TO DEDUCTION. THE ABATEMENT REFERS TO SUSPENSION OR TERMINATION OF THE PROCEEDINGS EITHE R 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. 3 .6 THE WORD PENDING OCCURRING IN THE SECO ND 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 REASSESSMENT PROCEEDINGS ARE LIABLE TO ABATE. IN OTHER WORDS, ASS ESSMENTS WHICH ARE NOT PENDING I.E. COMPLETED ASSESSMENTS AS ON THE DATE OF SEARCH WOULD HOLD THEIR BASE AND WOULD NOT ABATE. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 34 3 .7 THUS WHAT EMERGES IS THAT ONLY PENDING ASSESSMENTS AS ON THE DATE OF SEARCH SHALL ABATE. THE LEGISLATURE IS CLEAR THAT ANY APP EAL, 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 CONTINUE 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 AND HAS BECOME FINAL. 3 .8 IT IS I MPORTANT 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 THE 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 DEALS WITH SEARCH CASES AND THEREFO RE, THE CONCEPT OF UNDISCLOSED INCOME U/S 132( 1 )(C) WILL COME INTO PLAY. 3 .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 15 3A IS NOT MEANT TO UNSETTLE THE INCOME SHOWN IN THE REGULAR RETURN IN RESPECT 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 ASSESSMENTS. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 35 THEREFORE, IN PROCEEDING S 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. 3 .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 REFERENCE TO THE VALUABLE ARTICLES O R 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 INCOME 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 DISTURBED. 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 PERSON. THEREFORE, A SEARCH PUTS IN MOTION THE PROCESS OF ASSESSMENT OF THE UNDISCLOSED INCOME OF A TAX PAYER WHICH IS NOT DISCLOSED TO THE DEPARTMENT BEFORE THE IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 36 DATE OF SEARCH. THUS SECTION 153 A IS LIMITED TO THE ASSESSMENTS OF INCOME WHICH ARE DISCOVERY OF SEARCH. 3 .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 CAS E OF PENDING ASSESSMENTS AND REASSESSMENTS SHALL BE MADE IN RESPECT OF COMPLETED ASSESSMENTS WHERE INCRIMINATING MATERIAL IS FOUND. 4 . HAVING UNDERSTOOD THE LEGAL POSITION AS LAID OUT BY THE LAW ITSELF, WE NOW MOVE ON TO ANALYSE THE POSITION AS LAID OUT B Y 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 OUT OF SEARCH OR EXERCISE OF POWE R 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 ASSESSMENT YEAR RELEVANT TO THE PREVI OUS 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 TH AT 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 INCOME OR THE RETURN OF INCOME FILED FOR ALL THESE ASSESSMENT YEARS IS TO BE TAKEN INTO ACCOUNT. A REFERENCE IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 37 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 BE. THE PROVISION DEALS WITH THOS E 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 DATE OF THE INITIATION OF THE SEA RCH 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 ARE IN FORCE ON THE DATE OF INITI ATION 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 WAS RIGHT IN HOLDING THAT THE POW ER 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 W ITHIN 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 UNDE R: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 38 MANDATORILY ISSUED TO THE PERSON IN RESPECT OF WHOM SEARCH WAS CONDUCTED REQUIRING, HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDI NG 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 OFF ICERS 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 THE POWER TO ASSESS AND REASSESS T HE 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 ASSESSING OFFICER WHICH CAN HE RE LATED 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 ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 39 (I.E., THOSE PENDING ON THE DATE OF SEARCH) AN D 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 SEPARA TELY 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 ASSESSM ENT 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 PRODUCED 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 UNEAR THED 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, DISMISSING THE APPEAL, THAT THE ORDE R 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 WAS MANIFEST FROM THE ORDER OF THE ASSESSING OFFICER. CONSEQUENTLY, IT WAS HEL D THAT THE ASSESSING OFFICER WAS IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 40 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 WAS PERVERSE. [THE SUPREME COURT H AS 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 CALCUTTA 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 MATERIAL. 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 DISMISSED 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 BEFORE 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 DISALLOWANCES MADE BY THE ASSESSIN G OFFICER WERE UPHELD IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 41 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. COMMISSIONER OF INCOME TAX CENTRAL C IRCLE - 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 REASSESS THE TOTAL INCOME BUT BY T AKING 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 DUTY BOUND TO ASSESS OR REASSESS TH E 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 ASSESSMENT YEARS FOR WHICH THE ASS ESSMENTS 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 TOTAL INCOME IS DIFFERENT IN RESP ECT 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 S EARCH BY RESTRICTING ADDITIONS ONLY TO THOSE WHICH FLOW FROM INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IF IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 42 NO INCRIMINATING MATERIAL IS FOUND IN RESPECT OF SUCH COMPLETED ASSESSMENT, THEN THE TOTAL INCOME IN THE 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 CONSIDERING THE ORIGINALLY DETERM INED 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 A FRESH 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 ASSE SSMENT 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 ALREADY 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. S UB - 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 BEEN ABATED UNDER THE SECOND PROVISO TO SECTION 153A IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 43 SHALL STAND REVIVED FROM THE DATE OF RECEIPT O F 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 PROCEEDINGS 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 HOSPITAL 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 DISALLOWANCE / ADDITIONS CAN BE MA DE 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 CHAW LA 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 SUSTAINABLE IN THE EYES OF LAW. IN OUR CON SIDERED 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, T HE SAME DOES NOT NEED ANY INTERFERENCE ON OUR PART AND ALSO BY RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 44 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. 399 6/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. MEETU 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 ASSESSMENT UNDER SECTION 153A WAS NOT AR BITRARY 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 OCCASION FOR MAKING THEM AROSE BECAUSE OF THE SEARCH AND IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 45 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 WELL 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 E SSENTIALLY 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 DISCUSS ING 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 ADMI SSION 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 - WISE NON - RECORDING OF TRANSACTIONS. HAVING OBSERVED AS ABOVE, THE HONBLE DELHI HIGH COURT HELD AS UNDER: IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 46 .. 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 T HE 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 CAN HARDLY BE ACCEPTED TO MAINTAI N 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 DECISIO NS 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 B ASIS 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 O F 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 SEARCH PROCEEDINGS. COPY OF THE DECI SION OF IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 47 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 IN 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: THE SEIZED INCRIMINATING MATERIAL H AVE TO PERTAIN TO THE AY IN QUESTION AND HAVE CO - RELATION, DOCUMENT - WISE, WITH THE AY. THIS REQUIREMENT U/S 153C IS ESSENTIAL AND BECOMES A JURISDICTIONAL FACT. IT IS AN ESSENTIAL CONDITION PRECEDENT THAT ANY MONEY, BULLION OR JEWELLERY OR OTHER VALUABLE A RTICLES OR THING OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN S. 153A. KAMLESHBHAI DHARAMSHIBHAI PA T EL 31 TM.COM 50 (GUJ) APPROVED. SSP AVIATION 20 TM.COM 214 (DEL) DISTINGUISHED THE BOM HC IN THE SAID CASE QUOTED IN 378 ITR 84 ON MARCH 25, 2015 HELD AS UNDER:. IN TERMS OF SECTION 153C OF THE INCOME - TAX ACT, 1961, THE ASSESSING OFFICER SHOULD BE SATISFIED THAT ANY MONEY, BU LLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG OR BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT AND HE CAN HAND OVER THE SEIZED DOCUMENTS TO THE ASSESS ING OFFICER HAVING JURISDICTION OVER THAT PERSON. HELD, DISMISSING THE APPEALS, THAT THE REASONS ASSIGNED BY THE ASSESSING OFFICER IN THE SATISFACTION NOTE WERE SILENT ABOUT THE ASSESSMENT YEAR IN WHICH SPECIFIC INCRIMINATING INFORMATION OR UNACCOUNTED OR UNDISCLOSED HIDDEN INFORMATION WAS DISCOVERED OR SEIZED BY THE REVENUE FROM THE ASSESSEE. IN THE CIRCUMSTANCES, THE GENERAL SATISFACTION AND AS RECORDED IN THE NOTE WAS NOT ENOUGH. THERE WAS ABSOLUTELY NOTHING TO INDICATE AS TO IN WHICH EDUCATIONAL COURSE S, THE EDUCATION WAS IMPARTED AND INSTITUTION - WISE, WHETHER THE ADMISSIONS WERE GRANTED TO THE TECHNICAL COURSES MERIT - WISE OR ON THE BASIS OF MARKS OBTAINED IN XII STANDARD HSC EXAM. WHETHER ANY FEE STRUCTURE WAS APPROVED AND CASH COMPONENT WAS, THEREFORE , COLLECTED OVER AND ABOVE THE SANCTIONED IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 48 FEES WERE MATTERS WHICH OUGHT TO HAVE BEEN GONE INTO AND THERE COULD NOT BE A GENERAL OR VAGUE SATISFACTION. THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ASSESSMENTS. TRISHUL HI - TECH INDUSTRIES VS DCIT (IT(S S).A.82,84 - 86/KOL/2011) 12. UPON ASSESSEE'S 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 IT AT, KOLKATA IN THE CASE OF LMJ INTERNATIONAL 119 TTJ 214. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 13. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PERUSED THE RECORDS. WE HAVE ALREAD Y HELD IN THE ASSESSEE'S 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. INTHESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF THE ID. CIT(A) AND WE UPHOLD THE SAME. 5. 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 INTERFE RED WITH BY THE A.O. ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DU RING THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. ISSUES ORIGINAL ASSESSMENT WHICH HAVE NO RELAT ION TO THE SEARCH CANNOT IN ANY WAY FORM BASIS OF ASSESSMENT OF ANY COMPLETED ASSESSMENT. 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 APPEAL 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 ASSESS MENT 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.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 49 5 . THUS FROM ALL THE ABOVE DECISIONS I T 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 OF ANY COMPLETED ASSESSMENTS. 6 . 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. 6 .1 IN CONNECTION TO THE ABOVE, YOUR KIND ATTENTION IS INVITED 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 PROCESS ED U/S 143( 1 )(A) OF THE ACT AND NO NOTICE UNDER SUB SECTION (2) OF SECTION (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 T ECHNICALLY 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 ASSESS EE WITHIN THE STIPULATED TIME PERIOD, THE ASSESSMENT WOULD BE TERMED AS CONCLUDED ASSESSMENT I.E. NO PROCEEDINGS ARE PENDING. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 50 RELIANCE IS ALSO PLACED ON THE RECENT JUDGMENT OF THE HONBLE ITAT KOLKATA IN THE CASE OF SMT YAMINI AGARWAL VS DCIT (ITA NOS.9 7 & 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 AND 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 I SSUED NOR A NOTICE U/S,143(2) OF THE ACT IS ISSUED WITHIN THE TIME LIMIT 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 ASSAILED 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 UN SUSTAINABLE EVEN IN A CASE WHERE THE ORIGINAL ASSESSMENT ON THE DATE OF 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 WHERE 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 KO LKATA 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.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 51 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 ORDER 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 R ETURN OF INCOME BEING ACCEPTED PRIOR TO THE DATE OF SEARCH AND NO NOTICE 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 ABATED, 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 ASSESSMENT 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 NO T BE MADE BY THE AO. GR.NO. 1 RAISED BY THE ASSESSEE IN BOTH THE APPEALS 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. 6 .2 THE PROVISO TO SECTIO N 143(2) OF THE ACT WHICH STIPULATES THE TIME PERIOD FOR ISSUING OF THE 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 YEA R IN WHICH THE RETURN IS FURNISHED.] AS SUCH, THE PRESCRIBED TIME LIMIT 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. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 52 NOW, CONSIDERING THE ABOVE DECISION AND THE SAID PROVISO, T HE FACTS OF THE PRESENT CASE ARE DISCUSSED IN PARA 9.3 BELOW. 6 .3 IN THE PRESENT CASE, NO PROCEEDINGS WERE PENDING FOR BOTH THE ASSESSMENT YEARS. IN OTHERWORDS, ASSESSMENT FOR A.Y. 2011 - 12 AND A.Y. 2012 - 13 BEING THE SUBJECT ASSESSMENT YEARS, STOOD CONCLU DED AND THUS UNABATED AS ON THE DATE OF SEARCH I.E. 6.8.2014. FOR THE SAID AY 2011 - 12 AND A.Y. 2012 - 13, THE ASSESSEE FILED THE RETURN OF INCOME ON 29 - 09 - 201 1 AND 27.9.2012 RESPECTIVELY. . RETURN FOR AY 201 1 - 12 WAS PROCESSED ON 1 3 - 2 - 201 2 AND FOR A.Y. 2012 - 13 ON 20.1.2014. 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 - 201 2 FOR AY 2011 - 12 AND 30.9.2013 FOR 2012 - 13. THE SEARCH WAS CONDUCTED ON 06 - 08 - 2014. AS SUCH, ASSESSMENT FOR BOTH THE ASSESSMENT YERS STOOD CONCLUDED AND THUS UNABATED AS ON THE DATE OF SEARCH AND WAS NOT PENDING AS ON THAT DATE. 7. NEXT , ANALYSING THE DOCUMENTS WHOSE REFERENCE IS MA DE 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 THE ASSESSEE COMPANY WHEREIN REFERENCE TO TWO PAGES OF THE SEIZED MATERIAL, SGINDIA - 24, SGINDIA - 26. HOWEVER , THE SAID DOCUMENTS WERE ROUTINE IN NATURE AND WERE DULY EXPLAINED IN COURSE OF ASSESSMENT PROCEEDINGS. THESE DOCUMENTS DID NOT CONTAIN ANY INCRIMINATING INFORMATION AND ON BEING SATISFIED, NO ADDITION WAS MADE WITH REFERENCE TO THE SAID DOCUMENTS. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 53 IN TH E ASSESSMENT ORDER, THE LD. ASSESSING OFFICER HAD REFERRED TO SOME PAGES 69 - 83 AND 85 OF SEIZED MATERIAL I E SGINDIA - 1 .HOWEVER, AT NO POINT OF TIME DURING ASSESSMENT, THE ASSESSEE WAS ASKED TO EXPLAIN THE SAID PAGES. A COPY OF THE SAME IS ENCLOSED AT PAGE 77 - 96 OF THE PAPER BOOK FOR AY 2011 - 12. IN THIS REGARD, PLEASE NOTE THE SAID PAGES 69 - 83 AND PAGE 85 OF SGINDIA - 1 DOES NOT BELONG TO THE ASSESSEE. PAGE 69 IS THE BILL FROM SURYAMUKHI VYAPAAR LTD TO JMD INVESTOR PVT LTD. PAGE 70 - 83 CONTAINS THE DETAILS O F INVESTMENT IN SHARES BY DIFFERENT COMPANIES. IN NONE OF THESE PAGES, THE NAME OF THE ASSESSEE IS MENTIONED, EXCEPT PAGE 72. PAGE 72 CONTAINS THE DETAILS OF INVESTMENT BY SHREE JAGANATH INFRACOM IN DIFFERENT COMPANIES, INCLUDING THE ASSESSEE COMPANY. HOWE VER, THE SAID PAGE BELONGS TO SHREE JAGANATH INFRACOM AND NOT THE ASSESSEE COMPANY. MORE SO, THE SAID INVESTMENT IS ALSO DULY RECORDED IN THE BOOKS OF BOTH THE PARTIES. PAGE 85 CONTAINS THE DETAILS OF SHARE ALLOTMENT BY DIFFERENT PARTIES AND NOT THE ASSESS EE COMPANY. AS SUCH, THESE PAGES OF SGINDIA CANNOT BE SAID TO BE INCRIMINATING MATERIAL IN THE CASE OF THE ASSESSEE COMPANY. THE AFORESAID FACT CLEARLY INDICATES THAT THERE WAS NO INCRIMINATING SEIZED MATERIAL AND THE SGINDIA - 1 HAVE BEEN DELIBERATELY BEEN TREATED AS INCRIMINATING MATERIAL WITHOUT ESTABLISHING ANY REASONABLE NEXUS WITH THE ASSESSEE. CONSEQUENTLY, THE SAID VARIOUS ADDITIONS MADE IN THE ORDERS OF ASSESSMENT OUGHT NOT TO HAVE OR COULD NOT BE MADE BY THE AO. GROUND NO.1 RAISED BY THE ASSESSEE I N BOTH THE APPEALS ARE ACCORDINGLY ALLOWED. 27. 27. IN VIEW OF THE ABOVE CONCLUSIONS, THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS, DO NOT REQUIRE ANY CONSIDERATION. 6.2 PROVISO TO SECTION 143(2) OF THE ACT WHICH STIPULATES THE TIME PERIOD FOR ISSUING OF THE 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.] AS SUCH, THE PRESCRIBED TIME LIMIT 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 THIS PROVISO, THE FACTS OF THE PRESENT CASE ARE DISCUSSED IN PARA 6.3 BELOW. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 54 6.3 IN THE PRESENT CASE, NO PROCEEDINGS WERE PENDING FOR BOTH THE ASSESSMENT YEARS. IN OTHER WORDS, ASSESSMENT FOR AY 2011 - 12 AND AY 2012 - 13, BEING THE SUBJECT ASSESSMENT YEARS, STOOD CONCLUDED AND THUS UNABATED AS ON THE DATE OF SEARCH I.E 06 - 08 - 2014. FOR AY 2011 - 1 2 AND AY 2012 - 13, THE ASSESSEE FILED THE RETURN OF INCOME ON 29 - 09 - 2011 AND 27 - 09 - 2012 RESPECTIVELY. RETURN FOR AY 2011 - 12 WAS PROCESSED ON 13 - 02 - 2012 AND FOR AY 2012 - 13 ON 20 - 01 - 2014 ADMITTEDLY NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE CO MPANY 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 - 2012 FOR AY 2011 - 12 AND 30 - 09 - 2013 FOR AY 2012 - 13. THE SEARCH WAS CONDUCTED ON 06 - 08 - 2014. AS SUCH, ASSESSMENT FOR BOTH THE RELEVANT YEARS STOOD CONCLUDED AND THUS UNABATED AS ON THE DATE OF SEARCH AND WAS NOT PENDING AS ON THAT DATE. 7 NEXT ANALYSING THE DOCUMENTS WHOSE REFERENCE IS MADE BY THE ID. A.O. IN HIS ASSESSMENT ORDER, IT IS SEEN THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDING THE LD. ASSESSING OFFICER ISSUED 5 (FIVE) NO OF NOTICES ON VARIOUS DATES IN WHICH THERE WAS REFERENCE OF ONLY FEW SEIZED MATERIAL SUCH AS SG1ND1A - 9, SGINDIA - 24, SGINDIA - 26. HOWEVER THE SAID DOCUMENTS WERE ROUTINE IN NATURE AND WERE D ULY EXPLAINED IN COURSE OF ASSESSMENT PROCEEDING. THESE DOCUMENTS DID NOT CONTAIN ANY INCRIMINATING INFORMATION AND ON BEING SATISFIED, NO ADDITION WAS MADE WITH REFERENCE TO THE SAID DOCUMENTS. IN THE ASSESSMENT ORDER, THE LD. ASSESSING OFFICER HAD REFERR ED TO SOME PAGES 69 - 83 AND 85 OF SEIZED MATERIAL I.E. SGINDIA - 1 - HOWEVER, AT NO POINT OF TIME DURING ASSESSMENT, THE ASSESSEE WAS ASKED TO EXPLAIN THE SAID PAGES. A COPY OF THE SAME IS ENCLOSED AT PAGE 77 - 96 OF THE PAPER BOOK FOR AY 2011 - 12. IN THIS REGARD, PLEASE NOTE THE SAID PAGES 69 - 83 AND PAGE 85 OF SGINDIA - 1 DOES NOT BELONG TO THE ASSESSEE. PAGE 69 IS THE BILL FROM SURYAMUKHI VYAPAAR LTD TO JMD INVESTOR PVT LTD. PAGE 70 - 83 CONTAINS THE DETAILS OF INVESTMENT IN SHARES BY DIFFERENT COMPANIES. IN NONE OF THESE PAGES, THE NAME OF THE ASSESSEE IS MENTIONED, EXCEPT PAGE 72. PAGE 72 CONTAINS THE DETAILS OF INVESTMENT BY SHREE JAGANATH INFRACOM IN DIFFERENT COMPANIES, INCLUDING THE ASSESSEE COMPANY. HOWEVER, THE SAID PAGE BELONGS TO SHREE JAGANATH INFRACOM AND NOT THE ASSESSEE COMPANY. MORE SO, THE SAID INVESTMENT IS ALSO DULY RECORDED IN THE BOOKS OF BOTH THE PARTIES. PAGE 85 CONTAINS THE DETAILS OF SHARE ALLOTMENT BY DIFFERENT PARTIES AND NOT THE ASSESSEE COMPANY. AS SUCH, THESE PAGES OF SGINDIA CANNOT BE SAID TO BE INCRIMINATING MATERIAL IN THE CASE OF THE ASSESSEE COMPANY. THE FORESAID FACT CLEARLY INDICATES THAT THERE WAS NO INCRIMINATING SEIZED MATERIAL AND THE SGINDIA - 1 HAVE BEEN DELIBERATELY BEEN TREATED AS INCRIMINATING MATERIAL WITHOUT ESTABLISHING ANY REASONABLE NEXUS WITH THE ASSESSE. IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 55 THE OTHER SEIZED MATERIALS ON WHICH NOTICES WERE ISSUED WERE DULY SUBSTANTIATED BY THE ASSESSEE AND THEREFORE THE SAME WERE NOT REFERRED IN THE ORDER AT ALL. 8. FURTHER NOTE THAT THE LEARNED AO HAS RELIED ON THE STATEMENT OF SOME ALLEGED ENTRY OPERATORS, MR. RAJ KUMAR THARAD AND MR. PRADEEP GARG. MR. RAJ KUMAR THARAD HAD ALLEGEDLY IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT STATED THAT ASSESSEE IS A JAMAKHARCHI COMPANY AND HE IS ONE OF THE DIRECTOR IN THIS COM PANY. THE FULL STATEMENT OF THESE PARTIES WAS NEVER PROVIDED TO THE ASSESSEE FOR CROSS EXAMINATION EVEN AFTER MAKING A WRITTEN REQUEST TO THE AO, REFER PAGE 75 OF THE PAPER BOOK FOR AY 2011 - 12. ONLY THE EXTRACT OF THE STATEMENT WHICH IS ALSO PRODUCED IN TH E ASSESSMENT ORDER WAS PROVIDED TO THE ASSESSEE. THE RELEVANT PARTS OF THE SAID ALLEGED STATEMENTS WERE SIMPLY QUOTED BY THE ID. A.O. AT PAGES 4 AND 5 OF HIS ORDER. 9.1. 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 STATEMENTS WERE NOT FOUND OR RECORDED IN THE COURSE OF SEARCH AND AS SUCH, CANNOT BE TERMED AS AN INCRIMINATING MATERIAL IN THE PRESENT CASE. 8.2. AT NO POINT OF TIME DURING THE RELEVANT YEARS UNDER CONSIDERATION, MR. RAJ KUMAR THARAD WAS A DIRECTOR OF THE ASSESSEE COMPANY. TO SUBSTANTIATE, PLEASE FIND ENCLOSED THE RELEVANT EXTRACT OF THE ITR FILED FOR EACH OF THE YEARS COVERED UNDER ASSESSMENT I.E. AY 2010 - 11 TO AY 2015 - 16 AT PAGE 97 - 106 OF THE PAPER BOOK FOR AY 2011 - 12. 8.3. FURTHER, RAJ KUMAR THARAD AND PRADEEP GARG IN THEIR STATEMENT 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 SEVE RAL COMPANIES GOT DEPOSITED IN THE BOOKS OF SGBL (INDIA) LTD. AND OTHER GROUP COMPANIES CONTROLLED BY SHRI SUNIL GUPTA. HOWEVER, HERE PLEASE NOTE THAT WHEN ASKED ABOUT THE DETAILS OF MONEY TRAIL USED TO IN DEPOSITING CASH AND ROUTING IT BACK TO THE ASSESSE E 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 DOES NOT POSSESS THE KNOWLEDGE ABOUT THE MONEY TRAIL USED FOR DEPOSITING CASH. 8.4. FURTHER, PLEASE NOTE THAT BOTH RAJ KUMAR THARAD AND PRADEEP GARG HAS GIVEN THE SAME STATEMENT WHICH SIMPLY MEANS THAT THAT THE STATEMENTS WERE PRE - PRINTED AND THEY WERE JUST ASKED TO JUST SIGN THE IMPUGNED STATEMENTS. 8.5. FURTHER, IT WAS REQUESTED TO THE LEARNED AO TO PROVIDE A CERTIFIED COPY OF THE ALLEGED STATEMENTS AND ALSO TO PROVIDE AN OPPORTUNITY OF CROSS EXAMINATION OF THESE PARTIES. HOWEVER, NO SUCH OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT WHICH IS DENIAL OF NATURAL JUSTICE TO THE ASSESSEE. IT IS A SETTLED POSITION AS DECIDED IN SEVERAL JUDICIAL IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 56 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 CR OSS - 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 CONTENTION OF THE ASSESSEE, RE LIANCE 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 (SQ WHEREIN IT WAS HELD THAT, 'NOT ALLOWING THE ASSESSEE TO CROSS - EXAMINE THE WITNESSES BY THE ADJUDICATIN G 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. 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 ADJUDICATING AUTHO RITY 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 SUCH OPPORTUN ITY 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 THAT CROSS - EXAMINATION OF THE SAID DE ALERS 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 APPELLANT WANT ED 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 SUCH, THIS IS A CASE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE HAS BEEN ADVERSELY AFFECTED. 9. FURTHER, IN THE ASSESSMENT ORDER, THE LEARNED AO HAD REFERRED TO THE STATEMENT RECORDED FROM MR. ABHISET BASU BY INVESTIGATION WING OF KOLKATA IN SOME OTHER PROCEEDING. THE SAID STATEMENT WAS NEVER REFERRED TO BY THE AO IN ANY OF THE NOTICES ISSUED BY HIM. THE SAID STATEMENT WAS NOT FOUND OR RECORDED IN THE COURSE OF SEARCH AND AS SUCH, CANNOT BE TERMED AS AN INCRIMINATING MATERIAL IN THE PRESENT CASE. ALSO OPPORTUNITY OF CROSS EXAMINATION OF MR.ABHISET BASU WAS NOT PROVIDED TO THE ASSESSEE TO CONTROVERT HIS STATEMENT AND AS SUCH, THE SAME CANNOT BE USED TO THE DISADVANTAGE OF THE ASSESSEE. AS SUCH, THESE STATEMENTS CANNOT BE USED AGAIN ST THE ASSESSEE AS HELD BY THE APEX COURT IN THE CASE OF ANDAMAN TIMBERS (SUPRA). 10. NOW, AS EVIDENT FROM ALL OF THE ABOVE, IT STANDS PROVED BEYOND DOUBT THAT THE LD. AO, IN THE CASE OF THE ASSESSEE COMPANY IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 57 WAS NOT IN POSSESSION OF ANY INCRIMINATIN G MATERIAL, FOUND DURING THE COURSE OF SEARCH. THE ENTIRE ADDITION IN BOTH THE YEARS WAS MADE ON ACCOUNT OF SALE PROCEEDS RECEIVED AGAINST SALE OF SHARES DONE IN THE NORMAL COURSE OF BUSINESS AND WAS DULY ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS. THE ENTIRE PURCHASE AND SALE TRANSACTION WAS RECORDED IN THE REGULAR BOOKS AND WAS EFFECTED THROUGH NORMAL BANKING CHANNELS. THE SAME IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF, PLEASE REFER FIRST LINE OF PAGE 2 OF THE ASSESSMENT ORDER, WHEREIN THE AO HAS HI MSELF STATED THAT 'ON EXAMINATION OF THE SEIZED TALLY ACCOUNTS OF THE ASSESSEE, IT WAS FOUND THAT FOLLOWING AMOUNTS HAVE BEEN CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE.' HOWEVER, SIMPLY THE FINDING OF REGULAR BOOKS OF ACCOUNTS AND DOCUMENTS DURING THE C OURSE OF SEARCH WITHOUT A SINGLE INCRIMINATING DOCUMENT IS NOT SUFFICIENT TO VEST JURISDICTION U/S 153A OF THE ACT. INCRIMINATING MATERIAL REFLECTING SOME UNDISCLOSED INCOME IS NECESSARY FOR THE PURPOSE OF INITIATING ANY PROCEEDING U/S 153A OF THE ACT. FUR THER, HE HAS REFERRED TO SOME 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. FURTHER, AS HELD IN A NUMBER OF JUDICIAL PRECEDENTS, AO IS NOT EMPOWERED TO DISTURB THE CONCLUDED ASSESSMENTS AND FRAME FRESH ASSESSMENTS DE - HORS ANY INCRIMINATING MATERIAL FOUND 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, THE ENTIRE ADDITION OF RS.9,94,50,000/ - IN AY 2011 - 12 AND RS. 15,00,000/ - WAS ON ACCOUNT OF SALE PROC EEDS RECEIVED AGAINST SALE OF INVESTMENTS IN SHARES. THE ENTIRE SALE PROCEEDS WERE RECEIVED THROUGH NORMAL BANKING CHANNELS AND WERE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. AS SUCH, THE ADDITION WAS MADE BY THE LEARNED AO ON ITEMS OF REGULAR ASSESS MENT. NO INCRIMINATING MATERIAL WAS FOUND IN COURSE OF SEARCH IN ANY OF THE SUBJECT ASSESSMENT YEARS. 11. WITHOUT PREJUDICE TO THE ABOVE, COMING TO THE FACTS OF THE CASE, PLEASE NOTE THAT THE AO WHILE ANALYSING THE INVESTMENTS OF THE ASSESSEE STATE D THAT IT HAD BEEN FOUND THAT ALL THE INVESTMENTS OF THE ASSESSEE COMPANY IN KOLKATA BASED COMPANIES WERE FINALLY SOLD TO FOLLOWING COMPANIES ON VARIOUS DATES IN THE F.Y.S 2010 - 11 AND 2011 - 12: I) SIGNET VINIMAY PVT. LTD. II) SCOPE VYAPOR PVT. LTD. III) SANKALP VINCOM PVT. LTD. IV) WINALL VINIMAY PVT. LTD. V) SRIJAN VYAPAR PVT LTD VI) WESTLINE VII) YOGIRAJ IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 58 IN CONNECTION TO THE ABOVE, THE LD. A.O. OBSERVED THAT THE SALE PROCEEDS WERE INVESTED IN SISTER COMP ANIES OF THE GROUP AS LOANS/ADVANCES AND IN FIXED DEPOSITS IN BANKS. IN THIS REGARD, IT WAS DULY SUBMITTED BEFORE THE LD. A.O. THAT THE SHARE CAPITAL OF RS. 10,57,45,300/ - WAS RAISED IN DIFFERENT YEARS UPTO A.Y.2007 - 08 AND SINCE THEN, AFTER 31/03/2007 NO FURTHER NEW SHARE CAPITAL WAS RAISED. THE SCHEDULE OFTHE CAPITAL STRUCTURE OFTHE COMPANY OVER THE YEARS WAS LAID OUT AS UNDER: SHARE A.Y. CAPITAL PREMIUM TOTAL INTRODUCTIO N 2015 - 16 17,135,300 88,610,000 105,745,300 _ 2014 - 15 17,135,300 88,610,000 1 05,745,300 - 2013 - 14 17,135,300 88,610,000 105,745,300 - 2012 - 13 17,135,300 88,610,000 105,745,300 - 2011 - 12 17,135,300 88,610,000 105,745,300 - 2010 - 11 17,135,300 88.610,000 105,745,300 - 2009 - 10 17,135,300 88,610,000 105,745,300 - 2008 - 09 17,135,30 0 88,610,000 105,745,300 - 2007 - 08 17,135,300 88,610,000 105,745,300 43,800,000 2006 - 07 12,755,300 49,190,000 61,945,300 21,100,000 2005 - 06 10,645,300 30,200,000 40,845,300 36,050,000 2004 - 05 3,435,300 1,360,000 4,795,300 THE ENTIRE INVESTMENT IN SHA RES WAS MADE FROM OWN FUNDS OF THE ASSESSEE COMPANY. FURTHER, THE ASSESSEE BEING A NBFC COMPANY WAS PRIMARILY ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF INVESTMENTS. AS SUCH, THE ENTIRE INVESTMENT IN SHARES AND SUBSEQUENT THE SALE THEREOF WAS A ROUTIN E AFFAIR FOR THE ASSESSEE COMPANY AND WAS DULY RECORDED IN THE AUDITED BOOKS. ALSO IT WAS SUBMITTED THAT THE SAID INTRODUCTION OF CAPITAL WAS VERIFIED IN COURSE OF SCRUTINY ASSESSMENTS DURING THE YEAR. COPY OF THE ASSESSMENT ORDERS U/S 143 (3) OF THE ACT F OR THE SAID A.Y.S 2005 - 06, 2006 - 07 AND 2007 - 08 WERE ALSO PRODUCED FOR VERIFICATION. A COPY OF THE SAME IS ENCLOSED AT PAGE 22 - 28 OF THE PAPER BOOK FOR AY 2011 - 12. HOWEVER, IGNORING THE ENTIRE SUBMISSIONS OF THE ASSESSEE, THE AO PASSED THE ASSESSMENT ORDER S FOR THE SAID A.Y. 2011 - 12 AND 2012 - 13 IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 59 WHEREIN HE HELD THAT THE CREDIT OF RS.9,94,50,.000/ - AND RS.15,00,000/ - RESPECTIVELY SHOWN AS SALES PROCEEDS AND CREDITED IN THE BOOKS OF THE ASSESSEE WAS UNEXPLAINED AND THUS ADDED THE SAME U/S.68 OF THE ACT. 13. A GGRIEVED WITH THE ORDER OF THE LEARNED AO, 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 FOLLOWIN G TWO JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS HELD THAT 'IT IS NOT NECESSARY THAT SEARCH ON WHICH IT WAS FOUNDED SHOULD HAVE NECESSARILY YIELDED ANY INCRIMINATING MATERIAL AGAINST ASSESSEE OR THE PERSON TO WHOM SUCH NOTICE U/S.L53A(L)(A), IS ISSUED. ' 1. E.N. GOPIKUMAR VS C7T(CENTRAL) (HIGH COURT OF KER A LA) PRONOUNCED ON 03 - 10 - 2016. 2. CIT ,CENTRAL VS RAJ KUMAR ARORA (HIGH COURT OF ALLAHABAD) PRONOUNCED ON 11 - 07 - 2014. 13.1 IN THIS REGARD, PLEASE NOTE THAT THE ISSUE ON WHETHER AN ASSESSMENT U/S 153 A OF THE ACT CAN BE MADE EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING SECTION 132 SEARCH PROCEEDINGS HAD ALREADY BEEN DECIDED BY THE HON'BLE APEX COURT IN THE CASE OF DAYAWANTI GUPTA VS. CIT PRONOUNCED ON 3 RD OCTOBER, 2017. THE APEX COURT HAS ST AYED 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 ASSESSMENT YEAR SPECIFIC INCRIMINATING MATERIAL OR DOCUMENT IS FOUND, ASSESSMENTS OF SUCH ASSESSMENT YEARS CANNOT BE DISTURBED BY INVOKING THE PROVISIONS OF SC . 153C. HENCE, THIS ISSUE HAS ALREADY BEEN DECIDED BY THE HON'BLE APEX C OURT AND THE SAME WAS ALSO RELIED UPON BY THE ASSESSEE IN THE COURSE OF APPELLATE PROCEEDINGS. HOWEVER, THE LEARNED CIT(A) HAS COMPLETELY IGNORED THE JUDGMENT OF THE HON'BLE APEX COURT, THUS VIOLATING THE PRINCIPLES OF PRECEDENT IN FOLLOWING APEX COURT VER DICT WHICH IS THE LAW UNDER ARTICLE 141 OF THE INDIAN CONSTITUTION. ARTICLE 141 OF THE INDIAN CONSTITUTION STATES THAT 'THE LAW DECLARED BY SUPREME COURT SHALL BE BINDING ON ALL COURTS WITHIN TERRITORY OF INDIA. 13.2 FURTHER, WHEN AN ORDER IS PASSED BY A HIGHER AUTHORITY, THE LOWER AUTHORITY IS BOUND THEREBY KEEPING IN VIEW THE PRINCIPLES OF JUDICIAL DISCIPLINE. THIS ASPECT OF THE MATTER HAS BEEN HIGHLIGHTED BY THIS COURT IN BHOPAL SUGAR INDUSTRIES V. INCOME TAX OFFICER, BHO P AL [AIR 1961 SC 182] IN THE FOLLOWING TERMS: 'IF A SUBORDINATE TRIBUNAL REFUSES TO CARRY OUT DIRECTIONS GIVEN TO IT BY A SUPERIOR TRIBUNAL 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.' IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 60 13.3 FURTHER NOTE THAT THE ABOVE TWO CASE DECISIONS CITED BY THE LEARNED CIT(A) WERE ALSO RELIED UPON BY THE CIT(DR) IN THE CASE OF: 1. DCIT VS ANKUSH SALUJA ITA.NO.2047/DEL./2016 PRONOUNCED ON 07 - 12 - 2017 2. M/S EMPIRE REALTECH PVT LTD VS DCIT ITA.NO.3 407/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 AN Y LEGAL BASIS AS THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HENCE, THE JUDGEMENT CITED BY THE LD CIT(A) DO NOT HOLD GOOD IN THE PRESENT CASE BY VIRTUE OF THE JUDGEMENT ON AN IDENTICAL ISSUE PRONOUNCED BY THE HONBLE SUPREME COUR T IN FAVOUR OF THE ASSESSEE. 14 THE LEARNED CIT(A) HAD 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 FULL STATEMENTS OF THESE PARTIES WERE NEVER PROVIDED TO THE ASSESSEE FOR CROSS EXAMINATION EVEN AFTER MAKING A WRITTEN REQUEST TO THE AO. ONLY THE EXTRACT OF THE STATEMENT WHICH IS ALSO PRODUCED IN THE ASSESSMENT ORDER WAS PROVIDED TO THE ASSESSEE. HENCE, THE PRESENT CASE IS DENIAL OF NATURAL JUSTICE TO THE ASSESSEE. 14.1 FURTHER, THE LEARNED CIT(A) HAS RELIED UPON THE JUDGMENT OF HIGH COURT OF BOMBAY IN THE CASE OF SANJAY BIMALCHAND JAIN VS PCIT WHEREIN THE ISSUE INVOLVED WAS EXEMPTION CLAIMED BY THE ASSESSEE U/S 10(38) OF THE ACT. IN THIS CASE THE SHARES O F UNKNOWN COMPANIES WERE PURCHASED AT A VERY NOMINAL PRICE IN CASH ON ADVICE OF INCOME TAX COUNSEL AND THE SAME WERE SOLD AFTER A YEAR AT AN EXORBITANT PRICE, THUS THE ASSESSEE CLAIMED LONG TERM CAPITAL GAINS EXEMPT U/S 10(38) OF THE ACT. THE LEARNED AO DI SALLOWED THE CLAIM OF THE ASSESSEE. THE LEARNED CIT(A) SUSTAINED THE ORDER OF THE LEARNED AO. ON FURTHER APPEAL, THE HON'BLE IT AT, NAGPUR HELD THAT 'THE FANTASTIC SALE PRICE REALISATION IS NOT AT ALL HUMANLY PROBABLY, AS THERE IS NO ECONOMIC OR FINANCIAL BASIS, THAT A SHARE OF LITTLE KNOWN COMPANY WOULD JUMP FROM RS.5/~ TO 485/ - .' THE ORDER OF THE IT AT, NAGPUR WAS UPHOLD BY THE HON'BLE HIGH COURT FOR THE SAME REASONS. HOWEVER THE FACTS OF THE PRESENT CASE ARE DIFFERENT FROM THE CASE OF THE ASSESSEE. THE A SSESSEE BEING A NBFC COMPANY WAS PRIMARILY ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF INVESTMENTS. AS SUCH, THE ENTIRE INVESTMENT IN SHARES AND SUBSEQUENT THE SALE THEREOF WAS A ROUTINE AFFAIR FOR THE ASSESSEE COMPANY AND WAS DULY RECORDED IN THE AUDI TED BOOKS. IN THIS CASE BEFORE THE HIGH COURT, THE SHARES WERE SOLD AT AN EXORBITANT PRICE. HOWEVER, IN THE PRESENT CASE, THE SHARES WERE SOLD AT THE SAME PRICE AT WHICH THEY WERE PURCHASED. AS SUCH, NO CAPITAL GAINS WERE EARNED BY THE ASSESSEE. FURTHER, T HE ENTIRE TRANSACTION OF PURCHASE AND SALE WAS MADE THROUGH NORMAL BANKING CHANNELS AND THE SOURCE OF INVESTMENT IN SHARES WAS THE OWN FUNDS OF THE ASSESSEE. AS SUCH, THE RATIO OF THIS CASE CANNOT BE APPLIED TO THE PRESENT CASE OF THE ASSESSEE. 15. REITERA TING AND CONCLUDING THE SUBMISSIONS MADE ABOVE, PLEASE NOTE THAT IN THE ASSESSEE'S CASE FOR BOTH THE SUBJECT ASSESSMENT YEARS, THERE WERE NO PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IN OTHER WORDS THE ASSESSMENTS WERE CONCLUDED FOR THESE YEARS. AS HEL D IN A NUMBER OF JUDICIAL IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 61 PRECEDENTS ALREADY CITED ABOVE, AO IS NOT EMPOWERED TO DISTURB THE CONCLUDED ASSESSMENTS AND FRAME FRESH ASSESSMENTS DE HORS ANY INCRIMINATING MATERIAL FOUND 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 VIDE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH. FURTHER NO INCRIMINATING MATE RIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE ASSESSMENT WAS MADE ON THE BASIS OF REGULAR BOOKS OF ACCOUNTS. FURTHER, THE AO HAS RELIED ON THE ALLEGED STATEMENTS OF SOME ALLEGED ENTRY BROKERS. THESE STATEMENTS WERE NOT RECORDED OR FOUND DURING THE COU RSE OF ANY SEARCH PROCEEDINGS ON THE ASSESSEE. THEY DO NOT FORM ANY INCRIMINATING MATERIAL IN THE CASE OF THE ASSESSEE. ALSO THE OPPORTUNITY TO CROSS EXAMINE THESE PERSONS WAS NEVER GIVEN TO THE ASSESSEE. AS SUCH, THIS IS A CASE OF DENIAL OF NATURAL JUSTIC E TO THE ASSESSEE AND HENCE THESE STATEMENTS CANNOT BE USED TO THE DISADVANTAGE OF THE ASSESSEE. THE SALE OF INVESTMENT IN SHARES WAS DULY RECORDED IN THE AUDITED BOOKS AND THE SAME WAS ALSO NOT DISPUTED BY THE LEARNED AO. AS SUCH, THE ENTIRE PROCEEDINGS U /S 153 A OF THE ACT WAS NOT AS PER LAW AND LIABLE TO BE QUASHED. 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 153 A OF THE ACT FOR BOTH THE SUBJECT ASSESSMENT YEARS DE HORS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 22. THE DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF ASSESSING OFFICER AND CIT(A). 23. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MA TERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE , THE ASSESSEE ORIGINALLY FILED ITS RETURN OF INCOME ON 29.9.2011 FOR THE ASSESSMENT YEAR 2011 - 12 AND ON 27.9.2012 FOR THE ASSESSMENT YEAR 2012 - 13 DISCLOSING TOTAL INCOME AT RS. 9,56,200/ - AND RS.2,95,840/ - A ND MATY OF RS.21,90,642/ - . 24. IN PURSUANCE TO SEARCH CONDUCTED ON 6.8.2014, PROCEEDINGS U/S.153A WAS INITIATED IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION. IN PURSUANCE TO THESE PROCEEDINGS, THE IMPUGNED ORDERS OF ASSESSMEN T WAS PASSED ON 28.12.2016 , WHERE, IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 62 ADDITIONS OF RS.9,94,50,000/ - AND RS.15,00,000/ - WERE MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. IT IS NOT IN DISPUTE THAT THE TIME LIMIT OF ISSUANCE OF NOTICE U/S.143 (2) OF THE ACT WITH REFERENCE TO THE ORIGINAL RETURN FILED BY THE ASSESSEE ON 29.9.2011 FOR THE ASSESSMENT YEAR 2011 - 12 AND ON 27.9.2012 FOR THE ASSESSMENT YEAR 2012 - 13, RESPECTIVELY EXPIRED ON 30.9.2012 FOR THE ASSESSMENT YEAR 2011 - 12 AND ON 30.9.2013 FO R ASSESSMENT YEAR 2012 - 13 AND NO SUCH NOTICE WAS ISSUED TO THE ASSESSEE BY THE SAID DATES. THUS, THE ORIGINAL RETURN OF INCOME BECAME FINAL ON 30.9.201 1 AND 30.9.2012 FOR THE ASSESSMENT YEARS 2011 - 12 AND 2012 - 13, RESPECTIVELY I.E. BEFORE THE DATE OF RELEV ANT SEARCH. IN OTHER WORDS , THE ASSESSMENT YEARS UNDER CONSIDERATION WERE NOT ABATED. 25. FURTHER, THE OTHER RELATED FACTS WHICH HAVE BEEN NOTICED ARE THAT THE ASSESSEE RECEIVED RS.9,94,50,000/ - BY CHEQUES FOR THE ASSESSMENT YEAR 2011 - 12 AND RS.15,00,000/ - FOR THE ASSESSMENT YEAR 2012 - 13 ON ACCOUNT OF SALE PROCEEDS OF INVESTMENT AND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE RELEVANT ASSESSMENT YEARS. THE ABOVE FACTS WERE DISCLOSED IN THE RETURN OF INCOME FILED ON 29.9.2011 AND 27.9.2012. 2 6 . ON THE OTHER HAND, LD CIT DR IS OF THE VIEW THAT IN A PROCEEDING U/S.153A OF THE ACT EVEN IN THE CASE OF UNABATED ASSESSMENT, ADDITION CAN BE MADE DEHORS INCRIMINATING SEARCH MATERIAL. LD D.R. IN SUPPORT OF HIS ABOVE VIEW RELIED UPON THE FOLLOWING DECISI ONS . IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 63 (A) E.N. GOPAKUMAR V. COMMISSIONER OF INCOME - TAX (CENTRAL) [2016] 75 TAXMANN.COM 215 (KERALA): 'SECTION 153A, READ WITH SECTION 132, OF THE INCOME - TAX ACT, 1961 - SEARCH & SEIZURE - ASSESSMENT IN CASE OF (SCOP E OF) - WHETHER FOR ISSUANCE OF A NOTICE UNDER SECTION 153A(1)(A), IT IS NOT NECESSARY THAT SEARCH ON WHICH IT WAS FOUNDED SHOULD HAVE NECESSARILY YIELDED ANY INCRIMINATING MATERIA L A GAINST ASSESSEE OR PERSON TO WHOM SUCH NOTICE IS ISSUED - HELD, YES - WHET HER, THEREFORE, ASSESSMENT PROCEEDINGS GENERATED BY ISSUANCE OF A NOTICE UNDER SECTION 153A(1)(A) CAN BE CONCLUDED AGAINST INTEREST OF ASSESSEE INCLUDING MAKING ADDITIONS EVEN WITHOUT ANY INCRIMINATING MATERIAL BEING AVAILABLE AGAINST ASSESSEE IN SEARCH UN DER SECTION 132 ON BASIS OF WHICH NOTICE WAS ISSUED UNDER SECTION 153A(1)(A) HELD, YES [PARAS 7 AND 8] [IN FAVOUR OF REVENUE). ' (B) COMMISSIONER OF INCOME - TAX CENTRAL, KANPUR V. RAJ KUMAR ARORA [2014] 52 TAXMANN.COM 1 72 (ALLAHABAD) : 'SECTION 153A, READ WITH SECTION 143 OF THE INCOME - TAX ACT, 1961 - SEARCH AND SEIZURE - ASSESSMENT IN CASE OF (SCOPE OF ASSESSMENT) - ASSESSMENT YEAR 2000 - 01 - WHETHER ASSESSING OFFICER HAS POWER TO REASSESS RETURNS OF ASSESSEE NOT ONLY F OR UNDISCLOSED INCOME, WHICH WAS FOUND DURING SEARCH OPERATION BUT ALSO WITH REGARD TO MATERIAL THAT WAS AVAILABLE AT TIME OF ORIGINAL ASSESSMENT - HELD, YES [PARA 11] [IN FAVOUR OF REVENUE/MATTER REMANDED]' 2 7 . ON THE OTHER HAND, THE AR OF THE ASSESS EE RELIED UPON THE FOLLOWING DECISIONS : (I) (1) CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. (2)A LL CARGO GLOBAL LOGISTICS LTD. (2015) 374 1TR 645 (BOM), WHERE IT WAS HELD THAT THE NOTICE U/S.153A OF THE ACT WAS FOUNDED ON SEARCH. IF THE RE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH THEN THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE POWER U/S.153A OF THE ACT 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) JAI STEEL (INDIA) LTD. VS. ACIT, [2013] 36 AXMANN.COM 523 (RAJ.HC), WH EREIN THE HON'BLE RAJASTHAN HIGH COURT HAS HELD THAT THE PLEA RAISED ON BEHALF 0 THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 64 ASSESSMENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRR ESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND 'REASSESS' HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MA KING OF REQUISITION AND WHICH WOULD - ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. (III) PR.C IT VS. MEETA GUTGUTIA PROP. M/S.FEMS 'N' PETALS [2017) 395 ITR 526 (DEL), WHEREIN IT WAS HELD THAT IT IS ONLY IF DURING THE COURSE OF SEARCH U/S.132 OF THE ACT INCRIMINATING MATERIAL JUSTIFYING THE RE - OPENING OF THE ASSESSMENTS FOR SIX PREVIOUS YEARS IS F OUND THAT THE INVOCATION OF SECTION 153A QUA SEARCH OF THE ASSESSMENT YEARS WOULD BE JUSTIFIED. IV) IN CASE OF PR. CIT - 2, KOLKATA VS. M/S SALASAR STOCK BROKING LTD., G.A.NO.1929 OF 2016 (ITAT NO.264/KOL/2016), ORDER DATED 24.08.2016, THE HON'B LE KOLKATA HIGH COURT HAS HELD AS UNDER : - 'WE ARE IN AGREEMENT WITH THE VIEWS EXPRESSED BY THE KA M ATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE - REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED UNDER SECTION 153C READ WITH SECTION 153A. IN THE CA SE BEFORE 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 CON TAINED UNDER SECTION 153C READ WITH SECTION 153A. THE DISALLOWANCE S MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES . IN THAT V I EW OF THE MATTER, WE ARE UNABLE TO ADMIT THE APPEAL. THE APPEAL IS, THEREFORE, DISMISSED.' 28 . WE FIND THAT NONE OF THE DECISION REL IED UPON BY EITHER OF THE PARTIES ARE OF JURISDICTIONAL HIGH COURT. IT IS A WELL SETTLED POSITION OF LAW THAT WHEN THERE ARE CONFLICTING DECISIONS OF HIGH COURTS NONE OF WHICH IS THE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVOUR OF IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 65 THE ASSESSEE SH OULD BE FOLLOWED. FOR THIS, WE DERIVE SUPPORT FROM THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. 88 ITR 192 (SC). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IN AN ASSESSMENT MADE U/S.153A OF THE ACT FOR AN ASSESSME NT YEAR FOR WHICH ASSESSMENT HAS NOT BEEN ABATED, THEN THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE ADDITION IN SUCH AN ASSESSMENT, IS CONFINED TO SUCH INCRIMINATING SEARCH MATERIAL AND NO ADDITION DEHORS THE SEARCH MATERIAL CAN BE MADE. 29 . IN THE IN STANT CASE, WE FIND THAT DURING THE COURSE OF THE RELEVANT SEARCH ONLY TALLY DATA OF THE ASSESSEE COMPANY WAS FOUND WHICH SHOWS THAT THE ASSESSEE HAS RECEIVED CASH CREDIT FROM (I) RUNICHA MERCHANTS PVT LTD., (II) SANKALP (III) SCOPE VYAPAR, EVENT DEVELOPER S PVT LTD.,(V) SCOPE VYAPAR, HARMAN HIRE PURCHASE PVT LTD.(VI) SCOPE VYAPAR SARWATI VINCOM LTD., (VI) SCOPE ALFHA PROPERTIES PVT LTD., (VII) SIGNET VINIMAY PVT LTD., (VIII) SIGNET COUNTRY WIDE TRADECOM PVT LTD., (IX) SRIJAN VYPAR PVT LTD., (X) SRIJAN VYAP AR CAPLIN MARKETING PVT LTD., (XI) SRIJAN TANTIA AGROCHEMICALS PVT LTD.,(XII) WEST LINE, ECONOMY ADVISORY SERVICES PVT LTD., (XIII) WINALL VINIMAY PVT LTD., (XIV) WINALL ELECTRO COCK FUELS PVT LTD AND (XV) YOGIRAJ AGGREGATING TO RS.9,94,50,000/ - FOR THE AS SESSMENT YEAR 2011 - 12 AND RS.15,00,000/ - FOR THE ASSESSMENT YEAR 2012 - 13. 3 0 . IN THE INSTANT CASE, WE FIND THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE SOLE GROUND THAT AMOUNT RECEIVED ON SALE OF INVESTMENT OF RS.9,94,50,000/ - FOR THE ASSESS MENT YEAR 2011 - 12 AND IT(SS)A NO.04 & 05/CTK/2018 SA NO.10 & 11/CTK/20 18 66 RS.15,00,000/ - FOR THE ASSESSMENT YEAR 2012 - 13 WERE UNEXPLAINED CASH CREDIT OF THE ASSESSEE. THUS, THERE IS NOT REFERENCE TO ANY SEARCH MATERIAL BY THE ASSESSING OFFICER BASED ON WHICH SUCH ADDITIONS WERE MADE IN THE HANDS OF THE ASS ESSEE. THEREFORE, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.9,94,50,000/ - FOR THE ASSESSMENT YEAR 2011 - 12 AND RS.15,00,000/ - FOR THE ASSESSMENT YEAR 2012 - 13, RESPECTIVELY AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 3 1 . THE ASSESSEE HAS FILED STAY APPLICATIONS FOR STAY OF DEMAND. AS WE HAVE HEARD AND DECIDED THE APPEALS OF THE ASSESSEE, THE STAY PETITIONS OF THE ASSESSEE HAVE BECOME INFRUCTUOUS AND, ACCORDINGLY THEY ARE DISMISSED. 3 2 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED AND STAY PETITIONS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 23 .3. 2018 AT CUTTACK. S D/ - S D/ - ( PAVAN KUMAR GADALE ) (N. S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CUTTACK DATED 23 /03/2018 B.K.PARIDA, SENIOR PRIVATE SEC RETARY COPY OF THE ORDER FORWARDED TO : BY ORDER, ( SENIOR PRIVATE SECRETARY ) ITAT, CUTTACK 1. THE APPELLANT - MIDAS CAPITAL PVT LTD., CUTTACK , 2. THE RESPONDENT - ACIT, CENTRAL CIRCLE, CUTTACK 3. THE CIT(A), 4. CIT 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//