Appeal Details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 0771 (ITAT-CUTTACK)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 1 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
14-12-2020
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Assessment Year
2009-2010
Appeal Filed On
31-10-2019
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM (THROUGH : VIRTUAL HEARING ) ( ) / IT(SS)A NOS.69 - 75/CTK/2019 ( / A SSESSMENT YEARS : 2009 - 2010 - 20 15 - 2016 ) THE LIBERTY MARINE SYNDICATE (P) LTD., PLOT NO.22, MADHUBAN MARKET, PARADEEP, DISTRICT - JAGATSINGHPUR - 754142 VS ACIT, CENTRAL CIRCLE, CUTTACK PAN NO. : AA ACT 6486 C /ASSESSEE BY : SHRI P.K .MISHRA, ADVOCATE /REVENUE BY : SHRI M.K.GAUTAM, CIT DR / DATE OF HEARING : 20 / 10 /20 20 / DATE OF PRONOUNCEMENT : 14 / 12 /20 20 / O R D E R PER L.P.SAHU, AM : TH E ASSESSEE HAS FILED SEVEN APPEALS AGAI NST THE TWO SEPARATE ORDERS DATED 23.09.2019 & 24.09.2019, PASSED BY THE CIT(A) - 2, BHUBANESWAR FOR THE ASSESSMENT YEARS 2009 - 2010 TO 2015 - 2016 . 2 . OUT OF THE SEVEN APPEALS, THREE APPEALS FILED FOR THE ASSESSMENT YEARS 2009 - 2010 TO 201 1 - 201 2 IN IT(SS)A NOS. 69 - 7 1 /CTK/2019 HAVING SIMILAR ISSUES INVOLVED ARE UNABATED , TO BE DECIDED FIRST AND REST FOUR APPEALS FILED FOR ASSESSMENT YEARS 2012 - 2013, 2013 - 2014 , 2014 - 2015 & 2015 - 2016 IN IT(SS)A NOS.7 2 - 75/CTK/2019 ALSO HAVING SIMILAR ISSUES AND ABATED ASSESSMENTS , TO BE DECIDED THEREAFTER. IT (SS) A NO S . 69 - 75/CTK/2019 2 3. AT THE OUTSET , WE WOULD LIKE TO REPRODUCE THE DETAILS OF ASSESSMENTS AS EMANATE FROM THE ASSESSMENT ORDERS FOR THE YEARS UNDER CONSIDERATION : - IT(SS)A NOS. AYS. RETURN FILED U/S.139(1) OF THE ACT INCOME ASSESSED U/S.143(3) OF T HE ACT RETURN FILED IN PURSUANCE TO NOTICE U/S.153A(1)(A) OF THE ACT INCOME ASSESSED U/S.153A DATED INCOME DECLARED DATED INCOME DECLARED 69/CTK/19 2009 - 10 23.09.09 1,06,09,940 1,21,31,750 23.08.16 1,06,09,940 16,04,51,410 70/CTK/19 2010 - 11 25.09. 10 6,51,32,170 6,55,43,620 23.08.16 6,51,33,170 11,45,84,750 71/CTK/19 2011 - 12 23.09.11 6,55,87,960 7,37,92,539 23.08.16 1,06,09,940 48,92,18,420 72/CTK/19 2012 - 13 28.09.12 1,37,80,430 1,87,61,830 23.08.16 1,37,80,430 2,66,95,780 73/CTK/19 2013 - 14 29.11 .13 2,42,48,080 NO ORDER 24.08.16 2,42,48,480 5,85,62,620 74/CTK/19 2014 - 15 29.11.14 5,20,16,000 NO ORDER NO RETURN FILED 9,27,57,460 75/CTK/19 2015 - 16 NOT FILED - ASSESSED U/S.144 - - 8,20,75,333 4. THE ISSUES INVOLVED IN ALL THE APPEALS UNDER CONSID ERATION HAVE BEEN TABULATED BY THE CIT(A) IN ITS ORDER AT PAGE 3.1, WHICH IS AS UNDER: - SL.NO. ASSESSM ENT YEAR ITA NO. ORDER U/S. ADDITIONS MADE 01 2009 - 10 0794/20 16 - 17 153A/144 A) SUPPRESSION OF SALE ON ACCOUNT OF EXPORT OF IRON ORE - RS.12,59,63,889/ - B) SHARE CAPITAL AND SHARE PREMIUM RS.1,60,00,000/ - C) UNSECURED LOAN - RS.35,01,563/ - D) TRANSPORTATION EXPENSES - RS.28,54,211/ - 02 2010 - 11 0718/20 16 - 17 153A/144 A) TRANSPORTATION EXPENSES RS.3,20,77,830/ - B) UNSECURED LOAN - RS.1,65,57,537/ - C) DIFFERENCE IN BANK DEPOSIT - RS.8,17,209/ - 03 2011 - 12 0826/20 16 - 17 153A/144 A) SUPPRESSION OF SALE ON ACCOUNT OF EXPORT OF IRON ORE - RS. 17,06,01,476/ - B) SHARE CAPITAL AND SHARE PREMIUM RS. 24,30,00, 000/ - C ) TRANSPORTATION EXPENSES - RS. 18 , 24 , 402 / - 04 2012 - 13 082 7 /2 016 - 17 153A/144 A) TRANSPORTATION EXPENSES - RS.10,33,952/ - B) SHARE CAPITAL AND SHARE PREMIUM RS. 69 , 00 ,000/ - 05 2013 - 14 082 9 /2 016 - 17 153A/144 A) INCOME FROM BUSINESS ON ESTIMATE BASIS RS.5,22,51,455/ - B) OTHER INCOME - RS.63,11,160/ - 06 2014 - 15 082 8 /2 016 - 17 A) INCOME FROM BUSINESS ON ESTIMATE BASIS RS.9,08,67,866/ - B) OTHER INCOME - RS.18,89,596/ - 07 0 579 /2 016 - 17 A) INCOME FROM BUSINESS ON ESTIMATE BASIS RS.2,65,35,845/ - B) UNACCOUNTED INCOME RS.5,00,50,000/ - C ) OTHER INCOME - RS. 54,89,488/ - IT (SS) A NO S . 69 - 75/CTK/2019 3 5. FIR ST WE SHALL TAKE UP THE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEARS 2009 - 2010 TO 201 1 - 201 2 IN IT(SS)A NOS.69 - 7 1 /CTK/2019, WHEREIN T HE ISSUE INVOLVED IN ALL THE APPEALS ARE SIMILAR, THEREFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY, FIRST WE DECIDE IT(SS) A NO.69/CTK/2019 FILED FOR THE ASSESSMENT YEAR 2009 - 2010 AND THE DECISION OF THE SAME SHALL APPLY MUTATIS MUTANDIS TO THE OTHER APPEALS ALSO. 6 . THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL FOR A.Y.2009 - 2010 READ AS UNDER : - 1. FOR THAT, THE IMPUGNED O RDER OF ASSESSMENT SO PASSED U/S.153A/144 OF THE ACT IS WITHOUT JURISDICTION AND WITHOUT THE AUTHORITY OF LAW, AS SUCH, THE SAME BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 2. FOR THAT, WHEN THERE IS NO INCR IMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE IMPUGNED ADDITIONS MADE BY THE LEARNED A.O. ARE NOT SUSTAINABLE IN THE EYE OF LAW, THE LEARNED C.I.T.(A) SHOULD HAVE ALLOWED THE APPEAL IN TOTO INSTEAD OF ALLOWING THE APPEAL IN PART. THE ADDITIONS CONFIRMED BY THE LEARNED C.I.T.(A) BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 3. FOR THAT, THE LEARNED C.I.T(A) SHOULD NOT HAVE CONFIRMED THE ADDITION OF RS.1,60,00,000.00 MADE BY THE LEARNED A.O. BY APPLYI NG SECTION 68 OF THE ACT, PARTICULARLY WHEN, THE APPELLANT HAS COMPLIED ALL NECESSARY INGREDIENTS WITH EVIDENCES. THUS, THE IMPUGNED ADDITION BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 4. FOR THAT, THE FORU MS BELOW HAVE COMMITTED GROSS ERROR OF LAW AS WELL AS IN FACT IN MAKING ADDITION OF RS.1,60,00,000.00, IGNORING THE EXPLANATION AND OBJECTION OF THE ASSESSEE. THE IMPUGNED ADDITION SO CONFIRMED BY THE LEARNED C.I.T(A) BEING NOT SUSTAINABLE IN THE EYE OF LA W IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 5. FOR THAT, THE LEARNED C.I.T(A) SHOULD HAVE DELETED THE ADDITION OF RS.28,54,211.00 CLAIMED UNDER THE HEAD OF TRANSPORTATION EXPENSES INSTEAD OF REDUCING IT TO RS.6,18,662.00. THE FINDINGS OF IT (SS) A NO S . 69 - 75/CTK/2019 4 THE LEA RNED C.I.T(A) AS WELL AS OF THE LEARNED A.O. IN CONFIRMING THE ADDITION OF RS.6,18,662.00 BEING CONTRARY TO THE FACTS ON RECORD AND ILLEGAL IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 6. FOR THAT, YOUR APPELLANT CRAVES LEAVE OF THIS HON'BLE TRIBUN AL TO URGE ANY OTHER GROUNDS, IF ANY, AT THE TIME OF HEARING IN THE INTEREST OF JUSTICE. 7 . FURTHER THE ASSESSEE VIDE LETTER DATED 28.08.2020 HAS FILED ADDITIONAL GROUNDS OF APPEAL, WHICH READ AS UNDER : - 1. THAT, FOR ASSESSMENT YEAR 2009 - 10, ASSESSMENT WAS COMPLETED BY THE LEARNED A.O. U/S.153A/144 OF THE I.T. ACT, 1961 BY MAKING ADDITIONS UNDER DIFFERENT HEADS. BEING AGGRIEVED WITH THESE ADDITIONS, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED C.I.T.(A) AND THE SAME WAS ALREADY ADJUDICATED UPON. SINC E, THE LEARNED C.I.T.(A) DID NOT ALLOW THE APPEAL IN TOTO, BEING HIGHLY AGGRIEVED AND SERIOUSLY PREJUDICED, THE APPELLANT/ASSESSEE PREFERRED THIS PRESENT APPEAL BEFORE YOUR HONOUR. 2. THAT, WHILE DRAFTING THE GROUNDS OF APPEAL BEFORE THE LEARNED C.I.T(A) AS WELL AS BEFORE THIS HONBLE TRIBUNAL, THE MANAGING DIRECTOR OF THE APPELLANT COMPANY DUE TO LACK OF KNOWLEDGE, COULD NOT TAKE ONE MORE LEGAL GROUND. SINCE, THE APPELLANT COMPANY ITSELF HAS PREPARED AND FILED THE APPEAL, HAVING NO KNOWLEDGE ON INCOME TA X LAW, COULD NOT TAKE THIS LEGAL GROUND. LEGAL GROUND THAT, THE APPELLANT PROPOSED TO TAKE HERE IS AS SUCH; 1. THAT, THE IMPUGNED ORDER OF ASSESSMENT IS NOT SUSTAINABLE IN THE EYE OF LAW, IN VIEW OF THE FACT THAT DUE PROCEDURE OF LAW AND STATUTORY REQUI REMENT HAS NOT BEEN FOLLOWED BY THE LEARNED AUTHORITIES BELOW IN GRANTING APPROVAL U/S.153D OF THE ACT. IT BEING MANDATORY IN THE EYE OF LAW IN ABSENCE OF IT, THE ORDER OF ASSESSMENT NEEDS TO BE QUASHED IN THE INTEREST OF JUSTICE. 3. THAT, IT MAY BE RES PECTFULLY SUBMITTED HERE THAT, IT BEING JURISDICTIONAL GROUND AND GOES TO THE ROOT OF THE CASE, IT NEEDS TO BE ADMITTED FOR HEARING IN THE INTEREST OF JUSTICE. IF THIS LEGAL GROUND IS NOT ADMITTED AND NOT ADJUDICATED, THE APPELLANT/ASSESSEE WILL SUFFER FRO M IRREPARABLE LOSS AND INJURY, HENCE THE; P R A Y E R UNDER THE FACTS AND IN THE CIRCUMSTANCES STATED ABOVE, IT IS THEREFORE RESPECTFULLY PRAYED THAT, THIS HONBLE TRIBUNAL SHALL BE GRACIOUSLY PLEASED TO CONSIDER THE GENUINE DIFFICULTIES FACED BY THE APPEL LANT COMPANY AND BE FURTHER PLEASED TO ACCEPT THIS ADDITIONAL LEGAL GROUND TAKEN HERE IN THE REVISED GROUNDS OF APPEAL FOR ADJUDICATION IN THE INTEREST OF JUSTICE. AND FOR THIS ACT OF KINDNESS, THE APPELLANT/ASSESSEE AS IN DUTY BOUND SHALL EVER PRAY. IT (SS) A NO S . 69 - 75/CTK/2019 5 8 . T HE ASSESSEE ALSO VIDE LETTER DATED 28.08.2020 HAS FILED REVISED GROUNDS OF APPEAL, WHICH READ AS UNDER : - REVISED GROUNDS OF APPEAL 1. FOR THAT, THE IMPUGNED ORDER OF ASSESSMENT SO PASSED U/S.153A/144 OF THE ACT IS WITHOUT JURISDICTION AND WITHOUT THE AU THORITY OF LAW, AS SUCH, THE SAME BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 2. FOR THAT, WHEN THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE IMPUGNED ADDITIONS MADE BY THE LEARN ED A.O. ARE NOT SUSTAINABLE IN THE EYE OF LAW, THE LEARNED C.I.T.(A) SHOULD HAVE ALLOWED THE APPEAL IN TOTO INSTEAD OF ALLOWING THE APPEAL IN PART. THE ADDITIONS CONFIRMED BY THE LEARNED C.I.T.(A) BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DEL ETED IN THE INTEREST OF JUSTICE. 3. THAT, THE IMPUGNED ORDER OF ASSESSMENT IS NOT SUSTAINABLE IN THE EYE OF LAW, IN VIEW OF THE FACT THAT DUE PROCEDURE OF LAW AND STATUTORY REQUIREMENT HAS NOT BEEN FOLLOWED BY THE LEARNED AUTHORITIES BELOW IN GRANTING AP PROVAL U/S.153D OF THE ACT. IT BEING MANDATORY IN THE EYE OF LAW IN ABSENCE OF IT, THE ORDER OF ASSESSMENT NEEDS TO BE QUASHED IN THE INTEREST OF JUSTICE. 4. FOR THAT, THE LEARNED C.I.T(A) SHOULD NOT HAVE CONFIRMED THE ADDITION OF RS.1,60,00,000.00 MADE BY THE LEARNED A.O. BY APPLYING SECTION 68 OF THE ACT, PARTICULARLY WHEN, THE APPELLANT HAS COMPLIED ALL NECESSARY INGREDIENTS WITH EVIDENCES. THUS, THE IMPUGNED ADDITION BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JU STICE. 5. FOR THAT, THE FORUMS BELOW HAVE COMMITTED GROSS ERROR OF LAW AS WELL AS IN FACT IN MAKING ADDITION OF RS.1,60,00,000.00, IGNORING THE EXPLANATION AND OBJECTION OF THE ASSESSEE. THE IMPUGNED ADDITION SO CONFIRMED BY THE LEARNED C.I.T(A) BEING NO T SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 6. FOR THAT, THE LEARNED C.I.T(A) SHOULD HAVE DELETED THE ADDITION OF RS.28,54,211.00 CLAIMED UNDER THE HEAD OF TRANSPORTATION EXPENSES INSTEAD OF REDUCING IT TO RS.6,18, 662.00. THE FINDINGS OF THE LEARNED C.I.T(A) AS WELL AS OF THE LEARNED A.O. IN CONFIRMING THE ADDITION OF RS.6,18,662.00 BEING CONTRARY TO THE FACTS ON RECORD AND ILLEGAL IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 7. FOR THAT, YOUR APPELLANT CRA VES LEAVE OF THIS HONBLE TRIBUNAL TO URGE ANY OTHER GROUNDS, IF ANY, AT THE TIME OF HEARING IN THE INTEREST OF JUSTICE. 9 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY DERIVES INCOME FROM STEVEDORING, SHIP HANDLING AND OTHER IT (SS) A NO S . 69 - 75/CTK/2019 6 MARINE RELATED JOBS. THE ASSESSEE FILED ITS RETURN OF INCOME U/S.139(1) OF THE INCOME TAX ACT,1961 WAS FILED ON 23.09.2009 DISCLOSING TOTAL INCOME OF RS. 1,06,09,940/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE AO COMPLETED ASSESSMENT U/ S 143(3) OF THE L.T ACT ON 29.12.2011 DETERMINING THE TOTAL INCOME OF RS. 1,21,31,750/ - BY MAKING ADDITIONS UNDER THE FOLLOWING HEADS. I) DISALLOWANCE U/S 40A(3) - RS.1,62,061/ - II) FILING FEES - RS.1,39,638/ - III) LOSS ON SALE OF MOTOR CAR - RS.52,203/ - IV) STEVEDORING EXPENSES - RS.11,67,905/ - RS.15,21,807/ - SUBSEQUENTLY A SEARCH & SEIZURE OPERATION U/S. 132(1) OF THE L.T. ACT, 1961 WAS CONDUCTED ON 11.09.2014 IN THE RESIDENTIAL PREMISES OF THE ASSESSEE AT 156/2, BLOCK - G, N EW ALIPORE, KOLKATA - 700053. CONSEQUENT UPON THE SEARCH AND SEIZURE OPERATION, NOTICES U/S. 1 53A (1) (A) OF THE ACT DT.04.07,2016 WAS ISSUED FOR COMPLIANCE WITHIN THE STIPULATED PERIOD. IN RESPONSE TO THE DEPARTMENTAL NOTICE , THE ASSESSEE FILED RETURN U/S 15 3A OF THE ACT ON 23.08.2016 DISCLOSING THE TOTAL INCOME OF RS.1,06,09,940/ - WHICH WAS DISCLOSED U/S.139(1) OF THE ACT . THEREAFTER STATUTORY NOTICES U/S 143(2) & U/S 142(1) OF THE ACT WERE ISSUED ON 12.09.2016 ALONG WITH THE QUESTIONNAIRE REQUIRING THE ASS ESSEE TO PRODUCE THE BOOKS OF ACCOUNT , BILLS AND VOUCHERS AND TO EXPLAIN CERTAIN ISSUES. HOWEVER NO COMPLIANCE WAS MADE BY THE ASSESSEE . THE AO IN IT (SS) A NO S . 69 - 75/CTK/2019 7 THE ASSESSMENT ORDER AT PAGE 2 HAS MENTIONED THE CONDUCT OF THE ASSESSEE IN NON - COMPLIANCE TO THE NOTICES ISS UED BY THE DEPARTMENT. THEREFORE, THE AO OBSERVED THAT DESPITE BEING ALLOWED A NUMBER OF OPPORTUNITIES THE ASSESSEE FAILED TO FURNISH THE BASIC DETAILS CALLED FOR IN ITS CASE. HOWEVER ON 20.10.2016 THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED A PETITION SEEKING AN ADJOURNMENT. ACCORDINGLY THE CASE WAS ADJOURNED TO 24.10.2016. BUT ON THE SAID DATE NO COMPLIANCE MADE BY THE ASSESSEE. HOWEVER ON 24.11.2016 SRI S. K. ACHARYA , LD. AR OF THE ASSESSEE APPEARED AND SUBMITTED PETITION REQUESTING TO KEEP T HE ASSESSMENT PROCEEDINGS IN ABEYANCE AS THE MATTER IS ADJUDICATED BEFORE THE HON'BLE HIGH COURT OF ODISHA. THE WRIT FILED BY THE ASSESSEE IS DISMISSED. THEREAFTER, THE ASSESSEE WAS ASKED TO COMPLY THE QUERIES ASKED ON 12.09.2016 &30.09.2016, HOWEVER, AFTE R THAT NEITHER THE ASSESSEE NOR ITS A/R TO EXPLAIN THE QUERIES ASKED FOR IN THE QUESTIONNAIRES. THE NON - COMPLIANCE OF THE ASSESSEE TO THE NOTICES ISSUED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ENABLED THE AO TO COMPLETE THE ASSESSMENT TO THE BEST OF H IS JUDGMENT BASING ON THE FACTS BROUGHT TO THE RECORD U/S 144 OF THE L.T. ACT. IT WAS ALSO NOTED BY THE AO THAT WITHOUT THE DOCUMENTS WHICH ARE CALLED FOR THE GENUINENESS AND CORRECTNESS OF INCOME CANNOT BE ASCERTAINED BEYOND ALL REASONABLE DOUBTS. ACCORDI NGLY, THE AO PROCEEDED TO COMPLETE THE ASSESSMENT IN THE FOLLOWING MANNER ON THE FOLLOWING HEADS : - IT (SS) A NO S . 69 - 75/CTK/2019 8 1. SUPPRESSION OF SALE ON ACCOUNT OF EXPORT OF IRON ORE. ] THE SCRUTINY ASSESSMENT IN THIS CASE WAS COMPLETED ON 29.12.2011. SUBSEQUENTLY ON VERIFICATION OF THE ASSESSMENT RECORD IT IS FOUND THAT THE ASSESSEE HAS SHOWN 39540 METRIC TON EXPORT OF IRON ORE. THE VALUE OF EXPORT OF SUCH METRIC TON IS RS. 11,50,08,891/ - . ON VERIFICATION OF THE INFORMATION RECEIVED FROM TRAFFIC MANAGER PARADEEP PORT TRUST IT IS R EVEALED THAT THE ASSESSEE HAS EXPORTED 85390 METRIC TON OF IRON ORE. THE VALUE OF SUCH IRON ORE WORKS OUT RS.24,09,72,780/ - . THUS THERE IS A DIFFERENCE ON THE EXPORTED IRON ORE TO THE TUNE OF RS. 12,59,63,889/ - . THE ASSESSEE VIDE THIS OFFICE LETTER DT. 13. 12.2016 WAS ASKED TO RECONCILE THE DISCREPANCIES WITH PROPER DOCUMENTARY EVIDENCE. HOWEVER NO COMPLIANCE WAS MADE BY THE ASSESSEE ON THE GIVEN DATE. THUS I AM INCLINED TO CONSTRUE THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER FOR THE AFORESAID DIFFERENTIAL AMOUNT. THEREFORE THE SALE VALUE OF EXPORTED IRON ORE OF RS. 12,59,63,889/ - REPRESENTS SUPPRESSION OF SALE OF THE ASSESSEE OUTSIDE BOOKS OF ACCOUNT. IN THE ABOVE CIRCUMSTANCES 1 INCLINED TO CONSIDERED THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER FOR THI S SUPPRESSION SALE AS DISCUSSED ABOVE. HENCE THE ENTIRE AMOUNT OF RS. 12,59,63,889/ - IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE UNDER SUPPRESSION OF SALES. ADD: RS. 12,59,63,889/ - 2. S H ARE CAPITAL AND SHARE PREMIUM ON EXAMINATION OF THE BALANCE SHEE T IT IS FOUND THAT THERE WERE ABNORMAL INCREASE IN SHARE CAPITAL AND RESERVE TO THE TUNE OF RS.70,00,000/ - & RS. 90,00,000/ - RESPECTIVELY. VIDE THIS OFFICE LETTER DT.25.10.2016 ASSESSEE WAS REQUESTED TO EXPLAIN THE SHARE CAPITAL AND RESERVE AND SURPLUS AMO UNT WITH SUITABLE DOCUMENTARY EVIDENCE. HOWEVER ASSESSEE DID NOT SUBMIT A N Y EXPLANATION IN THIS REGARD. POST SEARCH ENQUIRE REVEALED THAT UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN BROUGHT BACK IN THE FORM OF SUCH SHARE CAPITAL AND SHARE PREMIUM. IN VIEW OF THE ABOVE I DEEMED PROPER TO ADD THE INCREASE AMOUNT SHOWN UNDER THE HEAD SHARE CAPITAL A N D RESERVED AS THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. ADDITION: RS. 1,60,00,000/ - 3, UNSECURED LOAN OR VERIFICATION OF THE BALANCE SHEET IT IS FO UND THAT ASSESSEE HAS SHOWN RS. 39,72,036/ - UNDER THE HEAD UNSECURED LOAN AS AGAINST RS. 4,70,473/ - SHOWN IN THE PREVIOUS YEAR. THUS THE INCREASE UNDER THE SAID WORKS OUT TO RS. 35,01,563/ - . THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS, CREDITWORTHINESS & IDENTITY OF THE CREDITORS. THE ASSESSEE FAILED TO SUBMIT ANY EVIDENCE AS REGARDS TO THE UNSECURED LOAN. IN ABSENCE OF SUPPORTING DOCUMENTS THE LOAN TAKEN BY THE ASSESSEE CANNOT BE TREATED AS GENUINE AND FROM ANY RELIABLE SOURCES. THUS THE SAME IS ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT, 1961. ADDITION: RS.35,01,563/ - IT (SS) A NO S . 69 - 75/CTK/2019 9 4. TRANSPORTATION EXPENSES ON EXAMINATION OF THE PROFIT AND LOSS ACCOUNT IT IS FOUND THAT TRANSPORT EXPENSES AS SHOWN AT RS. 2,85,42,1 \ 1J - AS AGAINST THE TRANSPO RT INCOME OF RS. 3,26,43,774/ - , AN EXTRACT OF LETTER DT.28.10.2016 IS GIVEN BELOW FOR BETTER APPRECIATION OF THE FACT. A. ON SCRUTINY OF THE SEIZED DOCUMENTS IT IS FOUND THAT ASSESSEE HAD CLAIMED TRANSPORTATION EXPENSES PAYMENT TO THE COMPANIES/FARMS NAME D BELOW. S! NO NAME ADDRESS T AMCD TRANSPORT 5 LH FLOOR, HOTEL MILAND PALACE, 540, CUTTACK ROAD, BHUBANESWAR - 751006 2 KANAK TRANSPORT KEONJHAR GARH, KEONJHAR - 758001 3 MAA KUNARI TRANSPORT 5 M FLOOR, HOTEL MILAND PALACE, 540, CUTTACK ROAD, BHUBANESWAR - 7 5 1006 4 M/S NILACHAL MINING & MINERALS PVT. LTD, AT/PO - GUALI, BARBIL, KEONJHAR 5 SANTUKA TRANSPORT NEW INDUSTRIAL ESTATE ROAD, JAGATPUR,CUTTACK - 754021 6 GARG LOGISTICS PLOTNO - 214, SEC - 25, TRANSPORT NAGAR, PANLPAT, HR - 132103 7 M/S INTIMATE CONSTRUCTION P VT. LTD 28, ROY BAHADUR ROAD, SNEHE GARDEN, KOLKATA - 700053 8 M/S REWARD COMMOSALE PVT. LTD ARRAH BIDHAN PARK, PO - DURGAPUR, BARDHAMAN, WESTBENGAL - 713212 9 M/S BHUMI FINANCIAL CONSULTANTS PVT. LTD ARRAH, BIDHAN PARK, PO - BIDHAN NAGAR, BARDHAMAN, WESTBENGAL - 713212 10 M/S GREEN VIEW PROJECTS PVT. LTD 28, ROY BAHADUR ROAD, SNEHEPARDEN, KOLKATA - 700053 11 OM TRANSPORT CO PVT LTD 68, CHHAKRABHUJ KHETSI BUILDING, 3 R ' FLOOR, 178, SANT TUKARAM ROAD, MASJID BUNDER, MUMBAI 12 JBS MINERALS & OVERSEAS PVT. LTD AT - 333 CUTTACK ROAD, BOMIKHAT,BHUBANESWAR - 751006 13 RUPKAR TRADELINK PVT. LTD 16, MUNSI SADRUDDIN LANE , 1 ST FLOOR, KOLKATA 14 SHRIYA LOGISTICS IN THIS CONNECTION, ASSESSEE WAS REQUESTED TO FURNISH 1. T HE YEAR WISE LEDGER A/C AND COPIES OF INVOICES/VOUCHERS OF THE ABOVE ASSESSEES MENTIONING THEREIN THE DETAILS OF TRANSACTION FOR THE FINANCIAL YEARS - 2008 - 09 TO 2014 - 15. 2. REGULAR BOOKS OF ACCOUNT, LEDGER, VOUCHERS & CASH BOOK. NEITHER BOOKS OF ACCOUNTS WAS PRODUCED NOR ANY WRITTEN SUBMISSION WAS FILED TO EXPLAIN THE TRANSPORT EXPENSES. IN COURSE OF SEARCH AND SEIZURE ACTION IT WAS NOTICED THAT THE ASSESSEE HAS GENERATED HUGE UNDISCLOSED INCOME BY DEBITING BOGUS EXPENSES UNDER THE HEAD TRANSPORTATION HEAD. IN VIEW OF THE ABOVE I DISALLOW 10% OF TRANSPORT E XPENSES WHICH WORKS AT RS. 28,54,211/ - AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ADDITION : RS.28,54,211/ - IT (SS) A NO S . 69 - 75/CTK/2019 10 10 . AGAINST THE ABOVE ORDER OF AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE CIT(A) PARTLY ALLOWED THE APPEAL OF T HE ASSESSEE. 11 . LD. AR BEFORE US REITERATED THE SUBMISSION MADE BEFORE THE AUTHORITIES BELOW . HE ARGUED BEFORE US ON LEGAL ISSUE AS WELL AS ON MERITS OF THE CASE AND ALSO FILED WRITTEN SUBMISSION FOR THE ASSESSMENT YEARS 2009 - 2010 TO 2011 - 2012, WHICH READ S AS UNDER : - 1. THAT, THE APPELLANT IS A PRIVATE LIMITED COMPANY HAVING ITS REGISTERED OFFICE AT 22, MADHUBAN MARKET COMPLEX, PARADEEP IN THE DISTRICT OF JAGATSINGHPUR AND BRANCH OFFICE AT KOLKATA. IT DERIVES INCOME FROM STEVEDORING, SHIP CHANDLING, EXPOR T AND OTHER MARINE RELATED JOBS. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE BRANCH OFFICE OF THE APPELLANT COMPANY AND A SURVEY OPERATION WAS CONDUCTED IN THE REGISTERED OFFICE AT PARADEEP ON 11.09.2014. CONSEQUENT TO SEARCH AND SURVEY OPERATION, THE LEARNED A.O COMPLETED ASSESSMENT U/S.153A / 144 OF THE ACT FROM ASSESSMENT YEARS: 2009 - 10 TO 2014 - 15 AND ASSESSMENT YEAR: 2015 - 16, BEING THE YEAR OF SEARCH COMPLETED REGULAR ASSESSMENT U/S.144 OF THE ACT. 2. THAT, SINCE THE LEARNED A.O. DID NOT PROVI DE SUFFICIENT EFFECTIVE OPPORTUNITY, WHILE COMPLETING ASSESSMENT AND PASSED THE ORDER FROM ASSESSMENT YEARS: 2009 - 10 TO 2014 - 15 U/S.153A / 144 OF THE ACT AND FOR ASSESSMENT YEAR 2015 - 16, U/S.144 OF THE ACT, BY MAKING HUGE ADDITIONS, BEING AGGRIEVED, APPELLANT COMPANY PREFERRED APPEAL BEFORE THE LEARNED C.I.T(A). WHILE ADJUDICATING APPEALS OF THE APPELLANT, THE LEARNED C.I.T(A) DISMISSED THE LEGAL GROUND AND DID NOT CONSIDER THE FACTUAL ASPECTS IN ITS PROPER PERSPECTIVES AND ALLOWED THE APPEALS OF THE APPELLANT COMPANY PARTLY, BEING SERIOUSLY AGGRIEVED, THE APPELLANT COMPANY PREFERRED APPEALS BEFORE THIS HONBLE TRIBUNAL AND KNOCKED THE DOOR OF THIS HONBLE TRIBUNAL FOR JUSTICE. 3. THAT, IT MAY BE SUBMITTED HERE THAT, OUT OF SEVEN ASSESSMENT YEARS, FR OM ASSESSMENT YEARS: 2009 - 10 TO 2011 - 12, REGULAR ASSESSMENTS U/S.143(3) WERE COMPLETED MUCH PRIOR TO THE DATE OF SEARCH, AS SUCH, THESE THREE ASSESSMENT YEARS REMAINED UNABATED AND FROM ASSESSMENT YEARS:2012 - 13 TO 2014 - 15, REGULAR ASSESSMENTS WERE PENDING ON THE DATE OF SEARCH, AS SUCH, THESE THREE YEARS ASSESSMENT GOT ABATED AND ASSESSMENT YEAR:2015 - 16 IS THE SEARCH YEAR. SINCE, THE LEGAL ISSUE COVERS FROM ASSESSMENT YEARS: 2009 - 10 TO 2011 - 12, THESE THREE ASSESSMENT YEARS MAY BE TAKEN UP TOGETHER FOR SAKE OF CONVENIENCE AND BETTER APPRECIATION. 4. THAT, THE APPELLANT COMPANY APPRISES HEREWITH ASSESSMENT YEAR - WISE DETAILS OF FACTS, ADDITIONS MADE BY THE LEARNED A.O AND DECISION OF THE LEARNED C.I.T.(A) AND ITS SUBMISSIONS FOR CONVENIENCE AND BETTER APPREC IATION OF FACT; IT (SS) A NO S . 69 - 75/CTK/2019 11 ASSESSMENT YEAR:2009 - 10 (FACTS): 1. THAT, ORIGINAL RETURN OF INCOME WAS FILED ON 23.09.2009, DECLARING TOTAL INCOME AT RS. 1,06,09,940.00 ALONG WITH AUDIT REPORT. ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 29.12.2011, DETERMINING TOTAL INCOME AT RS. 1,21,31,750.00 (REFERENCE MAY BE DRAWN TO PAGE NO.37 AND 183 OF PAPER BOOK FOR ASSESSMENT YEAR:2009 - 10.) CONSEQUENT TO SEARCH DATED 11.09.2014, ASSESSMENT PROCEEDING U/S.153A WAS INITIATED AND COMPLETED. WHILE COMPLETING ASSESSMENT U/S. 153A/144, WHEN THE LEARNED A.O DID NOT HAVE ANY INCRIMINATING MATERIAL IN HIS HAND, INSTEAD OF ACCEPTING THE INCOME ALREADY ASSESSED U/S.143(3) OF THE ACT, STARTED RE - EXAMINING ISSUES OF REGULAR ASSESSMENT, WHICH HAD ATTENDED FINALITY AND MADE ADDITION OF RS.12,59,63,889.00 BY WRONGLY INTERPRETING THE INFORMATION RECEIVED U/S.133(6) FROM M/S. PARADEEP PORT TRUST DURING COURSE OF ASSESSMENT PROCEEDING AS SUPPRESSED SALES TURNOVER, HE ALSO MADE ADDITION OF DISCLOSED SHARE CAPITAL AND SHARE PREMIUM OF RS.1,60, 00,000.00 ON THE BASIS OF A STATEMENT OF AN UNRELATED THIRD PARTY / ALLEGED ENTRY OPERATOR RECORDED MUCH PRIOR TO THE DATE OF SEARCH AND ADDED DISCLOSED UNSECURED LOAN OF RS.35,01,563.00 BY APPLYING SECTION 68 OF THE ACT, FURTHER STARTED RE - EXAMINING THE T RANSPORTATION EXPENSES AND DISALLOWED 10% OF TRANSPORTATION EXPENSES ON AD HOC ESTIMATION BASIS IN ABSENCE OF BOOKS OF ACCOUNT. IT MAY BE POINTED OUT HERE THAT, NONE OF THESE FOUR ADDITIONS / DISALLOWANCES ARE BASED ON ANY INCRIMINATING MATERIAL. ALL THESE POINTS WERE ALREADY VERIFIED BY THE LEARNED A.O., WHILE COMPLETING THE REGULAR ASSESSMENT U/S.143(3) OF THE ACT, THEREFORE, THE SAME CANNOT BE TREATED AS INCRIMINATING MATERIAL AND CANNOT FORM PART OF SEARCH ASSESSMENT. BEING AGGRIEVED, THE APPELLANT COMP ANY PREFERRED APPEAL BEFORE C.I.T.(A). WHILE ADJUDICATING APPEALS, THE LEARNED C.I.T.(A) DISMISSED THE LEGAL ISSUE RELYING ON TWO JUDGMENTS, PARTICULARLY WHEN, SAID JUDGMENTS WERE ON A DIFFERENT FOOTINGS AND HAS NO APPLICATION TO THE FACT OF THE PRESENT CA SE. HOWEVER, HE DELETED THE ADDITIONS OF ALLEGED SUPPRESSED SALES TURNOVER OF RS.12,59,63,889.00, UNSECURED LOAN OF RS.35,01,563.00 AND REDUCED THE DISALLOWANCE OF TRANSPORTATION EXPENSES TO THE EXTENT OF RS.22,35,549.00 ON THE BASIS OF REMAND REPORT AND C ONFIRMED ADDITION OF SHARE CAPITAL AND SHARE PREMIUM OF RS.1,60,00,000.00 AND ALSO CONFIRMED TRANSPORTATION EXPENSES, DISALLOWANCE PARTLY BY RS.6,18,662.00 AND ALLOWED THE APPEAL OF THE APPELLANT PARTLY ON MERIT. SINCE, THE ORDER PASSED BY THE LEARNED C.I. T.(A) IS NOT IN CONFORMITY WITH THE LAW AND CONTRARY TO THE SETTLED PRINCIPLES OF LAW AND FACT, THE APPELLANT KNOCKED THE DOOR OF THIS HONBLE TRIBUNAL FOR JUSTICE. A DETAIL CHART OF ADDITIONS MADE BY THE A.O AND ADDITIONS DELETED BY C.I.T.(A) AND ISSUES F OR ADJUDICATION BEFORE THIS HONBLE TRIBUNAL ARE GIVEN HERE UNDER FOR BETTER APPRECIATION; HEADS OF ADDITION BY THE LEARNED A.O ADDITION DELETED BY THE LEARNED CIT(A) WHETHER ANY APPEAL PREFERRED BY REVENUE ISSUE FOR ADJUDICATION BY THIS HONBLE TRIBUNAL A) SUPPRESSION OF SALE ON ACCOUNT OF EXPORT OF IRON ORE - RS.12,59,63,889/ - DELETED NO NO B) SHARE CAPITAL AND SHARE PREMIUM - RS.1,60,00,000/ - CONFIRMED NO ADDITION OF RS.1,60,00,000/ - C) UNSECURED LOAN RS.35,01,563/ - DELETED NO NO D) TRANSPORTATION EXPENSES - RS.28 ,54,211/ - RESTRICTED TO 6,18,662/ - NO ADDITION OF RS. 6,18,662/ - IT (SS) A NO S . 69 - 75/CTK/2019 12 ASSESSMENT YEAR:2010 - 11(FACTS): THAT, ORIGINAL RETURN OF INCOME WAS FILED ON 25.09.2010, DECLARING TOTAL INCOME AT RS. 6,51,32,170.00 ALONG WITH AUDIT REPORT. ASSESSMENT U/S.143(3) OF TH E ACT WAS COMPLETED ON 21.03.2013, DETERMINING TOTAL INCOME AT RS. 6,55,43,620.00 (REFERENCE MAY BE DRAWN TO PAGE NO.83,84 AND 168 OF PAPER BOOK FOR ASSESSMENT YEAR:2010 - 11.) CONSEQUENT TO SEARCH DATED 11.09.2014, ASSESSMENT PROCEEDING U/S.153A WAS INITIATE D AND COMPLETED. WHILE COMPLETING ASSESSMENT U/S.153A / 144, WHEN THE LEARNED A.O DID NOT HAVE ANY INCRIMINATING MATERIAL IN HIS HAND, INSTEAD OF ACCEPTING THE INCOME ALREADY ASSESSED U/S.143(3) OF THE ACT, STARTED RE - EXAMINING ISSUES OF REGULAR ASSESSMENT WHICH HAD ATTENDED FINALITY AND MADE ADDITION OF RS.3,20,77,830.00 BY DISALLOWING 10% OF FREIGHT EXPENSES, MADE ADDITION OF UNSECURED LOAN OF RS.1,65,57,537.00 BY APPLYING SECTION 68 OF THE ACT, FURTHER ADDED EXCESS DEPOSIT CALCULATED BY HIM OF RS.8,17,20 9.00 OUT OF BANK ACCOUNTS, TREATING IT AS UNEXPLAINED INCOME. IT MAY BE POINTED OUT HERE THAT, NONE OF THESE THREE ADDITIONS ARE BASED ON ANY INCRIMINATING MATERIAL. ALL THESE POINTS WERE ALREADY VERIFIED BY THE LEARNED A.O. WHILE COMPLETING THE REGULAR AS SESSMENT U/S.143(3) OF THE ACT, THEREFORE, THE SAME CANNOT BE TREATED AS INCRIMINATING MATERIAL AND CANNOT FORM PART OF SEARCH ASSESSMENT. BEING AGGRIEVED, APPELLANT PREFERRED APPEAL BEFORE C.I.T.(A). WHILE ADJUDICATING APPEALS THE LEARNED C.I.T.(A) DISMIS SED THE LEGAL ISSUE RELYING ON TWO JUDGMENTS, PARTICULARLY WHEN, SAID JUDGMENTS WERE ON A DIFFERENT FOOTINGS AND HAS NO APPLICATION TO THE FACT OF THE PRESENT CASE. HOWEVER, HE REDUCED THE ADDITION OF FREIGHT EXPENSES PARTLY AND CONFIRMED ADDITION OF RS.52 ,23,907.00, DELETED ADDITION OF UNSECURED LOAN OF RS.1,65,57,537.00 AND DELETED RS.1,42,774.00 OUT OF ADDITION OF RS.8,17,209.00 AND CONFIRMED ADDITION OF RS.6,74,435.00 ON THE BASIS OF REMAND REPORT AND PARTLY ALLOWED THE APPEAL OF THE APPELLANT ON MERIT. SINCE, THE ORDER PASSED BY THE LEARNED C.I.T(A) IS NOT IN CONFORMITY WITH THE LAW AND CONTRARY TO THE SETTLED PRINCIPLES OF LAW AND FACT, THE APPELLANT KNOCKED THE DOOR OF THIS HONBLE TRIBUNAL FOR JUSTICE. A DETAIL CHART OF ADDITIONS MADE BY THE A.O AND ADDITIONS DELETED BY C.I.T.(A) AND ISSUES FOR ADJUDICATION BEFORE THIS HONBLE TRIBUNAL ARE GIVEN HERE UNDER FOR BETTER APPRECIATION. HEADS OF ADDITION BY THE LEARNED A.O ADDITION DELETED BY THE LEARNED CIT(A) WHETHER ANY APPEAL PREFERRED BY REVENUE ISSUE FOR ADJUDICATION BY THIS HONBLE TRIBUNAL A) 10% OF TRANSPORTATION EXPENSES RS.3,20,77,830/ - RS.2,68,53,923/ - NO ADDITION OF RS.52,23,907/ - B) UNSECURED LOAN RS.1,65,57,537/ - DELETED NO NO. C) EXCESS DEPOSIT IN BANK RS. 1,42,774/ - NO ADDITION OF RS. 6,74 ,435/ - ASSESSMENT YEAR:2011 - 12:( FACTS): 1. THAT, ORIGINAL RETURN OF INCOME WAS FILED ON 23.09.2011, DECLARING TOTAL INCOME AT RS. 6,55,87,960.00 ALONG WITH AUDIT REPORT. ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 30.03.2014, IT (SS) A NO S . 69 - 75/CTK/2019 13 DETERMINING TOTAL INCOME AT RS. 7,37,92,539.00 (REFERENCE MAY BE DRAWN TO ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT.) CONSEQUENT TO SEARCH DATED 11.09.2014, ASSESSMENT PROCEEDING U/S.153A WAS INITIATED AND COMPLETED. WHILE COMPLETING ASSESSMENT U/S.153A / 144, WHEN THE LEARNED A.O DID NOT HAVE ANY INCRIMINATING MATERIAL IN HIS HAND, INSTEAD OF ACCEPTING THE INCOME ALREADY ASSESSED U/S.143(3) OF THE ACT, STARTED RE - EXAMINING ISSUES OF REGULAR ASSESSMENT WHICH HAD ATTENDED FINALITY AND MADE ADDITION OF RS.17,06,01,476.00 BY WRONGL Y INTERPRETING THE INFORMATION RECEIVED U/S.133(6) FROM M/S. PARADEEP PORT TRUST DURING ASSESSMENT PROCEEDING AS SUPPRESSED SALES TURNOVER, ALSO MADE ADDITION OF DISCLOSED SHARE CAPITAL AND SHARE PREMIUM OF RS.24,30,00,000.00 ON THE BASIS OF A STATEMENT OF A UNRELATED THIRD PARTY / ALLEGED ENTRY OPERATOR RECORDED MUCH PRIOR TO THE DATE OF SEARCH, FURTHER STARTED RE - EXAMINING THE TRANSPORTATION EXPENSES AND DISALLOWED 10% OF TRANSPORTATION EXPENSES RS.18,24,402.00 ON AD HOC ESTIMATION BASIS IN ABSENCE OF BOO KS OF ACCOUNT. ALL THESE POINTS WERE ALREADY VERIFIED BY THE LEARNED A.O. WHILE COMPLETING THE REGULAR ASSESSMENT U/S.143(3) OF THE ACT, THEREFORE, THE SAME CANNOT BE TREATED AS INCRIMINATING MATERIAL AND CANNOT FORM PART OF THE SEARCH ASSESSMENT. BEING AG GRIEVED, THE APPELLANT COMPANY PREFERRED APPEAL BEFORE C.I.T.(A). WHILE ADJUDICATING APPEALS THE LEARNED C.I.T.(A) DISMISSED THE LEGAL ISSUE, RELYING ON TWO JUDGMENTS, PARTICULARLY WHEN, SAID JUDGMENTS WERE ON A DIFFERENT FOOTINGS AND HAS NO APPLICATION TO THE FACT OF THE PRESENT CASE, HOWEVER, HE REDUCED THE ADDITION OF ALLEGED SUPPRESSED SALES TURNOVER PARTLY TO RS.1,18,32,767.00, CONFIRMED ADDITION OF SHARE CAPITAL AND SHARE PREMIUM OF RS.24,30,00,000.00 AND REDUCED THE ADDITION OF TRANSPORTATION EXPENS ES TO RS.2,78,250.00 ON THE BASIS OF REMAND REPORT AND PARTLY ALLOWED THE APPEAL OF THE APPELLANT ON MERIT. SINCE, THE ORDER PASSED BY THE LEARNED C.I.T(A) IS NOT IN CONFORMITY WITH THE LAW AND CONTRARY TO THE SETTLED PRINCIPLES OF LAW AND FACT, THE APPELL ANT COMPANY KNOCKED THE DOOR OF THIS HONBLE TRIBUNAL FOR JUSTICE. A DETAIL CHART OF ADDITIONS MADE BY THE A.O AND ADDITIONS DELETED BY C.I.T.(A) AND ISSUES FOR ADJUDICATION BEFORE THIS HONBLE TRIBUNAL ARE GIVEN HERE UNDER FOR BETTER APPRECIATION; HEADS OF ADDITION BY THE LEARNED A.O ADDITION DELETED BY LEARNED CIT(A) APPEAL PREFERRED BY REVENUE ISSUE FOR ADJUDICATION BY THIS HONBLE TRIBUNAL A) SUPPRESSION OF SALE ON ACCOUNT OF EXPORT OF IRON ORE - RS. 17,06,01,476 / - REDUCED TO RS.1,18,32,767/ - NO ADDITION O F RS.1,18,32,767/ - B) SHARE CAPITAL AND SHARE PREMIUM - RS. 24,30 ,00,000/ - CONFIRMED NO ADDITION OF RS.24,30,00,000/ - C) TRANSPORTATION EXPENSES RS.18,24,402 / - REDUCED TO RS. 2,78,250/ - NO ADDITION OF RS. 2,78,250/ - 2. THAT, THE APPELLANT COMPANY CHALLENGE S THE IMPUGNED ASSESSMENTS AND CONSEQUENTIAL ADDITIONS MADE BY THE LEARNED A.O. AND CONFIRMED BY THE LEARNED C.I.T(A), BOTH ON LEGAL ISSUES AS WELL AS ON MERIT. SINCE, THE LEGAL ISSUE ARISES OUT OF THE FACT AND IT (SS) A NO S . 69 - 75/CTK/2019 14 GOES TO THE ROOT OF THE CASE, THE APPELLANT P RAYS TO DECIDE THE LEGAL ISSUE FIRST. THE LEGAL ISSUE TO BE URGED IS THAT, IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE IMPUGNED ASSESSMENT U/S.153A / 144 AND CONSEQUENTIAL ADDITIONS MADE THEREIN ARE NOT IN CONFORMITY WITH THE LAW, HENCE NOT SUSTAINABLE. IMPUGNED ASSESSMENTS AND ADDITIONS MADE ARE WITHOUT JURISDICTION IN ABSENCE OF INCRIMINATING MATERIALS . 4.1 THAT, THOUGH THERE WAS A SEARCH OPERATION CONDUCTED IN THE CASE OF THE APPELLANT COMPANY, BUT NO INCRIMINATING MATERIAL RELATING TO ANY UNDISCLOS ED INCOME COULD BE UNEARTHED EITHER DURING SEARCH OR DURING POST SEARCH INQUIRY WITHIN THE MEANING OF SECTION 132(1)(C) OF THE ACT. EVEN THOUGH, CERTAIN DOCUMENTS WERE SEIZED AS PER PANCHANAMA, BUT UNDISCLOSED INCOME COULD NOT BE DERIVED FROM THESE SEIZED MATERIALS, THATS WHY WHILE COMPLETING ASSESSMENT, THE LEARNED A.O COULD NOT REFER TO ANY SEIZED MATERIAL, THE LEARNED A.O. MADE ADDITIONS AS MENTIONED ABOVE FOR THESE THREE ASSESSMENT YEARS BY REVIEWING ISSUES ALREADY ADJUDICATED UPON DURING REGULAR ASSES SMENTS AND BY WRONGLY INTERPRETING THE INFORMATION RECEIVED DURING COURSE OF 153A ASSESSMENT U/S.133(6) FROM M/S. PARADEEP PORT TRUST AS SUPPRESSED SALES TURNOVER, ALSO MADE ADDITION OF DISCLOSED SHARE CAPITAL AND SHARE PREMIUM AND DISCLOSED UNSECURED LOAN BY APPLYING SECTION 68 OF THE ACT, FURTHER MADE ADDITION BY RECOUNTING BANK DEPOSITS AND ALSO DISALLOWED 10% OF TRANSPORTATION EXPENSES ON AD HOC ESTIMATION BASIS IN ABSENCE OF BOOKS OF ACCOUNT. 4.2 THAT, SO FAR AS THESE ASSESSMENT YEARS ARE CONCERNED, ADMITTEDLY, ADDITIONS ARE ROUTINE & TECHNICAL ADDITION OF REGULAR NATURE OUT OF REGULAR RETURN OF INCOME AND REGULAR ASSESSMENT. THERE ARE NO INCRIMINATING DOCUMENTS FOR SUCH DISALLOWANCES / ADDITIONS. ALL THE ABOVE ADDITIONS / DISALLOWANCES MADE IN THE AS SESSMENT ORDER ARE PART AND PARCEL OF THE REGULAR ASSESSMENT. ABOVE ADDITIONS HAVE NOT BEEN MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. THIS FACT IS EVIDENT FROM THE ASSESSMENT ORDER, AS THE LEARNED A.O. HAS NOT REFERRED ANY INCRIMINATING MATERIAL FOR MAKING THE ABOVE ADDITION / DISALLOWANCES, EVEN THE LEARNED C.I.T(A) ALSO COULD NOT REFER TO ANY INCRIMINATING MATERIALS. THE LEARNED A.O ALSO ADMITTED THIS FACT IN THE REMAND REPORT THAT ALL THESE ISSUES FORMED PART OF REGUL AR ASSESSMENT. 4.3 THAT THE AUTHORITIES BELOW HAVE COMMITTED GROSS ERROR OF LAW IN TREATING DISCLOSED ASSESSED ITEMS AS INCRIMINATING MATERIALS, PARTICULARLY WHEN, ON PERUSAL OF SECTION 132(1)(C) OF THE ACT, IT GOES ON SAYING WITHOUT ANY IOTA OF DOUBT THA T, A DOCUMENT CAN BE CONSTRUED AS INCRIMINATING IN NATURE, ONLY WHEN, THE APPELLANT FOUND TO BE IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY OR IT (SS) A NO S . 69 - 75/CTK/2019 15 OTHER VALUABLE ARTICLES OR THINGS AND SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS MUST REPRESENT EITHER WHOLLY OR PARTLY INCOME WHICH HAS NOT BEEN DISCLOSED OR WOULD NOT BE DISCLOSED, WHERE AS IN THE CASE IN HAND ALL ADDITIONS MADE BY THE AUTHORITIES BELOW WERE ALREADY DISCLOSED AND ASSESSED. FURTHER, FROM SECTION 132(1)(C), IT IS AMPLY CL EAR THAT, IN ORDER TO BE INCRIMINATING, THE DOCUMENTS SEIZED MUST REPRESENT UNDISCLOSED INCOME WHICH HAS NOT BEEN DISCLOSED. IF DISCLOSED AND ASSESSED, LIKE THE PRESENT CASE, THEN IT WILL BE OUT OF PURVIEW OF SECTION 153A OF THE ACT AND CANNOT BE CONSTRUED AS INCRIMINATING MATERIAL. 4.4 THAT, WHEN THE SEARCH WING COULD NOT BE ABLE TO TRACE OUT ANY INCRIMINATING MATERIAL, OUT OF THE DOCUMENTS SEIZED, AS MENTIONED IN THE PANCHNAMA, THEY STARTED POST SEARCH INQUIRY, EVEN IN THE POST SEARCH INQUIRY ALSO , THEY COULD NOT BE ABLE TO GET ANY INCRIMINATING MATERIAL, HAVING NO OTHER ALTERNATIVE, THEY RELIED ON A STATEMENT OF AN UNRELATED THIRD PERSON NAMELY B IPIN KUMAR SINGH, WHICH WAS ALLEGED TO BE RECORDED ON 19.12.2014, PARTICULARLY WHEN SAID ALLEGED THIRD PERSON WAS NEITHER A DIRECTOR OR THE SHARE HOLDER OF THE COMPANY NOR HAD ANY RELATION WITH THE SHARE HOLDER OF THE COMPANIES NOR WAS IN POSSESSION OF ANY BOOKS OF ACCOUNT OF THE APPELLANT COMPANY OR THE SHARE HOLDER COMPANIES NOR HAS ANY KNOWLEDGE ABOUT THE BUSI NESS ACTIVITY OF THE APPELLANT COMPANY. BASING ON HIS STATEMENT ONLY, THE LEARNED A.O. TREATED ALL THE DISCLOSED FACTS AS INCRIMINATING MATERIAL AND MADE ADDITIONS. PARTICULARLY WHEN, NO OPPORTUNITY OF CROSS - EXAMINATION WAS PROVIDED TO THE APPELLANT BEFO RE TAKING ANY ADVERSE INFERENCE ON THE BASIS OF STATEMENT OF THAT ALLEGED THIRD PARTY. STATEMENT RECORDED OF SUCH THIRD PERSON EVEN WAS NOT KNOWN TO THE APPELLANT. THE APPELLANT AFTER RECEIVING THE REMAND REPORT ONLY CAME TO KNOW ABOUT SUCH STATEMENT. THE STATEMENT AS REFERRED BY THE LEARNED A.O IS NOT IN CONFORMITY WITHIN THE MEANING OF SECTION 132(4) OF THE ACT, AS SUCH, HAS NO EVIDENTIARY VALUE AND CANNOT BE CONSTRUED AS INCRIMINATING MATERIAL. FURTHER, LAW IN THIS ASPECT IS ALSO WELL SETTLED T HAT, THE STATEMENT OF A THIRD PARTY RECORDED WITHOUT PROVIDING OPPORTUNITY OF CROSS EXAMINATION CANNOT BE CONSTRUED AS INCRIMINATING MATERIAL, THUS N O ADDITION CAN BE MADE WHILE COMPLETING ASSESSMENT UNDER SECTION 153A OF THE I.T. ACT, 1961 , IN THE CASE OF COMPLETED ASSESSMENT, IF NO UNDISCLOSED INCOME IS DETERMINABLE FROM THE MATERIAL FOUND AS A RESULT OF SEARCH. THE BASIC PRINCIPLE OF LAW IS THAT, THE A.O HAS NO POWER AND AUTHORITY TO REVIEW HIS OWN ORDER IN ABSENCE OF ANY NEW TANGIBLE MATERIAL. 4.5 THAT ON A PLAIN READING OF SECTION 132(4) OF THE ACT, IT INDICATES THAT, THE AUTHORIZED OFFICER IS EMPOWERED TO EXAMINE ON OATH IT (SS) A NO S . 69 - 75/CTK/2019 16 ANY PERSON WHO IS FOUND IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNTS, DOCUMENTS, MONEY , BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLE OR THING. THE EXPLANATION TO SECTION 132 (4), WHICH WAS INSERTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 W.E.F. 1ST APRIL, 1989, FURTHER CLARIFIES THAT, A PERSON MAY BE EXAMINED NOT ONLY IN RESPECT OF THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FOUND AS A RESULT OF SEARCH BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER THE ACT. HOWEVER, A STATEMENT ON OATH CAN ONLY BE RECORDED OF A PERSON WHO IS FOUND IN POSSESSION OF BOOKS OF ACCOUNTS, DOCUMENTS, ASSETS, ETC. THE INTENTION OF THE PARLIAMENT IS TO PERMIT SUCH EXAMINATION ONLY WHERE THE BOOKS OF ACCOUNTS, DOCUMENTS AND ASSETS POSSESSED BY A PERSON ARE RELEVANT FOR THE PURPOSES OF THE INVESTIGATION BEING UNDERTAKEN. NOW, IF THE PROVISIONS OF SECTION 132(4) OF THE ACT ARE READ IN THE CONTEXT OF SECTION 153A OF THE ACT, IT IS CLEAR THAT A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT CAN BE USED AS EVIDENCE FOR MAKING A ASSESSMENT ONLY, IF THE SAID STATEMENT IS MADE IN THE CONTEXT OF OTHER EVIDENCE OR MATERIAL DISCOVERED DURING THE SEARCH. A STATEMENT OF A PERSON, WHICH IS NOT RELATABLE TO ANY INCRIMINATING D OCUMENT OR MATERIAL FOUND DURING SEARCH AND SEIZURE OPERATION CANNOT, BY ITSELF, TRIGGER A SEARCH ASSESSMENT. THE UNDISCLOSED INCOME OF AN APPELLANT HAS TO BE COMPUTED ON THE BASIS OF EVIDENCE AND MATERIAL FOUND DURING SEARCH. THUS, SECTION 132(4) OF TH E ACT MAKES IT AMPLY CLEAR THAT, FIRST THERE MUST BE DISCOVERY OF CERTAIN MATERIAL FROM THE POSSESSION OF A PERSON, THEN ONLY POWER U/S.132(4) CAN BE EXERCISED TO RECORD HIS STATEMENT TO THE EXTENT IT IS RELATABLE TO THE INCRIMINATING EVIDENCE / MAT ERIAL UNEARTHED OR FOUND DURING SEARCH. BUT, IN THE PRESENT CASE, THE ALLEGED STATEMENT WAS RECORDED, WHEN THAT ALLEGED PERSON WAS NOT IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNTS, DOCUMENTS, MONEY, BULLION, JEWELLERY OR ANY OTHER VALUAB LE ARTICLE OR THING. THE ALLEGED STATEMENT WAS NOT IN CONFORMITY WITH SECTION 132(4) OF THE ACT. THEREFORE, IT CANNOT BE TREATED AS AN EVIDENCE OR INCRIMINATING MATERIAL TO BE USED AGAINST THE APPELLANT. FURTHER, THERE MUST BE A NEXUS BETWEEN THE STATEMENT RECORDED DURING SEARCH AND THE EVIDENCE / MATERIAL FOUND DURING SEARCH IN ORDER TO FORM AN ASSESSMENT TO BE BASED ON THE STATEMENT RECORDED. IN C.I.T. VS - SRI RAMDAS MOTOR TRANSPORT LTD. REPORTED IN [1999] 238 ITR 177 (AP), A DIVISION BENCH OF HONBLE AN DHRA PRADESH HIGH COURT, WHILE READING THE PROVISION OF SECTION 132(4) OF THE ACT IN THE CONTEXT OF DISCOVERING UNDISCLOSED INCOME, EXPLAINED THAT, IN CASES WHERE NO UNACCOUNTED DOCUMENTS OR INCRIMINATING MATERIAL IS FOUND, THE POWERS UNDER SECTION 132(4) OF THE ACT CANNOT BE INVOKED. THE RELEVANT PASSAGE FROM THE AFORESAID JUDGMENT IS QUOTED HERE FOR BETTER APPRECIATION OF FACT AND LAW : 'A PLAIN READING OF SUB - SECTION (4) SHOWS THAT THE AUTHORISED OFFICER DURING THE CO URSE OF SEARCH IS EMPOWERED TO EXAMINE ANY PERSON, IF IT (SS) A NO S . 69 - 75/CTK/2019 17 HE IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY UNDISCLOSED BOOKS OF ACCOUNT, DOCUMENTS, MONEY OR OTHER VALUABLE ARTICLES OR THINGS, ELICIT INFORMATION FROM SUCH PERS ON WITH REGARD TO SUCH ACCOUNT BOOKS OR MONEY WHICH ARE IN HIS POSSESSION AND CAN RECORD A STATEMENT TO THAT EFFECT. UNDER THIS PROVISION, SUCH STATEMENTS CAN BE USED AS EVIDENCE IN ANY SUBSEQUENT PROCEEDING INITIATED AGA INST SUCH PERSON UNDER THE ACT. THUS, THE QUESTION OF EXAMINING ANY PERSON BY THE AUTHORISED OFFICER ARISES ONLY, WHEN HE FOUND THAT, SUCH PERSON IS IN POSSESSION OF ANY UNDISCLOSED MONEY OR BOOKS OF ACCOUNT OR OTHER VALUABLE ARTICLES OR T HINGS. BUT, IN THIS CASE, IT IS THE FACT THAT ON THE DATE OF SEARCH, THE DEPARTMENT WAS NOT ABLE TO FIND ANY UNACCOUNTED MONEY, UNACCOUNTED BULLION NOR ANY OTHER VALUABLE ARTICLES OR THINGS, NOR ANY UNACCOUNTED DOCUMENTS NOR ANY SUCH INCRI MINATING MATERIAL EITHER FROM THE PREMISES OF THE COMPANY OR FROM THE RESIDENTIAL HOUSES OF THE MANAGING DIRECTOR AND OTHER DIRECTORS. ON THE OTHER HAND, THE ALLEGED STATEMENT WAS RECORDED FROM A THIRD PERSON WHEN, THAT PERSON WAS NEITH ER AN EMPLOYEE OF APPELLANT COMPANY NOR AN EMPLOYEE OR DIRECTOR OF SHARE HOLDERS COMPANY NOR KNOWN TO THE APPELLANT COMPANY BY ANY MEANS NOR WAS IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY OR BOOKS OF ACCOUNT OR ANY VALUABL E ARTICLES OR THINGS OF THE APPELLANT COMPANY. THEREFORE, THE STATEMENT OF THE UNRELATED THIRD PERSON RECORDED DOES NOT HAVE ANY EVIDENTIARY VALUE AND CANNOT BE CONSTRUED AS A STATEMENT RECORDED WITHIN THE MEANING OF SECTION 132(4) READ WIT H SECTION 131 OF THE ACT. 4.6 THAT, IT HAS BEEN HELD BY VARIOUS HONBLE HIGH COURTS AND BY HONBLE APPELLATE TRIBUNALS THAT, THE ISSUE FORMING PART OF THE REGULAR ASSESSMENT IS BEYOND THE SCOPE OF SEARCH ASSESSMENT U/S. 153A / 153C AND THE LEARNED A.O. HAS NO JURISDICTION TO MAKE ADDITION OTHERWISE THAN, ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH ON THE PRINCIPLE THAT, THE ASSESSING OFFICER HAS NO POWER TO REVIEW HIS OWN ASSESSMENT ORDER. 4.7 THAT, IN THE REMAND PROCE EDING, THE LEARNED A.O HIMSELF HAS ADMITTED THAT, ALL ADDITIONS SO MADE IN 153A ASSESSMENT WERE ADJUDICATED IN REGULAR ASSESSMENT U/S.143(3) OF THE ACT. REFERENCE MAY BE DRAWN TO THE REMAND REPORT ENCLOSED IN THE PAPER BOOKS . ADMITTEDLY, NO INCRIMINATING M ATERIAL WAS FOUND FROM THE PREMISES OF THE APPELLANT COMPANY DURING THE COURSE OF SEARCH, THEREFORE THE COMPLETED ASSESSMENT CANNOT BE DISTURBED. IN SUPPORT OF THE SUBMISSIONS MADE HERE IN ABOVE, THE APPELLANT/APPELLANT COMPANY MOST RESPECTFULLY RELIES ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS; IT (SS) A NO S . 69 - 75/CTK/2019 18 1. COMMISSIONER OF INCOME TAX VRS - CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. AND ALL CARGO GLOBAL LOGISTICS LTD. REPORTED IN [2015] 374 ITR 645 (BOMBAY HC). 2. COMMISSIONER OF INCOME TAX VRS - KABUL CHA WLA REPORTED IN [2016] 380 ITR 573(DELHI HC). 3. PRINCIPAL COMMISSIONER OF INCOME TAX VRS KURULE PAPER MILLS P. LTD. REPORTED IN [2016] 380 ITR 571(DELHI HC). 4. CIT, KOLKATA III VS. VEEPRABHU MARKETING LIMITED REPORTED IN [2016] 73 TAXMANN.COM 149 (CAL CUTTA HC). 5. ACIT CENTRAL CIRCLE - IX VRS - M/S.RAVNET SOLUTIONS PVT. LTD., ITAT DELHI BENCH (DELHI). 6. PR. COMMISSIONER OF INCOME TAX VRS - BEST INFRASTRUCTURE (INDIA) PVT. LTD. REPORTED IN 397 ITR 82(DELHI HC). 7. PR. CIT - VRS. - SOMAYA CONSTRUCTION PVT. LTD. 387 ITR 529 (GUJ HC), 8. CIT VS. IBC KNOWLEDGE PARK PVT. LTD. REPORTED IN 385 ITR 346 (KAR) 9. CIT VS.GURINDER SINGH BAWA REPORTED IN 386 ITR 483. 10. PRINCIPAL CIT VRS - LATA JAIN(2016)384 ITR 543(DELHI HC) 11. MIDAS CAPITAL PVT. LTD. VRS - ACIT , CENTRAL CIRCLE, (ITAT, CUTTACK BENCH) 12. DCIT CENTRAL CIRCLE - VRS - IMAGE VINIMAY LTD.( ITAT, KOLKATA - B BENCH) 13. CIT - VRS - DEEPAK KUMAR AGRAWAL (BOMBAY HC) 14. RASHMI METALICKS - VRS - DCIT CENTRAL CIRCLE .( ITAT, KOLKATA - B BENCH) 15. DCIT - VRS - CHANDIGARH DE VELOPERS PVT. LTD .( ITAT, CHANDIGARH - A BENCH) 16. GEETANJALI SPACE PVT. LTD. - VRS - DCIT .( ITAT, MUMBAI - G BENCH). 4.8 THAT, IN ADDITION TO ABOVE SUBMISSIONS, IT MAY ALSO BE SUBMITTED HERE THAT, WHILE ADJUDICATING THIS ISSUE, THE LEARNED C.I.T(A) COMMITT ED GROSS ERROR OF LAW IN CONFIRMING THE VALIDITY OF ASSESSMENT AND CONSEQUENTIAL ADDITIONS MADE THEREIN RELAYING ON JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CASE OF E.N.GOPAKUMAR VS - CIT AND IN THE CASE OF CIT - VRS - RAJ KUMAR ARRORA BY HONBLE ALLAHA BAD HIGH COURT , PARTICULARLY WHEN, THESE TWO JUDGMENTS STANDS ON DIFFERENT FOOTING AND HAS NO APPLICATION TO THE FACT OF THE PRESENT CASE. IN THESE TWO CASES, INCRIMINATING MATERIAL WAS THERE AND THE ISSUE WAS EVEN WHEN, NO INCRIMINATING MATERIAL WAS FOUN D, WHETHER A.O CAN ASSESS U/S.153A OR NOT. NO DOUBT THAT, A.O CAN ASSESS U/S.153A OF THE ACT, BUT WHILE COMPLETING ASSESSMENT IN ABSENCE OF INCRIMINATING MATERIAL, UNABATED ASSESSMENT CANNOT BE DISTURBED. THE LEARNED C.I.T.(A) MISCONSTRUED THESE TWO JUDGME NTS. FURTHER, BY FOLLOWING THESE TWO JUDGMENTS, THE LEARNED C.I.T.(A) HIMSELF ADMITTED THE FACT THAT, THERE WERE NO INCRIMINATING MATERIALS FOR THESE ASSESSMENT YEARS. 4.9 THAT, IN VIEW OF THE SETTLED PRINCIPLES OF LAW, IT MAY BE SUBMITTED HERE THAT, SIN CE NO INCRIMINATING MATERIAL IS THERE, THE LEARNED IT (SS) A NO S . 69 - 75/CTK/2019 19 A.O. HAS NO POWER AND AUTHORITY TO DISTURB THE COMPLETED UNABATED ASSESSMENTS, AS SUCH, THE IMPUGNED ASSESSMENT ORDER AND ADDITIONS SO MADE THEREIN, NEEDS TO BE QUASHED IN THE INTEREST OF JUSTICE. 4.10 T HAT, THE APPELLANT COMPANY SUBMITTED HERE IN ABOVE, LEGAL ISSUES AND HOPES THAT APPEALS FOR THESE THREE ASSESSMENT YEARS CAN BE DECIDED ON THIS LEGAL ISSUES AS IT GOES TO THE ROOT OF THE MATTER. IN CASE, THIS HONBLE TRIBUNAL AFTER HEARING LEGAL ISSUES DIR ECTS THE APPELLANT COMPANY TO ADVANCE ARGUMENT ON FACTUAL ISSUES, THEN THE APPELLANT MAY BE PROVIDED WITH ANOTHER OPPORTUNITY TO FILE SUBMISSION ON FACTUAL ISSUES. 12 . FURTHER THE LD. AR OF THE ASSESSEE VIDE DATED 31.07.2020 HAS FILED ADDITION WRITTEN SUBMISSIONS, WHICH READ AS UNDER : - ADDITIONAL SUBMISSION ON BEHALF OF THE APPELLANT COMPANY: 1. THAT, IN ADDITION TO EARLIER SUBMISSIONS, THE APPELLANT COMPANY WANTS TO ADD SOME MORE SUBMISSIONS AND PRAYS THIS HONBLE TRIBUNAL TO ACCEPT THE ADDITIONAL S UBMISSION. THIS ADDITIONAL SUBMISSION RELATES TO ASSESSMENT YEARS: 2009 - 10 TO 2011 - 12 ON LEGAL ISSUE AS WELL AS ON MERIT. ADDITIONAL SUBMISSION ON LEGAL ISSUE : 2. THAT, DURING SEARCH THOUGH VARIOUS DOCUMENTS (LMS - 1 TO LMS - 30) WERE FOUND AND SEIZED, BU T FROM NONE OF THE DOCUMENTS, A.O COULD BE ABLE TO FIND OUT ANY UNDISCLOSED INCOME. MAIN CONTENTION OF THE INVESTIGATION WING AS WELL OF THE A.O IS THAT, THE ASSESSEE COMPANY INFLATED TRANSPORTATION EXPENSES, BOOKED BOGUS TRANSPORTATION EXPENSES IN THE NAM E OF NON - EXISTENT PAPER COMPANIES AND THROUGH THEM ROOTED ITS BOGUS EXPENSES TO OTHER COMPANIES AND THOSE OTHER COMPANIES HAVE PURCHASED SHARES OF THE ASSESSEE COMPANY. BY THIS WAY ASSESSEE UTILIZED ITS UNACCOUNTED MONEY IN THE GUISE OF SHARE CAPITAL AND S HARE PREMIUM. THESE FINDINGS WERE NOT BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE BY THE A.O. WHILE COMPLETING ASSESSMENTS NOT EVEN BY THE LEARNED C.I.T(A) ALSO. WHILE SUBMITTING REMAND REPORT, THESE FACTS WERE RECORDED BY THE LEARNED A.O. FOR THE FIRST TIME IN THE REMAND REPORT WITHOUT REPORTING THE ASSESSEE EVEN IN REMAND PROCEEDING. HOWEVER, THIS ALLEGATION IS COMPLETELY WRONG, WITHOUT ANY BASIS AND NOT SUPPORTED BY ANY EVIDENCES ARISING OUT OF SEIZED MATERIALS. TO JUSTIFY, THE APPELLANT WANTS TO DRAW KIND ATTENTION OF THIS HONBLE TRIBUNAL TO THE FOLLOWING FACTS; 1. FOR ASSESSMENT YEAR: 2009 - 10 TO 2011 - 12, REGULAR ASSESSMENTS U/S.143(3) OF THE ACT WERE COMPLETED MUCH PRIOR TO THE DATE OF SEARCH. DURING ASSESSMENT, ISSUE OF SHARE CAPITAL, SHARE PREMIUM, UNSECU RED LOAN, GROSS RECEIPTS AND EXPENSES WERE DULY VERIFIED AND NO ADVERSE INFERENCE WAS DRAWN ON THESE ISSUES. IT (SS) A NO S . 69 - 75/CTK/2019 20 2. IN THE REMAND REPORT, THE LEARNED A.O ALLEGED THAT THE ASSESSEE DID NOT PROVIDE DETAILS DURING ASSESSMENT, HENCE INQUIRY COULD NOT BE CONDUCTED THIS OBSERVATION GOES ON SAYING WITHOUT ANY IOTA OF DOUBT THAT, FROM THE SEIZED DOCUMENTS, A.O COULD NOT GET ANYTHING INCRIMINATING MATERIAL OR UNDISCLOSED THINGS OR PROPERTY, FOR WHICH IN ASSESSMENT ORDER, HE COULD NOT SPECIFY ANY SEIZED DOCUMENT EXCEPT OF GIVING GENERAL STATEMENT. 3. DURING ASSESSMENT U/S.153A / 144 OF THE ACT, A.O COULD NOT SPECIFY THAT OUT OF TRANSPORTATION EXPENSES AND OTHER EXPENSES CLAIMED, EXPENSES RELATING TO WHICH PARTY WAS BOGUS ? HE MADE SUMMARY DISALLOWANCES OF 10% OF TRANSPORT ATION EXPENSES ON AD - HOC ESTIMATION BASIS FOR WANT OF EVIDENCES. IF HE HAD MATERIALS WITH HIM, HE COULD HAVE DISALLOWED EXPENSES OF THOSE PARTIES, BUT HE COULD NOT DO SO, THIS FACT CLEARLY JUSTIFIES THAT, HE HAD NO MATERIAL TO JUSTIFY THAT, THE ASSESSEE HA D INFLATED TRANSPORTATION EXPENSES BY CLAIMING BOGUS EXPENSES. 4. DURING REMAND PROCEEDING, A.O VERIFIED TRANSPORTATION EXPENSES AND OTHER EXPENSES, DID NOT FIND ANY INFLATION OF EXPENSES OR BOGUS BILLING. AFTER VERIFICATION OF BOOKS OF ACCOUNT, BILLS AND V OUCHERS AND CONFIRMATIONS FROM DIFFERENT TRANSPORTERS, IN REMAND PROCEEDING, A.O COULD NOT PROVE HIS ALLEGATION OF BOGUS CLAIM OF TRANSPORTATION EXPENSES. THEREFORE, THIS ALLEGATION NO MORE EXISTS. 5. FOR ASSESSMENT YEAR:2009 - 10 , A.O AFTER VERIFICATION OF TR ANSPORTATION EXPENSES IN REMAND PROCEEDING DISALLOWED TRANSPORTATION EXPENSES OF HP ENTERPRISES AND DEVENDRA SINGH FOR CLAIM OF RS.3,45,912.00 AND RS.2,59,450.00 RESPECTIVELY AND DISALLOWED RS.9,500.00 AND RS.3,800.00 AS UNEXPLAINED LIABILITY FOR EXPENSES. TOTAL DISALLOWANCES OF RS.6,18,662.00 WAS MADE FOR WANT OF SUPPORTING EVIDENCES. THE DISALLOWANCES OF TRANSPORTATION EXPENSES OF HP ENTERPRISES AND DEVENDRA SINGH DO NOT FORM PART OF ALLEGED LIST GIVEN BY THE A.O. IN THE ASSESSMENT ORDER. 6. AGAINST TOTAL CLAIM OF TRANSPORTATION EXPENSES OF RS.2,85,42,112.00 CORRESPONDING TRANSPORTING INCOME OF RS.3,26,43,474.00 WAS SHOWN WHICH WAS VERIFIED AND ACCEPTED BY THE A.O. 7. FOR ASSESSMENT YEAR: 2010 - 11 , A.O AFTER VERIFICATION OF TRANSPORTATION EXPENSES IN REMAND PR OCEEDING DISALLOWED TRANSPORTATION EXPENSES OF TRADING SOLUTIONS AMOUNTING TO RS.52,23,907.00 FOR WANT OF BILLS AND VOUCHERS. DISALLOWANCES OF TRANSPORTATION EXPENSES OF TRADING SOLUTIONS DO NOT FORM PART OF ALLEGED LIST GIVEN BY THE A.O. IN THE ASSESSMENT ORDER. IT (SS) A NO S . 69 - 75/CTK/2019 21 8. FOR ASSESSMENT YEAR: 2011 - 12 , A.O AFTER VERIFICATION OF TRANSPORTATION EXPENSES IN REMAND PROCEEDING DISALLOWED TRANSPORTATION EXPENSES CLAIMED AGAINST THE PARTY NAMELY DK LOGISTICS, M/S. VICTORY TRANSPORT AND M/S. AGARWAL TRANSPORT FOR THE CLAIM OF RS.1,85,500.00, RS.10,500.00 AND RS.82,500.00 RESPECTIVELY. THE TOTAL DISALLOWANCES UNDER THIS HEAD WAS OF RS.2,78,250.00 FOR WANT OF CONNECTED BILLS AND VOUCHERS. DISALLOWANCES OF TRANSPORTATION EXPENSES OF THESE TRANSPORTERS DO NOT FORM PART OF ALLEG ED LIST GIVEN BY THE A.O. IN THE ASSESSMENT ORDER. 9. AGAINST TOTAL CLAIM OF TRANSPORTATION EXPENSES OF RS.1,82,44,018.00 CORRESPONDING TRANSPORTING INCOME OF RS.1,91,80,734.00 WAS SHOWN WHICH WAS VERIFIED AND ACCEPTED BY THE A.O. 10. APART FROM THIS ORAL ALLE GATION, NO OTHER DIRECT / INDIRECT EVIDENCE COULD BE BROUGHT OUT BY THE A.O FROM SEIZED DOCUMENT TO JUSTIFY THAT THE DISCLOSED AND ASSESSED TRANSPORTATION EXPENSES, UNSECURED LOANS, SHARE CAPITAL AND SHARE PREMIUM ARE FALSE OR WERE OUT OF ITS UNACCOUNTED M ONEY. 11. THE LEARNED C.I.T(A) IN PARA - 7.3 OF HIS ORDER BY FOLLOWING TWO JUDGMENTS DREW CONCLUSION THAT, A.O. IS EMPOWERED TO MAKE ADDITIONS WITHOUT ANY INCRIMINATING MATERIALS BEING AVAILABLE AGAINST THE ASSESSEE MEANING THEREBY, THE LEARNED C.I.T(A) HIMSEL F HAS ADMITTED THAT, NO INCRIMINATING MATERIALS WERE THERE TO SUPPORT THE ADDITION MADE BY THE A.O. 12. IN THE REMAND REPORT, WHILE ADJUDICATING SHARE CAPITAL AND SHARE PREMIUM ISSUE, THE LEARNED A.O. HAS OBSERVED AS UNDER; FURTHER, IT IS ALSO SEEN THAT, DURING THE COURSE OF REGULAR SCRUTINY PROCEEDING, THE A.O. HAS NOT VERIFIED THE SOURCE OF SOURCE OF THE AMOUNTS CREDITED TO THE ACCOUNT OF THE PARTIES / SHAREHOLDERS WHICH IMMEDIATELY DEBITED AND TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE COMPANY. THEREFOR E, THOUGH THE CONTENTION OF THE A/R OF THE ASSESSEE COMPANY THAT, ISSUE OF INCREASE OF SHARE CAPITAL / PREMIUM HAS BEEN VERIFIED BY THE A.O. DURING THE COURSE OF REGULAR SCRUTINY PROCEEDINGS IS CORRECT. BUT, THE ISSUE OF DEBITING THE BOGUS EXPENSES AND BRI NGING BACK THE UNDISCLOSED INCOME BY THE LIBERTY GROUP IN THE FORM OF SHARE CAPITAL AND PREMIUM THROUGH SHELL / PAPER COMPANIES IN THE FORM OF ACCOMMODATION ENTRIES HAS COME TO LIGHT ONLY WHEN, THE SEARCH WAS CONDUCTED. FURTHER, AFTER CONDUCTING THE POST S EARCH ENQUIRIES AND EXAMINATION OF SEIZED DOCUMENTS, THE INVESTIGATION OFFICER, IN CHAPTER - 8 TO THE APPRAISAL REPORT, DISCUSSED THE MODUS OF OPERANDI AND AREAS OF UNDISCLOSED INCOME. ALSO, AS PER CHAPTER - 9 TO THE APPRAISAL REPORT, THE INVESTIGATION OFFICER HAS GIVEN SPECIFIC SUGGESTIONS FOR FURTHER FOLLOW UP ENQUIRY / IT (SS) A NO S . 69 - 75/CTK/2019 22 INVESTIGATION TO THE A.O. FOR THOROUGHLY EXAMINATION OF THE ISSUE AS TILL THE FINALIZATION OF APPRAISAL REPORT, SOME OF THE PARTIES HAS NOT APPEARED IN RESPONSE TO SUMMONS ISSUED. THE INVESTIG ATION OFFICER HAS ALSO REPORTED THAT DUE TO PAUCITY OF TIME, THE TRIAL OF FUND FLOW OF THE GROUP COULD NOT BE PREPARED IN RESPECT OF THE ENTIRE AMOUNT OF ENTRY OF SHARE CAPITAL AND SHARE PREMIUM. HOWEVER, ON THE BASIS OF POST SEARCH ENQUIRY CONDUCTED AND E XAMINATION OF BANK STATEMENTS, THE INVESTIGATION OFFICER HAS PREPARED THE TRIAL OF FUND FLOW TO THE EXTENT OF PARTIES MENTIONED IN ANNEXURE - B TO THE APPRAISAL REPORT. ALSO DURING THE COURSE OF POST SEARCH ENQUIRY, THE STATEMENTS OF PAPER COMPANY OPERATORS AND DIRECTORS HAS BEEN RECORDED WHICH ENCLOSED AS ANNEXURE - A TO THE APPRAISAL REPORT. AS PER STATEMENTS RECORDED U/S. 131 OF THE I.T. ACT, 1961, THE ACCOMMODATION ENTRY OPERATORS ADMITTED THAT THEIR MAIN SOURCE OF INCOME IS FROM COMMISSION FOR PROVIDING AC COMMODATION ENTRIES THROUGH JAMA - KHARCHI COMPANIES FORMED BY THEM AND THEY HAD PROVIDED THE ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY IN WHICH THE ASSESSEE COMPANY TRANSFERRED THE FUND IN THE GUISE OF BOGUS EXPENSES FOR WHICH THEY ARRANGED BOGUS SHAR E CAPITAL AND PREMIUM THROUGH VARIOUS PAPER COMPANIES. ACCORDINGLY, ON THE BASIS OF ALL MATERIAL FACTS AVAILABLE ON RECORD THE INVESTIGATION OFFICER CONCLUDED THAT, THE LIBERTY GROUP HAS BROUGHT BACK ITS UNDISCLOSED INCOME IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM. 13. THIS OBSERVATION CLEARLY JUSTIFIES THE FACT THAT, THERE WAS NO INCRIMINATING MATERIAL WITH THE A.O. TO PROVE THE DISCLOSED SHARE CAPITAL AND SHARE PREMIUM ARE FALSE EXCEPT THE OBSERVATION OF APPRAISAL REPORT. EVEN, THE INVESTIGATION WING C OULD NOT FIND ANY EVIDENCE TO CO - RELATE WITH THE STATEMENT RECORDED FROM THE ALLEGED UNKNOWN ENTRY OPERATORS, FOR WHICH THEY SUGGESTED THE A.O. TO MAKE FURTHER APPROPRIATE INQUIRY. THIS FACT CLEARLY PROVES THAT, THERE WAS NO INCRIMINATING MATERIAL EXCEPT T HE ALLEGED STATEMENT OF UNKNOWN PERSONS. 14. FROM THIS FACT, FOLLOWING ISSUES COME FOR ADJUDICATION BEFORE THIS HONBLE TRIBUNAL; 1. WHEN REGULAR ASSESSMENTS WERE COMPLETED AND ALL ADDITIONS MADE IN 153A ASSESSMENTS, WERE EXAMINED IN REGULAR ASSESSMENTS, WHET HER, THE DISCLOSED AND ASSESSED ITEMS CAN BE TREATED AS UNDISCLOSED / INCRIMINATING MATERIAL AND CAN BE ADDED AGAIN ? 2. WHEN THE A.O. COULD NOT CO - RELATE THE STATEMENTS OF THIRD PARTY WITH SEIZED DOCUMENTS, WHETHER THE STATEMENT OF THIRD PARTY RECORDED U/S. 131 CAN BE TREATED AS INCRIMINATING MATERIAL AND WHETHER ADDITION CAN BE MADE ON THAT BASIS ? 3. WITHOUT BRINGING TO THE KNOWLEDGE OF THE ASSESSEE ABOUT ANY STATEMENT RECORDED MUCH AFTER THE SEARCH AND WITHOUT PROVIDING IT (SS) A NO S . 69 - 75/CTK/2019 23 ANY OPPORTUNITY OF CROSS - OBJECTION. WH ETHER ADDITIONS CAN BE MADE ON THE BASIS OF STANDALONE STATEMENT ? 15. SO FAR AS, ISSUE NO.1 IS CONCERNED, WELL SETTLED PRINCIPLES OF LAW IS THAT, IN CASE OF NON - ABATED ASSESSMENT, ASSESSMENT HAS TO BE DONE ONLY WHEN, SOME UNDISCLOSED INCOME OR INCRIMINATING MATERIALS ARE UNEARTHED DURING THE COURSE OF SEARCH TO PROVE THE DISCLOSED FACTS ARE FALSE, OTHERWISE THE A.O. HAS TO REITERATE THE ASSESSMENT COMPLETED U/S.143(3) OF THE ACT. REFERENCE MAY BE DRAWN TO FOLLOWING JUDICIAL PRONOUNCEMENT; 1. HONBLE BOMBAY HI GH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX - VERSUS - CONTINENTAL WAREHOUSING CORPORATION REPORTED IN 374 ITR 645 (BOM) AT PARA - 29 RELEVANT PAGE 664 HAVE HELD THAT, IN RESPECT OF NON - ABATED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BASIS OF BOO KS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 2. SPECIAL BENCH ITAT MUMBAI, IN THE CASE OF ALL CARGO GLO BAL LOGISTICS LTD. IN PARA NO.53 HAVE HELD THAT, I N RESPECT OF NON - ABATED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 3. HONBLE ITAT HYDERABAD BENCH A IN CASE OF M/S. VALUELINE SECURITIES (INDIA) LTD. VS - ACIT, CIRCLE - 6(2), HYDERABAD REPORTED IN [2007] 108 ITD 639 IN PARA - 47 HAVE HELD THAT , T RANSACTIONS RELATING TO SHARE CAPITAL ARE REFLECTED IN THE BOOKS OF ACCOUNT OF THE COMPANY, THUS, THIS CANNOT BE SAID TO BE A TRANSACTION REPRESENTING WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAD NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THE INCOME - TAX ACT SO AS TO BE TERMED AS UNDISCLOSED INCOME AS DEFINED IN CHAPTER XIV - B. AS REGULAR RETURNS HAVE BEEN FILED BY THE ASSESSEE COMPANY, SUCH ENQUIRIES SHOULD ALWAYS BE MADE IN SUCH REGULAR ASSESSMENTS. 4. HONBLE DELHI HIGH COURT IN CASE OF M/S. SSP AVIATION LT., - VS - DCIT REPORTED IN [2012] 20 TAXMAN.COM 214, WHILE DEALING WITH SECTION 153C OF THE ACT, AT PARA - 17 HAVE HELD THAT , THE ASSESSING OFFICER HAVING JURISDICTION OVER THE OTHER PERSON TO FOLLOW THE PROCEDURE PRESCRIBED BY SECTION 153A IN AN ATTEMPT TO ENSURE THAT, THE INCOME REFLECTED BY THE DOCUMENT HAS BEEN ACCOUNTED FOR BY SUCH OTHER PERSON. IF HE IS SO SATISFIED AFTER OBTAINING THE RETURNS FROM SUCH OTHER PERSON FOR THE SIX ASSESSMENT YEARS, THE PROCEEDINGS U/S.153C WILL HAVE TO BE CLOSED. IT (SS) A NO S . 69 - 75/CTK/2019 24 5. HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA IN PARA NO.37 HAVE HELD THAT , COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE A.O. WHILE MAKING THE ASSESSMENT U/S.153A OF THE ACT, ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHE D 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. 6. HONBLE KARNATAKA HIGH COUR T IN CASE OF M/S. LANCY CONSTRUCTIONS VS - CIT, BANGALORE REPORTED IN [2016] 237 TAXMAN 728, IN PARA - 4 & 6 HAVE HELD THAT , WHERE ACCOUNTS WHICH WERE DULY VERIFIED DURING REGULAR ASSESSMENT OF ASSESSEE COULD NOT BE RE - APPRECIATED MERELY BECAUSE FURTHER A SEA RCH WAS CONDUCTED IN PREMISES OF ASSESSEE AS SAME WOULD AMOUNT TO REOPENING OF CONCLUDED ASSESSMENT. 7. HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS - MEETA GUTGUTIA PROP. M/S.FERN 'N' PETALS [2017) 395 ITR 526 (DEL), WHEREIN IT WAS HELD THAT, IT IS ONL Y, 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 ARE FOUND THEN THE INVOCATION OF SECTION 153A QUA SEARCH OF THE ASSESSMENT YEARS WOULD BE JUSTIFIED. 8. HONBLE KA RNATAK HIGH COURT IN THE CASE OF PCIT ,CENTRAL BANGALURU - VS. - M/S. STAR PVG EXPORTS REPORTED [2019] 112 TAXMAN.COM 163 (KARNATAKA), IN PARA - 10 HAVE HELD THAT WE HAVE CAREFULLY GONE THROUGH THE SATISFACTION NOTE RECORDED BY THE ASSESSING OFFICER DATED 06 TH OF JANUARY, 2014. THE AFORESAID ASSESSMENT NOTE NOWHERE SATISFIES THE REQUIREMENTS REFERRED TO, IN THE PRECEDING PARAGRAPH. BEFORE THE TRIBUNAL, THE REVENUE COULD NOT ADDUCE ANY COGENT MATERIAL OR EVIDENCE TO PROVE THAT, THE ADDITIONS IN ALL THE ASSESSMENT YEARS WERE MADE IN THE CASE OF ASSESSEE IN THE ASSESSMENT COMPLETED U/S.144 READ WITH SECTION 153C OF THE ACT ON THE BASIS OF ANY INCRIMINATING MATERIAL OR DOCUMENT BEING FOUND DURING THE COURSE OF THE SEARCH. IT IS FURTHER NOTICED THAT, EVEN NO SUCH INCR IMINATING MATERIAL OR DOCUMENT HAS BEEN REFERRED TO BY THE ASSESSING OFFICER DURING THE COURSE OF THE SEARCH WHILE COMPLETING ASSESSMENT. THE ORDER PASSED BY THE ASSESSING OFFICER HAS BEEN PASSED IN CONTRAVENTION OF THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CALCUTTA KINTWEARS (SUPRA). THEREFORE, THE APPEAL PREFERRED BY THE ASSESSEE WAS RIGHTLY ALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE APPEAL PREFERRED BY THE REVENUE WAS RIGHTLY DISMISSED BY THE INCOME TAX APPELLATE TRIB UNAL. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION IN THIS APPEAL. 9. HONBLE HIGH COURT OF DELHI IN CASE OF C.I.T DELHI (CENTRAL - 1) VS - PINAKI MISRA, REPORTED IN 392 ITR 347, IN PARA - 36 HAVE HELD IT (SS) A NO S . 69 - 75/CTK/2019 25 THAT, THE GIFT TO M/S. SANGEETA MISRA WAS SCRUTIN IZED PREVIOUSLY IN AN ASSESSMENT U/S.143(3) OF THE ACT, THE RECEIPT OF THE GIFT WAS DULY DISCLOSED IN THE RETURN FOR ASSESSMENT YEAR:1992 - 93 AND THE GIFT HAD BEEN ACCEPTED ON SCRUTINY OF THE DOCUMENTS AND EVIDENCE. AS SUCH, SINCE THE GIFTS HAVE ALREADY BEE N DISCLOSED TO THE REVENUE PRIOR TO THE SEARCH, THEY CANNOT FORM PART OF THE BLOCK ASSESSMENT WITHIN THE MEANING OF SECTION 158BB(1), AND CANNOT BE THUS, BROUGHT TO TAX AS 'UNDISCLOSED INCOME', AS WAS REITERATED IN HOTEL BLUE MOON ( SUPRA ) WHICH HELD THAT T HE SCOPE OF BLOCK ASSESSMENT IS LIMITED TO MATERIAL FOUND DURING THE SEARCH, AND THEREBY, CANNOT INCLUDE MATERIAL ALREADY REVEALED. THIS WAS SIMILARLY HIGHLIGHTED IN CIT V. JUPITER BUILDERS (P.) LTD. [ 2006] 156 TAXMAN 361/287 ITR 287 (DELHI) AND CIT V. VIS HAL AGGARWAL [2005] 147 TAXMAN 597/[2006] 283 ITR 326 (DELHI) THAT WHERE AN INCOME AND ASSETS ARE DISCLOSED IN THE BOOKS OF ACCOUNT AND NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH AND SEIZURE, ADDITION IN THE BLOCK ASSESSMENT IS NOT VALID. THEREFORE, THE GIFTS RECEIVED BY THE ASSESSEES FROM JHANWAR LAL KOTHARI, AS WELL AS THE GIFT FROM SHRI R. K. JATIA FELL OUTSIDE THE PURVIEW OF BLOCK ASSESSMENT, AND THE AO HAS NO JURISDICTION TO BRING TO TAX THE SAID SUMS. 10. HONBLE SUPREME COURT OF INDIA IN CASE OF C .I.T. VS - SINHGAD TECHNICAL EDUCATION SOCIETY, REPORTED IN [2017] 397 ITR 344 (SC), IN PARA - 18 HAVE HELD THAT, AS PER PROVISIONS OF SECTION 153C OF THE ACT, INCRIMINATING MATERIAL WHICH WAS SEIZED HAD TO PERTAIN TO ASSESSMENT YEAR IN QUESTION AND IT IS AN UNDISPUTED FACT THAT, THE DOCUMENTS WHICH WERE SEIZED DID NOT ESTABLISH ANY CO - RELATION DOCUMENT - WISE WITH THESE FOUR ASSESSMENT YEARS. SINCE, THESE REQUIREMENTS U/S.153C OF THE ACT ARE ESSENTIAL UNDER THE ACT OF THIS PROVISIONS, IT BECOMES THE JURISDICTI ON FACT. 11. HONBLE ITAT KOLKATA B BENCH, IN CASE OF SMT. YAMINI AGARWAL VS - DCIT, CENTRAL CIRCLE - 3(3), KOLKATA, REPORTED IN [2017] 83 TAXMAN.COM 209 AT PARA - 25 AND 26 HAVE HELD THAT , IN CASE OF COMPLETED ASSESSMENT, NO ADDITIONS CAN BE MADE IN ABSENCE O F ANY INCRIMINATING MATERIAL. 12. HONBLE ITAT DELHI E BENCH IN CASE OF M/S. VERSATILE DATAMATICS (P) LTD. IN I.T.A. NO. 7530/DEL/2017, IN PARA - 46 & 50 OF PAGE - 22 & 24 HAVE HELD THAT , THE ADDITION WAS NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL, BU T IS BASED ON STATEMENTS RECORDED DURING THE SEARCH U/S. 132(4) AND POST - SEARCH ENQUIRIES. SINCE, IN THE INSTANT CASE ADDITION WAS MADE ON THE BASIS OF STATEMENTS RECORDED U/S. 132(4) AND POST - SEARCH ENQUIRY AND NO INCRIMINATING MATERIAL WAS FOUND / SEIZED DURING THE COURSE OF SEARCH, THEREFORE, FOLLOWING THE DECISIONS CITED (SUPRA), WE HOLD THAT NO ADDITION COULD HAVE BEEN MADE U/S.153A SINCE THE ASSESSMENT WAS NOT ABATED IN THE INSTANT CASE. IT (SS) A NO S . 69 - 75/CTK/2019 26 13. HONBLE ITAT DELHI E BENCH IN CASE OF MOON BEVERAGES LTD. VS . ACIT, CENTRAL CIRCLE IN ITA NO.7374/DEL/2017 IN PARA NO. 45 HAS HELD THAT SINCE IN THE INSTANT CASE ADDITION OF RS.11,85,00,000/ - WAS MADE ON THE BASIS OF STATEMENTS RECORDED U/S 132(4) AND POST - SEARCH ENQUIRY AND NO INCRIMINATING MATERIAL WAS FOUND / SEIZED DURING THE COURSE OF SEARCH, THEREFORE, FOLLOWING THE DECISIONS CITED (SUPRA), WE HOLD THAT NO ADDITION COULD HAVE BEEN MADE U/S 153A SINCE THE ASSESSMENT WAS NOT ABATED IN THE INSTANT CASE. IN VIEW OF THE ABOVE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ASSUMING JURISDICTION U/S 153A OF THE I.T. ACT. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LD. CIT(A) IN THE 153A ASSESSMENT PROCEEDINGS BEING VOID AB - INITIO ARE D ELETED. 14. HONBLE ITAT DELHI D BENCH IN CASE OF ACIT, CENTRAL CIRCLE VS. M/S. RAVNEET SOLUTIONS PVT. LTD IN ITA NO.6589/DEL/2013 IN PARA 8.1 HAVE HELD THAT NO INCRIMINATING MATERIAL WAS FOUND SO AS TO MAKE ANY ADDITION UNDER SECTION 153A OF THE ACT, ON A CCOUNT OF UNEXPLAINED SHARE CAPITAL/PREMIUM WHICH WAS ALREADY DISCLOSED IN THE ORIGINAL RETURN OF INCOME. THEREFORE, THE DECISIONS OF JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE BECAUSE NO ASSESSMENT WAS PENDING ON THE DATE OF SEARCH AND ADDITION IS MADE MERELY ON THE BASIS OF BOOK ENTRIES ALREADY DISCLOSED TO THE REVENUE DEPARTMENT. THEREFORE, THE LD. CIT(A) SHOULD HAVE DELETED THE ADDITION ON THIS GROUND ITSELF. THE OR DER OF THE LD. CIT(A), TO THAT EXTENT, IS SET ASIDE AND QUASHED. THE ADDITION WOULD STAND DELETED BECAUSE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO MAKE ANY ADDITION UNDER SECTION 68 OF THE I.T. ACT, 1961. THE PETITION UNDER RULE - 2 7 OF THE APPELLATE TRIBUNAL RULES, IS ACCORDINGLY ALLOWED. 15. HONBLE DELHI ITAT A BENCH IN CASE OF M/S. LIARY DISTRIBUTORS (P) LTD., - VS - DCIT, CENTRAL CIRCLE - 3, NEW DELHI REPORTED IN 74 TAXMAN.COM 122 IN PARA - 54 HAVE HELD THAT, ASSESSMENT CAN BE MADE ON THE BASIS OF DOCUMENTS FOUND DURING COURSE OF SEARCH BUT NOT PRODUCED OR DISCLOSED TO THE DEPARTMENT IN ORIGINAL RETURN / ASSESSMENT. 16. HONBLE ITAT CUTTACK BENCH, CUTTACK IN CASE OF M/S.MIDAS CAPITAL PVT. LTD. VS. ACIT, IT(SS)A NO.04 & 05/CTK/2018, IN PA RA - 30 HAVE HELD THAT, 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 ASSESSMENT YEAR 2011 - 12 AND RS.15,00,000/ - FOR THE ASSESSMENT Y EAR 2012 - 13 WERE UNEXPLAINED CASH CREDIT OF THE ASSESSEE. THUS, THERE IS NO REFERENCE TO ANY SEARCH MATERIAL BY THE ASSESSING OFFICER BASED ON WHICH SUCH ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDERS IT (SS) A NO S . 69 - 75/CTK/2019 27 OF LOWER AUTHORIT IES 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. 17. HONBLE DELHI ITAT B BENCH IN CASE OF M/S. PROMAIN LTD., - VS - DCIT, SPL. RANGE - 23, NEW DELHI, REPORTED IN [2018] 91 TAXMAN.COM 198 IN PARA - 6.4 HAVE HELD THAT, UNDISCLOSED INVESTMENTS (GENERAL) WHETHER, IF INCOME UNEARTHED DURING SEARCH HAD ALREADY BEEN DISCLOSED TO DEPARTMENT PRIOR TO SEARCH, IT CANNOT BE TREAT ED AS UNDISCLOSED INCOME OF ASSESSEE AS PER CHAPTER XIV - B OF THE ACT - HELD, YES - WHETHER STATEMENT RECORDED UNDER SECTION 132(4), CAN BE USED AS EVIDENCE IN BLOCK ASSESSMENT ORDER, ONLY IF, SAID STATEMENT IS MADE IN CONTEXT OF OTHER EVIDENCE OR MATERIAL DISCOVERED DURING SEARCH; STATEMENT OF A PERSON, WHICH IS NOT RELATABLE TO ANY INCRIMINATING DOCUMENT OR MATERIAL FOUND DURING COURSE OF SEARCH AND SEIZURE OPERATION CANNOT, BY ITSELF INITIATE BLOCK ASSESSMENT. 18. HONBLE DELHI ITAT, IN CASE OF ARUN KUMAR & OTHERS VS - ACIT, CIRCLE - 1, NOIDA IN ITA NO. 457/DEL/2018, IN PARA - 15, 16 & 17 HAVE HELD THAT, IN ABSENCE OF ANY SPECIFIC DIRECT EVIDENCE, THE ASSESSEE CANNOT BE HELD TO BE INVOLVED IN ALLEGED BOGUS TRANSACTIONS, NO ADDITION CAN BE MADE ON THAT GROUND. 19. HONBLE SUPREME COURT OF INDIA IN CASE OF COMMISSIONER OF INCOME TAX VS - DAULAT RAM RAWATMULL, REPORTED IN [1973] 87 ITR 349 (SC), HAVE HELD THAT, THE ONUS TO PROVE THAT, THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO. AS IT WAS THE D EPARTMENT WHICH CLAIMED THAT, THE AMOUNT OF FIXED DEPOSIT RECEIPT BELONGED TO THE RESPONDENT FIRM EVEN THOUGH, THE RECEIPT HAD BEEN ISSUED IN THE NAME OF BISWANATH, THE BURDEN LAY ON THE DEPARTMENT TO PROVE THAT, THE RESPONDENT WAS THE OWNER OF THE AMOUNT DESPITE THE FACT THAT, THE RECEIPT WAS IN THE NAME OF BISWANATH. A SIMPLE WAY OF DISCHARGING THE ONUS AND RESOLVING THE CONTROVERSY WAS TO TRACE THE SOURCE AND ORIGIN OF THE AMOUNT AND FIND OUT ITS ULTIMATE DESTINATION. SO FAR AS, THE SOURCE IS CONCERNED, THERE IS NO MATERIAL ON THE RECORD TO SHOW THAT, THE AMOUNT CAME FROM THE COFFERS OF THE RESPONDENT FIRM OR THAT IT WAS TENDERED IN BURRABAZAR CALCUTTA BRANCH OF THE CENTRAL BANK, ON NOVEMBER 15, 1944, ON BEHALF OF THE RESPONDENT. AS REGARDS THE DESTINATIO N OF THE AMOUNT, IT HAS ALREADY BEEN MENTIONED THAT, THERE IS NOTHING TO SHOW THAT, IT WENT TO THE COFFERS OF THE RESPONDENT. ON THE CONTRARY, THERE IS POSITIVE EVIDENCE THAT THE AMOUNT WAS RECEIVED BY BISWANATH ON JANUARY 22, 1946. IT WOULD THUS FOLLOW TH AT, BOTH AS REGARDS THE SOURCE AS WELL AS THE DESTINATION OF THE AMOUNT, THE MATERIAL ON THE RECORD GIVES NO SUPPORT TO THE CLAIM OF THE DEPARTMENT. 20. HONBLE SUPREME COURT OF INDIA IN CASE OF M/S. E.P. ROYAPPA VS - STATE OF TAMILNADU REPORTED IN AIR 1 974 SC 555, AT PAGE 586 , IT (SS) A NO S . 69 - 75/CTK/2019 28 THE APEX COURT HAS OBSERVED THAT, 'THE BURDEN OF ESTABLISHING MALA FIDE IS VERY HEAVY ON THE PERSON WHO ALLEGES IT. THE ALLEGATIONS OF MALA FIDES ARE OFTEN MORE EASIER MADE THEN PROVED AND THE VERY SERIOUSNESS OF SUCH AN ALLEGATION DEMANDS PROOF OF A HIGH ORDER OF CREDIBILITY.' 21. HONBLE ITAT DELHI BENCH IN THE CASE OF ALANKAR SAPHIRE DEVELOPERS VS. DEPUTY COMMISSIONER OF INCOME - TAX REPORTED IN [2020] 116 TAXMAN.COM 389 HAS HELD THAT - IN ASSESSMENT ORDER UNDER SECTION 153A, ASSESSIN G OFFICER MADE ADDITIONS BASED ON ITEMS ALREADY DISCLOSED TO REVENUE DEPARTMENT IN ORIGINAL RETURN / BALANCE - SHEET - WHATEVER ADDITIONS HAD BEEN MADE WERE NOT SUPPORTED BY ANY INCRIMINATING MATERIAL FOUND DURING COURSE OF SEARCH - HELD, THAT APPRAISAL REPO RT OF DEPARTMENT WAS AN INTERNAL MATTER OF INVESTIGATION WING WHICH HAD NOTHING TO DO WITH INCRIMINATING MATERIAL IF FOUND DURING COURSE OF SEARCH - IN ABSENCE OF ANY NEW/INCRIMINATING MATERIAL BEING UNEARTHED DURING COURSE OF SEARCH, NO ADDITION COULD BE MADE UNDER SECTION 153A. 22. HONBLE ITAT SURAT BENCH , SURAT IN THE CASE OF ACIT - VS. PATDI COMMERCIAL AND INVESTMENT LTD. IN ITA NO.263/AHD/204/SRT IN PARA NO.28 HAVE HELD THAT THE ADDITION U/S. 68 OF THE ACT CAN BE MADE IN THE ASSESSMENT ORDER FRAMED U/S. 1 43(3) READ WITH SECTION 153A OF THE ACT ONLY ON THE BASIS OF SEIZED MATERIAL. WHERE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD BE MADE TO THE INCOME ALREADY ASSESSED. 16. SO FAR AS, ISSUE NOS.2 AND 3 ARE CONCERNED, THE WELL SETTLED PRINCIPLES OF LAW IS THAT, STATEMENT OF A UNCONNECTED THIRD PARTY RECORDED U/S.131 OF THE ACT BEHIND THE ASSESSEE, MUCH AFTER COMPLETION OF SEARCH, CANNOT BE TREATED AS INCRIMINATING MATERIAL AND HENCE CANNOT BE APPLIED AGAINST THE APPELLANT UNLESS IT WAS BROUGHT TO THE KNOWLEDGE OF THE APPELLANT BY PROVIDING COPY OF IT AND OPPORTUNITY OF CROSS - EXAMINATION TO THE ASSESSEE. FURTHER CONTENTS OF SUCH STATEMENT MUST HAVE TO BE FOUND FROM SEIZED DOCUMENT. IN THE PRESENT CASE NEITHER THE ALLEGED RECORDING OF STATEMENT AFTER SEARCH WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE, NOR COPY OF SUCH STATEMENT WAS PROVIDED TO THE ASSESSEE, OR WAS AN OPPORTUNITY OF CROSS EXAMINATION PROVIDED TO THE ASSESSEE. MERE RECORDING OF STATEMENT OF UNKNOWN PERSON ON STANDALO NE BASIS BEHIND THE ASSESSEE CANNOT BE TREATED AS INCRIMINATING MATERIAL OR PART OF SEIZED MATERIAL AND ADDITION CANNOT BE MADE ON THE BASIS OF SUCH STATEMENT OF THAT THIRD PARTY ALONE. REFERENCE MAY BE DRAWN TO FOLLOWING JUDICIAL PRONOUNCEMENT; 1. HONBLE S UPREME COURT OF INDIA IN CASE OF M/S. ANDAMAN TIMBER INDUSTRIES VRS - COMMISSIONER OF CENTRAL EXCISE, KOLKATA - II, REPORTED IN 281 CTR 241, IN PARA - 2 OF PAGE - 4 HAVE HELD THAT , NOT IT (SS) A NO S . 69 - 75/CTK/2019 29 ALLOWING THE ASSESSEE TO CROSS - EXAMINE THE WITNESSES BY ADJUDICATING AUTHORIT Y, 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 AFFECTE D AND FURTHER OPINED THAT, IF THE TESTIMONY OF THOSE WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTMENT ON THE BASIS OF WHICH, IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THOSE WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE NO TICE. 2. HONBLE BOMBAY HIGH COURT IN CASE OF H.R. MEHTA VS - A.C.I.T REPORTED IN 387 ITR 561, IN PARA - 17 HAVE HELD THAT , REVENUE WAS NOT JUSTIFIED IN MAKING ADDITION AT THE TIME OF REASSESSMENT WITHOUT HAVING FIRST GIVEN THE ASSESSEE AN OPPORTUNITY TO CROS S - EXAMINE THE DEPONENT ON THE STATEMENTS RELIED UPON BY THE ASSISTANT COMMISSIONER. QUITE APART FROM DENIAL OF OPPORTUNITY OF CROSS - EXAMINATION, THE REVENUE DID NOT EVEN PROVIDE THE MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT SOUGHT TO CONCLUDE THE LOAN WAS A BOGUS TRANSACTION. IN THE LIGHT OF THE FACT THAT, MONEY WERE ADVANCED APPARENTLY BY ACCOUNT PAYEE CHEQUE AND WERE REPAID BY ACCOUNT PAYEE CHEQUE, THE LIST THAT, THE REVENUE SHOULD HAVE DONE WAS TO GRANT TO OPPORTUNITY TO THE ASSESSEE TO MEET THE CASE AGAINST HIM BY PROVIDING THE MATERIAL SOUGHT TO BE USED AGAINST THE ASSESSEE BEFORE PASSING THE ORDER OF ASSESSMENT. THIS NOT HAVING BEEN DONE, THE DENIAL OF SUCH OPPORTUNITY WENT TO THE ROOT OF THE MATTER, THE ORDER OF REASSESSMENT WAS NOT VALID. 3. HONB LE DELHI HIGH COURT IN CASE OF BEST INFRASTRUCTURE INDIA (P) LTD., REPORTED IN 397 ITR 82 AT PARA - 17 HAVE HELD THAT , STATEMENT RECORDED U/S.132(4) OF THE ACT DO NOT THEMSELVES CONSTITUTE INCRIMINATING MATERIAL AS HAS BEEN EXPLAINED BY THIS COURT IN CIT VS - HARJEEV AGGARWAL (SUPRA). STATEMENT RECORDED U/S. 132(4) OF THE ACT DOES NOT CONSTITUTE INCRIMINATING MATERIAL PROCEEDING U/S.153A IS UNJUSTIFIED. THE WORD EVIDENCE FOUND AS A RESULT OF SEARCH WOULD NOT TAKE WITHIN ITS SWEEP STATEMENTS RECORDED DURING SEARCH AND SEIZURE OPERATION. THEIR LORDSHIPS FURTHER OBSERVED HOWEVER SUCH STATEMENTS ON A STANDALONE BASIS WITHOUT REFERENCE TO ANY OTHER MATERIAL DISCOVERED DURING SEARCH AND SEIZURE OPERATION WOULD NOT EMPOWER THE A.O. TO MAKE A BLOCK ASSESSMENT. 4. H ONBLE DELHI HIGH COURT IN CASE OF ASHWANI GUPTA, REPORTED IN 322 ITR 396 (DELHI), IN PARA - 7 HAVE HELD THAT , ONCE THERE IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, INASMUCH AS, WHEN ITS SEIZED MATERIAL WAS NOT PROVIDED TO AN ASSESSEE NOR HE WAS PERMIT TED TO CROSS - EXAMINE A PERSON ON WHOSE STATEMENT THE ASSESSING OFFICER RELIED, IT WOULD AMOUNT TO DEFICIENCY, AMOUNTING TO DENIAL OF OPPORTUNITY AND THEREFORE, VIOLATION OF IT (SS) A NO S . 69 - 75/CTK/2019 30 PRINCIPLES OF NATURAL JUSTICE, IN THAT CASE, THE ORDER COULD NOT BE SUSTAINED. 5. HON BLE ITAT, DELHI C BENCH IN CASE OF M/S. SHIVALI MAHAJAN IN ITA NO.5585/DEL/2015 IN PARA - 28 OF PAGE - 19 HAVE HELD THAT , THE STATEMENT RECORDED DURING THE COURSE OF SEARCH ON STANDALONE BASIS WITHOUT REFERENCE TO ANY OTHER MATERIAL DISCOVERED DURING THE SE ARCH AND SEIZURE OPERATION WOULD NOT EMPOWER THE ASSESSING OFFICER TO MAKE THE ADDITION MERELY BECAUSE ANY ADMISSION WAS MADE BY THE ASSESSEE DURING THE SEARCH OPERATION. 6. HONBLE ITAT DELHI G BENCH IN CASE OF SAJAN KUMAR JAIN IN ITA NOS.5949 TO 5951/DE L/2018, IN PARA - 5.1 OF PAGE - 53 HAVE HELD THAT , AS REGARDS THE ARGUMENTS ADVANCED BY THE LD. CIT (DR) ARE CONCERNED, THE SAME ARE NOT APPLICABLE IN THE PRESENT CASE BECAUSE KEEPING IN VIEW OF THE ASSESSMENT ORDER PASSED BY THE A.O. WE HAVE NOT SEEN FROM THE PROCEEDINGS OF THE A.O. REGARDING PROVIDING ANY STATEMENT OF SH. PRADEEP KUMAR JINDAL TO THE ASSESSEE AND PROVIDING OPPORTUNITY OF CROSS - EXAMINATION OF SH. PRADEEP KUMAR JINDAL TO THE ASSESSEE MEANING THEREBY THE REVENUE AUTHORITIES HAVE NOT PROVIDED THE STATEMENT OF SH. PRADEEP KUMAR JINDAL TO THE ASSESSEE AND ALSO DID NOT PROVIDE THE OPPORTUNITY OF CROSS EXAMINATION OF SH. PRADEEP KUMAR JINDAL, ON WHICH BASIS THE ADDITION HAS BEEN MADE AND THE PROVISIONS OF SECTION 153A OF THE ACT HAVE BEEN WRONGLY APPLI ED IN THE CASE OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY COGENCY IN THE ARGUMENTS ADVANCED BY THE LD. CIT (DR) AND THE CASE LAWS CITED BY HIM IN SUPPORT OF HIS CONTENTION ARE NOT APPLICABLE HERE. 7. HONBLE ITAT KOLKATA B BENCH IN CASE OF RASHMI METAL IKS LTD.,IN I.T. (SS).A NOS. 24 TO 30/KOL/2016 IN PARA - 14 & 17 OF PAGE - 11 & 14 HAVE HELD THAT , AFTER GIVING DUE CONSIDERATION TO THE RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN THE LD. ARS SUBMISSION THAT, BEFORE THE A.O. MADE ADD ITIONS WITH REFERENCE TO STATEMENTS RECORDED FROM THIRD PARTIES NOT ONLY THE COPY OF THE STATEMENT SHOULD HAVE BEEN PROVIDED TO THE ASSESSEE BUT ALSO OPPORTUNITY OF CROSS - EXAMINATION SHOULD HAVE BEEN ALLOWED. IN THE GIVEN FACTS OF THE CASE WE, HOWEVER FIND THAT, NEITHER THE A.O. HIMSELF EXAMINED THESE PERSONS NOR AN OPPORTUNITY TO CROSS - EXAMINE ANY OF THESE PERSONS WAS GIVEN TO THE APPELLANT, BASED ON WHOSE STATEMENTS THE ADDITION WAS MADE. WE, THEREFORE, FIND MERIT IN THE LD. A/RS SUBMISSIONS THAT, THE AD DITIONS WERE MADE WITHOUT COMPLYING WITH PRINCIPLES OF NATURAL JUSTICE. IN THIS REGARD THE RELIANCE PLACED BY THE LD. A/R ON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM VS. CIT, 125 ITR 713 (SC) IS RELEVANT. IN THIS JUDG MENT THE HONBLE APEX COURT HAD HELD THAT, THE OPPORTUNITY OF CROSS - EXAMINATION MUST BE PROVIDED TO THE ASSESSEE. THIS PROPOSITION WAS REITERATED BY THE IT (SS) A NO S . 69 - 75/CTK/2019 31 HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBERS LTD. VS. COMMISSIONER OF CENTRAL EXCISE 62 TAXMAN 03. 8. HONBLE HIGH COURT OF DELHI IN CASE OF C.I.T. VS - RAJ PAL BHATIA IN PARA - 13 & 15 OF PAGE - 5 HAVE HELD THAT , THE STATEMENT COULD NOT BE TREATED BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS WHICH ONLY COULD BE THE BASIS FOR INVOKING THE PROVISION OF SECTION 158BD OF THE ACT. ADMITTEDLY, STATEMENT OF MRS. CHARLA IS NEITHER BOOKS OF ACCOUNT OR ASSETS. THE QUESTION, THEREFORE, IS AS TO WHETHER THIS STATEMENT CAN BE TREATED AS OTHER DOCUMENTS. PRIMA FACIE, IT IS DIFFICULT TO ACCEPT THIS PROPOSITION. STATEMENT WAS NOT THE DOCUMENT WHICH WAS FOUND DURING SEARCH. IN FACT THIS WAS THE DOCUMENT WHICH CAME TO BE CREATED DURING THE SEARCH AS THE STATEMENT WAS RECORDED AT THE TIME OF SEARCH. THEREFORE, IT CANNOT BE SAID THAT THE STATEMENT WAS SEIZED DURING THE SEARCH AND THUS, WOULD NOT QUALIFY THE EXPRESSION DOCUMENT HAVING BEEN SEIZED DURING THE SEARCH. IN SUCH A SCENARIO, PROPER COURSE OF ACTION WAS REASSESSMENT U/S.147 READ WITH SECTION 148 OF THE ACT. IN THE CASE OF SMT. CHITRA DEVI VS - CIT [2002] 7 7 TTJ (JODH.) 430, IT IS HELD THAT, STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT DURING THE SEARCH IS NO EVIDENCE AS CONTEMPLATED UNDER SECTION 158BD OF THE ACT AND ON THAT BASIS NO VALID PROCEEDINGS IN CHAPTER XIV - B OF THE ACT COULD BE INITIATED. 9. HONBLE HIGH COURT OF DELHI IN CASE OF C.I.T. VS - HARJEEV AGGARWAL, IN PARA - 20 OF PAGE - 9 HAVE HELD THAT , IN OUR VIEW, A PLAIN READING OF SECTION 158BB(1) OF THE ACT DOES NOT CONTEMPLATE COMPUTING OF UNDISCLOSED INCOME SOLELY ON THE BASIS OF A STATEMENT R ECORDED DURING THE SEARCH. THE WORDS EVIDENCE FOUND AS A RESULT OF SEARCH WOULD NOT TAKE WITHIN ITS SWEEP STATEMENTS RECORDED DURING SEARCH AND SEIZURE OPERATIONS. HOWEVER, THE STATEMENTS RECORDED WOULD CERTAINLY CONSTITUTE INFORMATION AND IF SUCH INFORM ATION IS RELATABLE TO THE EVIDENCE OR MATERIAL FOUND DURING SEARCH, THE SAME COULD CERTAINLY BE USED IN EVIDENCE IN ANY PROCEEDINGS UNDER THE ACT AS EXPRESSLY MANDATED BY VIRTUE OF THE EXPLANATION TO SECTION 132(4) OF THE ACT. HOWEVER, SUCH STATEMENTS ON A STANDALONE BASIS WITHOUT REFERENCE TO ANY OTHER MATERIAL DISCOVERED DURING SEARCH AND SEIZURE OPERATIONS WOULD NOT EMPOWER THE A.O. TO MAKE A BLOCK ASSESSMENT MERELY BECAUSE ANY ADMISSION WAS MADE BY THE ASSESSEE DURING SEARCH OPERATION. 10. HONBLE KOLKATA HIGH COURT IN CASE OF C.I.T VS - EASTERN COMMERCIAL ENTERPRISES REPORTED IN 210 ITR 103 HAVE HELD THAT, AS A MATTER OF FACT, RIGHT TO CROSS - EXAMINATION A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSIBLE RIGHT AND AN OPPORTUNITY OF SUCH CROSS - EXAMINATIO N IS ONE OF THE CORNERSTONES OF NATURAL JUSTICE. IT (SS) A NO S . 69 - 75/CTK/2019 32 11. HONBLE ITAT KOLKATA BENCH B IN CASE OF M/S. IMAGE VINIMAY IN IT(SS)A NO.84/KOL/2017 IN PARA - 9.2 & 10 OF PAGE - 32 HAVE HELD THAT , EVEN OTHERWISE, IT IS NOT CLEAR AS TO WHICH OF THESE STATEMENTS WERE REC ORDED DURING THE COURSE OF SEARCH OPERATION U/S.132 OF THE ACT OR WHETHER THE STATEMENTS WERE RECORDED DURING THE COURSE OR ANY SURVEY OPERATIONS U/S.133A OF THE ACT. IT IS WELL SETTLED THAT A STATEMENT RECORDED DURING THE COURSE OF SURVEY OPERATION CANNOT BE USED AS EVIDENCE UNDER THE ACT. 12. HONBLE SUPREME COURT OF INDIA AND HONBLE RAJASTHAN HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX CENTRAL, JAIPUR VS - SUNITA DHADDA, IN SPECIAL LEAVE PETITION (CIVIL) DIARY NO(S). 9432/2018 HAVE HELD THAT, SINCE T HERE WAS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE IN NOT PROVIDING THE OPPORTUNITY OF CROSS - EXAMINATION, NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT OF THIRD PARTY. 13. CBDT VIDE CIRCULAR F.NO.286/98/2013 ALSO INSTRUCTED REVENUE AUTHORITIES NOT T O RECORD ANY STATEMENT, RATHER TO COLLECT EVIDENCES. 17. IN THE PRESENT CASE, ADMITTEDLY NOTHING WAS FOUND EITHER FROM SEIZED DOCUMENTS OR IN POST SEARCH INQUIRY TO PROVE THAT THE ASSESSED SHARE CAPITAL, SHARE PREMIUM, UNSECURED LOAN, TRANSPORTATION EXPENSES A ND OTHER EXPENSES CLAIMED IN AUDIT REPORT ARE NOT GENUINE, EXCEPT THE UN - CONFRONTED, UN - CORROBORATED STATEMENT OF THIRD PARTY WHICH WAS RECORDED BEHIND THE ASSESSEE 98 DAYS AFTER COMPLETION OF SEARCH. THIS FACT OF RECORDING OF ALLEGED STATEMENT WAS NEITHER CONFRONTED TO THE ASSESSEE NOR WAS OPPORTUNITY OF CROSS EXAMINATION PROVIDED EITHER DURING POST SEARCH INQUIRY, OR IN ASSESSMENT OR IN REMAND PROCEEDING. 18. FROM THE FACTS SUBMITTED HERE - IN - ABOVE ALONG WITH THE JUDICIAL PRONOUNCEMENTS, IT IS ABSOLUTELY CLEA R THAT, ONCE ASSESSEE FILED RETURN DISCLOSING ALL MATERIAL FACTS AND REGULAR ASSESSMENT HAS BEEN COMPLETED PRIOR TO SEARCH, AND NOTHING UNDISCLOSED WAS FOUND IN SEARCH OR NO NEW DIRECT MATERIAL IS FOUND DURING SEARCH TO PROVE THAT THE DISCLOSED ONE IN THE RETURN ARE FALSE OR NOT GENUINE, THEN, THE DISCLOSED FACTS WILL BE OUT OF SCOPE AND AMBIT OF SECTION 153A AND CANNOT BE TREATED AS INCRIMINATING MATERIAL. THE LEARNED A.O IN THE GRAB OF ASSESSMENT U/S.153A CANNOT REVIEW ITS OWN ASSESSMENT ORDER WHICH WAS P ASSED AFTER DUE EXAMINATION OF EVIDENCES. THEREFORE, FROM ASSESSMENT YEAR: 2009 - 10 TO 2011 - 12, ADDITIONS MADE BY THE LEARNED A.O BEING NOT SUSTAINABLE IN THE EYE OF LAW ARE LIABLE TO BE QUASHED. IT (SS) A NO S . 69 - 75/CTK/2019 33 SUBMISSIONS ON MERIT (ASSESSMENT YEAR: 2009 - 10): ADDITIO N OF RS.1,60,00,000.00: 1. THAT, DURING, REGULAR ASSESSMENT, IN RESPECT OF INCREASE IN SHARE CAPITAL AND SHARE PREMIUM OF RS.70,00,000.00 AND RS.90,00,000.00 ALL DETAILS OF IDENTITY, CREDITWORTHINESS AND GENUINENESS WERE PROVED BEYOND DOUBT WITH SUPPORTING D OCUMENTARY EVIDENCES. THE LEARNED A.O. ALSO IN PAGE NO.192 OF THE PAPER BOOK HAS OBSERVED THAT, THE SUBMISSION MADE DURING COURSE OF REGULAR ASSESSMENT PROCEEDING HAS BEEN DULY VERIFIED. THE CONTENTION OF THE A/R OF THE ASSESSEE COMPANY IS THAT, ISSUE OF INCREASE OF SHARE CAPITAL/PREMIUM HAS BEEN VERIFIED BY THE A.O. DURING THE COURSE OF REGULAR SCRUTINY PROCEEDING IS CORRECT. BUT, IN PAGE NO.193 HAS OBSERVED THAT, AS DURING COURSE OF SEARCH ASSESSMENT, THOUGH THE A.O. HAS PROVIDED MORE THAN SUFFICIENT OP PORTUNITY, BUT THE ASSESSEE COMPANY FAILED TO FURNISH REQUIRED DETAILS, HENCE, A.O. COULD NOT CARRY OUT FURTHER FOLLOW UP OF INQUIRY / INVESTIGATION TO THOROUGHLY EXAMINATION OF THE ISSUE OF SHARE CAPITAL AND SHARE PREMIUM. ULTIMATELY, HE OBSERVED THAT, TH E ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE SOURCE, FOR WHICH HE SUPPORTED THE ADDITION. 2. THAT, THE IMPUGNED OBSERVATION OF THE LEARNED A.O. IS WRONG AND CONTRARY TO THE FACTS ON RECORD, HENCE NOT ACCEPTABLE. ON ONE HAND, HE HIMSELF HAS OBSERVED THAT, ALL DETAILS WERE VERIFIED DURING COURSE OF REGULAR ASSESSMENT, ON THE OTHER HAND, HE CONTRADICTED HIS OWN STATEMENT BY OBSERVING THAT, DETAILS WERE NOT PRODUCED, HENCE INQUIRY COULD NOT BE MADE. ONCE, ALL DETAILS WERE FILED AND VERIFIED DURING REGULAR ASS ESSMENT, WITHOUT MAKING ANY FURTHER INQUIRY, IF AT ALL, IT IS REQUIRED FOR HIM, HE IS NOT EMPOWERED UNDER THE LAW TO CONFIRM THE ADDITION ASKING THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SOURCE, PARTICULARLY WHEN, THE ASSESSEE HAS DISCHARGED ITS PRIMARY ON US AND IS NOT REQUIRED UNDER THE LAW TO EXPLAIN THE SOURCE OF THE SOURCE. 3. THAT, THE LEARNED C.I.T.(A) CONFIRMED THE ADDITION BY APPLYING THE FIRST PROVISO TO SECTION 68 OF THE ACT, WHICH CAME INTO EFFECT ON AND FROM 01.04.2013. FINDINGS OF THE LEARNED C. I.T.(A) IS THAT, THIS ASSESSMENT HAS BEEN COMPLETED ON 30.12.2016 AND THEREFORE, THE PROVISO IS APPLICABLE TO THE APPELLANT. THE APPELLANT HAS NOT EXPLAINED THE SOURCE OF THE SOURCE. 4. THAT, FROM IMPUGNED FINDINGS OF THE AUTHORITIES BELOW, IT IS ABSOLUTELY CLEAR THAT, THE ADDITION HAS NOT BEEN MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL, RATHER WAS MADE ON WRONG APPLICATION OF LAW, IGNORING THE FACT THAT, ALL DETAILS WERE AVAILABLE WITH THEM AND THE SAME WERE ALREADY VERIFIED. FURTHER, LAW IS WELL SETTL ED THAT, THE FIRST PROVISO TO SECTION 68 OF THE ACT CAME INTO EFFECT ON AND FROM 01.04.2013 HAS PROSPECTIVE APPLICATION AND CANNOT BE APPLIED TO PREVIOUS ASSESSMENT YEARS. REFERENCE MAY BE DRAWN TO THE JUDICIAL PRONOUNCEMENT OF THE HONBLE BOMBAY HIGH COUR T IN THE CASE OF COMMISSIONER OF INCOME TAX VS - M/S. GAGANDEEP IT (SS) A NO S . 69 - 75/CTK/2019 34 INFRASTRUCTURE PVT. LTD. REPORTED IN 394 ITR 680, AND IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS - VEEDHATA TOWER PVT. LTD AND BY THE HONBLE SUPREME COURT IN THE CASE OF PRINCIPA L COMMISSIONER OF INCOME TAX VS - CHAIN HOUSE INTERNATIONAL PVT. LTD., IN SLP (CIVIL) DIARY NO(S).1992 OF 2019 AND ALSO BY THE HONBLE ITAT MUMBAI IN CASE OF M/S. PALI FABRICS PVT., LTD. VS - DCIT CENTRAL CIRCLE - 8(4) (MUMBAI), BEARING ITA NO.904/MUM/2018 . 5. THAT, IN ALL THESE JUDGMENTS, THEIR LORDSHIPS HAVE HELD THAT, PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013. THUS, IT WOULD BE EFFECTIVE ONLY FROM ASSESSMENT YEAR 2013 - 14 ONWARDS AND NOT FOR THE SUBJECT AS SESSMENT YEAR. THE PARLIAMENT DID NOT INTRODUCE THE PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATE THAT, IT WAS INTRODUCED FOR REMOVAL OF DOUBTS OR THAT, IT IS DECLARATORY. THEREFORE, IT IS NOT OPEN TO GIVE RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT, THE ADDITION OF THE PROVISO TO SECTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER ADDING THE PROVISO. IN THE PRESENT CASE, SINCE THE IMPUGNED ADDITION WAS MADE FOR WANT OF EXPLANATION THE SOURCE OF SOURCE, THE SAME IS NOT SUSTAINABLE IN VIEW OF THE SETTLED PRINCIPLES OF LAW, AS SUCH, CONSEQUENTIAL ADDITION OF RS.1,60,00,000.00 MADE BY THE AUTHORITIES BELOW NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. TRANSPORT EXPENSES OF RS.6,18,662.00 : 6. THAT, IN ASSESSMENT, THE LEARNED A.O. DISALLOWED RS.28,54,211.00 I.E. 10% OF TRANSPORTATION EXPENSES . IN REMAND PROCEEDING, THE ASSESSEE PRODUCED LEDGER ACCOUNT COPIES, BILLS AND VOUCHERS IN RESPECT OF ALL PARTIES, PAYMENTS WERE MADE THROUGH BANKING CHANNELS BUT, COULD NOT PRODUCE ORIGINAL BILLS IN RESPECT OF M/S. HP ENTERPRISES OF RS.3,45,912.00 AND DEVENDRA SINGH OF RS.2,59,450.00, HOWEVER PRODUCED VOUCHERS AND EXPLAINED THAT PAYMENT TO THESE TWO PARTIES WERE MADE THROUGH BANKING CHANNELS WHICH WAS CLEARLY VERIFIABLE. IGNORING THE PROOF OF PAYMENT, THE LEARNED AUTHORITIES BELOW SHOULD NOT HAVE MADE ADDITION BY HOLDING THAT, THESE ARE NOT VERIFIABLE. THE IMPUGNED ADDITION, THUS BEING NOT S USTAINABLE IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 7. (ASSESSMENT YEAR: 2010 - 11): TRANSPORT EXPENSES OF RS.52,23,907.00 : 1. THAT, IN ASSESSMENT, THE LEARNED A.O. DISALLOWED RS.3,20,77,830.00 I.E. 10% OF TRANSPORTATION EXPENSES. IN REMAND PROCEEDIN G, THE ASSESSEE PRODUCED LEDGER ACCOUNT COPIES, BILLS AND VOUCHERS IN RESPECT OF ALL PARTIES, PAYMENTS WERE MADE THROUGH BANKING CHANNELS BUT, COULD NOT PRODUCE ORIGINAL BILLS IN RESPECT OF M/S. TRADING SOLUTIONS OF RS.55,23,907.00, HOWEVER PRODUCED VOUCHE RS AND EXPLAINED THAT PAYMENT TO THIS PARTY WERE MADE THROUGH BANKING CHANNELS WHICH WAS CLEARLY VERIFIABLE FROM BANK STATEMENTS AND LEDGER ACCOUNT COPY. IGNORING THE PROOF OF PAYMENT, THE LEARNED AUTHORITIES BELOW IT (SS) A NO S . 69 - 75/CTK/2019 35 SHOULD NOT HAVE MADE ADDITION BY HOLDING THAT, IT IS NOT VERIFIABLE. THE IMPUGNED ADDITION, THUS BEING NOT SUSTAINABLE IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. DIFFERENCE IN BANK DEPOSITS OF RS.6,74,435.00 : 2. THAT, IN ASSESSMENT, THE LEARNED A.O. DISALLOWED THE EXCESS DEPOSITS MADE IN THE BANK ACCOUNTS OF RS.8,17,209.00, TREATING IT AS UNEXPLAINED INCOME OF THE ASSESSEE COMPANY. IN REMAND PROCEEDING, THE ASSESSEE PRODUCED RECONCILIATION STATEMENT. WHEN FROM THE RECONCILIATION STATEMENT, THE ASSESSEE COULD BE ABLE TO RECONCILE THE DISCRE PANCY AMOUNT OF RS.8,17,209.00 AND IT IS CLEARLY REVEALED THAT, THE CHEQUES WERE ISSUED BUT NOT ENCASHED, AS SUCH, THE DISCREPANCY AROSE IN BETWEEN THE BALANCE AS PER COMPANIES BOOK AND BALANCE AS PER BANK STATEMENT, THE LEARNED AUTHORITIES BELOW SHOULD NO T HAVE CONFIRMED RS.6,74,435.00. AS IT APPEARS, THE AUTHORITIES BELOW FOR SAKE OF ADDITION HAVE IGNORED RECONCILIATION STATEMENTS AND CONFIRMED RS.6.74.435.00. THE IMPUGNED ADDITION, THUS BEING NOT SUSTAINABLE, NEEDS TO BE DELETED IN THE INTEREST OF JUSTIC E. ASSESSMENT YEAR:2011 - 12: ADDITION OF RS.1,18,32,767.00: 1. THAT, IN ASSESSMENT, THE LEARNED A.O. MADE ADDITION OF RS.17,06,01,476.00 ON THE GROUND OF SALES SUPPRESSION. IN REMAND PROCEEDING, IT WAS EXPLAINED THROUGH RECONCILIATION STATEMENT. THE LEARNE D A.O. FOUND THAT, THE PARADEEP PORT TRUST HAS INTIMATED THAT, ASSESSEE COMPANY HAS SHOWN 2,76,487 MT QUANTITY EXPORT DURING THE YEAR AND BY REDUCING 1200 MT QUANTITY BEING SHORT SHIPMENT SHOWN, NET QUANTITY OF RS.2,75,287 MT IRON ORE. THEREAFTER, THE LEAR NED A.O. VERIFIED THIS FACT WITH THE AUDIT REPORT AND FOUND THAT, AS PER QUANTITATIVE DATA FOR THE YEAR UNDER CONSIDERATION AND PER THE PREVIOUS YEAR. BEING CONFUSED, HE TREATED THAT, THERE IS SHORT SALE OF RS.2085 MT QUANTITY OF IRON ORE, HENCE TREATED IT AS UNEXPLAINED AND CAME TO THE CONCLUSION THAT, THE ASSESSEE COMPANY HAS SUPPRESSED THE SALE TO THE EXTENT SALE OF 2085 MT QUANTITY OF IRON ORE, IGNORING THE SPECIFIC SUBMISSION OF HANDLING LOSS DURING LOADING AND UNLOADING OF IRON ORE AT THE PORT AREA AN D IN THE SHIP. THE LEARNED C.I.T.(A) DID NOT CONSIDER THE EXPLANATION OF THE ASSESSEE COMPANY, BLINDLY RELYING ON THE REMAND REPORT AND WITHOUT HIS JUDICIAL MIND CONFIRMED THE FINDINGS OF THE A.O. IN THE REMAND REPORT AND VALUED IT AS RS.1,18,32,767.00. 2. T HAT, IT IS QUITE NATURAL THAT, AFTER PURCHASE OF IRON ORE, IT HAS TO BE TRANSPORTED OF MORE THAN 250 KM TO REACH PARADEEP PORT. PURCHASE BILLS WERE RAISED BEFORE TRANSPORTING. AFTER TRANSPORTATION, GOODS WERE TO BE STORED AT THE PARKING PLOT, AGAIN IT WAS TO BE TRANSPORTED TO THE PORT, THEN AGAIN UNLOADED, THEREAFTER FINALLY IT WAS LOADED IN THE SHIP. SO, HANDLING LOSS IS QUITE NATURAL IN TRANSPORTATION BUSINESS. THE QUANTITY OF GOODS MENTIONED IN THE PURCHASE BILL REMAINED THE SAME, WHEREAS WHILE EXPORTING , THE HANDLING LOSSES WERE TO BE IT (SS) A NO S . 69 - 75/CTK/2019 36 REDUCED AND FINAL SALE BILL WERE MADE. THIS IS NOT HAPPENING IN THE CASE OF ASSESSEE ONLY, RATHER IT HAPPENS IN CASE OF EXPORTERS. AUTHORITIES BELOW SHOULD HAVE GIVEN PRACTICAL APPROACH AGAINST THIS HANDLING LOSS. IF WE COM PARE GROSS TURNOVER WITH THIS QUANTITY OF HANDLING LOSS, THEN IT WILL BE FOUND THAT, LOSS OF 2085 MT IS NATURAL AND QUITE REASONABLE. THE AUTHORITIES BELOW, WITHOUT APPLYING THEIR MIND SIMPLY CONFIRMED THE ADDITION. THE IMPUGNED ADDITION THUS, BEING NOT SU STAINABLE IN THE EYE OF LAW, NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. ADDITION OF RS.24,30,00,000.00: 3. THAT, DURING, REGULAR ASSESSMENT, IN RESPECT OF INCREASE IN SHARE CAPITAL AND SHARE PREMIUM ALL DETAILS OF IDENTITY OF SHARE HOLDERS, CREDIT WORTHINESS AND GENUINENESS WERE PROVED BEYOND DOUBT WITH SUPPORTING DOCUMENTARY EVIDENCES. THE LEARNED A.O. ALSO IN PAGE NO.165 OF THE PAPER BOOK HAS OBSERVED THAT, THE SUBMISSION MADE DURING COURSE OF REGULAR ASSESSMENT PROCEEDING HAS BEEN DULY VERIFIED. THE CONTENTION OF THE A/R OF THE ASSESSEE COMPANY IS THAT, ISSUE OF INCREASE OF SHARE CAPITAL / PREMIUM HAS BEEN VERIFIED BY THE A.O. DURING THE COURSE OF REGULAR SCRUTINY PROCEEDING IS CORRECT. BUT, IN PAGE NO.166 HAS OBSERVED THAT, AS DURING COURSE OF SEARCH ASSESSMENT, THOUGH THE A.O. HAS PROVIDED MORE THAN SUFFICIENT OPPORTUNITY, BUT THE ASSESSEE COMPANY FAILED TO FURNISH REQUIRED DETAILS, HENCE, A.O. COULD NOT CARRY OUT FURTHER FOLLOW UP OF INQUIRY / INVESTIGATION TO THOROUGHLY EXAMINATION OF THE ISS UE OF SHARE CAPITAL AND SHARE PREMIUM. ULTIMATELY, HE OBSERVED THAT, THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE SOURCE, FOR WHICH HE SUPPORTED THE ADDITION. 4. THAT, THE IMPUGNED OBSERVATION OF THE LEARNED A.O. IS WRONG AND CONTRARY TO THE FACTS ON R ECORD, HENCE NOT ACCEPTABLE. ON ONE HAND, HE HIMSELF HAS OBSERVED THAT, ALL DETAILS WERE VERIFIED DURING COURSE OF REGULAR ASSESSMENT, ON THE OTHER HAND, HE CONTRADICTED HIS OWN STATEMENT BY OBSERVING THAT, DETAILS WERE NOT PRODUCED, HENCE INQUIRY COULD NO T BE MADE. ONCE, ALL DETAILS WERE FILED AND VERIFIED DURING REGULAR ASSESSMENT, WITHOUT MAKING ANY FURTHER INQUIRY, IF AT ALL, IT IS REQUIRED FOR HIM, HE IS NOT EMPOWERED UNDER THE LAW TO CONFIRM THE ADDITION ASKING THE ASSESSEE TO EXPLAIN THE SOURCE OF TH E SOURCE, PARTICULARLY WHEN, THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS AND IS NOT REQUIRED UNDER THE LAW TO EXPLAIN THE SOURCE OF THE SOURCE. 5. THAT, THE LEARNED C.I.T(A) CONFIRMED THE ADDITION BY APPLYING THE FIRST PROVISO TO SECTION 68 OF THE ACT, WHI CH CAME INTO EFFECT ON AND FROM 01.04.2013. FINDINGS OF THE LEARNED C.I.T(A) IS THAT, THIS ASSESSMENT HAS BEEN COMPLETED ON 30.12.2016 AND THEREFORE, THE PROVISO IS APPLICABLE TO THE APPELLANT. THE APPELLANT HAS NOT EXPLAINED THE SOURCE OF THE SOURCE. 6. TH AT, FROM IMPUGNED FINDINGS OF THE AUTHORITIES BELOW, IT IS ABSOLUTELY CLEAR THAT, THE ADDITION HAS NOT BEEN MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL, RATHER WAS MADE ON WRONG APPLICATION OF IT (SS) A NO S . 69 - 75/CTK/2019 37 LAW, IGNORING THE FACT THAT, ALL DETAILS WERE AVAILABLE WIT H THEM AND THE SAME WERE ALREADY VERIFIED. FURTHER, LAW IS WELL SETTLED THAT, THE FIRST PROVISO TO SECTION 68 OF THE ACT CAME INTO EFFECT ON AND FROM 01.04.2013 HAS PROSPECTIVE APPLICATION AND CANNOT BE APPLIED TO PREVIOUS ASSESSMENT YEARS. REFERENCE MAY B E DRAWN TO THE JUDICIAL PRONOUNCEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS - M/S. GAGANDEEP INFRASTRUCTURE PVT. LTD. REPORTED IN 394 ITR 680, AND IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS - VEEDHATA TO WER PVT. LTD AND BY THE HONBLE SUPREME COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS - CHAIN HOUSE INTERNATIONAL PVT. LTD., IN SLP (CIVIL) DIARY NO(S).1992 OF 2019 AND BY THE HONBLE ITAT MUMBAI IN CASE OF M/S. PALI FABRICS PVT., LTD. VS - DCIT CENTRAL CIRCLE - 8(4) (MUMBAI), BEARING ITA NO.904/MUM/2018. 7. THAT, IN ALL THESE JUDGMENTS, THEIR LORDSHIPS HAVE HELD THAT, PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013. THUS, IT WOULD BE EFFECTIVE ONL Y FROM ASSESSMENT YEAR 2013 - 14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. THE PARLIAMENT DID NOT INTRODUCE THE PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATE THAT, IT WAS INTRODUCED FOR REMOVAL OF DOUBTS OR THAT, IT IS DECLARATORY. THEREFORE, IT IS NOT OPEN TO GIVE RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT, THE ADDITION OF THE PROVISO TO SECTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE A CT BOTH BEFORE AND AFTER ADDING THE PROVISO. IN THE PRESENT CASE, SINCE THE IMPUGNED ADDITION WAS MADE FOR WANT OF EXPLANATION THE SOURCE OF SOURCE, THE SAME IS NOT SUSTAINABLE IN VIEW OF THE SETTLED PRINCIPLES OF LAW, AS SUCH, CONSEQUENTIAL ADDITION OF RS .24,30,00,000.00 MADE BY THE AUTHORITIES BELOW NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. ADDITION OF RS.2,78,250.00 : THAT, IN ASSESSMENT, THE LEARNED A.O. DISALLOWED RS.18,24,402.00 I.E. 10% OF TRANSPORTATION EXPENSES. IN REMAND PROCEEDING, THE ASS ESSEE PRODUCED LEDGER ACCOUNT COPIES, B ILLS AND VOUCHERS IN RESPECT OF ALL PARTIES, PAYMENTS WERE MADE THROUGH BANKING CHANNELS BUT, COULD NOT PRODUCE ORIGINAL BILLS IN RESPECT OF M/S. D.K. LOGISTICS, M/S. VICTORY TRANSPORT AND M/S. AGARWALLA TRANSPORT TOT AL AMOUNTING TO RS.2,78,250.00, HOWEVER PRODUCED VOUCHERS AND EXPLAINED THAT, PAYMENT TO THESE PARTIES WERE MADE THROUGH BANKING CHANNELS WHICH WAS CLEARLY VERIFIABLE FROM BANK STATEMENTS AND LEDGER ACCOUNT COPY. IGNORING THE PROOF OF PAYMENT, THE LEARNED AUTHORITIES BELOW SHOULD NOT HAVE MADE ADDITION BY HOLDING THAT, IT IS NOT VERIFIABLE. REFERENCE MAY BE DRAWN TO ANNEXURE - 9, PAGE NO.203 TO 205 OF THE PAPER BOOK. IN VIEW OF THE ABOVE FACTS, THE IMPUGNED ADDITIONS, THUS BEING NOT SUSTAINABLE ARE LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. IT (SS) A NO S . 69 - 75/CTK/2019 38 THE LD. AR OF THE ASSESSEE HAS ALSO FILED CASE LAWS PAPER BOOK CONTAINING PAGES FROM 1 TO 858 IN SUPPORT OF HIS ARGUMENTS, WHICH ARE PLACED ON RECORD. HE ALSO RELIED ON THE JUDGMENT OF CO - ORDINATE BENCH OF ITAT KOLKA TA IN CASE OF M/S MANI SQUARE, IT(SS)A NO.58/KOL/2019 FOR A.Y.14 - 15. 13 . ON THE OTHER HAND, LD. CIT DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND HAS ALSO FILED HIS WRITTEN SUBMISSIONS AND PAPER BOOK CONTAINING PAGES FROM 1 TO 119. IN WRITTEN SUBMISSIONS , THE LD. CITDR SUBMITTED AS UNDER : - THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF STEVEDORING, SHIP CHANDLING, EXPORTS AND OTHER MARINE RELATED JOBS. A SEARCH & SEIZURE OPERATION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE COMPANY ON 11.09.2014. AS A RESULT, THE ASSESSMENTS WERE COMPLETED U / S .153A BY THE ASSESSING OFFICER. 2. DURING THE COURSE OF VIRTUAL HEARING ON 14.07.2020, THE ID. AR OF THE ASSESSEE HAD ARGUED THAT THE IMPUGNED ADDITIONS MADE BY THE AO ON ACCOUNT OF SHARE CAPITAL/SHARE PREMI UM OF RS. 1,60,00,000/ - AND DISALLOWANCE OUT OF TRANSPORT EXPENSES OF RS.6,18,662/ - (RESTRICTED TO RS.6,18,662/ - FROM RS.28,54,211/ - BY THE CIT, APPEALS) FOR AY 2009 - 10, DISALLOWANCE OF RS.52,23,907/ - OUT OF TRANSPORT EXPENSES AND ADDITION OF RS.6,74,435/ - ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS FOR AY 2010 - 11 AND SHARE CAPITAL/SHARE PREMIUM OF RS.24,30,00,000/ - , SUPPRESSION OF SALES OF RS.1,18,32,767/ - AND DISALLOWANCE OUT OF TRANSPORT EXPENSES OF RS.2,78,250/ - (RESTRICTED TO RS.2,78,250/ - FROM RS.18,24,402 / - BY THE CIT, APPEALS) FOR AY 2011 - 12 ARE NOT SUSTAINABLE IN THE EYES OF LAW AS NO INCRIMINATING MATERIAL/DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH OR POST - SEARCH ENQUIRY WITHIN THE MEANING OF SECTION 132(L)(C) OF THE ACT. IT WAS ARGUED BY THE ID. AR OF THE ASSESSEE THAT THESE ABATED ASSESSMENTS COULD NOT HAVE BEEN DISTURBED BY THE A.O. IT WAS ALLEGED THAT THE AO HAD RELIED UPON THE STATEMENT OF A THIRD PARTY NAMELY SHRI BIPIN KUMAR SINGH RECORDED ON OATH ON 19.12.2014 WHO WAS NEITHER RELATED WITH T HE SHAREHOLDERS OF THE ASSESSEE COMPANY NOR WITH THE DIRECTORS OF THE ASSESSEE COMPANY NOR WAS AN EMPLOYEE OF THE ASSESSEE COMPANY. FURTHER NO OPPORTUNITY OF CROSS - EXAMINATION OF SHRI BIPIN KUMAR SINGH WAS ALLOWED BY THE A.O. IT HAS BEEN ALLEGED THAT AS ON THE DATE OF SEARCH, THE DEPARTMENT WAS NOT ABLE TO FIND OUT ANY UNACCOUNTED MONEY, BULLION OR ANY OTHER VALUABLE ARTICLE OR THINGS. FURTHER NO INCRIMINATING MATERIAL/DOCUMENTS WERE FOUND FROM THE IT (SS) A NO S . 69 - 75/CTK/2019 39 PREMISES OF THE ASSESSEE COMPANY OR FROM RESIDENTIAL PREMIS ES OF THE DIRECTORS. RELIANCE WAS PLACED ON THE DECISIONS OF HON'BLE HIGH COURTS IN THE CASES OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NAVA SHEVA) LTD. (374 ITR 645), CIT VS. KABUL CHAWLA (380 ITR 573), PR. CIT VS. KURULE PAPER MILLS PVT. LTD. (380 ITR 571) ETC. IT MAY KINDLY BE NOTED THAT THIS ISSUE WAS DISCUSSED BY THE CIT(A) - 2, BHUBANESWAR IN PARA - 7.3 ON PAGE - 9 OF THE APPELLATE ORDER FOR REFERENCE. 3. DURING THE COURSE OF VIRTUAL HEARING ON 14.07.2020, THE UNDERSIGNED HAD BROUGHT TO THE NOTICE OF HON'BLE MEMBERS CONTENTS OF SEIZED MATERIALS/DOCUMENTS AS PER ANNEXURE - A ON PAGE - 13 OF PAPER BOOK FOR AY 2009 - 10 FILED ON 25TH JUNE, 2020. THE ITEM NO.10 REFERS TO A BUNCH OF LOOSE SHARE APPLICATION FORMS NUMBERING 1 TO 86. ACCORDINGLY THE UNDERSIGNED H AD SOUGHT TIME TO FILE A PAPER BOOK CONTAINING THE SEIZED MATERIALS. 4. KINDLY REFER TO PAGES 1 TO 86 OF ANNEXURE - LMS/10 IN THE PAPER BOOK FILED BY THE DEPARTMENT ON 31.08.2020. A) THE SHARE APPLICATION FORM NUMBERED 85 TO 86 PERTAINS TO SEASONS TRAD ECOM PRIVATE LIMITED HAVING REGISTERED OFFICE AT 4, SADANANDA ROAD, KOLKATA - 26. IT HAS APPLIED FOR 5000 SHARES EACH AT A FACE VALUE OF RS.100/ - AND PREMIUM OF RS.900/ - PER SHARE. AN AMOUNT OF RS.50 LAKHS HAS BEEN PAID FROM BANK ACCOUNT MAINTAINED WITH KARUR VYSYA BANK ON 18.09.2010 (PERTAINING TO AY 2011 - 12). PLEASE NOTE THAT THIS APPLICATION FORM WAS APPLIED BY A COMPANY BASED AT KOLKATA. IN SPITE OF PAYMENT OF RS.50 LAKHS BY THE APPLICANT, IT HAS NOT BEEN SIGNED BY THE MANAGING DIRECTOR OR AUTHORIZED SIGNA TORY OF SAID APPLICANT COMPANY. IT HAS REMAINED UNEXPLAINED AS HOW THIS UNSIGNED SHARE APPLICATION FORM HAS COME INTO THE POSSESSION/HANDS OF THE ASSESSEE COMPANY I.E. THROUGH A POSTAL DEPARTMENT OR PERSONAL HAND OVER OR A PRIVATE COURIER. SINCE THE SHARE APPLICATION FORM IS NOT SIGNED AND ALSO UNDATED, IT SHOWS THE COLLUSIVE NATURE OF TRANSACTIONS IN QUESTION. B) THE SHARE APPLICATION FORMS NUMBERED 77 TO 84 PERTAIN TO GOKUL GOODS PVT. LTD. HAVING REGISTERED OFFICE AT 4, SADANANDA ROAD, KOLKATA - 26 (SAME ADDRESS AS SEASONS TRADECOM PVT. LTD.). IT HAS APPLIED FOR 20,000 SHARES EACH AT A FACE VALUE OF RS.100/ - AND PREMIUM OF RS.900/ - PER SHARE. AN AMOUNT OF RS.2 CRORES HAS BEEN PAID FROM BANK ACCOUNT MAINTAINED WITH KARUR VYSYA BANK ON VARIOUS DATES I.E. 20 .09.2010, 21.09.2010 AND 24.09.2010 (PERTAINING TO AY 2011 - 12). PLEASE NOTE THAT THESE APPLICATION FORMS WERE APPLIED BY A COMPANY BASED AT KOLKATA. IN SPITE OF PAYMENT OF RS.2 CRORES BY THE APPLICANT, THESE FORMS HAVE NOT BEEN SIGNED BY THE MANAGING DIREC TOR OR AUTHORIZED SIGNATORY OF SAID APPLICANT COMPANY. IT HAS REMAINED UNEXPLAINED AS HOW THESE UNSIGNED SHARE APPLICATION FORMS HAVE COME INTO THE POSSESSION/HANDS OF THE ASSESSEE COMPANY I.E. THROUGH A POSTAL DEPARTMENT OR PERSONAL HANDING OVER OR A PRIV ATE COURIER. SINCE THE SHARE APPLICATION FORMS ARE NOT SIGNED AND ALSO UNDATED, IT SHOWS THE COLLUSIVE NATURE OF TRANSACTIONS IN QUESTION. IT (SS) A NO S . 69 - 75/CTK/2019 40 C) THE SHARE APPLICATION FORMS NUMBERED 35 TO 76 PERTAIN TO UNICORN COMMERCIAL PVT. LTD. HAVING REGISTERED OFFICE AT 4, SADANANDA ROAD, KOLKATA - 26 (SAME ADDRESS AS SEASONS TRADECOM PVT. LTD. AND GOKUL GOODS PVT. LTD.). IT HAS APPLIED FOR 1,60,000 SHARES EACH AT A FACE VALUE OF RS.100/ - AND PREMIUM OF RS.900/ - PER SHARE. AN AMOUNT OF RS.16 CRORES HAS BEEN PAID FROM BANK ACCOUNTS MAINTAINED WITH ORIENTAL BANK OF COMMERCE AND HDFC BANK, KOLKATA ON VARIOUS DATES I.E. 15.09.2010, 16.09.2010, 17.09.2010, 08.09.2010, 06.09.2010, 04.09.2010, 03.09.2010, 02.09.2010, 30.08.2010 AND 28.08.2010 (PERTAINING TO AY 2011 - 12). PLEASE NOT E THAT THESE APPLICATION FORMS WERE APPLIED BY A COMPANY BASED AT KOLKATA. IN SPITE OF PAYMENT OF RS.16 CRORES BY THE APPLICANT, THESE FORMS HAVE NOT BEEN SIGNED BY THE MANAGING DIRECTOR OR AUTHORIZED SIGNATORY OF SAID APPLICANT COMPANY. IT HAS REMAINED UN EXPLAINED AS HOW THESE UNSIGNED SHARE APPLICATION FORMS HAVE COME INTO THE POSSESSION/HANDS OF THE ASSESSEE COMPANY I.E. THROUGH A POSTAL DEPARTMENT OR PERSONAL HANDING OVER OR A PRIVATE COURIER. SINCE THE SHARE APPLICATION FORMS ARE NOT SIGNED AND ALSO UN DATED, IT SHOWS THE COLLUSIVE NATURE OF TRANSACTIONS IN QUESTION. D) THE SHARE APPLICATION FORMS NUMBERED 1 TO 34 PERTAIN TO KARISMA TREXIM PVT. LTD. HAVING REGISTERED OFFICE AT 14/2, OLD CHINA BAZAAR STREET, 4TH FLOOR, ROOM NO.402, KOLKATA - 01. IT HAS APP LIED FOR 80,000 SHARES EACH AT A FACE VALUE OF RS.100/ - AND PREMIUM OF RS.900/ - PER SHARE. AN AMOUNT OF RS.8 CRORES HAS BEEN PAID FROM BANK ACCOUNT MAINTAINED WITH PUNJAB NATIONAL BANK, KOLKATA ON VARIOUS DATES I.E. 21.09.2010, 18.09.2010, 17.09.2010, 16 .09.2010, 15.09.2010, 13.09.2010, 10.09.2010, 06.09.2010, 03.09.2100, 02.09.2010, 01.09.2010, 31.08.2010, 30.08.2010 AND 27.08.2010 (PERTAINING TO AY 2011 - 12).. PLEASE NOTE THAT THESE APPLICATION FORMS WERE APPLIED BY A COMPANY BASED AT KOLKATA. IN SPITE O F PAYMENT OF RS.8 CRORES BY THE APPLICANT, THESE FORMS HAVE NOT BEEN SIGNED BY THE MANAGING DIRECTOR OR AUTHORIZED SIGNATORY OF SAID APPLICANT COMPANY. IT HAS REMAINED UNEXPLAINED AS HOW THESE UNSIGNED SHARE APPLICATION FORMS HAVE COME INTO THE POSSESSION/ HANDS OF THE ASSESSEE COMPANY I.E. THROUGH A POSTAL DEPARTMENT OR PERSONAL HANDING OVER OR A PRIVATE COURIER. SINCE THE SHARE APPLICATION FORMS ARE NOT SIGNED AND ALSO UNDATED, IT SHOWS THE COLLUSIVE NATURE OF TRANSACTIONS IN QUESTION. FURTHER THE ASSESSE E HAS NEITHER FILED THE CONFIRMATIONS FROM THE APPLICANTS, THEIR BANK STATEMENTS ETC. NOR EXPLAINED THE SOURCES OF INVESTMENTS MADE BY THEM NOR THE COPIES OF RETURNS OF INCOME RELATING TO ASSESSMENT YEARS IN QUESTION BEFORE THE A.O. OR CIT(A). THUS EVEN TH E PRIMARY ONUS HAS NOT BEEN DISCHARGED BY THE ASSESSEE. THE ASSESSEE HAS NOT BROUGHT ON RECORD THE BASIS ON WHICH THE SHARE PREMIUM @RS.900 WAS COMMANDED BY IT AND NOT EXPLAINED THE CIRCUMSTANCES IN WHICH THE VARIOUS PRIVATE ENTITIES, FOUND SUCH A PROPOSIT ION ATTRACTIVE TO COMMIT FUNDS RUNNING INTO CRORES OF RUPEES. THERE IS NOTHING ON RECORD TO SHOW WHETHER THESE PRIVATE ENTITIES HAVE RECEIVED ANY INCOME ON SUCH INVESTMENTS OR NOT. IT (SS) A NO S . 69 - 75/CTK/2019 41 5. ON EXAMINATION OF THE VARIOUS SEIZED DOCUMENTS, IT IS FOUND THAT THE L IBERTY GROUP HAS RECEIVED SHARE CAPITAL/SHARE PREMIUM FROM PAPER/SHELL COMPANIES HAVING NO ACTUAL BUSINESS ACTIVITIES. THE MODUS OPERANDI OF THE ASSESSEE COMPANY IS THAT THESE PAPER/SHELL COMPANIES HAVE RECEIVED SHARE CAPITAL AND SHARE PREMIUM FROM SOME 'J AMA KHARCHI' COMPANIES. IN TURN, THESE PAPER/SHELL COMPANIES HAVE INVESTED THE CAPITAL RECEIVED FROM THE 'JAMA KHARCHI' COMPANIES IN THE FLAGSHIP COMPANY OF THE LIBERTY GROUP. APART FROM THIS, THE ASSESSEE COMPANY HAS DIRECTLY RECEIVED SHARE CAPITAL FROM J AMA KHRACHI COMPANIES. THE UNDISCLOSED INCOME GENERATED BY THE LIBERTY GROUP HAS BEEN BROUGHT BACK IN THE BOOKS OF ACCOUNT THROUGH THE WEB OF JAMAKHARCHI COMPANIES IN COLLUSION WITH VARIOUS ACCOMMODATION ENTRY OPERATORS. IN THIS WAY, THE TOTAL AMOUNT OF EN TRIES OF SHARE CAPITAL TAKEN BY THE LIBERTY GROUP WILL AGGREGATE TO ABOUT RS.31 CRORES. THE TOTAL SHARE CAPITAL (PAID UP CAPITAL + PREMIUM) RAISED BY THE ABOVE - MENTIONED COMPANIES ARE M/S. SEASONS TRADECOM PVT. LTD. - (RS.5.28 CRORES), M/S UNICORN COMMERCIAL PVT. LTD. - (RS. 16.05 CRORES), M/S GOKUL GOODS PVT. LTD - (RS.4.21 CRORES), M/S. KRISH COMMOTRADE PVT. LTD. - (RS.7.62 CRORES) AND M/S KARISHMA TREXIM PVT. LTD. - (RS.8.85 CRORES), BONN SUPPLIERS PVT. LTD. - (RS.6.44 CRORES). THUS ABOVE INVESTORS COMPANIES HAVE RECEIVED SHARE CAPITAL/PREMIUM OF RS.49 CRORES FROM VARIOUS JAMAKHARCHI COMPANIES. THE ASSESSEE COMPANY HAS BROUGHT BACK UNACCOUNTED CASH OF NEARLY RS.31 CRORES THROUGH THESE PAPER/SHELL COMPANIES OUT OF SALE PROCEEDS OF THEIR INVESTMENTS. THE STATEMENTS OF ALL THE OPERATORS OF ABOVE MENTIONED COMPANIES AND DIRECTORS WERE ALSO RECORDED BY THE INVESTIGATION WING OF KOLKATA. THE RECEIPT OF SHARE CAPITAL AS WELL AS CONSEQUENT INVESTMENTS IN THE BOOKS OF ACCOUNT OF THESE COMPANIES WERE ONLY ON PAPER, HAVING NO REAL BUSINESS. 6. THIS PROCESS, WHICH IS COMMONLY TERMED AS 'KHALI KARANA' IN THE MARKET, IS EXPLAINED AS UNDER BELOW: STAGE 1: THE LIBERTY GROUP HAS DEBITED BOGUS EXPENSES IN ITS BOOKS OF ACCOUNT IN THE NAMES OF SOME CONCERNS SUCH AS GREENVIEW P ROJECTS PVT. LTD., BHUMI FINANCIAL CONSULTANTS PVT. LTD., INTIMATE CONSTRUCTION PVT. LTD., REWARD COMMOSALE PVT. LTD., MAA DURGA UDYOG SUPPLIERS PVT. LTD., SINGH TRANSPORT ETC. THE LIBERTY GROUP HAS ISSUED CHEQUES TO THOSE COMPANIES/CONCERNS FOR ' BOGUS E XPENSES SUCH AS TRANSPORT EXPENSES, OTHER EXPENSES ' ETC. STAGE 2: THE ABOVE - MENTIONED COMPANIES/CONCERNS TRANSFERRED THE AMOUNT IN THE GUISE OF BOGUS BILLING TO ANOTHER COMPANY VIZ. M/S. SWAR TRADERS PVT. LTD. OR M/S. GURU NANAK ROADWAYS P VT. LTD. WHICH ARE ALSO PAPER/SHELL COMPANIES FLOATED FOR PROVIDING ACCOMMODATION ENTRY. STAGE 3: THESE COMPANIES VIZ. M/S SWAR TRADERS PVT. LTD., M/S. GURU NANAK ROADWAYS PVT. LTD. ETC. HAVE TRANSFERRED THE AMOUNTS TO THE ACCOUNT OF SUCH PAPER/SHE LL COMPANIES I.E. M/S SEASONS TRADECOM PVT. LTD., M/S UNICORN COMMERCIAL PVT. LTD., M/S. GOKUL GOODS PVT. LTD., M/S. IT (SS) A NO S . 69 - 75/CTK/2019 42 KRISH COMMOTRADE PVT. LTD., M/S. KARISHMA TREXIM PVT. LTD. IN THE FORM OF SALE PROCEEDS OF INVESTMENTS. IT IS FOUND THAT LIBERTY MARINE S YNDICATE PVT. LTD. ISSUED THREE CHEQUES AMOUNTING TO RS.82,40,170/ - , RS.68,20,120/ - AND RS.49,39,710/ - IN FAVOUR OF M/S. INTIMATE CONSTRUCTION PVT. LTD. THE CHEQUES WERE ISSUED ON ACCOUNT OF TRANSPORTATION CHARGES AND THE EXPENDITURE WAS DULY DEBITED IN TH E BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. M/S INTIMATE CONSTRUCTION PVT. LTD. WHICH IS AGAIN A PAPER/SHELL COMPANY TRANSFERRED THIS AMOUNT TO M/S. SWAR TRADERS PVT. LTD. JUST TO LAYER THE TRANSACTION. IN TURN, M/S SWAR TRADERS PVT. LTD. TRANSFERRED THE A MOUNT TO M/S UNICORN COMMERCIAL PVT. LTD., A PAPER/SHELL COMPANY WHICH HAS INVESTED IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY. M/S. UNICORN COMMERCIAL PVT. LTD. HAS SHOWN THIS AMOUNT RECEIVED FROM SWAN TRADERS PVT. LTD. AS SALE PROCEEDS OF ITS INVESTMEN TS AND THUS INTRODUCED THE UNACCOUNTED MONEY OF THE ASSESSEE COMPANY IN THE GARB OF SHARE CAPITAL. USING THIS METHOD, THE LIBERTY GROUP HAS BROUGHT IN ITS BOOKS UNACCOUNTED MONEY WORTH RS.31 CRORES OUT OF THE SHARE CAPITAL OF RS.49 CRORES OF SUCH PAPER/SHE LL COMPANIES. 7. IT IS ALSO NOTEWORTHY THAT THE BANK ACCOUNTS OF THESE PAPER/SHELL COMPANIES VIZ., SWAR TRADERS PVT. LTD., GREENVIEW PROJECTS PVT. LTD., BHUMI FINANCIAL CONSULTANTS PVT. LTD., INTIMATE CONSTRUCTION PVT. LTD., REWARD COMMSALE PVT. LTD., H AVE BEEN OPENED ON 09.09.2010 WITH A CASH DEPOSIT OF RS.5,000/ - IN THE SAME BANK AND BRANCH I.E. ALLAHABAD BANK, DURGAPUR CITY BRANCH, DURGAPUR. MOREOVER, THE DIRECTORS AND SIGNATORIES OF ALL THE SAID COMPANIES ARE THE SAME PERSONS. 8. PAGES 43, 44, 50 & 51 OF SEIZED BUNCH ANNEXURE - LMS/7 CONTAIN BANK STATEMENTS OF KARISHMA TREXIM PVT. LTD., GOKUL GOODS PVT. LTD. AND SEASONS TRADECOM PVT. LTD. A PERUSAL OF THESE ACCOUNTS SHOWS TRANSFER OF FUNDS FROM GURU NANAK ROADWAYS, SWAR TRADERS PVT. LTD., MAA DURGA UDY OG TO THE BANK ACCOUNTS OF KARISHMA TREXIM PVT. LTD., GOKUL GOODS PVT. LTD. AND SEASONS TRADECOM PVT. LTD. IN TURN, THESE PAPER/SHELL COMPANIES HAVE TRANSFERRED THE FUNDS TO THE ASSESSEE COMPANY FOR THE PURPOSE OF ROUTING ITS UNACCOUNTED INCOME AS DISCUSSE D ABOVE. KINDLY NOTE THE MEAGER BANK BALANCES IN THESE BANK ACCOUNTS OF THE INVESTOR COMPANIES BEFORE THE TRANSFER OF FUNDS FROM GURU NANAK ROADWAYS, SWAR TRADERS PVT. LTD., MAA DURGA UDYOG AND ALSO AFTER THE TRANSFER OF FUNDS TO THE ASSESSEE COMPANIES. 9 . DURING THE COURSE OF SEARCH, WHILE RECORDING HIS STATEMENT, SHRI BHASKAR GHOSH WAS ALSO CONFRONTED ABOUT THE TRANSACTIONS MADE WITH M/S BHUMI FINANCIAL CONSULTANTS PVT. LTD. AND THEIR BUSINESS RATIONALE BUT HE COULD NOT EXPLAIN IT SATISFACTORILY. THE REL EVANT PORTION OF THE STATEMENT OF SHRI BHASKAR GHOSH, DIRECTOR OF THE ASSESSEE COMPANY ON OATH U/S. 132(4) ON 12.09.2014 IS REPRODUCED AS UNDER: 'QUES.15. PLEASE GO THROUGH THE CONTENT OF PAGE NO. 23 OF THE BUNCH OF LOOSE SHEET INVENTORISED VIDE ID MARK LMS/3 IN WHICH PAYMENT IT (SS) A NO S . 69 - 75/CTK/2019 43 OF RS.25,00,000/ - WAS MADE TO BHUMI FINANCIAL CONSULTANTS PVT. LTD. PLEASE GIVE DETAILS OF REASON FOR SUCH PAYMENT. ANS. THESE PAYMENTS WERE MADE FOR HANDLING AND TRANSPORTATION AND HANDLING OF IRON ORE AND CUSTO M CLEARANCE JOB. QUES. .16. PLEASE GIVE THE CONTACT ADDRESS, PHONE NOS. OF THE DIRECTORS OR RESPONSIBLE STAFF OF BHUMI FINANCIAL CONSULTANTS PVT. LTD. TO WHOM YOU OR YOUR STAFF HAVE CONTACTED. ANS. I CAN'T REMEMBER NOW, I WILL GIVE YOU LATER ON. QUE S.17 PLEASE STATE HOW OR THOUGH WHOM YOU CAME TO KNOW ABOUT BHUMI FINANCIAL CONSULTANTS PVT. LTD? ANS. I HAVE NO COMMENT. Q.20 PLEASE GO THROUGH THE CONTENT OF THE BUNCH OF LOOSE SHEET INVENTORISED VIDE ID MARK LMS/5 WHICH SHOWS LEDGER ACCOUNT OF BHUMI FINANCIAL CONSULTANTS PVT. LTD. FOR THE PERIOD OF 01.04.2010 TO 31.03.2014. WHAT IS THE BUSINESS TRANSACTION WITH BHUMI FINANCIAL CONSULTANTS PVT. LTD. ANS. SIR, WE TAKE SERVICE OF BHUMI FINANCIAL CONSULTANTS PVT. LTD. FOR TRANSPORTA TION AND HANDLING OF IRON ORE FINES AND CUSTOM CLEARANCE JOB. Q.21 IT IS SEEN IN THE INVENTORISED BOOK LMS/5 THAT TOTAL OUTSTANDING BALANCE WITH BHUMI FINANCIAL CONSULTANTS PVT. LTD. IS RS.3,63,97,144/ - . FURTHER, IT IS SEEN IN PAGE NO. 4 LMS/5 THAT M/ S. IVORY IMPEX PVT. LTD., DESTINY VANIJYA PVT. LTD. AND EVERGREEN MERCHANTS PVT. LTD. HAVE COLLECTIVELY REFUNDED RS.68.00 LAKHS ON BEHALF OF BHUMI FINANCIAL CONSULTANTS PVT. LTD. ON VERIFICATION FROM ROC SITE, IT IS FOUND THAT BHUMI FINANCIAL CONSULTANTS PVT. LTD. IS A NON FILER AND IN THE PROCESS OF STRIKING OFF. FURTHER, I AM SHOWING YOU STATEMENT OF MR. DEVESH UPADHYAY AND MR. AJAY KUMAR THAKUR WHO ARE ONE OF THE DIRECTOR/AUTHORISED SIGNATORY IN VARIOUS PAPER COMPANIES AS MENTIONED ABOVE WHICH ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRY. PLEASE OFFER YOUR COMMENTS. ALSO STATE WHY ALL THE TRANSACTION MADE WITH BHUMI FINANCIAL CONSULTANTS PVT. LTD. SHOULD NOT BE TREATED AS BOGUS? ANS. SIR, I DO NOT HAVE ANY IDEA ABOU T THE ABOVE MENTIONED PERSONS WHO ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRY. HOWEVER, I CONFIRM THAT I HAVE TAKEN ACTUAL SERVICE FROM BHUMI FINANCIAL CONSULTANTS PVT. LTD'. FROM THE ABOVE STATEMENT, IT IS AMPLY CLEAR THAT THE ASSESSEE COMPANY HAS SUPPR ESSED ITS ACTUAL PROFITS BY DEBITING BOGUS EXPENSES WHICH THEN HAVE BEEN BROUGHT BACK IN THE BOOKS OF THE ASSESSEE COMPANY IN THE GARB OF SHARE CAPITAL AND SHARE PREMIUM. THIS MODUS OPERANDI HAS IT (SS) A NO S . 69 - 75/CTK/2019 44 BEEN ADOPTED BY THE LIBERTY GROUP WITH THE SOLE MOTIVE TO GIV E A COLOUR OF GENUINENESS TO OTHERWISE BOGUS TRANSACTIONS. 10 M/S. UNICORN COMMERCIAL PVT. LTD., THE ALLEGED SHAREHOLDER OF THE ASSESSEE COMPANY HAS ALLOTTED 3,21,100 SHARES AT A FACE VALUE OF RS.10/ - AND PREMIUM OF RS.490/ - PER SHARE TO THE FOLLOWING PAPER COMPANIES/JAMAKHARCHI COMPANIES WITHOUT ANY RATIONALE FOR SUCH HIGH PREMIUM: DATE OF ALLOTMENT NAME OF ALLOTTEE ADDRESS NUMBER OF EQUITY SHARES 31.03.2008 AMTEK COMMOTRADE PVT. LTD. 15, GANESH CHANDRA AVENUE, 7 TH FLOOR KOLKATA - 700013 12000 31.03.2008 APEX REAL ESTATE PVT. HOG, NSC BOSE ROAD, 2 ND 24000 LTD. FLOOR, TOLLYGUNGE, KOLKATA - 700040 31.03.2008 BEACON DISTRIBUTORS PVT. LTD. 12, TILJALA ROAD, KOLKATA - 700039 24800 31.03.2008 BLACKBERRY VANIJYA PVT. LTD. 103, RAKHALDAS AUDDY ROAD, KOLKATA - 700027 20000 31.03.2008 EMERALD MERCANTILE PVT. LTD HOG, NSC BOSE ROAD, 2 ND FLOOR, TOLLYGUNGE, KOLKATA - 700040 30000 31.03.2008 ESTEEM VYAPAAR PVT. LTD. 15, GANESH CHANDRA AVENUE, 7 TH FLOO R, KOLKATA - 700013 22000 31.03.2008 ALLIANCE COMMODITIES PVT. LTD. 15, GANESH CHANDRA AVENUE, 7 TH FLOOR, KOLKATA - 700013 10200 31.03.2008 ALLIANCE REAL ESTATES PVT. LTD. 103, RAKHALDAS AUDDY ROAD, KOLKATA - 700027 7000 31.03.2 008 ALTERNATE VYAPAAR PVT. LTD. 15, GANESH CHANDRA AVENUE, 7 TH FLOOR, KOLKATA - 700013 20000 31.03.2008 AMPLE TRACOM PVT. LTD. HOG, NSC BOSE ROAD, 2 ND FLOOR, TOLLYGUNGE, KOLKATA - 700040 30000 31.03.2008 FAB DISTRIBUTORS PVT. LTD. 12, TILJALA ROAD, KOLKATA - 700039 25600 31.03.2008 NICE VANIJYA PVT. LTD. 15, GANESH CHANDRA AVENUE, 7 TH FLOOR, KOLKATA - 700013 5500 31.03.2008 NOBEL DEALCOM PVT. LTD. 12, TILJALA ROAD, KOLKATA - 700039 12000 31.03.2008 OCTAGON AGENCIES PVT. LTD. HOG , NSC BOSE ROAD, 2 ND FLOOR, TOLLYGUNGE, KOLKATA - 700040 10000 31.03.2008 PROMINENT HEIGHTS PVT. LTD. 103, RAKHALDAS AUDDY ROAD, KOLKATA - 700027 24000 IT (SS) A NO S . 69 - 75/CTK/2019 45 31.03.2008 SPRINGVALLEY DISTRIBUTORS PVT. LTD. 15, GANESH CHANDRA AVENUE, 7 TH FLOOR, KOLK ATA - 700013 10000 31.03.2008 WISE DEALCOM PVT. LTD 103, RAKHALDAS AUDDY ROAD, KOLKATA - 700027 14000 31.03.2008 ZED MERCHANTS PVT. LTD. HOG, NSC BOSE ROAD, 2 ND FLOOR, TOLLYGUNGE, KOLKATA - 700040 20000 TOTAL 321100 11. SIMILARLY SEASONS TRADECOM PVT. LTD., THE ALLEGED SHAREHOLDER OF THE ASSESSEE COMPANY HAS ALLOTTED 211200 SHARES AT A FACE VALUE OF RS.10/ - PER SHARE AND PREMIUM OF RS.240/ - PER SHARE TO THE FOLLOWING PAPER/SHELL COMPANIES WITHOUT ANY BUSINESS RATIONALE FOR SUCH HUGE PREMIUM: DATE OF ALLOTMENT NAME OF ALLOTTEE ADDRESS NUMBER OF EQUITY SHARES 31.03.2008 OM COMMOTRADE PVT. LTD. 50, BURTOLLA STREET, KOLKATA - 700007 70800 31.03.2008 PRIMEROSE VINCOM PVT. LTD. 27A, WATERLOO STREET, KOLKATA - 700064 72000 31.03.200 8 VIDHAN PARIDHAN PVT. LTD. 32, METCALFE STREET, KOLKATA - 700013 68400 TOTAL 211200 12. FURTHER M/S. GOKUL GOODS PVT. LTD. HAS ALLOTTED 4,20,000 SHARES AT A FACE VALUE OF RS.10/ - PER SHARE AND PREMIUM OF RS.90/ - PER SHARE TO THE FOLLOWIN G PAPER/SHELL COMPANIES WITHOUT ANY RATIONALE FOR SUCH A PREMIUM: DATE OF ALLOTMENT NAME OF ALLOTTEE ADDRESS NUMBER OF EQUITY SHARES 31.03.2009 HORA FINANCE AND INVESTMENT PVT. LTD. HORA CHAMBERS, LINK ROAD, BILASPUR, MADHYA PRADESH, PIN - 495001 70000 31.03.2009 EVERNEW TRADELINKS PVT. LTD. 86,CANNING STREET, KOLKATA - 700001 51000 31.03.2009 JDM UDYOG PVT. LTD. 3B,CAMAC STREET, BLOCK - B, 2 ND FLOOR, KOLKATA - 700016 58000 31.03.2009 CHERRY VINTRADE PVT. LTD. 27A, WATERLOO STEET, KOLKATA - 700064 118000 31.03.2009 HANUMAN FINCON PVT. LTD. 9/12, LAL BAZAR STREET, 1 ST FLOOR, KOLKATA - 700001 56000 31.03.2009 VIBHUTI MARKETING PVT. LTD 8, NAYA PATTI ROAD, KOLKATA - 700055 67000 TOTAL 420000 IT (SS) A NO S . 69 - 75/CTK/2019 46 13. DURING POST SEARCH ENQUIRY, SUMMONS WERE ISSUED BY THE DDIT (INVESTIGATION), KOLKATA THROUGH POST TO THE PRINCIPAL OFFICERS OF THE SHAREHOLDING COMPANIES BUT MOST OF THEM WERE RETURNED BACK BY THE POSTAL AUTHORITIES AS THESE COMPANIES WERE NOT FOUND AT THEIR GIVEN ADDRESSES . FURTHERMORE, NO ONE APPEARED BEFORE THE DDIT(INVESTIGATION), KOLKATA TILL COMPLETION OF POST - SEARCH ENQUIRIES. THIS FACT HAS ALSO STRENGTHENED THE FINDINGS THAT THE SAID INVESTOR COMPANIES ARE ALL PAPER/SHELL COMPANIES HAVING NO ACTUAL EXISTENCE OR CAR RYING OUT REAL BUSINESS. 14. DURING THE COURSE OF POST SEARCH ENQUIRIES, STATEMENT OF ONE KOLKATA BASED ENTRY OPERATOR VIZ. SHRI BIPIN KUMAR SINGH, WHO WAS ONE OF THE DIRECTORS OF M/S. KARISMA TREXIM PVT. LTD., WAS RECORDED. FROM HIS STATEMENT RECORDED ON 19.12.2014, IT IS CRYSTAL CLEAR THAT THE LIBERTY GROUP HAS TAKEN ACCOMMODATION ENTRIES THROUGH M/S. KARISMA TREXIM PVT.LTD. THE RELEVANT PORTION OF THE SAID STATEMENT IS REPRODUCED BELOW: 'QUES.10 PLEASE GO THROUGH THE LIST OF COMPANIES IN WHICH YOU ARE WERE ONE OF THE DIRECTORS, AS PER ROC DATA OF MINISTRY OF CORPORATE AFFAIRS. IT IS APPARENT FROM THE SAID DOCUMENT THAT YOU WERE ONE OF THE DIRECTORS IN KARISMA TREXIM PVT. LTD. PLEASE STATE THE MODUS OPERANDI OF BUSINESS OF THE SAID COMPANY. ANS. SIR, I WAS ONE OF THE DIRECTORS OF M/S. KARISMA TREXIM PVT. LTD. TILL 22.08.2011. THIS COMPANY ALSO IS A JAMA - KHARCHI COMPANY HAVING NO REAL BUSINESS ACTIVITY OTHER THAN PROVIDING ACCOMMODATION ENTRY TO BENEFICIARIES. AS FAR AS MY KNOWLEDGE GOES, ONE OF THE BE NEFICIARY OF THIS JAMAKHARCHI COMPANY IS THE LIBERTY MARINE SYNDICATE PVT. LTD. QUES. 11 PLEASE GO THROUGH THE BANK STATEMENT OF PUNJAB NATIONAL BANK JADAVPUR BRANCH KOLKATA, IT IS SHOWN THAT M/S THE LIBERTY MARINE SYNDICATE PVT. LTD HAS DEPOSITED (PAID) FUND IN THE ACCOUNT OF M/S SINGH TRANSPORT (A/C NO - 1485002100008816) AS PER TABLE AS BELOW: SI NO. DATE PARTICULARS (DEPOSITOR) AMOUNT IN RS. 1 01 - 09 - 2010 THE LIBERTY MARINE SYNDICATE PVT LTD. 25,00,000/ - 2 02 - 09 - 2010 THE LIBERTY MARINE SYNDICATE PVT LTD . 30,68,225/ - 3 02 - 09 - 2010 THE LIBERTY MARINE SYNDICATE PVT LTD. 19,36,840/ - 4 03 - 09 - 2010 THE LIBERTY MARINE SYNDICATE PVT LTD. 16,10,190/ - IT (SS) A NO S . 69 - 75/CTK/2019 4 7 5 03 - 09 - 2010 THE LIBERTY MARINE SYNDICATE PVT LTD. 34,03,840/ - 6 04 - 09 - 2010 THE LIBERTY MARINE SYNDICATE PVT LT D. 38,10,722/ - 7 04 - 09 - 2010 THE LIBERTY MARINE SYNDICATE PVT LTD. 12,06,699/ - 8 06 - 09 - 2010 THE LIBERTY MARINE SYNDICATE PVT LTD. 14,09,781/ - 9 TOTAL 1,89,46,297/ - PLEASE OFFER YOUR COMMENT ABOUT THE TRANSACTIONS. ANS. M/S. LIBERTY MARINE SYNDICA TE PVT. LTD HAS MADE RTGS PAYMENT TO THE BANK ACCOUNT OF M/S. SINGH TRANSPORT AGAINST BOGUS BILLING AND SAME FUND HAS BEEN TRANSFERRED TO THE BANK ACCOUNT OF M/S. GURU NANAK ROADWAYS ALSO AGAINST BOGUS BILLING. THEREAFTER, M/S. GURU NANAK HAD SIPHONED OFF THE WHOLE FUND TO THE BANK ACCOUNT OF M/S. KARISMA TREXIM PVT LTD. BY DEBITING BOGUS EXPENSES. M/S. KARISMA TREXIM PVT. LTD, IN TURN, PURCHASED SHARE WITH PREMIUM OF M/S. LIBERTY MARINE SYNDICATE PVT. LTD. BY UTILIZING THE SAME FUND AND IN THIS PROCESS, TH E UNACCOUNTED INCOME OF M/S. LIBERTY MARINE SYNDICATE PVT. LTD. HAS ROUTED BACK TO IT IN THE FORM OF SHARE CAPITAL. QUES.12 PLEASE REFER TO YOUR ANSWER TO THE EARLIER QUESTION WHICH INDICATES THAT THE COMPANY, M/S. LIBERTY MARINE SYNDICATE PVT LTD, HAD B ROUGHT BACK ITS UNACCOUNTED INCOME IN ITS BOOKS OF ACCOUNT IN THE GUISE OF BOGUS SHARE CAPITAL, BOGUS SHARE APPLICATION/PREMIUM MONEY BY DEBITING BOGUS EXPENSES. PLEASE STATE YOUR COMMENT. ANS. YES SIR, I CONFIRM THAT THE COMPANY, M/S. LIBERTY MARINE SYND ICATE PVT. LTD., HAD BROUGHT BACK ITS UNACCOUNTED INCOME IN ITS BOOKS OF ACCOUNT IN THE GUISE OF SHARE CAPITAL THROUGH THIS PROCESS AS EXPLAINED BY ME IN MY ANSWER TO THE EARLIER QUESTION. QUES.13 IT IS ALSO SEEN THAT THE DIRECTORS OF M/S. KARISMA TREXIM PVT. LTD. HAVE BEEN CHANGED AND AT PRESENT YOU ARE NOT A DIRECTOR OF THIS COMPANY. WHAT IS THE REASON BEHIND THAT, ANS. SIR, PRESENTLY, I AM NOT CONTROLLING THE COMPANY. NOW IT IS CONTROLLED BY THE LIBERTY GROUP. AND THEY HAVE APPOINTED DIRECTORS OF THEIR OWN CHOICE. HOWEVER, THE ACCOMMODATION ENTRIES WERE ENTERED WITH LIBERTY MARINE SYNDICATE PVT. LTD. AT THE TIME WHEN I WAS ONE OF THE DIRECTORS OF M/S. KARISMA TREXIM PVT. LTD. AND THE COMPANY WAS CONTROLLED BY ME THEN. QUES.14 M/S. KARISMA TREXIM PVT. L TD. HAS ALLOTTED 8,85,500 NUMBER OF SHARES WITH A FACE VALUE OF RS. 10/ - AND PREMIUM AMOUNT PAID PER SHARE IT (SS) A NO S . 69 - 75/CTK/2019 48 RS.90/ - TOTALING RS. 8,85,50,000/ - AS ON 31/03/2008. PLEASE SUBMIT THE DETAILS OF ALLOTTEES ALONG WITH DETAILED NAME AND ADDRESS. ANS. SIR, ALL THE ALLOTTEES ARE NON - EXISTENT PAPER/SHELL COMPANIES AND THE SOURCE OF FUND WAS THE UNACCOUNTED MONEY OF M/S. LIBERTY MARINE SYNDICATE PVT. LTD. M/S. LIBERTY MARINE SYNDICATE PVT. LTD. HAD TRANSFERRED THE FUND IN RTGS MODE IN THE GUISE OF BOGUS EXPENSES FOR WH ICH WE HAD ARRANGED THE BOGUS SHARE CAPITAL THROUGH VARIOUS PAPER COMPANIES OF KOLKATA AGAINST COMMISSION'. 15. FURTHER, THE STATEMENT OF SHRI SHYAM SUNDAR AGARWAL, DIRECTOR OF M/S. UNICORN COMMERCIAL PVT. LTD. AND SHRI RAHUL SHARMA, DIRECTOR OF KRISH COM MOTRADE PVT. LTD., SEASONS TRADECOM PVT. LTD. AND BONN SUPPLIERS PVT. LTD. WAS ALSO RECORDED ON OATH. THEIR ADMISSIONS ALSO STRENGTHENED THE FACT THAT THE LIBERTY GROUP HAS TAKEN ACCOMMODATION/HAWALA ENTRIES FROM DIFFERENT JAMAKHARCHI COMPANIES. THE RELEVA NT PORTIONS OF THE STATEMENTS OF SHRI SHYAM SUNDAR AGARWAL AND SHRI RAHUL SHARMA ARE REPRODUCED BELOW: STATEMENT OF SHRI SHYAM SUNDAR AGARWAL: 'QUES.5. WHAT IS YOUR SOURCE OF INCOME ? .ANS. MY MAIN SOURCE OF INCOME IS FROM COMMISSION EARNING BY PROVIDING ACCOMMODATION ENTRIES THROUGH 'JAMA KHARCHI'/SHELL COMPANIES TO VARIOUS BENEFICIARIES AND BY SELLING COMPANIES TO DIFFERENT GROUPS. QUES.6 ARE YOU ASSESSED TO TAX? .ANS. YES, I AM ASSESSED TO TAX. QUES.7 PLEASE EXPLAIN IN DETAIL THE MODUS OPERANDI OF BUSI NESS DONE BY YOU. .ANS. MY MAIN BUSINESS IS PROVIDING ACCOMMODATION ENTRIES THROUGH 'JAMA KHARCHI'/SHELL COMPANIES TO VARIOUS BENEFICIARIES IN LIEU OF COMMISSION. I ALSO SELL COMPANIES TO DIFFERENT BUSINESS ENTITIES. SUCH PAPER/SHELL COMPAN IES ARE BEING CONTROLLED AND MAINTAINED FROM MY OFFICE LOCATED AT THE FOLLOWING ADDRESSES: 1. 15 & 16 GANESH CHANDRA AVENUE, 4TH FLOOR, KOLKATA - 700013. 2. 7A, BENTINCK STREET, 4TH FLOOR, KOLKATA - 700001. QUES.8. PLEASE STATE THE NAME OF THE COMPANIES IN WHICH YOU AND YOUR FAMILY MEMBERS ARE ASSOCIATED WITH AS DIRECTOR/PROPRIETOR? ANS. I WAS/IS ONE OF THE DIRECTORS OF NUMBER OF COMPANIES, THE NAMES OF WHICH I CANNOT RECALL NOW. I AM PROVIDING MY DIN 00617273 AND THE NAMES OF COMPANIES IN WHICH I AM DIRECT OR CAN BE FOUND FROM MCA WEBSITE. COPY OF LIST OF COMPANIES FROM MCA IS ENCLOSED FOR YOUR REFERENCE. NO OTHER MEMBER OF MY FAMILY IS/WAS DIRECTOR OF ANY COMPANY OR PARTNER OF ANY FIRM OF ENGAGED IN ANY BUSINESS. QUES.9 PLEASE STATE THE DETAILS OF THE COMP ANIES/PROPRIETORSHIP FIRMS MANAGED & CONTROLLED BY YOU AND ALSO STATE WHO ARE THE DIRECTORS IN THESE COMPANIES/PROPRIETOR OF THE CONCERNS? IT (SS) A NO S . 69 - 75/CTK/2019 49 .ANS. THERE ARE/WERE A NUMBER OF COMPANIES WHICH ARE/WERE BEING CONTROLLED BY ME. PRIMARILY, AFTER FLOATING ANY PAPE R/SHELL COMPANY, THE BOOKS OF ACCOUNTS OF THOSE COMPANIES ARE MAINTAINED IN THE COMPUTER IN MY OFFICES. HOWEVER, AFTER THE SO CALLED SALE OF ANY COMPANY IN LIEU OF COMMISSION, I DO NOT KEEP ANY FURTHER BOOKS OF ACCOUNTS OF THE RESPECTIVE COMPANY. I AM NOT HAVING ANY CONSOLIDATED LIST OF ALL THE COMPANIES FLOATED BY ME. HERE I WOULD ALSO LIKE TO MAINTAIN THAT APART FROM ME THE OTHER DIRECTOR IN ALL OF THESE COMPANIES IS DUMMY DIRECTOR WHO IS MOSTLY ONE OF MY OFFICE STAFF, SHRI ASIT MALLIK, WHO LENDS HIS NAME FOR DIRECTORSHIP IN LIEU OF COMPENSATION WHICH I PROVIDE HIM TIME AND AGAIN. QUES.10 IT IS FOUND THAT M/S UNICORN COMMERCIAL PVT. LTD. WITH 3,21,000 SHARES WAS SOLD TO THE LIBERTY GROUP AT A FACE VALUE OF RS. 10 AND AT A PREMIUM OF RS.490 PER SHARE. PLEA SE EXPLAIN THE SAID BUSINESS TRANSACTIONS AND ALSO EXPLAIN HOW THE PREMIUM IS SO HIGH WHEREAS THE COMPANY M/S. UNICORN COMMERCIAL PVT. LTD. HAD NO ACTUAL BUSINESS ACTIVITY AT ALL. ANS. SIR, M/S UNICORN COMMERCIAL PVT. LTD. WAS A PAPER COMPANY HAVING NO AC TUAL BUSINESS ACTIVITIES AND IT WAS FLOATED BY ME ONLY FOR THE SOLE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES TO BENEFICIARY. THE COMPANY WAS FORMED TO CREATE A HUGE SHARE CAPITAL THROUGH BOGUS TRANSACTIONS AND ULTIMATELY TO SALE IT TO BENEFICIARY WITH A PURPOSEFULLY AND ARBITRARILY CREATED HUGE PREMIUM. THIS COMPANY WAS SOLD TO THE LIBERTY GROUP DURING THE YEAR 2010 BY ME WHEN I WAS ONE OF THE DIRECTORS OF M/S. UNICORN COMMERCIAL PVT. LTD. IN LIEU OF COMMISSION @ 0.05%. THE OTHER DIRECTOR OF M/S. UNICORN COMMERCIAL PVT. LTD. AT THAT TIME WAS SHRI ASIT MALLIK. I SOLD THE COMPANY TO THE LIBERTY GROUP THROUGH A MEDIATOR AGAINST THE SAID COMMISSION. QUES.LL. PLEASE EXPLAIN IN DETAIL THE PROCESS OF GENERATION OF SUCH HUGE SHARE CAPITAL IN THE BOOKS OF ACCOUNT S OF M/S. UNICORN COMMERCIAL PVT. LTD. ANS. IT IS THE NORMAL PRACTICE IN OUR BUSINESS OF PROVIDING ACCOMMODATION ENTRY THAT AFTER FLOATING A PAPER COMPANY, WE APPLIED FOR SHARE APPLICATIONS THROUGH OTHER COMPANIES MANAGED BY OUR FRIENDS WHERE WE RECEIVE C HEQUES AS SHARE APPLICATION AND PAY BACK THE SAME AS INVESTMENT. IN THIS PROCESS, WE CREATE HUGE AMOUNT OF ARTIFICIAL SHARES CAPITAL AND CORRESPONDING INVESTMENT ON THE OTHER SIDE WITHOUT ANY ACTUAL BALANCE IN THE BANK ACCOUNT OF THE CONCERNED COMPA NY. THE SAME PROCESS WAS ALSO FOLLOWED IN THE CASE OF M/S. UNICORN COMMERCIAL PVT. LTD. TO CREATE ITS ARTIFICIAL SHARES TO THE TUNE OF 3,21,000 BEFORE IT WAS SOLD TO THE LIBERTY GROUP. QUES.12. HOW THE ABOVE ARTIFICIAL INVESTMENT AS SHOWN IN BOOKS OF ACCO UNTS OF M/S UNICORN COMMERCIAL PVT. LTD. HAS BEEN LIQUIDATED AND TRANSFERRED TO LIBERTY GROUP? ANS. I HAVE ONLY TRANSFERRED THE SAID COMPANY AND NOT DEALT WITH FUND IT (SS) A NO S . 69 - 75/CTK/2019 50 ROTATION. HOWEVER, AS PER BEST OF MY KNOWLEDGE THEY HAVE LIQUIDATED ABOVE INVESTMENT THROU GH FUNDING FROM SOME CONCERNS THAT ARE INVOLVED WITH LIBERTY GROUP AND RECEIVED THE FUNDS FROM LIBERTY GROUP BY WAY OF BOGUS EXPENSES'. STATEMENT OF SHRI RAHUL SHARMA: 'QUES.7 PLEASE EXPLAIN THE NATURE OF BUSINESS DONE BY YOU. ANS. MY MAIN SOURCE OF INCOME IS FROM COMMISSION FOR PROVIDING ACCOMMODATION ENTRIES THROUGH 'JAMA - KHARCHI' COMPANIES. ALTHOUGH A NUMBER OF COMPANIES FORMED BY ME WITH DIFFERENT ADDRESSES AND HAVING NO REAL EXISTENCE, THEY ARE/WERE BEING MAINTAINED FR OM MY RESIDENCE - CUM - OFFICE. 0UEST.8 PLEASE STATE THE NAMES OF THE COMPANIES IN WHICH YOU ARE ASSOCIATED WITH PROPRIETOR/DIRECTOR OR OTHERWISE. ANS. SIR, I AM/WAS DIRECTOR IN 16 COMPANIES IN VARIOUS POINTS OF TIME. I AM SUBMITTING HEREWITH A PRINTOUT OF TH E LIST OF COMPANIES WHICH IS AVAILABLE IN MCA WEBSITE AGAINST MY DIN 01475326. QUES.9.PLEASE STATE THE NAMES OF OTHER DIRECTORS/PARTNERS IN THOSE COMPANIES/PROPRIETORSHIP FIRM? ANS. RIGHT NOW, I CANNOT RECOLLECT THE NAME OF ALL THE COMPANIES/PROPRIETORSH IP FIRMS AND THEIR DIRECTORS/PROPRIETORS. QUES.10 PLEASE GO THROUGH THE LIST OF COMPANIES IN WHICH YOU ARE/WERE ONE OF THE DIRECTORS, AS PER ROC DATA OF MINISTRY OF CORPORATE AFFAIRS. IT IS APPARENT FROM THE SAID DOCUMENT THAT YOU WERE ONE OF THE DIRECTO RS IN KRISH COMMOTRADE PVT. LTD. AND SEASONS TRADECOM PVT. LTD. PLEASE STATE THE MODUS OPERANDI OF BUSINESS OF THE SAID TWO COMPANIES. ANS. SIR, I WAS ONE OF THE DIRECTORS OF M/S. KRISH COMMOTRADE PVT. LTD. AND MS. SEASONS TRADECOM PVT. LTD. THESE TWO COM PANIES ARE ALSO JAMA - KHARCHI COMPANIES HAVING NO REAL BUSINESS ACTIVITY OTHER THAN PROVIDING ACCOMMODATION ENTRY TO BENEFICIARIES. NOW THESE TWO COMPANIES ARE UNDER THE CONTROL OF THE LIBERTY GROUP WHICH HAS BOUGHT THESE TWO COMPANIES DURING THE FINANCIAL YEAR 2010 - 11 AND AT THAT TIME, I WAS ONE OF THE DIRECTORS OF THE SAID COMPANIES. THE COMPANIES WERE SOLD TO THE LIBERTY GROUP IN LIEU OF COMMISSION. QUES S.LL PLEASE EXPLAIN IN DETAIL THE PROCESS OF GENERATION OF SUCH HUGE SHARE CAPITAL IN THE BOOKS OF ACC OUNTS OF M/S. KRISH COMMOTRADE PVT. LTD. AND SEASONS TRADECOM PVT. LTD. ANS. BEING AN OPERATOR OF ACCOMMODATION ENTRIES, WE FLOAT COMPANIES FOR PROVIDING ACCOMMODATION ENTRIES IN THE GUISE OF SHARE CAPITALS TO BENEFICIARIES. IT IS A NORMAL PRACTICE FOLLOW ED IN THE BUSINESS OF JAMAKHARCHI OPERATOR, AFTER FLOATING A PAPER COMPANY, WE APPLIED FOR SHARE APPLICATIONS THROUGH OTHER COMPANIES MANAGED BY OUR FRIENDS AND ASSOCIATES WHERE WE RECEIVE CHEQUES AS SHARE APPLICATION AND PAY IT (SS) A NO S . 69 - 75/CTK/2019 51 BACK THE SAME AS INVESTMENT. I N THIS PROCESS, WE CREATE HUGE AMOUNT OF ARTIFICIAL SHARE CAPITAL AND CORRESPONDING INVESTMENTS ON THE OTHER SIDE WITHOUT ANY ACTUAL BALANCE IN THE BANK ACCOUNTS OF THE CONCERNED COMPANY. THE SAME PROCESS WAS ALSO FOLLOWED IN THE CASE OF THESE ABOVE - MENTIO NED TWO COMPANIES TO CREATE ITS ARTIFICIAL SHARES TO THE TUNE OF RS.7.62 CRORES AND RS.5.28 CRORES RESPECTIVE FOR M/S. KRISH COMMOTRADE PVT. LTD. AND SEASONS TRADECOM PVT. LTD. BEFORE IT WAS SOLD TO THE LIBERTY GROUP. QUES.12 M/S SEASONS TRADECOM PVT. LTD . HAS ALLOTTED 2,11,200 NUMBER OF SHARES WITH A FACE VALUE OF RS.10/ - AND PREMIUM AMOUNT PAID PER SHARE RS. 240/ - TOTALING RS. 5,28,00,000/ - . PLEASE SUBMIT THE DETAILS OF ALLOTTEES ALONG WITH DETAILED NAME AND ADDRESS. ANS. SIR, M/S. SEASONS TRADECOM PVT. LTD. WAS A PAPER COMPANY HAVING NO ACTUAL BUSINESS ACTIVITIES AND IT WAS FLOATED BY ME ONLY FOR THE SOLE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES TO BENEFICIARY. THE COMPANY WAS FORMED TO CREATE A HUGE SHARE CAPITAL THROUGH BOGUS TRANSACTIONS AND ULTIMA TELY TO SELL IT TO BENEFICIARY WITH A PURPOSEFULLY AND ARBITRARILY CREATED HUGE PREMIUM. THE SAME PROCEDURE WAS FOLLOWED IN THE CASE OF M/S. KRISH COMMOTRADE PVT. LTD. ALSO TO MAKE A HUGE CAPITAL IN ITS ACCOUNTS. BOTH THESE COMPANIES WERE SOLD TO THE LIBER TY GROUP DURING THE YEAR 2010 BY ME WHEN I WAS ONE OF THE DIRECTORS OF BOTH THE ABOVE TWO PAPER COMPANIES AND IT WAS SOLD IN LIEU OF COMMISSION. I SOLD THE COMPANY TO THE LIBERTY GROUP THROUGH A MEDIATOR AGAINST THE SAID COMMISSION. QUES.13 HOW THE ABOVE A RTIFICIAL INVESTMENT AS SHOWN IN THE BOOKS OF ACCOUNTS OF THE COMPANIES VIZ. SEASONS TRADECOM PVT. LTD. AND KRISH COMMOTRADE PVT. LTD. HAVE BEEN LIQUIDATED AND TRANSFERRED TO THE LIBERTY GROUP? .ANS. I HAVE ONLY TRANSFERRED THOSE COMPANIES AND NOT DEALT W ITH FUND ROTATION. HOWEVER, AS PER BEST OF MY KNOWLEDGE, THEY HAVE LIQUIDATED ABOVE INVESTMENTS THROUGH FUNDING FROM SOME CONCERNS THAT ARE INVOLVED WITH LIBERTY GROUP AND RECEIVED THE FUNDS FROM LIBERTY GROUP BY WAY OF BOGUS EXPENSES'. 16. FURTHER, ON EX AMINATION OF THE PAPERS AND DOCUMENTS SEIZED AND IMPOUNDED DURING SEARCH & SEIZURE OPERATION AND RELATED SURVEYS, IT IS FOUND THAT ASSESSEE COMPANY M/S. LIBERTY MARINE SYNDICATE PVT. LTD. HAS EARNED PROFIT TO THE TUNE OF RS.4,25,50,000/ - FROM COMMODITY TRA DING DURING THE PERIOD 01.04.2014 TO 19.06.2014. THIS PROFIT FROM COMMODITY TRADING HAS NOT BEEN INCLUDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE COMPANY. THIS AMOUNT ALONG WITH BOGUS TRANSPORT EXPENSES OF RS.75 LAKHS HAS BEEN OFFERED TO TAX BY THE ASSESSE E COMPANY BY FILING A DISCLOSURE PETITION BEFORE THE DDIT (INVESTIGATION), KOLKATA WHICH READS AS UNDER: 'DATED: 27TH NOVEMBER, 2014 FROM: THE LIBERTY MARINE SYNDICATE PVT. LTD., 104 S. P. MUKHERJEE ROAD, IT (SS) A NO S . 69 - 75/CTK/2019 52 3RD FLOOR KOLKATA - 700026. TO THE DEPUTY DIRECTOR O F INCOME TAX (INV.) UNIT - 4(3)P - 13, CHOWRINGHEE SQUARE, KOLKATA - 700069. SUB: CLARIFICATION OF SEIZED DOCUMENT AND ASSET FOUND IN THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATION AND WORKING OF THE INCOME DISCLOSED U/S. 132/4) OF THE INCOME TAX ACT. SIR, THERE WAS A SEARCH & SEIZURE OPERATION CARRIED ON AT THE DIRECTOR'S RESIDENCE AND OFFICE PREMISES (104, S P MUKHERJEE ROAD) OF OUR COMPANY ON 11.09.2014 AND ON SUBSEQUENT DATES. APART FROM THE SEARCH, SURVEY OPERATION WAS ALSO CARRIED O N AT OUR REGISTERED OFFICE ADDRESS AT 22, MADHUBAN MARKET COMPLEX, PARADEEP, ORISSA - 754142. IN THE COURSE OF SEARCH OPERATION, OUR ACCOUNTS, DOCUMENTS AND VALUABLES WERE FOUND AND OUT OF WHICH PART OF THEM WERE SEIZED. IN THE COURSE OF SEARCH & SEIZURE AN D SURVEY OPERATION OUR COMPANY'S BOOKS OF ACCOUNTS WERE ALSO IMPOUNDED. PLEASE FIND ENCLOSED HEREWITH SCHEDULE - A & A - 1 SHOWING PARTICULAR OF DOCUMENTS AND ASSETS FOUND AND SEIZED FROM VARIOUS PREMISES INCLUDING ASSETS AND DOCUMENTS FOUND IN THE COURSE OF SURVEY INCLUDING BOOKS AND DOCUMENTS IMPOUNDED. SINCE, I WAS NOT PRESENT AT THE TIME OF SURVEY OPERATION AT BRANCH AT 22, MADHUBAN MARKET COMPLEX, PARADEEP, ORISSA - 754142, I AM NOT AWARE OF ALL THE STATEMENTS OR CONTENTS THAT HAVE BEEN GIVEN UNDER PRESSUR E/IN STRESSFUL MIND TO THE PRESENT OFFICERS AT THE TIME OF SURVEY OPERATION. - WE HAVE RECEIVED XEROX COPIES OF MOST OF THE DOCUMENTS, BOOKS OF A CCOUNTS ETC WHICH WERE SEIZED/IMPOUNDED AT THE TIME OF SEARCH. NOW ON THE BASIS OF VARIOUS SEIZED BOOKS OF ACCO UNTS/ DOCUMENTS/ PAPERS/INVENTORIES OF ASSETS & OTHERS, WE HAVE TRIED TO CONCLUDE THE ENTRIES MADE IN THAT SEIZED DOCUMENTS, WHERE MOST OF THE DOCUMENTS ARE ALREADY RECORDED IN REGULAR BOOKS OF ACCOUNT AND ARE IN ORDER. HOWEVER ONLY IN ORDER TO BUY PEACE I N MIND AND TO AVOID THE UNNECESSARY LITIGATION WITH THE TAXATION AUTHORITIES, I MYSELF INCLUDING ALL ASSOCIATED CONCERNS, COMPANIES/ FIRMS ETC. IN WHICH I HAVE DIRECT OR INDIRECT INTEREST, VOLUNTARILY AND IN GOOD FAITH DISCLOSE A SUM OF RS.5.00 CRORES (RUP EES FIVE CRORES) FOR THE CURRENT FY 2014 - 15 COVERING ALL ASPECTS OF TAXATION MATTERS INCLUDING THE REGULAR INCOME FOR ASSESSMENT YEARS COVERED UNDER SEARCH. THE DISCLOSED INCOME OF RS.5.00 CRORES IN THE CURRENT FY 2014 - 15 IS RELEVANT TO ALL THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH AND LATER ON AND THIS DISCLOSED AMOUNT OF RS.5.00 CRORES INCLUDES/COVERS ALL THE FAMILY MEMBERS/ ASSOCIATED CONCERNS/COMPANIES/FIRMS/OTHER IN THE GROUP AND ALSO INCLUDES ALL THE ASSESSMENT YEARS COVERED UNDER SEARCH. A FTER NECESSARY RECONCILIATION/ADJUSTMENTS, WORKINGS IN DETAILS ON THE BASIS OF SEIZED BOOKS OF ACCOUNTS/DOCUMENTS/PAPERS/INVENTORIES OF THE ASSETS INCLUDING MOVABLE & IMMOVABLE PROPERTIES, WE SHALL FILE THE INCOME TAX RETURNS OF ALL THE GROUP PERSONS CONCE RNED WITH US AS ALREADY STATED. WE HOPE THAT WE SHALL NOT BE PENALIZED IN ANY MANNER IT (SS) A NO S . 69 - 75/CTK/2019 53 FOR THE DISCLOSURE OF INCOME MADE/GIVING VARIOUS EXPLANATION/STATEMENTS WITH UTMOST COOPERATIVE ATTITUDE WITH THE INCOME TAX DEPARTMENT DURING THE COURSE OF SEARCH PROCEED INGS. APART FROM REGULAR BUSINESS INCOME M/S. LIBERTY MARINE SYNDICATE PVT LTD HAS EARNED INCOME FROM PAPER TRADING OF PRICING DIFFERENTIATION OF COMMODITIES IN SIMILAR ITEMS OF ITS REGULAR BUSINESS/CURRENCY TRADING FOR WHICH PAYMENT HAS NOT BEEN RECEIVED . HENCE THESE ARE NOT REFLECTING IN ITS BOOKS OF ACCOUNT. BREAK - UP OF UNACCOUNTED INCOME SI NO. NAME OF THE COMPANY NATURE OF UNACCOUNTED INCOME/EXPENDITUR E FINANCIA L YEAR AMOUNT THE LIBERTY MARINE SYNDICATE PVT. LTD. TRANSPORTATION CHARGES 2013 - 14 75,00 ,000/ - 2 THE LIBERTY MARINE SYNDICATE PVT. LTD. COMMODITY PROFIT 2014 - 15 4,25,50,000/ - TOTAL 5,00,50,000/ - SD/ - DIRECTOR/ AUTHORIZED SIGNATORY 17. IN LIGHT OF ABOVE FACTS, IT CAN'T BE SAID THAT THERE WERE NO INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE ASSESSEE COMPANY. FURTHER DURING THE POST - SEARCH ENQUIRIES, THE DDIT (INVESTIGATION), KOLKATA HAS COLLECTED VALUABLE/CREDIBLE INFORMATION PERTAINING TO UNACCOUNTED INCOME BEING BROUGHT BACK BY THE ASSESSEE COMPANY I N THE FORM OF SHARE CAPITAL/PREMIUM THROUGH PAPER/SHELL COMPANIES. THEREFORE RELIANCE PLACED BY THE ID. AR OF THE ASSESSEE FIRM ON THE DECISIONS OF HON'BLE HIGH COURTS IN THE CASES OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NAVA SHEVA) LTD. (374 ITR 6 45), CIT VS. KABUL CHAWLA (380 ITR 573), PR. CIT VS. KURULE PAPER MILLS PVT. LTD. (380 ITR 571) AND OTHERS, IS OF NO USE TO THE ASSESSEE FIRM . IN THIS CONNECTION, RELIANCE IS PLACED ON THE ORDER OF HON'BLE CUTTACK ITAT IN THE CASE OF SMT. N. ROJA FOR AY 20 10 - 11 TO AY 2014 - 15 & AY 2016 - 17 IN IT(SS)A NOS.101 - 106/CTK/2018 DATED 04.06.2020. ON PAGES 16 & 17 OF SAID ORDER DATED 04.06.2020, THE HON'BLE MEMBERS OF ITAT HAVE ANALYZED CLAUSE (VII) OF PARA - 37 RELATING TO THE DECISION OF HON'BLE DELHI HIGH COURT IN TH E CASE OF KABUL CHAWLA (380 ITR 573). FROM THE SAME, IT IS CLEAR THAT THE AO CAN INTERFERE WITH THE COMPLETED ASSESSMENTS IF THERE IS EITHER AN INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH OR UNDISCLOSED INCOME OR PROPERTY IS DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. ON ANALYZING THE FINDINGS OF HON'BLE DELHI HIGH COURT, IT IS CLEAR THAT THE CASE OF ASSESSEE COMPANY CLEARLY FALLS WITHIN THE AMBIT OF THE OBSER VATIONS OF THE HON'BLE DELHI HIGH COURT IN PARA - 37 OF SAID DECISION TOWARDS IT (SS) A NO S . 69 - 75/CTK/2019 54 'INCRIMINATING MATERIAL' AS WELL AS 'UNDISCLOSED INCOME'. SIMILARLY THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION LTD. (SUPRA) HAS ALSO MADE SIMI LAR OBSERVATIONS. PARA - IV STATES THAT ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCES FOUND IN THE COURSE OF SEARCH OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCES FOUND BUT THAT DOES NOT MEAN THAT THE ASSESSMENT SHOULD BE TOTALLY ARBITRARY. IN THE PRESENT CASE, THERE IS SUFFICIENT INCRIMINATING MATERIAL AGAINST THE ASSESSEE COMPANY FOUND DURING THE COURSE OF SEARCH AND POST - SEARCH ENQUIRIES. AS REGA RD NO CASH BEING FOUND AT THE PREMISES OF THE ASSESSEE FIRM DURING SEARCH OPERATIONS, RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE PUNE TRIBUNAL IN THE CASE OF KHOPADE KISANRAO MANIKRAO VS. ACIT (74 ITD 25) (TM) WHEREIN IT WAS HELD BY THE THIRD MEMBER THAT IF EVIDENCE OF UNDISCLOSED INCOME IS FOUND THEN CORRESPONDING ASSETS/EXPENSES NEED NOT BE PROVED BY THE A.O. 18. SIMILARLY THE ARGUMENT THAT THE A.O. HAD RELIED ON THE STATEMENT OF A THIRD PARTY WITHOUT PROVIDING AN OPPORTUNITY OF CROSS EXAMINATION , IS ALSO VERY FEEBLE. THE DETAILS OF NON - COMPLIANCE BY THE ASSESSEE COMPANY HAVE BEEN DISCUSSED BY THE A.O. ON PAGE - 2 OF THE ASSESSMENT ORDER. AT THE OUTSET, THE AR OF THE ASSESSEE COMPANY OR ITS DIRECTORS NEVER SOUGHT AN OPPORTUNITY TO CROSS - EXAMINE THE WITNESSES (MAINLY THE HAWALA ENTRY OPERATORS) BEFORE THE A.O. SUCH A REQUEST WAS ALSO NOT MADE BEFORE THE CIT (APPEALS). WHEN THE ASSESSEE COMPANY AND ITS DIRECTORS AVOIDED COMPLIANCE BEFORE THE A.O., THE QUESTION OF GRANTING AN OPPORTUNITY TO CROSS - EXAMIN E THE WITNESSES SHALL NOT ARISE. MOREOVER IT IS CONCEIVABLE THAT A MERE DENIAL BY THE ASSEESSEE IS NOT SUFFICIENT TO REBUT THE DOCUMENTARY EVIDENCE AND STATEMENTS WHICH LED TO THE INESCAPABLE CONCLUSION THAT IT HAD ROUTED BACK ITS UNACCOUNTED INCOME (GENER ATED BY DEBITING BOGUS TRANSPORT EXPENSES) IN THE GARB OF SHARE CAPITAL/PREMIUM. THE ASSESSEE COMPANY HAD BEEN CONFRONTED WITH THE SEIZED DOCUMENTS AND STATEMENTS OF THIRD PARTIES. IT WAS FAILURE ON THE PART OF THE ASSESSEE COMPANY THAT IT DID NOT SEEK AN OPPORTUNITY TO CROSS - EXAMINE THE VARIOUS WITNESSES. THEREFORE SUCH AN ARGUMENT IS NOT TENABLE AT THIS STAGE. HENCE RELIANCE PLACED BY THE AR OF THE ASSESSEE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF M/S. ANDAMAN TIMBER INDUSTRIES VS. COMMISSI ONER OF CENTRAL EXCISE, KOLKATA (281 CTR 241), HON'BLE MUMBAI HIGH COURT IN THE CASE OF H. R. MEHTA VS. ACIT( 387 ITR 561), HON'BLE DELHI HIGH COURT IN THE CASE OF BEST INFRASTRUCTURE INDIA (P.) LTD. (397 ITR 82), HON'BLE DELHI HIGH COURT IN THE CASE OF ASHWANI GUPTA (322 ITR 396) AND OTHER DECISIONS ARE OF NO HELP TO THE ASSESSEE COMPANY. 19. RELIANCE IS PLACED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF SMT. DAYAWANTI VS. CIT ( 75 TAXMANN.COM 308) WHEREIN IT WAS HELD THAT THE STATEMENTS RECORDED DURING SEARCH OPERATIONS COULD BE RELIED UPON TO MAKE ADDITION TO ASSESSEE'S INCOME. IT WAS FURTHER HELD THAT WHERE INFERENCES DRAWN IN RESPECT OF UNDECLARED INCOME OF ASSESSEE WERE PREMISED ON MATERIA LS FOUND AS WELL AS STATEMENTS RECORDED BY ASSESSEE'S SON IN COURSE OF SEARCH OPERATIONS, ADDITIONS SO IT (SS) A NO S . 69 - 75/CTK/2019 55 MADE BY ASSESSING OFFICER WERE JUSTIFIED. THE OBSERVATIONS OF HON'BLE DELHI HIGH COURT IN PARA - 17 ARE REPRODUCED AS UNDER: 'FROM A PERUSAL OF THE AFORES AID STATEMENT ON 18.04.2006, IT IS MANIFEST THAT IT WAS NOT A CASE OF MERE SURRENDER AS CLAIMED BY THE ID. COUNSEL. ON THE CONTRARY WE FIND IN PG 60 & 61, ANNEXURE A'3 AND PG 1 TO 29 OF ANNEXUREA - 2 WERE FOUND AND SEIZED FROM THE ASSESSEE. ONCE CONFRONTED W ITH THE AFORESAID SEIZED DOCUMENTS, IT WAS ADMITTED BY SHRI ABHAY GUPTA THAT THE PROPRIETORSHIP CONCERN OF THE ASSESSEE WAS ENGAGED IN UNACCOUNTED CASH SALES AND PURCHASES AND THEREFORE THERE WAS UNDISCLOSED INCOME. THUS THE NECESSARY LOGICAL FALL OUT OF T HE AFORESAID IS THAT THERE WAS MATERIAL FOUND AS A RESULT OF SEARCH ON THE ASSESSEE, SHOWING UNACCOUNTED TRANSACTIONS. IN OUR OPINION, EVEN THE STATEMENT OBTAINED WHEREBY, THE ADDITIONAL INCOME OF RS.3.5 CRORES WAS OFFERED ALSO CONSTITUTES MATERIAL UNEARTH ED DURING SEARCH. THE ID. COUNSEL HOWEVER HAS SUBMITTED THAT THE SAID STATEMENT WAS NOT OF THE ASSESSEE, AND WAS THAT OF THE SON OF THE ASSESSEE. THIS ARGUMENT TOO DOES NOT COME TO THE RESCUE OF THE ASSESSEE, BECAUSE THE ASSESSEE ALSO HAS SIGNED THE SAID S TATEMENT AS NO. 2 ABOVE; AND IT HAS BEEN STATED VERY CLEARLY IN THE STATEMENT OF SHRI ABHAY GUPTA TO QUESTION NO. 2 (SUPRA) THAT HE HAS MADE THE STATEMENT ON BEHALF OF OTHERS U/S. 132(4) OF THE ACT INCLUDING THE ASSESSEE. MOREOVER THE AFORESAID STATE MENT DATED 18.04.2006 WAS FOLLOWED BY ANOTHER STATEMENT ON 03.05.2006, WHERE TOO SHRI ABHAY GUPTA REPRESENTED HIMSELF AS THE AUTHORIZED REPRESENTATIVE OF THE PROPRIETORSHIP CONCERN OF THE ASSESSEE AND SISTER CONCERN BALAJEE PERFUMES. IN THE SAID STATEMENT TOO THE SURRENDER WAS REITERATED. THE AFORESAID SURRENDER NO DOUBT WAS NOT ACTED UPON BY THE ASSESSEE, BUT THE SAID FACT CANNOT LEAD US FROM THE IRRESISTIBLE CONCLUSION THAT IN CRIMINATING MATERIAL WAS UNEARTHED DURING SEARCH. NO MATE RIAL HAS BEEN PLACED BEFORE US TO NEGATE THE AFORESAID FACTUAL ASPECT AS WELL AS TO SUPPORT THE CLAIMS OF AR THAT THE ADMISSION BEFORE THE REVENUE WAS NOT VALID AND HIT BY DURESS AND COERCION. BEFORE WE CONCLUDE THIS ISSUE, WE CONSIDER IT APPROPRIATE TO N OTE THAT THE ID. AR, HAD ALSO STATED THAT NO MATERIAL PER - SE WAS FOUND PERTAINING TO THE YEAR UNDER CONSIDERATION. HOWEVER, THIS ARGUMENT ALSO DOES NOT HOLD ANY WATER BECAUSE ONCE SECTION 153A IS TRIGGERED ON ACCOUNT OF UNEARTHING OF IN CRIMINATING MAT ERIAL DURING SEARCH, THE AO IS EMPOWERED TO COMPUTE THE TOTAL INCOME FOR SIX ASSESSMENT YEAR PRIOR TO THE YEAR OF SEARCH. THERE ARE NO FETTERS OR LIMITATION UNDER THE STATUTE, SO AS TO CURTAIL THE JURISDICTION OF THE AO. WE DERIVE SUPPORT FROM THE JUDGMEN T OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ANIL BHATIA (352 ITR 493) (DELHI HC)'. IN THE PRESENT CASE, THERE IS SUFFICIENT INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THIS HAS BEEN FURTHER STRENGTHENED BY THE POST - SEARCH ENQUIRIES MADE BY THE DDIT (INVESTIGATION), KOLKATA. THE ASSESSEE FIRM HAS DISCLOSED AN AMOUNT OF RS.5.05 CRORES BY FILING A DISCLOSURE PETITION. SUBSEQUENTLY IT HAS RETRACTED FROM SAID DISCLOSURE BUT IT DOES NOT HELP IN ITS CASE IN ANY MANNER AS HELD BY HON'BLE D ELHI HIGH COURT. IT (SS) A NO S . 69 - 75/CTK/2019 56 20. RELIANCE IS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF PR. CIT, CENTRAL CIRCLE VS. NRA IRON & STEEL (P.) LIMITED (103 TAXMANN.COM 48) WHEREIN IT WAS HELD THAT WHERE ASSESSEE RECEIVE D SHARE CAPITAL/PREMIUM, HOWEVER THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH CREDITWORTHINESS OF INVESTOR COMPANIES, THE ASSESSING OFFICER WAS JUSTIFIED IN PASSING ASSESSMENT ORDER MAKING ADDITIONS UNDER SECTION 68 FOR SHARE CAPITAL/PREMIUM RECEIVED BY ASSESSEE COMPANY. THE OBSERVATIONS OF HON'BLE SUPREME COURT IN PARA - 11 TO 16 ARE REPRODUCED AS UNDER: '11. THE PRINCIPLES WHICH EMERGE WHERE SUMS OF MONEY ARE CREDITED AS SHARE CAPITAL/PREMIUM ARE : I. ) THE ASSESSEE IS UNDER A LEGAL OBLIGATIO N TO PROVE THE GENUINENESS OF THE TRANSACTION, THE IDENTITY OF THE CREDITORS AND CREDIT - WORTHINESS OF THE INVESTORS WHO SHOULD HAVE THE FINANCIAL CAPACITY TO MAKE THE INVESTMENT IN QUESTION, TO THE SATISFACTION OF THE AO, SO AS TO DISCHARGE THE PRIMARY ONU S. II.) THE ASSESSING OFFICER IS DUTY BOUND TO INVESTIGATE THE CREDIT - WORTHINESS OF THE CREDITOR/SUBSCRIBER, VERIFY THE IDENTITY OF THE SUBSCRIBERS, AND ASCERTAIN WHETHER THE TRANSACTION IS GENUINE, OR THESE ARE BOGUS ENTRIES OF NAME - LENDERS. III.) IF TH E ENQUIRIES AND INVESTIGATIONS REVEAL THAT THE IDENTITY OF THE CREDITORS TO BE DUBIOUS OR DOUBTFUL, OR LACK CREDIT - WORTHINESS, THEN THE GENUINENESS OF THE TRANSACTION WOULD NOT BE ESTABLISHED. IN SUCH A CASE, THE ASSESSEE WOULD NOT HAVE DISCHARGED THE PRI MARY ONUS CONTEMPLATED BY SECTION 68 OF THE ACT. 12. IN THE PRESENT CASE, THE A.O. HAD CONDUCTED DETAILED ENQUIRY WHICH REVEALED THAT: I. THERE WAS NO MATERIAL ON RECORD TO PROVE, OR EVEN REMOTELY SUGGEST, THAT THE SHARE APPLICATION MONEY WAS RECEIVED FR OM INDEPENDENT LEGAL ENTITIES. THE SURVEY REVEALED THAT SOME OF THE INVESTOR COMPANIES WERE NON - EXISTENT, AND HAD NO OFFICE AT THE ADDRESS MENTIONED BY THE ASSESSEE. FOR EXAMPLE: A. THE COMPANIES HEMA TRADING CO. PVT. LTD. AND ETERNITY MULTI TRADE PVT. LT D. AT MUMBAI, WERE FOUND TO BE NON - EXISTENT AT THE ADDRESS GIVEN, AND THE PREMISES WAS OWNED BY SOME OTHER PERSON. B. THE COMPANIES AT KOLKATTA DID NOT APPEAR BEFORE THE A.O., NOR DID THEY PRODUCE THEIR BANK STATEMENTS TO SUBSTANTIATE THE SOURCE OF TH E FUNDS FROM WHICH THE ALLEGED INVESTMENTS WERE MADE. C. THE TWO COMPANIES AT GUWAHATI VIZ. ISPAT SHEET LTD. AND NOVELTY TRADERS LTD., WERE FOUND TO BE NON - EXISTENT AT THE ADDRESS PROVIDED. THE GENUINENESS OF THE TRANSACTION WAS FOUND TO BE COMPLETEL Y DOUBTFUL IT (SS) A NO S . 69 - 75/CTK/2019 57 II. THE ENQUIRIES REVEALED THAT THE INVESTOR COMPANIES HAD FILED RETURNS FOR A NEGLIGIBLE TAXABLE INCOME, WHICH WOULD SHOW THAT THE INVESTORS DID NOT HAVE THE FINANCIAL CAPACITY TO INVEST FUNDS RANGING BETWEEN RS. 90,00,000 TO RS. 95,00,000 IN THE ASSESSMENT YEAR 2009 - 10, FOR PURCHASE OF SHARES AT SUCH A HIGH PREMIUM. FOR EXAMPLE: NEHA CASSETES PVT. LTD., KOLKATTA HAD DISCLOSED A TAXABLE INCOME OF RS.9,744/ - FOR A.Y. 2009 - 10, BUT HAD PURCHASED SHARES WORTH RS.90,00,000 IN THE ASSESSEE COMPANY. SIMILARLY WARNER MULTIMEDIA LTD., KOLKATTA FILED A NIL RETURN, BUT HAD PURCHASED SHARES WORTH RS.95,00,000/ - IN THE ASSESSEE COMPANY. ANOTHER EXAMPLE IS OF GANGA BUILDERS LTD., KOLKATTA WHICH HAD FILED A RETURN FOR RS.5,850/ - BUT INVESTED IN SHARES TO TH E TUNE OF RS.90,00,000 IN THE ASSESSEE COMPANY. III. THERE WAS NO EXPLANATION WHATSOEVER OFFERED AS TO WHY THE INVESTOR COMPANIES HAD APPLIED FOR SHARES OF THE ASSESSEE COMPANY AT A HIGH PREMIUM OF RS. 190 PER SHARE, EVEN THOUGH THE FACE VALUE OF THE SHAR E WAS RS. 10/ - PER SHARE. IV. FURTHERMORE, NONE OF THE SO - CALLED INVESTOR COMPANIES ESTAB LI SHED THE SOURCE OF FUNDS FROM WHICH THE HIGH SHARE PREMIUM WAS INVESTED. V. THE MERE MENTION OF THE INCOME TAX FILE NUMBER OF AN INVESTOR WAS NOT SUFFICIENT TO DISCHARGE THE ONUS UNDER SECTION 68 OF THE ACT. 13. THE LOWER APPELLATE AUTHORITIES APPEAR TO HAVE IGNORED THE DETAILED FINDINGS OF THE AO FROM THE FIELD ENQUIRY AND INVESTIGATIONS CARRIED OUT BY HIS OFFICE. THE AUTHORITIES BELOW HAVE ERRONEOUSLY HELD TH AT MERELY BECAUSE THE RESPONDENT COMPANY - THE ASSESSEE HAD FILED ALL THE PRIMARY E V IDENCE, THE ONUS ON THE ASSESSEE STOOD DISCHARGED. THE LOWER APPELLATE AUTHORITIES FAILED TO APPRECIATE THAT THE INVESTOR COMPANIES WHICH HAD FILED INCOME TAX RETURNS WITH A MEAGRE OR NIL INCOME HAD TO EXPLAIN HOW THEY HAD INVESTED SUCH HUGE SUMS OF MONEY IN THE ASSESSE COMPANY. CLEARLY THE ONUS TO ESTABLISH THE CREDIT WORTHINESS OF THE INVESTOR COMPANIES WAS NOT DISCHARGED. THE ENTIRE TRANSACTION SEEMED BOGUS, AND LACKED C REDIBILITY. THE COURT/AUTHORITIES BELOW DID NOT EVEN ADVERT TO THE FIELD ENQUIRY CONDUCTED BY THE AO WHICH REVEALED THAT IN SEVERAL CASES THE INVESTOR COMPANIES WERE FOUND TO BE NON - EXISTENT, AND THE ONUS TO ESTABLISH THE IDENTITY OF THE INVESTOR COMPANIE S, WAS NOT DISCHARGED BY THE ASSESSEE. IT (SS) A NO S . 69 - 75/CTK/2019 58 14. THE PRACTICE OF CONVERSION OF UN - ACCOUNTED MONEY THROUGH THE CLOAK OF SHARE CAPITAL/PREMIUM MUST BE SUBJECTED TO CAREFUL SCRUTINY. THIS WOULD BE PARTICULARLY SO IN THE CASE OF PRIVATE PLACEMENT OF SHARES, WHERE A HIGHER ONUS IS REQUIRED TO BE PLACED ON THE ASSESSEE SINCE THE INFORMATION IS WITHIN THE PERSONAL KNOWLEDGE OF THE ASSESSEE. THE ASSESSEE IS UNDER A LEGAL OBLIGATION TO PROVE THE RECEIPT OF SHARE CAPITAL/PREMIUM TO THE SATISFACTION OF THE AO, FAILURE OF W HICH, WOULD JUSTIFY ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. 15. ON THE FACTS OF THE PRESENT CASE, CLEARLY THE ASSESSEE COMPANY FAILED TO DISCHARGE THE ONUS REQUIRED UNDER SECTION 68 OF THE ACT, THE ASSESSING OFFICER WAS JUSTIFIED IN AD DING BACK THE AMOUNTS TO THE ASSESSEE'S INCOME. 16. THE APPEAL FILED BY THE APPELLANT - REVENUE IS ALLOWED. IN THE AFORESAID FACTS AND CIRCUMSTANCES, AND THE LAW LAID DOWN ABOVE, THE JUDGMENT OF THE HIGH COURT, THE ITAT, AND THE CIT ARE HEREBY SET - ASIDE. THE ORDER PASSED BY THE AO IS RESTORED'. 21. RELIANCE IS ALSO PLACED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NR PORTFOLIO (P.) LTD. (42 TAXMANN.COM 339) WHEREIN THE A.O. HAD FOUND OUT THAT THE S UBSCRIBERS BELONGED TO A GROUP OF ENTRY OPERATORS, WHICH INCLUDED 51 COMPANIES/PERSONS, WHO WERE OPERATING MORE THAN 100 BANK ACCOUNTS IN DIFFERENT BANKS/BRANCHES. THEIR MODUS OPERANDI WAS TO PROVIDE ACCOMMODATION ENTRIES TO DIFFERENT PERSONS/BENEFICIARIES . THIS WAS THE ONLY ACTIVITY OF THESE COMPANIES/PERSONS. THE SAID COMPANIES/PERSONS WERE NOT CARRYING ON ANY OTHER BUSINESS ACTIVITY I.E., MANUFACTURING OR TRADING ACTIVITY. FURTHER, THERE WAS NO RELATIONSHIP OR CONNECTION BETWEEN THE SUBSCRIBERS AND THE R ESPONDENT - ASSESSEE, AS NORMALLY HAPPENS IN CASE OF CLOSELY HELD COMPANIES FOR SUBSCRIBERS TO BECOME INVESTORS. THERE WAS NO IDEA OF THE ACTUAL BUSINESS UNDERTAKEN AND ENGAGED IN BY THE RESPONDENT - ASSESSEE AND IT WAS NOT EXPLAINED HOW AND WHY THESE UNRELATE D AND UNCONNECTED THIRD PARTIES DECIDED TO BECOME INVESTORS IN THE ABSENCE OF PUBLIC ISSUE OR ADVERTISEMENT. ON THE QUESTION OF CREDITWORTHINESS AND GENUINENESS, IT WAS HIGHLIGHTED THAT THE MONEY NO DOUBT WAS RECEIVED THROUGH BANKING CHANNELS, BUT DID NO T REFLECT ACTUAL GENUINE BUSINESS ACTIVITY. THE SHARE SUBSCRIBERS DID NOT HAVE THEIR OWN PROFIT MAKING APPARATUS AND WERE NOT INVOLVED IN BUSINESS ACTIVITY. THEY MERELY ROTATED MONEY, WHICH WAS COMING THROUGH THE BANK ACCOUNTS, WHICH MEANT DEPOSITS BY WAY OF CASH AND ISSUE OF CHEQUES. THE BANK ACCOUNTS, THEREFORE, DID NOT REFLECT THEIR CREDITWORTHINESS OR EVEN GENUINENESS OF THE TRANSACTION. THE BENEFICIARIES, INCLUDING THE RESPONDENT - ASSESSEE, DID NOT GIVE ANY SHARE - DIVIDEND OR INTEREST TO THE SAID ENTRY O PERATORS/SUBSCRIBERS. THE PROFIT MOTIVE NORMAL IN CASE OF INVESTMENT, WAS ENTIRELY ABSENT. IN THE PRESENT CASE, NO PROFIT OR DIVIDEND WAS DECLARED ON THE SHARES. ANY PERSON, WHO WOULD INVEST MONEY OR GIVE LOAN WOULD C ERTAINLY SEEK RETURN OR INCOME AS CONSI DERATION. THESE FACTS ARE NOT A DVERTED TO AND AS NOTICED BELOW ARE TRUE AND CORRECT. THEY ARE UNDOUBTEDLY RELEVANT AND MATERIAL FACTS FOR ASCERTAINING CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. [PARA 19] IT (SS) A NO S . 69 - 75/CTK/2019 59 THE ASSESSING OFFICER HAD ISSUED NOTICES BY SPEED POST TO 31 PARTIES AS PER ADDRESSES GIVEN BY THE RESPONDENT - ASSESSEE REQUIRING THEM TO APPEAR FOR PERSONAL DEPOSITION, PRODUCE BOOKS OF ACCOUNT WITH COMPLETE VOUCHERS AND BILLS AND STATEMENT OF BANK ACCOUNTS FOR THE RELEVANT PERIOD. IN RESPECT OF 22 PARTIES, THE NOTICE SUMMONS WERE RECEIVED BACK WITH POSTAL REMARKS 'NO SUCH FIRM/COMPANY/PERSON' OR A FEW 'LEFT WITHOUT ADDRESS' AND A VERY FEW 'REFUSED TO ACCEPT'. REMAINING 9 PARTIES NEITHER ATTENDED AND FILED ANY APPLICATION FOR ADJOURNMENTS NOR FILE D DETAILS. THUS, IT WAS OBSERVED THAT THE IDENTITIES HAD BEEN ONLY PROVED ON PAPER, I.E., IN FORM OF NEUTRAL DOCUMENTS LIKE PAN NUMBER, ITR, REGISTRAR OF COMPANIES REGISTRATION, BUT WITHOUT FULL DETAILS AS TO THE ACTUAL BUSINESS ACTIVITIES UNDERTAKEN BY TH ESE COMPANIES, THE REASON WHY THESE COMPANIES HAD MADE INVESTMENT IN A PRIVATE LIMITED COMPANY ETC. THE PERSONS BEHIND THESE COMPANIES WERE NOT PRODUCED BY THE RESPONDENT. ON THE OTHER HAND RESPONDENT ADOPTED PREVARICATE AND NON - COOPERATION ATTITUDE BEFO RE THE ASSESSING OFFICER ONCE THEY CAME TO KNOW ABOUT THE DIRECTED ENQUIRY AND THE INVESTIGATION BEING MADE. EVASIVE AND TRANSIENT APPROACH BEFORE THE ASSESSING OFFICER WAS LIMPID AND PERSPICUOUS. IDENTITY, CREDITWORTHINESS OR GENUINENESS OF THE TRANSACTIO N IS NOT ESTABLISHED BY MERELY SHOWING THAT THE TRANSACTION WAS THROUGH BANKING CHANNELS OR BY ACCOUNT PAYEE INSTRUMENT. IT MAY, AS IN THE PRESENT CASE REQUIRED ENTAIL A DEEPER SCRUTINY. IT WOULD BE INCORRECT TO STATE THAT THE ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR STANDS DISCHARGED IN ALL CASES IF PAYMENT IS MADE THROUGH BANKING CHANNELS. WHETHER OR NOT ONUS IS DISCHARGED DEPENDS UPON FACTS OF EACH CASE. IT DEPENDS ON WHETHER THE TWO PARTIES ARE RELATED OR KNO WN TO EACH; THE MANNER OR MODE BY WHICH THE PARTIES APPROACHED EACH OTHER, WHETHER THE TRANSACTION WAS ENTERED INTO THROUGH WRITTEN DOCUMENTATION TO PROTECT THE INVESTMENT, WHETHER THE INVESTOR PROFESSES AND WAS AN ANGEL INVESTOR, THE QUANTUM OF MONEY, CRE DITWORTHINESS OF THE RECIPIENT, THE OBJECT AND PURPOSE FOR WHICH PAYMENT/INVESTMENT WAS MADE ETC. THESE FACTS ARE BASICALLY AND PRIMARILY IN KNOWLEDGE OF THE ASSESSEE AND IT IS DIFFICULT FOR REVENUE TO PROVE AND ESTABLISH THE NEGATIVE. CERTIFICATE OF INCOR PORATION OF C OMPANY, PAYMENT BY BANKING CHANNEL, ETC. CANNOT IN ALL CASES TANTAMOUNT TO SATISFACTORY DISCHARGE OF ONUS. THE FACTS OF THE PRESENT CASE NOTICED ABOVE SPEAK AND ARE OBVIOUS. WHAT IS UNMISTAKABLY VISIBLE AND APPARENT, CANNOT BE SPURRED BY FORMA L BUT UNRELIABLE PALE EVIDENCE IGNORING THE PATENT AND WHAT IS PLAIN AND WRIT LARGE. [PARA 31] RELIANCE IS ALSO PLACED ON THE DECISION OF HON.BLE DELHI HIGH COURT IN THE CASE OF ONASSIS AXLES (P.) LTD. VS. CIT (44 TAXMANN. COM 408/314 ITR 53) WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE RECEIVED CERTAIN AMOUNT AS SHARE APPLICATION MONEY, IN VIEW OF FACT THAT AMOUNTS USED TO SUBSCRIBE TO SHARES WERE DEPOSITED IN BANK ACCOUNTS OF PARTIES ON SAME DAY OR ON PROXIMATE DAYS AND PA Y ORDER GIVEN FOR APPLYING TO SHARES WAS ISSUED FROM A FAR OFF BANK BRANCH, AUTHORITIES BELOW RIGHTLY CONCLUDED THAT TRANSACTION IN QUESTION WAS SHAM AND IT (SS) A NO S . 69 - 75/CTK/2019 60 THEREFORE SHARE APPLICATION MONEY WAS TO BE BROUGHT TO TAX UNDER SECTION 68 OF THE ACT. CONSIDERING T HE ABOVE FACTS, THE LEGAL ISSUE RAISED BY THE ASSESSEE COMPANY FOR AY 2009 - 10 TO AY 2011 - 12 NEEDS TO BE REJECTED. 14. FURTHER, LD. CIT DR VIDE HIS LETTER DATED 14.10.2020, HAS ALSO FILED WRITTEN SUBMISSIONS, WHICH READ AS UNDER : - A SEARCH & SEIZURE OPERA TION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE COMPANY ON 11.09.2014 DURING THE COURSE OF WHICH A LARGE NUMBER OF INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RELATION TO NOTICE U/S.153A OF THE ACT, TH E ASSESSEE EVADED COMPLIANCE BEFORE THE AO AS EVIDENT FROM THE DETAILS OF NON - COMPLIANCE MENTIONED BY THE A.O. ON PAGE - 2 OF THE ASSESSMENT ORDER U/S.153A R.W.S. 144 OF THE ACT. THE ASSESSEE ALSO FILED WRIT PETITION (C) NO.20421/2016 CHALLENGING THE ASSESS MENT PROCEEDINGS PURSUANT TO NOTICE U/S.153A OF THE ACT. THE OUTCOME OF SUCH A WRIT PETITION IS NOT KNOWN. BUT DUE TO NON - COOPERATIVE ATTITUDE OF THE ASSESSEE, THE ASSESSMENTS WERE COMPLETED EX - PARTE BY THE ASSESSING OFFICER. I.) A LARGE NUMBER OF SEIZE D DOCUMENTS PERTAINING TO TRANSPORT EXPENSES, FREIGHT FORWARDING CHARGES, CARRIAGE INWARDS AND OTHER EXPENSES COULD NOT BE VERIFIED DUE TO NON - COMPLIANCE BY THE ASSESSEE. THESE SEIZED DOCUMENTS ARE DISCUSSED AS UNDER: IDENTIFICATION MARK PAGE NUMBER DESC RIPTION OF THE SEIZED DOCUMENTS LMS/2 PAGE NO.1 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO BASUKINATH ROADWAYS ---- DO --- PAGE NO.2 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO MAA KUMARI TRANSPORT ------ DO ---- PAGE NO.3 TRANSPORT CHARGES/FREIGHT CHARGES PA ID TO SMC ROADWAYS ----- DO --- PAGE NO.4 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO SRI GANPATI ROAD CARRIERS ----- DO --- PAGE NO.5 LEDGER ACCOUNT OF SHREE NEELACHALA MINING & MINERALS PVT. LTD. ----- DO ---- PAGE NO.6 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO R. S. LOGISTICS --- DO ---- PAGE NO.7 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO SAGAR ROAD CARRIERS ----- DO ---- PAGE NO.8 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO SUPER SONIC CARRIERS PVT. LTD. ----- DO ---- PAGE NO.10 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO AMCD TRANSPORT ----- DO ----- PAGE NO.11 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO BABA TRANSPORT ----- DO ---- PAGE NO.12 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO GARG LOGISTICS ----- DO --- PAGE NO.13 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO KANA K TRANSPORT IT (SS) A NO S . 69 - 75/CTK/2019 61 ----- DO ---- PAGES NO.14 & 15 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO SHRIYA LOGISTICS ----- DO ---- PAGE NO.16 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO ANMOL LOGISTICS ----- DO ---- PAGE NO.17 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO A R LOG ISTICS ----- DO --- PAGES NO.18 TO 21 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO SANTUKA TRANSPORT. THESE EXPENSES WERE VERIFIED BY THE A.O. IN THE REMAND PROCEEDINGS. ---- DO ---- PAGE NO.23 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO SANTUKA TRANSPORT. THESE EXPENSES WERE VERIFIED BY THE A.O. IN THE REMAND PROCEEDINGS. --- DO ------ PAGE NO.22 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO SHREE TRANSPORT ---- DO --- PAGES NO.32 & 33 LEDGER ACCOUNT OF HANDLING AND SUPERVISION CHARGES FOR AY 2011 - 12 AND OUTSTANDING BA LANCE IS RS.14.28 CRORES ----- DO ----- PAGES NO.40 TO 42 LEDGER ACCOUNT OF TRANSPORT CHARGES FOR AY 2010 - 11 ---- DO ---- PAGES NO.35 TO 38 PAGES NO.57 TO 62 LEDGER ACCOUNT OF PURCHASE OF IRON ORES FINES FOR AY 2010 - 11 AND CLOSING BALANCE IS RS.33.75 CRORES. DURING THE COURSE OF SEARCH, SHRI BHASKAR GHOSH WAS ASKED TO EXPLAIN THE HIGH RATE FOR PURCHASE OF FINES. IT WAS REPLIED THAT RATE ALSO INCLUDES THE TRANSPORT CHARGES. ---- DO --- PAGE NO.63 COPY OF LEDGER OF BHUMI FINANCIAL CONSULTANTS PVT. LTD. FOR THE P ERIOD 01.04.10 TO 31.03.14 LMS/3 PAGES NO.2 TO 4 LEDGER ACCOUNT OF TRANSPORT CHARGES FOR AY 2011 - 12 LMS/5 PAGE NO.4 COPY OF LEDGER OF BHUMI FINANCIAL CONSULTANTS PVT. LTD. FOR THE PERIOD 01.04.13 TO 31.03.14 ---- DO ---- PAGE NO.6 COPY OF LEDGER OF BHUMI FINANCIAL CONSULTANTS PVT. LTD. FOR THE PERIOD 01.04.11 TO 31.03.12 ----- DO ---- PAGE NO.7 COPY OF LEDGER OF BHUMI FINANCIAL CONSULTANTS PVT. LTD. FOR THE PERIOD 01.04.10 TO 31.03.11 LMS/8 PAGES 42 & 43 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO KANAK TRA NSPORT FOR THE PERIOD 01.04.13 TO 31.03.2014 LMSP/9 PAGES NO.16 TO 21 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO SHRIYA LOGISTICS FOR THE PERIOD 26.08.2013 TO 28.08.2013 ---- DO --- PAGES NO.32 & 33 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO AMCD TRANSPORT ---- DO --- PAGES NO.37 & 38 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO AMCD TRANSPORT --- DO --- PAGES NO.43 TO 47 TRANSPORT CHARGES/FREIGHT CHARGES PAID TO GARG LOGISTICS AMOUNTING TO RS.22,67,226/ - FOR THE PERIOD 10.10.2013 TO 26.10.2013 II.) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO VIDE QUESTIONNAIRE DATED 12.09.2016 (ITEM NO.28) AND 28.10.2016 (ESPECIALLY 14 PARTIES WHO WERE DOING BOGUS BILLING) ASKED THE ASSESSEE COMPANY TO FURNISH BOOKS OF ACCOUNT, COPIES OF INVOICES/BILLS, LEDGER ACCOUNT OF TRANSPORTERS/OTHER COMPANIES, VOUCHERS AND CASH BOOK FOR AY 2009 - 10 TO AY 2015 - 16. BUT THERE WAS NO COMPLIANCE BY THE ASSESSEE COMPANY. AS A RESULT, THESE SEIZED DOCUMENTS REMAINED UNVERIFIED. IT (SS) A NO S . 69 - 75/CTK/2019 62 III.) IN THE REMAND PROCEEDINGS, THE CIT(A) ASKED THE A.O. T O SUBMIT A REMAND REPORT ON THE ISSUE OF ADDITIONS MADE IN RESPECT OF SHARE CAPITAL/PREMIUM AND TRANSPORT/FREIGHT CHARGES BY FORWARDING HIM THE ADDITIONAL EVIDENCES. HOWEVER THE A.R. OF THE ASSESSEE HAS NOT SUBMITTED THE ADDITIONAL EVIDENCES FURNISHED BY H IM DURING THE APPELLATE PROCEEDINGS IN THE PAPER BOOK SUBMITTED BEFORE HON'BLE ITAT. HENCE IT IS NOT KNOWN WHETHER THESE SEIZED DOCUMENTS WERE VERIFIED BY THE A.O. OR NOT. FURTHER THE AO HAS CATEGORICALLY MENTIONED IN THE REMAND REPORT DATED 22.07.2019 ( P AGE - 194 OF PAPER BOOK) THAT THE A.R. OF THE ASSESSEE HAS NEITHER FURNISHED THE LEDGER ACCOUNTS OF 14 PARTIES NOR GIVEN ANY EXPLANATION IN THIS REGARD. AS FAR AS OTHER TRANSPORT EXPENSES ARE CONCERNED, THE A.O. HAS CATEGORICALLY MENTIONED THAT THE ASSESSEE HAS ONLY SUBMITTED THE LEDGER ACCOUNT OF SOME TRANSPORTERS WHICH DO NOT CONTAIN ANY ADDRESS OR CONTAIN INCOMPLETE ADDRESS. HENCE HE IS UNABLE TO CROSS - VERIFY THE TRANSPORT EXPENSES. THE AO HAS ONLY VERIFIED THE VOUCHERS FOR TRANSPORT EXPENSES. IV.) FOR AY 2010 - 11, THE AO HAS ISSUED A NOTICE U/S.133(6) TO SANTUKA TRANSPORT AND IN RESPONSE, REPLY DATED 06.06.2019 HAS BEEN FILED. HOWEVER THE AO HAS NOT COMPARED THE ENTRIES IN THE SEIZED DOCUMENTS PERTAINING TO SANTUKA TRANSPORT. IN THIS REGARD, I HAVE OBTAINE D X EROX COPIES OF SEIZED DOCUMENTS (LMS/2 PAGES 18 TO 21 AND LMS/2 PAGE 23) FROM THE AO. PLEASE FIND ENCLOSED HEREWITH 12 PAGES CONTAINING SEIZED DOCUMENTS AND REPLY OF SANTUKA TRANSPORT FOR YOUR KIND PERUSAL. ON COMPARISON OF THE LEDGER ACCOUNT FURNISHED BY SANTUKA TRANSPORT WITH THE SEIZED DOCUMENTS, IT HAS BEEN NOTICED THAT THERE ARE SIGNIFICANT/HUGE DIFFERENCES WHICH HAVE REMAINED UN - RECONCILED. EVEN THE DIFFERENCES IN OPENING BALANCES/CLOSING BALANCES RUN INTO SEVERAL LAKHS OF RUPEES. THUS IT IS CLEAR THAT EVEN IN THE REMAND PROCEEDINGS, THE ASSESSEE HAS NOT TRIED TO EXPLAIN THE CONTENTS OF SEIZED DOCUMENTS AND ONUS U/S.132(4A) R.W.S 292C HAS NOT BEEN DISCHARGED. IN ALL FAIRNESS, IT CAN BE SAID THAT MATTER WILL REQUIRE RE - ADJUDICATION BY THE CIT(A) OR RE - EXAMINATION BY THE A.O. IN ADDITION TO THE ABOVE WRITTEN SUBMISSIONS, LD. CIT DR ALSO SUBMITTED THAT IN A PROCEEDING U/S.153A OF THE ACT EVEN IN THE CASE OF UNABATED ASSESSMENT, ADDITION CAN BE MADE DE HORS INCRIMINATING SEARCH MATERIAL. IN SUPPORT OF HIS CONTENTIONS, LD. CIT DR RELIED UPON THE FOLLOWING DECISIONS : - I ) E.N. GOPAKUMAR V. COMMISSIONER OF INCOME - TAX (CENTRAL) [2016] 75 TAXMANN.COM 215 (KERALA) : II ) COMMISSIONER OF INCOME - TAX CENTRAL, KANPUR V. RAJ KUMAR ARORA [2014] 52 TAXMANN.COM 172 (ALLAHABAD) : IT (SS) A NO S . 69 - 75/CTK/2019 63 15. FURTHER THE LD. CITDR DREW OUR ATTENTION ON THE ASSESSMENT ORDER, THE AO HAS MADE A TABLE IN WHICH IT IS CLEAR THAT THE ASSESSEE DID NOT APPEAR AND PRODUCED THE BILLS AND VOUCHERS BEFORE THE AO IN SPITE OF MANY OPPORTUNITIES WERE PROVIDE D TO HIM , THEREFORE, HE COMPLETED THE ASSESSMENT U/S.144 OF THE I.T.ACT . FURTHER HE DREW OUR ATTENTION ON THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AND POST SEARCH INQUIRY, THE ENTRY OPERATORS HAVE ACCEPTED THAT THE COMPANIE S TO WHOM THE SHARES ALLOTTED ARE PAPER COMPANY AND IN LIEU OF THE ENTRY PROVIDING FOR SHARE CAPITAL THE ENTRY OPERATOR HAS ACCEPTED THAT THEY ARE GETTING CERTAIN COMMISSION. HE ALSO REFERRED TO THE BANK STATEMENTS PRODUCED IN THE FORM OF PAPER BOOK, WHERE IN IT IS CLEAR THAT THE TRANSACTIONS HAVE BEEN OCCURRED BETWEEN THE ASSESSEE AND THE SHELL COMPANY IMMEDIATELY WHEN THE MONEY IS CREDITED INTO THE BANK ACCOUNT OF THE SHELL COMPANY AND THE SHELL COMPANIES ARE MAINTAINING MEAGRE BALANCE. T HE CREDITWORTHINES S HA S ALSO NOT BEEN PROVED BY THE ASSESSEE . HE FURTHER DREW OUR ATTENTION ON THE COPY OF PANCHNAMA AND SEIZED MATERIALS WHICH WAS MARKED AND KEPT IN ANNEXURE - 3. IN THE ANNEXURE, LMS - 10, WHICH ARE PLACED AT PAPER BOOK PAGE NO.1 TO 86 IN WHICH HE DREW OUR A TTENTION ON THE SHARE APPLICATION FORM IN WHICH IN THE BOTTOM SIDE WHICH ARE LEFT BLANK AND SOME OF THE SHARE APPLICANTS HAVE DONE BOGUS TRANSPORTATION WORK OF THE ASSESSEE AGAINST WHICH THEY HAVE BEEN PAID TRANSPORTATION CHARGES IT (SS) A NO S . 69 - 75/CTK/2019 64 AND THE BOGUS TRANSPORTATI ON CHARGES PAID BY THE ASSESSEE HAS BEEN BROUGHT BACK IN THE FORM OF SHARE CAPITAL IN THE ASSESSEE COMPANY. 16 . THE ASSESSEE HAS RAISED A LEGAL GROUND THAT THERE WAS NO PROPER GRANT OF APPROVAL U/S.153D OF THE ACT , WHICH IS RAISED FIRST TIME BEFORE THE TRI BUNAL. SINCE THIS IS A LEGAL ISSUE INVOLVED, THEREFORE, THE PRAYER OF THE ASSESSEE IS CONSIDERED FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS COMMISSIONER OF INCOME TAX 229 ITR 383 (SC) THE PRAYER IS ACCEPTED. ON PERUSAL OF THE DOCUMENTS FILED IN THE PAPER BOOK, WE FIND THAT THE COMPETENT AUTHORITY HAS RIGHTLY APPROVED THE DRAFT ORDER SENT BY THE AO WITHIN THE DUE TIME, THEREAFTER THE ASSESSMENT ORDER HAS BEEN PASSED BY THE AO AND WE DO NOT FIND ANY I LLEGALITY/IRREGULARITIES , THEREFORE, THE LEGAL GROUNDS RAISED BY THE ASSESSEE REGARDING GRANT OF APPROVAL U/S.153D OF THE ACT IS DISMISSED. 17 . NOW, WE HAVE TO DECIDE THE SECOND LEGAL GROUND RAISED BY THE ASSESSEE THAT AS TO WHETHER THE ASSESSING OFFICER I S JUSTIFIED TO COMPLETE THE ASSESSMENT U/S.153A OF THE ACT BY MAKING IMPUGNED ADDITION S FOR THE ASSESSMENT YEAR S UNDER CONSIDERATION EVEN IN THE ABSENCE OF ANY INCRIMINATING MATERIAL DEEMED TO BE FOUND DURING THE SEARCH CONDUCTED U/S.132 OF THE ACT. WE HAV E ALSO GONE THROUGH THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF DR. SUKANTA CHANDRA MALLICK AND DR. SAMBEET KUMAR MALLICK RELIED UPON BY THE LD. IT (SS) A NO S . 69 - 75/CTK/2019 65 AR OF THE ASSESSEE AND FOUND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AFTER OBSERVING AS UNDER : - 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THE ISSUE RAISED BY BOTH THE ASSESSEES IN THEIR RESPECTIVE APPEALS FOR THE ASSESSMENT YE ARS UNDER CONSIDERATION IS WITH REGARD TO THE ASSESSMENT U/S.153A OF THE ACT IS NOT MAINTAINABLE AS NO INCRIMINATING DOCUMENTS WHATSOEVER HAS BEEN FOUND OR SEIZED BY THE SEARCH TEAM DURING THE SEARCH CONDUCTED U/S.132 OF THE ACT. WE FOUND THAT THE LD. AR V EHEMENTLY EMPHASIZED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, HENCE NO ADDITION CAN BE MADE. IT WAS ALSO THE CONTENTION OF LD. AR THAT THE CIT(A) RELYING ON THE DECISIONS OF HON'BLE KERALA AND ALLAHABAD HIGH COURTS HAS DISMISSE D THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN RESPECT OF NO INCRIMINATING MATERIAL WAS FOUND IN THE COURSE OF SEARCH AND THE ASSESSMENT U/S.153A HAS TO BE COMPLETED AS PER THE ORIGINAL ASSESSMENT ORDER. DURING THE COURSE OF HEARING, LD. AR DREW OUR ATT ENTION TO THE PARA 2 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE AO IN THE LAST TWO LINES HAS MENTIONED THAT CASE OF THE ASSESSEE WAS DISCUSSED DURING THE ASSESSMENT PROCEEDINGS WITH THE AR OF THE ASSESSEE WITH REFERENCE TO THE BOOKS OF ACCOUNTS SEIZED RELATING TO THE GROUP OF THE CASES AS A WHOLE. FOR THE COMPLETENESS OF OUR ORDER, WE WOULD LIKE TO REPRODUCE THE PARA 2 OF THE ASSESSMENT ORDER, WHICH READS AS UNDER : - 02. NOTICE U/S.153A WAS ISSUED ON 31.01.2017. THE A.R. OF THE ASSESSEE, MS. SWATI KEJ IRWAL, FCA APPEARED AND SUBMITTED A COPY OF THE RETURN U/S.153A FILED ON 10.03.2017 SHOWING A TOTAL INCOME AT RS.2,05,420/ - . HERE TOTAL INCOME U/S.153A IS EQUAL TO THAT SHOWN IN THE RETURN U/S.139(1). ACCORDINGLY, NOTICES US/S.143(2) & U/S.142(1) ARE ISSUE D AND SERVED. THE A.R., MS. SWATI KEJIRWAL, FCA APPEARED FROM TIME TO TIME AND THE CASE IS DISCUSSED WITH HER WITH REFERENCE TO THE FACTS IN THE RETURN OF INCOME AND ALSO WITH REFERENCE TO THE BOOKS OF ACCOUNTS SEIZED RELATING TO THE GROUP OF THE CASES AS A WHOLE . 9. FURTHER, THE LD. AR DREW OUR ATTENTION TO THE PANCHANAMA FILED IN THE PAPER BOOK AT PAGES 8 TO 23 AND SUBMITTED THAT NO SUCH BOOKS OF ACCOUNTS HAS BEEN SEIZED NEITHER ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH TO ENABLE T HE AO TO INVOKE THE PROVISIONS OF SECTION 153A OF THE ACT. ACCEPTING THE CONTENTION OF LD. AR, WE HAVE GONE THROUGH THE PANCHANAMA FILED BY THE ASSESSEE IN THE PAPER BOOK RUNNING FROM PAGES 8 TO 23 AND WE FOUND THAT IN THE PANCHANAMA PREPARED ON 12.03.2016 IN PARA NO.5(A)(I), IT IS MENTIONED THAT BOOKS OF ACCOUNTS AND DOCUMENTS WERE FOUND AND SEIZED AS PER ANNEXURE A (01 SHEETS) AND IN ANNEXURE - 1 FILED AT PAGE 10 OF THE PAPER BOOK, CONTAIING LIST/INVENTORY OF A/C BOOKS ETC. FOUND/SEIZED, IT IS MENTIONED THAT BUNCH OF LOOSE SHEET FOUND/SEIZED AND MARKED AS SCMR - 01. SIMILARLY, IN THE PANCHANAMA PREPARED ON 14.03.2016 & 17.03.2016, IN PARA (I) OF SL.NO.5(A), WITH REGARD TO WHAT ARE FOUND AND SEIZED DURING THE COURSE IT (SS) A NO S . 69 - 75/CTK/2019 66 OF SEARCH, THE PANCHAS HAVE PUT A CROSS MARK ON THE SAME, MEANING THEREBY THERE IS NO MENTION ABOUT THE BOOKS OF ACCOUNTS FOUND OR SEIZED DURING THE COURSE OF SEARCH. LD. DR WAS UNABLE TO ESTABLISH THAT THE LOOSE SHEETS CAN BE TREATED AS BOOKS OF ACCOUNTS, WHEREAS IN THE ASSESSMENT ORDER THE AO HAS MENTIONED THAT THE BOOKS OF ACCOUNTS HAVE BEEN SEIZED BUT IN THE COPY OF PANCHANAMA PRODUCED BEFORE US, NO SUCH BOOKS OF ACCOUNTS HAS BEEN FOUND AND SEIZED. FURTHER, IN THE ASSESSMENT ORDER WHILE MAKING ADDITION THE AO HAS NOT REFERRED TO ANY LOOSE SHE ET OR ANY SPECIFIC INCRIMINATING DOCUMENT FOUND DURING THE COURSE OF SEARCH ENABLING HIM TO MAKE SUCH ADDITION. 10. WE FIND THAT THE CIT(A) RELYING UPON THE DECISIONS OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF E.N.GOPAKUMAR VS. CIT [2016] 75 TAXM ANN.COM 215 (KERALA) AND THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR ARORA [2014] 52 TAXMANN.COM 172 (ALLAHABAD) HAS HELD THAT EVEN IF THERE IS NO INCRIMINATING MATERIAL, THE AO IS EMPOWERED TO MAKE ADDITIONS IN AN ASSESSM ENT FRAMED U/S.153A OF THE ACT. W E FIND THAT NONE OF THE DECISION RELIED 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 JUR ISDICTIONAL HIGH COURT, THEN THE DECISION FAVOURING THE ASSESSEE SHOULD 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.153 A OF THE ACT FOR AN ASSESSMENT YEAR FOR WHICH ASSESSMENT HAS NOT BEEN ABATED, THEN THE JURISDICTION OF THE ASS ESSING 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. 11. UNDISPUTEDLY, IN THE INSTANT CASE, THE ASSESSMENT FOR THE ASSESSMENT YEARS IN QUESTION HAV E ALREADY BEEN COMPLETED ON THE DATE OF SEARCH IN THE CASES OF BOTH THE ASSESSEES AND SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, AS IS EVIDENT FROM THE PANCHANAMA PREPARED DURING THE COURSE OF SEARCH, NO ADDITIONS CAN BE MADE TO THE I NCOME ALREADY ASSESSED. TO SUPPORT OUR VIEW, WE SHALL RELY ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA, [2015] 61 TAXMANN.COM 412 (DELHI), WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER : - ON A CONSPECTUS OF SECTION 153A(1), READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN VARIOUS DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS IT (SS) A NO S . 69 - 75/CTK/2019 67 WILL HAVE TO BE COMPUTED BY THE ASSESSING OFFICERS AS A FRESH EXERCISE. ( III ) THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT OR DER 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 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE .STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE CO URSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' (V) IN 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 (I.E., THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETE ASSESSMENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIG INAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSIN G OFFICER. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UND ISCLOSED 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. [PARA 37] THE PRESENT APPEALS CONCERN ASSESSMENT YEARS 2002 - 03, 2005 - 06 AND 2006 - 07. ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. [PARA 38] THE REVENUE'S APPEALS ARE ACCORDINGLY DISMISSED. [PARA 40] 12. IN THE PRESENT CASE, WE FIND THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS FOUND IN THE COURSE OF SEARCH WHICH WOULD SHOW ANY CONNECTION ON ADDITION MADE BY AO WITH THE SEIZED IT (SS) A NO S . 69 - 75/CTK/2019 68 MATERIAL WHICH IS THE SUBJECT MATTER OF DISPU TE IN ASSESSMENT ORDER. NOTHING IS FOUND CONTRARY TO THE STATED POSITION OF THE ASSESSEE. WE ALSO FIND THAT THERE IS NO MATERIAL REFERRED TO BY THE AO TO SAY THAT ANY INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH. THEREFORE, IN THE FACTUAL BACKGRO UND, WE DO NOT FIND ANY JUSTIFICATION FOR THE AO TO MAKE THE IMPUGNED ADDITIONS/DISALLOWANCE IN AN ASSESSMENT FINALIZED U/S 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL HAVING BEEN FOUND DURING THE COURSE OF SEARCH, QUA THE IMPUGNED ADDITIO NS MADE IN ASSESSMENT ORDER. RESPECTFULLY, FOLLOWING THE RATIO OF DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), WHEREIN , THE HON'BLE HIGH COURT AFTER DETAIL ANALYSIS CONCLUDED THAT, WHERE THERE IS NO INCRIMINATING MATERIAL Q UA EACH OF THE ASSESSMENT YEAR ROPED IN UNDER SECTION 153A OF THE ACT, THEN, NO ADDITION CAN BE MADE WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT. THE AFORESAID PRINCIPLE AND RATIO ARE CLEARLY APPLICABLE ON THE FACTS OF THE PRESENT CASE ALSO, AS ADMITTEDLY NO INCRIMINATING MATERIAL RELATING TO THESE ASSESSMENT YEARS OR AS A MATTER OF FACT FOR ANY OF THE ASSESSMENT YEARS WERE FOUND DURING THE COURSE OF SEARCH AND ACCORDINGLY, WE SET ASIDE THE ORDERS OF BOTH THE AUTHORITIES BELOW AND HELD THAT WHEN NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH THEN, NO ADDITION CAN BE MADE WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT. THUS, THE GROUNDS RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010 - 2011 ARE ALLOWED. 18 . IN THE ABOVE CASE, THE TRIBUNAL SET ASIDE THE ORDERS OF BOTH THE AUTHORITIES BELOW HOLDING TH EREIN THAT WHEN NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH THEN, NO ADDITION CAN BE MADE WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT. THE AFORESAID PRINCIPLE AND RATIO ARE CLEARLY APPLICABLE ON THE FACTS OF THE PRESENT CASE ALSO, AS ADMITTEDLY IN THE ASSESSMENT YEAR S UNDER CONSIDERATION, WHILE FRAMING THE ASSESSMENT, THE AO HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL . THEREFORE, IT IS CLEAR THAT NO INCRIMINATIN G MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, WHICH COULD HAVE BEEN UTILIZED FOR MAKING ASSESSMENT U/S.153A/14 4 OF THE ACT. 19 . RELIANCE CAN ALSO BE PLACED ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MIDAS CAPITAL PVT. LTD. VS. ACIT, IT(SS)A IT (SS) A NO S . 69 - 75/CTK/2019 69 NO.04&05/CTK/2018, ORDER DATED 23.03.2018 FOR THE ASSESSMENT YEARS 2011 - 2012 & 2012 - 2013, WHERE THE DECISION RELIED ON BY THE CIT(A) OF HONBLE KERALA AND ALLAHABAD HIGH COURT WAS CONSIDERED BY THE COORDINATE BENCH AND OBSERVED AS UNDER : - 23. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS 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/ - AND 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 ASSESSMENT WAS PASSED ON 28.12.2016, WHERE, 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 FOR ASSESSMENT YEAR 2012 - 13 AND NO SUCH NOTICE WAS ISSUED TO THE ASSESSEE BY THE SAID DATES. THUS, THE ORIGINAL RETURN OF I NCOME BECAME FINAL ON 30.9.2011 AND 30.9.2012 FOR THE ASSESSMENT YEARS 2011 - 12 AND 2012 - 13, RESPECTIVELY I.E. BEFORE THE DATE OF RELEVANT 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 ASS ESSEE IN THE RELEVANT ASSESSMENT YEARS. THE ABOVE FACTS WERE DISCLOSED IN THE RETURN OF INCOME FILED ON 29.9.2011 AND 27.9.2012. 26. ON THE OTHER HAND, LD CIT DR IS OF THE VIEW THAT IN A PROCEEDING U/S.153 A 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 DECISIONS. (A) E.N. GOPAKUMAR V. COMMISSIONER OF INCOME - TAX (CENTRAL) [2016] 75 TAXMANN.COM 215 (KERALA): IT (SS) A NO S . 69 - 75/CTK/2019 70 ' SECTION 153A , READ WITH SECTION 132 , OF THE INCOME - TAX ACT , 1961 - SEARCH & SEIZURE - ASSESSMENT IN CASE OF (SCOPE 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 YIELDE D ANY INCRIMINATING MATERIAL AGAINST ASSESSEE OR PERSON TO WHOM SUCH NOTICE IS ISSUED - HELD, YES - WHETHER, 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 UNDER 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 172 (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 FOR 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 FAVOU R OF REVENUE/MATTER REMANDED]' 27. ON THE OTHER HAND, THE AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS: (I) (1) CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. (2)ALL CARGO GLOBAL LOGISTICS LTD. (2015) 374 1TR 645 (BOM), WHERE IT WAS HELD THAT THE NOTICE U/S.153 A OF THE ACT WAS FOUNDED ON SEARCH. IF THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH THEN THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE POWER U/S.153 A 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), WHEREIN THE HON'BLE RAJASTHAN HIGH COURT HAS HELD THAT THE PLEA RAISED ON BEHALF 0 THE ASSESSEE THAT AS THE F IRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX 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 IRRESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND 'REAS SESS' HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE IT (SS) A NO S . 69 - 75/CTK/2019 71 SEARCH OR MAKING OF REQUISITION AND WHICH WOULD - ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSE SSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. (III) PR.CIT VS. MEETA GUTGUTIA PROP. M/S.FEMS 'N' PETALS [2017) 395 ITR 526 (DEL), WHEREIN IT WAS HELD THAT IT IS ON LY 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 FOUND 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'BLE KOLKATA HIGH COURT HAS HELD AS UNDER : - 'WE ARE IN AGREEMENT W ITH THE VIEWS EXPRESSED BY THE KAMATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE - REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED UNDER SECTION 153C 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 CONTAINED UNDER SECTION 153C READ WITH SECTION 153A . THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES. IN THAT VI EW OF THE MATTER, WE ARE UNABLE TO ADMIT THE APPEAL. THE APPEAL IS, THEREFORE, DISMISSED.' 28. WE FIND THAT NONE OF THE DECISION RELIED 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 THE ASSESSEE SHOULD 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.153 A OF THE ACT FOR AN ASSESSMENT YEAR FOR WHIC H 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 INSTANT CASE, WE F IND 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 DEVELOPERS PVT LTD.,(V) S COPE 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) IT (SS) A NO S . 69 - 75/CTK/2019 72 SRIJAN VYAPAR CAPLIN MARKETI NG 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 ASSESSMENT YEAR 2011 - 12 AND RS.15,00,000/ - FOR THE ASSESSMENT YEAR 2012 - 13. 30. 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 ASSESSMENT YEAR 2011 - 12 A ND 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 ASSESSEE. 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. 20 . LD. AR FURTHER EXP LAINED THAT THE ASSESSMENT IS UNABATED AS THE RETURN OF INCOME U/S.139 OF THE ACT FILED ON 23 .09.2009 FOR A.Y.2009 - 2010, FOR THE ASSESSMENT YEAR 2010 - 2011, RETURN WAS FILED ON 25.09.2010 AND FOR THE ASSESSMENT YEAR 2011 - 2012, THE RETURN WAS FILED ON 23.09. 2011, WHEREAS THE DATE OF SEARCH U/S.132 OF THE ACT DATED 06.08.2014 AND AT THE TIME OF SEARCH THE ASSESSMENT WAS COMPLETED AND NO INCRIMINATING MATERIAL WAS FOUND AS PER RECORD. 21 . FROM THE ENTIRE ASSESSMENT ORDER, THE AO HAS NOT REFERRED ANY SEIZED MAT ERIALS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AND WE ALSO OBSERVE THAT THE ASSESSEE HAS NOT COOPERATED DURING THE ENTIRE PROCEEDINGS OF ASSESSMENT. IF THE ASSESSEE DOES NOT APPEAR BEFORE THE AO AFTER GIVING SEVERAL NOTICES/OPPORTUNITIES TH EN THE AO CAN UTILIZE THE REMEDY PROVIDED IN THE ACT. THE AO HAS HUGE POWER TO REQUIRE THE PRESENCE OF THE ASSESSEE BEFORE HIM AS DEFINED IN IT (SS) A NO S . 69 - 75/CTK/2019 73 THE INCOME TAX ACT. HE CAN ALSO IMPOSE THE PENALTY BUT NOT DONE SO. THE BOOKS OF ACCOUNTS AND OTHER SEIZED DOCUMENT S WERE AVAILABLE BEFORE HIM WHILE COMPLETING THE ASSESSMENT. FROM THE ASSESSMENT ORDER, IT IS CLEAR THAT THAT IN THE OPINION OF THE AO THAT THERE WAS NO ANY INCRIMINATING MATERIAL. HAD IT BEEN FOUND SOME INCRIMINATING MATERIAL DURING THE COURSE OF SEARCH, THEN THE AO MUST HAVE TAKEN INTO COGNIZANCE WHILE FRAMING THE ASSESSMENT ORDER BUT HE DID NOT REFER TO ANY INCRIMINATING DOCUMENT. EVEN THE LD. CIT(A) IN HIS ORDER HAS NOT REFERRED ANY INCRIMINATING MATERIAL. HE HAS SIMPLY MADE ADDITION ON AD HOC BASIS ON TRANSPORTATION EXPENSES. FURTHER WE NOTICE THAT THE AO HAS ADDED ENTIRE SHARE CAPITAL RECEIVED BY THE ASSESSEE WITHOUT REFERRING TO ANY SEIZED/INCRIMINATING MATERIAL. THE IMPUGNED ASSESSMENT YEAR IS ABATED ASSESSMENT YEAR AND IN CASE OF ABATED ASSESSMENT Y EAR FOR MAKING ADDITION THERE MUST BE INCRIMINATING MATERIAL AS DECIDED BY VARIOUS COURTS . THE LD. CITDR HAS SUBMITTED THAT THE BOGUS TRANSPORTATION EXPENSES HAVE BEEN BROUGHT BY ASSESSEE COMPANY IN THE FORM OF A SHARE CAPITAL. THE DOCUMENTS REFERRED BY T HE CITDR WERE AVAILABLE BEFORE THE AO AT THE TIME OF FRAMING ASSESSMENTS. IN THE SHARE APPLICATION FORM, THE NAME AND ADDRESS ARE MENTIONED OF THE SHARE APPLICANTS. THE AO CAN UTILIZE THE SEIZED SHARE APPLICATION FORM AND HE CAN CALL TO THEM AND RECORD THE STATEMENTS BUT THE AO KEPT HIMSELF MUM. SINCE THESE THREE YEARS ARE UNABATED ASSESSMENT YEARS IT (SS) A NO S . 69 - 75/CTK/2019 74 AND NO ANY INCRIMINATING MATERIAL REFERRED BY THE AO, THEREFORE, THE ARGUMENT ADVANCED BY THE LD. CITD IS NOT ACCEPTED. THE STATEMENT RECORDED OF OTHER PERSONS A FTER POST SEARCH ENQUIRY CANNOT BE TERMED AS INCRIMINATING MATERIAL. 22 . THEREFORE, CONSIDERING THE ABOVE FACTS OF THE CASE AND ALSO THE OBSERVATIONS OF BOTH THE LOWER AUTHORITIES AND THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL REFERRED ABOVE, ARE OF THE SUBSTANTIVE OPINION THAT THE ASSESSMENT IS UNABATED AND THE TRIBUNAL IS BOUND BY THE JUDICIAL PRECEDENCE AND, HENCE, APPLYING THE RATIO OF ABOVE DECISION S TO THE PRESENT CASE, WE ALLOW LEGAL GROUND RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 20 09 - 2010 TO 2011 - 2012 CHALLENGING THE ASSESSMENT FRAMED U/S.153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIALS NOR OBSERVED BY THE AO WHILE FRAMING THE ASSESSMENT ORDER . ACCORDINGLY, WE SET ASIDE THE ORDERS OF BOTH THE AUTHORITIES BELOW AND HELD THAT ASSESSMENT FRAMED U/S.153A OF THE ACT FOR ALL THE THREE YEARS UNDER CONSIDERATION ARE NOT SUSTAINABLE BEING UNABATED ASSESSMENT AND, THEREFORE, ALSO NO ADDITION CAN BE MADE WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT HAVING NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH , WHICH IS CLEAR FROM THE ASSESSMENT ORDER . THUS, IT(SS)A NOS.69 - 71/CTK/2019 ARE ALLOWED ON LEGAL GROUNDS ON THE BASIS OF NO INCRIMINATING MATERIAL. IT (SS) A NO S . 69 - 75/CTK/2019 75 23 . SI NCE, WE HAVE ALREADY QUASHED THE ASSESSMENT FRAMED BY THE AO U/S.153A OF THE ACT ALLOWING THE APPEALS OF THE ASSESSEE ON LEGAL ISSUE, THE OTHER GROUNDS ON MERIT NEED NOT TO BE ADJUDICATED UPON. IT(SS)A NO.72/CTK/2019 (AY : 2012 - 2013) : 24 . IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT, THE IMPUGNED ORDER OF ASSESSMENT SO PASSED U/S.153A/144 OF THE ACT IS WITHOUT JURISDICTION AND WITHOUT THE AUTHORITY OF LAW, AS SUCH, THE SAME BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 2. FOR THAT, WHEN THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE IMPUGNED ADDITIONS MADE BY THE LEARNED A.O. ARE NOT SUSTAINABLE IN THE EYE OF LAW, THE LEARNED C.I.T.(A) SHOULD HAVE ALLOWED THE APPEAL IN TOTO INSTEAD OF ALLOWING THE APPEAL IN PART. THE ADDITIONS CONFIRMED BY THE LEARNED C.I.T.(A) BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 3. FOR THAT, THE LEARNED C.I.T(A) SHOULD HAVE DELETED THE TOTAL ADDITION OF RS. 10,33,952.00 MADE BY THE LEARNED A.O OUT OF TRANSPORT EXPENSES INSTEAD OF CONFIRMING TO THE EXTENT OF RS.7,47,998.00. THE PARTIAL; DISALLOWANCE OF TRANSPORT EXPENSES BY THE LEARNED C.I.T(A), IGNORING THE EVIDENCES OF THE APPELLANT IS NOT CORRECT, HENCE NEEDS TO BE DELETED. 4. FOR THAT, THE LEARNED C.I.T(A) HAS COMMITTED GROSS ERROR IN IGNORING THE EVIDENCES AND EXPLANATION OF THE APPELLANT WHILE CONFIRMING THE DISALLOWANCE OF TRANSPORT EXPENSES TO THE EXTENT OF RS.7,4 7,998.00. THUS, THE IMPUGNED ADDITION CONFIRMED BY THE LEARNED C.I.T(A) IS NOT SUSTAINABLE, HENCE IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 5. FOR THAT, THE LEARNED C.I.T(A) HAS COMMITTED GROSS ERROR IN CONFIRMING THE ADDITION OF RS.69,00,000.00 MADE BY THE LEARNED A.O. BY APPLYING SECTION 68 OF THE ACT, PARTICULARLY WHEN, THE APPELLANT HAS COMPLIED ALL NECESSARY INGREDIENTS WITH EVIDENCES. THUS, THE IMPUGNED ADDITION BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 6. FOR THAT, THE FORUMS BELOW HAVE COMMITTED GROSS ERROR OF LAW AS WELL AS IN FACT IN MAKING ADDITION OF RS,69,00,000.00, IGNORING THE EXPLANATION AND OBJECTION OF THE ASSESSEE. THE IMPUGNED IT (SS) A NO S . 69 - 75/CTK/2019 76 ADDITION SO CONFIRMED BY THE LEARNED C.I.T(A) BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 7. FOR THAT, YOUR APPELLANT CRAVES LEAVE OF THIS HON'BLE TRIBUNAL TO URGE ANY OTHER GROUNDS, IF ANY, AT THE TIME OF HEARING IN THE INTEREST OF JUSTICE. 25 . F URTHER, THE LD. AR HAS FILED ADDITIONAL GROUNDS WHICH READ AS UNDER : - 1. FOR THAT, THE IMPUGNED ORDER OF ASSESSMENT SO PASSED U/S.153A/144 OF THE ACT IS WITHOUT JURISDICTION AND WITHOUT THE AUTHORITY OF LAW, AS SUCH, THE SAME BEING NOT SUSTAINABLE IN TH E EYE OF LAW IS LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 2. FOR THAT, WHEN THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE IMPUGNED ADDITIONS MADE BY THE LEARNED A.O. ARE NOT SUSTAINABLE IN THE EYE OF LAW, THE LEARNED C. I.T.(A) SHOULD HAVE ALLOWED THE APPEAL IN TOTO INSTEAD OF ALLOWING THE APPEAL IN PART. THE ADDITIONS CONFIRMED BY THE LEARNED C.I.T.(A) BEING NOT SUSTAINABLE IN THE EYE OF LAW ARE LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 3. THAT, THE IMPUGNED ORD ER OF ASSESSMENT IS NOT SUSTAINABLE IN THE EYE OF LAW, IN VIEW OF THE FACT THAT DUE PROCEDURE OF LAW AND STATUTORY REQUIREMENT HAS NOT BEEN FOLLOWED BY THE LEARNED AUTHORITIES BELOW IN GRANTING APPROVAL U/S.153D OF THE ACT. IT BEING MANDATORY IN THE EYE OF LAW IN ABSENCE OF IT, THE ORDER OF ASSESSMENT NEEDS TO BE QUASHED IN THE INTEREST OF JUSTICE. 4. FOR THAT, THE LEARNED C.I.T(A) SHOULD HAVE DELETED THE TOTAL ADDITION OF RS.10,33,952.00 MADE BY THE LEARNED A.O OUT OF TRANSPORT EXPENSES INSTEAD OF CONFIR MING TO THE EXTENT OF RS.7,47,998.00. THE PARTIAL DISALLOWANCE OF TRANSPORT EXPENSES BY THE LEARNED C.I.T(A), IGNORING THE EVIDENCES OF THE APPELLANT IS NOT CORRECT, HENCE NEEDS TO BE DELETED. 5. FOR THAT, THE LEARNED C.I.T(A) HAS COMMITTED GROSS ERROR I N IGNORING THE EVIDENCES AND EXPLANATION OF THE APPELLANT WHILE CONFIRMING THE DISALLOWANCE OF TRANSPORT EXPENSES TO THE EXTENT OF RS.7,47,998.00. THUS, THE IMPUGNED ADDITION CONFIRMED BY THE LEARNED C.I.T(A) IS NOT SUSTAINABLE, HENCE IS LIABLE TO BE DELET ED IN THE INTEREST OF JUSTICE. 6. FOR THAT, THE LEARNED C.I.T(A) HAS COMMITTED GROSS ERROR IN CONFIRMING THE ADDITION OF RS.69,00,000.00 MADE BY THE LEARNED A.O. BY APPLYING SECTION 68 OF THE ACT, PARTICULARLY WHEN, THE APPELLANT IT (SS) A NO S . 69 - 75/CTK/2019 77 HAS COMPLIED ALL NECESSA RY INGREDIENTS WITH EVIDENCES. THUS, THE IMPUGNED ADDITION BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 7. FOR THAT, THE FORUMS BELOW HAVE COMMITTED GROSS ERROR OF LAW AS WELL AS IN FACT IN MAKING ADDITION O F RS.69,00,000.00, IGNORING THE EXPLANATION AND OBJECTION OF THE ASSESSEE. THE IMPUGNED ADDITION SO CONFIRMED BY THE LEARNED C.I.T(A) BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. 8. FOR THAT, WHILE COMPUTING TOTAL INCOME IN THE ASSESSMENT ORDER FORUMS BELOW HAVE COMMITTED GROSS ERROR OF LAW IN TAKING THE ASSESSED INCOME U/S.143(3) OF THE ACT, PARTICULARLY WHEN, THE IMPUGNED ASSESSMENT ORDER IS A NULLITY. THE AUTHORITIES BELOW SHOULD HAVE TAKEN THE RETURNED IN COME. THE IMPUGNED ADDITION OF RS.49,81,399.00, THUS BEING ILLEGAL NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. 26 . BRIEF FACTS OF THE CASE AS EMANATE FROM THE ORDER OF AO THAT A SEARCH WAS CONTENDED ON THE ASSESSEES PREMISES ON 11.09.2014 AND THE A SSESSEE FILED RETURN OF INCOME U/S.139(1) OF THE ACT ON 28.09.2012 DECLARING TOTAL INCOME AT RS.1,37,80,430/ - AND THE CASE WAS SELECTED FOR SCRUTINY AND SCRUTINY ASSESSMENT WAS COMPLETED ON 30.03.2015 DETERMINING TOTAL INCOME OF RS.1,87,61,830/ - BY MAKING THE FOLLOWING ADDITIONS : - 1. DISALLOWANCE OF DIRECTORS SALARY & REMUNERATION - RS.26,00,000/ - II. DISALLOWANCE U/S 40A(3) - RS. 7,16,415/ - III. SECURITY CHARGE S - RS. 1,36,341/ - I V. LOSS ON SALE/DISCARDED FIXED ASSET - RS. 3,57,927/ - V. DONATION - RS. 65,000/ - VI. OTHER HEAD EXPENSES - RS. 11,05,716/ - TOTAL - RS.49,81,399/ - THEREAFTER NOTICE U/S.153A(1)(A) OF THE ACT WAS ISSUED ON 04.07.2016 TO FILE THE RETURN OF INCOME AND IN RESPONSE TO THE NOTICE THE ASSESSEE FILED ITS RETURN U/S 153A OF THE ACT ON 23.08.2016 DISCLOSING THE SAME INCOME WHICH WAS DECLARED IN THE RETURN FILED U/S.139(1) OF THE ACT I.E. RS.1,37,80,430/ - . IN THE ASSESSMENT ORDER PASSED U/S.153A/144 OF THE IT (SS) A NO S . 69 - 75/CTK/2019 78 ACT THEN AO MADE TWO ADDITIONS ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM OF RS.69 LAKHS AND TRANSPORTATION EXPENSES OF RS.10,33,952/ - . WHILE COMPUTING THE TOTAL TAXABLE INCOME OF THE ASSESSEE THE AO PASSED ORDER U/S.153A/144 OF THE ACT CONSIDERING THE TOTAL TAXABLE INCOME WHICH WAS DETERMINED AT RS.2,66,95,780/ - INCLUDING THE ADDITIONS MADE U/S.143(3) OF THE ACT OF RS.49,81,399/ - . IN APPEAL, THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW, THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ADDITIONS CONFIRMED BY THE CIT(A). 2 7 . LD. AR BEFORE US REITERATED THE SUBMISSION MADE IN THE WRITTEN SYNOPSIS, THE CONTENTS OF WHICH ARE AS UNDER : - ASSESSMENT YEAR:2012 - 13: 5.1 THAT, FOR ASSESSMENT YEAR:20 12 - 13, THE APPELLANT COMPANY HAS FILED ITS REGULAR RETURN OF INCOME ON 28.09.2012, DISCLOSING TOTAL INCOME AT RS.1,37,80,430.00. REGULAR ASSESSMENT PROCEEDING WAS PENDING ON THE DATE OF SEARCH, EVEN THOUGH IT GOT ABATED, HOWEVER, THE LEARNED A.O. IGNORING STATUTORY RESTRICTIONS AS PROVIDED U/S.153A COMPLETED ASSESSMENT U/S.143(3) OF THE ACT ON DATED 30.03.2015, DETERMINING TOTAL INCOME AT RS.1,87,61,830.00 BY MAKING ADDITION OF RS.49,81,399.00 ON DIFFERENT HEADS. THEREAFTER, THE LEARNED A.O COMPLETED ASSESS MENT U/S.153A. WHILE COMPLETING ASSESSMENT, THE LEARNED A.O MADE FOLLOWING ADDITIONS SUCH AS; 1. SCRUTINY ASSESSMENT ADDITION RS.49,81,399.00 2. 10% OF FREIGHT CHARGES RS.10,33,952.00 3.SHARE CAPITAL AND SHARE PREMIUM RS.69,00,000.00 5.2 THAT, BEING AGGRIEV ED, THE APPELLANT COMPANY PREFERRED APPEAL, WHILE ADJUDICATING APPEAL, THE LEARNED C.I.T.(A) IGNORED EVIDENCES SUBMITTED BEFORE THE A.O. DURING REMAND PROCEEDING AND BEFORE HIM DURING APPEAL PROCEEDING AND RESTRICTED THE DISALLOWANCE OF TRANSPORTATION EXPE NSES TO RS.7,47,998.00. FURTHER, HE CONFIRMED THE ADDITION OF SHARE CAPITAL AND SHARE PREMIUM OF RS.69,00,000.00 AND DID NOT DIRECT THE LEARNED A.O TO ACCEPT THE RETURNED INCOME WHILE GIVING APPEAL EFFECT, AS THE ASSESSED INCOME TAKEN BY THE LEARNED A.O. A S RS.1,87,61,830.00, WHILE COMPUTING INCOME IS COMPLETELY WRONG AND ILLEGAL. HENCE, IT (SS) A NO S . 69 - 75/CTK/2019 79 THIS APPEAL. ISSUE - WISE SUBMISSIONS ARE GIVEN HEREUNDER FOR BETTER APPRECIATION OF FACT; DISALLOWANCE OF FREIGHT EXPENSES : 5.3 THAT, WHILE COMPLETING ASSESSMENT U/S.153A , THE LEARNED AUTHORITIES BELOW, SHOULD NOT HAVE DISALLOWED 10% OF TRANSPORTATION / FREIGHT EXPENSES ON AD - HOC ESTIMATION BASIS, BECAUSE, THE SETTLED PRINCIPLES OF LAW IS THAT, WHILE COMPLETING ASSESSMENT U/S.153A, ANY ADDITION / DISALLOWANCE, IF ANY, HAS TO BE MADE STRICTLY ON THE BASIS OF SEIZED MATERIAL, NO AD - HOC OR ESTIMATED DISALLOWANCE CAN BE MADE. IT IS ADMITTED BY THE LEARNED A.O THAT, DURING REMAND PROCEEDING, THE APPELLANT COMPANY PRODUCED PARTY - WISE LEDGER OF TRANSPORTATION EXPENSES AND PRODUCED JOURNAL VOUCHERS, WHERE BILLS ARE NOT AVAILABLE. THE AUTHORITIES BELOW SHOULD NOT HAVE DISBELIEVED THE JOURNAL VOUCHERS AND SHOULD NOT HAVE CONFIRMED ADDITION OF RS.7,47,998.00, WHEN THE JOURNAL VOUCHER ITSELF IS SELF EXPLANATORY. MERELY BECAUSE, CORRESPO NDING BILL IS NOT AVAILABLE, THE LEARNED AUTHORITIES BELOW SHOULD NOT HAVE GIVEN A PRACTICAL APPROACH AND SHOULD HAVE CONSIDERED THE FACT THAT, MANY TIMES, DRIVERS DID NOT CARRY BILL BOOKS WITH THEM, FOR WHICH, THEY SIGNED IN JOURNAL VOUCHER CREATED BY THE APPELLANT, WHILE RECEIVING PAYMENT. SINCE, THE APPELLANT PRODUCED JOURNAL VOUCHER AND PARTY WISE LEDGER ACCOUNT COPIES OF TRANSPORTATION EXPENSES AND IT COULD NOT BE DISPUTED, THE IMPUGNED DISALLOWANCE OF RS.7,47,998.00 IS NOT SUSTAINABLE, HENCE NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. ADDITION OF SHARE CAPITAL AND SHARE PREMIUM : 5.4 THAT, ON PERUSAL OF PAGE NO.158 OF THE PAPER BOOK, IT IS CLEAR THAT, THE APPELLANT HAS SATISFACTORILY EXPLAINED ALL NECESSARY INGREDIENTS OF SECTION 68 OF THE ACT. S O FAR AS IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CREDITORS ARE CONCERNED, THEY ARE BEYOND REASONABLE DOUBT. ON VERIFICATION OF BANK ACCOUNT, THE LEARNED AUTHORITIES BELOW FOUND THAT, MONEY HAS BEEN TRANSFERRED TO APPELLANT COMPANYS ACCOUNT AND 6000 SHARES WERE ALLOTTED TO M/S. LIBERTY HIGHRISE PVT. LTD. ADDITION WAS MADE IN THE HAND OF THE APPELLANT COMPANY ON THE GROUND THAT, APPELLANT COMPANY FAILED TO EXPLAIN SOURCE OF SOURCE WHICH IS NOT REQUIRED UNDER THE LAW FOR THIS ASSESSMENT YEAR. 5.5 THAT, THE LEARNED AUTHORITIES BELOW HAVE COMMITTED GROSS ERROR OF LAW IN HOLDING THAT, SINCE THE IMPUGNED ASSESSMENT WAS COMPLETED ON 30.12.2016, THEREFORE THE AMENDED PROVISION OF SECTION 68 W.E.F. 01.04.2013 IS APPLICABLE TO THE APPELLANT COMPANY. SINCE , THE APPELLANT HAS NOT EXPLAINED THE NATURE AND SOURCE FROM WHERE, THE INVESTORS HAS RECEIVED MONEY, THEREFORE, RS.69,00,000.00 RECEIVED AS SHARE APPLICATION MONEY IS LIABLE TO BE ADDED IN THE HAND OF THE APPELLANT COMPANY. THE IMPUGNED IT (SS) A NO S . 69 - 75/CTK/2019 80 FINDINGS OF THE AU THORITIES BELOW ARE ILLEGAL AND CONTRARY TO THE SETTLED PROVISIONS OF LAW. LAW IN THIS ASPECT IS WELL SETTLED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS - M/S. GAGANDEEP INFRASTRUCTURE PVT. LTD. REPORTED IN 394 ITR 680 AND BY THE HONBLE ITAT MUMBAI IN CASE OF M/S. PALI FABRICS PVT., LTD. VS - DCIT CENTRAL CIRCLE - 8(4) (MUMBAI), BEARING ITA NO.904/MUM/2018 THAT, PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013. THUS, IT WOULD BE EF FECTIVE ONLY FROM ASSESSMENT YEAR 2013 - 14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. THE PARLIAMENT DID NOT INTRODUCE THE PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATE THAT, IT WAS INTRODUCED FOR REMOVAL OF DOUBTS OR THAT, IT IS DECLARATORY. THEREFORE, IT IS NOT OPEN TO GIVE RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT, THE ADDITION OF THE PROVISO TO SECTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER ADDING THE PROVISO. IN THE PRESENT CASE, SINCE THE IMPUGNED ADDITION WAS MADE FOR WANT OF EXPLANATION THE SOURCE OF SOURCE, THE SAME IS NOT SUSTAINABLE IN VIEW OF THE SETTLED PRINCIPLES OF LAW, AS SUCH, CONSEQUENTIAL ADD ITION OF RS.69.00.000.00 MADE BY THE AUTHORITIES BELOW NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. SCRUTINY ASSESSMENT ADDITION:RS.49,81,399.00: 5.6 THAT, THE APPELLANT COMPANY FILED ITS RETURN OF INCOME, DECLARING TOTAL INCOME AT RS.1,37,80,430.00 . REGULAR ASSESSMENT PROCEEDING U/S.143(3) OF THE ACT WAS INITIATED FOR THIS ASSESSMENT YEAR. DURING PENDENCY OF REGULAR ASSESSMENT PROCEEDING, SEARCH OPERATION WAS INITIATED ON 11.09.2014. PURSUANT TO NOTICE U/S.153A, THE APPELLANT FILED ITS RETURN OF IN COME ON 23.08.2016, DECLARING TOTAL INCOME OF RS.1,37,80,430.00. IN VIEW OF SECOND PROVISO TO SECTION 153A, ANY PENDING ASSESSMENT PROCEEDING ON THE DATE OF SEARCH SHALL ABATE, BUT THE LEARNED A.O. HAS COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT, VIDE O RDER DATED 30.03.2015, THEREFORE THE IMPUGNED ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT, BEING NOT IN CONFORMITY WITH THE STATUTORY PROVISIONS IS NON - EST AND VOID. WHILE COMPLETING ASSESSMENT U/S.153A OF THE ACT, THE LEARNED A.O. HAS COMMITTED GROSS ER ROR, WHILE COMPUTING ASSESSED INCOME, THE AUTHORITIES BELOW HAD TAKEN THE INCOME DETERMINED U/S.143(3) OF THE ACT FOR COMPUTATION, WHICH IS COMPLETELY WRONG AND NOT SUSTAINABLE. WHEN, THE ASSESSMENT COMPLETED U/S.143(3) OF THE ACT ITSELF IS A NULLITY, THE INCOME DETERMINED THEREIN CANNOT BE CONSIDERED WHILE COMPUTING INCOME U/S.153A OF THE ACT. THEREFORE, ADDITION OF RS.49,81,399.00 MADE IN THE ASSESSMENT ORDER U/S.143(3) OF THE ACT CANNOT BE MADE IN 153A ASSESSMENT, AS SUCH, THE IMPUGNED ADDITION OF RS.49, 81,399.00 BEING NOT SUSTAINABLE IN THE EYE OF LAW, NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. IT (SS) A NO S . 69 - 75/CTK/2019 81 2 8 . IN ADDITION TO THE ABOVE, LD. AR REFERRED TO THE SECOND PROVISO OF SECTION 153A OF THE ACT AND SUBMITTED THAT ANY PENDING ASSESSMENT PROCEEDINGS ON THE DATE OF SEARCH SHALL BE ABATED BUT THE AO COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT AND MADE ADDITION. THE AO HAS COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT VIOLATING THE LAW LAID DOWN IN THIS REGARD. THEREFORE, THE ADDITIONS MADE BY THE AO IN TH E ASSESSMENT FRAMED U/S.143(3) OF THE ACT ARE NOT SUSTAINABLE IN THE EYES OF LAW. IN RESPECT OF FREIGHT EXPENSES AND SHARE CAPITAL AND SHARE PREMIUM, RELIED HIS WRITTEN SUBMISSION AS REPRODUCED ABOVE. ACCORDINGLY, LD. AR SUBMITTED THAT THE ABOVE ADDITIONS MADE BY THE AO AND CONFIRMED BY THE CIT(A) DESERVE TO BE DELETED. 29 . ON THE OTHER HAND, LD.CIT DR RELIED ON THE ORDER OF AO AND SUBMITTED THAT THE AO HAS RIGHTLY COMPLETED THE ASSESSMENT U/S.153A OF THE ACT AS THE ASSESSEE, EVEN AFTER PROVIDING MANY OPPOR TUNITIES BY THE AO, COULD NOT SUBMIT THE BOOKS OF ACCOUNTS, WRITTEN SUBMISSION NOR FILED ANY SUITABLE DOCUMENTARY EVIDENCE TO SUBSTANTIATE HIS CLAIM. FOR THE ADDITIONS MADE BY THE AO FOR THE YEAR UNDER CONSIDERATION, THE LD. CITDR HAS VEHEMENTLY RELIED ON THE WRITTEN SYNOPSIS AS REPRODUCED ABOVE AND SUBMITTED THAT THE APPEAL OF THE ASSESSEE DESERVES TO BE DISMISSED. 30 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD ALONG WITH THE ORDERS OF AUTHORITIES BELOW AS WELL IT (SS) A NO S . 69 - 75/CTK/2019 82 AS THE CASE LAWS CITED BY BOTH THE PARTIES, WE FOUND THAT I N THE INSTANT APPEAL UNDER CONSIDERATION, THE ASSESSEE HAS RAISED A LEGAL GROUND THAT THERE WAS NO PROPER GRANT OF APPROVAL U/S.153D OF THE ACT. THIS ISSUE HAS ALREADY BEEN DECIDED BY US IN THE PARA NO.1 6 OF THIS ORDER, THEREFORE, SAKE OF CONVENIENCE AND BREVITY, WE DO NOT WANT TO REPEAT THE SAME AND THE OBSERVATIONS MADE IN THE ABOVE PARA SHALL APPLY TO THIS MUTATIS MUTANDIS , TO THIS GROUND RAISED IN THIS APPEAL UNDER CONSIDERATION ALSO. 31 . FURTHER, WE FIND THAT THE ASSESSEE RAISED THE SECOND LEGAL GROUND THAT THE ASSESSMENT FRAMED BY THE AO U/S.153A/144 OF THE ACT IS WITHOUT JURISDICTION AND WITHOUT AUTHORITY OF LAW. IN THIS REGARD, AFTER GOING THROUGH THE ORDER OF AO, WE FIND THAT THE AO HAS COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT ON 30.03.2015, WHICH IS AFTER SEARCH CONDUCTED ON 11.09.2014 ON THE ASSESSEE. FOR COMPLETENESS OF OUR ORDER, WE WOULD LIKE TO REPRODUCE THE SECOND PROVISO TO SECTION 153A OF THE ACT, WHICH READS AS UNDER : - PROVIDED FUR THER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FAILING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS [AND FOR THE RELEVANT ASSESSMENT YEAR OR YEARS] REFERRED TO IN THIS [SUB - SECTION] PENDING ON THE DATE OF INITIATION OF THE SEARC H UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. 32 . IT IS CLEAR FROM THE ABOVE PROVISO THAT THE IMPUGNED ASSESSMENT YEAR WAS PENDING BEFORE THE AO AT THE TIME OF SEARCH CONDUCTED UPON THE ASSESSEE, THEREFO RE, THE ASSESSMENT PROCEEDINGS SHALL ABATE AND THE IT (SS) A NO S . 69 - 75/CTK/2019 83 AO SHOULD NOT HAVE COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT. THE ASSESSMENT PENDING ON THE DATE OF SEARCH WAS TO BE COMPLETED AS P ER SECTION 153A OF THE ACT. THERE IS A GROSS VIOLATION OF PROVISIONS OF INCOME TAX ON THE PART OF THE AO, THEREFORE, THE ASSESSMENT WHICH WAS PENDING ON THE DATE OF SEARCH IS WRONG. ACCORDINGLY, THE ADDITIONS MADE IN THE ASSESSMENT U/S.143(3) OF THE ACT CANNOT BE SUSTAINED. 33 . ON FURTHER PERUSAL OF THE ASSESSMENT FRAMED U /S.153A/144 OF THE ACT, IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAS CONSIDERED THE INCOME WHICH WAS DETERMINED IN THE SCRUTINY ASSESSMENT AND THE SCRUTINY ASSESSMENT THERE WAS ADDITION OF RS.49,81,399/ - WHICH IS INCLUDED IN THE INCOME DETERMINED U/S. 143(3) OF THE ACT BY THE AO. THEREFORE, AS PER OUR CONSIDERED OPINION, THE INCOME CONSIDERED BY THE AO U/S.153A/144 OF THE ACT RS.1,87,61,830/ - SHOULD BE REDUCED BY THE ADDITION MADE BY THE AO U/S.143(3) OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL IS AL LOWED. 3 4 . ON FURTHER PERUSAL OF ASSESSMENT ORDER, IT IS NOTED THAT THE AO HAS MADE ADDITION UNDER THE HEAD TRANSPORTATION EXPENSES OF RS.10,33,952/ - ON VERIFICATION OF 14 PARTIES AS MENTIONED IN THE ASSESSMENT ORDER FOR NON - PRODUCTION OF BOOKS OF ACCOUNTS , BILLS VOUCHERS AS REQUIRED BY THE AO. IN APPEAL, THE CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AND DURING THE REMAND PROCEEDINGS, THE ASSESSEE ALSO COULD NOT PRODUCE THE BILLS AND VOUCHERS IN RESPECT OF IT (SS) A NO S . 69 - 75/CTK/2019 84 RAHUL KUMAR, AN COMPANY, ASHA ROAD, MD. FAKH RUDDIN AND STAR CARGO FOR THE CLAM OF RS. 5,59,528/ - , RS.67,600/ - , RS.7,150/ - AND RS.36,600/ - RESPECTIVELY. ACCORDINGLY, THE CIT(A) SUSTAINED THE ADDITION OF RS.7,47,998/ - . 35 . DURING THE COURSE OF ARGUMENTS, LD. AR DREW OUR ATTENTION TO THE WRITTEN SUBMI SSIONS WHICH IS REPRODUCED ABOVE AND SUBMITTED THAT ALL THE BILLS AND VOUCHERS WHICH WERE EXAMINED BY THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT, AND HE HAS NOT POINTED OUT ANY MISTAKE, THEREFORE, HE CANNOT MADE ANY A DDITION ON THIS COUNT. THEREFORE, CONFIRMING OF RS.7,47,998/ - BY THE CIT(A) IS NOT JUSTIFIED, ALTHOUGH COMPLIANCE WERE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 36 . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW AND ALSO RELIED ON THE WRITTEN SUBMISSIONS AS REPRODUCED ABOVE AS WELL AS THE REMAND REPORT SUBMITTED BY THE AO IN WHICH THE AO HAS CLEARLY STATED THAT IN RESPECT OF FOUR PARTIES THE ASSESSEE COULD NOT PRODUCE BILLS AND VOUCHERS, THEREFORE, THE AUTHORITIES BELOW WERE JUS TIFIED AND ORDER OF THE CIT(A) DESERVES TO SUSTAINED, 37 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD AND THE ORDER OF THE AUTHORITIES BELOW AND ON PERUSAL OF THE REMAND REPORT SUBMITTED BY THE AO, WE OBSERVE THAT THE ASSESSEE COULD NOT PRODUCE BILLS AND VOUCHERS IN RESPECT OF THE FOUR IT (SS) A NO S . 69 - 75/CTK/2019 85 PARTIES OF RS.7,47,998/ - , WHEREAS IT WAS CLAIMED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT UNDER THE HEAD TRANSPORTATION/HIRE EXPENSES. IT IS SETTLED PROPOSITION OF LAW THAT IF THE A SSESSEE CLAIMS ANY EXPENSES IT WAS THE DUTY OF THE ASSESSEE TO SUBSTANTIATE WITH CREDIBLE EVIDENCE TO THE REVENUE AUTHORITIES, HOWEVER, THE ASSESSEE WAS FAILED TO PRODUCE THE SAME BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE ALSO DO NOT FI ND ANY SUBSTANCE ON THE ARGUMENTS SUBMITTED BY THE LD. AR OF THE ASSESSEE IN THIS REGARD THAT THESE EXPENSES WERE NOT EXAMINED BY THE AO WHILE PASSING THE ORDER U/S.143(3) OF THE ACT, WHEREAS THE ASSESSMENT COMPLETED U/S.143(3) OF THE ACT HAS BEEN DECLARED AS BEYOND THE PROVISIONS OF INCOME TAX ACT, THEN NO LEGS TO STAND THE ORDER FRAMED U/S.143(3) OF THE ACT. 38 . WE ALSO NOTED FROM THE REMAND REPORT SUBMITTED BY THE AO DURING THE COURSE OF APPELLATE PROCEEDINGS THAT THE ASSESSEE COULD NOT SUBMIT ANY DOCUME NTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM. THE ADDITIONS HAVE BEEN MADE IN RESPECT OF FOUR PARTIES AS NOTED ABOVE. ACCORDINGLY, THE CIT(A) HAS CONFIRMED THE ADDITION OF RS.7,47,998/ - . WE DO NOT SEE ANY GOOD REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(A ) RECORDED IN THIS REGARD. THUS, WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 39 . ON FURTHER PERUSAL OF THE ORDERS OF AUTHORITIES BELOW, WE OBSERVE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD IT (SS) A NO S . 69 - 75/CTK/2019 86 NOT EXPLAIN THE SOURCE OF SHARE CAPITAL AND SHARE PREMIUM RESULTING INTO ADDITION OF THE SAID AMOUNT. IN THE REMAND REPORT CALLED FOR BY THE CIT(A), THE AO STATED THAT THE ASSESSEE HAS NOT GIVEN ANY DETAILS REGARDING SPECIFIC SOURCE FROM WHERE THE ALLEGED INVESTORS HAVE RECEIVED MONEY FO R INVESTMENT IN THE ASSESSEE COMPANY. BEFORE THE CIT(A), THE ASSESSEE PLEADED THAT THIS ISSUE WAS ALREADY BEEN EXAMINED BY THE AO WHILE COMPUTING THE ASSESSMENT U/S.143(3) OF THE ACT AND HE WAS SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. LD. CIT( A) WAS NOT SATISFIED FROM THE EXPLANATION MADE BY THE ASSESSEE AND THE REMAND REPOT WAS CALLED FOR FROM THE AO AND THE AO SUBMITTED HIS REMAND REPORT AS UNDER : - '8.1 SHARE CAPITAL AND SHARE PREMIUM THE A.O. HAS MADE ADDITION OF RS.69,00,000/ - AS UNEXPL AINED SHARE CAPITAL INVESTMENT AS THE ASSESSEE COMPANY FAILED TO EXPLAIN THE INCREASE IN SHARE CAPITAL, RESERVE AND SHARE PREMIUM WITH SUPPORTING DOCUMENTARY EVIDENCES. AS PER ADDITIONAL EVIDENCE SUBMITTED BEFORE YOUR HONOUR THE A.R. OF THE ASSESSEE COMPA NY SUBMITTED THAT A.O. HAS NOT ARRIVED AT THE CONCLUSION FROM ANY INCRIMINATING MATERIAL FOUND DURING SEARCH. FURTHER, DURING THE COURSE OF REMAND PROCEEDINGS THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN THE SPECIFIC SOURCE OF AMOUNTS CREDITED TO THE ACCOUNTS OF THE SHAREHOLDER WHICH WERE IMMEDIATELY DEBITED AND TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE COMPANY. HOWEVER, IT IS SEEN THAT THE A.R. OF THE ASSESSEE COMPANY HAS NOT FURNISHED ANY EXPLANATION AND RELIED UPON THE SUBMISSION MADE BEFORE YOUR HONOUR AN D FURNISHED ONLY JOURNAL VOUCHER AND LEDGERS OF SHARE CAPITAL. THE SUBMISSION MADE DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS HAS BEEN DULY VERIFIED. ON VERIFICATION OF THE SAME IT IS SEEN THAT TOTAL 6,000 SHARES WERE ALLOTTED TO THE GROUP CONCER NS NAMELY M/S. LIBERTY HIGHRISE PVT. LTD. DURING THE COURSE OF REMAND PROCEEDINGS THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN THE SPECIFIC SOURCE OF THE PARTY/SHAREHOLDER FOR AMOUNT CREDITED IN THEIR ACCOUNTS WITH SUPPORTING DOCUMENTARY EVIDENCES. HOWEVER, I T IS SEEN THAT THE A.R. OF IT (SS) A NO S . 69 - 75/CTK/2019 87 THE ASSESSEE COMPANY NEITHER EXPLAINED THE SPECIFIC SOURCE NOR FURNISHED ANY SUPPORTING DOCUMENTARY EVIDENCES DURING REMAND PROCEEDING RATHER THAN EXPLAINING ABOUT ITS SUBMISSION BEFORE YOUR HONOUR. THE ISSUE OF DEBITING THE BOGUS EXPENSES AND BRINGING BACK THE UNDISCLOSED INCOME BY THE LIBERTY GROUP IN THE FORM OF SHARE CAPITAL AND PREMIUM THROUGH SHELL/PAPER COMPANIES IN THE FORM OF ACCOMMODATION ENTRIES HAS COME TO LIGHT ONLY WHEN THE SEARCH WAS CONDUCTED. F URTHER, AFTER CONDUCTING THE POST SEARCH ENQUIRIES AND EXAMINATION OF SEIZED, DOCUMENTS THE INVESTIGATION OFFICER, IN CHAPTER - 8 TO THE APPRAISAL REPORT DISCUSSED THE MODES OF OPERANDI AND AREAS OF UNDISCLOSED INCOME. ALSO, AS PER CHA PTER - 9 TO THE APPRAISAL REPORT THE INVESTIGATION OFFICER HAS GIVEN SPECIFIC SUGGESTIONS FOR FURTHER FOLLOW UP ENQUIRY/INVESTIGATION TO THE A.O. FOR THOROUGHLY EXAMINATION OF THE ISSUE AS TILL THE FINALISATION OF APPRAISAL REPORT SOME OF THE SHAREHOLDERS HA S NOT APPEARED IN RESPONSE TO SUMMONS ISSUED. THE INVESTIGATION OFFICER HAS ALSO REPORTED THAT DUE TO PAUCITY OF TIME, THE TRIAL OF FUND FLOW OF THE GROUP COULD NOT BE PREPARED IN RESPECT OF THE ENTIRE AMOUNT OF ENTRY OF SHARE CAPITAL AND SHARE PREMIUM. HO WEVER, ON THE BASIS OF POST SEARCH ENQUIRY CONDUCTED AND EXAMINATION OF BANK STATEMENTS THE INVESTIGATION OFFICER HAS PREPARED THE TRAIL OF FUND FLOW TO THE EXTENT OF PARTIES MENTIONED IN ANNEXTURE - B TO THE APPRAISAL REPORT. ALSO DURING THE COURSE OF POST SEARCH ENQUIRY THE STATEMENTS OF PAPER COMPANY OPERATORS AND DIRECTORS HAS BEEN RECORDED WHICH ENCLOSED AS ANNEXTURE - A TO THE APPRAISAL REPORT. AS PER STATEMENTS RECORDED U/S. 131 OF THE IT. ACT, 1961 THE ACCOMMODATION ENTRY OPERATORS ADMITTED THAT THEIR M AIN SOURCE OF INCOME IS FROM COMMISSION FOR PROVIDING ACCOMMODATION ENTRIES THROUGH 'JAMA - KHARCHI' COMPANIES FORMED BY THEM AND THEY HAD PROVIDED THE ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY IN WHICH THE ASSESSEE COMPANY TRANSFERRED THE FUND IN THE GU ISE OF BOGUS EXPENSES FOR WHICH THEY ARRANGED BOGUS SHARE CAPITAL AND PREMIUM THROUGH VARIOUS PAPER COMPANIES. ACCORDINGLY, ON THE BASIS OF ALL MATERIAL FACTS AVAILABLE ON RECORD THE INVESTIGATION OFFICER CONCLUDED THAT THE LIBERTY GROUP HAS BROUGHT BACK I TS UNDISCLOSED INCOME IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM. AS DURING THE COURSE OF SEARCH ASSESSMENTS ASSESSEE COMPANY FAILED TO FURNISH THE REQUIRED DETAILS HENCE, THE A.O. COULD NOT CARRY OUT FURTHER FOLLOW UP ENQUIRY/INVESTIGATION TO TH OROUGHLY EXAMINATION OF THE ISSUE UNDER CONSIDERATION. FURTHER, DURING THE COURSE OF REMAND PROCEEDINGS ALSO THE A.R. OF THE ASSESSEE COMPANY HAS FAILED TO EXPLAIN THE SPECIFIC SOURCE OF AMOUNTS CREDITED TO THE ACCOUNT OF SHAREHOLDERS AND HEN CE THE THOROUGHLY EXAMINATION OF THE ISSUE IS NOT POSSIBLE DURING THE REMAND PROCEEDINGS. THEREFORE, IT IS CLEAR THAT THE INCREASE OF SHARE CAPITAL/PREMIUM OF RS. 69,00,000/ - IS NOTHING BUT UNDISCLOSED INCOME OF THE ASSESSEE COMPANY WHICH BROUGHT BACK IN T HE FORM OF SHARE CAPITAL AND PREMIUM AS PER MODUS OF OPERANDI AND INCRIMINATING DOCUMENTS DISCUSSED IN APPRAISAL REPORT. IN VIEW OF THE ABOVE DISCUSSED FACTS, THE ADDITION OF RS.69,00,000/ - MADE BY THE A.O.IS CORRECT AND JUSTIFIABLE. IT (SS) A NO S . 69 - 75/CTK/2019 88 THE CIT(A) AFTER CON SIDERING THE CASE LAWS RELIED ON BY THE LD. AR OF THE ASSESSEE AND ALSO CONSIDERING THE CASE LAWS RELIED ON BY HIM, DISMISSED THIS GROUND OF ASSESSEE, AGAINST WHICH THE ASSESSEE IS AGITATING BEFORE US. 40 . LD. AR BEFORE US REITERATED THE SUBMISSIONS MADE B EFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE LIABILITY CASTS UPON THE ASSESSEE AS PER SECTION 68 OF THE ACT HAS BEEN DISCHARGED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE COMPANY RAISED A SHARE CAPITAL AND SHARE PREMIUM FOR ALLOTTING 6000 SHARES TO M/S LIBERTY HIGHRISE PVT.LTD. . HE ALSO CONTENDED THAT THE AMENDMENT BROUGHT TO SECTION 68 OF THE ACT W.E.F.01.04.2013IS NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE ALLEGATION MADE BY THE CIT(A) I S NOT CORRECT. THE CASE LAWS RELIED ON BY THE CIT(A) AND THE LD.CITDR ARE NOT APPLICABLE IN THE PRESENT CASE IN HAND. IN THIS REGARD, RE PLACED NUMBER OF JUDGMENTS WHICH ARE PLACED IN THE PAPER BOOK. 4 1 . ON THE OTHER HAND, LD. CITDR RELIED ON THE ORDER OF AUTHORITIES BELOW AND ALSO RELIED ON HIS WRITTEN SUBMISSIONS AS REPRODUCED ABOVE AND PAPER BOOK FILED AND ARGUMENTS MADE EARLIER AS QUOTED IN RESPECT OF SHARE CAPITAL. HE FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT SUCCEED TO SUBSTANTIATE HIS CASE AS PE R SECTION 68 OF THE INCOME TAX ACT, 1961 AS DUTY CASTS UPON THE ASSESSEE. IT (SS) A NO S . 69 - 75/CTK/2019 89 4 2 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD ALONG WITH THE ORDERS OF AUTHORITIES BELOW AND THE CASE LAWS CITED BY BOTH THE SIDES, WE OBSERVE THAT THE ASSESSEE HAS ISSUED 6000 SHARES TO M/S LIBERTY HIGHRISE PVT. LTD., WHICH HAS BEEN DOUBTED BY THE AUTHORITIES BELOW. WE FOUND SUBSTANCE ON THE SUBMISSIONS MADE BY THE LD. AR OF THE ASSESSEE THAT SOURCE OF SOURCE IS NOT REQUIRED TO PROVE BY THE ASS ESSEE BECAUSE THE CASE RELATES TO ASSESSMENT YEAR 2012 - 2013 WHEREAS THE AMENDED PROVISIONS IN THE FINANCE ACT, 202 THEREBY AMENDING SECTION 68 OF THE ACT AND MADE NEW INSERTION WHICH READS AS UNDER : - PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY, (NOT BEI NG A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED) AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE - COMPANY SHALL BE D EEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPIN ION OF THE ASSESSING OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: 4 3 . THUS, IT IS CLEAR FROM THE ABOVE AMENDED SECTION THAT IT WILL BE APPLICABLE W.E.F.01.04.2013 BUT THE CASE OF THE ASSESSEE RELATES TO A.Y.2012 - 2013, THEREFORE, THIS PROVISION WILL NOT APPLICABLE IN THIS CASE. HOWEVER, WE OBSERVE FROM THE ORDER OF THE AUTHORITIES BELOW AND THE REMAND REPORT SUBMITTED BY THE AO, THE ASSESSEE HAS NOT DISCHARGED HIS DUTY AS CASTED UPON HIM AS PER SECTION 68 OF THE ACT. THE CREDITWORTHINESS OF THE SHAR E APPLICANTS HAVE NOT BEEN PROVED. IT (SS) A NO S . 69 - 75/CTK/2019 90 4 4 . IT IS ALSO OBSERVED FROM THE DOCUMENTS SUBMITTED BY THE ASSESSEE THAT THERE IS NO FINANCIAL STATEMENTS OF SHARE APPLICANTS NAMED M/S LIBERTY HIGHRISE PVT. LTD. IN THE SECTION 68 OF THE ACT, 1961, THE ASSESSEE MUST HA VE DISCHARGED THE THREE INGREDIENTS AND MANY HONOURABLE COURTS HAVE ALSO DECIDED THAT THE ASSESSEE MUST DISCHARGE HIS LIABILITY AS CASTS UPON HIM FOR PROVING THE CASH CREDIT RECEIVED DURING THE YEAR. THE ASSESSEE HAS ALSO NOT PROVED THE CREDITWORTHINESS O F THE SHARE APPLICANTS VIZ. THERE IS FINANCIAL STATEMENTS, COPY OF INCOME TAX RETURNS ETC., THE GENUINENESS OF THE BUSINESS ACTIVITY CARRIED ON BY M/S LIBERTY HIGHRISE CO. LTD. THE LD. CITDR HAS RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE O F NRA IRON & STEEL (P.) LIMITED (103 TAXMANN.COM 48) , WHICH IS CLEARLY APPLICABLE. 4 5 . IN THE SURVEY PROCEEDINGS THE STATEMENT RECORDED U/S.131 OF THE ACT THAT THE ACCOMMODATION ENTRY PROVIDERS ADMITTED THAT THIS IS A JAMA - KHARCHI COMPANY AND PROVIDING ACCOMMODATION ENTRY IN LIEU OF COMMISSION TO THE ASSESSEE . THEY HAVE ALSO ADMITTED THAT THE COMPANY TRANSFERRED THE FUND IN THE GUYS OF BOGUS EXPENDITURE FOR WHICH THEY ARRANGED THE BOGUS SHARE CAPITAL AND SHARE PREMIUM, THRO UGH VARIOUS PAPER COMPANIES. THE ASSESSEE HAS ALSO NOT APPLIED FOR CROSS - EXAMINATION TO THE ENTRY PROVIDER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE FINDINGS RECORDED BY THE CIT(A) IN THIS IT (SS) A NO S . 69 - 75/CTK/2019 91 REGARD. CONSIDERING TO THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION MADE UNDER THE HEAD SHARE CAPITAL AND SHARE PREMIUM OF RS.69 LAKHS IS CONFIRMED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 4 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IN IT(SS)A NO.72/CTK/2019 IS PARTLY ALLOWED. IT(SS)A NOS.73 - 75/CTK/2019 (AY: 2013 - 2014 - 2015 - 2016) : 4 7 . NOW, WE SHALL TAKE UP THE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEAR 20 13 - 201 4 TO 201 5 - 201 6 IN IT(SS)A NOS. 73 - 75 /CTK/2019, WHEREI N THE ISSUE INVOLVED IN ALL THE APPEALS ARE SIMILAR, THEREFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY, FIRST WE DECIDE IT(SS)A NO. 73 /CTK/2019 FILED FOR THE ASSESSMENT YEAR 20 13 - 201 4 AND THE DECISION OF THE SAME SHALL APPLY MUTATIS MUTANDIS TO THE OTHER A PPEALS ALSO ON THE COMMON ISSUE INVOLVED FOR ALL THE YEARS. 4 8 . IN ALL THE THREE APPEALS, THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL FOR ALL THE THREE YEARS UNDER CONSIDERATION : - IT(SS)A NO. ASSESSMENT YEAR ADDITIONS MADE BY TH E AO AND CONFIRMED BY THE CIT(A) AMOUNT (IN RS.) 73/CTK/2019 2013 - 2014 A) INCOME FROM BUSINESS ON ESTIMATE BASIS RS.5,22,51,455/ - B) OTHER INCOME RS.63,11,160/ - 74/CTK/2019 2014 - 2015 A) INCOME FROM BUSINESS ON ESTIMATE BASIS RS.9,08,67,866/ - B) OTHER INCOME RS.18,89,596/ - 75/CTK/2019 2015 - 2016 A) INCOME FROM BUSINESS ON ESTIMATE BASIS RS.2,65,35,845/ - B) UNACCOUNTED INCOME RS.5,00,50,000/ - C) OTHER INCOME RS.54,89,488/ - IT (SS) A NO S . 69 - 75/CTK/2019 92 49 . FOR THE SAKE OF CONVENIENCE, WE SHALL TAKE INTO CONSIDERATION TH E FACTS MENTIONED IN IT(SS)A NO.73/CTK/2019 FOR DECIDING ALL THE THREE APPEALS. 5 0 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.153A/144 OF THE ACT FOR ALL THE THREE YEARS UNDER CONSIDERATION, THE AO ISSUED NOTICE U/S.143(2) & 142(1) OF THE ACT ON 12.0 9.2016 ALONGWITH QUESTIONNAIRES FOR REQUIRING THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS , BILLS AND VOUCHERS AND TO EXPLAIN THE CERTAIN ISSUES BUT THE ASSESSEE DID NOT MAKE ANY COMPLIANCE WHICH HAS BEEN SPELT OUT BY THE AO IN HIS ORDER BY A CHART, WHICH READS AS UNDER : - SI NO NOTICE/LETTER ISSUED DATE OF NOTICE DATE OF COMPLIANCE FIXED ON RESPONSE OF THE ASSESSEE 1, 153A(L)(A) 04.07.2016 WITHIN 15 DAYS OF THE SERVICE OF THE NOTICE 23.08.2016 2. REMINDER TO FILLING OF RETURN OF INCOME & SHOW CAUSE NOT ICE FOR PENALTY / PROSECUTION 19.08.2016 29.08.2016 RETURN FILED ON 23.08.2016 3. NOTICE U/S 143(2) S2.09.2U16 23.09.2016 NO COMPLIANCE 4. NOTICE U/S 142(1) ALONG WITH QUESTIONNAIRE 12.09.2016 23.09.2016 NO COMPLIANCE 5. SHOW CAUSE OF PENALTY U/S 271(L) (B) 30.09.2016 07.10.2016 NO COMPLIANCE 6. PENALTY ORDER U/S 271(L)(B) 04.11.2016 - 7. SHOW CAUSE TO ASSESSMENT PROCEEDINGS U/S 153A 30.09.2016 07.10.2016 NO COMPLIANCE 8. SHOW CAUSE TO ASSESSMENT PROCEEDINGS U/S 153A 25.10.2016 31.10.2016 NO COMPLIANC E 9. NOTICE U/S 142(1) ALONG WITH QUESTIONNAIRE 07.10.2016 19.10.2016 NO COMPLIANCE 10. SHOW CAUSE TO ASSESSMENT PROCEEDINGS U/S 153A 28.10.2016 03.11.2016 NO COMPLIANCE 11. SHOW CAUSE TO ASSESSMENT PROCEEDINGS U/S 153 A 07.11.2016 11.11.2016 NO COMPLIA NCE 12. SHOW CAUSE TO ASSESSMENT PROCEEDINGS U/S 153 A 08.11.2016 11.11.2016 NO COMPLIANCE 13. SHOW CAUSE TO ASSESSMENT PROCEEDINGS U/S 153 A 13.12.2016 20.12.2016 NO COMPLIANCE IT (SS) A NO S . 69 - 75/CTK/2019 93 5 1 . FROM THE ABOVE CHART, IT IS CLEAR THAT THE ASSESSEE DID NOT COMPLIANCE OF THE NOTICES APPEAR BEFORE THE AO EVEN A NUMBER OF OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE AND THE SRI S . K. ACHARYA, ADVOCATE, DULY AUTHORIZED BY THE ASSESSEE SUBMITTED A PETITION SEEKING AN ADJOURNMENT. ACCORDINGLY THE CASE WAS ADJOURNED TO 24.10 2016. BUT ON SAID DATE NO COMPLIANCE MADE BY THE ASSESSEE. HOWEVER ON 24.112016 SRI S. K. ACHARYA A/R OF THE ASSESSEE APPEARED AND SUBMITTED PETITION REQUESTING TO KEEP THE ASSESSMENT PROCEEDINGS IN ABEYANCE AS THE MATTER IS ADJUDICATED BEFORE THE HON'BLE HIGH COURT OF ODISHA BUT THE AO NOTICED THAT THE WRIT PETITION FILED HAS BEEN DISMISSED ON 07.12.2016 IN WP(C) NO.20241 OF 2016. AGAIN THE ASSESSEE WAS ASKED TO COMPLY THE QUERIES AND HE FILED CERTAIN DETAILS BUT NO COMPLIANCE MADE IN PURSUANCE TO THE NOTI CE ISSUED U/S.142(1) OF THE ACT. FROM THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE, IT WAS NOTICED BY THE AO THAT THE COPY OF LEDGER ACCOUNTS OF CERTAIN TRANSACTIONS WITHOUT CORROBORATIVE EVIDENCE AND CONFIRMATIONS WERE FILED. ACCORDINGLY, THE AO COMPL ETED THE ASSESSMENT U./S.144 OF THE ACT AND REJECTED THE BOOKS OF ACCOUNTS WHATSOEVER SO MAINTAINED BY THE ASSESSEE AND AFTER COMPUTING THE NET PROFIT DECLARED BY THE ASSESSEE FOR THE LAST FOUR YEARS HE COMPUTED FOR THE SAME VARIES 2.82% TO 4.31%, THEREFOR E, HE TAKING INTO CONSIDERATION THE FACTUAL ASPECTS, ESTIMATED THE NET PROFIT OF 5% OF THE TOTAL BUSINESS RECEIPTS FROM THE IT (SS) A NO S . 69 - 75/CTK/2019 94 BUSINESS. THE AO ALSO ADDED OTHER INCOME AS SHOWN BY THE ASSESSEE IN THE FINANCIAL STATEMENTS. 5 2 . ON APPEAL, THE CIT(A) CALLED FOR REMAND REPORT AND HE OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE AO EVEN AFTER PROVIDING SUFFICIENT OPPORTUNITIES TO THE ASSESSEE. A LETTER WAS ALSO ISSUED BY THE AO DURING THE REMAND PROCEEDINGS WHICH HAS BEEN INCORPORATE D BY THE CIT(A) IN HIS APPELLATE ORDER AND IN THE LETTER THE ASSESSEE WAS SPECIFICALLY ASKED FOR PRODUCTION OF BOOKS OF ACCOUNTS BUT THE ASSESSEE FAILED TO PRODUCE BILLS AND VOUCHERS, INVOICES AND OTHER SUPPORTING DOCUMENTS AS REQUIRED DURING THE COURSE OF REMAND PROCEEDINGS BY THE AO. THEREAFTER THE CIT(A) AFTER CONSIDERING AND ANALYZING THE PROFIT DECLARED BY THE ASSESSEE, UPHELD THAT BOOKS OF ACCOUNTS WERE NOT PRODUCED, THEREFORE, THE AO WAS JUSTIFIED IN ESTIMATING THE NET INCOME FROM THE BUSINESS @5% OF THE BUSINESS RECEIPT AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 5 3 . LD. AR OF THE ASSESSEE HAS FILED WRITTEN SUBMISSION FOR THESE THREE ASSESSMENT YEARS ACCORDING TO THE GROUNDS OF APPEAL TAKEN BY HIM WHICH READS AS UNDER : - ASSESSMENT YEAR: 201 3 - 14 TO 2015 - 16: 1.1. THAT, FOR ASSESSMENT YEAR 2013 - 14, THE APPELLANT COMPANY FILED ITS RETURN INCOME ON 29.11.2013, DISCLOSING ITS TOTAL INCOME AT RS.2,42,48,080.00. SUBSEQUENTLY, SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 11.09.2014. CONSEQUENT UPON T HE SEARCH, NOTICE U/S.153A WAS ISSUED AND IN RESPONSE TO NOTICE, THE APPELLANT FILED ITS RETURN U/S.153A OF THE ACT, DISCLOSING TOTAL INCOME AT RS.2,42,48,080.00. IT MAY IT (SS) A NO S . 69 - 75/CTK/2019 95 BE SUBMITTED HERE THAT, THE RETURN FILED U/S.139(1) AND THE RETURN FILED U/S.153A ARE SAME. THEREAFTER, ASSESSMENT PROCEEDING WAS INITIATED. SINCE, THE DOCUMENTS WERE SEIZED IN THE SEARCH PROCEEDING AND THE COPY OF SEIZED DOCUMENTS WERE NOT HANDED OVER TO THE APPELLANT COMPANY, IT COULD NOT COMPLY TO THE STATUTORY NOTICES, AS SUCH, WHILE C OMPLETING THE ASSESSMENT, THE LEARNED A.O. REJECTED THE BOOK RESULT AND COMPLETED THE ASSESSMENT U/S.144 OF THE ACT BY ESTIMATING THE NET PROFIT @ 5% OF THE GROSS TURNOVER AND ALSO ADDED SEPARATELY, THE INTEREST INCOME INCLUDED IN THE PROFIT AND LOSS ACCOU NT, ARISING OUT OF FIXED DEPOSITS MORTGAGED FOR WORKING CAPITAL LOAN WITH SBI. ON APPEAL, THE LEARNED C.I.T(A) CONFIRMED THE ACTION OF THE LEARNED A.O. HENCE, THESE APPEALS; ESTIMATION OF PROFIT @5% : 1.2. THAT, THE IMPUGNED ESTIMATION OF NET PROFIT @ 5% OF T HE GROSS TURNOVER BY THE AUTHORITIES BELOW IS ILLEGAL, EXCESSIVE AND WITHOUT ANY BASIS, AS SUCH, THE SAME IS NOT SUSTAINABLE IN THE EYE OF LAW. HENCE, CONSEQUENTIAL ADDITIONS MADE FOR THESE THREE ASSESSMENT YEARS, IN VIEW OF SUCH ESTIMATION NEEDS TO BE DEL ETED IN THE INTEREST OF JUSTICE. 1.3. THAT, WHILE ESTIMATING THE NET PROFIT @ 5% OF THE GROSS TURNOVER, NEITHER AUTHORITIES BELOW HAVE ISSUED ANY SHOW CAUSE NOTICE TO THE ASSESSEE FOR REBUTTAL NOR THE AUTHORITIES BELOW COULD BE ABLE TO BRING OUT ANY COMPARATI VE CASES NOR HAVE CONSIDERED THE MARKET POSITION AND BUSINESS HISTORY OF THE ASSESSEE. THE IMPUGNED ESTIMATION OF NET PROFIT @ 5% IS EXCESSIVE, ARBITRARY AND NOT BACKED BY EITHER ANY EVIDENCE OR ANY SOUND REASON, AS SUCH, IT NEEDS TO BE DELETED IN THE INTE REST OF JUSTICE. 1.4. THAT, THE LEARNED AUTHORITIES BELOW FAILED TO APPRECIATE THE FACT THAT, FROM FINANCIAL YEAR 2012 - 13 ONWARDS, THE RATE OF IRON ORE DRASTICALLY REDUCED IN THE INTERNATIONAL MARKET. IT BECAME HALF OF THE RATE OF PREVIOUS YEARS. THE ASSESSEE COMPANY HAS BEEN ENGAGED IN EXPORT OF IRON ORE TO CHINA. BECAUSE OF REDUCTION OF RATE IN INTERNATIONAL MARKET, THE PROFIT IN COMPARISON TO PREVIOUS YEARS, REDUCED DRASTICALLY, FOR WHICH THE PROFIT PERCENTAGE DECLARED FROM ASSESSMENT YEARS : 2013 - 14 TO 201 5 - 16 REDUCED SUBSTANTIALLY. 1.5. THAT, WHILE ESTIMATING THE NET PROFIT, THE AUTHORITIES BELOW HAVE COMMITTED GROSS ERROR IN COMPLETELY IGNORING THE INTEREST EXPENDITURE AND DEPRECIATION, PARTICULARLY WHEN, FOR THESE THREE ASSESSMENT YEARS, THE NET PROFIT REDU CED NOT BECAUSE OF CLAIM OF ANY EXCESSIVE EXPENDITURE, BUT BECAUSE OF HUGE INTEREST EXPENDITURE AND DEPRECIATION. IF, WE CONSIDER THE PROFIT BEFORE INTEREST EXPENDITURE AND DEPRECIATION, THEN IT WILL BE FOUND THAT, THE PROFIT PERCENTAGE DECLARED BY THE ASS ESSEE IS MUCH HIGHER THAN THE PROFIT PERCENTAGE ADOPTED BY THE AUTHORITIES BELOW. THE APPELLANT COMPANY SUBMITS HEREWITH A DETAIL CHART OF ASSESSMENT YEAR WISE GROSS TURNOVER, PROFIT PERCENTAGE, INTEREST AND DEPRECIATION EXPENDITURE FOR BETTER APPRECIATION OF FACT; 1.6. ASST. YEAR GROSS TURNOVER NET PROFIT PROFIT % INTEREST EXPENDITURE DEPRECIATION EXPENDITURE 2013 - 14 104,50,29,101.40 1,76,56,027.17 1.69 3,10,59,465.00 53,28,199.00 2014 - 15 181,92,46,919.00 5,05,06,745.00 2.78 3,23,77,732.00 52,69,153.00 IT (SS) A NO S . 69 - 75/CTK/2019 96 2015 - 16 53,07,16,917.00 ( - 14,06,65,055.00) LOSS 2,84,83,564.00 84,66,049.00 1.7. THAT, IT MAY BE SUBMITTED HERE THAT NET PROFIT REDUCED IN THESE THREE YEARS BECAUSE OF INCREASE OF PROCUREMENT PRICE OF MATERIALS EXPORTED, INCREASE IN INTEREST EXPENDITURE AND DEPRECIATION, EXCEPTIONALLY HIGH INCREASE IN PLOT RENT BY PARADEEP PORT TRUST FROM ASSESSMENT YEAR:2013 - 14 ONWARDS. IN ASSESSMENT YEAR:2013 - 14 PLOT RENT WAS RS.28,62,437.00, WHERE AS IN ASSESSMENT YEAR:2014 - 15 PLOT RENT WAS RS.2,43,17,538.00 AND IN ASSESS MENT YEAR: 2015 - 16, PLOT RENT WAS RS.5,56,77,843.00. FURTHER INTERNATIONAL MARKET RATE OF IRON ORE EXPORTED REDUCED DRASTICALLY FROM RS.6,474.00 PER METRIC TON IN ASSESSMENT YEAR:2012 - 13 TO RS.4,689.00 IN ASSESSMENT YEAR:2013 - 14 , AGAIN INCREASED TO RS.4,9 91.00 IN ASSESSMENT YEAR:2014 - 15 AND REDUCED TO RS.3,403.00 IN ASSESSMENT YEAR:2015 - 16. THESE ARE THE KEY FACTORS FOR REDUCTION OF NET PROFIT. EVEN THOUGH ALL THESE CONNECTED EVIDENCES WERE WELL AVAILABLE WITH THE AUTHORITIES BELOW, BUT NONE OF THEM HAD CO NSIDERED ALL THESE FACTORS AND ESTIMATED NET PROFIT @5% OF TURNOVER. SINCE THE IMPUGNED ESTIMATION OF NET PROFIT @5% FOR THESE THREE ASSESSMENT YEARS ARE WITHOUT ANY BASIS AND EXCESSIVE, IT BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. ADDITIONAL SUBMISSIONS FOR ASSESSMENT YEAR:2015 - 16 1.8. THAT, SO FAR AS ASSESSMENT YEAR: 2015 - 16 IS CONCERNED, IN ADDITION TO ABOVE COMMON SUBMISSIONS, IT MAY BE SEPARATELY SUBMITTED HERE THAT, IN THIS YEAR: OUT OF TOTAL TURNOVER OF RS.53,07,16,917.00 ONLY RS.32,69,92,345.00 WAS EXPORT SALES. ON EXPORT SALE OF RS. 32,69,92,345.00, THE APPELLANT COMPANY WAS REQUIRED TO PAY CUSTOM DUTY OF RS.9,79,62,901.00, PLOT RENT OF RS.5,56,77,843.00,INTEREST ON LOAN PAID OF RS.2,84,83,564.00, DEPR ECIATION OF RS. 84,66,049.00 AND IN ADDITION TO THESE, THERE ARE OTHER DIRECT EXPENSES OF RS.13,50,14,086.00. FROM THESE UNDISPUTED FACTS, IT IS AMPLY CLEAR THAT THE LOSS DECLARED FOR THIS ASSESSMENT YEAR IS TRUE, GENUINE AND CORRECT. BECAUSE OF THIS HUGE LOSS, THE APPELLANT COMPANY COULD NOT PAY INTEREST ON WORKING CAPITAL LOAN AND BANK DECLARED THE LOAN ACCOUNT AS NPA ON 28.10.2015 AND STARTED RECOVERY PROCEEDING BY ISSUING NOTICE U/S.13(2) UNDER THE SARFAESI ACT. IN VIEW OF THIS IT MAY BE SUBMITTED HERE THAT, SINCE WITHOUT CONSIDERING ALL THESE AVAILABLE FACTS, THE AUTHORITIES BELOW HAVE COMMITTED GROSS ERROR IN ESTIMATING NET PROFIT @5% OF THE GROSS TURNOVER. SEPARATE ADDITION OF INTEREST INCOME : 1.9. FOR THAT, THE LEARNED AUTHORITIES BELOW HAVE ADDED SE PARATELY, THE INTEREST INCOME INCLUDED IN THE PROFIT AND LOSS ACCOUNT, ARISING OUT OF FIXED DEPOSITS MORTGAGED FOR WORKING CAPITAL LOAN WITH SBI. THE APPELLANT COMPANY SUBMITS HEREWITH ASSESSMENT YEAR - WISE DETAILS OF ADDITION OF INTEREST INCOME SEPARATELY FOR BETTER APPRECIATION OF FACTS; IT (SS) A NO S . 69 - 75/CTK/2019 97 ASSESSMENT YEARS INTEREST INCOME ADDED SEPARATELY 2013 - 14 63,11,159.93 2014 - 15 18,89,596.00 2015 - 16 45,47,157.00 1.10. FOR THAT , THE AUTHORITIES BELOW HAVE COMMITTED GROSS ERROR OF LAW IN SEPARATELY ADDING THE INTEREST INC OME EARNED UNDER THE HEAD INCOME FROM OTHER SOURCES, PARTICULARLY WHEN THESE RECEIPTS ARE PART OF THE BUSINESS. THEREFORE, THE IMPUGNED ADDITION BY TREATING THESE RECEIPTS AS SEPARATE INCOME BY THE LEARNED A.O AND BY LEARNED C.I.T(A) IS NOT ONLY ILLEGAL BU T ALSO NOT SUSTAINABLE IN THE EYE OF LAW. 1.11. THAT, SO FAR AS THE INTEREST INCOME EARNED FROM OTHER SOURCES IS CONCERNED, IT IS RESPECTFULLY SUBMITTED THAT, IT IS A RECEIPT CONNECTED WITH THE BUSINESS. THE INTEREST ACCRUED ON THESE DEPOSITS IS ALREADY DISCLOS ED AND FORMED PART OF THE P & L ACCOUNT. THEREFORE, THE SAME CANNOT BE TAXED SEPARATELY AND AS SUCH, BY DISCLOSING THE SAME AND ADDING IN THE P & L ACCOUNT, THE APPELLANT COMPANY HAS NOT COMMITTED ANYTHING WRONG. 1.12. THAT, WHETHER A PARTICULAR INCOME WILL BE CLASSIFIED AS INCOME FROM BUSINESS PROFESSION OR INCOME FROM OTHER SOURCES, DEPENDS ON FACTS AND CIRCUMSTANCES OF EACH CASE . THERE IS NO STRAIGHT JACK FORMULA PRESCRIBED UNDER THE ACT. SECTION 14 OF THE ACT CLEARLY SPECIFIES THAT, ALL INCOMES ARE TO BE CL ASSIFIED UNDER FIVE HEADS, OUT OF WHICH THE INCOME FROM OTHER SOURCES IS RESIDUARY HEAD. IF ANY INCOME CANNOT BE CLASSIFIED IN ANY OF THE FOUR CATEGORIES, THEN THE SAME CAN BE TREATED AS INCOME FROM OTHER SOURCES. IN THE INSTANT CASE, ALL THESE RECEIPTS AR E WELL COMING UNDER THE HEAD BUSINESS PROFESSION. LAW IN THIS ASPECT HAS BEEN WELL SETTLED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S. KOSHIKA TELECOM LIMITED VRS - CIT REPORTED IN 287 ITR 479 AND BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C IT VRS - LOK HOLDING REPORTED IN 308 ITR 356 IN FAVOR OF THE ASSESSEE AND THE IMPUGNED ADDITION RUNS CONTRARY TO THE SETTLED PRINCIPLES OF LAW, AS SUCH THE SAME BEING NOT SUSTAINABLE IN THE EYE OF LAW IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. THA T, IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF SETTLED PRINCIPLES OF LAW REFERRED TO HEREIN ABOVE, IT MAY BE SUBMITTED HERE THAT, THE IMPUGNED ORDERS PASSED BY THE AUTHORITIES BELOW AND ADDITIONS MADE THEREIN BEING NOT SUSTAINABLE IN THE EYE OF LAW ARE LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 5 4 . IN ADDITION TO THE ABOVE WRITTEN SUBMISSIONS, LD. AR ALSO SUBMITTED THAT THE ASSESSMENT HAS BEEN COMPLETED U/S.153A OF THE ACT IT (SS) A NO S . 69 - 75/CTK/2019 98 AND NO ANY INCRIMINATING MATERIALS HAVE BEEN FOUND DURIN G THE COURSE OF SEARCH PROCEEDINGS, THEREFORE, THE ADDITION CANNOT BE MADE IN THE ABSENCE OF SEARCH MATERIAL /INCRIMINATING MATERIAL AND THE RETURN FILED U/S.139(1) & 153A OF THE ACT IS THE SAME AND DOCUMENTS WERE SEIZED DURING THE COURSE OF SEARCH PROCEEDI NGS WHICH HAS NOT BEEN HANDED OVER TO THE ASSESSEE COMPANY, THEREFORE, THE ASSESSEE COULD NOT COMPLY THE NOTICE S ISSUED BY THE AO . ON PERUSAL OF THE WRITTEN SUBMISSIONS, WE OBSERVE THAT THE LD. AR OF THE ASSESSEE HAS MENTIONED THAT THE BOOKS OF ACCOUNTS WE RE SEIZED BY THE SEARCH TEAM DURING THE COURSE OF SEARCH PROCEEDINGS WHICH WERE NOT HANDED OVER TILL THE DATE OF ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS. THE LD. AR OF THE ASSESSEE SUBMITTED BEFORE US THAT N OW THE BOOKS OF ACCOUNTS HAVE BEEN HAND ED OVER BY THE DEPARTMENT, THEREFORE, HE REQUESTED THAT THE MATTER MAY KINDLY BE SENT TO THE AO FOR VERIFICATION OF THE DISALLOWANCE MADE BY THE AO. THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS WHICH CAN BE PRODUCED BEFORE THE AO. W E ALSO OBSERVE THAT THE SE ASSESSMENTS ARE ABATED ASSESSMENTS AND THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNTS BUT WHILE FRAMING THE ASSESSMENTS, THE LD. AR OF THE ASSESSEE DID NOT APPEAR AND HAS NOT FILED DOCUMENTS, THEREFORE, THE AO MADE ADHOC ADDITIONS ON THE TRANSPORTATION HEADS. FURTHER WE OBSERVE THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN GOT AUDITED BY A QUALIFIED ACCOUNTANT AS DEFINED IT (SS) A NO S . 69 - 75/CTK/2019 99 IN THE INCOME TAX ACT AND THE FINANCIAL STATEMENTS ARE AVAILABLE IN THE PAPER BOOKS. CONSIDERING THE PRAYER OF THE ASSESSEE, IT WOULD BE FAIR TO MAKE DE NOVO ASSESSMENTS FOR ALL THE THREE YEARS. THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE AO FOR EARLY COMPLETION OF ASSESSMENTS AND PRODUCE ALL THE DOCUMENTS BEFORE THE AO. NEEDLES S TO SAY THAT A REASONABLE OPPORTUNITY OF HEARING BE PROVIDED TO THE ASSESSEE. EXCEPT THE COMMODITY BUSINESS AS ACCEPTED BY THE ASSESSEE HIMSELF IN THE DISCLOSURE PETITION. THIS GROUND OF APPEAL OF THE ASSESSEE FOR ALL THE THREE ASSESSMENT YEARS UNDER CONS IDERATION IS ALLOWED FOR STATISTICAL PURPOSES. 5 5 . FROM THE GROUNDS OF APPEAL, WE ALSO OBSERVE THAT FOR THESE THREE ASSESSMENT YEARS THE ASSESSEE HAS CHALLENGED THE INTEREST INCOME EARNED BY THE ASSESSEE SHOULD BE TAXED AS A BUSINESS INCOME, HOWEVER, WE SP ECIFICALLY RAISED THE QUESTION TO THE AR DURING THE COURSE OF VIRTUAL HEARING THAT IN THE RETURN FILED BY THE ASSESSEE UNDER WHICH HEAD THE ASSESSEE HAS CONSIDERED AS INCOME IN THE INCOME TAX RETURN FILED, THEN THE LD. AR REPLIED THAT IT HAS BEEN CONSIDERE D AS INCOME FROM OTHER SOURCES AND THEREAFTER HE CONCEDED THAT IT SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. WE ALSO VERIFIED IT FROM THE COPY OF THE INCOME TAX RETURN THAT THE ASSESSEE HAS OFFERED IT AS INCOME FROM OTHER SOURCES. ONCE THE A SSESSEE HAS OFFERED AS INTEREST INCOME THEN FURTHER HE CANNOT CHANGE HIS VIEW AS PER HIS OWN INTERPRETATION. IN IT (SS) A NO S . 69 - 75/CTK/2019 100 VIEW OF ABOVE SUBMISSION MADE BY THE LD. AR OF THE ASSESSEE THAT IT HAS RIGHTLY BEEN CONSIDERED AS INCOME FROM OTHER SOURCES, WE DISMISS THE COM MON GROUND RAISED IN ALL THE APPEALS FOR ALL THE THREE YEARS UNDER CONSIDERATION. 5 6 . IN THE ADDITIONAL GROUNDS NO.5 & 6, THE ASSESSEE HAS CHALLENGED THAT THE ADDITION MADE BY THE AO IS BASELESS AND NOT BASED BY ANY EVIDENCE AND IT WAS TAKEN UNDER THE COER CION DURING THE SEARCH AND SUBSEQUENTLY IT WAS RETRACTED FROM IT AND THERE WAS NO ANY CONCRETE EVIDENCE TO SUPPORT THE DECLARATION MADE. LD. AR SUBMITTED THAT THE ASSESSEE HAS SHOWN IT AS AN INCOME IN THE RETURN OF INCOME FILED IN ITR - VI AND THE DECLARATIO N WAS MADE UNDER COERCION DURING THE SEARCH AND IT WAS RETRACTED BY THE ASSESSEE LATER ON . IT WAS ALSO SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT DURING THE COURSE OF SEARCH, THERE WAS NO ANY INCRIMINATING MATERIAL FOUND, THEREFORE, THE ADDITIONS MADE BY THE AO DESERVES TO BE DELETED. 5 7 . ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF AUTHORITIES BELOW AND REITERATED THE WRITTEN SYNOPSIS SUBMITTED BY HIM IN THIS REGARD AND HE FURTHER SUBMITTED THAT THE AR OF THE ASSESSEE HAS HIMSELF VOLUNTARILY BY WAY O F A LETTER DATED 27.11.2014 IN WHICH HE HAS CLEARLY ACCEPTED THAT TOTAL SURRENDERS APPROXIMATELY RS.5 CRORES AND HAS GIVEN BREAKUP ALSO, THEREFORE, THE CONTENTION RAISED BY THE LD. AR OF THE ASSESSEE IS NOT TENABLE IN THE EYES OF LAW. IT (SS) A NO S . 69 - 75/CTK/2019 101 5 8 . AFTER HEARING B OTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD ALONG WITH THE ORDERS OF AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED BY BOTH THE PARTIES, WE FOUND THAT I N ALL THE THREE APPEALS UNDER CONSIDERATION, THE ASSESSEE HAS RAISED A LEGAL GR OUND THAT THERE WAS NO PROPER GRANT OF APPROVAL U/S.153D OF THE ACT. THIS ISSUE HAS ALREADY BEEN DECIDED BY US IN THE PARA NO.16 OF THIS ORDER, THEREFORE, SAKE OF CONVENIENCE AND BREVITY, WE DO NOT WANT TO REPEAT THE SAME AND THE OBSERVATIONS MADE IN THE A BOVE PARA SHALL APPLY TO THIS MUTATIS MUTANDIS , TO THIS GROUND RAISED IN THIS APPEAL UNDER CONSIDERATION ALSO. 59 . FURTHER, ON MERITS OF THE CASE, IN RESPECT OF SURRENDER OF RS.5 CRORES APPROX., WE OBSERVE FROM THE RETURN FILED BY THE ASSESSEE IN WHICH HE HAS HIMSELF OFFERED IT AS AN INCOME UNDER THE HEAD BUSINESS INCOME WHICH IS CLEAR FROM THE SL.NO.24 OF THE RETURN FILED IN PAGE NO.32 OF THE PAPER BOOK BUT WE ALSO NOTED THAT HE HAS TAKEN THE FIGURE OF RS.5, 05 , 00 ,000/ - BUT THE ACTUAL SURRENDER AMOUNT IS R S.5, 00, 50,000/ - . WE ALSO PERUSED THE LETTER WRITTEN BY THE ASSESSEE TO THE DY.DIT (INV.), WHEREIN HE HAS ACCEPTED FOR THE SEARCH AND SEIZURE PROCEEDINGS AND BREAKUP OF THE UNACCOUNTED INCOME DISCLOSED BY HIM BY A LETTER DATED 27.11.2014 WHICH ARE INCLUDED IN THE WRITTEN SUBMISSION OF THE CITDR, WHICH READS AS UNDER : - IT (SS) A NO S . 69 - 75/CTK/2019 102 BREAK - UP OF UNACCOUNTED INCOME SI NO. NAME OF THE COMPANY NATURE OF UNACCOUNTED INCOME/EXPENDITURE FINANCIAL YEAR AMOUNT THE LIBERTY MARINE SYNDICATE PVT. LTD. TRANSPORTATION CHARGES 2013 - 1 4 75,00,000/ - 2 THE LIBERTY MARINE SYNDICATE PVT. LTD. COMMODITY PROFIT 2014 - 15 4,25,50,000/ - TOTAL 5,00,50,000/ - 60. FROM THE ABOVE TABLE, IT IS CLEAR THAT THE ASSESSEE HAS DISCLOSED RS.5,00,50,000/ - FOR THE TWO ASSESSMENT YEARS. IN THE ASSESSMENT YEAR 2013 - 2014 UNDER THE HEAD TRANSPORTATION CHARGES OF RS.75 LAKHS AND IN THE ASSESSMENT YEAR 2015 - 2016, THE COMMODITY PROFIT OF RS.4,25,50,000/ - . FROM THE BODY OF THE LETTER WRITTEN BY THE ASSESSEE IN WHICH HE HAS CLEARLY ACCEPTED AS UNDER : - NOW ON THE BASIS OF VARIOUS SEIZED BOOKS OF ACCOUNTS/ DOCUMENTS/ PAPERS/INVENTORIES OF ASSETS & OTHERS, WE HAVE TRIED TO CONCLUDE THE ENTRIES MADE IN THAT SEIZED DOCUMENTS, WHERE MOST OF THE DOCUMENTS ARE ALREADY RECORDED IN REGULAR BOOKS OF ACCOUNT AND ARE IN ORDER. HOWEVER ONLY IN ORDER TO BUY PEACE IN MIND AND TO AVOID THE UNNECESSARY LITIGATION WITH THE TAXATION AUTHORITIES, I MYSELF INCLUDING ALL ASSOCIATED CONCERNS, COMPANIES/ FIRMS ETC. IN WHICH I HAVE DIRECT OR INDIRECT INTEREST, VOLUNTARILY AND IN GOOD FAITH DISCLOSE A SUM OF RS.5.00 CRORES (RUPEES FIVE CRORES) FOR THE CURRENT FY 2014 - 15 COVERING ALL ASPECTS OF TAXATION MATTERS INCLUDING THE REGULAR INCOME FOR ASSESSMENT YEARS COVERED UNDER SEARCH. THE DISCLOSED INCOME OF RS.5.00 CRORES IN THE CURRENT FY 2014 - 15 IS RELEVANT TO ALL THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH AND LATER ON AND THIS DISCLOSED AMOUNT OF RS.5.00 CRORES INCLUDES/COVERS ALL THE FAMILY MEMBERS/ ASSOCIATED CONCERNS/COMPANIES/FIRMS/OTHER IN THE GROUP AND ALSO INCLUDES ALL THE ASSE SSMENT YEARS COVERED UNDER SEARCH. AFTER NECESSARY RECONCILIATION/ADJUSTMENTS, WORKINGS IN DETAILS ON THE BASIS OF SEIZED BOOKS OF ACCOUNTS/DOCUMENTS/PAPERS/INVENTORIES OF THE ASSETS INCLUDING MOVABLE & IMMOVABLE PROPERTIES, WE SHALL FILE THE INCOME TAX R ETURNS OF ALL THE GROUP PERSONS CONCERNED WITH US AS ALREADY STATED. WE HOPE THAT WE SHALL NOT BE PENALIZED IN ANY MANNER FOR THE DISCLOSURE OF INCOME MADE/GIVING VARIOUS EXPLANATION/STATEMENTS WITH UTMOST COOPERATIVE ATTITUDE WITH THE INCOME TAX DEPARTMEN T DURING THE COURSE OF SEARCH PROCEEDINGS. APART FROM REGULAR BUSINESS INCOME M/S. LIBERTY MARINE SYNDICATE PVT LTD HAS EARNED INCOME FROM PAPER TRADING OF PRICING DIFFERENTIATION OF IT (SS) A NO S . 69 - 75/CTK/2019 103 COMMODITIES IN SIMILAR ITEMS OF ITS REGULAR BUSINESS/CURRENCY TRADING FO R WHICH PAYMENT HAS NOT BEEN RECEIVED. HENCE THESE ARE NOT REFLECTING IN ITS BOOKS OF ACCOUNT. 61 . ON PERUSAL OF THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS ACCEPTED THAT THE TRADING PRICING DIFFERENCE OF COMMODITIES IN A SIMILAR ITEMS OF ITS REGULAR BUS INESS/CURRENCY TRADING FOR WHICH PAYMENT HAS NOT BEEN RECEIVED AND ACCORDINGLY HE HAS ACCEPTED THAT COMMODITY PROFIT OF RS.4,25,50,000/ - IS NOT REFLECTING IN THE BOOKS OF ACCOUNTS AND HE HIMSELF HAS ACCEPTED AS A BUSINESS PROFIT IN THE RETURN OF INCOME TO WHICH THE AO HAS ADDED INTO THE TOTAL INCOME OF THE ASSESSEE, THEREFORE, THE ASSESSEE CANNOT ESCAPE HIMSELF BY TAKING THE GROUND BEFORE US THAT IT WAS DISCLOSED UNDER THE COERCION, WHICH CANNOT BE ACCEPTED. WE ALSO OBSERVE THAT THE RETRACTION WAS MADE BY T HE ASSESSEE VERY LATE BEFORE THE REVENUE AUTHORITIES. THIS IS THE PRACTICE OF THE ASSESSEE THAT THE INCOME IS NOT RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED BY HIM. THE ASSESSEE HIMSELF STATED T HAT THE COMMODITY PROFIT HAS NOT ENTERED INTO THE REGULAR BO OKS WHICH ITSELF IS AN INCRIMINATING MATERIAL , THEREFORE, ITSELF IS AN UNDISCLOSED INCOME AND UNDISCLOSED INCOME SHALL BE TAXED IN THE YEARS IN WHICH THE ASSESSEE HAS ACCEPTED. WE ALSO OBSERVE THAT THE DISCLOSURE MADE BY THE ASSESSEE RELATING TO TWO ASSESS MENT YEARS, HOWEVER, THE AO HAS CONSIDERED THE TOTAL IN THE ASSESSMENT YEAR 201 5 - 201 6 AND THE ASSESSEE HAS ALSO OFFERED IT AS AN INCOME FOR THE ASSESSMENT YEAR 201 5 - 201 6 . IT IS A SETTLED PROPOSITION IT (SS) A NO S . 69 - 75/CTK/2019 104 OF LAW THAT THE INCOME SHOULD BE TAXED IN THE RIGHT ASSES SMENT YEAR. THE SECTIONS 3,4 & 5 OF THE INCOME TAX ACT ARE VERY MUCH RELEVANT FOR DETERMINING THE TOTAL INCOME FOR THE PARTICULAR YEAR. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FOUND THAT THE AO HAS MISSED THE BUS. IT IS CLEAR FR OM THE DISCLOSURE LETTER THAT RS.75 LAKHS HAS BEEN DISCLOSED IN THE ASSESSMENT YEAR 2014 - 2015, THEREFORE, IT SHOULD BE TAXED BY THE REVENUE AUTHORITIES IN THE ASSESSMENT YEAR 2014 - 2015, HOWEVER, THE ENTIRE AMOUNT HAS BEEN TAXED IN THE ASSESSMENT YEAR 2015 - 2016. AS PER OUR CONSIDERED VIEW THE AO SHOULD MAKE ADDITION FOR THE AMOUNT OF RS.4,25,50,000/ - WHICH RELATES TO THE ASSESSMENT YEAR 201 5 - 201 6 , WHICH IS AN EARNING FROM THE COMMODITY PROFIT AS PER SURRENDER PETITION . THUS, THE ASSESSEE GETS RELIEF OF RS.75 LAKHS FOR WRONGLY TAXED IN THE ASSESSMENT YEAR 2015 - 2016. ACCORDINGLY, THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 62 . THUS, IT(SS)A NOS.73 - 75/CTK/2019 ARE PARTLY ALLOWED. 6 3 . IN THE RESULT, THE APPEAL S OF THE ASSESSEE I.E. IT(SS)A NOS.69 - 71/CTK/2019 ARE ALLOWED; IT(SS)A NO.72/CTK/2019 IS PARTLY ALLOWED AND IT(SS)A NOS.73 - 75/CTK/2019 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 14 / 1 2 / 20 20 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 14 /1 2 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. IT (SS) A NO S . 69 - 75/CTK/2019 105 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - THE LIBERTY M ARINE SY NDICATE (P) LTD., PLOT NO.22, MADHUBAN MARKET, PARADEEP, DISTRICT - JAGATSINGHPUR - 754142 2. / THE RESPONDENT - ACIT, CENTRAL CIRCLE, CUTTACK 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//
Other Referred Cases
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Laws Referred To
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1:1 Consultation on Tax Litigation
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1:1 Consultation on Business Valuations
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1:1 Consultation on Tax Litigation
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Initial LLP Agreement
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HUF Deed
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