The Deputy Commr. of Income Tax, Cen. Circle-1, RAJKOT-GUJARAT V. M/s Siyaram Metals Pvt. Ltd., JAMNAGAR

ITSSA 91/RJT/2018

AI Insights

The case involves the Deputy Commissioner of Income Tax, Central Circle-1, Rajkot (Appellant) vs. M/s Siyaram Metals Pvt. Ltd. (Respondent) concerning the assessment year 2009-10. The primary issue was the deletion of an addition of Rs. 24,68,25,000 under section 68 of the Income Tax Act, 1961, which was initially made by the Assessing Officer (AO) on account of unexplained capital introduction. The AO alleged that the share capital and premium received by the assessee were from bogus transactions. However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted this addition, leading to the revenue's appeal. The tribunal upheld the CIT(A)'s decision, emphasizing that no incriminating material was found during the search that could justify the additions made by the AO.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302860 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2018
• Other Referred Cases: CIT vs. Saumya Construction Pvt. Ltd., PCIT vs. Sunrise Finlease Pvt. Limited, Vijay Kumar D. Agarwal vs. DCIT, CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd, Commissioner of Income Tax-7 vs. RRJ Securities Ltd, Taraben Ballewbhai Patel vs. CIT, Anishaben R. Agarwal vs. CIT, Kalpen K. Doshi vs. CIT, Mukesh Ramchandra Patel vs. CIT, Virendra Mahasukhbhai Thaker vs. CIT, Jayaben Atal Sorathia vs. CIT, B. Kishore Kumar vs. Dy. CIT, Jai Steel (India) vs. Assistant Commissioner of Income Tax, Abhisar Buildwell Pvt. Ltd. vs. PCIT, Central-3, Saumya Construction Pvt. Ltd. vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRISHRAMDEEPSINHA; FORTHERESPONDENT; THECONTROVERSYINVOLVEDINTHE
• Assessee Lawyers: SHRISAGARSHAH

Judgement Text

INTHEINCOMETAXAPPELLATETRIBUNAL RAJKOTBENCH,RAJKOT [CONDUCTEDTHROUGHVIRTUALCOURT] Before:ShriWaseemAhmed,AccountantMember AndShriSiddharthaNautiyal,JudicialMember TheDy.CIT, CentralCircle-1, Rajkot (Appellant) Vs M/sSiyaramMetalsPvt. Ltd.B-18,ShankarTekari Udhyognagar,Jamngar PAN:AAECS2779P (Respondent) Revenueby:ShriShramdeepSinha,CIT-D.R Assesseeby:ShriSagarShah,A.R. Dateofhearing:26-07-2023 Dateofpronouncement:20-10-2023 आदेश/ORDER PER:WASEEMAHMED,ACCOUNTANTMEMBER:- Thisassessee’sappealforA.Y.2009-10,arisesfromorderofthe CIT(A)-11,Ahmedabaddated23-03-2018,intheproceedingsundersection 250oftheIncomeTaxAct,1961,inshort“theAct”. IT(SS)ANo.91/Rjt/2018 AssessmentYear2009-10 I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 2 2.Theonlyeffectiveissueraisedbytherevenueisthatthelearned CIT(A)erredindeletingtheadditionmadebytheAOforRs.24,68,25,000/- undersection68oftheActonaccountofunexplainedcapitalintroduction. 3.Thefactsinbriefarethattheassessee,aprivatelimitedcompany,is engagedinthebusinessofmanufacturingrecycledmetalscrap.Duringthe yearunderconsiderationi.e.A.Y.2009-10,theassesseecompanyissued 1,64,550newsharesatRs.1500/-persharehavingafacevalueofRs.10 eachandpremiumofRs.1490/-eachwhichweresubscribedbythe26 differentcompaniesbasedindifferentcitiesofIndia.Thus,thebooksof accountoftheassesseewerecreditedbytheamountofRs.24,68,25,000/- onlyrepresentingsharecapital.Duringtheregularassessmentproceedings undersection143(3)oftheAct,aquestionwasraisedbythethenAOto explainthesourcesofimpugnedcreditsinthebankwhichwasduly compliedwithbytheassesseebyfurnishingnecessarydetails.Accordingly, theAOcompletedtheassessmentundersection143(3)oftheActvideorder dated27 th October2011whereintheAOacceptedthegenuinenessofcredits representingsharecapitalandpremium. 3.1Subsequently,therewassearchproceedingundersection132ofthe Actdated23 rd August2012carriedatthepremisesoftheassessee.During thesearchproceeding,theoriginalsharecertificateformsalongwiththeir counterfoilswerefoundlyingwiththeassesseeandthesamewasseized whichweremarkedasAnnexureA-23,A-24,andA-27ofthesearch materials.Theseizureofsharecertificatesrevealedthatoriginalcopiesof thesharecertificateswerenotissuedtothesharesubscribersthoughthe I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 3 samewereissued4yearsago.Thesearchteamfurtherfoundthatallthe sharesissuedto26differentpartiesatapremiumofRs.1490/-pershare weresubsequentlyboughtbackbySmt.MadhubenRMaheshwariatthe facevalueofRs.10onlywhohappenedtobeoneofthepromotersandthe wifeofdirectorofassesseecompanynamelyShriRamgopalMaheshwari. 3.2AspertheAO,therewasnojustificationandreasonablenesswhy suchphysicalsharescertificateswerestilllyingwiththeassesseealongwith theircounterfoils,specially,whentheinvestorswhomadesuchahuge investmentwereneitherthefamilymembersofthepromotersnorknownto them.Likewise,theassesseecompanyalsoneitherbotheredtoissuethe certificatenortheinvestorshaveshownanyconcerntocollectsuchshares certificateevenafterpassingof4years.Thus,theassessee’scontentionthat merephysicalsharescertificatenotissuedtotheinvestorswillnotmakethe allotmentofsharesasbogusisnotacceptableinthegivenfactsand circumstances,specially,whentheassesseehasnojustificationfornot issuingthecertificatestotheconcernedinvestors.Similarly,thecontention oftheassesseethatitsdirectorswerenotqualifiedenough,andthe documents(SharesCertificates)wereatthepremisesofconsultantisalso notacceptablebecausethisfactwillnotabsolvetheassesseeofits obligation.Itistruethatissueofphysicalcopyofsharecertificatetothe investorisprerogativeofCompaniesAct1956or2013andnotundertheIT Act,butthefactthatinvestorsaccountswerecreditedwithsuchahuge amountintheformofsharecapitalandpremiumandbutneitherthe assesseenortheso-calledinvestorstriedtocomplywithstatutory requirements. I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 4 3.3TheAOalsofoundthattheassesseecompanyissuedsharesatahuge premiumbutthesamewasnotsupportedbyanyperformancestatisticsof thecompany.Assuch,theprofitabilityoftheassesseepluggedafter issuanceofsharesatpremium.Thecontentionthattheloanparties,after lookingattheprofitabilityoftheassesseeconvertedtheirloantoequity shareisalsoself-serving.Assuchtherewasnojustificationforcharging suchahugepremium. 3.4TheAOalsofoundthattherewereappointedvariouscommissions undersection131(1)(d)oftheActinthenameoftheinvestingcompaniesto findoutthegenuinenessoftheamountcreditedinthebooksoftheassessee inguiseofsharecapitalandpremium.Asperthecommissionreport submittedbythedifferentDDIT(Inv.),investorcompanieswereeithernot foundorpapercompaniesornotinapositiontomakesuchhuge investments.Someofthemacceptedthattheyenteredthetransactionjustto earncommissionincome,andsomestatedtheydidnotknowtheassessee companyoritsdirectorormadeanyinvestmentinitssharesbutenteredto intotransactionforissuingchequesonadviceofcharteredaccountant.The detailedfindingsinthisregardwereplacedonpages20to46ofthe assessmentorder. 3.5Thus,theAOinviewoftheaboveheldthatamountcreditedinthe booksoftheassesseeintheguiseofsharecapitalandpremiumisnothing butunexplainedincomeoftheassesseewhichwerebroughtinthebooks withhelpofentryproviders/papercompanies.TheAOinholdingsoreferred I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 5 severalcaselaws,modusoperandiofpapercompaniesinconvertingthe blackmoneyintheguiseofthesharecapitalandunsecuredloanetc.Hence theAOtreatedthesumcreditedinthebooksforRs.24,68,25,000/-inthe formofsharecapitalandpremiumasunexplainedcashcreditundersection 68oftheActandaddedtothetotalincomeoftheassessee. 4.TheaggrievedassesseepreferredanappealbeforethelearnedCIT(A). TheassesseebeforethelearnedCIT(A)raisedspecificgroundregarding initiationofproceedingundersection153AoftheActinabsenceof incriminatingmaterialfoundduringthesearchproceedings.Theassessee submittedthattheregularassessmentundersection143(3)oftheActhas alreadybeencompletedbeforethedateofsearchproceeding.Duringregular assessmentundersection143(3)oftheAct,specificquestionswereraised bytheAOregardingcreditofimpugnedsharecapitalandpremiumforRs. Rs.24,68,25,000/-whichweredulyexplainedandthereaftertheAO acceptedthegenuinenessofthecredit.Therefore,theyearunder considerationisunabatedassessmentforthepurposeofproceedingunder section153AoftheAct.Theunabatedassessmentcanonlybedisturbedin caseanyincriminatingmaterialisfoundinthesearch.Theincriminating materialinthecontextoftheprovisionoftheActcanbeunderstoodas “booksofaccount,otherdocument,foundinthecourseofsearchwhich werenotproducedinthecourseoforiginal/regularassessment,orthe undisclosedincomeorpropertiesdiscoveredinthecourseofsearch”.During searchproceedingsatitspremisesnomaterialwasfound,whichcanbe referredtoasincriminatinginnature,nordidthedirectororpromoterin theirstatementadmitdisclosinganyincome. I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 6 4.1TheAOintheassessmentorderreferredtothesharecertificatefound andseizedduringthesearchproceedingandbasedonsameheldtheissueof sharesasbogus.Theissueofsharesonpremiumandamountcreditedfrom suchissuecannotbeheldbogusmerelyonthebasisthatcopyphysicalshare certificateswerenottornfromregisterofphysicalshare.Theassessee furthersubmittedtheissueofphysicalsharecertificatetobegiventothe shareholderisprerogativeofcompaniesActandthereisnoprovisioneither undercompaniesAct1956or2013whichpenalizestheassesseeifphysical sharecertificatesnottornoutfromtheregisterfordispatchtothe shareholder.Therefore,noadverseinferencecanbemadeundertheIncome TaxActbasedonphysicalsharecertificatelyingintheofficeofthedirector/ consultantandmerelyforthatreasonitcannotbesaidthatthesharesissued werebogus.Assuch,allthecompliancesofissueofsharesatpremiumwere dulycompliedwith,theamountswerereceivedthroughbankingchannel reflectedinthebankstatementofshareholdersandassessee. 4.2ThelearnedCIT(A)videletterdated03-02-2017soughtremand reportfromtheAOregardingtheincriminatingmaterialfoundduringsearch proceedinginrelationtocreditofsharecapital&premium.TheAOinthe remandreportsubmittedthatthephrase“incriminatingmaterial”hasnot beendefinedintheActhoweverconsideringthelanguageusedinthe provisionofsection153A/153CoftheActandviewstakeninthevarious judicialpronouncementtheincriminatingmaterialcanbedefinedas documents/booksofaccount/factsandinformationemergedduringsearch whichwerenotavailableatthetimeoforiginalassessment.Inthecaseof I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 7 thepresentassessee,theoriginalsharecertificateswhichshouldhavebeen inthepossessionofshareholderswerefoundlyingwiththeassessee.The factthatthephysicalsharecertificateswerelyingwiththeassesseealone cannotbetermedasincriminatingmaterial,butthisfactcoupledwiththe otherfactsthatemergedduringsearchmakesitincriminatingmaterial.As such,theshareswereissuedto26differentcompaniesduringFY2008-09at apremiumofRs.1490persharewhichweretransferredtothewifeofthe managingdirector,whoalsohappenstobeoneofthedirectorsataface valueofRs.10/-onlyinthenextfinancialyeari.e.2009-10.Thesearch proceedingwascarriedoutintheyear2013i.e.after4yearsofissueof sharesatahugepremiumto26companiesandafter3yearsfromthe transferofsuchsharestothewifeofmanagingdirectoratafacevalueonly. Butthesharescertificateswerestilllyingwiththeassesseenoteventorn awayfromtheregisterofphysicalsharewhichmakesitincriminating.The factthatsharesweresubsequentlytransferredtothewifeofMDatface valueonlywithouthandingoverthephysicalsharecertificateswhichwere availablebeforetheAOatthetimeoforiginalassessment.Therefore,the abovefactemergedduringthesearchproceedingisincriminatingmaterial basedonwhichtheproceedingsundersection153AoftheActwererightly initiated.Assuch,theadditionwasrightlymadebasedonnewfacts emergedduringthesearchandbasedonthefactemergedinthepostsearch inquirymadethroughappointingvariouscommissionsundersection 131(1)(d)oftheAct. 4.3However,thelearnedCIT(A)afterconsideringthefactsintotality rejectedtheviewoftheAOandconcurredwithsubmissionoftheassessee I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 8 thatnoincriminatingmaterialinrelationtothecreditofsharecapitalwas foundduringsearch.TherelevantfindingofthelearnedCIT(A),inthis regardreadsasunder: “5.1Thefactsofthecaseasmentionedintheassessmentorder&remandreport submissionsoftheappellantrejoinderfiledbytheappellantandrelevantcase lawshavebeencarefullyconsideredinthiscase,theappellantfiledoriginal returnforAY2009-10on29.9.2009showingincomeofRs1,41,35,540/-Thecase wasselectedforscrutinybyissuingnoticeu/s.143(2)oftheActandthe assessmentwasfinalizedbytheAddCITRange-2Jamnagarvideorderdated27 10.2011Thesearchus132oftheActwasconductedatthepremisesofthe appellanton23/08/2012Astheassessmentu/s143(3)wasalreadycompleted beforethedateofsearchinthiscase,theassessmentfortheyearunder considerationwasnotabatedaspertheprovisionsoftheAct.Theappellant contendedthatduringthecourseofsearch,noincriminatingmaterialwasfound pertainingtothisassessmentyear.Therefore,additionsmadebytheAOarenot justifiedTheadditionsofRs24.68croreswasmadeonthebasisofshare certificatesinoriginalfoundatthepremisesoftheappellantandtheAO consideredthefindingofthesharecertificatesinoriginalatthepremisesofthe appellantasincriminatinginnatureTheAOalsostatedintheremandreportthat notonlydocumentsfoundduringthecourseofsearchbutthefindingofpost searchenquiriescanalsobeconsideredwhilemakingassessmentu/s152Aofthe Act.TheAOalsocitedseveralcaselawswhichhaveboonclearlydistinguished bytheappellantinitsrejoinderNowtheissueinthiscaseIswhetherthefinding oforiginalsharecertificatesatthepromisesoftheappellantonthedateofsearch isofincriminatingnatureornotThereisnodisputeaboutthefactthattheshares wereissuedalongwithpremiumto26personsinthefinancialyearpertainingto Assessmentyearunderconsideration.Theissueofshareandreceiptofshare capitalincludingpremiumhavebeenshownintheregularbooksofaccountsof theappellant.TheissuewasexaminedthoroughlybytheAOi.e.TheCIT, Jamnagarwhilemakingtheassessmentu/s143(3)oftheActandhehasenhis clearfindingonthisissueasreproducedbelow. “10.Onverificationofassessee'saccountitisseenthatassesseehas issuedadditionalsharesofRs.16,54,400.00.Itisalsoseenthatthereis increaseinthesharepremiumaccountamountingtoRs.24,68,25,000.00. Assesseewasaskedtoprovethesame.Insupportoftheaboveassessee hasthatduringtheyearcompanyhasallotted165440.00equityshareof Rs.10.00atpremiumofRs.1490.00each.Assesseehasfurthersubmitted detailedlistoftheallottesalongwiththesupportingevidenceslikePAN Nooftheallottes,copiesofthebankstatement,copiesofthereturnfilled etc.Fromthedetailssubmitteditisseemthatallthealloteesare corporateinvestorsandareassessedtotax.Theyhavemadethepayment I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 9 aftergoingthroughproperprotocolunderthecompaniesAct,1956.All thedetailshasbeenverifiedandconsideredforassessment." Thusitisclearlyestablishedthattheissueofsharepremiumandreceiptofshare capitalincludingpremiumhasalreadybeendisclosedintheregularbooksof accountsoftheappellant.Merefindingoforiginalsharecertificatesatthe premisesoftheassesseeduringthecourseofsearchwhicharedisclosedinthe booksofaccountscannotbeconsideredasofincriminatingnature.Theappellant hasalreadyinformedtheRegistrarofCompaniesinForm2abouttheallotment ofsharesandallnecessaryentrieshavebeenmadeintheregularbooksof accounts.Thereceiptofsharecapitalwiththepremiumwasinthebooksof accountsformorethan3yearsbeforethesearchwastakenplace.Therefore, thereisnodoubtaboutthedisclosureofthisamountintheregularbooksof accountsoftheappellantcompany.Duringthecourseofsearchatthepremisesof theappellantanditsdirector,nodocumentwasfound,whichcontainanydetail forpaymentofcashinlieuofchequesfortheinvestmentinsharesbytheinvestor companies.Itprovesthatnoincriminatingmaterialwasfoundduringthecourse ofsearchrelatedtothisassessmentyear.Thetransactionswhichhavealready reflectedinregularbooksofaccountscannotbeconsideredasincriminatingin nature.Moreover,thesetransactionswerethoroughlyexaminedbyasuperior officerthantheAOindetailandveryspecificfindingshavebeengiven,as reproducedabove.Therefore,itisheldthatthereisnoincriminatingdocument foundduringthecourseofsearchonthebasisofwhichadditionsweremadeby theA.O.Whennoincriminatingmaterialsisfoundduringthecourseofsearch, additionsmadebytheA.O.arenotfoundjustifiedkeepinginviewtheseveral caselawsascitedbytheappellant.TheHon’bleGujaratHighCourtinthecase ofCITvs.SaumyaConstructionPvt.Ltd.(TaxappealNo.24of2016)81 taxman.com292dated14 th March,2016,heldasunder: 15.Onaplainreadingofsection1534oftheAct,itisevidentthatthe triggerpointforexerciseofpowersthereunderasasearchundersection 132orarequisitionundersection132AoftheAct.Onceasearchor requisitionismade,amandateacastupontheAssessingOfficertoissue noticeundersection1534oftheActtotheperson,requiringhimto furnishthereturnofincomeinrespectofeachassessmentyearfalling withinsixassessmentyearsimmediatelyprecedingtheassessmentyear relevanttothepreviousyearinwhichsuchsearchisconductedor requisitionismadeandassessorreassessthesame.Sincetheassessment undersection1534oftheActislinkedwithsearchandrequisitionunder sections132and132AoftheAct,itisevidentthattheobjectofthesection istobringtotaxtheundisclosedincomewhichisfoundduringthecourse oforpursuanttothesearchorrequisition.However,insteadoftheearlier regimeofblockassessmentwhereby,itwasonlytheundisclosedincomeof theblockperiodthatwasassessedsection153AoftheActseeksto I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 10 assesseethetotalincomefortheassessmentyearwhichisclearfromthe firstprovisotheretowhichprovidesthattheAssessingOfficershallassess orreassessthetotalincomeinrespectofeachassessmentyearfalling withinsuchsixassessmentyears.Thesecondprovisomakestheintention ofthelegislatureclearasthesameprovidesthatassessmentor reassessment,ifany,relatingtothesixassessmentyearsreferredtointhe sub-sectionpendingonthedateofinitiationofsearchundersection132 orrequisitionundersection1324,asthecasemaybe,shallabateSub- section(2)ofsection153AoftheActprovidesthatifanyproceedingor anyorderofassessmentorreassessmentmadeundersub-section(1)is annulledinappealoranyotherlegalprovision,thentheassessmentor reassessmentrelatingtoanyassessmentyearwhichhadabatedunderthe secondprovisowouldstandrevivedTheprovisotheretosaysthatsuch revivalshallceasetohaveeffectifsuchorderofannulmentissetaside. Thus,anyproceedingofassessmentorreassessmentfallingwithinthesix assessmentyearspriortothesearchorrequisitionstandsabatedandthe totalincomeoftheassesseeisrequiredtobedeterminedundersection 1534oftheAct.Similarly,sub-section(2)providesforrevivalofany assessmentorreassessmentwhichstoodabated,ifanyproceedingorany orderofassessmentorreassessmentmadeundersection153AoftheAct asannulledinappealoranyotherproceeding. 16.Section153Abearstheheading"Assessmentincaseofsearchor requisitionawellsettledasheldbytheSupremeCourtinacatenaof decisionsthattheheadingofthesectioncanberegardedasakeytothe interpretationoftheoperativeportionofthesectionandifthereisno ambiguityinthelanguageorifitisplainandclear,thentheheadingused inthesectionstrengthensthatmeaning.Fromtheheadingofsection153, theintentionofthelegislatureisclearviz.toprovideforassessmentin caseofsearchandrequisition.Whentheverypurposeoftheprovisionis tomakeAssessmentincaseofsearchorrequisition,itgoeswithoutsaying thattheassessmenthastohaverelationtothesearchorrequisition.In otherwords,theassessmentshouldbeconnectedwithsomethingfound duringthesearchorrequisition,viz.,incriminatingmaterialwhichreveals undisclosedincome.Thus,whileinviewofthemandateofsub-section(1) ofsection153AoftheAct,ineverycasewherethereisasearchor requisition,theAssessingOfficerisobligedtoissuenoticetosuchperson tofurnishreturnsofincomeforthesixyearsprecedingtheassessment yearrelevanttothepreviousyearinwhichthesearchisconductedor requisitionismade,anyadditionordisallowancecanbemadeonlyonthe basisofmaterialcollectedduringthesearchorrequisition.Incaseno incriminatingmaterialisfound,asheldbytheRajasthanHighCourtin thecaseofJaiSteel(India)(supra),theearlierassessmentwouldhaveto bereiterated.Incasewherependingassessmentshaveabated,the AssessingOfficercanpassassessmentordersforeachofthesixyears I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 11 determiningthetotalincomeoftheassesseewhichwouldincludeincome declaredinthereturns,ifany,furnishedbytheassesseeaswellas undisclosedincome,ifany,unearthedduringthesearchorrequisitionIn casewhereapendingreassessmentundersection147oftheActhas abated,needlesstostatethatthescopeandambitoftheassessmentwould includeanyorderwhichtheAssessingOfficercouldhavepassedunder section147oftheActaswellasundersection153AoftheAct. 17.Inthefactsofthepresentcase,asearchcametobeconductedon 07.10.2009andthenoticewasissuedtotheassesseeundersection153A oftheActforassessmentyear2006-07on04.08.2010.Inresponsetothe notice,theassesseefiledreturnofincomeon18.11.2010.Intermsof section1538,theassessmentwasrequiredtobecompletedwithinaperiod oftwoyearsfromtheendofthefinancialyearinwhichthesearchcameto becarriedout,namely,onorbefore31stMarch,2012.Here,insofaras theimpugnedadditionisconcerned,thenoticeinrespectthereofcameto beissuedon19.12.2011seekinganexplanationfromtheassessee.The assesseegaveitsresponsebyreplydated21.12.2011callinguponthe AssessingOfficertoprovidecopiesofstatementsrecordedonoathofShri RohitP.ModiandSmt.PareshabenK.Modiduringthesearchaswellas thecopiesofthedocumentsuponwhichthedepartmentplacedreliance forthepurposeofmakingtheproposedadditionaswellasthecopyofthe explanationgivenbyShriRohitP.ModiandSmt.PareshabenK.Modi regardingtheon-moneyreceived,copiesoftheassessmentordersincase ofsaidpersonsandalsorequestedtheAssessingOfficertopermithimto cross-examinethesaidpersons.TheAssessingOfficerissuedsummonsto thesaidpersons,however,theywereoutofstationanditwasnotknown astowhentheywouldreturn.Inthisbackdrop,withoutaffordingany opportunitytotheassesseetocross-examinethesaidpersons,the AssessingOfficermadetheadditioninquestion. 18Inthiscase,itisnotthecaseoftheappellantthatanyincriminating materialinrespectoftheassessmentyearunderconsiderationwasfound duringthecourseofsearch.Attherelevanttimewhenthenoticecameto beissuedundersection153AoftheAct,theassesseefileditsreturnof income.Muchlater,atthefagendoftheperiodwithinwhichtheorder undersection153AoftheActwastobemade,inotherwords,whenthe limitforframingtheassessmentasprovidedundersection153wasabout toexpire,thenoticehasbeenissuedinthepresentcaseseekingtomake theproposedadditionofRs.11,05,51,000/-onthebasisofthematerial whichwasnotfoundduringthecourseofsearch,butonthebasisofa statementofanotherperson. Intheopinionofthiscourt,inacaselikethepresentone,wherean assessmenthasbeenframedearlierandnoassessmentorreassessment waspendingonthedateofinitiationofsearchundersection132or I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 12 makingofrequisitionundersection132Awhilecomputingthetotal incomeoftheassesseeundersection153AoftheActadditionsor disallowancescanbemadeonlyonthebasisoftheincriminatingmaterial foundduringthesearchorrequisition,inthepresentcaseitisanadmitted positionthatnoincriminatingmaterialwasfoundduringthecourseof search.however,itisonthebasisofsomematerialcollectedbythe Assessingtsubsequenttothesearch,thattheimpugnedadditionscameto bemade. 19.Onbehalfoftheappellant,ithasbeencontendedthatifany incriminatingmaterialisfound,notwithstandingthatinrelationtothe yearunderconsiderationnoincriminatingmaterialisfound,itwouldbe permissibletomakeadditionsanddisallowanceinrespectofallthesix assessmentyears.Intheopinionofthiscourtthesaidcontentiondoesnot meritacceptance,inasmuchas,theassessmentinrespectofeachofthesix assessmentyearsisaseparateanddistinctassessmentUndersection 153AoftheAct,anassessmenthastobemadeinrelationtothesearchor requisition,namely,inrelationtomaterialdisclosedduringthesearchor requisition.Ifinrelationtoanyassessmentyear,noincriminating materialafoundnoadditionordisallowancecanbemadeinrelationto thatassessmentwearnexerciseofpowersundersection1534oftheAct andtheearlierassessmentshallhavetobereiteratedinthisregard,this courtisincompleteagreementwiththeviewadoptedbytheRajasthan HighCourtinthecaseofJaiSteel(India),JochpurvAssistant CommissionerofIncomeTax(supra).Besides,asrightlypointedoutby thelearnedcounselfortherespondent,thecontroversyinvolvedinthe presentcasestandsconcludedbythedecisionofthiscourtinthecaseof CommissionerofIncome-tax-1v.JayabenatialSorathia(supra)whereinit hasbeenheldthatwhileitcannotbedisputedthatconsideringsection 153AoftheAct,theAssessingOfficercanreopenand/orassessthereturn withrespecttosixprecedingyears;however,theremustbesome incriminatingmaterialavailablewiththeAssessingOfficerwithrespectto thesaletransactionsintheparticularassessmentyear. 20.Fortheforegoingreasons,itisnotpossibletostatethattheimpugned orderpassedbytheTribunalsuffersfromanylegalinfirmitysoastogive risetoaquestionoflaw,muchless,asubstantialquestionoflaw, warrantinginterference. Theappeal,therefore,failsandis,accordingly,dismissed." ItisobservedthatincasebeforeHon'bleGujaratHighcourt,factsofthecase wereasunder: I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 13 "Duringthecourseofassessmentproceedings,itwasnoticedthatthe assesseehadpaidRs11,05,51,000/-tooneShriRohitModiinrespectof thelandsituatedatShilaj,TalukaDaskroi(knownasTapovanland) (whichwastransactedbyTheSandeshLtd.asconfirmingparty,M/s SaumyaConstructionPvt.LtdasthirdpartyandAryamanCo-operative HousingSocietyLtd.aspurchaserfromShriRohitP.Modiand PareshabenK.Modi)throughasaledeeddated01.06.2006.ShriRohit Modi,inhisassessment,admittedreceiptofRs.11,05,51,000/-ason- moneyreceivedincashinthetransactionofland.TheAssessingOfficer heldthattheon-moneyhasbeenpaidbytheassesseeinthetransaction forthepurchaseoflandfromShriRohitPModhiandPareshabenK. Modiandaccordingly,addedanamountof11,05,51,000/-tothetotal incomeoftheassesseeundersection68oftheActinrespectofthe unexplainedinvestmentforpurchaseofland......” TheHon’bleHighcourtatpara18ofitsorderhascategoricallyheldthat"itis anadmittedpositionhotnoincriminatingmaterialwasfoundduringthecourseof search,however,itisonthebasisofsomematerialcollectedbytheAssessing Officermuchsubsequenttothesearch,thattheimpugnedcometobemode. "ThereaftertheHon'bleCourthasheldthatundersection153A,anassessment hastobemadeinrelationtosearchorrequisition,namely,inrelationtomaterial disclosedduringsearchorrequisitionandifnoincriminatingmaterialisfound duringsearchfromappellant'spremises,noadditioncanbemadeonbasisof materialcollectedaftersearch.ThefactsofthecasebeforeHon'bleGujaratHigh courtaresimilarwiththefactsofappellant'scaseasentireadditionhasbeen basedupondocumentsfoundatthesearchofthirdpartyhencerelyinguponthe bindingdecisions,itisheldthattreatingexemptlongtermcapitalgainas undisclosedincomecannotbemadewhilepassingassessmentorderu/s153Aof theAct. TheHon'bleGujaratHighCourtinthecaseofPCITvsSunriseFinlease Pvt.Limited89taxmann.com1hasheldasunder: "Section1534oftheIncome-taxAct,1961SearchandseizureAssessment incaseof(Conditionprecedent)Assessmentyear2007-03Whetherwhere noincriminatingevidenceagainstassesseewasfoundduringcourseof searchsoastoattractprovisionsofsection153Aproceedings,no additionscouldbemadeonbasisofmaterialcollectedaftersearchHeld, yesWhethersincenoincriminatingevidenceagainstassesseewasfound orseizedduringcourseofsearchsoastoattractprovisionsofsection 153Aproceedings,noadditionscouldbemadeonbasisofstatementof directorofassesseecompanywhichwasrecorded" Itisobservedthatinabovecase,theTribunalhasrecordedafindingof facttotheeffectthatnoincriminatingmaterialhadbeenfoundduringthecourse I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 14 ofthesearchproceedingsandthatthestatementofthedirectorwhichisstatedto havebeenrecordedduringthecourseofsearchundersection131oftheAct,and whichformsthebasisfortheimpugnedaddition,wasrecordedmuchlateron 7.12.2009.TheHon'bleGujaratHighCourtfollowedthedecisionofSaumya ConstructionPvt.LimitedandheldthatitwasnotpermissiblefortheAssessing Officertomakeanyadditionundersection153AoftheActwhennoincriminating materialhadbeenfoundduringthecourseofthesearch. 5.2SimilarviewhasalsobeentakenbyHon'bleAhmedabadITATInthecaseof VijayKumarD.AgarwalvsDCIT82taxmann.com367.Hon'bleBombayHigh Courtinthecaseoftd.CIT(A)VsContinentalWarehousingCorporation(Nhava Sheva)Ltd[2015]58taxmann.com78(Bombay)andHon'bleDelhiHighCourtin caseofCommissionerofIncomeTax-7VisRRJSecuritiesLtd.(62taxmann.com 391isalsoobservedthatonsimilarissuesCIT(App)Ahmedabadhasalso decidedinfavourofAssesseeinfollowingcases: (i)CIT(A)11incaseofTarabenBallewbhaiPatelforAY.2006-07vide orderdated07/04/2014 (ii)CIT(A)-12incaseofAnishabenR.AgarwalforAY2008-09to2010-11vide orderdated16/08/2017 (iii)CIT(A)-12incaseofKalpenK.DoshiforA.V.2009-10to2012-13vide orderdated28/02/2017 [iv]CIT(A)-4incaseofMukeshRamchandraPatelforAY.2008-09videorder dated04/10/2016 (4)CIT(A)-13incaseofVirendraMahasukhbhaiThakerforAY2007-08to 2009-10orderdated19/09/2017 TheAO'scontentionthattheenquiriesmadeafterconclusionofthesearchcan alsobeconsideredwhilemakingassessmentu/s153Aisalsonotlegally acceptableAsperthecaselawsreproducedaboveadditionscanonlybemadeon thebasisofincriminatingmaterialfoundduringthecourseofsearchwhile makingassessmentus153AoftheAct.Theresultsofanyenquirybeforeorafter thesearchcannotbeconsideredwhilemakingassessmentu/s153AoftheAct. Relyinguponthebindingdecisionsasmentionedabove,additionsmade bytheAOwhicharenotbasedonanyincriminatingdocumentfoundduringthe courseofsearchattheappellant'spremisesaredeleted,asthesameisbeyondthe scopeofsection153AoftheAct.GroundNo.1&9areallowed.” I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 15 4.4BesidesabovethelearnedCIT(A)alsodeletedtheadditionmade undersection68oftheActonmeritandthedetailedfindinginthisregard areatpages71to91ofhisorderwhichcanbebrieflysummarizedinthe followingparagraph. 4.5Thelearnedwhiledeletingtheadditiononmeritheldthattheassessee hasprovidedsufficientdocumentaryevidencetoestablishidentity, genuineness,andcreditworthinessofthepartiesbeforetheAOduringthe originalassessmentaswellduringtheproceedingundersection153Aofthe Act.Consideringthefinancialsoftheassessee,theshareswereissuedata hugepremiumofRs.1490/-pershareagainstthebookvalueatRs.527/-per share.Assuch,thebasisforsharepremiumwaswelljustifiedandsame cannotbeareasonfortreatingthereceiptofsharecapitalandpremiumas bogustransaction. 4.6Thesharesthatweresubsequentlypurchasedbythewifeofthe managingdirectoralsocannotbethebasisfortreatingthetransactionas unexplained.Itisbecausethattheinvestingcompanieswereindependent entitieswhichenteredoutanindependenttransactionforthesaleoftheir holdingstoSmt.MahdhuMaheswariforwhichconsiderationwaspaid throughthebankingchannel.Duringthesearch,nodocumentwasfound whichwouldsuggestthatinvolvementofanyunaccountedcash.Further, Smt.MadhuMaheswariisassessedwiththesameAOandnoactionwas takenagainstherbytheAO.Therefore,noadditioncanbejustifiedbasedon thebuy-backofsharesbySmt.MadhuMaheshwari. I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 16 4.7TheAOreliedoncommissionreportundersection131(1)(d)ofthe Actcarriedoutduringthepostsearchenquirybutthesamecannotberelied sincethename,addressanddirectorofthosecompanieswerechangeddue towhichsomeoftheinvestingcompanieswerenotfound.Likewise,there werestatementsfromcertainindividualsrecordedbythecommissions,but thoseindividualswerenotthedirectoroftheinvestingcompaniesatthetime oftransaction.Furthercrossexaminationofthoseindividualswasalsonot providedtherefore,thesamecannotbereliedontodrawinferenceagainst theassessee.Thustheld.CIT-AdeletedtheadditionmadebytheAO. 5.BeingaggrievedbytheorderofthelearnedCIT(A),theRevenueisin appealbeforeus. 6.ThelearnedDRbeforeushasfiledextensivewrittensubmissionson differentdates.The1 st writtensubmissionwasfiledbythelearnedDRdated 27April2023runningfrompages1to14andthe2 nd writtensubmission wasfiledvideletterdated26July2023runninginto1to2pages.Areport ofthelearnedACITnamelyShriRajendraRaj,havingdifferentdates runninginto1to11pageswastaggedalongwiththe2 nd writtensubmission ofthelearnedDR. 6.1Inthe1 st writtensubmissionofthelearnedDRdated27April2023,it wassubmittedthatfindingsrenderedintheorderoftheITATinthegroup caseoftheassesseebeingM/sSiyaramMetalUdyogPvt.Ltd.inITANo. 373/RJT/2015videorderdated24 th February2023cannotbeappliedinthe I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 17 givenfactsofthecase.AsperthelearnedDR,therewereseveralfactual aspectswhichhavenotbeenconsideredbytheITATwhiledeliveringorder. Subsequently,thelearnedDRprovidedthesummaryoftheassessmentorder basedonwhichtheAOconcludedthatthesharecapitalreceivedbythe assesseewasbogusinnature.ThelearnedDRhasalsogivendetailsabout eachsharesubscribertodemonstratethatnoneofthesharesubscribershad sufficientnetworthtomaketheinvestmentintheassesseecompany.As such,thelearnedARreiteratedthefindingoftheAOinthesummarized mannersoastopointoutthedefectsinthelistofthecompanieswhichhave subscribedtothesharesofthecompany. 6.2ThelearnedDRalsosubmittedthereportofthecommission appointedundersection131(1)(d)theoftheActdated11-02-2013wherein itwasallegedthatthesharesubscribersaretheshellcompanies,havingno actualbusinessactivities.Assuchthesecompanieswereengagedin providingaccommodationentries. 6.3ThelearnedCITDRafterfurnishingtheabovedetailsinthewritten submissionhasraisedhiscontentionsasdetailedbelow: 2.SubmissionofCIT-DR: (a).ItiscontendedthatLd.CIT(A)hasnotdistinguishedtheauthoritiesrelieduponby Ld.AO,whilesheweavestheimplicationsoffactualfindingswiththejudicial pronouncementsbyrelyingupon/discussingthecasesofSmtShantaDeviv.CiT(1988) 171ITR532(Punj.&Har.)/AgrswalCoalCorpn.(P)Ltd.v.Asstt.CIT63DTR201/CITv. Frostair(P)Ltd.(2012)26taxmann.com11(Delhi)/CITv.HindonForge(P)Ltd.(2012) 25taxmann.com239(All.)/Dy.CITv.RohiniBuilders(Hon.GujaratHighCourt)/CITv. NovaPromoters&Finlease(P)Ltd.{2012)18taxmann.com217(Delhi)/CITv.N.R. PortfoliosPvt.LtdinITANos.134/2012 (b).Secondly,itiscontendedthatLd.CIT(A)hasfailedtoappreciatethattherewasa directnexusofanarrangedaffair,reflectedintheformofBUYBACKofsharesinthe I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 18 nameofthewifeoftheDirector,atface-valueofRs.10,whiletheappellantwas justifyingtheshare-valueoftheCompanyatRs.1500pershare.Suchnexusisdeeply establishedwhenitisobservedthattheoriginalshare-certificateswerefoundenclosedin thecounterfoil,butonpaperitwasshownthatsalehappenedaboutfouryearsbackand thenthroughMULTIPLELAYERS/MULTIPLEENTITIESre-purchasehashappened.Thus hehaslimitedhisdiscussiononlytotheextentofsaleofsharesdisclosedinthebooksof theassessee,while,thefindingswhichhavetobeappreciatedisthattheshare- certificatesshownameofthewifeofDirectorasultimateshare-holder,aridaseriesof transactionsEXISTbetweensaleofshareandbuy-backofshares-Thatthefindingthat despiteelaboratetransactionsbetweenMORETHAN50unrelatedparties,theoriginal share-certificatesdidnotleavethepremisesoftheappellant,whichundisputedlyshow thattheentiretransactionsisafictious,arranged,makebelievetransactions.Thusthisis notacaseinwhichtherehasbeenrelation/nexusbetweenseizedmaterialand assessmentorder. (c).Thatitistheprimaryresponsibilityoftheappellantassesseetodischargeonusu/s 68.Ld.AOhascarriedoutnecessaryinvestigationsandenquiriesandinmostofthe casesfoundthattheinvestorseitherdonotexist,orarenotawareofanygenuineshare transaction,orareevasive,orarefacingduetonon-paymentofdebtbuthavebeen shownasresourcefultoinvestinassesseecompany,etc.Thus,theLd.AOhasshownin almostallindividualcasethatthetransactionsofsaletobuybackofsharesaremake believetransactionsandmostoftheinvestorsareshell-companies. 6.4ThelearnedCITDRhasalsoreferredtovariousjudicial pronouncementspointingoutthefeaturesofashellcompanywhichare availableinthewrittensubmission. 6.5ThelearnedCITDRinthe2 nd writtensubmissiondated26July2023 hasstronglycontendedthatthesharecapitalreceivedbytheassessee representstheaccommodationentriestakenfromtheshellcompanieswhich wereeithernon-existentortheircreditworthinesswasnotuptothemark.As perthelearnedCITDR,thelearnedCIT-Awhiledeletingtheadditionmade bytheAOhasnotexamined/verifiedthecharacteristicsoftheshell companieswhichweredulybroughttohisnoticeasevidentfromthe assessmentorder. I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 19 7.Ontheotherhand,thelearnedARbeforeusfiledwrittensynopsis throughemaildated18-04-23,runningintopages1to4,highlightingthe favourablefindingsgivenbythelearnedCIT-Aondifferentreasonsalong withthepageandparagraphnumbers. 7.1ThelearnedARalsofiledthecountersubmissionsdated23-7-2023 againstthewrittensubmissionsfiledbythelearnedCITDRwhichare runningfrompagesA1toA-19whereinitwassubmittedthatthefinding givenbytheITATinthegroupcaseoftheassesseebeingM/sSiyaram MetalUdyogPrivateLtdinITANo.373/RJT/2015wasapplicabletothe givenfactsofthecase.AsperthelearnedAR,theld.CIT-Ahasgiven detailedandreasonedfindingswhichdonotrequireanyinterference. 7.2ThelearnedARalsocontendedthatbecauseofthesearchatthe premisesoftheassessee,nodocumentofincriminatingnaturewasfound andthereforetheyearindisputebeingunabatedassessmentyearcannotbe disturbed.ThelearnedARinsupportofhiscontentionhasreliedonvarious judicialpronouncements. 8.BoththelearnedDRandtheARbeforeusvehementlysupportedthe orderoftheauthoritiesbelowasfavourabletothem. 9.Wehaveheardtherivalcontentionsofboththepartiesandperused thematerialsavailableonrecord.Admittedly,therewassearchproceeding undersection132oftheActcarriedatthepremisesoftheassesseeon 23 rd August2012andthesamewasconcludedon22 nd October2012.In I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 20 consequenceofthesearchproceeding,anoticeundersection153Aofthe Actwasissuedfortheassessmentorreassessmentofimmediate6 assessmentyearswhichincludetheyearunderconsideration.Itis undisputedthattheyearunderconsiderationisanunabatedassessmentfor thepurposeoftheproceedingsundersection153AoftheAct,astheoriginal assessmentundersection143(3)oftheActhasalreadybeencompleted.Itis tritelawthatincaseofcompleted/unabatedassessmentyear,theregular itemofincomeoradditionalincomecanbedisturbedorassessedonlybased onincriminatingmaterialfoundduringsearch.Inthepresentcase,thereis nodisputeinthisregardbetweentheassesseeandtherevenue.Theonly disputeinthecaseathandisthatthedocumentseizedduringthesearch,i.e. sharecertificate,canbeheldasincriminatingmaterialfoundduringthe search.Theargumentoftheassesseeisthatthecopyofthesharecertificate wasnottornawayfromtheregistertohandovertotheinvestorisnotan incriminatingdocumentandbesidesthesharecertificate,nootherdocument whatsoeverhasbeenfound.Ontheotherhand,theargumentoftheAOis thattheoriginalsharecertificateswerelyingevenafter4yearsofissueof theshareswiththeassesseeandthisfactifcoupledwithotherfactthat emergedduringthecourseofsearchandpostsearchinquiryi.e.buybackof thesharesbythedirectoronfacevalue,makesthesameasincriminating material.Thephrase“incriminatingmaterial”hasnowherebeendefined undertheActbutthesamehasemergedbywayofthejudicial pronouncement.However,thewordincriminatingreferstotheMaterialor evidencewhichmakestobelieveorchargedorstronglylinkthatsomeoneis involvedinacrimeorfault,butitdoesnotrefertoanactualcrime.Likewise, incriminatingmaterialneednotnecessarilybesomethingtangible.Itnot I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 21 onlyincludesanyassets,documents,entryinbooksofaccountetc.butalso includesanyinformationstoredtherein.Assuch,theincriminatingmaterial canbeintheformofadocument,contentofdocument,anasset,statement givenonoathetc. 9.1Inshort,anyfact/evidencewhichcouldsuggestthatthe documents/transactionsclaimedorsubmittedinanyearlierproceedings werenotgenuine,beingonlyadevice/makebeliefbasedonnon-existent factsorsuppressed/misrepresentedfacts,fulfillingtheingredientsof undisclosedincome,wouldconstituteanincriminatingmaterialwhichis sufficienttomakeassessmentforthepurposesoftheAct.Amerestatement U/s132(4)isanevidenceformakinganassessmentasheldbyApexCourt inB.KishoreKumarv.Dy.CIT[2015]62taxmann.com215/234Taxman 771andevenastatementU/s132(4)shallalsoconstituteincriminating materialtodislodgeanyearlierfindingforthepurposeofmakingan assessmentU/s153AoftheAct.Theaforesaidlistrelatingtoincriminating materialissubjectiveandshallchangedependinguponthefactsand circumstances. 9.2Itispertinenttostatethatduringsearch,businessdocumentsexecuted inordinarycoursewillnaturallybefoundbutthatwouldnotmeanthatsuch documentsareincriminatingmaterialinnatureperse.Therefore,itistobe notedthatthereisadifferencebetweena'seizeddocument'andan incriminatingdocument'.Thelattercanbethepartoftheformer,ifthesame remainsunexplained,uncorroborated,undisclosed,unenteredor unsubstantiated. I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 22 9.3Movingfurther,anassessmentinpursuanttoasearchactionu/s132 hastobetreateddifferentlyandmoresacrosanctfromaregularassessment andassuchtheadditionsbeingsoughttobemadeinsuchsearch assessmentsmusthavethebackingandsupportofthediscoveryof someincriminatingmaterialorevidencefoundduringsearchundersection 132oftheAct.Assuch,themeaningofincriminatingmaterialorevidence maybecomplicatedtounderstanddependingonthedocuments.Any evidenceormaterialistobeconsideredasincriminatingiffordiscovering orunearthingit,theextrememeasureofsearchwasrequired.So,anyof thoseseizedmaterialorevidencewhicharealreadythereinpublicdomain orwhicharesimplydumbandnon-speakingdocumentsorrecords,orwhich couldhavebeenrequisitionedotherwisealso,byaregularenquiryduring regularassessmentproceedings,can'tbeconsideredasincriminating materialorevidence. 9.4Inthelightoftheabove-stateddiscussion,wefindthatthe informationabouttheissuanceofsharestothepartiesdiscussedabovewas availableinthepublicdomain.Assuch,theshareswereissuedafterthe necessarycomplianceoftheCompaniesAct.Thereceiptofsharecapitalby theassesseealongwiththesharepremiumwasbackedbythenecessary documentselaboratedintheprecedingparagraphwhichweredulyverified bytheAOduringtheoriginalassessmentproceedingsundersection143(3) oftheAct.Itisanundeniablefactthatthesharecertificatesshouldhave beenthepossessionoftheshareholdersbutinthegivencasesuchshare certificateswerefoundfromthepremisesoftheassesseeevenafterthelapse of4years.Itcanbeamatterofraisingdoubtbutbasedonthisnoadverse I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 23 inferencecanbedrawnagainsttheassesseetoholdthatthesharecapital receivedbytheassesseewasbogusinnature.Assuch,theinformationand documentsrelatingtosharecapitalhavealreadybeendisclosedbythe assesseeinthenormalcoursebeforetheincometaxauthoritiesandthesame hasalreadybeenverifiedbytheincometaxauthoritiesduringthe assessmentproceedingsundersection143(3)oftheAct.Nowthesame informationanddocumentscannotbegivenadifferentcolourinthesearch proceedingsuntilandunlessthereareevidenceorinformationfoundduring thesearchsuggestingthatinformationanddocumentsdisclosedbythe assesseeintheincometaxreturnwerebogusinnature.Inthepresentcase thesharecapitaldeclaredbytheassesseehasbeendoubtedbasedonthe originalcounterfoilofthesharescertificateswhichshouldhavebeeninthe possessionoftheshareholders.However,theinferencehasbeendrawnby therevenueafterignoringmuchotherdocumentaryevidencewhichwas furnishedduringtheoriginalassessmentproceedings. 9.5Movingfurthertherevenuehasseentheavailabilityofshare certificatesinthepossessionoftheassesseeinthelightofthefactthatinthe lateryearoneofthedirectorofthecompanywhowasalsothewifeof anotherdirectorofthecompanyhasacquiredsuchsharesatthefacevaluein thenextyear.Accordingly,adoubtaroseinthemindoftherevenuethat howisitpossiblethatthesharesubscriberswhoacquiredthesharesat ₹1500persharehavetransferredthesharesat₹10inthenextyearonly. Certainly,itisamatterofseriousconcern,butwhatwenoticeisthatitwasa transactionbetweenthe3 rd partiesandthisfactwasintheknowledgeofthe I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 24 AOofthedirectorwhichcanbeverifiedfromthefindingofthelearned CIT-Awhichisreproducedasunder: AnotherreasonformakingtheadditionshasbeenstatedasbuyingofthesesharesbySmt.Madhu Maheswari,wifeofoneofthedirector.Duringthecourseofsearch,nodocumentswasfound whichindicateanyreceiptofcashbySmt.MadhuMaheshwariagainstthepaymentmadeby chequesforpurchaseoftheseshares.TheseinvestorcompaniesarelocatedatAhmedabad, Mumbai,Surat,Pune,Indore,Kolkataetcanddirectoroftheappellantcompanyhadnocontrol overthosecompaniesorthedirectorsofthosecompanies.Smt.MadhuMaheshwariisassesseed withthesameAO,whoisAOoftheappellantcompanyandnoactionhasbeentakeninhercase onthisissue,whichmeans,thepurchaseofsharesbySmt.MadhuMaheshwarihasbeenfound correct&properbytheAO.Lookingtothesediscussion,theadditionsmadebycitingthese reasonsarenotfoundfactually&legallyjustified.Inthefollowingparas,issueofeveryinvestor companyisdecidedseparately. 9.6Withoutprejudicetoaboveitalsopertinenttohighlightthatthe provisionofsection56(vii)(c)(ii)oftheActprovidesthatifanindividual receivesapropertyotherthanimmovablepropertyfromanypersonor personsforaconsiderationlessthanthefairmarketvalueofsuchproperty byanamountexceedingRs.50thousand,thensuchdifferencebetweenthe considerationandfairmarketvalueshallbetreatedasincomeofsuch Individual.Inthecaseonhand,therevenueallegedthatoneofthedirectors buysbackthesharesoftheassesseecompanyfromoriginalsubscriberfor Rs.10pershareagainsttheshareissuedatRs.1500pershareoriginallybut theAOwhilemakingassessmentinhercasedidnotmakeanyinquiry regardingtheapplicabilityofsection56(vii)(c)(ii)oftheAct. 9.7NowcomingbacktotheabovefindingofthelearnedCIT-Awhich hasnowherebeenchallenged/controvertedbythelearnedDRappearingon behalfoftherevenueinhiswrittensubmission.Inotherwords,allthe informationwasdisclosedbytheassesseeanditsdirectorsbeforethe incometaxauthoritiesduringthenormalcourse.Thus,suchinformationto thebestofourknowledgecannotbetreatedasincriminatinginnature. I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 25 Accordingly,weholdthatnomaterialofanincriminatingnaturewasfound duringthesearchattheassessee.Thus,intheabsenceofanyincriminating documenttherecannotbeanyadditiontothetotalincomeoftheassessee withrespecttotheunabated/completedassessmentyears.Inholdingso,we drawsupportandguidancefromthejudgmentofHon’bleSupremeCourtin caseofPCIT,Central-3-Vs-AbhisarBuildwellPvt.Ltd.reported[2023] 149taxmann.com399(SC)whereinitwasheldasunder: 11.AspertheprovisionsofSection153A,incaseofasearchundersection132 orrequisitionundersection132A,theAOgetsthejurisdictiontoassessor reassessthe'totalincome'inrespectofeachassessmentyearfallingwithinsix assessmentyears.However,itisrequiredtobenotedthatasperthesecond provisotoSection153A,theassessmentorre-assessment,ifany,relatingtoany assessmentyearfallingwithintheperiodofsixassessmentyearspendingonthe dateofinitiationofthesearchundersection132ormakingofrequisitionunder section132A,asthecasemaybe,shallabate.Aspersub-section(2)ofSection 153A,ifanyproceedinginitiatedoranyorderofassessmentorreassessment madeundersub-section(1)hasbeenannulledinappealoranyotherlegal proceeding,then,notwithstandinganythingcontainedinsub-section(1)or section153,theassessmentorreassessmentrelatingtoanyassessmentyear whichhasabatedunderthesecondprovisotosub-section(1),shallstandrevived witheffectfromthedateofreceiptoftheorderofsuchannulmentbythe Commissioner.Therefore,theintentionofthelegislationseemstobethatincase ofsearchonlythependingassessment/reassessmentproceedingsshallabateand theAOwouldassumethejurisdictiontoassessorreassessthe'totalincome'for theentiresixyearsperiod/blockassessmentperiod.Theintentiondoesnotseem tobetore-openthecompleted/unabatedassessments,unlessanyincriminating materialisfoundwithrespecttoconcernedassessmentyearfallingwithinlastsix yearsprecedingthesearch.Therefore,ontrueinterpretationofSection153Aof theAct,1961,incaseofasearchundersection132orrequisitionundersection 132Aandduringthesearchanyincriminatingmaterialisfound,evenincaseof unabated/completedassessment,theAOwouldhavethejurisdictiontoassessor reassessthe'totalincome'takingintoconsiderationtheincriminatingmaterial collectedduringthesearchandothermaterialwhichwouldincludeincome declaredinthereturns,ifany,furnishedbytheassesseeaswellasthe undisclosedincome. I.T(SS).ANo.91/Rjt/2018A.Y.2009-10PageNo Dy.CITvs.M/s.SiyaramMetalsPvt.Ltd. 26 9.8TheHon’bleSupremeCourtintheabovejudgmentalsoconsidered JudgementsofvariousHon’bleHighCourtsandconcurredwithoneofthe JudgementoftheHon’bleGujaratHighCourtinthecaseofSaumya Constructionandlaiddownthefollowingpointsinanutshell: “......13.Forthereasonsstatedhereinabove,weareincompleteagreement withtheviewtakenbytheDelhiHighCourtinthecaseofKabulChawla(supra) andtheGujaratHighCourtinthecaseofSaumyaConstruction(supra)andthe decisionsoftheotherHighCourtstakingtheviewthatnoadditioncanbemade inrespectofthecompletedassessmentsinabsenceofanyincriminatingmaterial. 9.9Inviewoftheabove,weholdthattherecannotbeanyadditiontothe totalincomeoftheassesseeoftheregularitemsasmadebytheAOinthe presentcase. 9.10Sincewehavedecidedtheissueontechnicalcount,werestrain ourselvesfromgivingfindingonthemeritoftheadditionmadebytheAO. Assuchissueonmeritoftheadditionbecomesredundant.Accordingly,we herebydismissthegroundsofappealraisedbytheRevenue. 10.Intheresult,theappealfiledbytherevenueisherebydismissed. Orderpronouncedintheopencourton20-10-2023 Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad:Dated20/10/2023