Income Tax Appellate Tribunal - Delhi
M/S Brahmaputra Holdings (P) Ltd.,, New ... vs Dcit,, New Delhi on 29 May, 2018
In the Income-Tax Appellate Tribunal,
Delhi Bench 'A', New Delhi
Before : Shri Bhavnesh Saini, Judicial Member And
Shri L.P. Sahu, Accountant Member
ITA No. 3330/Del/2017
Assessment Year: 2007-08
Brahmaputra Holdings (P) Ltd., vs. DCIT, Central Circle-17,
Brahmaputra House, A-7, NH-8 New Delhi.
Mahipalpur-Crossing, Mahipalpur,
New Delhi (PAN-AACCB5616N)
(Appellant) (Respondent)
Assessee by Sh. Gautam Jain, Advocate and
Sh. Lalit Mohan, C.A.
Revenue by Sh. Ravi Kant Gupta, Sr. DR
Date of Hearing 15.05.2018
Date of Pronouncement 29.05.2018
ORDER
Per L.P. Sahu, A.M.:
This is an appeal at the instance of Revenue against the order dated 27.03.2017 of ld. CIT(A)-35, New Delhi for the assessment year 2007-08 on the following grounds :
2. The brief facts of the case are that the assessee is engaged in the business of investments and the return of income was originally filed by the assessee on 13.10.2017 declaring nil income, which was processed u/s.
143(1) of the IT Act. Subsequently, on the basis of some documents impounded on the search and seizure operation carried out on Brahmputra Group of cases u/s. 132 on 28.09.2010, notice u/s. 153C was issued to the assessee requiring it to file the return of its income. In response, the assessee ITA No. 3330/Del./2017 2 vide letter dated 28.01.2013 submitted that the return already filed may be deemed to have been filed in response to notice u/s. 153C of the IT Act. Further in response to notices u/s. 143(2)/143(1) of the Act, the assessee filed requisite details and complete books of account, which were examined by the Assessing Officer. From the details so submitted, the Assessing Officer noticed that the assessee raised share capital money worth Rs.10,00,000/- from the following companies based in Kolkata/Howarah.
Sl. Name of the Company No. of Nominal value Premium paid Date of
No. Shares of share (Rs) per share (Rs) allotment
1 Midnight Agencies Pvt. 3,000 30,000 (Rs. 10 2,70,000 (Rs 31.03.2007
Ltd. per share) 90 per share)
2 Kathleen Vyapaar Pvt. 3,000 30,000 (Rs. 10 2,70,000 (Rs 31.03.2007
Ltd. per share) 90 per share)
3 Canton Vinimay Pvt. 4,000 40,000 (Rs. 10 3,60,000 (Rs 31.03.2007
Ltd. per share) 90 per share)
By way of questionnaire, the assessee was further required to furnish some details and to produce the share applicants noted and referring to various enquiries/post search enquiries made by the Investigation Wing, statements of Shri Sampat Sharma, the Director in some of the group companies recorded by Investigation Wing, issued different show cause notices and finding the replies of assessee as not convincing, came to the conclusion that the various companies based in Kolkata/Howrah were found non-existent and thus, the assessee could not discharge its onus to prove the identity of the share applicants, their creditworthiness and genuineness of the transactions, as contemplated u/s. 68 of the IT Act and therefore, made an addition of Rs.10,00,000/- u/s. 68 of the Act in the hands of the assessee. The appeal filed by the assessee before the ld. CIT(A) stood dismissed vide impugned order, which has been challenged by the assessee by way of this appeal before the Tribunal.
ITA No. 3330/Del./2017 33. Assailing the impugned order, the ld. AR, Shri Gautam Jain, Advocate submitted that the order of assessment made u/s. 153C in the instant case is not legally valid, as the same is not based on any incriminating material detected as a result of search on the searched person, viz., Brahmaputra group of cases. It was submitted that no proceedings were pending either on the date of search or on the date of issuance of notice u/s. 153C of the Act and the ld. CIT(A) has not considered this submission raised before him by way of ground No. 3. It is also the contention of the assessee that the documents alleged to have been referred to by the Assessing Officer in the assessment order have been used by the Assessing Officer in multiple cases of the group including the assessee without pointing out as to how the said documents were incriminating to the assessee or the same belong to the assessee. It is further submitted that two such cases of the group are Brahmaputra Finlease (P) Ltd. for A.Y. 2007-07 and M/s. Brahmaputra Realtors (P) Ltd. (A.Y. 2007-
08) where also similar additions were made on the basis of the very same documents. The matter in those cases travelled upto the Tribunal and the identical additions have been deleted by the Tribunal in both the above cases vide orders dated 29.12.2017 and 23.04.2018. It was next contended on behalf of the assessee that none of the documents/papers pointed out by the Assessing Officer in the assessment order belong to the assessee and therefore, the notice issued u/s. 153C itself is invalid. Reliance is placed on the following decisions :
(i). Pr. CIT vs. Vinita Chaurasia, 394 ITR 758 (Del.) (ii). CIT vs. Arpit Land (P) Ltd., 393 ITR 276 (Bom)
(iii). Canyon Financial Services Ltd. vs. ITO, 399 ITR 202 (Del)
(iv). CIT vs. Renu Construction (P) Ltd. , 399 ITR 262 (Del.)
(v). Pepsi Foods Pvt. Ltd. vs. ITO, 367 ITR 112 (Del), SLP dismissed by Supreme Court in Appeal © No. 4659/2015 dated 04.12.2017 ITA No. 3330/Del./2017 4
(vi). M/s. Pepsico India Holding Pvt. Ltd. vs. ACIT, 370 ITR 295 (Del)
(vii). CIT vs. Lavanya Land (P) Ltd., 397 ITR 246 (Bom)
4. It was next contended that none of the documents referred to by the Assessing Officer are the material, much less incriminating material, to denote any income or share capital and share premium and therefore, the notice issued u/s. 153C is legally invalid, having been issued without any jurisdiction. Reliance is further placed on the following decisions in support:
(i). CIT vs. Sinhgad Technical Education Society, 378 ITR 84 (Bom) upheld by Hon'ble Supreme Court (397 ITR 344(SC)
(ii). CIT vs. RRJ Securities Ltd., 380 ITR 612 (Del.)
(iii). Pr. CIT vs. Index Securities (P) Ltd., 157 DTR 20(Del)
5. On the other hand, the ld. DR relied on the decisions of the authorities below and submitted that the ld. CIT(A) has passed a reasoned order which needs not to be interfered with.
6. We have considered the rival submissions and have gone through the entire material available on record including the decisions cited. A perusal of the assessment order reveals that the Assessing Officer while invoking the provisions of section 153C and issuing notice under that section to the assessee, has considered the following documents found as a result of search at the premises of Brahmaputra group of cases, belonging to the assessee:
i) Page No. 23 of Annexure A-6 (a diary relating to FY 2009-10)-on the back side of this page recording is made in the name of "Shri Shyam Trexim & Fincom (P) Ltd." against which Rs. 50 lakhs is written;
ii) Page No. 1 of Annexure A-7-on this page a recording of funds mentioning debit as well as credit of Rs. 25 lakhs in the name of Murari ITA No. 3330/Del./2017 5 Lal Aggarwal dated 31.5.2008 and further comments of the payment of same amount by cash to Murari Lal Aggarwal (MLA) is made;
iii) The back side of the above page 1 of Annexure A-7 mentions that Sarat Aggarwal was paid with cash of Rs. 30 lakhs bring back equal amount in other form. The date of noting is 04.06.2008;
iv) Page 1 of Annexure A-10-it contains a hand written extracted of cash book containing entry of Rs. 5 lakhs in the name of M.L. Aggarwal.
It also shows as debit of Rs. 3 lakhs in the name of Sarat Aggaral. The entries are for the date 28.05.2008, the date of writing of this page; and
v) Page No. 4 of above Annexure A-10 contains record of 30 lakhs in the name of Mr. A. Singhal and M.L. Aggarwala dividing into Rs. 25 lakhs and 5 lakhs respectively. On this page the name of Sudarshan Casting P. Ltd. is also written.
These documents led the Assessing Officer to doubt share capital raised by the assessee and to make addition of Rs.10,00,000/- u/s. 68 of the Act. We find considerable substance in the contention of the assessee that the above documents neither go to suggest any undisclosed income of the assessee nor any nexus with the share capital declared by the assessee. In fact, the Assessing Officer has derived inferences/presumptions on the basis of above papers found in the search without proving them as belonging to the assessee or their nature being incriminating to the assessee. Therefore, the assessment order confirmed by the ld. CIT(A) is not found fit to support, having been passed without proving the primary ingredients of section 153C of the Act. It is worthwhile to note that the very same papers, as listed above, were also taken against the other group companies, i.e., Brahmaputra Finlease (P) Ltd. and M/s. Brahmaputra Realtors (P) Ltd. for the assessment year 2007-08 and similar additions were made in those cases also based on the same search and same papers. However, the ITAT Delhi Bench in the case of Brahmaputa Finlease (P) Ltd. (ITA No. 3332/Del./2017) vide order dated 29.12.2017 has ITA No. 3330/Del./2017 6 examined the same documents and deleted the addition by quashed the assessment order as under :
4.10 Another argument, made by the Ld. CIT(DR) in support of her claim of incriminating material was that the Item No.(i) mentioned on page 6 of the assessment order, was incriminating in nature as it contained detail of accommodation entry. For having clarity on the issue raised by the Ld. CIT(DR), we may like to reproduce the relevant part of the assessment order as under:
"Apart from, during the course of search operation in Brahmaputra Group of cases, carried out at premises A-7, Mahipalpur, New Delhi, the following incriminating documents were inter alia seized by party BA-5 i. Page No. 23 of Annexure A-6 (a diary relating to F.Y. 2009-10)- on the back side\ of this page recording is made in the name of "Shri Shyam Trexim & Fincom P. Ltd." against which Rs. 50 lakhs is written.
ii. Page No. 1 of Annexure A-7 - on this page a recording of funds mentioning debit as well as credit of Rs. 25 lakhs in the name of Murari Lai Aggarwal dated 31.05.2008 and further comments of the payment of same amount by cash to Murari Lal Aggarwal (MLA) is made iii. The back side of the above page 1 of Annexure A-7 mentions that Sarat Aggarwal was paid with cash of Rs. 30 lakhs bring back equal amount in other form. The date of noting is 04.06.2008.
iv. Page 1 of Annexure A-10 - it contains a hand written extract of cash book containing entry of Rs. 5 lakhs in the main of M.L. Aggarwal. It also shows as debit of Rs. 3 lakhs in the name of Sarat Aggarwal. The entries are for the date 28.05.2008, the date of writing of this page.
v. Page No. 4 of above Annexure A-10 contains record of 30 lakhs in the name Mr. A Singhal and M.L. Aggarwala dividing into Rs. 25 lakhs and 5 lakhs respectively. On this page the name of Sudarshan Casting P. Ltd. is also written.
During the course of search and post search investigation, the assessees of this group have not been able to explain the above entries satisfactorily. Though these entries are to be dealt with in relevant cases but this also proves the fact that this group is engaged in bring back their unaccounted/undisclosed income in the guise of share capital/share application money."
4.11 We find that the Item No. (i) contains recording in the name of "Shri Shyam Trexim & Fincom Pvt. Ltd". The Assessing Officer has nowhere brought on record how the said recording on the page relates to the addition in question of share capital. The Ld. CIT(DR) also could not explain as how the said recording was related to the addition in question made in respect of alleged unexplained share capital. She only stated that said recording on the page reflected accommodation entry obtained by the ITA No. 3330/Del./2017 7 'Brahmaputra Group' and but no documentary evidence regarding the claim that the document was incriminating qua the addition, are filed. In respect of the Items No. (ii) to
(v), the Ld. counsel has submitted that additions in respect of the amounts mentioned in the document has been made in the case of another company namely "M/s Brahmaputra Infrastructure Ltd" in assessment year 2009-10. This fact was not controverted by Ld. CIT(DR). Thus, we find that no incriminating material qua the addition made is found during the course of search from the premises of the assessee. Accordingly, above contention of Ld. CIT(DR) are rejected. She also submitted that during the course of search, hard disks of computers and others material were also seized which contained incriminating material. The Ld. CIT(A) failed to substantiate the claim either by the impugned assessment order or through any other documentary evidence. In the assessment order, there is no mention that any incriminating material is found in hard disk etc. Thus, this contention of Ld. CIT(A) is also rejected.
Further, the ld. Authorities below have also referred to the statements recorded of Shri Sampat Sharma against the assessee. The same statements were also read against M/s. Brahmaputra Finlease (P) Ltd. (supra), where, the Tribunal after relying on various decisions has held as under :
"4.19 We find that in the case of best infrastructure (India) private limited (supra), despite the admission of accommodation entry in statements under section 132(4) of the Act, the court held that the statement do not constitute as incriminating material. In the instant case, neither is there any statement of any accommodation entry operator claiming that any entry was not provided nor any director has admitted that assessee obtained accommodation entry. Thus, the case of the assessee is on better footing then the case of Best Infrastructure (I) P. Ltd (supra). In such facts and circumstances, respectfully following the decision of the Hon'ble Delhi High Court in the case of best infrastructure (India) private limited (supra), we do not have any hesitation to hold that the statement under section 132(4) of Sh. Sampat Sharma cannot be treated as incriminating material found during the course of search."
In the result, we hold that addition of share capital in the year under consideration has been made without relying on any incriminating material found during the course of search.
In the result, we hold that addition of share capital in the year under consideration has been made without relying on any incriminating material found during the course of search.
4.20 In view of the above finding, both the conditions as completed assessment and no incriminating material, have been satisfied in the case, thus,no addition could have been made in the instant assessment year in view of the finding of the ITA No. 3330/Del./2017 8 Hon'ble Delhi High Court in the case of Kabul Chawla (supra). The grounds No. 1 and 1.1 of appeal are accordingly allowed."
7. The above decision of Tribunal was also followed by coordinate Bench in another group case, namely M/s. Brahmaputra Realtors (P) Ltd. vs. DCIT (ITA No. 3406/Del./2017) where vide order dated 23.04.2018, the addition made on account of unexplained share capital stood deleted in the identical facts and circumstances of the case. Therefore, respectfully following the above decisions of coordinate bench and there being no contrary material on record and further relying on the decision of Hon'ble Delhi High Court in the case of Kabul Chawla and plethora of other decisions relied by the assessee, we find no justification to sustain the impugned order and the addition made against the assessee. Accordingly, the appeal of the assessee deserves to be allowed, being full of merits.
8. In the result, the appeal is allowed.
Order pronounced in the open court on 29th May, 2018.
Sd/- Sd/-
(Bhavnesh Saini) (L.P. Sahu)
Judicial member Accountant Member
Dated: 29th May, 2018
*aks*
Copy of order forwarded to:
(1) The appellant (2) The respondent
(3) Commissioner (4) CIT(A)
(5) Departmental Representative (6) Guard File
By order
Assistant Registrar
Income Tax Appellate Tribunal
Delhi Benches, New Delhi