Income Tax Appellate Tribunal - Kolkata
M/S Msp Rolling Mills Pvt. Ltd., Kolkata vs Dcit, Cc-Xxx, Kolkata, Kolkata on 6 January, 2017
1
IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015
A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA"B" BENCH, KOLKATA
BEFORE SHRI S.S.VISWANETHRA RAVI, HON'BLE JUDICIAL MEMBER
AND
DR.A.L. SAINI, HON'BLE ACCOUNTANT MEMBER
IT(SS)A No.47/Kol/2015 (AY : 2009-2010)
M/s Adhunik Gases Ltd., Vs. DCIT, CC-XXX, Aayakar
1, Crooked Lane, Bhawan Purva, 110 Shanti
Kolkata-700069 Pally, Kolkata-107
PAN : AACCA 1027 E
IT(SS)A No.49/Kol/2015 (AY : 2006-2007)
M/s Swagat Trexim Pvt. Ltd. Vs. DCIT, CC-XXX, Aayakar
13A Decres Lane, 5th Floor, Bhawan Purva, 110 Shanti
Room No.501, Kolkata- Pally, Kolkata-107
700069
PAN : AAECS 1238 F
IT(SS)A No.50/Kol/2015 (AY : 2007-2008)
M/s Swagat Trexim Pvt. Ltd. Vs. DCIT, CC-XXX, Aayakar
13A Decres Lane, 5th Floor, Bhawan Purva, 110 Shanti
Room No.501, Kolkata- Pally, Kolkata-107
700069
PAN : AAECS 1238 F
IT(SS)A No.51/Kol/2015 (AY : 2008-2009)
M/s Swagat Trexim Pvt. Ltd. Vs. DCIT, CC-XXX, Aayakar
13A Decres Lane, 5th Floor, Bhawan Purva, 110 Shanti
Room No.503, Kolkata- Pally, Kolkata-107
700069
PAN : AAECS 1238 F
IT(SS)A No.52/Kol/2015 (AY : 2007-2008)
M/s Shree Vinay Finvest Pvt Vs. DCIT, CC-XXX, Aayakar
Limited, 13A Decres Lane, Bhawan Purva, 110 Shanti
5th Floor, Room No.503, Pally, Kolkata-107
Kolkata-700069
PAN : AAECS 8183 P
IT(SS)A No.54/Kol/2015 (AY : 2005-2006)
M/s MSP Metallics Ltd. Vs. DCIT, CC-XXX, Aayakar
1, Crooked Lane, Bhawan Purva, 110 Shanti
Kolkata-700069 Pally, Kolkata-107
PAN : AACCA 1027 E
IT(SS)A No.55/Kol/2015 (AY : 2007-2008)
M/s MSP Rolling Mills Pt Ltd Vs. DCIT, CC-XXX, Aayakar
1/1A, Biplabi Anukul Bhawan Purva, 110 Shanti
Chandra, Street, 4H, Pally, Kolkata-107
Electronic Centre, Kol-72
PAN : AACCM 0782 E
2
IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015
A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08
IT(SS)A No.94/Kol/2015 (AY : 2007-2008)
M/s Larigo Investment P. Ltd Vs. DCIT, CC-XXX, Aayakar
1, Crooked Lane, Bhawan Purva, 110 Shanti
Kolkata-700069 Pally, Kolkata-107
PAN : AAACL 4391 C
IT(SS)A No.95/Kol/2015 (AY : 2007-2008)
M/s Larigo Investment P. Ltd Vs. DCIT, CC-XXX, Aayakar
1, Crooked Lane, Bhawan Purva, 110 Shanti
Kolkata-700069 Pally, Kolkata-107
PAN : AAACL 4319 C
IT(SS)A No.96/Kol/2015 (AY : 2007-2008)
M/s Ravi Business Services Vs. DCIT, CC-XXX, Aayakar
Private Limited Bhawan Purva, 110 Shanti
th
13A Decres Lane, 5 Floor, Pally, Kolkata-107
Room No.503, Kolkata-
700069
PAN : AACCR 5158 B
(Appellant) (Respondent)
Assessee by :Shri Ashok Kumar Tulsyan, FCA
and Amit Kumar, ACA
Department By : Shri Niraj Kumar CIT (DR)
Date of hearing : 08/12/2016.
Date of pronouncement :06/01/2017
ORDER
Per Dr. Arjun Lal Saini, A. M. These captioned ten appeals filed by the Assessee, pertaining to Assessment Years (AYs) 2009-10,2006-07,2007-08,2008- 09,2007-08,2005-06,2007-08,2007-08,2010-11 and 2007-08 respectively, are directed against the orders passed by the Commissioner of Income Tax (Appeals)-21, Kolkata (CIT(A) for short), which in turn arise out of orders passed by Assessing Officer (AO)U/s 153A/143(3) of the Income Tax Act, 1961 (in short 'the Act'), dated 30.03.2013/31.03.2013.
3IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08
2. These ten appeals filed by the Assessee relate to same group companies-assessees, different assessment years, common issues involved, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The Assessee's appeal in IT(SS)A No. 49/Kol/2015 is taken as the lead case.
3. The brief facts qua the assessee are that a search and seizure operation was carried out U/s 132 of the I.T. Act,1961, on the assessee along with the sister concern and or others at various premises/offices of the group on 06.10.2010 and subsequent dates. In some cases survey operations U/s 133A was also conducted on the same date and / or subsequent dates. Later on the case of the assessee along with other assessees of the group were centralized in this charge with administrative jurisdiction of Range -V ( Central) of CIT ( Central)-III, Kolkata. Notices U/s 153A of the Act were issued on the assessee group companies. In response to such notices, the assessee group companies/sister concerns filed its return of income u/s 153A of the Income Tax Act. During the course of assessment proceedings, the Assessing Officer noted that the assessee was unable to produce the entry operator to prove identity, genuineness and credit worthiness of the transactions and further considering the fact that the entry operator himself filed a letter of his affirmation of providing entries to the assessee company through his companies made for this purpose, the entire share capital and share application money received from entry operator`s company to the assessee company is added back to the total income of assessee company. This way, the Assessing Officer made addition under section 68 "Cash Credit" on account of Share Capital/Share Application Money received by sister concerns/group companies.
4. Aggrieved from the order of the Assessing Officer, the assessee filed an appeal before the ld CIT (A), who has confirmed the addition made by the Assessing Officer, observing the followings:
4IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08
"5. I have considered the submission of the appellant and perused the assessment order. On careful consideration of the facts, I am not inclined to agree with the submission of the appellant that there were no new facts or material or evidence in consequence to the search by virtue of which the AO could have made an addition of a regular item declared in the original return of income. On perusal of the assessment order it is observed that on the date when search operation u/s 132 of the Act was conducted in the case of appellant company on 06.10.2010, a survey operation u/s 133A of the Act was conducted in the business premises of Shri Naresh Chhaparia at 3/A/7, 3rd Floor, Lal Bazar, Kolkata. It was gathered in the course of survey operation that the said Naresh Chhaparia was controlling several companies, though he may not be the director in all those companies but all the transactions in those companies were carried out on his direction only. It was found that through all these companies Shri Chhaparia was providing accommodation entries in the form of share application money to the MSP Group of companies. This fact was admitted by him in the statement recorded in the course of survey operation at his premises. In the year under consideration the appellant company had also accepted share application money from the companies controlled by Shri Naresh Chhaparia. Thus, I am of the opinion that it will not be correct to say that there was no a new fact or material or evidence in consequence to search by which the AO could made addition of regular item declared in the original return; in the proceeding u/s 153A of the Act. I am of the opinion that the decision of the Jurisdictional ITAT in the case of LMJ International Ltd. is not applicable in the case of appellant company on the facts of the case. In view of above, the ground no. 1 is dismissed.
6. In ground no. 2 the assessee has contested the action of the AO making addition of Rs.10,00,000/- on account of share capital received on the basis of statement of Shri Naresh Chhaparia. As mentioned above, the search operation u/s 132 of the Act was conducted in the case of assessee company on 06.10.2010. On the same date, a survey operation u/s 133A of the Act was conducted at the business premises of Shri Naresh Chhaparia at 3/A/7, 3rd Floor, Lal Bazar, Kolkata. It was gathered that Shri Naresh Chhaparia is one of the entry operators active in the market and he was engaged in the activity of providing entries to the beneficiaries through the concerns controlled and managed by him. The entries were provided to the beneficiaries in the form of share capital etc. During the course of survey the statement of Shri Naresh Chhaparia was recorded in which he gave name of 22 companies controlled by him and all of them were operating from the premise surveyed u/s 133A of the Act. It was stated by Shri Chhaparia that through these companies he had been providing accommodation entries to MSP Steel Group of companies. He gave name of 17 companies of MSP Group to whom he had provided the accommodation entries. The name of the assessee company also appeared in the said list of companies. During the course of assessment proceedings it was 5 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 observed by the AO that in the year under consideration the assessee company had received share capital of Rs.I0,00,000/- from M/s Shivarpan Mercantile Pvt. Ltd. The said company was controlled by Shri Naresh Chhaparia as per the list of companies given by him in the statement. From the assessment order it appears that the assessee company asked the AO to allow an opportunity of cross- examination of Shri Naresh Chhaparia. Therefore, the AO issued summon u/s 131 of the Act in the name of Shri Chhaparia for recording statement and simultaneously the letter was also issued to the assessee company. However, on the given date and time Shri Naresh Chhaparia did not appear before the AO. Under the circumstances, the AO asked the assessee to produce Shri Naresh Chhaparia and to prove the identity, creditworthiness and genuineness of those transactions. However, the assessee also did not produce Shri Chhaparia before the AO. As per the AO, meanwhile, Shri Naresh Chhaparia filed a letter through his Authorized Representative stating that he could not appear in the office of the AO due to bad health and confirmed his earlier statement given before the Investigation Wing. In view of above, the AO relied on the decision of Delhi High Court in the case of CIT vs. Nova Promoters & Finlease Pvt. Ltd., decision of Punjab & Haryana High Court in the case of Such Chain Pvt. Ltd., the decision of Calcutta High Court in the case of CIT vs. Ruby Traders & Exporters Ltd., 263 ITR 300 and the decision of ITAT, Delhi in the case of Beautex (India) Pvt. Ltd. and it was held by him that assessee was unable to produce the entry operator to prove identity, genuineness and creditworthiness of the transactions. Further, in view of the fact that entry operator himself filed a letter of his affirmation of providing accommodation entries to the assessee company through his companies made for this purpose, the AO added the sum aggregating to Rs.10,00,000/- to the income of the assessee u/s 68 of the Act on account of share capital.
7.It is observed that the similar issue as involved in the case of aappellant company was involved in its case for the A.Y. 2007-08 and 2008-09 wherein based on the statement of Shri Naresh Kumar Chhaparia dated 07.10.2010, the AO had made addition of Rs.25 lakhs and Rs.5O lakhs respectively on account of share capital/share application money. In the instant appeal, the appellant has filed same submission as filed in its case for the A.Y. 2007-08 and 2008-
09. There is change in submission only to the extent that there is difference in the amount of addition on account of share capital and the change in the names of subscribing companies. Otherwise, the facts of the two cases are exactly similar. The appeals in the appellant's case i.e. M/s Swagat Trexim Pvt. Ltd. for the A. Y. 2007- 08 and 2008-09 have been decided by the undersigned vide Appeal No. 461/CC-3(2)/CIT(A)-21/2014-15 dated 28.01.2015 and Appeal No. 460/CC-3(2)/CIT(A)-21/2014-15 dated 28.01.2015. In the said appeals; on the issue involved, I have upheld the addition made by the AO on account of share capital u/s 68 of the Act. Hence, following my orders in the case of appellant company for the A.Y. 2007-08 and 2008-09, for the year under consideration the addition 6 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 of Rs.10,00,000/- made by the AO u/s 68 of the Act is confirmed. The ground no. 2 is dismissed."
5.Not being satisfied with the order of ld.CIT(A),the assessee is in further appeal before us and has taken the following grounds of appeal :-
1) That the Ld.CIT(A) erred in holding that under the provisions of sec. 153A of the Income Tax Act, 1961, the AO is empowered to reassess the income for the completed assessment even in the cases where nothing incriminating was found in the course of search. Sec.153A neither empowers the AO to re-assess income of the completed assessment without any seized material or asset to that effect nor does it allow the AO to review the assessment already completed. As such, the additions made in the order u/s153A and confirmed by the Ld.CIT(A) is bad in law and need to be deleted.
2) That under the facts & circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of RS.10,00,000/-, being the share application money received by the assessee under sec.68 of the Income Tax Act, 1961, based on the statement of Mr.Naresh Chhaparia. The addition needs to be deleted.
6. The first ground relates to assessment u/s.153A made by the Assessing Officer. The Assessee has challenged the assessment U/s 153A stating that it was done by Assessing Officer without any incriminating documents.
6.1. Ld. AR for the assessee has vehemently submitted that during the search and seizure operation, the Search party did not find any new documents or material i.e. nor any incriminating document was found nor seized from the assessee's premises. During the course of survey, the survey team did not find any incriminating document except statement recorded by them of Shri Naresh Kumar Chhaparia. Ld. AR pointed out that neither the search party nor the survey party of the Income Tax Department found out any new or incriminating material except to statement recorded by them in the assessee's case under consideration. The search was conducted on 6.10.2010 and assessments u/s.143(3) of various group concerns/sister concerns were 7 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 completed before 6.10.2010. The period within which notice u/s.143(2) could be issued by the department also expired. The assessment proceedings of various group companies and sister concerns of the assessee were completed before the date of search. During the course of survey a statement was recorded by the survey team which pertains to Shri Naresh Kumar Chhaparia. During the course of appellate proceedings, before the ld. CIT(A), ld. AR for the assessee requested ld. CIT(A) to cross-examine the statement of Shri Naresh Kumar Chhaparia. Mr.Naresh Kumar Chhaparia subsequently retracted by an affidavit stating that statement recorded by the survey team is wrong and should not be relied upon because the statement had been taken by the survey team with threat and coercion. In the affidavit dated 11.10.2010, Shri Naresh Kumar Chhaparia has stated as follows :-
"6. That the survey operation was started around 2.P.M on 7.10.2010 and continued up to 2.30 A.M of 08.10.2010.
7. That the survey team was continuously harassing to convert the survey into search and also to cover my residence in search. They also threatened to disturb my business and all my clients. Due to this tremendous mental pressure by the Income Tax Officers during the survey operation which continued from afternoon of 07.10.2010 to after midnight of 07.10.2010. I was completely exhausted, tensed and had lost my mental balance under the continuous pressure from the Income Tax Authorities.
8. That in the course of the survey, the Authorised Officer and other survey teams threatened me that if I did not sign on oath the recorded statement prepared by the survey team then survey will be converted to search and I would face continuous harassment from the Income Tax Authorities and the same would be extended to my relatives, associates and persons having any type of business transactions with my company or with me.
9. That, the survey team continuously mentally tortured and threatened me and not allowed me to consult with my Chartered Accountant, family members or friends.
10. That, under such exhaustion, tension, depression & psychological fear, I signed the statement recorded by the Authorised Officer where it has been mentioned that my group companies have provided accommodation entries against which I earned a commission, which is completely wrong.8
IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08
11. That, the said statement was dictated by the authorised officer and I was forced to sign on the dotted line. Neither the companies mentioned above have given any accommodation entries nor I have received any commission."
Therefore, ld. AR for the assessee has submitted that Mr.Naresh Kumar Chhaparia had retracted and, therefore, his statement should not be relied upon. It is a settled position of law that a statement of double speaking person cannot be relied upon. Ld. AR for the assessee has submitted that at the time of original assessment u/s.143(3)/143(1) the assessee had submitted before the AO the evidence and documents such as copy of audited accounts, income tax return, bank statement, memorandum of association, article of association, investment schedule, payment details, source of fund, income of business etc. Neither the search team nor the survey team found out any incriminating document except a statement of Mr.Naresh Kumar Chhaparia who has later on retracted by an affidavit. Therefore, without any incriminating document, the assessment u/s.153A cannot be made. Ld. AR for the assessee has also relied on the following judgments :-
i) M/s MSP Steel & Power Ltd. IT(SS)A No.156-158/Kol/2014, order dated 02.12.2016) :
7. We have heard the rival submissions. We find it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the Act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessments for the Asst Years 2007-08 & 2008-09 were originally completed u/s 143(1) of the Act and time limit for issuance of notice u/s 143(2) of the Act had expired on the date of search and hence it falls under concluded proceeding, as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to those concluded years, the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and those proceedings were not pending on the date of search to get themselves abated. We find that the Co-ordinate Bench of this 9 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 tribunal in the case of Rahee Track Technologies Pvt Ltd vs DCIT in IT(SS)A Nos. 08 to 13/Kol/2015 dated 7.10.2016 had elaborately dealt with this issue by duly considering the decisions of Hon'ble Delhi High Court in the case of Kabul Chawla and Hon'ble Jurisdictional High Court in the case of Salasar Stock Broking Ltd , among other decisions had held as below:-
"2.11. We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act , as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. Hence the arguments advanced by the ld DR in this regard deserves to be dismissed.
Respectfully following the aforesaid decision, we hold that the additions made in the assessments framed u/s 153A of the Act for the Asst Years 2007-08 and 2008-09 in the absence of incriminating materials found in the course of search relatable to those assessment years, deserve to be deleted. Accordingly, the Ground No. 1 for Asst Years 2007-08 and 2008-09 raised by the assessee are allowed.
ii) Salasar Stock Broking Ltd., G.A.No.1929 of 2016 & ITA No.264 of 2016, dated. 24.08.2016 :
"We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under 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 10 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A.The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances."
iii) Veerprabhu Marketing Ltd., [2016] 73 taxmann.com 149 (Calcutta) :
7. With respect to the second submission advanced by Mr. Jain, we called upon Mr.Nizamuddin in vain to show us the incriminating material, if any, found either during the search or during the requisition or even during the survey which is or may be relatable to the assessee. Mr.Nizamuddin as unable to show that any such incriminating material was unearthed at any of the three stages pertaining to the assessee.
8. We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A.
9. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances.
iv) M/s Howrah Gases Limited, IT(SS)A No.26&27/Kol/2015, order dated 18.11.2016 :
5. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the impugned disallowance of Rs.41,14,917/- under section 40(a)(ia) was made by the Assessing Officer in the assessment originally completed under section 143(3) vide an order dated 31.12.2007, which had already become final before the search and seizure action took place in the case of the assessee on 06.10.2010. the said assessment thus did not abate as a result of search conducted in the case of the assessee not going by the limited scope of proceedings under section 153A which is only to reassess the income of the assessee for the year under consideration on the basis of incriminating material found during the course of the search, it was not permissible to the assessee to raise the issue relating to the disallowance under section 40(a)(ia) made in the assessment originally completed under section 143(3), which had already become final. We, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) upholding the action of the Assessing Officer in not allowing any relief to the assessee on the issue of disallowance under section 40(a)(ia) made in the 11 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 assessment originally completed under section 143(3), which had become final and upholding the same on this issue, we dismiss this appeal filed by the assessee for A.Y.2005-06."
v) Budhiya Marketing Pvt. Ltd., (2015) 154 ITD 0650 Kolkata :
22. In view of the decision of Special Bench in the case of All Cargo Global Logistics Ltd. (supra ), no doubt the addition in the case of the assessee can be made by the Assessing Officer only on the basis of incriminating material found during the course of search under section 153A as in the case of the assessee the assessment was not abated for the impugned assessment years in respect of which proceedings were taken under section 153A.
25. We noted that in the case of the assessee, the addition has been made in each of the assessment years on account of the share capital and the share premium as well as the disallowance of the expenses. During the course of the search taken place in the case of the assessee, we noted that no incriminating material was found in respect of the additions made by the Assessing Officer in each of the assessment years. The only material which was found was the Bank account which the assessee was having with the banker. The said Bank account was duly disclosed in the income-
tax return filed by the assessee. The said Bank account can also not be regarded to be the incriminating material. Even the Assessing Officer has also not made any addition on the basis of said bank account in each of the assessment years. The banker has made the Pay Order in respect of the balance of the Bank account in favour of the Revenue as per the order of ADIT and only that Pay Order was seized. It is not the case that the Bank account was not disclosed. Except the Bank account, no other assets, documents or material were brought to our knowledge by the ld. D.R., which has been found or seized by the Department, so that it could be regarded to be the incriminating material in respect of the share capital and the share premium as well as the disallowance of the expenses in respect of which the addition has been made in the assessment completed under section 153A. Since there was no incriminating material found in the course of the search and brought to our knowledge by the ld. D.R. in respect of the share capital and share premium, therefore, we are of the view that no addition on this account can be made in the case of the assessee in each of the assessment years.
vi) Shanti Kumar Surana, (2015) CCH 0241 Kol Trib :
In view of the facts in entirety and the legal principles enunciated by Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (NhavaSheva) Ltd., supra, of Hon'ble Allahabad High Court in the case of Shaila Agarwal, supra and Mumbai Special Bench decision in the case of All Cargo Global Logistics, supra, we are of the view that there is no incriminating material found during the course of search in the present case for 12 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 these assessment years, except the statement of one Shri Sambhu Kr More, as admitted by the AO in his remand report dated 23.09.2011 and despite number of opportunities revenue could not produce any incriminating material before the Bench and the assessments are already completed for these assessment years originally, the assessments framed u/s. 153A of the Act is invalid and hence, quashed. (Para 15)
8. On the other hand, ld. DR for the revenue has submitted that Section 132 & Section 153A of the Income Tax Act do not talk about incriminating documents/material. Ld. DR pointed out that with the help of statement of Mr.Naresh Kumar Chhaparia, it is quite clear and there is a direct nexus between his statement and the companies who gave accommodation entries. Mr.Naresh Kumar Chhaparia has admitted in his statement that he is an entry operator. Ld.DR also pointed out that Mr. Naresh Kumar Chhaparia did not attend the proceedings u/s.131 of the Act. Mr. Naresh Kumar Chhaparia is engaged in raising bogus funds and he is director in several companies which is shell Companies(JamaKharchi Companies). Mr. Naresh Kumar Chhaparia after his statement recorded by the survey team did not report to the Income Tax Authorities that statement was taken by force or by coercion. Ld. DR also pointed out that the statement of Mr.Naresh Kumar Chhaparia is itself a new incriminating document and there is entire nexus which has established by his statement. Ld. DR also pointed out that retraction by Mr. Naresh Kumar Chhaparia is afterthought process and should not be relied on his affidavit. Ld.DR has also relied on the following judgments :-
i) ST. Francis Clay Decor Tiles, [2016] 70 taxmann.com 234 (Kerala)
ii) Anil Kumar Bhatia, [2012] 24 taxmann.com 98(Delhi)
iii) Filatex India Ltd., (2014) 49 taxmann.com 465 (Delhi)
iv) Dr.P.Sasikumar, (2016) 73 taxmann.com 173 (Kerala)
v) GaribdasChandrika Prasad, (1997) 95 TAXMAN 431 (MP) The sum and substance of the above mentioned judgments are that retraction by Mr.Naresh Kumar Chhaparia is afterthought process and should not be relied on his affidavit. The Assessing officer may assess 13 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 the income of concluded assessments under section 143(3) and under section 143 (1)/147.
9. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the judgments of jurisdictional ITAT and Hon'ble High Courts. Ld. AR has pointed out that no incriminating documents was found either during survey or during search procedure. The statement of Shri Naresh Kumar Chhaparia should not be relied on, because he is a double speaking person. The assessment proceedings were completed before the date of search. Besides, the time limit to issue notice u/s.143(2) was also expired. In order to initiate assessment proceedings u/s.153A, there should be a new or incriminating document. The assessment which is already completed u/s.143(3)/143(1)should not be reopened. Therefore, considering the scheme of Section 132 and Section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of Section 153A. Ld. DR for the revenue had pointed out that there is a direct nexus among the companies, which has been established by the statement of Mr.Naresh Kumar Chhaparia, which cannot be relied on, as he was a double speaking person. Therefore, considering the factual position and the judgments cited by ld. AR, we are of the view that the additions made by the AO u/s.153A and confirmed by the ld. CIT(A) needs to be deleted. Therefore, we delete the addition.
10.In the result, appeal filed by the assessee on ground No.1[IT(SS)A No.47,49,50,51,52,54,55,94,95,96/Kol/2015] is allowed.
11. Next ground relates to addition u/s.68 - (cash credit) on account of share application money/share capital.
12. Ld. AR for the assessee has submitted that in order to make the addition u/s.68, the AO had relied mainly on the statement of Shri 14 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 Naresh Kumar Chhaparia. The Ld. CIT(A) also relied on the statement Shri Naresh Kumar Chhaparia. The Ld. CIT(A) did not take into cognizance of the denial affidavit of Shri Naresh Kumar Chhaparia, as he had subsequently retracted by the affidavit, therefore, he is a double speaking person and his statement should not be relied on. Besides, no cognisance was taken by the AO or ld. CIT(A) of the notice issued by the AO u/s.133(b) and reply received from share applicants in response to notice u/s.133(6) along with supporting documents. No any corroborate material in support of statement of Shri Naresh Kumar Chhaparia was brought by the AO. Even ld. CIT(A) could not bring any corroborative material in support of the statement of Shri Naresh Kumar Chhaparia, who had subsequently denied. Hence, the statement given by Shri Naresh Kumar Chhaparia cannot be relied at all. All the share applicants have submitted the adequate evidence with supporting documents. No addition can be made without any incriminating documents. In addition to this, the assessee under consideration has proved the identity, creditworthiness and genuineness of the transactions. Therefore, ld. AR submitted that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person because later on he retracted. The assessee has proved the identity, creditworthiness and genuineness of the transactions during the proceedings. Therefore, addition made by the AO and confirmed by the ld. CIT(A) may be deleted. Ld. AR has also relied on the following judgments :-
i) Zimkele Commodeal Pvt. Ltd., ITA No.959/Kol/2011, dated 24.08.2016 :
7.7. We find that the issue is also covered by another Jurisdictional High Court decision in the case of CIT vsMitul Krishna Kapoor in ITA No. 333 of 2009 dated 9.6.2016) wherein the question raised and the decision rendered thereon are reproduced below:-
"Whether on the facts and in the circumstances of the case the Learned Tribunal is justified in law in confirming the order of C.I.T.(Appeals) in deleting the addition of Rs.33,90,000/- and Rs.72,57,686/- made under Section 68 of the Income Tax Act, 1961?"15
IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 Addition of a sum of Rs.33.90 lakhs was made on the basis that the assessee had allegedly taken loan from the corpus fund, which the assessee has denied.
The assessing officer proceeded to add this sum of Rs.33.90 under section
68. C.I.T.(A) has clearly held that there is no knowledge as to what the corpus fund is. The C.I.T. also opined that there was no material on the basis of which the aforesaid addition could be made and on that basis the C.I.T. deleted the addition. The learned Tribunal concurred with such finding of the C.I.T.(A).
As regards other sum of Rs.72,57,686/- is concerned, the addition was found altogether unmeritorious because "all these amounts are paid by cheque out of accounted fund in the regular books of accounts. A copy of the confirmation along with the bank statement in respect of the assessee's accounts with Bharat Overseas Bank is filed, duly confirmed by Shri A E Medhora on behalf of M/s. Novrojee & Co. A copy of the bank account disclosed and the regular books of accounts were filed before the Ld.CIT(A) which were also made available before the AO. Based on these submissions, the ld.CIT(A) has deleted the same."
The facts and circumstances of the case, we are sorry to say, depict clear abuse of power of the assessing officer.
We were inclined to impose exemplary costs upon the revenue but refrained from doing so because notice of this appeal has not been given to the respondent. No one has appeared. The question formulated in this case is answered in the affirmative and against the revenue.
The appeal is, therefore, dismissed."
7.8. We also find that the issue under appeal is also covered by the decision of the Hon'ble Delhi High Court in the case of CIT vs Divine Leasing & Finance Ltd reported in (2008) 299 ITR 268 and also various other decisions relied upon by the ld AR which are not considered here for the sake of brevity.
7.9 In view of the aforesaid findings and respectfully following the decisions of Hon'ble Apex Court supra ;Hon'ble Jurisdictional High Court (supra) and co-ordinate bench decisions of various tribunals, we find no infirmity in the order of the Learned CIT(A) and accordingly, the grounds raised by the revenue are dismissed.
ii) Global Mercantiles Pvt. Ltd., ITA No.1669/Kol/2009, (2016) 46 CCH 0041 Kol Trib :
16IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 4.2. On first appeal, the Learned CIT(A) observed that the entire share application monies of Rs. 57,00,000/- were received during the previous year 2004-05 relevant to Asst Year 2005-06 from 20 persons and the shares were allotted to them during the asst year under appeal. He observed that the assessee had furnished details of the share applicants giving the date wise receipts, mode of payment, amount, name, address, income tax returns, PA No. of share applicants along with their balance sheet. The Learned CITA also observed that the assessee in its reply to show cause notice before the Learned AO had requested him to use his power and authority for the physical appearance of the shareholders which was not exercised by the Learned AO. Instead the Learned AO continued to insist on the assessee to produce the shareholders before him. He ultimately concluded that the assessee had duly discharged its onus of providing complete details of the shareholders and in any case, no addition could be made u/s 68 of the Act in the asst year under appeal as no share application monies were received during the asst year under appeal.
Aggrieved, the revenue is in appeal before us by filing the following ground:-
"That in the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made u/s 68 in respect of the allotment of shares to 20 numbers of individual investors for an amount of Rs. 57 lakhs, where genuineness of the transactions and creditworthiness of the investors were not established."
4.3. The Learned DR prayed for admission of the additional ground raised before us and vehemently supported the order of the Learned AO. In response to this, the Learned AR fairly conceded to admission of this additional ground and vehemently supported the order of the Learned CIT(A).
4.4. We have heard the rival submissions and perused the materials available on record including the detailed paper book filed by the assessee. We find that the additional ground raised by the assessee separately before us vide its covering letter dated 9.12.2011 is admitted as it appears to be a genuine and bonafide error of omission on the part of the revenue from not raising this ground in the original grounds of appeal filed along with the memorandum of appeal. Moreover, it does not require any fresh examination of facts. Hence the same is admitted herein for the sake of adjudication.
4.4.1. We find from the details available on record that the share application monies from 20 individuals in the sum of Rs. 57,00,000/- has been received by the assessee during the financial year 2004-05 relevant to Asst Year 2005-06 and only the shares were allotted to them during the asst year under appeal. Admittedly no monies were received during the asst year under 17 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 appeal and hence there is no scope for invoking the provisions of section 68 of the Act . Hence we hold that the order passed by the Learned CITA in this regard does not require any interference. Accordingly the ground no. 3 raised by the revenue is dismissed.
iii) Sri Rakesh Bhartia, ITA No.428/Kol/2012, order dated 29.02.2016:
9. We have heard the rival submissions and perused the material available on record including the detailed paper book containing the statement of computation of total income for the AY 2008-09 & salary certificate to this effect in page 1-5 of the assessee's paper book, assessee's personal balance sheet as at 31.03.2008, Capital A/c & Income & Expenditure A/c in page 6-8 of the paper book, Copies of loan confirmation issued by M/s. Bright Impex & Agencies Pvt. Ltd for the FYs. 2007-08, '08-09 & '09-10 in pages 13-15 of the paper book, copy of audited annual financial accounts of M/s. Bright Impex & Agencies Pvt. Ltd for the FY 2007-08 in pages 16- 28 of the paper book, copy of bank statement in respect of Current A/c No.95111010006717 of M/s. Bright Impex & Agencies Pvt. Ltd in pages 29-32 of the assessee's paper book, PAN details of M/s. Bright Impex & Agencies Pvt. Ltd in page 33 of the assessee's paper book and copy of ld. AO's Remand report in pages 35-36 of the assessee's paper book. On perusal of the aforesaid papers, we find that the lending company, M/s. Bright Impex & Agencies Pvt. Ltd has got paid up capital of Rs.3,25,85,000/- as on 31-03-2008 and Reserves & Surplus of Rs.26,87,67,396/- as on 31-03-2008. We also find that the said lending company, M/s. Bright Impex & Agencies Pvt. Ltd is a registered Non Banking Financial Company (NBFC) engaged in the business of granting of loans and advances and had indeed derived interest income of Rs.1,70,95,047/- from money lending business during the financial year 2007-08. We also find from the bank statement of lending company i.e M/s. Bright Impex & Agencies Pvt. Ltd, that there are several high value transactions with different persons through out the year. It is not the case of the ld.AO that the cash was deposited in the bank account of the loan creditor immediately before issuing the cheques to the assessee.
We also find that the entire loan of Rs. 2.5 crores have been paid by the loan creditor by 3 account payee cheques drawn on Syndicate Bank, Esplanade Branch, Kolkata. These facts have been cleared through banking channels. We also find that the entire loan has been repaid by the assessee in May- June 2009 by account payee cheques, which was also confirmed by the loan creditor. We find that the assessment has been completed in this case on 27- 12-2010, which is after 18 months from the date of repayment of the loan by the assessee. All these facts prove the genuineness of the transaction beyond doubt. We further find that the assessee has duly filed confirmation letters from the loan creditor by duly disclosing its income tax particulars. We find that the loan transaction of Rs. 2.5 crores have been duly reflected in the 18 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 balance sheet of the loan creditor, which were also placed before the ld.AO. However, the ld.AO based on certain factual errors committed by him with regard to the status and creditworthiness of the loan creditor that it is assessee's own money, which has been laundered and found it is way back to his own coffers in the garb of loan from M/s. Bright Impex & Agencies Pvt. Ltd . From the facts and material available on record, we find that the assessee has duly proved his complete onus with regard to the identity of the creditor, genuineness of the transaction and creditworthiness of the creditor and had satisfied all the three ingredients of section 68 of the Act. We find that the ld.AO had not chosen to issue summon/notice u/s. 133(6)/131 of the Act to verify the loan creditor and its veracity together with the creditworthiness of the loan creditor. We find that the wild allegation is made by the ld.AO that the assessee has laundered his unaccounted money/income and the same is brought back in the form of loan. We find from the entries of the bank statement of the loan creditor that no cash was deposited in the account of the loan creditor immediately before issuing the cheques to the assessee. On the contrary, there were other high value transactions reflected in the bank statement of the loan creditor. Hence, the basic allegation that the assessee has laundered his unaccounted income is not prima facie proved by the ld. AO even during the remand proceedings when the ld.AO got the second opportunity to make necessary verification by using his statutory powers vested on him and provided to him in the statute. We find that the facts of the case clearly proved that the assessee had completely discharged his onus by filing all the documentary evidences in support of the loan transaction from M/s. Bright Impex& Agencies Pvt. Ltd in terms of section 68 of the Act. Hence, it is fully covered by the decision of the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corporation reported in 159 ITR 78(SC). The facts before the Hon'ble SC and the facts of the case before us are exactly similar. Hence, the addition made on this count u/s. 68 of the Act based on mere surmises and suspicion is hereby deleted. This ground of revenue's appeal is also dismissed.
iv) Harshwardhan Gems Pvt. Ltd., ITA No.1070/Kol/2010, order dated 03.02.2016:
6. In the instant case also facts and circumstances are identical as the assessed has prima facie proved the identity of the share subscriber, the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels, the creditworthiness or financial strength of the share subscriber. The relevant details of the address or PAN identity of the share subscriber are furnished to the AO along with copies of the Shareholders Register, Shared Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee. The revenue would not be justified in drawing an adverse inference only because the share applicant failed to respond to notices. As held by Hon'ble Delhi 19 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 High Court AO is duty-bound to investigate the creditworthiness of the share applicant and the genuineness of the transaction.
Further, the AO the assessed has discharged its onus of proving the identity of the share applicants. In the given facts the AO had not brought any material or evidence which would indicate that the share applicants were (a) benamidars or (b) fictitious persons or
(c) that any part of the share capital represented the company's own income from undisclosed sources. In view of the facts and precedent before us, we Harshwardhan Gems Pvt. Ltd., AY 2005- 06 are of the view that CIT(A) has rightly deleted the addition and we confirm the order of CIT(A) on this issue.
v) PrabhuDhan Infrastructure Pvt. Ltd., ITA No.1908/Kol/2012, dated 20.01.2016:
7. As far as receipt of share application money from Kalisaran Properties (P)Ltd is concerned the facts are almost identical. Kalisaran Properties (P)Ltd held ITA No.1908/Kol/2012 - PrabhuDhan Infrastructure Pvt.Ltd., ,A.Y.2005-06 investments worth Rs.10,00,000/- in Prabhudhan Securities (P)Ltd as on 31.03.2004. These investments were liquidated and utilised in making investments in share application money with the assessee. The letter of Kalisaran Properties (P)Ltd in this regard is at page 1 of the paper book. Pages 3 and 4 is the bank statement of Kalisaran Properties (P)Ltd with Federal Bank. The entries in the bank account clearly demonstrates the factum of realisation of investment in Prabhudan Securities Pvt. Ltd by Kali Saran Properties (P)Ltd and such proceeds being utilised to make investments in share application money of the assessee company. The reasons assigned by the and CIT(A) for making addition u/s 68 of the Act are identical as were given while treating the investments by Jai Kali Properties (P)Ltd as unexplained. It is clear from the evidence on record that the assessee has established the identity and creditworthiness and genuineness of the transactions of the receipt of share application money from M/S.Kalisaran Properties (P) Ltd. We, therefore, hold that the addition made by the AO and sustained by CIT(A)should be deleted.
vi) Kunj Alloys Pvt. Ltd., ITA No.239/CTK/2007, order dtd. 27.11.2015 :
9. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld.
D.R. has relied on the order of the Assessing officer in support of the Revenue's case on this issue, the ld. Counsel for the assessee has pointed out that the total amount of Rs.19.26 crores was raised towards shares by the assessee- Company as well as other group Companies including the amount in question during the assessment years 2001-02 to 2007-08. He has submitted that pursuant to the search conducted in the case of all these group Companies including the assessee-Company, the entire amount of 20 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 share capital raised was verified by the Assessing Officer and the same was accepted and no addition under section 68was made by him after having found that the identity and capacity of the concerned creditors as well as genuineness of the relevant transactions was duly established by group Companies including the assessee-Company. He has also filed summary of the relevant extract of the notings made by the Assessing Officer in this regard, which shows that fresh notices issued by the Assessing Officer under section 133(6) of the Act were duly served on all the shares subscribers and the same were also duly complied with by them by filing the relevant details and documents. In the light of the said details and documents filed by the concerned share subscribers, it was held by the Assessing Officer that their identity and capacity as well as the genuineness of the relevant transactions were duly established and no addition under section 68 was called for. Keeping in view these submissions made by the ld. Counsel for the assessee, which have not been disputed or controverted by the ld. D.R., we find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) deleting the addition of Rs.1,35,00,000/- made by the Assessing Officer under section 68 and upholding the same on this issue, we dismiss the appeal of the Revenue.
vii) Roseberry Mercantile (P) Ltd., GA No.3296 of 2010 ITAT No.241 of 2010, order dated 10.01.2011:
On appeal the Learned CIT (A) by following the decision of the Supreme Court in the case of C.I.T. vs. M/s. Lovely Exports Pvt. Ltd., reported in (2008) 216 CTR 195 allowed the appeal by holding that share capital/premium of Rs.24,00,000/- received from the investors was not liable to be treated under Section 68 as unexplained credits and it should not be taxed in the hands of the appellant company.
As indicated earlier, the Tribunal below dismissed the appeal filed by the revenue.
After hearing the learned counsel for the appellant and after going through the decision of the Supreme Court in the case of C.I.T. vs. M/s. Lovely Exports Pvt. Ltd. [supra], we are at one with the Tribunal below that the point involved in this appeal is covered by the said Supreme Court decision in favour of the assessee and thus, no substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed.
In view of the dismissal of the appeal, the connected stay application is also dismissed.
13. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the 21 IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07-08,05-06,07-08,07-08,10-11,&07-08 submissions of the assessee, as the propositions canvassed by the ld.
AR for the assessee are supported by the judgments of the ITAT and Hon'ble High Courts. The Ld. AR pointed out that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person and later on he reiterated the statement by filing the affidavit. The share applicants have submitted the required document and evidences. The addition made by the AO u/s.68 is without any basis and without any incriminating material. The assessee has proved the identity, creditworthiness and genuineness of the transactions. Therefore, considering the factual position and the case law cited by ld. AR, we are of the view that the addition made by the AO u/s.68 and confirmed by the ld. CIT(A) needs to be deleted. Accordingly, we delete the addition.
13.In the result, appeals filed by the assessee [IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015.] on this ground are allowed.
Order pronounced in the open court on this 06/01/2017.
Sd/- Sd/- (S.S.VISWANETHRA RAVI) (DR. A.L.SAINI) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER कोलकाता/Kolkata; दनांक Dated 06/01/2017 काश म ा/Prakash Mishra, न.स/ PS आदे शक त ल पअ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant- 2. यथ / The Respondent.- 3. आयकरआयु#त(अपील) / The CIT(A), Kolkata. 4. आयकरआयु#त/ CIT
5. %वभागीय त न)ध, आयकरअपील+यअ)धकरण, कोलकाता/ DR, ITAT, Kolkata
6. गाड.फाईल / Guard file. ु ार/BY ORDER, आदे शानस स या%पत त //True Copy// उप/सहायकपंजीकार (Asstt. Registrar) आयकरअपील!यअ"धकरण, कोलकाता / ITAT, कोलकाता