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08-03-2019, Consortium Enterprises, Section 153C, 153A, Tribunal Kolkata

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2 months 1 week ago #8769 by amit
Section - 153C, 153A, 132
Order Date - 08-03-2019
Favouring - Assessee
Court - Tribunal Kolkata
Appellant - DCIT
Respondent - Consortium Enterprises Pvt. Ltd.
Justice - A. T. Varkey, JM & Dr. A. L. Saini, AM
Citation - 319Taxpundit218
Appeal No. - I.T(SS).A. No. 88/Kol/2017
Asstt. Year - 2009-10

Order

PER : A.T.Varkey, JM

This appeal preferred by the revenue is against the order of the Ld. CIT(A)-20, Kolkata dated 21.03.2017 for AY 2009-10.

2. This appeal of revenue is time barred by 26 days and a condonation application dated07.07.2017 has been filed by the Revenue explaining the reasons for condonation of delay. After perusing the condonation application and hearing both the sides, we condone the delay in filing the appeal of the revenue.

3. At the outset itself, it has been brought to our notice that this case is covered in assessee’s own case for AYs 2008-09 and 2010-11 by this Tribunal. According to Ld. AR, there was a search u/s. 132 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) which was conducted on 18.02.2013 at the residence, offices, factories and other business concerns of the M/s. Rashmi Group and the assessment for this year was not pending before the AO on the date of search. Since it was not an unabated assessment, the AO could not have made any addition without the aid of any incriminating material and the Ld. CIT(A) has given relief to the assessee taking note of the decision of the Hon’ble Delhi High Court in CIT Vs. Kabul Chawla (2016) 380 ITR 573 (Del), the decision of Hon'ble Calcutta High Court in ITA No. 661 of 2008 Commissioner of Income Tax vs.Veerprabhu Marketing Ltd. and Hon’ble Delhi High Court in Pr. CIT Vs. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571 (Del) which decision has been upheld by Hon’ble Supreme Court reported in (2016) 380 ITR (St.) 69-ed. We note that the Ld. CIT, DR assailed the decision of the Ld. CIT(A) and contended that in Sec. 153A proceedings, there is no necessity of any incriminating materials and the very concept of incriminating materials is alien to the scheme of the search proceedings u/s. 153A of the Act. However, during the hearing before us, we asked to Ld. CIT, DR the pointed question as to whether the AO has made any addition on the basis of incriminating materials and the Ld. CIT, DR could not point out from the assessment order that AO took the aid of any incriminating materials unearthed during search qua this assessment year to make the addition. We note that undisputedly this assessment year was not pending before the AO on the date of search and so it is an unabated assessment. So as per the settled law, in sec. 153A assessment, for assessment of unabated assessment as n the present case, no addition/disallowance can be made without the aid of incriminating materials unearthed during search qua this assessment year. In such a scenario, taking note of similar facts and law, we note that in assessee’s own case in IT(SS)A Nos. 72 and 73/Kol/2017 for AYs 2008-09 and 2010-11 order dated 05.12.2018, the Tribunal has upheld the action of Ld. CIT(A) on the same reasoning and decided as under:

“8. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:-

8.1. We first consider the legal position as to whether, an addition can be made in an assessment u/s 153A r.w.s. 143(3) of the Act, which is not based on any incriminating material found during the course of search and seizure, when the assessment for the Assessment Years in question have not abated. In the case on hand, the assessee filed its original return of income on 29/09/2008 for the Assessment Year 2008-09 and on 24/09/2010 for the Assessment Year 2010-11. The time limit for issual of notice u/s 143(2) of the Act, was 30/09/2009 and 30/09/2011 respectively for Assessment Year 2008-09 & 2010-11. The search and seizure operation was conducted in this case on 18/02/2013. The statutory period for issual of notice u/s 143(2) of the Act, in the case of both the Assessment Years had expired prior to the date of search operation. Hence the assessment for the impugned Assessment Years have not abated. The Assessing Officer made the addition in question by observing as under at page 14 & 15 of the assessment order:-

I) Names of the companies appealing m statements of the entry providers given to investigation wing figure as applicants to shares in the assessee company.

II) Perusal of the operating bank a/c shows that the a/c of most of the investing companies is in the same bank as that of the assessee company.

III) There is no justification on record whatsoever as to whether the company's credentials commanded a huge share premium, particularly when the same is being paid by strangers.

IV) Summons U/S 131 to such persons I company have not been adequately responded and the assessee has failed to produce them in response to the show- cause notice.

V) The findings that the investing companies which subscribed to the shares were borne on the file of the ROC and that the monies have come through a/c payee cheques is at best, neutral. Mere payment by cheques is not sacrosanct as would not, make a non-genuine transaction as genuine.

VI) Bonafide and genuineness of the transactions is the main issue and in this regard, the assessee company has failed miserably.

VII) Scrutiny has revealed the camouflage adopted by the assessee and exposed the true nature of the transactions.

VIII) Onus is on the assessee to prove the identity of share applicants, their creditworthiness and genuineness of the transactions appearing in its books of sale
which is not proved in this case. In fact, genuineness of the transactions has not been established in spite of repeated opportunities.

IX) There is enough material on record to doubt the veracity of the transactions.”

A perusal of the above demonstrates that the additions in question are not based on any incriminating material found during the course of search.

8.2. On the legal position, we find that the various Courts of law under similar circumstances have held as follows:-

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