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Income Tax Appellate Tribunal, DELHI ‘C’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS. ASTHA CHANDRA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
The above captioned three separate appeals by the assessee in
the case of Indo Autotech Ltd are preferred against the order of the ld.
CIT(A) - 29 New Delhi pertaining to Assessment Years 2010-11, 2011-12
and 2013-14 respectively. The other four captioned separate appeals
by the assessee in the case of Admach Auto India Limited are preferred
against the order of the ld. CIT(A) - 29 New Delhi pertaining to
Assessment Years 2010-11, 2011-12, 2012-13 and 2013-14 respectively.
The common challenge in the captioned appeals of both the
assessees relates to the validity of the assessment framed u/s 153A
r.w.s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as
'The Act'].
The underlying facts in the issues are common and identical in
the captioned appeals. Therefore, they are being disposed of by this
common order for the sake of convenience and brevity.
Briefly stated, the underlying common fact is that a search and
seizure operation u/s 132 of the Act was carried out on Sajan Kumar
Group of cases including the captioned assessees. Simultaneously, an
independent search was also carried out in the case of Shri Pradeep
Kumar Jindal Group of cases on the very same date i.e. 18.11.2015.
During the course of search operation, in the case of Shri
Pradeep Kumar Jindal, certain incriminating documents were found
and seized, basis which the Revenue formed a belief that Shri Pradeep
Kumar Jindal was providing accommodation entries to Shri Sajan Kumar
group companies and his family members.
During the course of assessment proceedings, the impugned
appellants were asked in respect of details of accommodation entries
on the basis of seized documents from Shri Pradeep Kumar Jindal.
Basis the alleged entries found in the seized documents from Shri
Pradeep Kumar Jindal, the impugned additions were made. The
additions were made mainly on account of accommodation entries
received through share/share premium and the alleged commission
paid for procuring accommodation entries from Shri Pradeep Kumar
Jindal as unexplained expenditure u/s 69C of the Act.
In ITA No. 6794/DEL/2018, there is also an addition of Rs. 52.50
lakhs which is on the basis of some documents found and seized during
the course of search proceedings from the office premises of Indo
Autotech Ltd.
Additions were challenged before the ld. CIT(A) by the appellants
but without any success.
We have heard the rival submissions and have carefully perused
the orders of the authorities below. The common facts resulting into
the impugned additions have been explained hereinabove. It would be
pertinent to refer to the impugned assessment order. It can be seen
that the impugned assessment orders are framed u/s 153A r.w.s 143(3)
of the Act.
As mentioned elsewhere, the basis of assessments are alleged
incriminating material found from Shri Pradeep Kumar Jindal, which
incriminating material/information may have belonged to the
appellants and its group companies. In our considered opinion, in such
a situation, the Legislature has provided section 153C in the Statute to
frame the assessment. If the Assessing Officer frames the assessment
without resorting to the dedicated section provided by the legislature,
the whole exercise of enacting such a provision would become futile.
Similar was the fate of members of the family, namely Shri
Anand Kumar Jain, HUF, Individual, Shri Satish Dev Jain. In their
respective cases also, under similar circumstances, assessment was
framed u/s 153A r.w.s 143(3) of the Act. In their cases also, basis of
the addition was a statement of Shri Pradeep Kumar Jindal recorded on
oath u/s 132(4) of the Act wherein he admitted to providing
accommodation entries to Shri Anand Kumar Jain, HUF and his family
members and the entries found in the incriminating material.
The quarrel travelled upto the Hon'ble High Court of Delhi and
vide order dated 12.02.2021 in ITA No. 23, 26 to 31/2021, the Hon'ble
High Court, inter alia, held as under:
“10. Now, coming to the aspect viz the invocation of section 153A on the basis of the statement recorded in search action against a third person. We may note that the AO has used this statement on oath recorded in the course of search conducted in the case of a third party (i.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be
construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the ITAT. Therefore, we do not find any substantial question of law that requires our consideration.”
Facts being identical, basis of addition are also similar and the
assessees considered by the Hon'ble High Court are members of same
group. Therefore, respectfully following the aforementioned judgment
of the Hon'ble Jurisdictional High Court of Delhi, we have no hesitation
in quashing the captioned assessment orders and decide the appeals in
favour of the assessees.
As mentioned elsewhere, in ITA No. 6794/DEL/2018, addition of
Rs. 52.50 lakhs is based upon some loose sheet found at the time of
search from the premises of Indo Autotech Ltd.
We have carefully perused the assessment order and also the
order of the first appellate authority. The Assessing Officer proceeded
to make the impugned addition on the basis that the seized documents
contained day-to-day expenditure detail for the date 06.03.2010.
When Shri Sajan Kumar Jain was confronted with the seized
documents, he explained that some RTGS payment of Rs. 50 lakhs was
planned for transfer to another bank of the assessee but the said
transaction could not materialize and, therefore, no such entry was
passed.
The Assessing Officer changed his view and asked the assessee to
explain why Rs. 50 lakhs should not be treated as unexplained
investment in shares and Rs. 2,50,000/- as commission paid.
It was again explained that the assessee was contemplating to
transfer Rs. 50 lakhs through RTGS which transfer did not materialize
and no such entries were passed and the same can be verified from the
bank account of the assessee.
The Assessing Officer finally made the addition holding that the
assessee has received accommodation entries of share
application/premium in lieu of cash and made addition of Rs. 52.50
lakhs which was confirmed by the ld. CIT(A).
As explained hereinabove, first the Assessing Officer proceeded
by treating the entries as unexplained expenditure and sought
explanation from the assessee. Then the Assessing Officer took the
view that the assessee has made investments and sought clarification
from the assessee, and without any further ado, he made the addition
as accommodation entries received by the assessee.
The conduct of the Assessing Officer is not only uncertain but full
of jigsaw puzzles. As no concrete evidence has been brought on record
to justify the addition, we have no hesitation in deleting the same.
Accordingly, the captioned assessment orders are quashed following
the judgment of the Hon'ble Jurisdictional High Court of Delhi [supra].
Since we have quashed the assessment orders, we do not find it
necessary to dwell into the merits of the case.
In the result, the appeals of the assessee in ITA Nos. 6794 to
6796/DEL/2018 and ITA Nos. 7095 to 7098/DEL/2017 is allowed.
The order is pronounced in the open court on 06.07.2022.
Sd/- Sd/-
[ASTHA CHANDRA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 06th JULY, 2022.
VL/