ACIT, CENTRAL CIRCLE- 13, NEW DELHI vs. JPM TOOLS LTD., NEW DELHI

4. The Revenue has raised following grounds of appeal in the case of M/s Jay Auto Components Ltd for AY 2008-09:- 1. “The Ld. CIT (A) has erred on facts and in law in deleting the addition made u/s 68 of the I.T Act, 1961 on account of receipt of share capital and share premium aggregating to Rs. 2, 53, 50, 000/- by the assessee company.

2. The Ld. CIT (A) has erred on facts and in law in observing that the statement recorded u/s 131 of the I.T. Act, 1961 has no evidentiary value despite the fact that specific details and corroborative banking transactions were identified by the entry operator.

3. The Ld. CIT (A) has erred on facts and in law in observing that requisite details and evidences were filed by the assessee to prove the genuineness of the claim despite the fact that the assessee company failed to produce the directors of the investing companies specifically asked for. ./2017 and 15 other appeals

4. The learned CIT (A) has erred on facts and in law in not even considering the statements of directors of the investing companies admitting that the investing companies in which they are directors, are actually paper companies meant for providing accommodation entries.

5. The appellant craves the leave to add, amend any/ all the grounds of appeal before or during the course of hearing of the appeal.”

5. That further, the assessee company has also filed applications under Rule 27 of ITAT Rules in as many as twelve appeals. The break – up of said appeals along with ground taken in Rule 27 application is extracted below:

Assessee’s Appeals involving legal issues under section 153A of the Act, as the assessments were final on date of search and additions are not based on incriminating material i) M/s Jay Iron & AY 2008-09: Steel Ltd. AY 2009-10: ITA No. 6639/Del/2017 AY 2010-11: ITA No. 6628/Del/2017 AY 2011-12: ITA No. 6629/Del/2017 ii) M/s JPM Tools AY 2010-11: ITA No. 7280/Del/2017 Ltd. AY 2011-12: M/s Jay Auto AY 2008-09: ITA No. 6627/Del/2017 Components Ltd. AY 2009-10: ITA No. 6622/Del/2017 AY 2010-11: ITA No. 6623/Del/2017 AY 2011-12: ITA No. 6624/Del/2017 iv) M/s Jay FE AY 2011-12: ITA No. 6640/Del/2017 Cylinder Ltd. v) M/s Jay Ace AY 2010-11: ITA No. 6638/Del/2017 Technologies Ltd.

“That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in overlooking the basic fact that no incriminating material was found during the course of search and the assessment as contemplated under section 153A is not a de novo assessment and as such, the additions so made by assessing officer are beyond the scope of assessment under section 153A of the Act and are liable to be deleted in totality”.

6. Since the aforesaid application filed under Rule 27 of ITAT Rules by the assessee involves purely a legal issue which goes to the root of the matter which has also been discussed and dismissed by learned CIT (A), hence, both the parties i.e. learned CIT DR and Learned Counsel for the assessee fairly agreed that the said legal issue may be taken up first and thereafter, the appeals on issues pertaining to merits may be taken up. As such, in view of the aforesaid, we are taking up the application under Rule 27, as filed by the assessee – respondents.

so taken in the application so filed under Rule 27 of the ITAT Rules. In support of the aforesaid ground and in addition to the oral arguments, the learned counsel for the assessee – appellant furnished brief written synopsis, which is being extracted here below for the sake of brevity and completeness of records: “Synopsis in Brief with regards to the legal issue i.e. additions so made in assessments framed under section 153A of the Act are beyond the scope of assessment, as the assessments were final on date of search and additions are not based on incriminating material 1. t the outset, it is most humbly submitted that the assessee – appellant has filed Rule 27 application on 24.07.2021 vide email with regards to 12 appeals, which involves consideration of legal issue and it is further submitted and prayed that “M/s Jay Iron & Steel Ltd.” may be taken as lead matter. As it contains all appeals which falls under Category 1 and 2. For instance, if appeal for AY 2008-09 is argued on legal and merits both, it will take care of 16 appeals falling in Category 1 and Category

2. That, if appeal for AY 2014-15 is argued, then the same will cover 5 appeals falling in Category

3. Thus, all in all, 21 appeals will be covered if M/s Jay Iron & Steel Ltd. is taken as the lead matter. As such, the chronological sequence of events with regards to the matter of M/s Jay Iron & Steel Ltd. for AY 2008-09, is as below:

Sr. Particulars Date No. Date of search u/s 132 of the Act 20.09.2013 i)

./2017 and 15 other appeals ii) Date of notice u/s 153A 08.06.2015 iii) Date of filing of original return of 27.09.2008 income at NIL (the said return of income was final on the date of search) iv) Date of filing of Return of Income 03.07.2015 under section 153A of the Act at NIL iv) Assessment u/s 153A Date of order 30.03.2016 Income assessed Rs.4,93,00,000/- v) Order of CIT(A) Date of order 26.08.2017 Findings Partly Allowed

2. It is most humbly submitted that, it is a settled position of law that the assessments under section 153A of the Act can only be made on the basis of incriminating materials unearthed/ gathered or found during the course of search with regards to the respective assessment year. That further, it is also a settled proposition that in the assessments under section 153A of the Act, additions cannot be made on post search enquiries by investigating team or by enquiries made by learned AO during the course of assessment. In order to support the aforesaid propositions, reliance is placed on following case laws:

a) Judgment of the High Court of Delhi in the case of CIT vs. Kabul Chawla reported in 380 ITR 573. b) Judgment of High Court of Delhi in the case of PCIT vs Jaypee Financial Services Ltd. reported in 280 Taxman 147. c) Judgment of the High Court of Delhi in the case of PCIT Meeta Gutgutia reported in 395 ITR 526. d) Judgment of the Supreme Court of India in the case of CIT vs Singhad Technical Education Society reported in 397 ITR 344.

10 ITA No.6627/Del./2017 and 15 other appeals e) Order of ITAT Delhi in the case of ACIT vs Moon Beverages Ltd. in to 118/Del/2018. f) Order of ITAT Delhi in the case of DCIT vs Sundaram IT Parks Pvt. Ltd. in ITA No. 5166/Del/2018. g) Order of ITAT Delhi in the case of ACIT vs M/s Five Vision Planners Pvt. Ltd. in ITA No. 4460/Del/2014. h) Judgment of High Court of Delhi in the case of PCIT vs M/s Dreamcity Buildwell Pvt. Ltd. in ITA No. 1152/2017. i) Order of ITAT Delhi M/s TDI Infrastructure Ltd. vs DCIT in ITA No. 5580, 4409, 4410 and 5072/Del/2012. j) Order of ITAT Delhi ACIT vs Realtech Construction Pvt. Ltd. (ITAT Delhi) in ITA No. 6569/Del/2016.

a) Share Certificates were found during the course of search, with regards to allotment of shares by Minda group of companies to various companies (kindly see page 18 of assessment order). These share certificates pertained to 8 companies, namely, M/s JA Builders Ltd, M/s JPM Automobiles Ltd, M/s IBER Medior Ltd, M/s JPM Tsukada Pvt Ltd, M/s Brilliant Jewels Pvt. Ltd, M/s JPM Tools Ltd, M/s JPM Farms Pvt. Ltd, M/s Jay Nikki Industries Ltd (kindly see page 60 to 61 of CIT (A) order). b) Party O – 2, Annexure A – 1 page 50 found and seized from the premises of M/s Jay Ushin Ltd. (kindly see pages 14 to 16 of AO’s order and pages 61 to 62 of CIT (A)’s order).

./2017 and 15 other appeals 5. With regards, to document seized from M/s Jay Ushin Ltd. marked as Party O – 2, Annexure A – 1, Page 50, it is most humbly submitted that a perusal of the said document, which has been extracted by learned AO at pages 14 to 16 of his order, would show that only transaction related to JPM group is with regards to receipt of unsecured loan of Rs. 95 lacs by M/s Jay Ace Technologies Ltd. from M/s Suhana Marketing Pvt. Ltd. and there is no other name which pertains to any of the companies of JPM Group. It is further, submitted that while framing the assessment of M/s Jay Ace Technologies Ltd. for AY 2013-14 (to which the document relates), no addition has been made by learned AO in the assessment under section 153A read with section 143(3) of the Act. Thus, here it is submitted that once the said document has been accepted to be recorded in books of accounts and no addition has been made with regards to the same, in the hands of M/s Jay Ace Technologies Ltd., the same document “cannot be treated as incriminating”, and that is why, even though the learned AO has referred the said document in the order of assessment, however, no adverse inference has been drawn with regards to the said document in the entire assessment order. Even the learned CIT (A) has recorded a positive finding in favor assessee (kindly see pages 61 to 62 of CIT (A) order).

6. With regards to copy of email seized and marked as Party O – 2, Annexure A – 4, Page 106, it is submitted that the same is only a simple email regarding discussion for future plan of restructuring and does not contain any financial transaction or have a bearing on the income of the assessee group. The said email has no where made any reference to any accommodation entry nor to any transaction with regards to the same. That is why, even though, the learned AO has referred the said document at pages 16 and 17 of his order, however, no adverse ./2017 and 15 other appeals inference has been drawn with regards to the said document while making the additions with regards to share capital. Even the learned CIT (A) at page 62 of his order, has recorded that the said email has no financial implication and as such, it is submitted that the said document cannot be termed as “incriminating in nature”.

7. In view of the aforesaid submissions and judgments sited above, it is most humbly submitted that none of the documents so found and referred in the order of assessment are incriminating in nature, as additions so made by learned AO are not based on these documents. The learned AO has merely referred the said documents in the order of assessment, however, makes no adverse inference while making the additions with regards to the issue of share capital. That further and even though the learned CIT (A) has decided the legal issue against the assessee (kindly see pages 59 and 60 of the order), however, while examining the aforesaid documents independently, the learned CIT (A) has recorded, that the said documents are duly disclosed in the books of accounts and have no financial bearing and as such, cannot be termed as incriminating in nature. Reliance is placed on the findings of learned CIT (A) at pages 60 to 62 of his order.

8. The aforesaid arguments take care of appeals in Category 1 i.e. 12 appeals with regards to the legal issue.”

• With regards to the share certificates of 8 companies seized during the course of search, it was submitted that even the learned AO has not made any adverse observations with regards to the said documents, as the same cannot be said to be incriminating in nature, since the share certificates merely records the details of shares issued and allotted which are duly recorded in the books of accounts prior to the date of search. These share

15 ITA No.6627/Del./2017 and 15 other appeals certificates were only the statutory records kept with the companies, to be filed before ROC and the same was kept by the Secretarial department of the companies for necessary legal compliances. Thus, here it is submitted that seizure of share certificates does not come within the definition of “incriminating material”, as the transactions so referred in the said share certificates are duly recorded and forms part of the books of accounts of the respective companies. This fact is also admitted by learned CIT (A) at pages 60 and 61 of the order (even though CIT (A) dismissed the assessee’s appeal on legal issue, however, recorded a positive finding in favour of assessee with regards to share certificates to be not incriminating in nature). That further, reliance is placed on the order of Hon’ble ITAT Delhi in the case of M/s ACIT vs Moon Beverages Ltd. in to 118/Del/2018, wherein, share certificates have been held to be not incriminating in nature as the details mentioned therein, are duly recorded in the books of accounts and for a document to be incriminating, it should depict some undisclosed income unearthed as a result of search.

• With regards, to document seized from M/s Jay Ushin Ltd. marked as Party O – 2, Annexure A – 1, Page 50, it was most humbly submitted that a perusal of the said document, which has been extracted by learned AO at pages 14 to 16 of his order, would show that only ./2017 and 15 other appeals transaction related to JPM group is with regards to receipt of unsecured loan of Rs. 95 lacs by M/s Jay Ace Technologies Ltd. from M/s Suhana Marketing Pvt. Ltd., with regards to unsecured loan and there is no other name which pertains to any of the companies of JPM Group. It is further, submitted that while framing the assessment of M/s Jay Ace Technologies Ltd. for AY 2013-14 (to which the document relates), no addition has been made by learned AO in the assessment under section 153A read with section 143(3) of the Act. That further, the said document nowhere refers or depicts that the share capital so raised by the Minda group is not genuine or bogus. Thus, here it is submitted that once the said document has been accepted to be recorded in books of accounts and no addition has been made with regards to the same, in the hands of M/s Jay Ace Technologies Ltd., the same document “cannot be treated as incriminating”, and that is why, even though the learned AO has referred the said document in the order of assessment, however, no adverse inference has been drawn with regards to the said document in the entire assessment order. Even the learned CIT (A) has recorded a positive finding in favor assessee (kindly see pages 61 to 62 of CIT (A) order).

• With regards to copy of email seized and marked as Party O – 2, Annexure A – 4, Page 106, it is submitted that the same is only a simple email regarding 17 ITA No.6627/Del./2017 and 15 other appeals discussion for future plan of restructuring and does not contain any financial transaction or have a bearing on the income of the assessee group. The said email has no where made any reference to any accommodation entry nor to any transaction with regards to the same. That is why, even though, the learned AO has referred the said document at pages 16 and 17 of his order, however, no adverse inference has been drawn with regards to the said document while making the additions with regards to share capital. Even the learned CIT (A) at page 62 of his order, has recorded that the said email has no financial implication and as such, it is submitted that the said document cannot be termed as “incriminating in nature”.

18 ITA No.6627/Del./2017 and 15 other appeals g) Order of ITAT Delhi in the case of ACIT vs M/s Five Vision Planners Pvt. Ltd. in ITA No. 4460/Del/2014. h) Judgment of High Court of Delhi in the case of PCIT vs M/s Dreamcity Buildwell Pvt. Ltd. in ITA No. 1152/2017. i) Order of ITAT Delhi M/s TDI Infrastructure Ltd. vs DCIT in 4409, 4410 and 5072/Del/2012. j) Order of ITAT Delhi ACIT vs Realtech Construction Pvt. Ltd. (ITAT Delhi) in ITA No. 6569/Del/2016.

10. The learned senior counsel for the assessee further, submitted that that the said aforesaid legal argument was specifically taken before learned CIT (A), wherein, judgment of Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla reported in 380 ITR 573, were cited before learned CIT (A), which even finds mention at pages 8 of learned CIT (A) order. However, the learned CIT (A) vide order dated 25.08.2017 dismissed the said ground so raised by the assessee company at pages 57 to 58 of CIT (A) order, wherein, while dismissing the said appeal, the learned CIT (A) has recorded a finding that “The overall schema that emerges there from indicates that there was prima facie material available in this regard to enable the AO to initiate proceedings u/s 153A”. It was further submitted that the said finding so recorded by learned CIT (A), is against the settled proposition of law so laid down by Hon’ble High Court of Delhi, as was also cited before learned CIT (A). As it has been held in by various judicial authorities that “the scope of assessment and addition in 153A ./2017 and 15 other appeals proceedings is restricted to the incriminating material i.e. material depicting undisclosed income unearthed during the course of search”, as such, the finding of learned CIT (A) that there appears to be a prima facie material cannot be termed as “incriminating”, as the said material did not depict any undisclosed income of the assessee, is not as per the various judicial pronouncements.

12. That the learned counsel of the assessee in rejoinder submitted that the arguments so made by learned CIT DR are contradictory to the law laid down by Hon’ble jurisdictional high court in the case of CIT vs Kabul Chawla

20 ITA No.6627/Del./2017 and 15 other appeals reported in 380 ITR 573 and further, the learned CIT DR has not been able to place reliance on any document/ material on record which can be termed as “incriminating” in nature, which was unearthed during the course of search. That further, out of copies of share certificates of 8 companies seized during the course of search, no addition or adverse inference was drawn in the case of 6 companies and as far as two assessee’s M/s JPM Tools Ltd. and M/s Jay Nikki Industries Ltd. is concerned, the copies of share certificates are also not incriminating, as the said document only shows the details of shares issued by those companies which are duly recorded in the books of accounts and as such, the same cannot be termed as “incriminating material”. The learned counsel for assessee placed reliance on the order of Hon’ble ITAT Delhi in the case of M/s ACIT vs. Moon Beverages Ltd. in to 118/Del/2018, wherein, share certificates have been held to be not incriminating in nature as the details mentioned therein, are duly recorded in the books of accounts and for a document to be incriminating, it should depict some undisclosed income unearthed as a result of search. That further, he argued that the post search investigation or statements recorded post search cannot be equated with the incriminating material found during the course of search, and on the said proposition the learned counsel of assessee relied on the judgment of Hon’ble High Court of Delhi PCIT vs. Jaypee Financial Servies Ltd. reported in 280

• Whether the additions so made in aforesaid twelve appeals are based on incriminating documents, which can lead to an inference that any undisclosed income has escaped assessment or there is any element of undisclosed income so as to be roped in assessment under section 153A for the assessment years which are unabated i.e. final.

i) Document seized from M/s Jay Ushin Ltd. marked as Party O – 2, Annexure A – 1, Page 50, a perusal of the said document, which has been extracted by learned AO at pages 14 to 16 of his order, would show that only transaction related to JPM group is with ./2017 and 15 other appeals regards to receipt of unsecured loan of Rs. 95 lacs by M/s Jay Ace Technologies Ltd. from M/s Suhana Marketing Pvt. Ltd. and there is no other name which pertains to any of the companies of JPM Group. We have also, noticed that the said document nowhere mentions about the share capital, rather the said document is with regards to unsecured loan and also while framing the assessment of M/s Jay Ace Technologies Ltd. for AY 2013-14 (to which the document relates), no addition has been made by learned AO in the assessment under section 153A read with section 143(3) of the Act. Thus, here it is observed that once the said document has been accepted to be recorded in books of accounts and no addition has been made with regards to the same, in the hands of M/s Jay Ace Technologies Ltd., the same document “cannot be treated as incriminating” for other companies of the same group, and that is why, we have also noticed that even though the learned AO has referred the said document in the order of assessment, however, no adverse inference has been drawn even by the learned AO with regards to the said document in the entire assessment order. Similar findings have also been recorded by the learned CIT (A) at pages 60 of his order. ii) Copy of email seized and marked as Party O – 2, Annexure A – 4, Page 106, we have gone through the ./2017 and 15 other appeals said document, which is extracted by AO at page 17 of his order, it is apparent that the same is only a simple email regarding discussion for future plan of restructuring and does not contain any financial transaction or have a bearing on the income of the assessee group. The said email has no where made any reference to any accommodation entry nor to any transaction with regards to the share capital. That is why, even though, the learned AO has referred the said document at page 16 and 17 of his order, however, no adverse inference has been drawn with regards to the said document while making the additions with regards to share capital. Even the learned CIT (A) at page 60 and 61 of his order, has recorded that the said email has no financial implication and as such, not incriminating. iii) Share Certificates found during the course of search, with regards to allotment of shares by Minda group of companies to various companies, noted by AO at page 18 of his order. We have gone through the orders so passed by AO, CIT (A) and also the remand report so furnished by AO during the course of appellant proceedings and notice that these share certificates pertained to 8 companies, namely, M/s JA Builders Ltd, M/s JPM Automobiles Ltd, M/s IBER Medior Ltd, M/s JPM Tsukada Pvt Ltd, M/s Brilliant Jewels Pvt. Ltd, M/s JPM Tools Ltd, M/s JPM Farms ./2017 and 15 other appeals Pvt. Ltd, M/s Jay Nikki Industries Ltd. as recorded by CIT (A) at pages 59 and 60 of his order. In our opinion share certificates merely record the number of shares issued along with the price of shares, which are duly disclosed in the books of accounts so compiled by the assessee, as such, even if the share certificates have been found and seized the same cannot be taken to be “incriminating” in nature, as they merely record the details of transactions, which are duly disclosed and recorded in the books of accounts. The learned CIT DR though argued that original share certificates were seized during the course of search, however, the assessee’s case all throughout has been that photocopies of share certificates were seized. In any case, even in the remand report which has been extracted by CIT (A) at page 42 of his order, the AO has not been able to place material on record to rebut the contention of assessee that the share certificates were photocopies and not original. Even the Ld. CIT DR during the course of hearing has not been able to place on record any material to establish the factual position as to whether the share certificates seized were original or photocopies. However, on going through the orders of assessment, we have noticed that no addition has been made with regards to the share certificates seized of six companies seized by the Revenue and additions have only been made with regards to two companies i.e. M/s JPM Tools Ltd. and M/s Jay Nikki Industries

25 ITA No.6627/Del./2017 and 15 other appeals Ltd., wherein, also the learned AO in the order of assessment has not made the share certificates as a basis to make addition under section 68, rather, he has placed reliance on the post investigation report and statement of a third party Sh. Rajesh Agarwal. Thus, whether the share certificates were original or photocopies, the same will make no difference, as the same has not been made as basis by the AO in the impugned order of assessment. Similar view has also been taken by a coordinate bench of ITAT Delhi in the case of ACIT vs Moon Beverages Ltd. (ITAT Delhi) in to 118/Del/2018, wherein, following findings have been recorded, on which we draw our support: “46.1 Before deciding the issue on merit, we would first like to decide the legal ground raised by the assessee challenging the validity of the assumption of jurisdiction u/s 153A in absence of any incriminating material found during the course of search when the assessment was not pending. As mentioned earlier, the original return was filed on 30th September, 2009 declaring income at Rs.10,27,91,857/-. The assessment was completed u/s 143(3) determining the total income at Rs.10,27,91,857/-. This assessment was rectified u/s 154 of the IT Act determining the income at Rs.7,50,21,860/-. Thus, the assessment was completed and was not pending ./2017 and 15 other appeals on the date of search. A perusal of the assessment order shows that the addition is not based on any incriminating material, but, based on post-search enquiries or statements recorded u/s 132(4) of the Act. The share certificates and counterfoils thereof found during the search, in our opinion, cannot be construed as incriminating in nature

i) CIT vs Kabul Chawla (Delhi HC) reported in 380 ITR 573.

37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found

in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. ii) PCIT vs Param Dairy Ltd. (Delhi HC) in ITA No. 37/2021.

iii) PCIT vs Jaypee Financial Services Limited (Delhi HC) reported in 280 Taxman 147.

Section 153A of the Income-tax Act, 1961 - Search and seizure - Assessment in case of - Assessment year 2008-09 - Assessee company was engaged in trading of equity shares, securities and commodities through ./2017 and 15 other appeals recognized exchange - It filed its return of income which was accepted and an assessment order was passed - Subsequently, a search operation under section 132 was conducted upon assessee - Thereafter, a notice under section 153A was issued against assessee - During course of post search proceedings, Assessing Officer found certain evidence showing client code modification done by assessee which were not for genuine reasons - Accordingly, Assessing Officer made addition on account of client code modification to income of assesssee - He also made an addition on account of income of assessee from selling equity shares of a company held by assessee to director of assessee at much below prevailing market price - Commissioner (Appeals) and Tribunal both held that said additions were not based on any incriminating material found during search and assessment was not pending on date of search, thus, impugned additions were unjustified and same were to be deleted- It was noted that revenue had failed to disclose any incriminating material against assessee found during search - Whether, therefore, impugned order passed by Commissioner (Appeals) and Tribunal was justified and same was to be upheld - Held, yes [Para 5]

5. We have considered the arguments canvassed by the learned counsel for the respective parties. On perusal of section153A of the Act, it is manifest that it does not make any distinction between assessment conducted under section 143(1) and 143(3). This court had occasion to consider the scope of section153A of the Act in the case of Gurinder Singh Bawa and in the case of Continental Warehousing Corpn. (Nhava Sheva) Ltd. (referred to supra). It has been observed that section153A cannot be a tool to have a second inning of assessment either to the Revenue or the assessee. Even in the case of Gurinder Singh Bawa (referred to supra) the assessment was under section 143(1) of the Act and the court held that the scope of assessment after search under section153A would be limited to the incriminating evidence found during the search and no further. In the said judgment, the judgment of this court in Continental Warehousing Corpn. (Nhava Sheva) Ltd. (referred to supra) has been followed.

“46.1 Before deciding the issue on merit, we would first like to decide the legal ground raised by the assessee challenging the validity of the assumption of jurisdiction u/s 153A in absence of any incriminating material found during the course of search when the assessment was not pending. As mentioned earlier, the original return was filed on 30th September, 2009 declaring income at Rs.10,27,91,857/-. The assessment was completed u/s 143(3) determining the total income at Rs.10,27,91,857/-. This assessment was rectified u/s 154 of the IT Act determining the income at Rs.7,50,21,860/-. Thus, the assessment was completed and was not pending on the date of search. A perusal of the assessment order shows that the addition is not based on any incriminating material, but, based on post-search enquiries or statements recorded u/s 132(4) of the Act. The share certificates and counterfoils thereof found during the search, in our opinion, cannot be construed as incriminating in nature. Even the document appearing at page 59 of Annexure A-10 found and seized from the corporate office of M/s Hindustan Aqua Limited at 1010, Vijaya Building, Barakhamba Road, New Delhi, showing the ./2017 and 15 other appeals details of advance for purchase of shares or refund of share application money in our opinion cannot be construed as incriminating since the entries are duly recorded in the books of account. The AO nowhere has disputed or challenged the above submission of the assessee before him as appears at page 43 of the assessment order. Therefore, once the entries are recorded in the books of account, the same in our opinion cannot be construed as incriminating in nature. So far as statements u/s 132(4) is concerned, the same are also not incriminating in nature as held in various decisions. Under these circumstances, we are of the considered opinion that when the addition is not based on any incriminating material found as a result of search, no addition can be made u/s 153A/143(3) of the Act.”

37 ITA No.6627/Del./2017 and 15 other appeals AY 2010-11: AY 2011-12: ITA No. 6624/Del/2017 iv) M/s Jay FE AY 2011-12: ITA No. 6640/Del/2017 Cylinder Ltd. v) M/s Jay Ace AY 2010-11: ITA No. 6638/Del/2017 Technologies Ltd.

38 ITA No.6627/Del./2017 and 15 other appeals independent appeals) again involve common issue and even the findings so recorded by learned CIT (A) and learned AO are identical in all the cases and with the consent of both the parties and also after perusing the brief files of all the assessments, we are also of the considered opinion that if any one appeal is taken up and decided it will have same bearing on the fate of other appeals, as all the appeals have identical facts and findings. It was further, agreed by both the parties that M/s Jay Auto Components Ltd. (AY 2008-09 may be taken as lead matter, since the findings of both learned AO and CIT (A) are similar in all the appeals and thus, if one appeal is heard on merits, it will take care of all other appeals as well.

“Synopsis in Brief with regards to merits of additions made in captioned assessee’s in Category 1 and 2 cases

9. It is again been submitted that the appeal with regards to M/s Jay Iron & Steel Ltd. pertaining to AY 2008-09, for which legal submissions have been made earlier, could also be taken as lead matter with regards to the addition on merits, as if the said appeal is argued, it will cover all 16 appeals coming on Category 1 and 2, since investigations and findings so done by learned AO and CIT (A) are identical with respect to these 16 appeals.

./2017 and 15 other appeals 10. To sum up, the findings of learned AO may be summed up in following bullet points: a) Relied on investigation wing report and also held that companies of JPM group have no great business prospects and as such, cannot command huge premium. The AO further held that the subscribing companies have meagre income as per their income tax returns and were thus, not in a position to invest in share capital of assessee JPM group (kindly see pages 2 to 14 of AO’s Order). b) Notices were issued to investor companies under section 133(6) of the Act, however, the replies so submitted by them are not satisfactory and assessee company has failed to produce directors of investor companies for deposition (kindly see pages 24 to 30 and 40 to 41 of AO’s order) c) Survey operation was conducted by Investigation wing of Sh. Rajesh Aggarwal (alleged accommodation entry provider), who has admitted to have arranged entries of share capital of Rs. 76.88 crores for JPM group (kindly see pages 30 to 37 of AO’s order). d) In view of the above, concluding findings of learned AO are at pages 52 to 61 of the order of assessment.

11. The aforesaid findings so recorded by learned AO, were rebutted by assessee before the learned CIT (A) and considered by learned CIT (A). The said submissions so filed before learned CIT (A) and findings so recorded by ./2017 and 15 other appeals learned CIT (A), on which completed reliance is placed by the assessee group, can be summarized as below: a) JPM group is a leading manufacturer in the country with regards to automotive components and its esteemed customers includes esteemed companies like Maruti Suzuki, Honda, Hyundai etc. That the entire JPM group commanded a turnover of over Rs. 2500 crores in financial year 2014-15 and further, even one of the companies in the group namely, M/s Jay Ushin Ltd. is a listed company with BSE for which the price of shares in open market are being traded at more then Rs.

a) PCIT vs Krishna Devi (Delhi HC) reported in 279 Taxman 148. b) 149 TTJ 165 ITAT (TM) Vishnu Jaiswal vs CIT c) [2013] 357 ITR 146 (Del) CIT vs. Fair Finvest Ltd. d) [2014] 361 ITR 10 (Del) CIT vs. Gangeshwari Metal (P) Ltd. e) A.Y. 2003-04 dated 25.05.2012 ITO vs. M/s Excellance Town Planner (P) Ltd.

47 ITA No.6627/Del./2017 and 15 other appeals f) A.Y. 2002-03 dated 01.06.2012 ITO vs. M/s Hi Tech Accurate Communication (P) Ltd. g) ITA No. 1177/D/2012 A.Y. 2001-02 dated 05.10.2012 ITO vs. India Texfab Marketing Ltd. h) ITA No. 4498/D2010 A.Y. 2003-04 dated 30.12.2010 Intimate Jewels (P) Ltd. i) ITA No. 1078/Del/2013 Mithila Credit Services Ltd. vs. ITO j) ITA No. 212/2012 (Del) dated 11.04.2012 CIT vs. Goel Sons Golden Estate (P) Ltd. k) ITA No. 50/Del/2011 ACIT vs. Panchanan International Pvt. Ltd. l) ITA No. 535/Del/2009 dated 31.03.2015 Asst. CIT vs. Lakshmi Float Glass Ltd. m) ITA No. 71, 72 & 84 of 2015 (Del) dated 12.08.2015 CIT vs. Vrindavan Farms Pvt. Ltd.

14. In light of the aforesaid, it is thus, prayed that all 16 appeals so filed by department on merits since involves consideration of identical issues and in view of our aforesaid submissions the appeals so filed by Revenue be dismissed.”

Subscribing Net Worth as Investment Company per Balance made in share Sheet (in Rs) capital (in Rs)

M/s Festino 2, 83, 00, 000/- 15, 00 , 000/- Agencies Pvt. Ltd. M/s Eversite 2, 65, 84, 000/- 15, 00, 000/- Commodities Pvt. Ltd. M/s Gajanand 7, 81, 98, 000/- 15, 00, 000/- Agrotech Ltd. M/s Gajeshwar Sales 3, 88, 61, 942/- 5, 00, 000/- Pvt. Ltd. M/s Matribhumi 4, 15, 90, 000/- 5, 00, 000/- Commodities Pvt. Ltd. M/s Monalisa 3, 74, 35, 000/- 16, 00, 000/- Commercial Pvt. Ltd. Lambodar 2, 96, 25, 000/- 8, 00, 000/- Commercial Pvt. Ltd. Bhavtarani Sales 3, 76, 50, 000/- 18, 00, 000/- Pvt. Ltd. M/s Mukul Mills Pvt. 2, 22, 33, 000/- 18, 00, 000/- Ltd. M/s Mayur Vanijya 3, 32, 99, 907/- 5, 00, 000/- Pvt. Ltd. M/s Octal 3, 03, 42, 000/- 15, 00, 000/- Commodities Pvt. Ltd. M/s Vandana 1, 65, 05, 000/- 8, 00, 000/- Designs Pvt. Ltd. M/s Exotica 1, 81, 73, 303/- 7, 00, 000/- Commodities Pvt. Ltd. M/s Kushal Infotech 4, 47, 41, 466/- 17, 00, 000/- Pvt. Ltd. M/s Mupnar Trexim 2, 62, 78, 000/- 33, 50, 000/- M/s Ranisati 1, 58, 89, 000/- 14, 00, 000/- Apartments Pvt. Ltd. M/s Festino Agro 3, 89, 58, 000/- 24, 00, 000/- Pvt. Ltd. M/s Frost Traders 2, 30, 68, 113/- 18, 00, 000/- Pvt. Ltd. M/s Trimline 2, 91, 44, 889/- 4, 00, 000/- Vyapaar Pvt. Ltd.

DECISION 36. We have carefully considered the rival contentions as well as perused the orders of both learned assessing officer and learned CIT – A. For all these years, there is only one of addition made by the learned assessing officer i.e. in respect to the issue of share capital along with premium under section 68 of the Income Tax Act, 1961.

Subscribing Net Worth as Investment Company per Balance made in share Sheet (in Rs) capital (in Rs)

M/s Festino 2, 83, 00, 000/- 15, 00 , 000/- Agencies Pvt. Ltd. M/s Eversite 2, 65, 84, 000/- 15, 00, 000/- Commodities Pvt. Ltd. M/s Gajanand 7, 81, 98, 000/- 15, 00, 000/- Agrotech Ltd. M/s Gajeshwar Sales 3, 88, 61, 942/- 5, 00, 000/- Pvt. Ltd. M/s Matribhumi 4, 15, 90, 000/- 5, 00, 000/- Commodities Pvt. Ltd. M/s Monalisa 3, 74, 35, 000/- 16, 00, 000/- Lambodar 2, 96, 25, 000/- 8, 00, 000/- Commercial Pvt. Ltd. Bhavtarani Sales 3, 76, 50, 000/- 18, 00, 000/- Pvt. Ltd. M/s Mukul Mills Pvt. 2, 22, 33, 000/- 18, 00, 000/- Ltd. M/s Mayur Vanijya 3, 32, 99, 907/- 5, 00, 000/- Pvt. Ltd. M/s Octal 3, 03, 42, 000/- 15, 00, 000/- Commodities Pvt. Ltd. M/s Vandana 1, 65, 05, 000/- 8, 00, 000/- Designs Pvt. Ltd. M/s Exotica 1, 81, 73, 303/- 7, 00, 000/- Commodities Pvt. Ltd. M/s Kushal Infotech 4, 47, 41, 466/- 17, 00, 000/- Pvt. Ltd. M/s Mupnar Trexim 2, 62, 78, 000/- 33, 50, 000/- Pvt. Ltd. M/s Ranisati 1, 58, 89, 000/- 14, 00, 000/- Apartments Pvt. Ltd. M/s Festino Agro 3, 89, 58, 000/- 24, 00, 000/- Pvt. Ltd. M/s Frost Traders 2, 30, 68, 113/- 18, 00, 000/- Pvt. Ltd. M/s Trimline 2, 91, 44, 889/- 4, 00, 000/- Vyapaar Pvt. Ltd.

“8. It is quite evident from the CIT (A)'s reasoning in paragraph 4.3, that the materials clearly pointed to the share applicants' possessing substantial means to invest in the assessee's company. The AO seized certain material to say that minimal or insubstantial amounts was paid as tax by such share applicants and did not carry out a deeper analysis or rather chose to ignore it. In these circumstances, the inferences drawn by the CIT (A) are not only factual but facially accurate.

9. Having regard to these circumstances, the Court discerns no question of law, least a substantial question, having regard to the fact that the judgment in Lovely Exports (supra)was cited and applied.

9. The tribunal, examined the factual matrix and has upheld the findings recorded by the CIT( Appeals).