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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & SHRI PRASHANT MAHARISHI, AM
These are 2 appeals filed by The Joint Commissioner Of Income Tax (OSD), Central Circle – 1 (4), Mumbai (the learned AO) in case of two different assessee for two different years involving same facts arising out of the same search and based on same evidences , therefore, both the parties argued them together and disposed of by this common order.
AY 2013-14 Poddar media Magazine and graphic points private limited is filed by the Jt. Commissioner of Income Tax (OSD), Central Circle 1(4), Mumbai [ the ld. AO ] for A.Y. 2013-14 against the order passed by Commissioner of Income-tax (Appeals)-47, Mumbai [ the Ld. CIT (A) ] dated 23rd March, 2022, wherein the appeal filed by the respondent M/s Podar Media Magazine & Graphics Prints Pvt. Ltd.[ Assessee/Respondent] against the assessment order dated 26th December, 2019 passed under Section 143(3) read with section 153C of the Income-tax Act, 1961 (the Act) by the learned Assessing Officer was partly allowed.
The learned Assessing Officer is aggrieved by the deletion of the addition of ₹3,99,00,000/- of share application money added by him under Section 68 of the Act was deleted.
i. complete details of the shareholders, ii. statements relied upon by the learned Assessing Officer of various persons are already retracted,
Hence, addition under Section 68 of the Act cannot be made.
The learned Assessing Officer analyzed the documents submitted by the assessee found that the companies have very meager and nominal income which does not justify the creditworthiness of the parties. It was also stated that some of the companies’ name have also been struck off. It further noticed that Assessee Company also has meager income and not worth for such as huge premium. He also held that statements retractedof the parties is merely an afterthought. Accordingly, he made an addition under Section 68 of the Act of ₹3,99,00,000/- and assessment order was passed on 26thDecember, 2019 under Section 153C of the Act. 09. Assessee aggrieved with the assessment order preferred the appeal before the learned CIT (A). The
The learned Assessing Officer is aggrieved with the above appellate order and is in appeal before us. All the three grounds raised are with respect to deletion of addition under Section 68 of the Act.
The learned Authorized Representative submitted that the learned CIT (A) in paragraph no.7 of his order has dismissed ground no.1,2,3,4,6 and 7 of the appeal of the assessee holding that there is an incriminating material found during the course of search. Ld. AR submitted that there is no incriminating material found during search. Therefore, the issue decided against the appellant are challenged under Rule 27 of the ITAT Rules on the ground that there is no incriminating material found during the course of search, the addition is made merely on the basis of the statement of Third parties which are subsequently retracted and
The learned Authorized Representative on the merits of the case submitted that the issue is squarely covered on identical facts and circumstances in case of group concern M/s Himadri Machine Tools in dated 9thAugust, 2021, which has been followed by the learned CIT (A).
The learned Departmental Representative vehemently objected to the same and submitted that cash credit in case of one assessee cannot be considered is having the proper creditworthiness as well the genuineness of the transaction on identical basis in case of another assessee because for each cash credit identity, creditworthiness and genuineness of the transactions is required to be proved by the assessee independently with respect to that transaction. Merely because name of person appears in one order and addition under Section 68 of the Act is deleted of that person, it cannot be stated to be covered for all the credits given by that person to the whole world. Accordingly, the learned
We have carefully considered the rival contentions and perused the orders of the lower authorities. The facts clearly shows that assessee has raised the issue that there is no incriminating material found during the course of search, the assessee has not raised any appeal against the issue decided by the learned CIT (A). However, before us, the assessee has challenged that there is an absence of incriminating material based on which the addition has been made. There is no written application made by the learned authorized representative for invocation of rule 27 of the ITAT rules.We find that issue is squarely covered on this ground of the decision of Hon'ble Delhi High Court in case of Mr. Sanjay Sawhney vs Principal Commissioner of Income-tax [2020] 116 taxmann.com 701 (Delhi) where in it has been held that “11. The Tribunal has taken a pedantic view on the interpretation of Rule27 by holding that for availing the remedy under the said provision, an application in writing is necessary. In our opinion, this surmise is fallacious and we cannot countenance the same. We agree with Mr. Krishnan that Rule27, as it stands today, does not mandate for the application to be made in writing. Revenue has not brought to our notice any particular Form notified for filing
“14. It emerges that Rule27 ought not to be applied narrowly and therefore we cannot agree with Mr. Hossain, that by permitting the Appellant- Assessee (respondent before the Tribunal) to invoke Rule27 before the Tribunal, to challenge the ground decided against him, scope of the subject matter of appeal would get expanded. We must also bear in mind that jurisdictional issue sought to be urged by the appellant under Rule27 is interlinked with the other grounds of appeal, and its adjudication would have a direct impact on the outcome of the appeal. The validity of the proceedings goes
16. It further held in last para that “We are, therefore, of the considered opinion that the impugned order passed by the ITAT suffers from perversity in so far as it refused to allow the Appellant - assessee (Respondent before the Tribunal) to urge the grounds by way of an oral application under Rule27. The question of law as framed is answered in favour of the Appellant - assessee and resultantly the impugned order is set aside.”
17. In view of the above we do not have any hesitation allowing the assessee to raise an issue Under rule 27 of the ITAT rules 1963 that addition has been made in the hands of the assessee in a concluded assessment without finding any incriminating evidence.
Now the issue required to be examined is whether the addition has been made in the hands of the assessee on the basis of any incriminating material found during the course of search and not. The learned CIT – A has dismissed this ground of appeal of the assessee. The learned CIT – A has dealt with this issue as per paragraph number 7 of his order: -
The learned departmental representative vehemently relied on the order of the learned CIT – A this issue has been decided against the assessee. It was stated that those statements are retracted later on, it is merely an afterthought. Even otherwise the statement recorded during the course of search u/s 132 (4) of the act have immense evidentiary value. Therefore, these statements are incriminating evidence.
We find that in the present case search took place on 9/1/2018. The impugned assessment year is 2012 – 13. Therefore, apparently as on the date of search the assessment was not pending but concluded. According to the provisions of Section 153C where the assessing Officer is satisfied that any money, bullion, jewelry or other valuable article or things seized or requisitioned belongs to or any books of
Therefore, now question is whether the statement recorded of 3rd persons can be considered to be a material based on which the provisions of Section 153C of the act is invoked. On reading of the order of the learned CIT – A, only material that is available is the statement of several persons. It is also a fact that such statements have been retracted. We are not on the issue that whether such a retracted statements have any evidentiary value or not but we are on the issue whether the statement of 3rd party can be said to be an incriminating material based on which an action u/s 153C of the act can be taken in case of other person.Further, this finding of the Ld. CIT(A) that the addition is made simply based on a statement which was retracted is not disputed.It
“38. Fifthly, statements recorded under section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this court in CIT v. Harjeev Aggarwal (supra). Lastly, as already pointed
Orders of The learned lower authorities as well as the learned departmental representative could not show us any other evidence other than those statements referred, which are also retracted, found during the course of search which can be said to be an incriminating material, based on which addition could be made in the hands of the assessee.
In view of this, such retracted statement cannot be considered to be an incriminating material based on which the assessment of the assessee can be disturbed u/s 153C of the act. Accordingly, the
As we have decided the issue on rule 27 invoked by the learned authorized representative in this appeal, the appeal of the learned assessing officer also deserves to be dismissed, as the deletion of the addition by the learned CIT – A on the merits of the case is not required to be adjudicated.
In the result ITA number 874/M/2022 filed by the learned assessing officer for assessment year 2013 – 14 in case of Podar media magazine and graphics points private limited is dismissed.
ITA number 880/M/2022 assessment year 2012 – 13 Parel graphics prints private limited
This appeal is filed by the learned joint Commissioner of income tax (OSD), central circle – 1 (4), Mumbai (the learned assessing officer is preferred against the order passed by the Commissioner of income tax (appeals) – 47, Mumbai dated 22/2/2022 for assessment year 2012 – 13 wherein the appeal filed by the assessee against the assessment order passed u/s 143 (3) read with Section 153C of the income tax act 1961 dated 26/12/2019 was partly allowed. The learned assessing officer is aggrieved with that and is in appeal before us.
Briefly stated the facts shows that the assessee company is a private Ltd company engaged in the business of printing services. The assessee filed its return of income on 20/9/2012 declaring total income at rupees nil. Pursuance of search and seizure action on Podar education group on 9/1/2018, the case of the assessee was covered and therefore necessary notices u/s 153C was issued on 21/9/2019 which was responded to by the assessee by filing return of income on 23/9/2019 declaring Nil income. The assessment order was passed u/s 143 (3) read with Section 153C dated 26/12/2019 where the learned assessing officer has made an addition of Rs 225 lakhs in respect of share application money received by the assessee.
On appeal, the learned CIT – A the contention of the assessee that there is no incriminating material found during the course of search however he deleted the addition on the merits of the case following the decision of the coordinate bench in case of Himadri machine tools Ltd (supra). Therefore, the learned AO aggrieved with appellate order is in appeal before us.
Identically, the learned authorized representative invokes the provisions of rule 27 of the ITAT rules
The learned departmental representative vehemently supported the order of the learned assessing officer on the issue of the merits of the addition as well as the order of the learned CIT – A that there reason incriminating material found during the course of search. The learned CIT DR vehemently objected invocation of rule 27 of the ITAT rules as assessee has not filed any application as well as has not filed any appeal before the ITAT.
We find that the addition in this case is made on the same set of facts i.e. statement of certain persons recorded during the course of search on Podar group, which was subsequently retracted. Further, orders of the lower authorities do not show any incriminating evidence except the statement of 3rd parties. The learned departmental representative also does not show that what are the incriminating material is other than those statements found during the course of search.
Identical issue has been dealt with by us in the impugned order in ITA number 874/M/2022 by this order in case of Podar media magazine and graphics
Both the parties have agreed that there is no change in the facts and circumstances of the case except the change of the assessment year and the amount of addition. Both the parties also confirmed that except those statement there are no incriminating material is found during the course of search related to the addition made in the hence of the assessee for this assessment year.
Therefore, as per reasons shown by has for deleting the addition in the case of ITA number 874/M/2022 in absence of any incriminating material, we also hold in case of this assessee in ITA number 80/M/2022 for assessment year 2012 – 13 that addition cannot be made in the hands of the assessee.
In the result, ITA number 880/M/2022 filed by the learned assessing officer is dismissed.
Order pronounced in the open court on 09.11.2022.