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Facts
A search action was conducted in the case of SVP Group, and incriminating documents related to the assessee were seized. Notices under Section 153C were issued, and assessments were completed. The assessee appealed, challenging the validity of the reassessment proceedings and the additions made.
Held
The Tribunal held that no addition could be made in the absence of incriminating material found during the search of the SVP group for the assessment years in question. The statement recorded during a survey under Section 133A was deemed irrelevant for the search proceedings under Section 132.
Key Issues
Whether proceedings under Section 153C are valid without incriminating material found during the search of a third party related to the assessee, and whether a statement recorded during a survey can form the basis for additions under Section 153C.
Sections Cited
153C, 132, 133A, 145(3), 143(1)
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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
As identical grounds have been raised in these appeals As identical grounds have been raised in these appeals As identical grounds have been raised in these appeals, therefore, same were heard together therefore, same were heard together and disposed off by way of this and disposed off by way of this consolidated order for the sake of convenience. The grounds raised consolidated order for the sake of convenience. The grounds raised consolidated order for the sake of convenience. The grounds raised 13 are reproduced as under: in assessment year 2012 in assessment year 2012-13 are reproduced as under:
The FAA i.e, CIT(A) The FAA i.e, CIT(A) - 54 Mumbai erred in not accepting the 54 Mumbai erred in not accepting the additional ground filed before CIT(A) additional ground filed before CIT(A) -54 Mumbai wherein it was Mumbai wherein it was claimed that From AY 2012 claimed that From AY 2012-13 to AY 2014-15 proceedings U/s 15 proceedings U/s 153C(1)(b) was not applicable abinitio. 153C(1)(b) was not applicable abinitio. Additional Ground is Additional Ground is reproduced hereunder : reproduced hereunder :- 4th Additional Ground Additional Ground- In view of Ground No 5 in the Original In view of Ground No 5 in the Original Grounds of Appeal
we would l Grounds of Appeal we would like to add that A.O erred in coming to ike to add that A.O erred in coming to conclusion that Appellant is connected with SVP Group on whose conclusion that Appellant is connected with SVP Group on whose conclusion that Appellant is connected with SVP Group on whose premises Search took place on 22.08.2017 as far as this financial premises Search took place on 22.08.2017 as far as this financial premises Search took place on 22.08.2017 as far as this financial year is concerned. A.O erred in adopting the percentage of year is concerned. A.O erred in adopting the percentage of year is concerned. A.O erred in adopting the percentage of estimation on turnover of sal estimation on turnover of sales and purchase which is not the case es and purchase which is not the case in this year.
2. The FAA i.e, CIT(A) The FAA i.e, CIT(A)-54 Mumbai erred in directing the A.O in 54 Mumbai erred in directing the A.O in restricting the estimation @ 1% on bogus trading of sales and restricting the estimation @ 1% on bogus trading of sales and restricting the estimation @ 1% on bogus trading of sales and purchase as against pleaded @ purchase as against pleaded @ 0.05% on SVP Group of Companies 0.05% on SVP Group of Companies only.
3. The Appeal is in time and order. al is in time and order.
4. The Appellant craves leave to add, alter or amend any of the The Appellant craves leave to add, alter or amend any of the The Appellant craves leave to add, alter or amend any of the grounds on or before the final date of hearing. grounds on or before the final date of hearing.
3. Briefly stated facts of the case are that the assessee filed its Briefly stated facts of the case are that the assessee filed its Briefly stated facts of the case are that the assessee filed its regular return of income on 29.09.2012 declaring regular return of income on 29.09.2012 declaring total income at Rs.2,69,239/-.The return of income filed by the assessee The return of income filed by the assessee The return of income filed by the assessee was processed u/s 143(1) of the Income u/s 143(1) of the Income-tax Act, 1961 1961 (in short ‘the Act’). Subsequently, a search action Act’). Subsequently, a search action u/s 132 of the Act u/s 132 of the Act was carried out in the case of ‘Shreevallabh Pittie’( ‘Shreevallabh Pittie’(SVP) Group on 22.08.2017. up on 22.08.2017. Consequently, a survey action u/s 133A of the Act was also carried Consequently, a survey action u/s 133A of the Act was also carried Consequently, a survey action u/s 133A of the Act was also carried out in the case of the assessee. During the course of the search out in the case of the assessee. During the course of the search out in the case of the assessee. During the course of the search
Axtron Tex-Chem (India) Pvt. Ltd. Axtron Tex 3 4791 & 4790/MUM/2024 4791 & action at the premises of the SVP Group it was found that SVP action at the premises of the SVP Group it was found that SVP action at the premises of the SVP Group it was found that SVP group had made various payments to other ent group had made various payments to other entities against bogus ities against bogus purchases as well as bogus expenditure on capital goods. The purchases as well as bogus expenditure on capital goods. The purchases as well as bogus expenditure on capital goods. The Assessing Officer noted that payments made against both Assessing Officer noted that payments made against both Assessing Officer noted that payments made against both expenditure were received back by the group either by way of expenditure were received back by the group either expenditure were received back by the group either unsecured loan, share premium etc. The Assessing Officer has unsecured loan, share premium etc. The Assessing Officer h unsecured loan, share premium etc. The Assessing Officer h recorded that during the course of the search u/s 132 at the recorded that during the course of the search u/s 132 a recorded that during the course of the search u/s 132 a premises of the SVP group at 97 & 99, 9 premises of the SVP group at 97 & 99, 9th floor, Maker Tower “F” floor, Maker Tower “F” Cuffe Parade, Mumbai certain incriminating documents/computer Cuffe Parade, Mumbai certain incriminating documents/computer Cuffe Parade, Mumbai certain incriminating documents/computer data back up in annexure A data back up in annexure A-6, A-9, A-12 were seized which were 12 were seized which were related to the assessee i.e. Axtron Tex lated to the assessee i.e. Axtron Tex-Chem India Pvt. Ltd. In view Chem India Pvt. Ltd. In view of incriminating material related to the assessee of incriminating material related to the assessee, a notice u/s 153C notice u/s 153C of the Act was issued in the case of the assessee and assessment issued in the case of the assessee and assessment issued in the case of the assessee and assessment u/s 153A r.w.s.153C of the Act, was completed on 20.12.2019 on 20.12.2019 u/s 153A r.w.s.153C of the wherein 2% of the total purchase transactions amounting to wherein 2% of the total purchase transactions amounting to wherein 2% of the total purchase transactions amounting to Rs.31,83,73,353/-, which was worked out to Rs.66,67,471/ which was worked out to Rs.66,67,471/-, has which was worked out to Rs.66,67,471/ been brought to tax in the hands of the assessee by invoking been brought to tax in the hands of the assessee by invoking been brought to tax in the hands of the assessee by invoking section 145(3) of the Act. section 145(3) of the Act.
On further appeal On further appeal before the Ld. CIT(A), the assessee the Ld. CIT(A), the assessee challenged validity of the reassessment proceedings u/s 153C of the challenged validity of the reassessment proceedings u/s 153C of the challenged validity of the reassessment proceedings u/s 153C of the Act as well as the addition on merit. The Ld. CIT(A) though upheld Act as well as the addition on merit. The Ld. CIT(A) though upheld Act as well as the addition on merit. The Ld. CIT(A) though upheld the addition on merit but did not give any finding on the ground the addition on merit but did not give any finding on the ground the addition on merit but did not give any finding on the ground challenging validity of se challenging validity of section 153C of the Act which was raised by ction 153C of the Act which was raised by way of additional ground before the Ld. CIT(A). way of additional ground before the Ld. CIT(A).
Axtron Tex-Chem (India) Pvt. Ltd. Axtron Tex 4 4791 & 4790/MUM/2024 4791 &
Aggrieved, the assessee is in appeal before the Tribunal by way Aggrieved, the assessee is in appeal before the Tribunal by way Aggrieved, the assessee is in appeal before the Tribunal by way of grounds raised as reproduced above. of grounds raised as reproduced above.
The ground No. 1 of the appeal before us is related to The ground No. 1 of the appeal before us is related to The ground No. 1 of the appeal before us is related to challenging the validity of the proceedings u/s 153C of the Act. The challenging the validity of the proceedings u/s 153C of the Act. The challenging the validity of the proceedings u/s 153C of the Act. The Ld. counsel for the assessee submitted that there is no material Ld. counsel for the assessee submitted that there is no material Ld. counsel for the assessee submitted that there is no material related qua the year which has been found in the course of the related qua the year which has been found in the course of the related qua the year which has been found in the course of the search of the SVP group and therefore, in absence of any search of the SVP group and therefore, in absence of any search of the SVP group and therefore, in absence of any incriminating material material qua the year, proceedings u/s 153C of the u/s 153C of the Act for the year under consideration the year under consideration is void-ab ab-initio. The Ld. counsel further submitted that there is no material except counsel further submitted that there is no material except counsel further submitted that there is no material except statement during the course of the survey which being not part of statement during the course of the survey which being not statement during the course of the survey which being not the search proceedings, t search proceedings, the proceedings u/s 153C invoked in the he proceedings u/s 153C invoked in the case of the assessee is liable to case of the assessee is liable to be quashed.
6.1 On the other hand, the Ld. Departmental Representative (DR) On the other hand, the Ld. Departmental Representative (DR) On the other hand, the Ld. Departmental Representative (DR) submitted that though there submitted that though there is no purchase or sale from the SVP or sale from the SVP group qua the year un under consideration but in the survey statement but in the survey statement at the premises of the assessee it was explained that assessee was at the premises of the assessee it was explained that assessee was at the premises of the assessee it was explained that assessee was engaged in providing bogus accommodation entry bills. Thus, the engaged in providing bogus accommodation entry bills. Thus engaged in providing bogus accommodation entry bills. Thus statement is having statement is having bearing on the purchase and sales made to bearing on the purchase and sales made to parties other than the SVP group during the year under n the SVP group during the year under n the SVP group during the year under consideration and thus 153C proceedings have been correctly consideration and thus 153C proceedings have been consideration and thus 153C proceedings have been initiated in the case of the assessee. initiated in the case of the assessee.
Axtron Tex-Chem (India) Pvt. Ltd. Axtron Tex 5 4791 & 4790/MUM/2024 4791 &
We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant materials on record the relevant materials on record. The issue in dispute i . The issue in dispute in the case of the assessee is whether any incriminating material was found qua the assessee is whether any incriminating material was found qua the assessee is whether any incriminating material was found qua the year under consideration. We find that the Ld. CIT(A) called for the year under consideration. We find that the Ld. CIT(A) called for the year under consideration. We find that the Ld. CIT(A) called for a remand report from the Assessing Officer regarding the contention a remand report from the Assessing Officer regarding the contention a remand report from the Assessing Officer regarding the contention of the assessee that there was no transa of the assessee that there was no transaction of the purchase and ction of the purchase and sale of SVP Group during the year under consideration. Said sale of SVP Group during the year under consideration. Said sale of SVP Group during the year under consideration. Said remand report has been reproduced by the Ld. CIT(A) in the remand report has been reproduced by the Ld. CIT(A) in the remand report has been reproduced by the Ld. CIT(A) in the impugned order. On perusal of the relevant part of the remand impugned order. On perusal of the relevant part of the remand impugned order. On perusal of the relevant part of the remand report, we find that there are no purchase and sa report, we find that there are no purchase and sales from the SVP les from the SVP group entities during the assessment year 2012 group entities during the assessment year 2012-13 to assessment 13 to assessment year 2014-15. Thus 15. Thus, it is undisputed that there was no it is undisputed that there was no incriminating material found from the search of the SVP group qua incriminating material found from the search of the SVP group qua incriminating material found from the search of the SVP group qua 15. The Ld. DR referred to the assessment years s 2012-13 to 2014-15. The Ld. DR re the statement of Shri Rathod recorded during the course of the the statement of Shri Rathod recorded during the course of the the statement of Shri Rathod recorded during the course of the survey proceedings u/s 133A of the Act at the premises of the survey proceedings u/s 133A of the Act at the premises of the survey proceedings u/s 133A of the Act at the premises of the assessee and submitted that he had arranged cash for several assessee and submitted that he had arranged cash assessee and submitted that he had arranged cash parties from the market and got commission @ 0.05% for arran the market and got commission @ 0.05% for arranging the market and got commission @ 0.05% for arran the said cash. The Ld. DR accordingly submitted that this part of the said cash. The Ld. DR accordingly submitted that the said cash. The Ld. DR accordingly submitted that his statement having bearing on the purchase and sales with the his statement having bearing on the purchase and sales with the his statement having bearing on the purchase and sales with the parties other than the SVP group, therefore proceedings u/s 153C parties other than the SVP group, therefore proceedings u/s 153C parties other than the SVP group, therefore proceedings u/s 153C we are of the opinion that this of the Act was justified of the Act was justified. However, we are of the opinion statement is recorded in the course of the survey u/s 133A of the statement is recorded in the course of the survey u/s 133A of the statement is recorded in the course of the survey u/s 133A of the 132 of the Act, Act and not under the search proceedings u/s Act and not under the search proceedings u/s 132 therefore it is irrelevant herefore it is irrelevant whether the statement was was incriminating
Axtron Tex-Chem (India) Pvt. Ltd. Axtron Tex 6 4791 & 4790/MUM/2024 4791 & material or not unless it unless it found during the course of the search. In of the search. In absence of any incriminating material found during the course of absence of any incriminating material found during the course of absence of any incriminating material found during the course of the search qua the issues the search qua the issues, no addition could have been made in no addition could have been made in case of completed assessment as held by the Hon’ble Bombay High case of completed assessment as held by the Hon’ble Bombay High case of completed assessment as held by the Hon’ble Bombay High Court in the case of Continental Court in the case of Continental Warehousing Corporation orporation (Nhava Sheva) Ltd [58 taxmann.com taxmann.com 78] (Bombay HC) and the ratio which and the ratio which have been upheld by the have been upheld by the Hon’ble Supreme Court in the case of Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. Abhisar Buildwell Pvt. Ltd. in Civil Appeal No. 6580 of 2021. A in Civil Appeal No. 6580 of 2021. As 26.08.2017, the search in the case of SVP gr search in the case of SVP group was conducted on 26.08.2017, t assessment year under consideration was not pending and assessment year under consideration was not pending and assessment year under consideration was not pending and therefore falling in the unabated assessments. Accordingly, therefore falling in the unabated assessments. Accordingly, therefore falling in the unabated assessments. Accordingly, following the ratio of the Hon’ble Supreme Court in the case of following the ratio of the Hon’ble Supreme Court in the case of following the ratio of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra) Abhisar Buildwell Pvt. Ltd. (supra), we hold that no additi we hold that no addition could have been made otherwise than incriminating material. The have been made otherwise than incriminating material. The have been made otherwise than incriminating material. The addition made in respect of commission from transaction with the addition made in respect of commission from transaction with the addition made in respect of commission from transaction with the parties other than the SVP group is accordingly deleted. The parties other than the SVP group is accordingly deleted. The parties other than the SVP group is accordingly deleted. The grounds of appeal are accordingly allowed. grounds of appeal are accordingly allowed.
8. The ground raise The ground raised in assessment years 2014-15 and 2015 15 and 2015-16 are identical to the legal ground raised in assessment year 2012-13. are identical to the legal ground raised in assessment year 2012 are identical to the legal ground raised in assessment year 2012 Therefore, following our find Therefore, following our finding in assessment year 2012 ing in assessment year 2012-13, the legal ground is allowed in favour of the assessee. The grounds legal ground is allowed in favour of the assessee. The grounds legal ground is allowed in favour of the assessee. The grounds raised on the merit of the appeal not required it of the appeal not required to be adjudicated to be adjudicated upon at this stage and and are left open.
Axtron Tex-Chem (India) Pvt. Ltd. Axtron Tex 7 4791 & 4790/MUM/2024 4791 &
In the result, all the three appeals of the assessee are allowed. In the result, all the three appeals of the assessee are allowed. In the result, all the three appeals of the assessee are allowed.
Order pronounced in the open Court on nounced in the open Court on 30/01/2025. /01/2025.