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Before: SHRI R. K. PANDA & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM These appeals are filed by the Revenue against the order dated 29/09/2014 passed by CIT(A)-XXXIII, New Delhi.
The grounds of appeal
are as under:- ( A.Y 2006-07)
1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in law in holding that the jurisdiction assumed u/s 153C in the case of the assessee is not in accordance with law.
2. The order of the CIT(A) is erroneous and is not tenable on facts and in law.” ( A.Y 2007-08)
1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in law in holding that the jurisdiction assumed u/s 153C/143(C) in the case of the assessee is not in accordance with law.
2. The order of the CIT(A) is erroneous and is not tenable on facts and in law.” ( A.Y 2009-10)
1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in law in holding that the jurisdiction assumed u/s 153C/143(C) in the case of the assessee is not in accordance with law.
2. The order of the CIT(A) is erroneous and is not tenable on facts and in law.”
A search and seizure operation u/s 132 of the Income-tax Act 1961, was conducted by the Investigation Wing of the Department on 22/3/2011 in the Amtek Group of cases. The premises of M/s Infotek Pvt. Ltd. & ors were also searched u/s 132(1) of the Income Tax Act, 1961 which is a group company of Amtek Group. The documents belonging to the assessee M/s Archon Estates Pvt. Ltd. were also found and seized from the premises of M/s Excel Infotek Pvt. Ltd. in whose name search warrant of authorization was issued. The case was centralized with Central Circle, 14 (New Delhi) vide orede dated 10/1/2013. Accordingly notice u/s 153C of the Income Tax Act, was issued to the assessee on 15/1/2015. The satisfaction note in this regard was supplied to the assessee on 14/1/2013 on his requisition. In response to the said notice the return declaring an income of Rs.4,920/- was filed on 31/1/2013. Notice u/s 143(2) & 142(1) of the Income Tax Act, 1961 were issued along with a questionnaire dated 31/1/2013 duly served upon the assessee and case was fixed for hearing. In response to various statutory notices CA along with Vide President of Amtek Group of companies attended the proceedings and furnish necessary details information and documents called for from time to time which were placed on record by the Assessing Officer. In view of the information filed the case was discussed with the assessee’s representatives. M/s Archon Estate Pvt. Ltd incorporated on 3rd day of January 2015 to carry on the business of real estate. During the course of search, certain documents were found and seized for the office of Amtek Group Companies. These documents represented the audited balance-sheet and profit and loss account of the group companies M/s Archon Estates Pvt. Ltd for the years 31/3/2006, 31/3/2007, 31/3/2008 & 31/3/2009. The balance sheet as on 31/3/2008 and 31/3/2009 shows the same share from time to time for Rs. 69,95,80,000/-. The same was confronted to Shri Arvind Dham, Chairman of the group and was asked about the source of the share premium and share capital in the company. In his statement recorded u/s 132(4) of the Act, during the course of search, he stated that he cannot gave the name and address of share holders but he will give the details of share holders within two day was further that he cannot explain these opinions and to by peace of mind he was ready to disclosed the same as undisclosed income of the company. Further, the assessee has furnished the details of share holders of these companies. On perusal of submission it was seen that following are the year wise share holders of M/s Archon Esates Pvt. Ltd and share holders as on 31/3/2006:
Amtek India Ltd.
2. Shareholders as on 31/3/2008; 1 Amtek Ring Gears Ltd 2. Amtek Crankshaft India Ltd. shareholders as on 3/3/2009; 1. Excel Hosiery Pvt. Ltd. 2. Dream Land Buildtech Pvt. Ltd. 3. Equatror Chemicals (P) Ltd. 4. Individual (name not given) The contents of the seized documents were verified from the audit balance sheet of the assessee for the year end on 31/3/2006 and 31/3/2008 by the Assessing Officer. It was found that share capital and share premium of Rs.24,50,00,000/- and Rs.51,00,00,000/- were introduced in the respective years during the course of assessment proceedings the assessee was asked to furnish the confirmations of the persons from whom the share capital was obtained along with their bank statements. The assessee submitted the confirmation of the share capital and share premium. In both the Assessment Years 2006-07 & 2008-09 which was received from its main group companies i.e. M/s Amtek India Ltd. in Assessment Year 2006-07 & from M/s Amtek Crankshaft India Ltd. and M/s Amtek Ring Gears Ltd. in Assessment Year 2008-09. The assessee also explained in details with supporting/relevant documents vide letter dated 11/3/2013 that the addition in the share capital/premium was made through limited companies and all these companies were flagship companies of Amtek Group having use free reserve and surplus. Thus, the above share capital of Rs.24,50,00,000/- introduced during the year under consideration was duly verified which was converted into share capital from the unsecured loans of Rs.24,50,00,000/- received in the earlier Financial Year 2004-05. The Assessing Officer observed that since the Investigation Wing mentioned nothing or given in details of any incriminating documents pertaining to share capital in this company which prima facie gives and communications or proving that the share capital was suspicious except the statement of Shri Arvind Dham Chairman of Amtek Group. Hence, in this regard, letter dated 7/3/2013 to Additional DIT Investigation (Unit 1) New Delhi through Additional CIT, Central Wing New Delhi to give further evidence/incriminating documents in his possession if any on the basis of which addition of Rs.69,95,80,000/- can be made to the income of the assessee on account of unexplained share capital and share premium even after filing the confirmation of the same by the assessee along with their bank statement. In this regard, DDIT, Investigation Unit replied that the seized and post search material has already been handed over to Central Circle, 14 (New Delhi) and there was no further evidence/documents and material lying in that office. Hence, they advised to take decision based on the interpretation of the material available on record since the DDIT, Investigation Unit 1 which had no other incriminating documents in their possession apart from the statement of Shri Arvind Dham. The assessee filed the confirmations of the share capital and share premium in both the Assessment Year 2006-07 & 2008-09 which was received from which is main group companies i.e. M/s Amtek India Ltd. for Assessment Year 2006-07 and from M/s Amtek Crankshaft India Ltd. and M/s Amtek Ring Hear Ltd in Assessment Year 2008-09 respectively. The Assessing Officer, therefore, observed that the assessee proved the requirements of Section 68 of the Income Tax Act, i.e. indentity of the person, genuineness of the transactions and creditworthiness of the share holders. Hence, no adverse view on this issue was drawn by the Assessing Officer. The Assessing Officer further observed that during the course of assessment proceedings it was noticed that the assessee company further investigated share capital of Rs.24,50,00,000/- for acquisition of property for a total consideration of Rs. 27 crore measuring 3185 square meter in the month of March 2005. This property has a built up area covered are of 464.5 square meters approximately 5,000/- square fees which is being used as Secretarial Office of Amtek Group of Companies but no rental income was shown in the return of income of the assessee company from this property. Since, the said property was used as Secretarial Office of Amtek Group of Companies. Hence, the Assessing Officer observed that it should have earn rental income from this property. Accordingly, the income of Rs.60 lakhs was treated as rental income u/s 23 of the Income Tax Act, earn by the assessee company from the property. In this way, after giving the repeat of 30% on account of repairing and maintenance u/s 24 of the Income Tax Act, the net rental income comes to Rs.42 lakhs which was added back to the income of the assessee for the year under consideration.
Aggrieved by this order, the assessee filed appeal before the CIT(A).
6. The CIT(A) held that the satisfaction was written in the file of the assessee, instead of person search and at the end of satisfaction note it was written that the notice u/s 153C issued to M/s Archon Estate Pvt. Ltd. Thus, the satisfaction note u/s 153C was recorded in assessee’s file and not in the file of the person who was searched. Thus, the CIT(A) held that satisfaction note for initiation of proceedings u/s 153C was not recorded in the case of the person search u/s 132. The CIT(A) further held that the jurisdiction assessment u/s 153C in the case of the assessee was not in accordance with the findings of the ITAT in the case of DSL Properties Pvt. Ltd. Therefore, the CIT(A) concluded that the jurisdiction u/s 153C was not assumed properly and in accordance with law as per the decision of the ITAT in case of M/s DSL Properties Ltd. Vs. DCIT being dated 22/3/2013, the assesse’s appeal was partly allowed by the CIT(A).
Being aggrieved by the said, the Revenue is in appeal before us.
The Ld. DR submitted that the CIT(A) has over looked the fact that the satisfaction was recorded by the Assessing Officer issuing notice u/s 153C and the same is sufficient as the Assessing Officer for search party and for the Assessing Officer is one and the same. The Ld. DR relied upon the Hon’ble Delhi High Court in the case of Principal CIT Vs. M/s NAU NIDH Overseas Pvt. Ltd. dated 3rd February 2017 wherein it is held that the satisfaction recorded by the Officer issuing notice u/s 153C is sufficient if the Assessing Officer of the search person and third party are the same. There is no representation during the hearing on behalf of the assessee.
We have heard both the parties and perused the material available on record. It can be seen that about the issue of satisfaction recorded or not, the CIT(A) has not taken cognizance of the ITAT decision in case of DSL Properties Pvt. Ltd. The CIT(A) held as under:
“9. I have already concluded that the satisfaction note is not recorded in the file of the assessee searched u/s 132 and documents claimed to be owned by the appellant was transferred the file of the appellant. Therefore, the jurisdiction assumed u/s 153C in the case of the appellant is not in accordance with the findings of Hon’ble ITAT in the case of DSL properties (P) Ltd cited supra. Therefore, it is concluded that the jurisdiction u/s 153C is not assumed properly and in accordance with the law as per the decision of Hon’ble ITAT cited supra. Accordingly, the assessment order passed u/s 153C for all the assessment years are hereby quashed.
All the appeals are having similar issues.” The CIT(A) has also not dealt the issue in respect of the merits of the case. The Hon’ble Delhi High Court in the case of Principal CIT Vs. M/s NAU NIDH Overseas Pvt. Ltd. dated 3rd February 2017 wherein it is held that the satisfaction recorded by the Officer issuing notice u/s 153C is sufficient if the Assessing Officer of the search person and third party are the same. But in the present case the same was not looked into by the CIT(A). Therefore, the order of the CIT(A) is set aside and remanded back to the file of the CIT(A) for a fresh adjudication. Needless to say, the assessee be given proper opportunity of hearing following principles of natural justice.
In result, all the appeals of the Revenue’s are partly allowed for statistical purposes.
Order pronounced in the Open Court on 28th September, 2017.