M/S KIWI FOODS INDIA PVT. LTD.,,NEW DELHI vs. DCIT, NEW DELHI

The additions in the impugned assessment order passed u/s 153A are bad in law and on facts because a) The additions were not based on any books of account or other material not produced in the course of original assessment but which could alleged to have been found in the course of search or an undisclosed income or property discovered therein. b) As the assessment proceedings were not abated but were already completed. Thus all the additions so made in the assessment order should be deleted following the Special Bench decision dated 6.7.2012 in the case of All Cargo Global Logistics Ltd. in appeals no. ITA/5018-5022/M/10.

7. The assessee also moved another application dated 18.02.2014 for admission of the following additional ground:

The CIT(A) erred in law and on facts in confirming issuance of notice u/s 153C to the appellant ignoring the fact that no assets, incriminating material and documents belonging to the appellant company were seized from the 5 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. searched parties/premises on 31.07.2008, which is the prerequisite for assuming jurisdiction u/s 153C of the Act. Thus, the notice issued without fulfilling the conditions laid down by the law is invalid and the assessment order should be annulled.

6 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. � DIT(Exemption) Vs Arunodya (2006) 286 ITR 383 (Del) � Satish Kumar Keshari Vs ITO (2007) 106 TTJ 980 (ITAT-Pat.) � ITO Vs Gurinder Kaur (2006) 102 ITD 189 (ITAT- Del) � CIT Vs J.K. Cotton Spinning & Weaving Mills Co. Ltd. (2005) 197 CTR 73 (All.) � DCIT Vs Maruti Udyog Ltd. (2006) 99 ITD 666 (Del-Trib) � CIT Vs Ashok Leyland Ltd. (2001) 25) ITR 452 (Mad.) � Orissa Cement Ltd. Vs CIT (2001) 117 Taxman 625/250 ITR 856 (Del) � Eicher Motors Ltd. Vs DCIT (2004) 82 TTJ (Ind.) 61 9. During the course of hearing the ld. Counsel for the assessee reiterated the contents of the aforesaid applications and requested to admit the additional grounds.

10. In his rival submissions the ld. DR objected for the admission of the additional grounds and submitted that these grounds were not raised before the ld. CIT(A), therefore, these should not be admitted.

9 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. Sl. Name of the Party No. of Shares Amount Received No. in (Rs.) 1. M/s Reenu Fincap P. Ltd 20000 10,00,000/- 2. M/s Satellite Marcon P. 26000 13,00,000/- Ltd.

3. M/s GFC Finance Ltd. 100000 50,00,000/- 4. M/s Diplomat International 30000 15,00,000/- P. Ltd.

5. M/s Enjoy Commercial P. 20000 10,00,000/- Ltd.

Sl. Name of the Subscriber No. of Amount paid No. Beneficiary Company Company Shares by subscriber company 1. Kiwi Foods Pvt. Ltd. Marrass Ind. 5000 500000 Pvt. Ltd.

3. Kiwi Foods Pvt. Ltd. PMP Farms Pvt. 7500 1500000 Ltd.

4. Kiwi Foods Pvt. Ltd. Intelecom Ltd. 10000 1000000 5. Kiwi Foods Pvt. Ltd. Optimates 5000 500000 Textiles Ind. Ltd 10 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd.

6. Kiwi Foods Pvt. Ltd. Unique 10000 1000000 Diagnostics Ltd.

8. Kiwi Foods Pvt. Ltd. Core Capital 10000 1000000 Services Ltd.

11. Kiwi Foods Pvt. Ltd. BSA Fincap Pvt. 5000 500000 Ltd. 95,00,000/-

Sl. Name of the Party A.Y. Income (Rs.) No.

6. M/s Mahanivesh India P. 2003-04 (-) 3340/- Ltd.

13 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. d. u/s 68A of the Companies Act no person can apply shares of any company under a fictitious and false name.”

� CIT Vs Lovely Exports Pvt. Ltd. (2008) 216 CTR (SC) 195 � CIT Vs Divine Leasing & Finance Lid. (2008) TIOL 118 (SC) IT � CIT Vs Steller Investment Ltd. (2001) 251 ITR 263 (SC) � CIT Vs Sophia Finance Ltd. (1994) 205 ITR 98 (Del)(FB) � CIT Vs Glocom Impex (P) Ltd. (2006) 157 Taxman 303 (Del) � CIT Vs. Dolphin Canpack Ltd. (2006) 283 ITR 190 (Del - Trib)

14 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. � DCIT Vs Esteem Towers (P) Ltd. (2006) 99 TTJ (Del) 472 � Uma Polymers (P) Ltd. Vs DCIT (2006) 100 1TD 1 (Jodh.) (TM) � Asstt. CIT Vs Anima Investments Ltd. (2000) 73 ITD 125 (Del) � United Cores (P) Ltd. Vs ACIT (1998) 62 TTJ (Delhi) 83 � Dy. CIT Vs Sahara India Financial Corporation Ltd. (2003) 81 TTJ (Lucknow) 389 � Swagat Synthetics (P) Ltd. Vs ITO (2002) 77 TTJ (Jodh.) 987 � Shiv Snakti Engg. Co. (P) Ltd. Vs DCIT (1999) 106 Taxman 224 (Delhi) � CIT Vs. Makhni & Tyagi Pvt. Ltd. (2004) 187 CTR (Del.) 550 � Mod Creations (P) Ltd. Vs. ITO [2011] 13 taxmann.com 114 (Delhi) � CIT Vs Orissa Corporation Ltd (1986) 159 ITR 78 (SC) 18. It was contended that if the assessee had furnished the evidences regarding the share capital allotted to the share applicants and the department alleges otherwise then onus lies on the department to prove the same. The reliance was placed on the following case laws: � CIT Vs Bedi & Co. Pvt. Ltd. (1998) 230 ITR 580 (SC) � CIT Vs Daulat Ram Rawatmull (1972) 87 ITR 349 (SC)

15 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. � Rajabali Nazarali & Sons Vs CIT (1987) 163 ITR 7 (Guj.) � CIT Vs Sukhdayal Rambilas (1982) 136 ITR 414 (Bom.) � Hiraluxmi Pandii Vs ITO 27 ITR 643 (Patna) � Juggilal Kamlapat Vs CIT (1969) 73 ITR 29 (SC) � Jaisalmer Construction Co. 9 TTJ 452 19. It was contended that the income on account of the buy back of the shares was already surrendered by a director of the company namely M/s Rajender Aggarwal in his hands in the year. It was further submitted that as far as the assessee company was concerned, it received money against the shares allotted by it to the shareholders and whether the same were given by the director or the shareholders was not its concern, rather availability of such documents absolved the assessee company altogether and proved that the assessee received the share capital amounts from the independent sources and the said shareholders amongst them transferred those shares. Thus, the said documents did not have any relevance to the matter in hand and no adverse cognizance of the same could be considered in the hands of the assessee company at all. It was further submitted that once it had been admitted by the revenue that the said shares were purchased by Mr. Rajender Aggarwal from the allottee shareholders in the F.Y. 2008-09 for Rs.45 lacs and 16 ITA Nos. 3053 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. in whose hands the same had been so assessed then the entire issue gets settled because in that case it becomes an admitted fact that the funds were invested in the assessee company by those shareholders only and no money of the assessee in any manner was invested, otherwise the said director would not have disclosed the purchase in his hands, rather he would have admitted the same as undisclosed investment by the assessee or his own money in the assessee. It was further submitted that the assessee placed all possible documentary evidences on record to substantiate the identity and creditworthiness of the lender and genuineness of transaction. Thereafter, the onus shifted on the AO to prove otherwise, however, no adverse material/information had been brought on record by the AO. The reliance was placed on the judgment of the Hon’ble Delhi High Court in the case of CIT Vs Value Capital Services (P) Ltd. (2008) 307 ITR 334.

17 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. “ii) The appellant has filed information as mentioned herein to support its claim of the share capital investment as required u/s 68 of the Act. The amounts were received by the appellant undisputedly through the account payee cheques. It is also not the case of the assessing officer that the search in the year 2008 after the above investment in share capital at the premises of the appellant yielded any evidence to show that the appellant gave any cash or allowed any other benefit to the said investors or anybody else against the said investments. Nothing is apparent from assessment order that any adverse material exists in the assessment folder for the relevant period. It is not the case where any person claimed before the revenue that the impugned share capital is nothing but bogus introduction by way of accommodation entries. In the impugned appeal the issue is squarely covered by the earlier judgments in the case of Lovely Exports Pvt. Ltd., Divine Leasing and Finance Ltd. (supra) etc cited in the above preceding paragraphs as none of the reasons to give ruling in favour of the department by the Court exists here. Further on perusal of the information down loaded from the official website of the Ministry of Corporate Affairs, Government of India, which is in public domain and it has been found that as per chart submitted by the appellant the following two companies have not filed their audited annual accounts for the period after the year 2008/09 with the ROC as per the information available on the portal of the MCA as on 28.12.2011. It is highly intriguing that have - .he companies which have invested heavily in the 18 ITA Nos. 3053 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. share of the appellant company can vanish. The list these two companies are as under; SI. Name of the Company in Information as Date of No Company which capital per portal of downloading invested & MCA information Investment in by the Rs. assessee 1 Reenu Fincap Rite Pack. Rs. Annual 28/12/01 PVT. Ltd 10LacsinAY accounts filed 2005-06 upto 2009 2 Satelite Rite Pack, Rs. Annual 28/12/01 Markcon PVT. 13 Lacs in accounts filed Ltd AY2005-06 upto 2003 Thus activities of these two companies cannot be considered beyond doubt and thus the action of the assessing officer is confirmed. iii) As regard the other companies, their regular information is available on the portal of the MCA and the same shows not only their creditworthiness to make investment in the equity capital of the appellant company at the relevant time but also reflects that they are regular in their business activities on year to year basis and there has been increase in their own funds ever since they made investment in the appellant company. All these companies have made substantial investments in the equity share capital of the listed as well unlisted scrips and some of them are blue chip companies. It is not the case where the equity was invested in the appellant company only by the investor companies but those have been made in several other companies as a part of their regular investment business. The own available funds of 19 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. these investors companies were sufficiently large and much more than the investments made by them in the appellant company. There is no findings on record from the assessing officer that these investors are not regular in filing their income tax returns despite that the income tax assessment particulars of these investors were on his record. Therefore, their existence are established. Besides, they had enough resources to make the impugned investments in the relevant period. The genuineness of the transaction has also not been found contrary to the audited books of account by the assessing officer. iv) In absence of any material contrary to the information on record, the action of the assessing officer based on surmises and conjecture while making addition u/s 68 of the Act in respect of share capital received cannot be sustained. Thus the addition of Rs. 85,00,000/- is deleted and for the balance amount of Rs. 23,00,000/- is confirmed.”

vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153A 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.

21 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd.

by the assessee first time before 22 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. the ITAT is a legal ground but the same was not raised before the ld. CIT(A), so he has no occasion to deal with this ground. It is also an admitted fact that the judgment of the Hon’ble Jurisdictional High Court in the case of CIT Vs Kabul Chawla (supra) relied by the ld. Counsel for the assessee was also not available to the ld. CIT(A) while deciding the appeal of the assessee. In the present case, the ld. CIT(A) observed that nothing was apparent from the assessment order that any adverse material existed in the assessment folder for the relevant period, on the other hand, claim of the ld. DR is that the additions were made by the AO on the basis of the documents found during the search. Thus, there is contradiction in the facts. On merit also the ld. CIT(A) without bringing on record the figures & statistics came to the conclusion that the companies had enough resources to make the impugned investment. Therefore, by keeping in view the aforesaid facts, we are of the opinion that the issues under consideration require a fresh adjudication. As the principles of natural justice demand that opportunity is to be given to both the parties, we, therefore, deem it appropriate to set aside these issues raised vide additional grounds to the file of the ld. CIT(A) to be adjudicated expeditiously in accordance with law after

23. ITA Nos. 3053 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. providing due and reasonable opportunity of being heard to both the parties. The assessee is also directed to co-operate and not to seek any unwarranted or undue adjournment. In the present case, no other ground was argued by either of the parties before us. Therefore, no finding is given on the merit of the case.

“1. The CIT(A) erred in law and on facts in confirming issuance of notice u/s 153C to the appellant ignoring the fact that no assets and documents belonging to the appellant company were seized from the searched premises on 24 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. 31/07/2008 which is the prerequisite for assuming jurisdiction u/s 153C of the Act. Thus the assessment order should be cancelled.

2. The CIT(A) erred in law and on facts in confirming issuance of notice u/s 153C to the appellant ignoring the fact that no incriminating material and documents belonging to the appellant was found at the time of search and seizure operation carried out on 31/07/08. Thus, the notice issued without fulfilling the conditions laid down by the law is invalid and the assessment made on the basis of an invalid notice should be cancelled.

3. The CIT(A) erred in law and on facts in confirming the addition of Rs. 20,00,000/- for the amounts received against allotment of the share capital during the relevant period due to irrelevant reasons. Thus the addition must be deleted.

4. The CIT(A) erred in law and on facts to confirm that the additions in the impugned assessment order passed u/s 153A are perverse and illegal because a. The additions were not based on any books of account or other material not produced in the course of search for an undisclosed income property discovered therein b. As the assessment proceedings were not abated but were already completed.

25 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. Thus all the additions so made in the assessment order should be deleted following the Special Bench decision dated 06/07/12 in the case of All Cargo Global Logistics Ltd. in appeals no. ITA/5018-5022/M/10. 5. The appellant craves the leave to add, substitute, modify, delete or amend al or any ground of appeal either before or at the time of hearing.”

27. For another assessment years under considerations, similar grounds are raised, the only difference is in the figure mentioned in ground no.

3. The assessee has also raised additional grounds in respect of the aforesaid appeals vide application dated 29.09.2015. The additional ground raised reads as under: “The Assessing Officer erred in law and on facts in making the assessment u/s 143(3) of the Act instead of section 153A since the satisfaction note was prepared by the Assessing Officer on 27.07.10, which became the “substituted” date of search u/s 153C and AY 2009-10 fell within the six preceding assessment years, i.e., from AY 2005-06 to 2010-11 for the purpose of assessment u/s 153A. Thus, the assessment framed u/s 143(3) is not valid and should be annulled.”

28. During the course of hearing the contention of both the parties were similar to the case of M/s Rite Pack Industries 26 ITA Nos. 3053 & 3553/Del/2012 ITA Nos. 2609 to 2611, 2613 to 2616/Del/2013 Rite Pack Industries & Kiwi Foods India Pvt. Ltd. Pvt. Ltd., New Delhi which we have already adjudicated in the former part of this order. As regards to the additional ground, the ld. Counsel for the assessee admitted that this legal ground is raised first time before the ITAT and it was not raised before the ld. CIT(A). We, therefore, by considering the similarity of the facts in the appeals pertaining to the case of assessee i.e. M/s Kiwi Foods India Pvt. Ltd., New Delhi, vis-à-vis the case of M/s Rite Pack Industries Pvt. Ltd. (supra), set aside the issues to the file of the ld. CIT(A) to be decided in accordance with our finding given in the former part of this order while deciding the appeals pertaining to M/s Rite Pack Industries Pvt. Ltd., New Delhi.

29. In the result, appeals of the assessees as well as department are allowed for statistical purposes. (Order Pronounced in the Court on 13/04/2016)