DCIT Vs M/s. Prominent Realtech Pvt. Ltd. (ITAT Delhi)
The issue under consideration is whether Addition made on account of investment made outside books of account u/s 153C is justified in law?
In the present case, the A.O, came to the conclusion that since assessee company purchased the same shares just after 05 days from TIDCL at a much lower price, therefore, assessee must have paid the sale consideration outside the books of account. Accordingly, A.O. in the assessment order held that assessee has paid to TIDCL outside books of account and made addition accordingly.
It is an admitted fact that during the course of search no incriminating material found which may belong to assessee to prove that assessee paid over and above what is stated in the books of account for purchase of shares of TIDCL. In the absence of any evidence on record, there were no basis for the A.O. to make any addition against the assessee. A.O. made addition merely on the basis of presumption of certain facts, for which, there is no evidence available on record. Further the same shares have been sold by assessee in subsequent A.Y. 2011-2012 at a lesser price as against the addition made by the A.O. which is accepted by the A.O. under section 143(3) of the I.T. Act. In these circumstances and in the absence of any evidence on record, no interference is called for. The Departmental Appeal is accordingly dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
Both the Departmental Appeals as well as Cross Objections by Assessee are directed against the different Orders of the Ld. CIT(A)-3, New Delhi, Dated 17.10.2013 and 15.10.2013 for the A.Y. 2008-2009.
2. We have heard the Learned Representatives of both the parties and perused the material on record. Both the parties mainly argued in the case of M/s. Prominent Real-Tech Pvt. Ltd., and have submitted that the issue is same in other case also, therefore, the Order in the case of M/s. Prominent Real-Tech Pvt. Ltd., may be followed in other appeals. Therefore, we decide appeal of M/s. Prominent Real-Tech Pvt. Ltd., as under.
ITA.No.6817/Del./2013 –A.Y. 2008-2009
And
CO.No.258/D/2014 –A.Y. 2008-2009
[ In the case of M/s. Prominent Real-Tech Pvt. Ltd., ]
3. Briefly the facts of the case are that A.O. passed the assessment order under section 1 53C read with section 143(3) of the I.T. Act, 1961, Dated 22.03.2013. In this year, as against the returned income of Rs.NIL, the A.O. assessed the assessee company at an income of Rs.9,70,40,500/- by making the addition on account of investment made from the source not disclosed to the Revenue Department. The A.O. noted that in the year under consideration, the assessee had purchased following shares from Triveni Infrastructure Development Co. Ltd., [“TIDCL”] on 28.03.2008 –
(i) 20,000 shares of Ramada Hospitality Pvt. Ltd., for a sum of Rs.50 lakhs.
(ii) 24,000 shares of Better Homes Build-Tech Pvt. , for Rs.89,59,500/-.
3.1. The A.O. found that TIDCL had purchased both the above shares from the promoter company at a much higher price i.e., for Rs. 5 crores for Ramada Hospitality Pvt. Ltd., and for Rs.6. 10 crores for Better Homes Build-Tech Pvt. Ltd. The A.O, therefore, came to the conclusion that since assessee company purchased the same shares just after 05 days from TIDCL at a much lower price, therefore, assessee must have paid the sale consideration outside the books of account. Accordingly, A.O. in the assessment order held that assessee has paid to TIDCL outside books of account and made addition of Rs.9,70,40,500/-.
4. The assessee challenged the assumption of jurisdiction under section 153C of the I.T. Act as well as addition on merits before the Ld. CIT(A). The Ld. CIT(A) rejected the ground relating to assumption of jurisdiction under section 1 53C of the I.T. Act. The assessee on merit contended that addition can be made under section 153C only on the basis of the incriminating material found during the course of search. However, no incriminating material was there, therefore, no addition can be made. It was further submitted that there is no evidence that assessee has made investment outside the books of account. There has to be some evidence for the undisclosed investment allegedly made by the assessee. Since there is no evidence available on record, therefore, whole addition is unjustified. It was further submitted that the shares were subsequently sold by the assessee company in F.Y. 2010-2011 for a sum of Rs. 1,39,59,500/- and this fact has been accepted by the A.O. in the assessment under section 143(3) for A.Y. 2011- 20 12. The Ld. CIT(A) accepted the explanation of assessee that there is no evidence on record with the A.O. to come to the conclusion that any payment over and above the stated price of shares have been paid to TIDCL. Further, these shares have been sold in subsequent A.Y. 2011-2012 and sale consideration have been accepted by the A.O. Therefore, there was no basis to make any addition. The addition was accordingly deleted. The Ld. CIT(A) also noted that since loss is booked by TIDCL, therefore, it needs investigation at the level of the A.O. in that case. The addition was accordingly deleted.
5. In the Departmental Appeal, the Revenue challenged the deletion of addition of Rs.9,70,40,500/-.
6. After considering the rival submissions, we are of the view that no interference is called for in the matter. It is an admitted fact that during the course of search no incriminating material found which may belong to assessee to prove that assessee paid over and above what is stated in the books of account for purchase of shares of TIDCL. In the absence of any evidence on record, there were no basis for the A.O. to make any addition against the assessee. A.O. made addition merely on the basis of presumption of certain facts, for which, there is no evidence available on record. Further the same shares have been sold by assessee in subsequent A.Y. 2011-2012 at a lesser price as against the addition made by the A.O. which is accepted by the A.O. under section 143(3) of the I.T. Act. In these circumstances and in the absence of any evidence on record, no interference is called for. The Departmental Appeal is accordingly dismissed.
7. In the Cross Objections the assessee challenged the assumption of jurisdiction under section 1 53C of the I.T. Act. Learned Counsel for the Assessee referred to satisfaction note, copy of which is filed at page-1 of the paper book of the Department, which reads as under :
“INCOME TAX DEPARTMENT
NAME OF THE ASSESSEE : M/s Prominent Realtech Pvt
