ACIT Vs Kuber Khadyan Pvt. Ltd. (ITAT Delhi)
Facts- The assessment u/s 153A was completed after making an addition of INR 2,47,00,000/- on account of unexplained credit u/s 68 of the Act. The only dispute is whether there was any incriminating material found during the course of the search.
Conclusion- We find that Hon’ble Delhi HC in the case of PCIT Vs. Best Infrastructure Pvt. Ltd. has held that statement under section 132(4) in itself doesn’t constitute incriminating material. Further, Hon’ble Delhi HC in Shri Mulchand Malu has held that statement under section 132(4) alone cannot be considered as incriminating material unless any corroborating incriminating material is found during the course of search from the premises of the assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals by Revenue are directed against three separate orders, all dated 22/03/2018, passed by the Learned Commissioner of Income Tax(Appeals)-30, New Delhi [in short “the Ld. CIT(A)”] for assessment years 2009-10, 2011-12 and 2013-14 respectively. In these appeals, a common dispute is involved and therefore, these appeals were heard together and disposed off by way of this consolidated order for convenience.
ITA No.4223/Del./2018 for AY : 2009-10
2. First, we take up the appeal of the Revenue (ITA No. 4223/Del/2018) for assessment year 2009-10. The grounds raised in the appeal are reproduced as under:
1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that no additions could be made u/s 153A on the basis of statement recorded u/s 132(4) and the power of the AO to assess or reassess total income u/s 153A is restricted to the material found during search.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in relying upon the decision of Hon’ble Supreme Court in the case of CIT vs. Singhad Technical Education Society when the facts and circumstances of the instant case are different from that case.
3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by ignoring the fact that the assessee during the assessment proceedings failed to produce the Directors of the company that gave accommodation entries to the assessee company and thereby failed to prove the genuineness and creditworthiness of the credits received in their books of account.
4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by not appreciating the fact that the statement of Sh. Mulchand Malu was provided to the assessee during the post search as well as assessment proceedings. During his statement, he being the promoter of the assessee company had admitted the unexplained credits in the assessee’s books of account.
5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by not appreciating the fact that it was humanly not possible for the persons operating paper/jamakharchi companies, to be present for oral cross examination in all the cases where the magnitude of the case is not less than a scam.
6. That the grounds of appeal are without prejudice to each other.
7. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time hearing of the appeal.
3. Briefly stated facts of the case are that for the year under consideration, the assessee filed original return of income on 30/09/2009, declaring total income as nil. The return was processed under section 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) in order dated 09/02/2011 at an income of ₹ 1,89,72,710/-. Subsequently, a search and seizure action under section 132 of the Act was conducted on 09/10/2014 at various premises of the assessee along with premises of the Directors etc. In view of search action, proceedings under section 153A of the Act were commenced by way of issue of notice dated 15/12/2015. The assessee filed return of income on 17/01/2016 declaring nil income. The assessment under section 153A was completed on 28/12/2016 after making an addition of Rs.2,47,00,000/- on account of unexplained credit under section 68 of the Act. On further appeal, the Ld. CIT(A) allowed the appeal of the assessee on legal ground following the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla, 380 ITR 573. Aggrieved, the Revenue is in appeal raising the grounds as reproduced above.
4. Before us, the parties appeared through Video Conferencing facility and filed paper-book in physical form as well as electronically.
5. In ground No. 1, the Revenue has challenged finding of the Ld. CIT(A) that no addition could be made under section 153A of the Act on the basis of the statement recorded under section 132(4) of the Act as there was no incriminating material found during the course of the search.
5.1 The facts in brief qua the issue in dispute are that search was conducted at the premises of one Sh. Moolchand Malu along with the premises of the assessee company. According to the Assessing Officer, Sh. Mool Chand Malu is the promoter of Kuber Group of companies, including the assessee company. In the impugned assessment order, the Assessing Officer has mentioned that Sh. Mool Chand Malu during the course of search action in statement dated 15/12/2014 under section 132(4) of the Act, offered undisclosed income of estimated ₹ 150 crores, including investment in unexplained share capital. The Assessing Officer has further mentioned that, Sh. Mool Chand Malu again reaffirmed his declaration of undisclosed income of Rs.100 crores towards share application money, share premium and unsecured loans. During assessment proceedings under section 153A of the Act, the Assessing Officer observed unsecured loans worth ₹ 2,47,00,000/- from 12 parties, a list of whom mentioned by the Assessing Officer in the impugned assessment order, is reproduced as under:
