PCIT Vs Jay Ace Technologies Ltd. (Supreme Court of India)
Summary: The litigation concerned Revenue appeals arising from a common order of the Delhi High Court concerning additions made in assessments under Section 153A of the Income Tax Act, 1961, following search proceedings. The underlying proceedings comprised multiple appeals relating to Assessment Years 2008-09 to 2011-12. The Delhi High Court considered whether additions in completed/non-abated assessments could be sustained where no incriminating material was found during the search.
Read Delhi HC Judgmentin this case: Revenue Appeals Dismissed: No Incriminating Material Found in Share Certificate Case
Proceedings Before the Delhi High Court
The Revenue contended that the ITAT had erred in relying on CIT vs Kabul Chawla, 380 ITR 573 (Del), particularly while an appeal involving a similar issue in M/s Apar Industries Ltd. was pending before the Supreme Court. The Revenue also argued that original share certificates found during search constituted incriminating material, that a statement of Shri Rajesh Agarwal had a live link with seized documents, and that investor companies were not genuine business entities because notices under Section 133(6) were returned unserved.
The assessees disputed these assertions and submitted that only photocopies of share certificates had been found. They relied upon the ITAT’s finding that the share certificates merely recorded transactions already disclosed in the books and had not formed the basis of the additions. They also submitted that the statement of Shri Rajesh Agarwal could not be relied upon because they had not been given an opportunity to cross-examine him. The assessees further relied upon details furnished by the investor companies in response to Section 133(6) notices and the net worth of those companies.
