The Division Bench of the Delhi High Court in the case of Pr. Commissioner of Income Tax (Central)-2 vs M/S JPM Tools Ltd. consisting of Justices Manmohan and Manmeet Pritam Singh Arora reiterated that where the assessment of the Respondents/Assessees has attained finality prior to the date of search and no incriminating documents/materials have been found and seized at the time of search, no additions can be made u/s 153A of the Income Tax Act (“the Act”)
Facts
Present income tax appeals were filed challenging the common order by the Income Tax Appellate Tribunal (‘ITAT’). Learned counsel for the Appellant stated that the ITAT erred in relying upon CIT vs Kabul Chawla ignoring the fact that Revenue’s SLP on similar issue is pending adjudication before the Supreme Court in the case of M/s Apar Industries Ltd.
Contentions Made
Petitioner: It was contended that ITAT erred in holding that no incriminating material was found in the search, whereas the original copies of share certificates pertaining to share capital and premium allotted to investor companies were found at the premises of the Assessee company itself instead of investor companies premises evidencing that the investor companies were bogus/accommodation entry providing entities. It was also contended that ITAT failed to appreciate that the additions were based on a statement made by one Sh. Rajesh Agarwal which has live link with the documents seized during search.
Respondent: It was contended that only photocopies of the share certificates were found during search and not the original share certificates. It was also contended that Mr. Rajesh Agarwal cannot be relied upon by the Appellant since the Assessees were not given an opportunity to cross-examine Mr. Rajesh Agarwal despite a request being made. It was also contended that all investor companies had filed detailed replies before the Assessing Officer and had furnished all requisite details as asked for in the notices issued u/s 133(6) of the Act.
Observations of the Court
The Bench relying on CIT vs Kabul Chawla reiterated that where the assessment of the Respondents/Assessees has attained finality prior to the date of search and no incriminating documents/materials have been found and seized at the time of search, no additions can be made u/s 153A of the Act, as in that eventuality, the cases of the Respondents-Assessees would be of non-abated assessment.
It opined that though the appeal in Apar Industries Ltd. was pending adjudication before the Apex Court, yet there was no stay order in favour of the revenue. So, relying on Kunhayammed & Ors. v. State of Kerala & Anr. and Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association CSI Cinod Secretariat, Madras, the issue of law was covered by the judgments passed by this Court.
In this case, both CIT (A) and ITAT cocnurred that no incriminating material had been brought on record by the Assessing Officer to sustain the additions. The ITAT in the impugned order, held that the allegation of the Assessing Officer that no notices u/s 133(6) of the Act were received by the investors, is irrelevant as the said parties had filed detailed replies in response to the Section 133(6) notices along with the details as required by the Assessing Officer. Moreover, since the Respondents-Assessees were denied the opportunity to cross-examine Mr. Rajesh Agarwal, despite a specific request, his statement could not be relied upon as a piece of evidence to make any addition.
Judgment
This Court was of the view that no substantial question of law arose for consideration in the present batch of appeals and accordingly, the same were dismissed.
Case: Pr. Commissioner of Income Tax (Central)-2 vs M/S JPM Tools Ltd.
Citation: ITA 358/2022 & CM APPL. 42277/2022
Bench: Justice Manmohan, Justice Manmeet Pritam Singh Arora
Decided on: 26th September 2022
Read Judgment ;
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