Bogus Share Capital Case: Photo copies of blank share transfer forms, blank signed receipts etc necessary for transfer of shares found with assessee are not admissible as evidence u/s 61 of Evidence Act and not incriminating in nature:ITAT Delhi

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Bogus Share Capital Case: Photocopies of blank share transfer forms, blank signed receipts etc necessary for transfer of shares found with assessee are not admissible as evidence u/s 61 of Evidence Act and not incriminating in nature: ITAT Delhi

Agson Global Pvt. Ltd vs. ACIT (ITAT Delhi)

INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “A”: NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

ITA No. 3741, 3742, 3743, 3744, 3745 & 3746/Del/2019
(Assessment Year: 2012-13 to 2017-18)
Agson Global Pvt. Ltd, Vs. The Assistant
A-25, Nirman Vihar, New Delhi Commissioner of Income Tax
,
Central Circle-28,
New Delhi
(Appellant) (Respondent)

ITA No. 5264, 5265, 5266, 5267, 5268 & 5269/Del/2019
(Assessment Year: 2012-13 to 2017-18)
The Assistant Commissioner of Vs. Agson Global Pvt. Ltd,
Income Tax , A-25, Nirman Vihar, New
Central Circle-28, Delhi
New Delhi
(Appellant) (Respondent)

Assessee by : Shri S. K. Tulsiyan, Adv
Ms. Abha Agarwal, FCA
Ms. Puja Somani, ACA
Revenue by: Shri Sanjay Goyal, CIT DR
Shri K. S. Rawat, ACIT (AO)
Date of Hearing 06/08/2019
Date of pronouncement 31/10/2019

ORDER
PER BENCH

  1. These are the 12 cross appeals filed by the assessee and the learned Assessing Officer involving similar issue in case of one assessee for all 6- assessment years. Both the parties argued them together raising similar arguments on these issues for concluded assessment and abated assessment. Therefore, these all appeals are disposed of by this common order..
  2. The parties agreed that AY 2012-13 is a lead Assessment Year and facts relating thereto were adverted by them. It was stated that identical additions were made in the hands of the assessee company for AY 2013- 14, 2014-15, 2015-16, 2016-17 and 2017-18. In case of AY 2017-18 is also a separate addition other then the identical addition as mentioned in Ay 2012-13 , which would be dealt with by both the parties independent and separate manner as the facts and circumstances leading to that additions were different. For ascertaining the status of each of the assessment, it is important to note that on 21/3/2017 there was a search on this group including the assessee company.
  3. Therefore, we cull out brief facts of the case which shows that assessee is a company [Appellant] who originally filed its return of income u/s 139 (1) of The Income Tax Act, 1961 (hereinafter referred to as The Act) on 31/10/2013 declaring income of INR 60285750/-. Assessment u/s 143 (3) of the act was made on 24/3/2015 at the assessed income of INR 245285750/-, wherein an addition of INR 185,000,000 was made because of unexplained share capital and share premium.
  4. On appeal before the learned CIT – A, per order dated 31/3/2016, the above addition was deleted. Against this, ld AO did not prefer further appeal. So, assessment for assessment year 2012 – 13 was concluded..
  5. Status of other assessment years is as under:-
  6. a) AY 2013-14 assessment u/s 143 (3) is completed as per order dated 31/3/2016 wherein the returned income of the assessee of INR 7 2289816/- was accepted.
    b) AY 2014 – 15, assessment u/s 143 (3) of the income tax act was passed on 28/12/2016 accepting the returned income of the assessee at INR 1 31641113/-.
    c) For assessment year 2015 – 16 assessee filed its return of income on 30/3/2017 declaring income of INR 1 58775950/- which is pending on the date of search on 21/3/2017.
    d) For assessment year 2016 – 17 assessee filed its return of income on 29/12/2017 declaring income of INR 3 55009894/-, which was pending on the date of search on 21/3/2017.
    e) For assessment year 2017 – 18 the return of income was filed by the assessee on 29/12/2017 declaring an income of INR 6 81855980/-
    which was pending for assessment as on the date of search on 21/3/2017.
    A search and seizure operation was carried out on 21/3/2017. For AY 2012-13, Notice u/s 153A of the act was issued on 6/8/2018. Assessee filed return of income, which was originally filed, on 28/8/2018. AO noted that assessment year 2011 – 12 was already settled before the income tax settlement commission (ITSC) order dated 11/3/2016. The assessment u/s 153A was carried out and it was found that assessee has issued share capital at different premium from different assesses on different dates and therefore assessee was asked to prove identity and creditworthiness of these companies. The learned assessing officer found that these companies do not have much operation but have a robust balance sheet. The companies have paid heavy premium per share and there is no rational for paying such a high premium. In the subsequent years after investment in the assessee company, the operations in most of the companies have reduced further. These companies have common directors. The companies are operated by Kolkata based operator. Further, during the course of search blank sign share transfer forms, blank signed power of attorney and other documents necessary for transfer of shares were found and seized. These documents related to the companies from which the assessee is claimed to received share capital and share premium. Thus, the AO noted that the entire transaction is a sham transaction. Mr. Apresh Garg, MD of appellant, was confronted issue of share capital in his statement u/s 132 (4) of the act. In response to question number 22 in statement dated 22/3/2017, he stated that the amounts so received, as share capital is nothing but the assessee’s own money that was routed back to the assessee company in the form of share capital. He submitted that assessee has paid through cheque to the depositors, who in turn made deposit of the above sum as share capital with the assessee company. The learned AO further noted that books of all these entities are maintained at the office of the assessee company, however, those books of accounts were not found. During the course of assessment proceedings, assessee was specifically asked to file the details of share capital and premium along with supporting evidences. On 14/11/2018, Assessee furnished chart showing name, address, correspondence address, share capital, share premium, total amount received from shareholders, confirmation, bank statement, ITR, . On verification of bank of these parties it was evident that it is own funds of the assessee, which has been routed through these parties by cheques, have been reintroduced in books of accounts of assessee as share capital. The assessee further contested that issue of share capital has already been decided in the completed assessment u/s 143 (3) of the act on 24/3/2015, wherein the addition made by the learned assessing officer out of the total addition has been deleted by the learned CIT – A, No appeal has been preferred before higher forum. It was therefore stated that, in absence of any incriminating documents/evidences found during the course of search, in the concluded assessment for assessment year 2012-13, 13-14 and 14- 15, no addition could be made.
    7. Further, assessee also submitted that all these cash credits have been duly verified during the original assessment proceedings, only addition was made to the extent of INR 185,000,000, which is deleted by the learned CIT Appeal, against which no appeal has been preferred before the higher forum, therefore, assessee has completely proved identity and creditworthiness of the depositors, source of the money invested in the assessee company, which is the assessee itself, genuineness of the transaction is also proved.
  7. In view of this, no addition could have been made in the hands of the assessee, even in case of abated assessments.
  8. The learned assessing officer rejected the contention of the assessee and held that most of the shareholders have merger returned income, investors to not have any substantial business activities, absence of substantial fixed assets, absence of strong financials, and absence of date in the documents found during the course of search such as blank share transfer forms etc. Shows that it is a sham transaction. Thus, the learned AO made an addition of INR 4 81987000/- as unaccounted income of the assessee which has been introduced into the books in the form of share capital and share premium. The AO further made an addition of INR 9639750/- being 2% of the amount of share capital as commission to obtain share capital. Thus, total addition of Rs 491626740/- was made.
  9. The second addition was with respect to the sum of INR 149,200,000/-

received during the year from M/s Mahalaxmi Traders, whose financials are obtained and it was found that it does not have financial worth to introduce the sum. The depositor was examined who denied the investment. Such addition was made u/s 68 of the act. In addition, of above, 2 percent on the above sum as commission was also added. Thus, total addition of INR 175814034/- was made.
11. During the course of search, Managing director of the assessee company, Mr. Apresh Garg, in his statement recorded u/s 132 (4) on 22/3/2017, has admitted that it resorted to bogus sale/purchase transactions. The learned AO noted that assessee has undertaken these bogus sale and purchase transaction with these entities to inflate its expenses and suppress taxable income. Such suppression of income has been brought back in the form of share capital. He further noted that assessee has purchased in shell almonds from one company at an average purchase price of 4414 KG whereas the sale price to the same entity was 04/04/2004 KG on average and thus the loss of Rs. one per KG. Thus, the AO noted that Assessee Company is involved in bogus sales and purchases. There was also a shortage of stock by nearly INR 450 crore is against the stock recorded in it is of accounts. Thus 25% of the total purchase price from these parties were added to the total income of the assessee amounting to INR 353,24,93,127/-.

  1. Thus, the total income of the assessee was assessed at INR 1 610849810/-

against the returned income of INR 60285750/- per order dated 30/12/2018 passed u/s 153A read with section 143 (3) of the income tax act, 1961 passed by the assistant Commissioner of income tax, central circle – 28, New Delhi (the learned AO).
Page | 5 Agson Global Pvt. Ltd Vs. ACIT, ITA No. 3741to 3746/Del/2019 (assessee) ITA No. 5264 to 5269/Del/2019 (Revenue) (Assessment Year: 2012-13 to 2017-18)
13. Assessee, aggrieved with the order of the learned assessing officer preferred an appeal before The Commissioner of Income Tax (Appeals) – 29, New Delhi. He passed an order dated 25/4/2019.

  1. On the issue of absence of any incriminating material found during the course of search, thus, no addition can be made in case of concluded assessments, he confirmed the addition with respect to share capital holding that statement of the director of the company has been recorded based on the good and cogent material and such statement recorded constitutes incriminating material within the meaning of section 153A of the act. He mainly referred to the seizure of photocopies of few blank share transfer deeds relating to the part of the share capital issued to outsider as well as the statement recorded u/s 132 (4) of the managing director of the appellant company as incriminating material. Thus, he held that the decision of the learned assessing officer passed u/s 153A of the act is not in conflict with the judgment of the honourable Delhi High Court including that of Kabul Chawla and others. He further confirmed the addition with respect to the share capital u/s 68 of the act. He also confirmed the addition because of commission paid allegedly for the above share capital.
  2. With respect to the addition because of bogus purchases, he directed the learned assessing officer to submit a remand report giving the periodical gross profit ratio of the assessee as well as the cash deposit in the bank accounts. Based on the gross profit ratio, he held that the appellant had sale/purchase of the similar quantity but instead of showing transactions with the real entities, the transactions were shown in the name of the species entities created by the appellant itself, which were not real but artificial to suppress the profit. He further noted that the entities are also showing the purchases and the sales to and from the appellant of such purchases and sales, which are bogus. Therefore, he noted that the assessing officer was not justified in disallowing 25% of the purchases since it is not a case where only purchases are in doubt and assessee has recorded fictitious sales and purchases to cover up the profits of actual sale and purchases. Therefore he held that in such a situation, in the interest of natural justice, it would be reasonable that the trading results to the extent of sale and purchase from the fictitious entities are rejected u/s 145 (3) of the act and the gross profit on the same is estimated. Accordingly gross profit shown by the assessee from its books for different years/periods was recorded and for assessment year 2012 – 13 where the gross profit shown by the assessee was 16.20% from the other parties, he applied that rate on the sales with the alleged bogus parties and restricted the addition to the extent of INR 54,43,23,729/-.
  3. Therefore, the learned AO as well as assessee both are aggrieved with the order of the learned CIT – A, are in appeal before us.
  4. Similarly for AY 20-13-14 to 2017-18 following addition were made by the ld AO in assessment u/s 153A rws 143(3)of the Act for all these years:-

S Particulars of A.Y. Additions made by 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
N the A.O

Addition u/s 68 on
1 a/c of share capital
and premium
received from:

(i) Outsiders/ 48,19,87,00 – – – – –

(ii) From alleged
associated
parties: – – – – –
– Mahalaxmi 14,92,00,00 15,20,00,00 – – – –
Traders 0 0 65,30,99,00 24,81,49,80 17,86,74,75 –
– Sri Balaji – 34,79,50,00 0 0 0 52,23,87,90
Enterprise 0 9,55,55,000 11,60,00,10 37,60,99,65 0
– Vishal Traders – – 6,48,90,000 0 0 –
– Rustagi Exim P. – – – –
Ltd – –
– Vikas 2,31,66,700 – – –
International ___________ ____________
81,35,44,00 ____________ ___________ _
(iii) From alleged 65,43,53,70 49,99,50,00 0 36,41,49,90 55,47,74,40 52,23,87,90

2 Total addition u/s 68
on account of share 1,62,70,880
capital/ premium 1,30,87,074 99,99,000 ___________ 72,82,998 1,10,95,488 1,04,47,758
____________ ____________ ___________ ____________ ____________
Alleged commission 82,98,14,88
expenses @ 2% on 66,74,40,77 50,99,49,00 0 37,14,32,89 56,58,69,88 53,28,35,65

3 Disallowance of
alleged bogus 88,31,23,28 65,25,24,88 1,79,46,43,2 2,67,93,04,3 2,99,56,36,9 1,21,763

25% of purchases
from alleged related
parties)
4 Addition u/s 68 on – – – – – 1,50,53,24,

in bank a/cs post
Agson Global Pvt. Ltd Vs. ACIT,
ITA No. 3741to 3746/Del/2019 (assessee)
ITA No. 5264 to 5269/Del/2019 (Revenue)
(Assessment Year: 2012-13 to 2017-18)demonetization

5 TOTAL ADDITIONS 1,55,05,64,0 1,16,24,73,8 2,62,44,58,0 3,05,07,37,2 3,56,15,06,8 2,03,82,81,

6 Income as per 6,02,85,750 7,22,89,816 13,16,41,11 15,87,75,95 35,50,09,89 68,18,55,98

7 Assessed Income 1,61,08,49,8 1,23,47,63,6 2,75,60,99,2 3,20,95,13,2 3,91,65,16,7 2,72,01,37,

8 Assessed Income 1,61,08,49,8 1,23,47,63,7 2,75,60,99,2 3,20,95,13,2 3,91,65,16,7 2,72,01,37,

  1. On appeal before the ld CIT (A) by the Assessee, addition u/s 68 on
    account of share capital were confirmed and addition on account of bogus purchases was restricted to the extent of the appropriate profit rate on such purchases as per finding in AY 2012-13 Addition u/s 68 on a/c of share capital/ premium Addition on a/c of alleged bogus purchases A.Y. & alleged commission expenses @ 2% thereon Made by the A.O Sustained by the Made by the A..O Sustained by the C.I.T(A) C.I.T(A) 2012-13 66,74,40,774 66,74,40,774 88,31,23,282 54,43,23,729 2013-14 50,99,49,000 50,99,49,000 65,25,24,882 23,50,36,945 2014-15 82,98,14,880 82,98,14,880 1,79,46,43,207 54,71,66,863 2015-16 37,14,32,898 37,14,32,898 2,67,93,04,397 72,00,54,941 2016-17 56,58,69,888 56,58,69,888 2,99,56,36,930 1,08,45,52,031 2017-18 53,28,35,658 53,28,35,658 1,21,763 4,87,053 TOTAL 3,47,73,43,098 3,47,73,43,098 9,00,53,54,461 3,13,16,21,562
  2. The assessee has raised the following grounds of appeal in ITA No. 3741/Del/2019 for the Assessment Year 2012-13:-

“1. That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) has erred in law and on facts in upholding the assessment made u/s. 153A of the Act in spite of the fact that no incriminating documents whatsoever was found/seized during the search operation u/s. 132 of the Act which is sine qua non for making any additions in an assessment framed u/s. 153A of the Act.

  1. That in view of the facts and in law, since no incriminating material was found in the course of search and the unabated assessment years remained undisturbed, the AO was wrong in invoking the provisions of section 153A of the Act and recomputing the income of the current assessment year.
  2. That on the facts of the case and in law, the Ld. CIT(A) erred in confirming the order of the learned AO in adding the share capital received and allotted during the year amounting to Rs.48,19,87,000/- as unexplained cash credit u/s. 68 of the Act in the hands of the assessee in spite of the fact that no incriminating material was found in the course of search and all the required information/evidences in support of such share transactions were furnished during the course of assessment and ingredients of provisions of sec.. 68 required to be satisfied by the assessee were fulfilled in respect of the impugned share allotment transactions.

3.a That on the facts of the case, the learned CIT(A) failed to consider that the issue of share capital and premium of Rs.48.,20.0..0,000/- had already been examined and considered in the original assessment order passed u/s 143(3) of the Act dated 24-03-2015 wherein out of the sum of Rs.48.20 crores, a sum of Rs. 18.50 crores was added to the income of the assessee and on appeal by the assessee, the preceding learned CIT(A) vide his order dated 31- 03-2016 had deleted the said addition made by the learned AO and the department had not filed any further appeal before the Hon’ble ITAT in this regard and as such, this issue has attained finality, therefore no addition could have been made in the absence of any incriminating documents. 3b. That on the facts and in law the Ld. CIT(A) erred in confirming the action of the learned AO in adding the sum of Rs.96,39,740/- as commission paid for arranging the share capital money without any evidence found in the course of search evidencing any such payment, more so when the transaction does not relate to the present assessment year.

3c. That on the facts and in law, no incriminating material was found in relation to the share capital issued during the year to invoke the provisions of section 68 of the Act in an assessment made u/s 153A of the Act read with section 143(3) of the Act.

4 That on the facts of the case and in law the learned CIT(A) erred in confirming the action of the learned AO, without any discussion in the appellate order, in adding the share application money received during the year amounting to Rs. 14.92.00.000/- as unexplained cash credit u/s. 68 of the Act in the hands of the assessee in spite of the fact that no incriminating material was found in the course of search and all the required information/evidences in support of such share transactions were furnished during the course of assessment and ingredients of provisions of sec. 68 required to be satisfied by the assessee were fulfilled in the impugned share allotment transactions.

5 That on the facts and in law the learned CIT(A) erred in confirming the action of the learned AO, without any discussion in the appellate order, in adding the sum of Rs.17,23,66,700/- received as share application money in the preceding years and the said preceding years were a part of the proceedings before the Hon’ble Settlement Commission and therefore cannot be brought to tax in the present assessment year u/s 68 of the Act.

5a That section 2451 of the Act makes the order of the Settlement Commission under section 245D (4) conclusive in respect of matters covered by it and these findings are not liable to be reopened or reviewed either in proceeding under this Act or in any other proceedings.

5b That on the facts of the case and in law the learned CIT(A) erred in confirming the action of the learned AO in adding the sum of Rs.34,47,334/- as commission paid for arranging the share capital money without any evidence found in the course of search evidencing any such payment, more so when the transaction does not relate to the present assessment year.

  1. That on the facts of the case and in law, the ld CIT(A) erred in confirming the addition of an amount of Rs.. 54,43,23,729/- on the allegation of bogus purchases out of the total addition of Rs. 88,31,23,282/- made by the ld AO on this account. 6a That on the facts of the case and in law, the Ld. CIT(A) erred in accepting the contention of the learned AO that the transactions with M/s Mahalaxmi Traders, M/s Shree Balaji Enterprises, M/s Vikas International, M/s Vishal Traders and M/s Rustagi Exim Pvt Ltd were bogus without any basis for the same nor any evidence having found in the course of search for drawing such adverse conclusions. 6b That on the facts of the case and in law, the Ld. CIT(A) erred in treating the transactions with M/s Mahalaxmi Traders, M/s Shree Balaji Enterprises, M/s Vikas International, M/s Vishal Traders and M/s Rustagi Exim Pvt Ltd as bogus and thereby computing GP on the sales to them @ 16.20%, being the GP wrongly calculated by the AO on the other transactions accepted as genuine by him. 6c. That on the facts of the case and in law, the Ld.. CIT(A) erred in accepting the incorrect GP @ 16.20% as calculated by AO and applying the same on the alleged bogus sales made to the alleged bogus parties.

6d That on the facts of the case and in law, the Ld. CIT(A) erred in assuming that the appellant had made sales to other parties and had booked them in the name of bogus parties when no such evidence was found in the course of search nor such allegation was made by the learned AO in the assessment order.

6e That on the facts of the case, the Ld. CIT(A) erred in not giving cognizance to the replies filed by the alleged bogus parties in response to the notices issued by the learned AO u/s 133(6) of the Act to them during the course of assessment and the learned AO could not point out any infirmity between the books of the appellant and the replies received from the alleged bogus parties.

6f That on the facts of the case and in law, the Ld. CIT(A) erred in relying on the purported statement recorded of Shri Apresh Garg, Director of the company u/s 132(4) of the Act on 23-03-2017 inspite of the fact that the said statement was immediately retracted by him since the contents of the impugned statement were incorrect and the same was forcefully signed by him.

7 That the learned CIT(A) erred in sustaining the assessment order passed by the learned AO u/s 153A of the Act read with section 143(3) of the Act wherein admittedly the said order was not based on his own judgment and belief but was made under pressure and force of the Coordination Committee comprising of AO, ACIT, ADIT(Inv) and JCIT(Inv) whereas the AO himself in his letter addressed to ADIT(Inv) had clearly admitted the impugned additions as unwarranted, thereby the whole order is erroneous, bad in law and liable to be quashed. 8 That the order of the Ld. CIT(A) being not based on the facts of the case of the appellant and being contrary to law, should hence be quashed and the appellant company be given such relief or reliefs as prayed for.”

  1. Identical grounds have been raised by the assessee for Ay 2013-14 to 2017-

18 except in case of 2017-18 where in ground no 5 is with respect to addition of sales u/s 68 of Rs. 73.13 Crores

  1. The revenue has raised the following grounds of appeal in ITA No. 5264/Del/2019 for the Assessment Year 2012-13:-
  2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in restricting the addition on account of bogus purchase to the extent of Rs. 54,43,23,729/- only as against the total addition of Rs. 88,31,23,282/- made at the GP rate disclosed by the assessee. The Ld CIT(A) ignoring the fact that the assessee was engaged in unaccounted sale and purchase the gross profit @25% of bogus purchase whereas, the Ld CIT(A) has restrict disallowance to the extent of estimated GP @16.20% .
  3. That the grounds of appeal are without prejudice to each other.”
  4. Identical grounds have been raised by the ld AO for Ay 2013-14 to 2016-17 except in case of 2017-18 where in ground no 1 is with respect to addition of sales u/s 68 of Rs. 77.40 Crores deleted by the ld CIT (A).

Page | 11 Agson Global Pvt. Ltd Vs. ACIT, ITA No. 3741to 3746/Del/2019 (assessee) ITA No. 5264 to 5269/Del/2019 (Revenue) (Assessment Year: 2012-13 to 2017-18)

  1. The assessee has made an application for admission of additional ground of appeal for assessment year 2012 – 13 to A.Y. 2017 – 18 identically “Additional Ground of Appeal
  2. That on the facts and in the circumstances of the case and in law, the CIT (A) erred in rejecting the books of ‘s account of the assessee by invoking section 145 (3) of the income tax act, 1961 in relation to the transactions with the alleged related party the order on the basis of surmises and conjectures although the search and seizure operation u/s 132 (1) in case of the assessee, the assessment proceedings and enquiry conducted by the AO u/s 142 (2) as the further enquiry conducted by the learned CIT (A) u/s 250 (4) did not lead to any adverse material whatsoever contrary to the entries recorded in the regular books of accounts of the assessee.
  3. That further, the CIT (A) erred in invoking section 145 (3) of the act without complying with the mandatory requirement of law of issuing prior show cause notice and allowing the assessee and about opportunity of being heard on materials, if any, transferred to be relied upon by him in support of the interest as rejection of the books and the consequent best judgment assessment u/s 145 (3) of the act.”
  4. He submitted that these are the additional grounds, which are going to the root of the matter, jurisdictional on issues, legal in nature, and therefore they deserve to be admitted. He submitted that both these issues are arising from the order of the learned CIT – A. He submitted that the powers of the CIT A with respect to finding out the new source of income as well as rejection of the books of account are challenged. He therefore submitted that these grounds should be admitted. He further submitted that these two additional grounds have been raised in all the six assessment years in appeal of the assessee as they involve identical facts and circumstances. He further relied upon plethora of the judicial precedents support its contention.
  5. The learned departmental representative vehemently opposed additional grounds raised by the assessee stating that there should not be admitted.
  6. We have carefully considered the rival contention and perused the application for the additional ground of appeal of the assessee is wherein the assessee has challenged the power of the learned CIT – A for rejection of the books of accounts by invoking the provisions of section 145 (3) of the act partially with respect to certain transactions of the assessee and that too without issue of notice u/s 251 of the act. Thus the grounds raised by the assessee are illegal in nature and goes to the root of the assessment and additions sustained by the learned CIT – A. Therefore, they are admitted for all these assessment years. They would be dealt with on the merits of the addition when the respective additions would be dealt with.
  7. The 1st ground of appeal is as under:-

“That on the facts and in the circumstances of the case, the learned CIT (Appeals) has erred in law and on facts in upholding the assessment made under section 153A of the act in spite of the fact that no incriminating documents whatsoever was found/seized during the search operation u/s 132 of the act which is sine qua non for making any addition in an assessment framed u/s 153A of the act.”
28. Ground no 2 is supporting ground no 1 .

  1. Adverting to the above ground of appeal, the learned authorised representative submitted that assessment u/s 143 (3) is concluded by order dated 24/3/2015. The search took place in case of the assessee on 21/3/2017. Therefore, the assessment for this year remains concluded hence it does not abate. He also submitted that accordingly for assessment year up to AY 2015-16 are unabated assessments, Therefore, any addition or adjustment to the total income of the assessee can only be made if there is any incriminating material found during the course of search. Thus, he stated that in absence of any incriminating material found, the concluded assessment could not be disturbed even after search. He further submitted that addition u/s 68 of the income tax act or addition of unaccounted purchases made by the learned AO for assessment year 2012 – 13 to A .Y. 14 – 15 are without any incriminating material. He referred to copies of panchnama placed at page number 1 – 89 of the paper book 1 to show that no incriminating material was found during the course of search. Therefore, he submitted that learned assessing officer cannot make any addition. However, he hastened to add that the learned assessing officer has mainly referred to the seizure of photocopies of few blank share transfer deeds relating to the part of the share capital issued to outsider as well as the statement recorded u/s 132 (4) of the managing director of the appellant company were considered by AO as incriminating material. He further submitted that none of these could be construed as incriminating materials to disturb the unabated assessment years. He submitted that even the statement recorded of the managing director of the assessee company which was made on 22/3/2017 u/s 132 (4) of the act was retracted on 24/3/2017 within 2 days of the recording of the statement and was also placed before the additional director of income tax (investigation) on 31/3/2017. He referred to the retraction statement placed at page number 171 – 175 of the paper book 1 of the assessee. To support its contention he further relied upon the decision of the honourable Bombay High Court in CIT vs. Continental warehousing Corp Ltd and All Cargo Global Logistics Ltd 374 ITR 645 (2015) (BOM). He further relied upon the decision of the honourable jurisdictional High Court in CIT (C) vs Kabul Chawla (Delhi) (2015) 61 412 and specifically at para number 37 and 38 of that order which held that assessment has to be made u/s 153A only on the basis of incriminating material and in the absence of any incriminating materials, the completed assessment can be reiterated and the abetted assessment are assessment can be made. Thus, he submitted that completed assessments could be interfered by the assessing officer while making the assessment u/s 153A only based on some incriminating material unearthed during the course of search or acquisition of documents or undisclosed income or property discovered in the course of search. He also referred to the decision of the honourable jurisdictional High Court in the principal Commissioner of income tax vs. Meeta Gutgutia wherein the special leave petition is dismissed by the honourable Supreme Court reported in (2018) 96  468.
  2. He further submitted that unless there is a specific incriminating material, each of the assessment years in which and additions are sought to be made, the assumption of jurisdiction u/s 153A would be vitiated in law. For this proposition, he referred to the decision of the honourable Delhi High Court in (Delhi) (2017). To support his submission for assessment year 2012 – 13 to 2014 – 15, he referred to plethora of judicial precedents.. He further placed into service the decision of the honourable Supreme Court in case of CIT vs. Sinhgad technical education society (2017) 397 ITR 344 (SC) wherein it has been held that where as per the provisions of section 153C of the act, incriminating material which was seized had to be pertaining to assessment year in question and the documents which were seized did not establish any co-relation document – wise with those assessment years, then order passed for initiation of proceedings u/s 153C should be quashed. He further referred to the decision of the honourable Delhi High Court in case of principal Commissioner of income tax, Delhi – 2 vs. Best infrastructure (India) private limited and others in ITA number 11/2017 to 22/2017 (2017) 397 ITR 82 (Delhi) which is in fact, carrying with the decision of the honourable Delhi High Court in CIT vs. Kabul Chawla (supra). He further referred to the decision of the honourable Delhi High Court in case of principal Commissioner of income tax vs. Dharampal Premchand Ltd (2017) 99 CCH 2002 wherein it has been held that when there was no incriminating material seized, each of assessment years, assessment for which were shot to be reopened, addition made in course of proceedings u/s 153A/143 (3) were not warranted.
  3. With respect to the contention of the learned assessing officer pertaining to the photocopies of the blank transfer form pertaining to the share capital issued, he submitted that the alleged seized material are not incriminating in nature because firstly, they are merely photocopies and not the original documents and secondly they mention the statement of facts. They do not have any transaction date, transaction value and the name of the transaction parties other than the persons who are holding the shares of the company. They are not incriminating in nature. He referred to several judicial precedents wherein such evidences were found during the course of search however, they were not held to be incriminating in nature. He further referred to mainly the decision of the coordinate bench in case of Galaxy rice industries Ltd in ITA number 1451, 52, 53 for assessment year 2007 – 08 – 2009 – 10 dated 1/3/2008 wherein in para number 9.4 the identical situation was discussed, he therefore submitted that it applies squarely to the facts of the case.
  4. He further submitted that the statement recorded u/s 132 (4) do not constitute any incriminating materials for the purpose of assessment u/s 153A of the income tax act. He submitted that the statement of the managing director and the statement of Mr. Praveen Agarwal recorded u/s 132 (4) of the act. With respect to the evidentiary value of the statement recorded u/s 132 (4) with respect to assessment in search cases he referred to the decision of the honourable Delhi High Court in CIT vs. Harjeev Agrwal (2016) 290 CTR 263 (Delhi) wherein it has been held that evidence found as a result of search would not take within its sweep statements recorded during search and seizure operations unless they are related to any material found during the course of search. He therefore submitted that there should be a nexus between the statement recorded u/s 132 (4) and evidence/material which are incriminating in nature found during the search. To support his this proposition he relied of the decision of the honourable Delhi High Court in case of principal Commissioner of income tax vs. Best infrastructure (India) private limited wherein it has been held that the statements recorded u/s 132 (4) do not by themselves constitute incriminating material for the purpose of assessment u/s 153A of the act. He further relied upon the decision of the coordinate bench in Brahmputra Finlease (private) Ltd in ITA number 3332/del/2017 dated 29/12/2017 to support his contention. He even otherwise submitted that that the managing director of the company retracted his statement immediately on 24/3/2017. He referred to the copy of retraction placed at page number 169 – 171 of the paper book number 1. He further referred to the circular number F. NO. 286/2/2003 – IT (INV) dated 10/3/2003 and 286/98/2013

– IT dated 18/12/2014. He further referred to the decision of the honourable Gujarat High Court in principal Commissioner of income tax vs. Sayumya construction private Ltd (2016) 387 ITR 529 (Gujarat). He further submitted that information gathered with regard to the share application money are the entries with respect to the sum is received by the assessee which are duly disclosed in the regular books of accounts of the assessee and therefore are part of the regular records of the assessee. Hence, it cannot be considered as an incriminating material. He further submitted that the copies of the power of attorney and share application forms are merely photocopies. He further submitted that share application forms even otherwise in original also should be with the assessee company who issued the share capital. He further referred to the order of the learned CIT – A in para number 5.1 and 5.2 of his order waiting that the financial position of the companies who invested in the share capital of the assessee were not discovered during the course of assessment proceedings. He even otherwise submitted that assessing officer himself has stated that their financial has is robust but they have meager income. Thus, even otherwise there financials creditworthiness is established. He further referred to the para number 5.2 of the order of the learned CIT – A wherein he referred to the statement recorded by the investigation wing of third party in altogether different search. He submitted that such a statement recorded in the search of third party could not be considered even otherwise as an incriminating material found during the course of search on assessee. With respect to para number 5.2 of the order of the learned CIT – A wherein it has been held that during the course of search operation in the office of the appellant, certain blank sign share transfer forms, blank sign receipts, blank sign the power of attorney and other documents necessary for transfer of shares were found and seized based on which learned CIT – A held that these are the incriminating documents, the learned authorised representative submitted that original copies of the transfer deeds and other papers were not found from the premises of the assessee. The documents found were only the photocopies, which could not have been capable of being acted upon. Those photocopies does not give any right to the assessee over the shares, therefore they are not incriminating in nature. Even otherwise, he submitted that as there was certain negotiation going on with respect to the acquisition of the shares of the assessee from those investors for the future public issue of the assessee, they were found at the premises of the assessee. He otherwise submitted that the shares are still held by those persons.. He otherwise stated that the AO has not made any enquiry with respect to this material. With respect to the statement of the managing director of the company he submitted that in statement recorded u/s 132 (4), he never stated that the unaccounted money of the assessee had been routed through various companies in the form of share capital. In fact, he stated that the share capital received from the impugned entities represented amount from the books of the assessee company from the disclosed sources rooted through these entities and received in back in the form of share capital. He submitted that the ultimate source of share application money received by the assessee was from the disclosed source of the assessee itself the transactions were verifiable from the bank account of the party as well as from the bank account of the assessee as the source of money is the assessee himself. Therefore, he submitted that there is no unaccounted money flowing from the assessee to the depositors but the accounted money is flowing to the depositors. He otherwise submitted that the statement of the managing director was retracted. With respect to the amount of INR 149,200,000 he submitted that it was initially paid by the assessee from it disclosed bank account to Mahalaxmi traders as advance, which was written back by Mahalaxmi trader’s assessee to the assessee therefore no addition u/s 68 on this court could be warranted. He further referred to the deviation report submitted by the learned assessing officer, which clearly held that according to the AO himself addition u/s 68 could not be made. He therefore submitted that the addition made by the learned assessing officer for assessment year 2012 – 13 and 2013 – 14 and 2014 – 15 deserves to be quashed at the very threshold for want of valid jurisdiction u/s 153A of the act.

  1. On the merits of the addition of the share capital, he submitted that AO has submitted a deviation report on 20/12/2018 addressed to The Deputy Director Of Income Tax (Investigation) which is placed at page number 368 – 377 of paper book – 1 in para number 3 the learned assessing officer himself has stated that on verification of the records as well as details and evidences filed by the assessee, it is seen that the assessment proceedings u/s 143 (3) of the income tax act, 1961 was conducted for the assessment year 2012 – 13, 2013 – 14 and 2014 – 15 wherein the issue of share capital were examined and verified in detailed by the assessing officer and were partly accepted at that stage. In para number 3 (ii) in deviation report with respect to the share capital returns been stated by the assessing officer that AO had added an amount of INR 185,000,000 to the total income of the assessee company for assessment year 2012 – 13 on account of share application and premium. The above addition of INR 185,000,000 is later on deleted by the learned CIT (A) after examination of the details filed by the assessee. Since the learned CIT – A being a higher authority had duly examined the amount of share capital of INR 185,000,000 is an allowable if there on against which no appeal was preferred by the Department before the income tax appellate tribunal. Therefore, the addition of this amount on the ground of bogus share capital/premium can only be made in the light of incriminating fees material. In the deviation report in para number 3 (iii) the learned assessing officer himself has stated that the chart prepared by the investigation wing is factually incorrect. Therefore, the learned authorised representative submitted that even in the deviation report dated 20/12/2018 the learned assessing officer himself was of the opinion that no addition u/s 68 on account of share capital is warranted for any of the years under consideration. He further submitted that such a deviation report dated 20/12/2008 was once again reiterated by the AO and also the additional Commissioner of income tax, CR – 7 in the deviation meeting held on 28/12/2018, the minutes of such meeting were enclosed at page number 381 – 385 of paper book – 1, even after consideration of the reply dated 24/12/2018 of the Deputy Director Of Income Tax (Investigation). Thus the learned AR vehemently stated that when the assessing officer and his superior both are of the view that no addition can be made in the hands of the assessee u/s 68, the whole addition was made on account of the opinion of the deputy director of income tax (investigation) as recommended in the appraisal report. He therefore submitted that assessing officer was not satisfied that addition is deserves to be made u/s 68 of the income tax act. In view of this, he submitted that the addition could not be made u/s 68 in the hands of the assessee.
  2. With respect to the issue of bogus purchases from 3 different concerns, the learned assessing officer has relied upon the statement of the managing Dir recorded u/s 132 (4) of the act dated 22/3/2017 to hold that sales and purchases with the alleged parties are bogus, the learned authorised representative submitted that in the deviation report submitted by the assessing officer dated 20/12/2018 he has observed that it would be difficult to make an ad hoc disallowance of 25% of purchases from the aforesaid parties as suggested in the appraisal report. He therefore submitted that even the assessing officer stating that the addition suggested in the appraisal report is not sustainable. He further referred to the argument of the assessing officer that if both purchase and sale from the aforesaid parties are treated as bogus, it will lead to a reduction in the returned income of the assessee instead of an addition which will be detrimental to the interest of the revenue. He therefore submitted that, (1) There is no additional incriminating evidence for making this addition, (2) The deviation report itself suggests that if the addition is made of bogus purchases and sales in the hands of the assessee, it will result into the reduction from the returned income.

He submitted that the reasons for the same is that assessee has booked sales from these parties from assessment year 2012 – 13 to 2017 – 18 of INR 36,20,60,89,783/- whereas the purchases from these parties is amounting to INR 36,02,14,17,848/- thus ultimately for all these years it will result into reduction of the returned income by INR 18,46,71,935/-. Thus, despite the above observation of the learned assessing officer in his deviation report itself, The Deputy Director Of Income Tax (Investigation) as per letter dated 24/12/2018 advised the assessing officer to make an addition on account of alleged bogus purchases at the rate of 25% of purchases from the impugned parties as recommended in the appraisal report. Thus, the learned authorised representative submitted that if the purchases and sales from these parties, which are alleged to be bogus purchases and sales recorded by the assessee are removed, there would be a net reduction in the returned income of the assessee of INR 1 84671935/- in the hands of the assessee. He further stated that there is absence of any incriminating material with the assessing officer on this issue. He submitted that the deviation report shown by the AO clearly states that there cannot be any additions in the hands of the assessee and addition is merely based on the appraisal report. He otherwise stated that the purchases made from these parties have been sold to other parties and the sales made to these parties the goods have been purchased from other parties. Thus, he submitted that one leg of the transaction is accepted as correct by the assessing officer and the other leg of the transaction is held to be bogus. He thus submitted that such addition could not be made. He further submitted that when i. the assessee maintains the detailed stock register showing quantity wise detail of each item, ii. purchases are vouched, iii. sales are vouched, There is no reason that this addition can be made in the concluded assessment or even in the open assessment. Coming to the order of the learned CIT – A, he submitted that, the learned CIT – A has found an innovative way, not provided in the income tax act, by invoking the provisions of section 145 (3), without verification of the books of accounts, rejects part of the books of accounts, applies the gross profit rate of the other transactions other than with these parties to the alleged transactions from the tainted parties and makes the addition on account of gross profit. He submitted that above addition has been made by the learned CIT – A i. without verifying the books of accounts, ii. without finding any latent patent or glaring defects in the books of accounts, iii. without rejecting the quantitative tally of the assessee, iv. without considering the explanation of the assessee that during the course of search the stocks lying at one of the godowns was not at all considered, v. without issuing any show cause notice, vi. finding the new source of the income, vii. partly accepting the books of account and partly rejecting it, viii. ignoring the principles of natural justice.

He further referred to para number 7.6 of the learned CIT – A wherein it is alleged that stock was found to be short during the course of search. The learned AR submitted that the learned CIT – A has completely ignored the submission of the assessee that the godown of the assessee at a logistic Park Sonipat, Haryana wherein part of the stock of the assessee was not at all covered under the search action. He submitted that stock lying at the said premises was not taken into consideration while arriving at the physical stock as on the date of search resulting in the alleged difference of INR 450 crore. He submitted that in fact there was no actual discrepancy in the stock physically lying with the assessee vis-a-vis the stock as per books of accounts. He submitted that had this stock was not available with the assessee, the addition would have been made of INR 450 crore , as shortage of stock could have been found as unaccounted sale of the assessee. He submitted that no evidences were found, that such a shortage of stock was sold by the assessee out of the books of accounts without recording it. He therefore submitted that when one premises was not at all covered in search wherein the stock of INR 450 crore is lying, it has no impact on the alleged transaction with these parties. Therefore, it was stated that the search action in the case of the assessee did not lead to the discovery of any incriminating material indicating that the assessee had recorded any bogus purchases or sales or that the assessee has made any purchase or sales outside the books of accounts. In the course of assessment proceedings, no evidence or material was brought on record by the assessing officer to prove that the transactions with the alleged related parties were bogus. The ad hoc disallowance of 25% of the purchases from the alleged parties was made by the learned assessing officer on mere direction contained in the appraisal report contrary to his own independent view expressed in the deviation report that addition on account of bogus purchases result into the reduction of the returned income. This fact itself shows that, even otherwise, even if the parties are accepted to be alleged bogus parties, the assessee has shown high profit in the return of income with respect to the transaction of purchase and sales from these parties. Thus, he submitted that in the concluded assessment, the addition is made without any incriminating material and in open assessment (abetted assessment); the addition was made without any evidence and contrary to the deviation report of the assessing officer.

  1. He further submitted that the additional grounds raised by the assessee are on this point where the learned CIT – A has rejected the books of accounts of the assessee partially without issue of any show cause notice for providing an opportunity of being heard to the assessee before invoking provisions of section 145 (3) of the act. He referred to the provisions of section 145 (3) of the income tax act and submitted that where the assessing officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided under subsection (1) has not been regularly followed by the assessee, or income has not been computed in accordance with this standards notified under subsection (2), the assessing officer may make an assessment in the manner provided in section 144 of the income tax act. He therefore submitted that the power of rejection of the books of accounts solely rests with the assessing officer only. He referred to the provisions of section 2 (7A) where the definition of the assessing officer is provided and he submitted that this does not include the power of the learned CIT – A as he is not an assessing officer. He therefore submitted that there is no power available with the learned CIT – A for invoking the provisions of section 145 (3) of the income tax act when specifically the learned assessing officer has tested the method of accounting of the assessee in the original assessment proceedings u/s 143 (3) of the income tax act as well as in the assessment proceedings u/s 153A of the income tax act and he does not find any reason to deviate from the book results. He submitted that it is not the case of the revenue that the assessing officer has not at all referred to the method of accounting employed by the assessee or the correctness and completeness of the books of accounts maintained by the assessee. He therefore submitted that when the learned assessing officer in two consecutive scrutiny assessment u/s 143 (3) and under section 153A of the income tax act, does not find any issue but is satisfied in fact with the correctness and completeness of the accounts of the assessee and as well as the method of accounting employed by the assessee, there is no reason for the learned CIT – A to reject the books of account and work out the appropriate gross profits. He further submitted that there is a defective methodology employed by the learned CIT – A in estimation of the gross profit. He submitted that the learned CIT – A has estimated the gross profit on the alleged transaction with the order identified parties though reflected in the books in the names of the alleged related parties at the lower gross profit ratio is cryptic, perverse, illogical and heavily prejudiced against the assessee. He stated that the learned CIT – A while selectively rejecting the trading results in relation to the transactions with the alleged related parties has accepted the trading results of the remaining transaction with the other parties and worked out the gross profit ratio for the assessment year 2012 – 13 to 2017 – 18. The above gross profit ratio is showing of Iran’s of 16.20 percentage for assessment year 2012 – 13 to 4.13 percentage for assessment year 2014 – 15. He further stated that the learned CIT – A has once again selectively accepted the gross profit ratio only for the those years where the same appeal is to be higher side and rejected the gross profit ratio for the years where the same appears to be lower side and thus has reached at the result which is not sustainable in law. He submitted that the learned CIT – A selectively rejected the gross profit ratio on transaction with other parties for assessment year 2014 – 15 is not sufficient and adopted the average of the gross profit ratio of the preceding 2 years instead for making the addition. He therefore submitted that the learned CIT – A has accepted one methodology in one assessment year for computing the gross profit and has adopted altogether a different methodology for computing gross profit in different year. He therefore submitted that the approach adopted by the learned CIT – A defies any logic and is clearly perverse and unsustainable in law. He therefore referred to the additional grounds of appeal wherein there is a specific challenge to the invocation of the provisions of section 145 (3) of the act by the learned CIT – A..
  2. Thus, the learned authorised representative submitted that in addition in the case of unabated assessment years i.e. Assessment Year 2012 – 13, 2013 – 14 and 2014 – 15 is made without any incriminating evidence. In case of addition assessment years (abetted assessment) for assessment year 2015 – 16, 16 – 17 and 17 – 18 the addition cannot be made on the merits of the issue.
  3. The learned CIT DR vehemently referred to the order of the learned assessing officer and the learned CIT – A supporting the order. He submitted that during the course of search, it was observed that the assessee has obtained huge share capital and share premium from various entities in different assessment years. He submitted that during the course of search at the office premises of the assessee at Jasola, photocopies of blank signed share transfer forms, blank signed receipts, blank signed power of attorney and other documents necessary for transfer of shares were found and seized. These documents related to companies from which the assessee has claimed to have received share capital and share premium. Together these companies have invested INR 481,900,000 in the target assessee company. Further the managing director of the assessee company was confronted on issue of share capital premium received by the assessee in statement u/s 132 (4) of the act on 22/3/2017 wherein in reply to question number 22 he stated that the amounts received in the form of share capital was nothing but the assessee’s companies own money which is rooted back to the assessee company in the form of share capital premium. He referred to the statement of the managing director of the assessee. Therefore, he submitted that for making an addition in the hands of the assessee in case of concluded assessment, there are enough incriminating materials available/found during the course of search. He therefore submitted that the addition of share capital has been made on the basis of the incriminating material found during the course of search thus the learned CIT – A is also correct in holding that the addition u/s 68 with respect to the share capital has been made on the basis of incriminating material found during the course of search u/s 153A of the act and therefore the addition is sustainable on this ground.
  4. He further stated that assessee is engaged into the large-scale transaction of bogus sales/purchases with various entities and in statement recorded u/s 132 (4) on 22/3/2017 of the managing director all the concerns were found to be associated with the assessee and the books of accounts on all these are also maintained at the office of the target company. The companies also submitted that all sale and purchases are at the instructions of Mr. Rajesh Garg, the accountant of the assessee. He submitted that these companies do not have any independent existence. He further stated that during the course of search the physical stock position of the appellant company was also not telling with the stock recorded in its books of accounts, which further strengthens the fact that the appellant was involved in bogus, sale purchase transactions. He further referred to the transaction of in shell almonds recorded which resulted into profit of INR 1 per KG is transferred to the non-existent entity. He thus submitted that the above stated documents, statements, stock positions lead to unavoidable conclusion that substantial incriminating material was discovered during the course of search. He further referred to the paper book submitted by the assessing officer which contains the statement of the managing director and the various documents such as blank share transfer certificates, affidavits, share application forms, copies of parties bank statement, property sale deeds and other documents which were seized from the premises of the assessee. However he admitted that the assessment for assessment year 2012 – 13 to assessment year 2014 – 15 was completed u/s 143 (3) however the assessments for assessment year 2015 – 16 to assessment year 2017 – 18 are not completed as on the date of search i.e. 21/3/2017 is the time for issue of notice u/s 143 (2) was available to the assessing officer.
  5. On the issue of merit of the addition u/s 68 of the income tax act, he extensively referred to the order of the learned assessing officer as well as the learned CIT – A to show that the share applicants do not have much business operation yet have a robust balance sheets, the shares are issued at a heavy premium which is varying from year to year so there is no rational. After the investment made by the investor was the operation in most of the concerns have been reduced further, the share applicants have common directors and further in case of certain companies, the controlling person is given a statement to the investigation wing on 12/11/2012 that these companies have given an accommodation entries. He therefore submitted that coupled with the above evidence the entire transactions are sham transactions are in fact a way to introduce the assessee’s own unaccounted income in the garb of the share capital receipts. He submitted that the share transfer forms are signed by the transfer. He submitted that such document should be in possession of the shareholder and not the share issue in companies. He further submitted that transaction of the purchase and sales with respect to four parties is bogus as held by the assessing officer wherein, the profit of the assessee is reduced, reintroduced in the books of the assessee as unaccounted income in the form of share capital.. He therefore submitted that in view of this submission the order of the learned CIT – A is based on sound analysis based on the facts available on record and based on incriminating material found during the course of search. With respect to the share capital, he relied upon the decision of the honourable Supreme Court in case of principal Commissioner of income tax vs. NRA iron and steel (2019) 103  48, decision of the honourable Delhi High Court in NDR promoters private limited (2019) – TIOL – 172 – HC – Del- IT. He also relied on plethora of judicial precedents on the issue of taxability of share capital. On the issue of the validity of the statement recorded u/s 132 (4) of the income tax act he further referred to the decision of the honourable Delhi High Court prominently in Smt Dayawanti vs. CIT (2016) 75 308 (Delhi) wherein it has been held that where inferences drawn in respect of undeclared income of the assessee was revised on basis of materials found as well as statements recorded by the assessee son in course of search operations and assessee had not been able to show as to how estimation made by the assessing officer was arbitrary or unreasonable, addition so made by the assessing officer by rejecting the books of account was justified.
  6. With respect to the addition on account of the bogus purchases, the learned DR vehemently relied upon the decision of NK proteins Ltd vs. CIT (2017 – TIOL – 23 – SC – IT), the decision of the honourable Gujarat High Court in case of NK industries Ltd vs. DCIT (2016)

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