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2022 Supreme(Del) 1858
IN THE HIGH COURT OF DELHI AT NEW DELHI
Manmohan, Manmeet Pritam Singh Arora, JJ.
Pr. Commissioner Of Income Tax (Central)-2 - Appellant
Versus
Panchmukhi Management Services Pvt. Ltd. - Respondent
ITA 319 of 2022, ITA 321 of 2022 PR, ITA 326 of 2022 PR
Decided On : 26-09-2022
Mr. Sanjay Kumar, Advocate with Ms. Easha Kadian, Advocate., for the Appellant; Mr. Salil Aggarwal, Sr. Advocate. with Mr. Madhur Aggarwal, Advocate., for the Respondent
The main legal point established in the judgment is that the lack of live link between seized material and the additions, as well as the acceptance of the genuineness of the share capital, rendered the assumption of jurisdiction by the Assessing Officer erroneous.
Headnote:
Income Tax - Protective Additions - ITA 319/2022 ITA 321/2022 ITA 326/2022 - The court dismissed income tax appeals challenging the order of the Income Tax Appellate Tribunal, holding that no incriminating material was found in the search and the additions made by the Assessing Officer were erroneous. The court emphasized the lack of live link between the seized material and the additions, and upheld the order of the ITAT deleting the substantive additions on merits in a separate batch of appeals.
Fact of the Case:
The income tax appeals were filed challenging the order of the Income Tax Appellate Tribunal, which had deleted the protective additions made in the hands of the respondent-assessee for the Assessment Years 2010-11, 2011-12, and 2012-13. The appellant argued that there was a live link between the additions and the incriminating material found in the search, while the respondent contended that the alleged incriminating materials did not pertain to the assessment years in question.
Finding of the Court:
The court found that the alleged incriminating materials did not pertain to the assessment years in question and that there was no live link between the seized material and the additions made. The court also upheld the order of the ITAT deleting the substantive additions on merits in a separate batch of appeals, leading to the dismissal of the present appeals.
Issues: The main issue was whether the protective additions made by the Assessing Officer were justified based on the incriminating material found in the search.
Ratio Decidendi: The court held that the lack of live link between the seized material and the additions, as well as the acceptance of the genuineness of the share capital by the appellate authorities, rendered the assumption of jurisdiction by the Assessing Officer erroneous.
Final Decision: The court dismissed the income tax appeals, stating that no substantial question of law arose for consideration in the present appeals.
JUDGMENT
Manmohan, (Oral) J. -
CM APPL. 39947/2022 in ITA 319/2022
CM APPL. 39949/2022 in ITA 321/2022
CM APPL. 40148/2022 in ITA 326/2022
Exemptions allowed, subject to all just exceptions. Accordingly, present applications stand disposed of.
ITA 319/2022 ITA 321/2022 ITA 326/2022
1. Present income tax appeals have been filed challenging the common order dated 28th February, 2022, passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No.767/Del/2018 for the Assessment Year 2011- 12 ITA 768/Del./2018 for the Assessment Year 2012-13 and ITA 766/Del./2018 for the Assessment Year 2010-11 deleting the protective additions made in the hands of the respondent-assessee.
2. Learned counsel for the appellant states that the ITAT has 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 issuing company itself instead of investor company's premises evidencing, that, the investor companies were bogus/accommodation entry providing entities.
3. He emphasises that in the present cases, there is a live link between the additions in question and the incriminating material.
4. Per contra, learned senior counsel for the Respondent, who appears on advance notice, states that in the present case the alleged incriminating materials do not pertain to the assessment years in question. In support of his contention, he relies on the satisfaction note dated 29th January, 2016 which reads as under:-
'Satisfaction Note for issue of notice u/s 153C of the Income Tax Act. Name of the assessee: M/s. Panchmukhi Management Services Pvt. Ltd.
A.Y : 2008-09 TO 2013-14.
PAN : AADCP7635E.
Search and seizure action u/s 132 of the Income Tax Act was carried out on 20.09.2013 in the case of Mind Group of cases for A.Ys, 2008-09 to 2013-14 under Section 153A/143(3). The material seized from the premises of the assessee has been examined by the undersigned being the jurisdictional Assessing Officer. After examining such seized material I am satisfied that the following seized documents belong to persons other than Minda Group of cases. The details of such papers are as under:-
Party No./Annexure No./ Seized from: | Page No. of Annexure | Brief description of documents | Person to whom the Documents belongs. | F.Y. involved. |
O-2/A-4, JAY USHIN LTD. GP-14, Sector 18, Gurgaon | 28 to 34 | Annual Report of M/s.Panchmukhi Management Services Pvt. Ltd. as on 31.3.2012 | M/s. Panchmukhi Management Services Pvt. Ltd. | 2011-12 |
O-2/A-4, JAY USHIN LTD. GP-14, Sector 18, Gurgaon | 35 | Details of amount invested by M/s. Panchmukhi Management Services Pvt. Ltd. as on 1.01.2013. | M/s. Panchmukhi Management Services Pvt. Ltd. | 2012-13 |
O-2/A-4, JAY USHIN LTD. GP-14, Sector 18, Gurgaon | 70-71 | Extract of annual return of M/s. Panchmukhi Management Services Pvt. Ltd. (period not known) | M/s. Panchmukhi Management Services Pvt. Ltd. |
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K4/PMEC 3 Rajesh Shiv & Associates, M/s. Panchmukhi Management Services Pvt. Ltd., M/sElectricals & electronics (I) Ltd., M/s. Manish Merchants Pvt.. Ltd., M.s Consortium Vyapaar Pvt. Ltd., Business Communication Centre, 21 Parsi Charch Street, Opp.18 Erza Street, Kolkata- 12 | 1-75 | Bank account details from 1.04.2005 to 31.03.2008 | M/s. Panchmukhi Management Services Pvt. Ltd. | 2007-08 |
O-2/A-11, JAY USHIN LTD. GP-14, Sector 18, Gurgaon. | 47, 48, 51 to 57, 60, 61, 63 to 72. | Original Share certificates dated 9.01.2010 were transferred to M/s. Panchmukhi Manage-ment Services Pvt. Ltd. 9.02.2010 | M/s. Panchmukhi Management Services Pvt. Ltd. | 2009-10. |
I have examined the above mentioned documents/papers and as the undersigned is the jurisdictional assessing officer for Minda Group of search cases (DOS: 20.09.2013), I am satisfied that the provisions of section 153C are invoke able in this case for A.Y.2008-09 to 2013-14. Accordingly this information is being passed to the jurisdictional AO of M/s. Panchmukhi Management Services Pvt. Ltd. For taking necessary acti
