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IN THE HIGH COURT OF DELHI
Manmohan, Manmeet Pritam Singh Arora, JJ.
Principal Commissioner of Income Tax (Central) - Appellant
Versus
Panchmukhi Management Services Pvt. Ltd. - Respondent
ITA 319 of 2022, ITA 321 of 2022 and ITA 326 of 2022
Decided On : 26-09-2022
Incriminating material must pertain to specific assessment years for jurisdiction under Section 153C, and protective additions were rightly deleted due to lack of evidence.
Headnote:(A) Income Tax Act, 1961 - Section 153C - Protective additions deleted by ITAT - Challenges to the dismissal of appeals regarding deletion of protective additions by the Income Tax Appellate Tribunal concerning multiple Assessment Years due to absence of incriminating material during search - Court upholds that seized materials must specifically relate to assessment years in question, and found no incriminating documents pertinent to the disputes on record. (Paras 1, 3-4, 7-10)
(B) Jurisdiction - Assessing Officer's assumption of jurisdiction deemed erroneous as no documents were seized relevant to the disputed assessment years. (Para 8)
Facts of the case:
Income tax appeals were filed against an ITAT order deleting protective additions made for multiple assessment years based on a search which found share certificates at the premises of the issuing company but deemed non-incriminating for the years in question.
Findings of Court:
The High Court agrees with the ITAT’s finding of no incriminating evidence against the respondent and confirms the deletion of protective additions.
Issues: The main issues addressed were whether incriminating materials were present to justify protective additions and the validity of the Assessing Officer’s jurisdiction under Section 153C.
Ratio Decidendi: The court concluded that without incriminating evidence directly related to the assessment years, the jurisdictional assumption of the Assessing Officer was improper, reaffirming previous rulings regarding the need for relevance of seized materials.
Result: Appeals dismissed.
| Table of Content |
|---|
| 1. income tax appeals challenging itat order. (Para 1) |
| 2. arguments regarding incriminating material. (Para 2 , 3 , 4 , 5) |
| 3. assessment year consideration and jurisdictional issues. (Para 6 , 7 , 8) |
| 4. upholding of itat order on merits. (Para 9) |
| 5. dismissal of appeals due to no substantial question. (Para 10) |
JUDGMENT
Manmohan, J. (Oral)
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 201112 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. | |
| K4/PMEC 3 Rajesh Shiv & Associates, M/s. Panchmukhi Management Services Pvt. Ltd., M/s Electricals & 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
