Pr. Commissioner Of Incometax (Central)-2 v. Panchmukhi Managementservices Pvt. Ltd

$~4, 6 & 7 *IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 319/2022 PR. COMMISSIONER OF INCOMETAX (CENTRAL)-2 ..... Appellant Through:Mr.SanjayKumar,AdvocatewithMs.Easha Kadian, Advocate. versus PANCHMUKHI MANAGEMENTSERVICES PVT. LTD. ..... RespondentThrough:Mr. Salil Aggarwal, Sr. AdvocatewithMr.MadhurAggarwal,Advocate. 6 +ITA 321/2022 PR. COMMISSIONER OF INCOMETAX (CENTRAL)-2 ..... Appellant Through:Mr.SanjayKumar,AdvocatewithMs.Easha Kadian, Advocate. Versus PANCHMUKHI MANAGEMENT SERVICES PVT. LTD. ..... RespondentThrough:Mr. Salil Aggarwal, Sr. AdvocatewithMr.MadhurAggarwal,Advocate. ITA 319/2022, ITA 321/2022 & ITA 326/2022 +ITA 326/2022PR. COMMISSIONER OF INCOME TAX(CENTRAL)-2 ..... Appellant Through:Mr.SanjayKumar,Sr.StandingCounsel for Revenue with Ms. EashaKadian, Advocate. versus PANCHMUKHI MANAGEMENT SERVICESPVT. LTD. ..... RespondentThrough:Mr. Salil Aggarwal, Sr. AdvocatewithMr.MadhurAggarwal,Advocate. % Date of Decision: 26[th]September, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): CM APPL. 39947/2022 in ITA 319/2022CM APPL. 39949/2022 in ITA 321/2022CM 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 Page 2 of 7 ITA 319/2022ITA 321/2022ITA 326/2022 1.Present income tax appeals have been filed challenging the commonorder dated 28[th]February, 2022, passed by the Income Tax AppellateTribunal (‘ITAT’) in ITA No.767/Del/2018 for the Assessment Year 2011-12 ITA 768/Del./2018 for the Assessment Year 2012-13 and ITA766/Del./2018 for the Assessment Year 2010-11 deleting the protectiveadditions made in the hands of the respondent-assessee. 2.Learned counsel for the appellant states that the ITAT has erred inholding that no incriminating material was found in the search, whereas theoriginal copies of share certificates pertaining to share capital and premiumallotted to investor companies were found at the premises of issuingcompany itself instead of investor company's premises evidencing, that, theinvestor companies were bogus/accommodation entry providing entities. 3.He emphasises that in the present cases, there is a live link betweenthe additions in question and the incriminating material. 4.Per contra, learned senior counsel for the Respondent, who appearson advance notice, states that in the present case the alleged incriminatingmaterials do not pertain to the assessment years in question. In support of hiscontention, he relies on the satisfaction note dated 29[th]January, 2016 whichreads 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 : . Search and seizure action u/s 132 of the Income Tax Act was carried out on20.09.2013 in the case of Mind Group of cases for A.Ys, 2008-09 to 2013-14 ITA 319/2022, ITA 321/2022 & ITA 326/2022 under Section 153A/143(3). The material seized from the premises of theassessee has been examined by the undersigned being the jurisdictionalAssessing Officer. After examining such seized material I am satisfied thatthe following seized documents belong to persons other than Minda Groupof cases. The details of such papers are as under:- ITA 319/2022, ITA 321/2022 & ITA 326/2022 Electricals&electronics(I)Ltd.,M/s.ManishMerchants Pvt..Ltd.,M.sConsortiumVyapaarPvt.Ltd.,BusinessCommunicationCentre, 21 ParsiCharchStreet,Opp.18ErzaStreet, Kolkata-12O-2/A-11,JAY47, 48, 51OriginalShareM/s.2009-10.USHINLTD.to 57, 60,certificates datedPanchmukhiGP-14,Sector61, 63 to9.01.2010wereManagement18, Gurgaon.72.transferredtoServices Pvt.M/s.Ltd.PanchmukhiManage-mentServices Pvt. Ltd.9.02.2010 under Section 153A/143(3). The material seized from the premises of theassessee has been examined by the undersigned being the jurisdictionalAssessing Officer. After examining such seized material I am satisfied thatthe following seized documents belong to persons other than Minda Groupof cases. The details of such papers are as under:- ITA 319/2022, ITA 321/2022 & ITA 326/2022 Electricals&electronics(I)Ltd.,M/s.ManishMerchants Pvt..Ltd.,M.sConsortiumVyapaarPvt.Ltd.,BusinessCommunicationCentre, 21 ParsiCharchStreet,Opp.18ErzaStreet, Kolkata-12O-2/A-11,JAY47, 48, 51OriginalShareM/s.2009-10.USHINLTD.to 57, 60,certificates datedPanchmukhiGP-14,Sector61, 63 to9.01.2010wereManagement18, Gurgaon.72.transferredtoServices Pvt.M/s.Ltd.PanchmukhiManage-mentServices Pvt. Ltd.9.02.2010 I have examined the above mentioned documents/papers and as theundersigned is the jurisdictional assessing officer for Minda Group ofsearch cases (DOS: 20.09.2013), I am satisfied that the provisions of section153C are invoke able in this case for A.Y.2008-09 to 2013-14. Accordinglythis information is being passed to the jurisdictional AO of M/s. PanchmukhiManagement Services Pvt. Ltd. For taking necessary action under Section153C for A.Y.2008-09 to 2013-14. This satisfaction note is placed in the filefor record purposes.Sd/-ACIT-CC-13, New Delhi.Dated: 29.01.2016.” ITA 319/2022, ITA 321/2022 & ITA 326/2022 Page 5 of 7 5.He also states that the genuineness of the share capital has beenaccepted in the case of JP Minda Group of Companies by the ITAT. 6.A perusal of the paper book reveals that in the present case asatisfaction note was drawn up under Section 153C of the Income Tax Act,1961, (the ‘Act’) on 29[th]January, 2016. Consequently, the search yearwould be the Assessment Year 2016-17 and Revenue would be entitled tore-open the returns for the Assessment Years 2010-11 to 2015-16. 7.Perusal of the satisfaction note reveals that no document pertaining toAssessment Year 2011-12 was seized during search. The Supreme Courtin Commissioner of Income Tax-III, Pune Vs. Sinhgad TechnicalEducation Society reported in [2017] 397 ITR 344 has held that seizedmaterial can be considered to be incriminating in terms of Section 153C ofthe Act only if the said material pertains to the Assesssment Years inquestion. 8.With respect to Assessment Years 2010-11 & 2012-13, this Court isof the view that the recovery of the annual report and the share certificate ofthe Petitioner from premises of Minda Group cannot be considered to beincriminating documents. After all, the Minda Group was not a third partybut the issuing authority of the share certificates. In fact, both the appellateauthorities below have given a concurrent finding that no incriminatingmaterial had been brought on record by the Assessing Officer to sustain theadditions on merit. Also, the genuineness of the share capital has beenaccepted both by CIT (A) and ITAT and also there is no live link betweenseized material and the additions made. Therefore, this Court is of the viewthat assumption of jurisdiction in the present cases by the Assessing Officerwas erroneous. ITA 319/2022, ITA 321/2022 & ITA 326/2022 9.Further, today, this Court by a separate order in a batch of appealsbeing ITA Nos.360-368/2022 has upheld the order of the ITAT deleting thesubstantive additions on merits made in different concerns of JP MindaGroup. Consequently, the issue of protective addition in the hand of therespondent-assessee does not arise. 10.Accordingly, this Court is of the view that no substantial question oflaw arises for consideration in the present appeals and the same aredismissed. MANMOHAN, J SEPTEMBER 26, 2022KA MANMEET PRITAM SINGH ARORA, J ITA 319/2022, ITA 321/2022 & ITA 326/2022