Recovery Of Annual Report And Share Certificate From the Assessee's Premises Are Not Incriminating Documents: Delhi High Court
The Delhi High Court has held that the recovery of the annual report and the share certificate of the assessee premises cannot be considered to be incriminating documents.The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that the genuineness of the share capital has been accepted both by CIT (A) and ITAT and that there is no live link between the...
The Delhi High Court has held that the recovery of the annual report and the share certificate of the assessee premises cannot be considered to be incriminating documents.
The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that the genuineness of the share capital has been accepted both by CIT (A) and ITAT and that there is no live link between the seized material and the additions made.
The appellant/department stated that the ITAT had erred in holding that no incriminating material was found in the search. The original copies of share certificates pertaining to share capital and premium allotted to investor companies were found at the premises of the issuing company itself instead of the investor company's premises. The investor companies were bogus or accommodation-providing entities. There was a live link between the additions in question and the incriminating material.
The respondent/assessee contended that the alleged incriminating materials do not pertain to the assessment years in question.
The court noted that a satisfaction note was drawn up under Section 153C of the Income Tax Act, 1961 on January 29th, 2016. Consequently, the search year would be the Assessment Year 2016-17 and the department would be entitled to re-open the returns for the Assessment Years 2010–11 to 2015–16.
The court noted that no documents pertaining to Assessment Year 2011–12 were seized during the search.
The court observed that the Minda Group was not a third party but the issuing authority of the share certificates. Both the appellate authorities below have given a concurrent finding that no incriminating material had been brought on record by the Assessing Officer to sustain the additions on merit.
Case Title: PCIT Versus Panchmukhi Management Services Pvt. Ltd.
Citation: 2022 LiveLaw (Del) 912
Date: 26.09.2022
Counsel For Appellant: Advocate Sanjay Kumar with Advocate Easha Kadian
Counsel For Respondent: Sr. Advocate Salil Aggarwal