Case Title: PCIT Versus Panchmukhi Management Services Pvt. Ltd. ITA 319/2022
The annual report and share certificate that was recovered from the assessee premises cannot be seen as incriminating papers, according to the Delhi High Court.
The validity of the share capital has been acknowledged by both the CIT (A) and Income Tax Appellate Tribunal, according to the division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora, and there is no active connection between the confiscated items and the additions made.
The appellant/department claimed that the Income Tax Appellate Tribunal erred in ruling that there was no evidence of wrongdoing discovered during the search. Instead of the investor company's premises, the original copies of share certificates related to share capital and premium allocated to investor businesses were discovered at the issuing company's premises. The investor businesses were false or were organisations that offered to lodge. There was a direct connection between the disputed additions and the evidence.
The respondent/assessee argued that the allegedly damning papers have nothing to do with the in-question assessment years.
The Court noted that on January 29, 2016, a satisfaction note was created in accordance with Section 153C of the Income Tax Act of 1961. The department would be allowed to reopen the returns for the Assessment Years 2010-11 to 2015-16 as a result of the search year being the Assessment Year 2016–17.
The Court noted that no Assessment Year 2011–12 related papers were found during the search, and so, no records related to the returns of the assessment years that the Revenue had the right to reopen were confiscated. This was because the Court further noted that the Minda Group was the organisation responsible for issuing the share certificates, not a third party. Both of the appeal authorities below have made a concordant determination that the Assessing Officer had not presented any evidence that would have supported the additions on merit.