AI Insights
The case involves three appeals by the revenue against Ratangiri Vanijya Private Ltd., concerning the assessment years 2013-2014 to 2015-2016. The appeals were directed against the orders of the CIT(A) which had deleted the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961, pertaining to unexplained cash credits from the sale of investments. The revenue contended that the CIT(A) erred in relying on decisions that were not applicable to the facts of the case and that the CIT(A) failed to appreciate the incriminating material which constituted the basis for the additions. The Tribunal, after examining the facts and the legal provisions, upheld the CIT(A)'s decision, noting the absence of any incriminating material and the fact that the assessments were unabated as on the date of search.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 776871 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
8 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
19-09-2025
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2013-2014
Appeal Filed On
20-12-2024
Judgement Text
" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI SONJOY SARMA, JUDICIAL MEMBER IT(SS)A No.154-156/KOL/2024 (निर्धारण वर्ा /Assessment Year : 2013-2014 to 2015-2016) ACIT, Central Circle-3(3), Kolkata Vs Ratangiri Vanijya Private Ltd. Room No.212, 2nd Floor, Diamond Prestige Building, 41A, Acharya Jagdish Chandra Bose Road, Kolkata-700017 PAN No.: AAFCR 0238 R (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) रधजस्व की ओर से /Revenue by : Shri P.N.Barnwal, CIT-DR निर्धाररती की ओर से /Assessee by : Shri Soumitra Choudhury, P. Sarkar & Nandini Sureka, Advocates सुनवाई की तारीख / Date of Hearing : 15/09/2025 घोषणा की तारीख/Date of Pronouncement : 19/09/2025 आदेश / O R D E R Per Manjunatha G, AM: These three appeals filed by the revenue are directed against the separate, but identical orders passed by the ld. CIT(A), Kolkata-21, all dated 05.09.2024 pertaining to assessment years 2013-2014, 2014-2015 & 2015-2016. 2. Since the facts are identical and issues are common, for the sake of conveniences, these appeals were heard together and are being disposed off by this consolidated order. 3. The revenue has more or less raised common grounds of appeal in all the three appeals for all the three assessment years, therefore, the grounds of appeal raised by the revenue for the assessment year 2013- 2014 are reproduced hereunder for the sake of brevity :- Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 2 1. That on the facts & circumstances of the case, the CIT(A)has erred in deleting the addition without appreciating the fact that during the course of search proceedings, statement of Shri Anand Kumar Saraogi, the Director of assessee company was recorded on oath u/s 132(4)of the Income-tax Act, in which he accepted that the proceeds of sale of investment was found credited in the assessee's books of account is nothing but the amount of unaccounted income brought into the regular books of account by adopting unscrupulous way. 2. That on the facts and in the circumstances of the case, the Ld.CIT(A)has erred in relying upon the decision of Hon'ble Delhi High Court in the case of PCIT vs. Best Infrastructure Pvt. Ltd. and Harjeev Agarwal when the facts and circumstances of the instant case are different. 3. CIT(A) has erred in deleting the addition without appreciating the factual position in the case of assessee statement recorded is not a standalone basis for making the alleged addition. The addition of Rs.3,34,00,000/-u/s 68 of the IT Act, 1961 in respect of unexplained cash credit is supported by statement recorded which is subsequently supported by assessee's failure to substantiate the fresh credit in its books of account in the guise of proceeds of fabricated sale of investment which is termed and constituted as incriminating material itself. 4. That on the facts & circumstances of the case, the Ld. CIT(A) has erred in deleting the addition without appreciating the fact that during the course of assessment proceedings, assessee failed to discharge its duty to prove genuineness of transaction and failed to establish identity and creditworthiness of entities from whom the fund was received by assessee via sale of share during the year under consideration in spite of giving ample opportunity and the source of funds for such huge investment in the hands of purchasing entities is also not substantiated by the assesee. 5. The department craves the right to add, alter, amend or withdraw any ground of appeal before or at the time of hearing. 4. Brief facts of the case extracted from IT(SS)A No.154/Kol/2024 for the assessment year 2013-2014 are that the appellant/assessee company is engaged in the business of investments, filed its original return of income for the assessment year 2013-2014 on 30.09.2013 declaring total income at Rs.47,487/-. The return of income was processed u/s.143(1) of the Act on 11.04.2014. A search and seizure operation u/s.132 of the Act was Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 3 conducted at the business premises of the assessee on 01.12.2020. Consequent to search, the case was centralized and notice u/s.153A of the Act was served on the assessee. In response to which, the assessee filed its return of income on 21.01.2022 declaring total income at Rs.47,490/-. The said case was selected for scrutiny and during the assessment proceedings, the Assessing Officer notice that the assessment has been reopened u/s.147 of the Act by issuance of notice u/s.148 of the Act dated 30.06.2021. As per the reasons recorded, the Assessing Officer suggested escapement of income on the basis of credible information received from the DDIT/ADIT(Inv.), Unit-4(2), Kolkata regarding acquisition of concern and subsequent bogus sales of shares amounting to Rs.1,65,00,000/- in the financial year 2012-2013 relevant to assessment year 2013-2014. The Assessing Officer further observed that since the assessment has been initiated in pursuance to the search action conducted u/s.132 of the Act, and notice u/s.153A of the Act was issued and further the issue of reassessment proceedings in respect of escapement of income was already taken into consideration in the said appraisal report, the assessment is abated. The Assessing Officer further observed that the assessment initiated is abated and accordingly issued notice u/s.142(1) of the Act dated 07.02.2022 and called upon the assessee to explain and file relevant evidence in respect of sale of investments to various companies were required to be submitted by the assessee. In response to the same, the assessee submitted that the assessment year in question was unabated on the date of search, because the original return of income was Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 4 filed u/s.139 of the Act on 30.09.2013 and the assessment has been completed u/s.143(3) of the Act on 11.04.2014. Further issuance of notice u/s.143(2) of the Act was expired on 30.09.2014. Since time limit for issue of notice u/s.143(2) of the Act was expired before the date of search, the assessment year is unabated and consequently no addition can be made in respect of credits found in the books of accounts in respect of sale of investments. The assessee has challenged the addition proposed by the Assessing Officer by filing relevant evidence. 5. The Assessing Officer after considering the relevant submissions of the assessee and also taking note of statement recorded from Shri Anand Kumar Saraogi on 01.12.2020, observed that the credits found in the books of accounts of the assessee and consequent sale of investment during the year is not explained with relevant evidence. Therefore, rejected the explanation of the assessee and made addition of Rs.3,34,47,490/- u/s.68 of the Act by treating the sale of investment as unexplained cash credit. The Assessing Officer while making the addition has also rejected the arguments of the assessee on the issue of unabated assessment and consequent addition in absence of incriminating material and observed that the statement recorded u/s.132(4) of the Act of the director of the company constitute incriminating material for the purpose of assessment in terms of search conducted u/s.132(4) of the Act. Therefore, the Assessing Officer made the addition of Rs.3,34,47,490/- The relevant findings of the Assessing Officer are as under :- Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 5 8. Admission made by the assessee The issues discussed above were confronted to the assessee, wherein he admitted that the concern was acquired. The relevant portion of the statement of Sri Anand Kumar Saraogi dated 01/02.12.2020 is given below: Q.19 It is very surprising that the company M/s Ratangiri Vanijya Pvt. Ltd having Share capital and share premium worth Rs 28,93,95,948/- has been acquired by your group companies/ individuals by paying Rs.6,00,000/-(By purchasing the shares from Its shareholders). Please explain the Business prudence behind this transaction and also explain why the same should not be presumed to be a bogus transaction to take accommodation entries of your unaccounted wealth in your books of account through pre-mediated transaction? Ans. Also provide the contact details of the middleman/ broker/ entry operator who facilitated you in acquisition of above shell company M/s Ratangiri Vanijya Pvt Ltd. Sir, I am unable to explain the same. I accept that we have acquired the company M/s Ratangiri Vanijya Pvt Ltd having capital of Rs. 28,93,95,948/- by payment of meager amount of Rs.6,00,000/-, Sir, the above deal of acquisition of shell company M/s Ratangiri Vanijya Pvt Ltd was facilitated by Sri Rakesh Singh. However, I do not have his contact details at this moment. I shall provide his whereabouts in due course of proceedings. Q.24 It is seen from the details of investment in unlisted equities of the company M/s Ratangiri Vanijya Pvt starting from 01/04/2012 that the unlisted shares have been sold to shell/paper companies/entities and in most cases such sale has been done to entities enlisted in the departmental database of shell companies. Financial analysis of these companies has also been done for the relevant period which clearly reveals that these companies do not have any financial creditworthiness to support these transactions. In most of these cases, these companies do not even exist at their given addresses. Funds generated through these sale transactions of unlisted equities made to database enlisted paper/shell entities is then utilized as investment in group concerns and given as unsecured loan to group concerns as below: Non-current investments As at 31.03.2020(Rupees) 37,55,700 shares in Alaknanda Infraproperties Pvt. Ltd. 3,75,57,000 4,40,000 shares in Alaknanda Realtech Pvt. Ltd. 44,00,000 23,09,543 shares in Alaknanda Sponge Iron Ltd. 18,60,79,821 297,000 shares in Golden Castings & Ispat Ltd. 2,97,00,000 Vishal Saraogi 1,49,25,000 Total 27,26,61,821 Loans & Advances (Asset) As on 31/03/2020 Alaknanda Ispat Pvt. Ltd. 15806912.00 Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 6 Alaknanda Metal Pvt. Ltd. 17190858.00 Total 3,29,97,770.00 GRAND TOTAL : 30,56,59,591/- In this manner unaccounted income is routed back to the regular books of accounts of group concerns. Please explain the rationale of such sale of unlisted equities. Please explain as to how the buyer is approached/liasioned with to make the respective sale transaction in case of sale of each unlisted equity. In regard to the above, please furnish copy of the sale bill, copy of share transfer receipt for each instance of sale of investment in unquoted equities by the stated company. For each such sale transaction, please furnish details (name, PAN, address) of the buyer and also details of broker/agent, if any, to include name, PAN, address, phone number of the buyer of the broker. Please state and furnish all relevant documentary evidence in support your answer. Ans Sir, I have gone through above facts brought on records. I admit that unaccounted funds of the group to the tune of Rs. 27,13,63,050 were introduced in guise of sale of investments in unquoted equities held by this acquired shell company to various other shell concerns managed and controlled and managed by entry operators. Further, unaccounted fund so introduced have been utilized as investment in group companies and unsecured loan to other group concerns...\" 9. Show Cause notice dated 23.12.2021 was issued to the assessee on the basis of the above observation. The assessee filed reply in response to the show cause which is perused. Point-wise rebuttal to the assessee's submission filed in response to this office show cause notice 9.1. Rebuttal to Para-1 & 2 Paras are general in nature. Hence no rebuttal. 9.2. Rebuttal to Para-3 The assessee contended that all the documents including the bank statements supporting the identity and creditworthiness of the shareholders and the genuineness of transactions were placed at the time of the assessment u/s 143(3) of IT Act which were considered by the then A.O. and passed assessment order without taking any adverse view on this issue. But it is found in the assessment record that it was examined by the A.O. without going into the detailed necessary enquiry in regard to the question of physical existence of such share subscriber companies, their creditworthiness and the Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 7 genuineness of such transactions. Summons u/s 131 were issued to all shareholders in the enquiry stage which were mostly returned back, even if the summons were not returned no reply to such notice was received from most of them and even if the reply was received there is no physical appearance of the director of such companies. Hence, the pertinent question remains unexplained that how they have decided to invest such huge amount of fund with such huge amount of premium where the company had no real business and assets. On verification of their bank statement it is also found that they used to receive fund from other bank account and immediately transferred it out to the bank account of the assessee in the name of Share Capital/Premium. This situation is similar in case of all share subscribers. All the share subscribers did not have requisite fund to extend such huge amount of share capital/premium unless there was sudden/immediate deposit from other bank account. Financial analysis of all the share subscribers reveal that none of them have any business asset, paid rent and most of them have either no income or meagre income. Therefore all these share subscribers are proved to be paper/shell company without having physical existence and lack necessary creditworthiness to pay such huge amount of capital/premium to the assessee company. Therefore transactions relating to receipts of capital/premium by the assessee company is established to be in-genuine, bogus and sham. In fact, the A:O. at the time of passing regulär assessment order u/s 143(3) of IT Act, has failed to look into all these aspects. But after detailed investigation carried by the Investigation Wing it is proved that the share subscribers have no physical existence and necessary creditworthiness and therefore the transaction involved therein was only ingenuine, bogus and sham. In this circumstances, verification only by compliance to notice u/s 133(6) of IT Act was not sufficient to find out the actual motive of such transaction. Further during the course search operation fresh evidence is gathered which proves that the said transactions of receiving share capital/premium was ingenuine and bogus. 9.3 Rebuttal to Para-4 The assessee's contention that the creditworthiness of the purchasers of the investments by the assessee are proved is not a correct statement/argument. On the other hand by referring to the earlier part of this order it is observed that almost all of the purchasers were 'Struck off companies, almost all of them are found to be non- existent at their given address and the analysis of ITRs available in office record also show that they did not have creditworthiness as they have no real business, pay no rent, have no business asset and have only meagre or no income and their bank statements do not reflect the regular business transaction apart from occasional debit and corresponding credit entry of almost equal amount. All these features clearly proves that these purchaser companies are only paper/shell companies and used only for the layering of unaccounted fund and all these companies are managed and controlled by entry operator, Shankar Kumar Khetan as admitted by him vide his Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 8 statement dt. 10.04.2015. This fact is also admitted by Shankar Kr. Khetan vide his statement dt. 10.04.2015 where he has categorically admitted that M/s Ratangiri Vanijya Pvt. Ltd was managed and controlled by him and this company was formed for this purpose only. Moreover, Anand Kumar Saraogi, the Director and the Key person of Alaknanda Group has also admitted vide his statement u/s 132(4) of IT Act that they have acquired the assessee company in the way narrated supra and also accepted that the proceeds of sale of investment found credited in the assessee's books of account was only the amount of unaccounted income brought into the regular books of account by adopting this unscrupulous way. The detailed process adopted by the assessee is described supra and also proved earlier in this order as to why the identity and creditworthiness of the purchasing companies are not proved especially on the basis of enquires carried out by serving notice (summon) u/s 131 of IT Act to the purchasers and their non-compliance. At the assessment stage also, the A.O. has again issued notice (summon) u/s 131 of IT Act to the purchasing companies in as many as 17 cases but none of notices were served on the address of the purchasing companies. This fact was also confronted with the assessee by serving notice for explanation of such observation. But the assessee has- failed to successfully put any explanation to it. It clearly proves that the purchaser companies were only paper/shell company having no physical existence. 9,4 Rebuttal to Para-5 The assessee has tried to explain that he had to put in signature of on assessee's statement recorded u/s 132(4) of IT Act which was dictated by the Investigation Officer at the time of search. It is also stated by the assessee that Mr. Anand Kumar Saraogi has retracted his statement at the earliest opportunity before 1st Class Magistrate of Alipore Cort. But it is not understandable that as it was an Income Tax Investigation proceedings, what prompted Mr. Anand Kr. Saraogi to retract his statement recorded before an Income Tax Authority without approaching the same Income Tax Authority to retract his earlier statement, It is to mention here that the statement recorded by the Income Tax Authority was on the basis of the seized books of account and other relevant documents specially on the detection of unaccounted income brought into the assessee's books in the guise of 'sale of investment which could not be explained by Mr. Saraogi at the time of recording his statement by the 1. T. Authority and finally admitted it. In case of any retraction from such statement recorded u/s 132(4) of IT Act, it should have been made before the Income Tax Authority as it pertains to a particular Income Tax Proceeding and also should have been done with reference to the explanation of the proceeds of sale of investment found in the books of the assessee which are main issue in this occasion in post-search enquiries. Though the assessee has mentioned that they informed the Income Tax Investigation Wing about the retraction but fails to submit any evidence that any such communication was made to the Investigation Wing in Post-search enquiry stage. It can be inferred Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 9 that retraction was not made before Income Tax Authority as it was not possible to explain the source of proceeds received out of sale of investment. While retracting before the 1st Class Judicial Magistrate, Mr. Saraogi did not explain how such cash credit found in the assessee's books in the guise of proceeds of sale of investment are to be explained. This clearly explains the reason as to why the assessee chose to retract before 1st Class Judicial Magistrate instead of appearing again before the Income Tax Authority for recording such retraction. Therefore the assessee's retraction to earlier statement of admission is not acceptable and it is only an afterthought to save its company from the mischief of section 68 of the IT Act. 9.5 Rebuttal to Para-6 Primarily it is to state here that the passing an order u/s 143(3) by the A.O. does not make all the cash credit entries of huge amount received from different shell/paper companies as genuine and explained, specially when the assessment order lacks proper enquiry to find out the truth behind such transactions. Further assessee's contention that the purchasers were active companies as per MCA records are also not correct. Almost all of the purchasing companies are 'struck off as per MCA list. Merely using banking channel to transfer fund does make such transaction genuine. The sale proceeds received by the assessee is the fresh cash credit found in the books of the assessee. Therefore the burden is on the assessee to prove the identity and creditworthiness of the purchasing companies who are claimed to have paid such amount to the assessee's bank account as proceeds of sale of investment. Therefore assessee's contention that it is not the burden of the assessee to prove the identity and creditworthiness of the purchase is not correct. Rather the fresh credit in the guise of proceeds of sale of investment is to be explained by the assessee with regard to its source. In the instant case, specific entries of cash credit was found in the regular books of accounts in the guise of proceeds of sale of investment of shares of paper/shell companies during course of search as well as in post-search enquiries. The assessee was asked to explain the source of such cash credit found in its books of account. But the assessee could not explain it. Rather on detailed enquiry with regard to identity and creditworthiness of the purchasing companies it is found that they were also paper/shell companies lacking physical identity and creditworthiness. This fact was confronted with Mr. Anand Kr. Saraogi, Director of the assessee company. As stated earlier, he admitted that the cash credits in the guise of sale proceeds of the sale of investment is unaccounted income of his group brought into the regular books of account through web of multilayered transactions of many shell companies controlled and managed by Entry Operator, Shankar Kumar Khetan. Once the assessee has failed to explain its entry found in regular books of account then it becomes an incriminating material. Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 10 Therefore the statement of admission recorded u/s 132(4) is itself is an incriminating material specially which is recorded on the basis of unexplained credit entry found in the books of the assessee. Apart from this many documents were found during the course of search which reveals that the unaccounted income of the group was generated through out of books business activities. 9.6 Rebuttal to Para-7 The assessee placed reliance on the case law in case of CIT Vs. Kabul Chawala specially on the issue of \"unabated statement without incriminating material\" is not applicable in the instant case because in the instant case there is statement of admission u/s 132(4) of IT Act by the Director of the assessee company which is based on the inability of the deponent to explain particularly the many entries relating to cash credits aggregating to Rs. 1,65,00,000/- in AY 2013- 14 which was subsequently admitted by him as the group's unaccounted income brought back into regular books of account in this unscrupulous way. In the same way the case laws cited by the assessee is also distinguishable in facts to the instant case. But here in the instant case the assessee admitted cash credit aggregating to Rs. 1,65,00,000/- is brought into in this books in the guise of proceeds of sale of investment while recording statement u/s 132(4) of IT Act. Therefore this statement of Mr. Saraogi u/s 132(4) of IT Act cannot be termed as 'standalone statement but it is made while he was trying to explain the abovementioned cash credits found in the books in the guise of sale of investments. Therefore, the statement of the assessee u/s 132(4) of the I.T. Act is justifiably treated as incriminating material in the instant cases. 9.7 Rebuttal to Para-8 As per the request of the assessee, copies of all statements of all parties which is used against the assessee has been handed over to the A/R of the assessee. In the instant case, the A.O. has also tried to make further enquiry in regard to identity and creditworthiness of the purchasers of the shares from whose bank accounts, the sale proceeds of Investments were received by the assessee. But all the notice u/s 131 of IT Act (Summon) could not be served by the Postal Authority by which the identity of such purchasers is proved to be physically non-existent and exist only on paper. Therefore corroborative evidence is also on record to prove that the identity and creditworthiness of the purchasers are not proved by the assessee. Therefore the statement of admission by the Director of the assessee company alongwith such corroborative evidence rightly constitute it as \"incriminating material required for the purpose of addition in proceedings u/s 153A/153C of IT Act by invoking section 68 of the IT Act. Therefore the assessee's reliance on the case law of Hon'ble ITAT, Kolkata in Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 11 the case of Loyalka Farms (P) Ltd. Vs. Dy. CIT is not applicable in the instant case. 10. In reply to the notices mentioned in the para 6 above, documents, explanations etc. were submitted by the assessee company which were perused. However, as per the assessee's submission and on going through the books of account and other documents, it is found that the assessee company had sold investment of Rs.3,34,00,000/- instead of Rs.1,65,00,000/- as mentioned in the show cause notice issued by this office in the A.Y. 2013-14. 11. Conclusion In view of the above narrated facts and findings with regard to the ingenuineness of the cash credit aggregating to Rs:3,34,00,000/- (as found in the books of account and the details of sale of investment during the year submitted by the assessee) and also the assessee's inability to explain such amount of fresh cash credit found in the books of account it is established that the assessee has falled to discharge its burden to prove the identity and creditworthiness of the purchasers of shares of shell companies from the assessee and the genuineness of transactions involved therein. Therefore the total cash credit found in the books of the assessee company aggregating to Rs.3,34,00,000/- in the A.Y. 2013-14 remains unexplained and therefore the same is hereby treated as \"unexplained cash credit in the hands of the assessee and subsequently added back to the total income of the assessee by invoking section 68 of IT Act and tax on it is charged u/s 115BBE of IT Act. (Addition: Rs.3,34,00,000/-) 6. Aggrieved by the assessment order, the assessee preferred appeal before the ld. CIT(A), wherein the assessee has challenged the addition made by the Assessing Officer towards cash credit u/s.68 of the Act in the light of material found during the course of search and consequent statements recorded from the director of the company and argued that the statement recorded u/s.132(4) of the Act without any incriminating material cannot constitute incriminating material for the purpose of addition in unabated/concluded assessment. The assessee further contended that once the assessment is unabated/concluded on the date of search, no addition can be made without any incriminating material found during the Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 12 course of search and in this regard relied on the decision of the Hon’ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell Pvt. Ltd., reported in [2023] 149 taxmann.com 399 (SC). 7. The ld.CIT(A) after considering the submissions of the assessee and also taking note of the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd.(supra), observed that going by the facts available on record that the assessee has filed return of income on 30.09.2013 declaring total income at Rs.47,487/- and the same was processed u/s.143(1) of the Act. A search and seizure operation was conducted on 01.12.2020 and as on the date of search, the assessment for the year under consideration was unabated/concluded because the assessment has been completed u/s.143(3) of the Act and the time limit for issuance of notice u/s.143(2) of the Act was expired on 30.09.2014. Although the Assessing Officer observed that in view of the issuance of notice u/s.148 of the Act dated 30.06.2021, the assessment is abated but fact remains that whether the assessment is abated or unabated needs to be checked from the date of search and going by the facts in the present case, as on the date of search the assessment was unabated and the proceedings u/s.148 of the Act was not initiated. Since the assessment was unabated as on the date of search and further reassessment proceedings were initiated after the date of search, the addition made by the Assessing Officer needs to be re-examined in the light of the incriminating material, if any, found at the time of search. Since the addition made by the Assessing Officer towards credits in the books of accounts u/s.68 of the Act is not Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 13 based on any incriminating material found during the search, the addition made by the Assessing Officer cannot be sustained. In this regard, he relied on the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra). The relevant findings of the ld.CIT(A) are as under :- Discussion and Findings I have carefully examined the material, on record including the assessment order u/s 153A/143(3) against which the instant appeal has been preferred, the submissions of the appellant, and the various documentary evidences furnished by the appellant. The assessee had filed original Return of income for the AY 2013- 14 on 30.09.2013 declaring total income of Rs.47 487/-. As per the notings of the AO in the assessment order, a search operation u/s 132 of the IT Acts was conducted on the Alaknanda Group of companies on 01.12.2020. The assessee company being a part of the Alaknanda Group was also covered under the said search operation. The AO in his impugned assessment order is noted to have made an addition of Rs. Rs.3,34,00,000/- by way by way of unexplained cash unexplained cash 68 of the Act in relation to sale of investment made during the relevant F.Y 2012-13 which was found to have been duly recorded by the appellant in the books of accounts. The details of the sale of investments made by the appellant during the relevant F.Y, has been tabulated by the AO in pages 17-18 of the assessment order. The AO in page 2, Para 7 of the assessment order has also recorded that on 10.02.2011 and on 12.03.2011 the appellant concern, Mis Ralangiri Vanijya Pvt Ltd raised share capital/premium to the tune of Rs. 2,00,00,000/- and Rs.26,85,10,875/- respectively through allottee concerns and the entire fund so raised was shown as investment in unlisted equities to the tune of Rs. 28,82.63,050/-in the F.Y: 2011-12. Thereafter sale was made from these investments during the F.Y: 2012-13 to the tune of Rs. 3.34 Crores, With the above facts in mind, the present appeal is being disposed off, issue by issue, as under: Grounds 1 & 2 In Both these grounds raised, the appellant has agitated against the additions made by the AO during the course of proceedings u/s 153A/143(3) on the issue on the ground that they were not based Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 14 upon seized material emanating from the search and seizure operation that was conducted, and the assessment for A.Y 2013-14 having remained unabated, the AO could not have made any addition in such respect. The AO in his impugned assessment order, is noted to have made an addition of Rs. 3,34,00,000/- by way of unexplained cash credit u/s 68 of the Act in relation to sale of investment made during the relevant F.Y which was found to have been duly recorded by the appellant in the books of accounts. In the instant case, the assessee had filed original Return of income for the A.Y 2013-14 on 30.09.2013 declaring total income of Rs.47,487/- The admitted facts are that a search operation u/s 132 of the IT Act was conducted on the Alaknanda Group of companies on 01.12.2020. The assessee company being a part of the Alaknanda Group was also covered under the said search operation. In view of the recent decision of the Hon'ble Apex Court in the case of PCIT Vs Abhisar Buildwell Pvt Ltd, dated 23.04.2023, Civil Appeal Number 6580 of 2023 and related appeals, the first issue to determine is whether the prerequisites of the applicability of the ratio of the above cited decision are satisfied in this case and if so, then were the additions made by the AO based upon incriminating material found during the search or not. In this connection, I have perused the assessment order and the submissions of the appellant. In the instant case search and seizure was conducted on 01.12.2020on Alaknanda Group of companies. A chronological brief of the case is as below SI No. Particulars Date/amount Remarks i.) Date of filing original return u/s 139 of the Act 30.09.2013 Returned Income as per notings of AO. Rs. 47,487/- ii) Date on which processing u/s 143(1) was completed 11.04.2014 iii) Date of search & seizure operation u/s 132 of the Act 01.12.2020 iv) Date of issuance of notice u/s 148 by ITO Ward-2(1), Kolkata 30.06.2021 v) Date of issuance of notice u/s 153A by DCIT CC-3(3), Kolkata 10.11.2021 vi) Date of filing return u/s 153A of the Act 21.01.2022 Returned Income as per notings of AO: Rs. 47,490/- vii) Date of assessment order passed u/s 153A 26.03.2022 Assessed Income: Rs. 3,34,47,490/- Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 15 Before proceeding to examine the issue at hand, it is instructive to appreciate the law as it stands in this connection and examine the prevailing jurisprudence on this jurisdictional issue as to whether any addition can be made in an unabated assessment sans incriminating material found in the course of search. In this regard, it is noted that recently the Hon'ble Apex Court in a batch of appeals with lead case of PCIT Vs Abhisar Buildwell Pvt Ltd (149 taxmann.com 399) has adjudicated upon this question as to whether, where no assessment proceeding is pending on the date of initiation of the search, the AO is required to consider only the incriminating material found during the search in order to disturb the finality of an unabated assessment. Answering the question is favour of the assessee and against the Revenue, the Hon'ble Apex Court is noted to have inter alia held as follows: “……. 12. If the submission where no incriminating material is found during the course of search, even in incriminating material Revenue that in case of search even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub-section (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 16 the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under i) that in case of search under Section 132 or requisition under Section 1324, the AO assumes the jurisdiction for block assessment under section 153A; i) all pending assessments/reassessments shall stand abated, iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AD, would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns, and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the Ad in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed.\" In the above judgment the Hon'ble Apex Court has endorsed the ratios laid down in several judgments of Hon'ble High Courts which have also held that, in cases where all assessments have been completed as on the date of search, no addition that is not based upon incriminating material found during search, can be made. Respectfully relying upon the decision of the Hon'ble Apex Court, the settled legal position which emerges in the case of unabated assessments of an assessee is that, no addition is permissible in an Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 17 assessment framed u/s 153A of the Act unless it is based on any tangible cogent and relevant incriminating material found during the course of search relating to the assessee and pertaining to the relevant AY. In the given facts of the present case, the first fact-in-issue which is required to be ascertained is whether the ratio decidendi laid down in the above cited judgment is applicable in the present case and if so, then were the additions made by the AO based upon incriminating material found during the search or not. From the above facts, I find that the assessment for the relevant AY 2013-14 had already been concluded much prior to the date of search Le. on 11.04.2014; and this was a completed and therefore unabated assessment year. The AO in his assessment order u/s 153A has recorded that reassessment proceedings u/s 148 stood abated with this search assessment. However, during the course of appeal proceedings, the appellant has produced copy of notice u/s 148 which was issued by the ITO Ward-2(1), Kolkata on 30.06.2021, i.e after the search. Therefore, on the date of search on 01.12.2020, no proceedings were pending in respect of the appellant. Hence, the only additions that could have been made during the search assessment would have to be those made on the basis of incriminating material found during the search. In the instant case the following additions, have been made by the AO in the assessment order passed u/s 153A/143(3): 1.Addition of Rs.3,34,00,000/- by way of unexplained cash credit u/s 68 of the Act in relation to sale of investment made during the relevant FY which was found to have been duly recorded by the appellant in its books of account. On perusal of the assessment order passed u/s 153A/143(3) it is observed that no incriminating material or seized material Impounded during the course of search were referred to by the AO while making the impugned addition of Rs 3,34,00,000/- u/s 68. In his assessment order, the AO has reproduced some sample ledgers depicting the sale of shares obtained from seized hard disc vide AG-HD-1 Tally ERP9A;DATAIData. These ledgers of sale of shares are in any case part of books of account maintained by the appellant and can never constitute incriminating material. It is observed that the AO has only relied heavily upon the statement(s) of Anand Kumar Sarangi, the Director and key person of the Alaknanda Group an alleged entry operator who in his Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 18 statement(s) recorded on bath u/s 132(4) on 02.12.2020 during the course of search proceeding, in response to Q. 24 had stated that unaccounted funds of the group to the tune of Rs. 27,13,63,050/- were introduced in the guise of sale of investments in unquoted equities. As per the submissions of the appellant, the deponent, Anand Kumar Saraogi had retracted from such statement(s) recorded during the course of search on 2.12.2020 by means of affidavit filed before the 1st class Judicial Magistrate at Alipore Court on 07.12.2020 Le within a week of recording such statement. As per the said affidavit, the appellant has alleged that the statement was made under duress and that major part of such statement was prepared beforehand under predetermined thinking of the Department. The AO has also referred to a very old statement of an alleged entry operator, Shankar Kumar Khetan recorded on 10.04.2015 based upon which the AO is alleging that the appellant company is a shell company. The said statement dated 10.04.2015 also cannot be considered as incriminating as the said statement is very old and was available with the Department since many years. The statement of Anand Kumar Saraogi has been perused and it is observed that there are no specific details such as dates, details of fund transfer or handing over of cash by the appellant company to facilitate such sale of investments and bringing back own unaccounted money of the appellant in its books in the garb of sale of investment. It is observed that in the entire statement there is no mention of any documents found from the premises of the appellant company or any of the group concerns in respect of the sale of investments made during the relevant F.Y or any document which would provide linkage or nexus of the unaccounted money of the appellant being routed in the garb of sale of investment. The investments (which have been sold) under consideration were present in the books of account of the appellant since FY: 2010-11 and the same was also subject to assessment for AY: 2011-12. In the instant case in hand since no material regarding the sale of investments has even been found from the premises of the appellant or any group concern or any third party, it is only the statement which has been recorded during the course of search operation u/s 132(4) which the AO is relying upon while making such additions and the said statement also was retracted within next 5 days of making such statement. Even if the statement of Son Anand Kumar Saraogi is to be attributed ought to be backed by some form of evidence discovered during the course of the search on the premises of the appellant as well as other group concerns. Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 19 Statements made by an assessee at the time of search become part of the record. Written and Oral Statements are normally termed as admissions and these provisions are found in Sections 17 to 31 of the Indian Evidence Act, 1872. However as far as Income Tax Provisions are concerned, admissions are normally in terms of written statements and, it has been held that an admission or acquiescence cannot form the sole foundation for making an assessment. Once a statement is made in the presence of witnesses and signature is taken, it indeed becomes a \"piece of evidence\". The general rule, though, is that admissions give rise to \"rebuttable presumptions\". It has been consistently held by judicial authorities that admissions are not conclusive proof and that they may operate as an estoppel in further proceedings as laid down in Section 31 of the Evidence Act. However, there is a right of rebuttal, that has been recognised, on the ground that the confession or admission was induced by threat, promise, coercion or some such circumstances. A confession even if inculpatory should be corroborated by independent evidence. It has been mentioned by judicial authorities that it is not unlikely that statements recorded during search continue for long periods and therefore, can, in some cases be considered to be free, fearless and voluntary. Such statements can be retracted on the ground that the same were recorded under pressure. In the instant case the AO has not brought on record any such independent evidence found during search that could be said to corroborate the statements being relied upon to make the impugned additions. Before embarking upon any further discussion in this connection, it must be emphasised that additions made merely on the basis of a confession or disclosure u/s 132(4) of the Act have in general been frowned upon by higher judicial formations, as well as by the CBDT itself. In the case of DCIT VS NIBR Bullion Pvt. Ltd. (ITAT Mumbai) ITA No. 6320/MUM/2011 Date: 05/12/2022; ΑΥ:2009-10, the Hon'ble ITAT Mumbai has held that addition merely on the basis of confession during the course of search operation, without supporting evidence, is unsustainable in law. Brief facts of the decided case are that the assessee was engaged in the business of dealing in Bullion. A search action w/s 1132 of the Income Tax Act, 1961 was carried out on NIBR Bullion group including its Directors and Associates on 25/09/2008. During the course of search proceedings, statement of Ajay, C. Arora, Director of the assessee company was recorded is 132(4) on the Act, in his Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 20 disclosure statement, he offered Rs.12 crores towards undisclosed income in financial year-2008-09 to cover the documents, digital data, excess jewellery, etc. Thereafter, Ajay C. Arora retracted from his statement after more than six months and restricted his disclosure to Rs.3.75 crores in respect of discrepancies aforesaid The AO rejected assessee’s retraction of statement and after making addition on various accounts as unaccounted stock, unaccounted investment. unaccounted commission, GP addition on unaccounted cash, GP addition of unaccounted purchases etc. made addition of the balance disclosure Rs. 8,18,19,881/- (Rs. 12,00,00,000/--Rs 3,81,80,119/-) made u/s 132(4) of the Act. Aggrieved by the assessment order, the assessee carried the issue in appeal before the CIT(A). The CIT(A) deleted the addition of Rs.8,18,19,881/-made on account of disclosure statement u/s 132(4) of the Act. Against the aforesaid findings of the CIT(A), the Revenue went in appeal. During proceedings before the Tribunal DR contended that the CIT(A) had erred in accepting the retraction statement and directing the AD to delete the addition made on the basis of disclosure u/s 132(4) of the Act. Onon, the disclosure has been made after duly consulting the other Directors of the company and the disclosure was reiterated in the subsequent statement, there is no valid reason for the assessee to retract from the said statement. The Hon'ble Tribunal, in its order, has discussed various judicial pronouncements in the context of making additions based solely on the statements recorded u/s 132(4) of the Act. It has thereafter arrived at the conclusion that additions based solely upon a statement made u/s 132(4), without any corroborating material, are unsustainable. It is instructive to study some the judicial pronouncements of particular relevance to the case at hand. In the case of CIT(A) Vs. Ashok Kumar Jain (369 ITR 145 (Raj.)), the Hon'ble High Court has held: 8 ………As we have noticed earlier the AO has not found or bothered to found or traced anything additional as a result of survey from the assessee except relying on the recorded statements at the time of survey and therefore this view found favour with the two appellate authorities that the funds are arising from the same business and have a direct nexus and the income was invested/utilized during the year under consideration. In our view, Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 21 the conclusion reached by the Income Tax Appellate Tribunal is based on the appreciation of evidence and is reached on the basis of finding of fact. is also a finding of fact admittedly that in assessment year 2007-08 despite surrender in statements of Rs. 2 crore the income was offered at Rs. 1.5 crore only and accepted by the Revenue/Assessing Officer. 9. Thus, the Income Tax Appellate Tribunal, after appreciation of evidence, has come to the conclusion that the amount of Rs.1.5 crore, which was surrendered/offered in the assessment year 2007- 08, was also available as a fund which came to be used partly in the Investment of share capital, creditors or other investments as well as other defects, unverifiable creditors etc. 10. We may add that if the assessee does not adhere to the surrender made during the course of survey, then it is for the Assessing Officer to bring on record cogent material and other evidences to support the addition rather than rely on statements simplicitor.” I find that in the case of Shree Ganesh Trading Company Vs. CIT [257 CTR (Jharkhand) 159], one of the questions before the Hon'ble High Court was 3. Whether the addition of Rs.20 lakhs was proper and justified on the basis of the admission in the statement u/s 132(4) voluntarily made without there being any corroborative evidence of the existence of any such income in any tangible form?\" The Hon'ble High Court answered the said question by observing: “6. We are of the considered opinion that statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharial Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 22 Here in this case also, no specific reason has been given for rejection of the assessee's contention by which the assessee has retracted from his admission None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the undisclosed income as admitted by where during the course of search by the assessee in his statement under Section 132(4) in fact situation Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash or cash was recovered from the assessee in that situation what had prompted the assessee to make declaration of undisclosed income of Rs. 20 lacs. Mere reading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self-incriminating. Therefore, we are of the considered opinion that in the present case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of Rs.20 lacs.\" In a similar vein the Pune Bench of Tribunal in the case of Assistant CIT Vs. Ghatge Patil Industries Limited (ITA No. 1281 to 1284/Pun/2016) dated 19.09.2018, where the assessee had retracted from the statement given u/s 132(4) of the Act concluded as under. \"10.1 We have also perused the order of Mumbai Bench of the Tribunal in the case of M/s Avishkar Infrastructure Pvt. Ltd. and the finding given by the Tribunal in Para Nos. 6.1 to 6.3 of the order reads as under: 6.1 Under these facts and circumstances of the case we have to exam me that whether sustenance of impugned addition is in accordance with law or not. The law in this regard has already been described in the above part of this order and reference can be made to the decision of Hon'ble Telangana & Andhra Pradesh High Court in the case of Gajjam Chinna Yellapa vs. ITO (supra), where their Lordships have observed that in case statement is retracted then totally different consideration altogether will ensue and the situation would resemble to section 164 of the Code of Criminal Procedure. The evidentiary value of retracted statement become diluted and it loses its strength to stand on its own. In that case Assessing authority has to gamer some support to the statement for passing an order of assessment. It is also held that retracted statement would not put an end to the procedure, then the AO is under an obligation to support his findings on the basis of other materials and it he does not have such material then it would reflect upon the very Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 23 perfunctory nature of the survey. For holding so their Lordships have referred to the aforementioned circular dated 10/3/2003, wherein CBDT has clearly given the mandate to the officers that during the course of search, seizures and survey no attempts should be made to obtain confession as to the undisclosed income and such instruction to CBDT were applicable when the search and seizure was made and assessment was framed, CBDT has further mandated that in respect of pending assessment also AO should rely upon the evidences/materials gathered during the course of search/survey operations on thereafter while framing relevant assessment order. The addition made in the present case is contrary to the aforementioned decision of Hon'ble Telangana Andhra Pradesh, High Court as well as aforementioned circular of CBDT as the assessments is entirely based upon the statement recorded during the course of search and no independent material has been brought on record by the AO to show that the income returned was incorrect. 6.2 The other decisions which have been relied upon by Ld. AR also supports similar proposition and these have been discussed in the above part of this order and for the sake of brevity they are not repeated. 6.3 So far as it relates to findings recorded by Ld. CIT(A), one of the finding is that by making admission under section 132(4) the assessee has altered the position of the Department because of which the Department did not pursue the matter further and did not visit the said Acme Centre at Ahmedabad. It may be mentioned that such opinion of Ld. CIT(A) would be contrary to the aforementioned circular issued by CBDT, where the clear mandate has been given to the Income Tax Authorises working under the CBDT that while recording the statement during the course of search/survey no attempt should be made to obtain confession of the undisclosed income and any such action would be viewed adversely. Recognizing such position their Lordships of Telangana & Andhra Pradesh High court have already observed that if addition is made simply on the basis of statement recorded under section 132(4) and no material is brought on record by the Revenue authorities then it would reflect upon very perfunctory nature of the survey/search action of the Department. Therefore, in absence of supporting material, the addition simply on the basis of statement cannot be upheld. The other findings of Ld. CIT(A) do not support the addition as they are only based upon the admission of the assessee. According, to the facts of the case, the assessee had furnished all Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 24 required particulars regarding sale and expenditure incurred on the impugned project and AO could not point out any defect in those particulars submitted by the assessee. Thus, the addition is made simply on the basis of statement recorded during the course of search and is not supported by any material. In view of case law relied upon by Ld. AR, the addition is not sustainable and is deleted\" The above extract from the Tribunal supports the view that the statement recorded during the search and seizure action in the absence of any independent and corroborating/incriminating material is not to be relied upon. Assessee offered the undisclosed income to the extent the corroborating evidences were seized it is not the case of the AO that total sum of Rs.8 crores is backed up by such incriminating material. Considering the above, we are of the opinion that factually the assessed offered the income to the extent the seized material was available and not otherwise. AQ's attempt to make the differential amounts of undisclosed strictly relying on the sworn statement of Mr Kiran Patil, MD of the company is unsustainable. In the context of additions made solely on the basis of statements made u/s u/s 132(4) of the evident of Act, while judicial authorities have statements given under oath it has also been held that these statements cannot be used in a stand-alone situation for making additions without any corroboration from anywhere else. In fact, the CBDT, Itself in recognition of the limitations of statements made u/s 132(4) during search and seizure operations, has brought out an instruction in this respect. CBDT Instruction F. No. 286/2/2003-IT (Inv.), dated 10-3-2003 regarding confession of additional income during the course of search & seizure and survey operation pertinent in this context. In pursuance of the Finance Minister's budget speech dated 28-2- 2003 this instruction was issued by the CBDT and is as under: Subject: Confession of additional Income during the course of search & seizure and survey operation regarding: Instances have come to the notice of the Board where assesseese have claimed that they have been forced to confess undisclosed income during the course of the search and seizure and survey operation. Such confession, if not based on credible evidence, are taken/retracted by the concerned assessees while filing return of income. In these circumstances, confession during the search and seizure and survey operation do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 25 collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the income-tax department. Similarly, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders\" A study of the above instruction clearly brings out the fact that standalone statements u/s 132(4) of the Act have limited evidentiary value, and emphasis during assessments has been laid upon evidence/ materials gathered during the course of search or thereafter. In the instant case, as already discussed above, I find that there is a singular absence of any form of evidence found from the premises of the appellant during the search operation that would go towards corroborating the statement made by Shri Anand Kumar Saraogi The matter in the present case however goes a step beyond the evidentiary value of a statement w/s 132(4). It has already been discussed earlier in this order that as far as the decision of the Hon'ble, Delhi High Court in the case of the Kabul Chawla 380 ITR 573 (Del) (affirmed by Hon'ble Supreme Court-in-Abhisar Büildwell Pvt. Ltd. 149 taxmann.com 399(SC)) is concerned, no addition could have been made in any assessment years if, (i) no incriminating material was found during the course of the search from the premises of the appellant. (ii) No assessment was pending as on the date of the search. As far as aforesaid second condition is concerned, the appellant had filed the original Return of income for the A.Y 2013-14 on 30.09.2013 declaring total income of Rs 47,487/- No notice under section 143(2) of the Act was issued till 30.09.2014 which was the limitation under which notice uls 143(2) of the Act could have been issued. The statement of Shankar Kumar Khetan dated 10.04.2015 loosely relied upon by the AD in stating that the appellant concern is a shell company itself, was also present before the AO since April, 2015, as was the information pertaining to raising of share capital by the appellant company during F.Y: 2010-11 and making Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 26 subsequent investments in the next F.Y, but no notice u/s 143(2) was Issued. The search action in the case of the appellant was carried out on 01.12.2020, therefore, no assessment proceeding was pending in the case of the appellant as on date of the search. Therefore, as already discussed, the only issue that remains for adjudication is whether there was any incriminating material found during the course of the search. Since no such material has been pointed out by the AO-who has based his addition only upon the statement of Shri Anand Kumar Saraogi at any point, the only remaining issue is whether the statement of Anand Kumar Saraogi would, under the present circumstances, qualify as incriminating material. Therefore, over and above the discussions made above about the evidentiary value of standalone (uncorroborated) statements, in the present circumstances, these statements must not only qualify as evidence but also as incriminating evidence. Regarding the issue whether a statement recorded under section 132(4) of the Act can in itself constitute as incriminating material, the decision of the Hon'ble Delhi High Court in the case of CIT Vs Harjeev Aggrawal 241 Taxman 199 (Delhi) and the decision in the case of PCIT v. Best Infrastructure (1) Pvt Ltd. 397 ITR 182 (Delhi) are very pertinent since statements made by Sri Anand Komar Saraogi admittedly had no nexus with any seized material The Hon'ble Delhi High Court in the case of PCIT Vs Best Infrastructure Private Limited, 397 ITR 82 has held that statement, under section 132(4) in itself does not constitute incriminating material. The relevant finding of the Hon'ble Hinh Court is reproduced as under: 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax vs Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v.CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 27 any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such The relevant paragraph of the decision of the Hon'ble Delhi High Court in the case of Harjeev Agrawal (supra) is also reproduced as under “20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words \"evidence found as a result of search\" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 21. A plain reading of Section 132 (4) of the Act indicates that the authorised officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken, Now, if the provisions of Section 132(4) of the Act are read in in the context of Section 158BB(1) read with Section 1588(b) of the Act, it is, at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 28 which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 22. In CIT v. Sri Ramdas Motor Transport Ltd.: (1999) 238 ITR 177 (AP), a Division Bench of Andhra Pradesh High Court, reading the provision of Section 132(4) of the Act in the context of discovering undisclosed income, explained that in cases where no unaccounted documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. The relevant passage from the aforesaid judgment is quoted below: \"A plain reading of sub-section (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such person under the Act. Thus, the question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section 132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub- Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 29 section (4) is obviously based on the well established rule of evidence that mere confessional statement, without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the above well settled principle: 23. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of the Act which expressly provides that the scope of examination under Section 132(4) of the Act is not limited only to the books of accounts or other assets or material found during the search. However, in the context of Section 1588B(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 25. In Commissioner of Income Tax v. Naresh Kumar Aggarwal: (2014) 369 ITR 171 (T & AP), a Division Bench of Telangana and Andhra Pradesh High Court held that a statement recorded under Section 132(4) of the Act which is retracted cannot constitute a basis for an order under Section 158BC of the Act The relevant extract from the said judgement is quoted below: 17. The circumstances under which a statement is recorded from an assessee, in the course of search and seizure, are not difficult to imagine. He is virtually put under pressure and is denied of access to external advice or opportunity to think independently. A battalion of officers, who hardly feel any limits on their power, pounce upon the assessee, as though he is a hardcore criminal. The nature of Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 30 steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under section 94 of the Code of Criminal Procedure by operation of sub-section (13) of section 132 of the Act The objective may be genuine, and the exercise may be legal. However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non-existents 18. It is not without reason that Parliament insisted that the recording of statement must be la relation to the seized and recovered material, which is in the form of documents, cash, gold etc. It is obviously to know the source thereof, on the spot. Beyond that it is not a limited licence, to an authority, to script the financial obituary of an assessee. 19. At the cost of repetition, we observe that if the statement made during the course of search remains the same, it can constitute the basis for proceeding further under the Act even if there is no other material. If, on the other hand, the statement is retracted, the Assessing Officer has to establish his own case. The statement that too, which is retracted from the assessee cannot constitute the basis for an order under section 158BC of the Act.\" (Emphasis provided] Even otherwise, a statement made during the course of search or subsequently has been held to be non-incriminating as laid down in the following judgments:- The decisions of the Hon’ble Supreme Court in the case of PCIT, Central-IT, New Delhi vs Mita Gutgutia reported in 257 taxmann 441 wherein it was held that: \"High Court in impugned order held that since no incriminating material was unearthed to show that there was failure by assessee to disclose franchise income, addition made by Assessing Officer was unjustified - Whether SLP against said decision was to be dismissed Held, yes [Para 2] [In favour of assessee The High Court decision upheld in the said case (reported in 395 ITR 526) is as under \"Therefore, in the present case, it would be wrong on the part of the revenue to characterize the statement as by itself an incriminating Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 31 material that could be used for making additions in all the assessment years in question apart from the year of search [Para 42]\" [Emphasis provided] So, as per the judicial precedents discussed hereinabove, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis, without reference to any other material discovered during the search and seizure operation, would not empower the AO to make a search assessment merely because merely because some admission was made by the Assessee during search operation. The mandate to the A gets further restricted when the statements have been retracted by offering reasons for doing so. Since in the instant case, no reference has been drawn to any material seized/impounded during the course of search, as also the fact that these statements have been retracted without eliciting any repudiation from the AO, the additions could not have been made merely on the basis of such statements. In view of the above mentioned judgements of various courts all over the country, as well as the Apex Court, as discussed above, which again and again reiterate that completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment, I am of the opinion that in search assessment made u/s. 153A, if assessment has been concluded, then, no addition can be made without linkage to incriminating material found during the course of search in the instant case, the original return of income had been filed on 30.09.2013. Therefore, I find that on the date of the search, ie 01.12.2020, since this case pertains to the AY: 2013-14 all the assessments had been concluded. It is no one's case that the sale of investments done by the appellant were not already disclosed in the regular books of the appellant, or were otherwise brought to light on account of the search. In view of the foregoing discussions, the addition made by the AO u/s 68 to the tune of Rs. 3,34,00,000/-, therefore, cannot be sustained as not having been made upon any incriminating material found during search, and, accordingly, is deleted. These grounds raised by the appellant are allowed.” Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 32 8. Ld. CIT-DR, referring to the date of search dated 01.12.2020 and subsequent notice issued u/s.148 of the Act, dated 30.06.2021 submitted that the assessment in the present case for the assessment year 2013- 2014 to 2015-2016 are abated as on the date of search which is evident from the findings of the Assessing Officer wherein the reassessment proceedings initiated on 30.06.2021 is considered to be abated to complete the assessment u/s.153A of the Act in pursuant to the search action conducted u/s.132 of the Act. Ld. CIT-DR further referring to the facts in the present case submitted that in the present case the search was conducted and the said company was in the list of the departmental database as a paper/shell company being controlled and managed by the entry operator who admitted before the Investigation Wing of the Department vide his sworn statement dated 01.12.2020 in regarding providing bogus entries of capital and loans. The ld.CIT-DR further referring to the observation of the Assessing Officer in regard to the abatement and unabatement assessment submitted that the Assessing Officer has considered this issue in the assessment order and after considering the statement recorded during the course of search concluded that the statement recorded u/s.132(4) of the Act, which is sufficient to make addition u/s.68 of the Act. Therefore, the observation of the ld CIT(A) that in absence of incriminating material, no addition can be made in an assessment passed in pursuance to the search action u/s.132 of the Act, is totally incorrect and cannot be accepted. 9. Ld.CIT-DR further referring to sub-section (2) of Section 153A of the Act submitted that, if any proceedings initiated or any order of assessment Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 33 or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub- section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner. Since the assessments in the present case for the assessment years 2013- 2014 to 2015-2016 are abated as on the date of search, deletion of addition made by the Assessing Officer, is not in accordance with law. Therefore, he submitted that once the ld.CIT(A) found that there is no incriminating material, he should have annulled the assessment instead of deleting the addition. Therefore, he submitted that the order of the ld. CIT(A) should be set aside and addition made by the Assessing Officer shosuld be upheld. 10. Ld. counsel for the assessee supported the orders of the ld. CIT(A) and submitted that, search action u/s.132 of the Act was conducted on 01.12.2020 and the assessments are unabated/concluded on the date of search. Further, in absence of any incriminating material, no addition can be made in an assessment order passed u/s.153A of the Act pursuant to search action conducted u/s.132 of the Act. In support of his argument, ld. counsel relied upon the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra) and also the decision of the ITAT Kolkata Bench in the case of Pawanputra Advertising Pvt. Ltd., passed in IT(SS)A Nos. 144&145/Kol/2024 & 157,158 & 159/Kol/2024 and 1/Kol/2025 for the assessment years 2015-2016 to 2020-2021, order dated Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 34 26.08.2025. Ld. Counsel also relied upon the decision of Hon’ble Jurisdictional High Court in the case of Veerprabhu Marketing Ltd., passed in ITA : 661 of 2008, dated 04.08.2016. Ld. counsel for the assessee further referring to the statement recorded during the course of search from the director of the assessee-company, submitted that in the statement recorded u/s.132(4) of the Act, there is no admission of any wrong doing as claimed by the AO in its assessment order but the director of the assessee company has admitted that these transaction are genuine and not able to give immediately the documents in support of the transaction. Further the statement recorded u/s.132(4) of the Act dated 1/2.12.2020 has been subsequently retracted by filing an affidavit before the 1st Class Magistrate at Alipore Court on 07.12.2020 and from the above it is clear that the statement recorded during the course of search is non est in law and, therefore, the said statement cannot be considered as incriminating material for the purpose of assessment u/s.153A of the Act. Ld. counsel for the assessee further referring to the additions made by the AO towards consideration received for sale of investment u/s.68 of the Act as unexplained cash credit, submitted that the assessee company has received said capital in the year 2010-2011 and all these facts have been disclosed in the regular assessment before the AO, which has also been examined by the AO, therefore, based on the same without any incriminating material, it cannot be alleged that the said transaction is bogus in nature and it can be considered u/s.153A of the Act. Therefore, the Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 35 ld.CIT(A) after considering the relevant facts has rightly deleted the addition made by the AO and, thus, the order of the ld.CIT(A) should be upheld. 11. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. The facts with regard to the impugned dispute are that a search and seizure action u/s.132 of the Act was conducted in the case of the assessee on 1.12.2020. Further as on the date of search i.e. 1.12.2020, the assessment for the assessment year 2013-2014 was unabated/concluded, because the assessee company has filed its original return of income u/s.139 of the Act on 30.09.2013 and the said return of income was processed u/s.143(1) of the Act on 11.04.2014. Further the due date for issue of notice u/s.143(2) of the Act was expired on 30.09.2014. Since the time limit for issue of notice u/s.143(2) of the Act was expired much before the due date of search i.e. 1.12.2020, in our considered view, the assessment year under consideration is unabated/concluded as on the date of search. Although the AO refers to the notice u/s.148 of the Act dated 30.06.2021 and claimed that the assessment year for the year under consideration is abated as on the date of search, because the search action was conducted u/s.132 of the Act and consequent notice issued, the assessment proceedings are initiated u/s.153A of the Act, but the fact remains that whether the particular assessment year is abated or unabated, can be decided in the light of the date of search and if we go by he said date, in the present case, the search was conducted on 1.12.2020 and as on the date of search, the assessment year under consideration was concluded/unabated assessment. Therefore, Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 36 the argument of the ld.CIT-DR in the light of the observation of the AO and more particularly in the light of notice issued u/s.148 of the Act dated 30.06.2021 that the assessment year under consideration is abated, is incorrect and cannot be accepted. 12. Having said so, let us come back as to whether the addition made by the AO towards sale of investment u/s.68 of the Act as unexplained cash credit is based on any incriminating material found at the time of search which can be considered in the assessment order passed u/s.153A of the Act. Admittedly, the assessee company has received share capital/share premium in the financial year 2009-2010 relevant to assessment yar 2010- 2011. The assessee company was acquired and the existing investment in the books of accounts have been sold during the financial year 2012-2013 relevant to assessment year 2013-2014. This fact has been gathered during the course of search proceedings wherein statement u/s.132(4) of the Act has been recorded from the director of the assessee company in relation to the said transaction where he has admitted and confirmed the transaction. The AO based on the said statement of the director came to the conclusion that there is incriminating material in the form of statement recorded u/s.132(4) of the Act for the purpose of assessment u/s.153A of the Act and consequently made the additions u/s.68 of the Act. We find that, although in the said statement recorded in the course of search on 1.12.2020, the director of the company has explained the transaction and claimed that it was bogus, but subsequently on 07.12.2020 i.e. within seven days of the search had filed retraction by filing an affidavit before the Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 37 Magistrate and claimed that whatever the statement recorded in the course of search cannot be taken into consideration and claimed that all these transactions including the transaction of issue of shares and subsequent acquisition of company and further sale of investment in the year under consideration were part of books of accounts maintained by the assessee in the relevant assessment year and also part of return of income filed u/s.139(1) of the Act, which was considered by the department either u/s.143(1) or 143(3) of the Act. Going by the statement recorded during the course of search u/s.132(4) of the Act dated 1.12.2020 and subsequent retraction in the affidavit filed before the Magistrate, in our considered view the initial statement recorded u/s.132(4) of the Act during the course of search cannot be considered as incriminating material in nature for the purpose of assessment, because the statement recorded in the course of search is not based on any incriminating material but only a confession statement from the director of the assessee company. Therefore, we are of the considered view that the findings recorded by the AO on the basis of statement recorded u/s.132(4) of the Act treating the same as incriminating material for the purpose of assessment, is devoid of merit and cannot be accepted. Once there is no nexus between the statement recorded u/s.132(4) of the Act and the evidence, then the statement cannot be in the nature of incriminating material and on the basis of the said statement without any further evidence which is incriminating in nature, the addition made by the AO towards sale of investment u/s.68 of the Act as unexplained cash credit cannot be sustained in an assessment passed Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 38 u/s.153A of the Act consequent to the search action conducted u/s.132 of the Act. This view of ours is supported by the decision of Hon’ble Delhi High Court in the case of CIT Vs. Harjeev Aggarwal, reported in (2016) 290 CTR 263(Delhi-HC), wherein it has been held as under :- \"Nexus between statement recorded under section 132(4) and evidence/material: A plain reading of section 158BB(1) does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words 'evidence found as a result of search' would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to section 132(4). However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the Assessing Officer to make a block assessment merely because any admission was made by the assessee during search operation. [Para 20]\" 13. Similar view has been taken by the Hon Delhi High Court in the case of PCIT Vs. Pavitra Realcon Pvt. Ltd. in ITA No.579/2018 dated 29.5.2024 for the proposition that addition cannot be made in search assessment only solely on the basis of statement recorded u/s 132(4) of the Act. The relevant observation of the Hon’ble Delhi High Court are as under :- \"However, it is an undisputed fact that the statement recorded under Section 132(4) of the Act has better evidentiary value but it is also a settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements.” 14. Further, Similar view has been taken by the Hon’ble Gujarat High Court in the case of CIT Vs. Kailashben Manharlal Chokshi, passed in ITA Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 39 No.579/2018, dated 29.05.2024 wherein the Hon’ble High Court has held as under :- \"The glaring fact required to be noted in the instant case was that the statement of the assessee had been recorded under section 132(4) at mid night. In normal circumstances, it is too much to give any credit to the statement recorded at such odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement, if such statement is recorded at such odd hours. Moreover, that statement was retracted after two months. [Para 22] The main grievance of the Assessing Officer was that the statement was not retracted immediately but it was done after two months. It was an afterthought and made under legal advice. However, if such retraction was to be viewed in light of the evidence furnished along with the affidavit, it would immediately be clear that the assessee had given proper explanation for all the items under which disclosure was sought to be obtained from him. So far as amount invested in house property was concerned, the assessee had specifically stated in his explanation that he had incurred the expenses on first floor structure to the tune of Rs. 2,03,185.65 and that amount had been withdrawn from the account of the firm in which he was a partner. As per the statement of the assessee, even the departmental valuation officer had also accepted the cost of construction of first floor to be Rs. 2,06,060. Further, the revenue had not brought any evidence whatsoever which would establish that the assessee had, in fact, incurred an amount of Rs. 4 lakhs on the construction of the first floor; and that said amount was invested out of the undisclosed income. Hence, there was no justification in making addition of Rs. 4 lakhs merely on the basis of statement recorded under section 132(4). [Para 23]\" 15. From the above, it is very clear that the addition made by the AO towards cash credit u/s.68 of the Act is not based on any incriminating material found in the course of search. Therefore, in our considered view, once the assessment year is unabated/concluded on the date of search, the addition made by the AO without any incriminating material is bad in law and cannot be sustained. 16. At this stage, it is relevant to refer to the decision in the case of Abhisar Buildwell Pvt. Ltd. (supra). The Hon’ble Supreme Court has considered an identical issue of assessment u/s.153A of the Act Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 40 consequent to search u/s.132 of the Act and after considering the various judicial precedents on this issue including the decision of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, reported in 380 ITR 573 held that no addition can be made in the assessment order framed u/s.153A/153C of the Act consequent to search action conducted u/s.132 of the Act, if such assessment is unabated/concluded as on the date of search, if there is no incriminating material found at the time of search. The relevant observation of the Hon’ble Supreme Court are as under :- 19. The Court then explained that the concept of time-limit for completion of assessment or reassessment under Section 153 had been done away with in a case covered by Section 153A and \"with all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an Assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be.\" The Court then dealt with the second proviso to Section 153A, which states that pending assessment or reassessment proceedings in relation to any AY falling out of the period of six AYs previous to the search shall abate. In such cases all pending assessments, the Court explained that once those proceedings abate, the decks were cleared, for the AO to pass assessment orders for each of those six years determining the total income of the Assessee. Such 'total income' would include \"both the income declared in the returns, if any, furnished by the Assessee as well as the undisclosed income, if any, unearthed during the search or requisition.\" Therefore, merely because the returns of income filed by the Assessee for the AYs previous to the date of the search already stood processed under Section 153A(1)(a) of the Act it could not be held that the provisions of Section 153A could not be invoked. 20. As regards the material unearthed during the search the Court in CIT v. Anil Kumar Bhatia (supra) observed that \"if it is not in dispute that the document was found in the course of the search of the Assessee, then Section 153A is triggered. Once the Section is triggered, it appears mandatory for the Assessing Officer to issue notices under Section 153A calling upon the Assessee to file returns for the six assessment years prior to the year in which the search took place.\" The Court clarified in para 24 as under: \"24. We are not concerned with a case where no incriminating material was found during the search conducted under Section 132 of the Act. We, therefore, express no opinion as to Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 41 whether Section 153A can be invoked even in such a situation. That question is therefore left open.\" 21. Therefore it is clear that the decision in CIT v. Anil Kumar Bhatia (supra) does not deal with a situation where, as in the present case, no incriminating material was found during the search conducted under Section 132 of the Act. The decision in Chetan Das Lachman Das 22. On the same date as it rendered the above decision, this Court also pronounced its decision in CIT v. Chetan Das Lachman Das (supra). In the latter case, again, a search was undertaken in the Assessee‟s premises under Section 132 of the Act on 13th December, 2005. The decision itself notes: \"in the course of the search certain documents were found which according to the Assessing Officer suggested gross under invoicing of sales and suppression of production/ yield of Hing.\" Consequently that was again not a case where there was no material unearthed during the search. The judgement also notes that it is on the basis of the material unearthed that the AO made additions of suppressed sale value of Hing and compound Hing. The High Court interfered with the order of the ITAT on the ground that it had failed to examine the seized material itself to find out if the findings of the CIT(A) were justified. Consequently the decision in CIT v. Chetan Das Lachman Das (supra) does not deal with the fact situation that arises in the present case. 23. Nevertheless it is interesting to note that in CIT v. Chetan Das Lachman Das (supra) the Court underscored the need for to Department to have unearthed material during search justifying the assessment sought to be made, in the following words: \"11. ....Section 153A (1) (b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material....\" The decision in Madugula Venu 24. Turning to the decision in Madugula Venu v. Director of Income Tax (supra), the question there was not whether in the absence of any incriminating material the assessment could be completed under Section 153A of the Act. No doubt a contention was put forth Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 42 on behalf of the Assessee that \"no material which would implicate him, in the earning of any undisclosed income was unearthed during the search and, therefore, there was no basis to issue the notice under section 153A.\" It must be remembered that the Petitioner in that case had come forth with a writ petition to challenge the search and seizure proceedings under Section 132 of the Act by questioning the very issuance of notice under Section 153A of the Act. It is in that context that the Court found no merit in the writ petition and observed that once a search was conducted under Section 132 of the Act, it was mandatory for the AO to issue notice to the person searched requiring him to furnish returns of income for the six AYs immediately preceding the AY relevant to the previous year in which the search was conducted. The Court was not entering into a discussion on whether any additions could be made in the assessment by the AO in the absence of any incriminating material unearthed during search. On the other hand, it left it open to the Assessee to raise all contentions in the assessment proceedings. The Court observed \"in case he has evidence or material to show that he has not earned any income which is not disclosed to the income tax authorities or to rebut the material gathered during the search, it is perfectly open to him to do so.\" One observation in the said judgement is, however, important. While explaining Section 153A of the Act, the Court observed \"it is not merely the undisclosed income that will be brought to tax in such assessments, but the total income of the assessee, including both the income earlier disclosed and income found consequent to the search, would be brought to tax.\" The Court, however, did not answer the question of whether a finding of undisclosed income would have to be based on some material unearthed during the search. The decision in Canara Housing 25. The Court would also like to refer to a judgement of the Karnataka High Court dated 25th July, 2014 in ITA No.38/2014 (M/s. Canara Housing Development Company v. The DCIT). There the Assessee, which was carrying on real estate business filed its return for AY 2008-2009. His case was taken up under Section 143(3) of the Act and an order came to be passed on 31st December, 2010. Subsequently a search took place in the premises of the Assessee under Section 132 of the Act on 12th April, 2011. The judgement notes \"in the course of search, incriminating material leading to undisclosed income was seized.\" The notice was issued to the Assessee under Section 153A(1) of the Act to file return of income on 13th January, 2012. Even while the return was under consideration, the CIT initiated proceedings under Section 263 of the Act on the ground that the order passed on 31st December, 2010 under Section 143(3) of the Act was prejudicial to the interests of the Revenue. When the CIT negated the objections of the Assessee to the said order, the Assessee appealed to the ITAT. The ITAT negated the plea of the Assessee that by virtue of the proceedings initiated under Section 153A of the Act, the assessment for six years stood reopened and it is for the assessing authority to pass Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 43 appropriate order on the basis of the return filed under Section 153A(1)(a) of the Act. 26. In the High Court the question was whether the CIT could invoke the power under Section 263 of the Act once the proceedings under Section 153A was initiated. The High Court in Canara Housing (supra) answered the question in the negative. It referred to the decision of this Court in CIT v. Anil Kumar Bhatia (supra) and came to the conclusion that once proceedings are initiated under Section 153A of the Act the legal effect was that even where an assessment order is passed, it would stand reopened. In the eye of law there was no order of assessment. It meant that the AO \"shall assess or reassess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the \"total income\" of each year and then pass the assessment order.\" 27. It is important to note that Canara Housing was also a case where some material was unearthed during the search. Further, the High Court was clear that the addition to the income already disclosed would have to be based on some material unearthed during the search. This is clear from the observation in para 9 of the decision to the effect: \"The AO is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search.\" It was further observed that in the facts of that case if the CIT had come across any income that the AO had not taken note of while passing the earlier order, \"the said material can be furnished to the assessing authority\" who will take note of it while determining total income. The decision in Filatex India Ltd. 28. In Filatex India Ltd. v. CIT-IV (supra), one of the questions framed was whether the ITAT erred on facts and in law in not holding that re- computation of book profit, de-hors any material found during the course of search, in the order passed under Section 153A of the Act was without jurisdiction, being outside the scope of proceedings under that Section? The facts of the case were that there was incriminating material found during the course of search conducted in the premises of the Assessee on 18 th January, 2006 and subsequent dates. This included a statement of the General Manager (Marketing). On the basis of the said material and statement additions were made to the disclosed income under Section 115 JB although no material was found specific to such addition. The Court held that under Section 153A \"the additions need not be restricted or limited to the incriminating material, which was found during the course of search.\" Consequently even if no incriminating material was found for the addition under Section 115JB of the Act, since there was some incriminating material found which would sustain Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 44 additions made and since the 'total income' had to be computed, they were sustained by the High Court. 29. In Filatex India Ltd. the Court sought to explain the observations in CIT v. Chetan Das Lachman Das (supra) in the following manner: \"3. Learned counsel for the appellant-assessee has relied on the decision of this Court in CIT v. Chetan Das Lachman Das [20121 211 Taxman 61/25 taxmann.com 227. The said decision notices insertion of Section 153A by Finance Act, 2003, its purpose and object, and the earlier proceedings for block assessment under Chapter XIVB, the difficulties and the legal issues which had arisen on the difference between regular assessment and block assessment. It is in this context that in the case of Chetan Das Lachman Das (supra), the Division Bench, [to which one of us (Sanjiv Khanna, J) was a party], has observed that Section 153A(l)(b) provides for assessment or re- assessment of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. It was emphasized that there is no condition in this Section that the additions should be strictly made on the basis of evidence found during the course of the search or other post search material or information available with the Assessing Officer, related to the evidence found. Subsequent observation to the effect that the assessment under section 153A should not be arbitrary or made without any relevance or nexus with the seized material, is basically clarificatory that the assessment under Section 153A emanates and starts on the foundation of the search, which is the jurisdictional precondition. The additions cannot and should not be arbitrary....\" 30. The above passage in Filatex India Ltd. (supra), paraphrases inter alia, the following line in CIT v. Chetan Das Lachman Das (supra): \"This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material\". However, the immediately next line in CIT v. Chetan Das Lachman Das (supra)reads: \"Obviously an assessment has to be made under this Section only on the basis of seized material....\" 31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das (supra) and Filatex India Ltd. v. CIT-IV (supra) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 45 under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT(A), affirmed by the ITAT, deleting the addition, was not interfered with. The decision in Jai Steel India 33. The decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (supra) involved a case where certain books of accounts and other documents that had not been produced in the course of original assessment were found in the course of search. It was held where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration while computing the total income under Section 153A of the Act. The Court then explained as under: \"22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made.\" 34. The argument of the Revenue that the AO was free to disturb income de hors the incriminating material while making assessment under Section 153A of the Act was specifically rejected by the Court on the ground that it was \"not borne out from the scheme of the said provision\" which was in the context of search and/or requisition. The Court also explained the purport of the words \"assess\" and \"reassess\", which have been found at more than one place in Section 153A of the Act as under: \"26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 46 pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents.\" The decision in Continental Warehousing 35. In Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 Taxmann.Com 78 (Bom) the question addressed by the Bombay High Court was whether the scope of assessment under Section 153A encompasses additions, not based on any incriminating material found during the course of search? It was held that no addition could be made in respect of the assessments that had become final in the event no incriminating material was found during search. The Bombay High Court relied on the earlier decision in CIT v. M/s. Murli Agro Products Ltd. (supra) and discussed the scope and ambit of the proceedings for assessment and reassessment of total income under Section 153A (1) of the Act and the provisos thereto. One of the specific pleas taken by the Assessee was that if no incriminating material was found during the course of search in respect of an issue then no addition in respect of any issue can be made to the assessment under Sections 153A and 153C. It was observed that the assessment or reassessment under Section 153A arises only when a search has been initiated and conducted and, therefore, \"such an assessment has a vital link with the initiation and conduct of the search.\" The Court then reproduced and affirmed the decision of the Special Bench of the ITAT in All Cargo Global Logistics Ltd. v. Deputy Commissioner of Income Tax [2012] 23 taxmann.com 103 (Mum.) (SB) and answered the question as regards the scope of the assessment of total income as under: \"53. ....We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results: (a) Insofar as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 47 and undisclosed income or undisclosed property discovered in the course of search\" 36. Ultimately in Continental Warehousing (supra), the Bombay High Court answered the question framed by it as under: \"a. In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153Afor which assessments shall be made for each of the six assessment years separately; b. In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search.\" Summary of the legal position 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs \"in which both the disclosed and the undisclosed income would be brought to tax\". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment \"can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.\" v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 48 reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006- 07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue. 40. The appeals are accordingly dismissed but in the circumstances no orders as to costs. 17. It is also relevant to refer to the decision of the ITAT Kolkata Bench in the case of Pawanputra Advertising Pvt. Ltd., passed in IT(SS)A Nos.144, 145, 157, 158 & 159/Kol/2024 & 1/Kol/2025 for the assessment years 2015-2016 to 2020-2021, order dated 26.08.2025, where under identical set of facts i.e. on the basis of search action conducted in the case of the assessee group, the coordinate bench has held in para 7 to 12 as under :- 7. We have heard the rival contentions and perused the materials available on record including the written submissions dated 21.04.2025 and paper books No. 1 (page No. 1 to 357), paper book Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 49 no. 2 (page No. 1 to 354 and paper book 3 (Case Laws). We find that the only dispute is sale of part unlisted equity shares to various parties thereby realizing total sales consideration of ₹11,56,20,000/-. We note that the assessee raised money by issue of equity shares in A.Y. 2008-09 of Rs. 64,85,49,000/- . We also note that entire funds raised were invested in unlisted equity shares in AY 2011-12. We note that the case of the assessee was selected for scrutiny only for this reason and the money raised by the assessee was accepted by the department and no adverse interference was drawn. We note that in A.Y. 2010-11 also, the case of the assessee was selected for scrutiny and all the money share capital /share premium was accepted. Thereafter the investments were made in private equity shares which were unlisted in A.Y. 2011-12. Similarly 2017-18 the case of the assessee was selected for scrutiny and investments were not doubted at all. Thus it is clear that over all these years the investments were not doubted by the department. These investments made in the A.Y. 20111-12 were partly sold at cost by the assessee during the instant assessment year which realized ₹11,56,20,000/- which were accepted by the Revenue right from A.Y. 2011-12 till the instant assessment year. We have also noted that the assessee has filed before the ld. AO as well as before the ld. CIT (A) all the evidences qua the purchases and sale of shares. The assessee has filed all the evidences qua the purchasers such as ITRs, names, addresses, audited balance sheets, bank statements, confirmations, etc. proving the identity, creditworthiness of the purchasers and genuineness of the transactions. We note that even the purchasing companies have filed their evidences as called for by the ld. AO comprising all the evidences as stated above. The ld. CIT (A) has recorded a finding of fact that apart from the assessee , purchasing companies had also filed all the evidences before the ld. AO however the ld. AO had not brought on record any independent and substantive evidences pointing out any defect or deficiency in the said evidences. The ld. CIT (A) finally noted that the assessee has proved the identity and creditworthiness of the parties and also the genuineness of the transactions by filing all these documents and thus, discharged its initial burden. Besides, we note that nothing incriminating was found and seized during the course of search. 8. We observe that the ld. CIT (A) also noted that the department has accepted all these investments in the earlier assessment years, even in the scrutiny assessments and had not drawn any adverse interference. Therefore, we do not find any infirmity/anomaly in the appellate order of the ld. CIT (A), who has passed a very reasoned and speaking order after following the decision of Hon'ble Jurisdictional High Court in case of CIT VS. Dataware Private Ltd. (supra) as well as the decision of the co-ordinate benches on the same issue namely; M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT (supra) & M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT (supra). We have perused the decisions in the above referred two decisions of the coordinate benches followed by the ld. CIT (A) and find that the issue is exactly similar as before us in the present case. The operative part of M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT (supra) extracted below: - Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 50 9. We have heard the rival contentions and perused the materials as placed before us. The issue for adjudication before us is in respect of confirmation of addition by ld CIT(A) as made by the AO on the ground that the identity and credentials of the purchasers are suspicious. We observe that the assessee has been in the regular business of purchase and sales of investments over the years as corroborated by the materials placed before us. Even the sales proceeds received during the current financial year were in respect of sale of shares /investments partly out of opening balance and partly out of current purchases as is apparent from the following chart placed before us:- 9.1. The assessee has also filed movement of investments over the years which showed that the phenomenon of purchase and sale of shares/investments was regular feature of the assessee’s business. This is also undisputed that the assessee company had raised share capital (including premium) amounting to Rs.119,84,67,000/- in financial year 2010-11, relevant to AY 2011- 12 and the capital so raised in AY 2011-12 was invested in shares/securities and accounted for in the books of accounts which were audited and audited accounts are placed at page no. 102 to 111 of PB Vol.-1. We also note that the assessment for AY 2011-12 was framed u/s 143(3) of the Act vide order dated 17.03.2014 a copy of which is placed at page no. 276 and 277 of PB Vol.-1 and the neither the share capital/share premium nor the investments out of that source were doubted by the AO. 9.2. We also note that similar issue was involved in the case of M/S Swarna Kalash Commercial Pvt Ltd. Vs ACIT ,Central Circle -2(2), Kolkata, a group concern of the Rashmi Group of Companies ,which was also subjected to search u/s 132(1) of the Act in the same search proceedings. We note that the coordinate bench has decided the issue in favour of the assessee in ITA No. I.T.(S.S.)A.No.53/Kol/2022 A.Y.2019-20 vide order dated 01.09.2023 involving the same issue of addition of sale of shares/investments by the AO on the ground that identity and credentials of the purchasers of shares/investments were suspicious. The operative part of the order is extracted as under: “6.1.We have considered the rival contentions and gone through the record. First we deal with the issue relating to the undated detailed order passed by the Assessing Officer even after the prescribed date of limitation for passing the assessment order for the assessment year under consideration which is other than the short cryptic order as reproduced above and which did not even bear any Document Identification Number, (in short “DIN”)as mandated vide CBDT Circular No.19 of 2019. Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 51 6.1. As mentioned in the said CBDT circular no. 19 of 2019 and as also further held by the Hon’ble Delhi High Court in the case of CIT vs. Brandix Mauritius Holdings Ltd. [2023[ 149 taxmann.com 238 (Del), any communication without mentioning of the DIN in its body is to be treated as non-est. Therefore, the subsequent undated assessment order and without any DIN mentioned in the order, and passed after the limitation period prescribed for passing of the assessment order cannot be taken cognizance of. 7. So far as the original order (extracted above) passed by the Assessing Officer is concerned, we are in agreement with the contentions of the Ld. Counsel for the assessee that the same is a small and cryptic order and the additions have been made by the Assessing Officer in the said order in a mechanical manner without any discussion on merits and without pointing out any justifying material warranting such additions. Therefore, the additions made by the Assessing Officer by way of such an cryptic order are not sustainable as per law. …….. 11. We have considered the rival contentions and gone through the record.We find force in the submissions made by the learned Counsel of the assessee which have been discussed above in detail. We note that it is an admitted fact on record that assessee raised share capital at a premium in FY 2005-06 which was accepted by the AO in scrutiny assessment under section 143(3). The capital so raised was invested in shares of Pvt. Ltd. of various companies. These shares were sold during the year under consideration to different parties, corporate/non-corporate. The sale proceeds have come in assessee’s bank account through banking channel. 11.1. In its normal course of business, the assessee had made purchases and sale of investments as under which is tabulated as under: 11.2. The shares were held by the assessee as investments and were sold at the cost of acquisition by the assessee. Hence, there is no profit/loss on such sale of investment. We also look at the movement of investment held by the assessee, which is tabulated below: FY AY Opening Purchase Sales Amount Closing Balance byA.O. 2014-15 2015-16 63,42,00,000 63,42,00000 2015-16 2016-17 63,42,00,000 42,44,960 18,344,960 62,01,00,000 1,83,44,960 2016-17 2017-18 62,01,00,000 56,27,44,459 468,499,459 71,43,45,000 46,84,99,459 2017-18 2018-19 71.43.45,000 1,55,17,29,538 2,062,064,910 20,40,09,628 2,06,20,64,910 2018-19 2019-20 20,40,09,628 66, 47, 64, 007 170,560,000 69,82,13,635 17,05,60,000 Total 2,71,94,69,239 Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 52 11.3. We also refer to the details of opening stock, purchases, sales and closing stock during the year, placed on record by the assessee: SI No Name of the Script Opening Balance Purchases Sales Closing Balance Amount Amount Amount Amount I Bellona Supply Pvt. Ld. 1,24,57,344 0 1,24,57,344 0 2 P N Jewelers Pvt ltd 38,45,323 0 38,45,323 0 3 Rozela Tie Up pvt. Ltd. 3,64,33,053 0 3,64,33,053 0 4 Rashmi Cement Ltd. 0 1,57,32,000 0 1,57,32.000 5 Cimmco Vinimay Pvt. Ltd. 13,32,04,353 53,71,44,701 0 67,03,49,05 4 6 Festive Vincom Pvt Ltd 28,01,625 0 0 28,01,625 7 GreenHillDealmark Pvt Ltd 26,14,850 0 0 26,14,850 8 SwabhimanCommosales Pvt Ltd 26,15,900 0 0 26,15,900 9 Topline Business Pvt Ltd 41,00,205 0 0 41,00,205 10 VidyaBuildcon Pvt Ltd 0 2,50,00,000 2,50,00,000 0 11 BadrinathMinning Pvt Ltd 59,36,974 75,250 60,12,224 0 12 Sankul Retailers Private Ltd 0 74,49,572 74,49,572 0 13 Alok Financial Services Pvt Ltd 0 8,10,000 8,10,000 0 14 Asankul Cosmetics Pvt Ltd 0 6,55,26,090 6,55,26,090 0 15 Daffodil Plaza Pvt Ltd 0 88,198 88,198 0 16 NAT Communication & Marketing Pvt Ltd 0 1,26,37,632 1,26,37,632 0 17 Alok Pattanayak 0 3,00,000 3,00,000 0 Total 20,40,10,245 66,47,63,507 17,05,60,000 69,82,13,63 4 11.4. Based on the analysis of the above details, it is evident that entire sales is made from purchases & opening stock as under: Breakup of Sale of Shares Amount(Rs.) Breakup of Sale of Shares Amount(Rs.) Sold out of Opening Investment 5,86,73,194 Sold out of Opening Investment 5,86,73,194 Sold out of Investment Purchased During the Year 11,18,86,806 Sold out of Investment Purchased During the Year 11,18,86,806 Total 17,05,60,000 Total 17,05,60,000 11.5. It is also important to note that the AO has made enquiries from the buyers of the shares sold by the assessee by issuing summons u/s 131 of the Act who have responded and furnished the required details. Summary Statement of the replies made in response to notice u/s 131 by various buyers (Sale of Shares) is tabulated below: Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 53 12. Further, according to the ld. Counsel, the only piece of evidence that is there in this case is the statement of Sri Sanjib Patwari who is one of the owners of the Rashmi group and Sri K K Verma is the accountant, recorded u/s 132(4) of the Act which have been relied upon by the Assessing Officer. These statements have been retracted the very next day by furnishing affidavits. Subsequent to retraction, no further cross-examination was conducted of these persons. The ld. Counsel has further submitted that even otherwise the addition made by the Assessing Officer was far more than the alleged disclosure made by these persons in their retracted statements and hence, no cognizance in fact can be taken for the purpose of the addition. 12.1. We find force in the above contentions of the ld. Counsel in the facts and circumstances of the case. As laid down by the various Higher Courts of the country, the retracted statement can not be made sole basis for making the additions. The Jurisdictional Calcutta High Court in the case of Principal Commissioner of Income Tax Vs. Golden Goenka Fincorp Ltd. [2023]148 taxmann.com 313(Calcutta) has held that where assessing officer solely based on statement of assessee’s director recorded during Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 54 search operation treated share application money received by assessee company as undisclosed income and made additions u/s 68 of the Act, since said statement was retracted and there was no cash trail or any other corroborative evidence or investigation brought on record by AO, impugned additions were liable to be deleted. Even the Hon’ble A.P. High Court in the case of “Naresh Kumar Agarwal” (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of “Shree Chand Soni vs. DCIT” (2006) 101 TTJ 1028 (Jodhpur). The Hon’ble Delhi High Court in the case of “CIT vs. Harjeev Agarwal” in ITA No.8/2004 vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a stand-alone basis, without reference to any other material discovered during search and seizure operation, would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. In the case of “Commissioner of Income Tax vs. Sunil Agarwal” (2015) 64 taxman.com 107 (Delhi-HC), the assessee therein, during the course of search, made a categorical admission under section 132(4) that the cash amount seized belonged to him and it represented undisclosed income not recorded in the books of accounts. The assessee did not immediately retract from the above admission but only during the assessment proceedings at a belated stage. In his retraction, the assessee stated that the surrender was made under a mistaken belief and without looking into books of account and without understanding law and that he had been compelled and perturbed by events of search and that the pressure of search was built so much that he had to make the surrender without having actual possession of the assets or unexplained investments or expenses incurred and that there was no such income as undisclosed. The Hon’ble Delhi High Court, after considering the fact and circumstances of the case, while dismissing the appeal of the revenue, observed that though the fact that the assessee may have retracted his statement belatedly, yet, it did not relieve the AO from examining the explanation offered by the assessee with reference to the books of account produced before him. Although, a statement under section 132(4) of the Act carries much greater weight than the statement made under section 133A of the Act, but a retracted statement even under section 132(4) of the Act would require some corroborative material for the AO to proceed to make additions on the basis of such statement. 12.2 In the case of “Basant Bansal vs. ACIT” reported in (2015)63 taxmann.com 199 (Jaipur Trib.), the assessee therein, during the search and seizure action u/s 132 of the Act, offered a summary discloser of income as undisclosed and the department accepted the summary surrender of income and thereafter advance tax for Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 55 the said surrendered of income was also deposited, but thereafter it was contended by the assessee that the surrender was made under threat or coercion and that no incriminating material was found during the search action. The stand of the department was that the admission was voluntary and was not under a mistaken belief of fact or law and that the assistance had enough time to go through the facts of their case, law applicable in their case and take advice from their counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by them was final and binding on them; The co-ordinate Jaipur Bench of the Tribunal, after overall appreciation of the fact and evidences before it, observed that the assessee’s surrender was not based on any incriminating material and that the discloser being not voluntary and extracted by the department in creating a coercive situation cannot be relied solely to be basis of addition as undisclosed income. The co-ordinate bench of the Tribunal while relying upon various case laws of the higher authorities observed that it is well settled legal position that merely on the basis of a statement which is not supported by the department with cogent corroborative material cannot be a valid basis for sustaining such ad-hoc addition. The co-ordinate Jaipur Bench of the Tribunal (supra) further observed that the issue of existence of pressure, threat, coercion during search proceedings is to be judged by reference to the existing facts and circumstances, human conduct and preponderance of possibilities. During the search proceedings, record relating thereto being in exclusive custody of the searching officers, it is their wish and will which prevails during the fateful period. That it is almost impossible for the assessee to adduce demonstrative evidence of exerting such pressure. The co-ordinate bench of the Tribunal (supra) while holding so, apart from relying upon various decisions of the higher courts has also relied upon the decision of the Tribunal in the case of “Dy CIT vs. Pramukh Builders” (2008) 112 ITD 179 (Ahd.) wherein it has been held that even in the absence of proof of coercion or pressure, the statement by itself cannot be taken as conclusive. Therefore, merely in the absence of proof of pressure, threat, coercion or inducement the statement cannot be held as conclusive and additions cannot be made by solely relying on a statement or a letter. 12.3. The case of the assessee, before us, is on better footing as in this case, there is no delay in retraction of the statement which was done on the very next day by filing affidavits before the Metropolitan Magistrate 12.4. Even the CBDT Letter No.286/2/2003-IT(Inv) dated Oct 3, 2003 in this respect read as under: “To The Chief Commissioners of Income Tax, (Cadre Contra) & Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 56 All Directors General of Income Tax Inv. Sir, Subject: Confession of additional Income during the course of search & seizure and survey operation – regarding Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. Yours faithfully, 12.5. A perusal of the above circular also shows that it is in the notice of the statutory controlling body of the Income Tax Authorities that the revenue officials are used to take confessional statements from the person searched under force, pressure or threat and that is why they have made it mandatory that additions solely on the basis on such statements should not be made and that corroborative evidences should be collected or obtained before making such additions. The circular of the CBDT is binding on the revenue officials. In the facts and circumstances of this case, when seen in the light of above case laws and CBDT circular, additions in this case cannot be said to be justifiably made. 13. All the above details when kept in juxtaposition, there remains nothing to cast an iota of doubt on the sale transaction of shares held by the assessee as investments which it undertook in the ordinary course of its business, more importantly, purchases having made in the current year also. Further, as rightly pointed out by the learned Counsel, both opening balance of investment in shares and the purchases made during the year have not been disputed or doubted by the authorities below so as to bring the entire sale consideration to tax. Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 57 14. At this stage, the ld. DR has submitted that the assessee has claimed that it has undertaken this sale transaction by selling the shares at the cost at which it had acquired them in AY 2006-07. At the same time, assessee submits that it has undertaken this transaction in the ordinary course of its business. The ld. DR has submitted that the conduct of business is always with a profit motive, more particularly when the assessee had held these shares for past several years and had also made purchases during the year, deploying its funds. There ought to be certain element of profit embedded in the sale transaction executed which must be brought to tax. 15. Considering the above submission of the ld. DR and taking a holistic view of the facts and circumstances of the case, we find it proper to consider net profit element @ 5% of the sale consideration i.e. 5% of Rs.17,05,60,000/- which comes to Rs.85,28,000/- be subjected to tax. We, accordingly delete the addition to the extent of Rs.16,20,32,000/- made u/s 68 of the Act and sustain the balance of Rs.85,28,000/- towards profit element on the impugned sale transaction of shares undertaken by the assessee. 16. In the result, appeal of the assessee is partly allowed. 9.4. It is clear from the above that the facts in the instant case before us are materially same vis a vis the facts in the case decided by the coordinate bench supra in group concern. We, therefore, respectfully following the same set aside the order of ld CIT(A) and direct the AO to apply profit of 5% on the sales proceeds of Rs. 99,72,36,896/- which comes to Rs. 4,98,61,845/- and delete the remaining addition of Rs. 94,73,75,051/-. 10. In the result the appeal of the assessee is partly allowed.” 9. We have also perused decision by the Hon'ble High Court in ITAT/239/2024 in IA No. GA/2/2024 vide order dated 16th April, 2025, in the case of PCIT Vs. Tulsyan and Sons Private Limited(supra) affirmed the order of the tribunal. In the said case the addition made by the ld. AO on account of sale of investment was deleted by the ld. CIT (A) and the Tribunal confirmed the order of the ld. Assessing Officer. The Hon'ble High Court while deciding the issue held as under: - We have heard Mr. Aryak Dutta, learned standing counsel assisted by Mr. Soumen Bhattacharjee, learned standing counsel for the appellant and Mr. J. P. Khaitan, learned senior advocate assisted by Mr. Pratyush Jhunjhunwalla, learned advocate for the respondent. The short issue which falls for consideration is whether the learned tribunal was right in affirming the order passed by the Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 58 Commissioner of Income Tax (Appeals)- 21, Kolkata [CIT(A)] dated 10.5.2023 by which the assessee’s appeal was allowed and the addition made under section 68 of the Act was deleted. The Assessing Officer made the addition by invoking section 68 of the Act on the ground that the assessee failed to discharge its onus to establish identity, creditworthiness and genuineness of the transaction in respect of the money received through cash trail. The CIT(A) in course of hearing the appeal called for a remand report from the Assessing Officer and in the said remand report the Assessing Officer has in no uncertain terms accepted the receipt of the impugned sum on account of sale proceeds of investment. The Assessing Officer verified the investment sold which are shown in the balance-sheet for the financial year 2010- 11 in Schedule-4 of the balance-sheet and after considering these facts it was stated that the assessee had sold shares held by way of the investment during the year to M/s. Shivshakti Communications and Investment Pvt. Ltd. and Carnation Tradelink Pvt. Ltd. and it is not a receipt of unsecured loan. This fact, apart from other factual details, were considered by the CIT(A) and by an elaborate order dated 10.5.2023 the appeal filed by the assessee was allowed. The tribunal on its part re-examined the factual position and took note of the findings rendered by the CIT(A) and concurred with the same. We also find that the tribunal has also examined the factual position and took note of the remand report as called for by the CIT(A) which confirmed the alleged sum is on account of sale of investment and not otherwise. Thus, we find no question of law much less substantial question of law arises for consideration in this appeal. Accordingly, the appeal fails and the same is dismissed. Consequently, the connected application stands closed. 10. Since, the facts of the case before us vis-à-vis, facts of the decisions cited above are substantially similar and therefore, we respectfully following the ratio laid down in the above decisions upheld the order of ld. CIT (A) on this issue by dismissing the appeal of the Revenue. 11. So far as the Cross Objection is concerned, we note that the assessee has challenged the direction of the ld. CIT (A) to the ld. AO to make an addition at the rate of 5% of the total sales consideration towards the net profit embedded in the sales consideration. 12. After hearing the rival contentions and perusing the materials available on record, we find that the ld. CIT (A) has not given any basis for such direction to the ld. Assessing Officer. In other words, the ld. CIT (A) has just acted on the presumptions and surmises and thus, presumed that the assessee might have made some profits from sale by investments. In our opinion, the said direction by the ld. CIT (A) is without any substantive basis and therefore cannot be sustained. Accordingly, we set aside the order of ld. Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 59 CIT(A) to the extent of this direction of making addition @ 5%. Accordingly, the cross objection of the assessee is allowed. 18. In this view of the matter and considering the facts and circumstances of the case and also by following the ratio laid down by the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra) and further the decision of the coordinate bench of the Tribunal in the case of Pawanputra Advertising Pvt. Ltd. (supra), we hold that the additions made by the Assessing Officer towards sale of investments u/s.68 of the Act as unexplained cash credit in the assessment order passed u/s.153A of the Act without therebeing any incriminating material found on the date of search, cannot be sustained once the assessment years under consideration are unabated/concluded as on the date of search. Since the assessment year under consideration is unabated/concluded, the addition made by the Assessing Officer without any incriminating material is contrary to the decision of the Hon’ble Supreme Court in the above cases and, thus, deleted. Ld.CIT(A) after considering the relevant facts has rightly deleted the addition made by the Assessing Officer. Thus, we are inclined to uphold the order of the ld. CIT(A) and dismiss the appeal of the revenue. 19. With regard to IT(SS)A Nos.155&156/Kol/2024 filed for the assessment years 2014-2015 & 2015-2016, the facts and issues involved in these appeals are identical to the facts and issues which we had considered in IT(SS)A No.154/Kol/2024 for the A.Y.2013-2014 but for figures. The reasons given by us in the preceding paragraphs shall apply mutatis mutandis to these appeals as well. Therefore, on similar reasons, we delete the additions made by the Assessing Officer towards sale of Printed from counselvise.com IT(SS)ANo.154-156/Kol/2024 60 investment u/s.68 of the Act as unexplained cash credit. The ld.CIT(A) after considering the relevant facts has rightly deleted the additions for both the years under consideration. Thus, we are inclined to uphold the findings of the ld. CIT(A) for both the years and dismiss appeals of the revenue. 20. In the result, all the three appeals of the revenue are dismissed. Order dictated in the open court on 19/09/2025. Sd/- (SONJOY SARMA) Sd/- (MANJUNATHA G) न्यधनयक सदस्य / JUDICIAL MEMBER लेखा सदस्य/ ACCOUNTANT MEMBER कोलकाता Kolkata; ददनाांक Dated 19/09/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// Printed from counselvise.com "
Other Referred Cases
PCIT vs. Best Infrastructure Pvt. Ltd., Harjeev Agarwal, PCIT vs. Abhisar Buildwell Pvt. Ltd., Kabul Chawla vs. CIT, CIT vs. Kabul Chawla, CIT vs. Harjeev Agarwal, CIT vs. Anil Kumar Bhatia, CIT vs. Chetan Das Lachman Das, CIT vs. Sunil Agarwal, CIT vs. Naresh Kumar Aggarwal, DCIT vs. NIBR Bullion Pvt. Ltd., CIT vs. Ashok Kumar Jain, CIT vs. Mita Gutgutia, CIT vs. Dataware Private Ltd., CIT vs. Harjeev Aggrawal, CIT vs. Best Infrastructure (1) Pvt Ltd., CIT vs. Chetan Das Lachman Das, CIT vs. Kailashben Manharial Chokshi, CIT vs. Ghatge Patil Industries Limited, CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., CIT vs. M/s. Canara Housing Development Company, CIT vs. Jai Steel India, CIT vs. M/s. Avishkar Infrastructure Pvt. Ltd., CIT vs. Shree Ganesh Trading Company, CIT vs. M/s. Loyalka Farms (P) Ltd., CIT vs. M/s. Pawanputra Advertising Pvt. Ltd., CIT vs. M/s. Swarna Kalash Commercial Pvt. Ltd., CIT vs. M/s. Alaknanda Infraproperties Pvt. Ltd., CIT vs. M/s. Alaknanda Realtech Pvt. Ltd., CIT vs. M/s. Alaknanda Sponge Iron Ltd., CIT vs. M/s. Golden Castings & Ispat Ltd., CIT vs. M/s. Vishal Saraogi, CIT vs. M/s. Ratangiri Vanijya Pvt. Ltd.
Laws Referred To
Income-tax Act, 1961
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