ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2), KOLKATA, KOLKATA V. VIKRAM SARAF, GORAKHPUR

ITSSA 118/KOL/2024

AI Insights

The case involves a series of appeals by the Revenue against the order of the CIT(A), which had deleted the addition of Rs. 22,62,074 made under Section 68 of the Income Tax Act, 1961, concerning bogus Long Term Capital Gain for the assessment years 2014-15 and 2015-16. The primary legal contention was whether the additions could be sustained in the absence of incriminating material found during the search operations under Section 132 of the Act. The Tribunal referenced the Supreme Court's decision in Principal Commissioner of Income-Tax v. Abhisar Buildwell P. Ltd., which clarified that in cases of unabated or completed assessments, no addition can be made in the absence of incriminating material found during the search.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 39540 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-11-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-11-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 13-09-2024
• Other Referred Cases: Principal Commissioner of Income-Tax v. Abhisar Buildwell P. Ltd. [2023] 454 ITR 212 (SC), Sumati Dayal vs. CIT [1995] 2014 ITR 801(SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH NATH BARNWALL
• Assessee Lawyers: S.M. SURANA
• Keywords: Onus to prove; Block assessment; Bogus
• Section: 250; 132; 153A; 68

Judgement Text

" आयकर अपीलीय अधिकरण न्यायपीठ, कोलकाता । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.(SS)A. No. 116, 118, 122, 123 &124 /KOL/2024 Assessment Years: 2015-16 ACIT, Central Circle 1(2) Office of the ACIT, Central Circle 1(2), Kolkata, R.No.310, 3rd Floor, Aaykar Bhavan Poorva, 110, Shanti Pally, Kolkata-700107 Vs Vandana Saraf, Gorakhpur [PAN: AFUPS7326A] Vikram Saraf, Gorakhpur [PAN: ASSPS3600A] Saumitra Saraf, Gorakhpur [PAN: BGDPS6749E] Smita Saraf, Gorakhpur [PAN: AAPPL9758B] Vinod Kumar Saraf, Gorakhpur Usha Devi Saraf, Legal Heir of Vinod Kumar Saraf, [PAN: AFUPS7334A] Saraf Sadan, Gandhi Nagar, Golghar Gorakhpur, Uttar Pradesh- 273001 अपीलार्थी/ (Appellant) प्रत्‍ यर्थी/ (Respondent) I.T.(SS)A. No. 117, 119, 120, 121/KOL/2024 Assessment Years: 2014-15 ACIT, Central Circle 1(2) Office of the ACIT, Central Circle 1(2), Kolkata, R.No.310, 3rd Floor, Aaykar Bhavan Poorva, 110, Shanti Pally, Kolkata-700107 Vs Vikram Saraf, Gorakhpur [PAN: ASSPS3600A] Madhu Saraf, Gorakhpur [PAN: AVBPS7919N] Smita Saraf, Gorakhpur [PAN: AAPPL9758B] Vinod Kumar Saraf, Gorakhpur Usha Devi Saraf, Legal Heir of Vinod Page | 2 A.Ys. 2014-15 & 2015-16 IT(SS)A Nos.116 to 124/KOL/2024 Kumar Saraf, [PAN: AFUPS7334A] Saraf Sadan, Gandhi Nagar, Golghar Gorakhpur, Uttar Pradesh- 273001 Assessee by : Shri S.M. Surana, Advocate Revenue by : Shri Prakash Nath Barnwall, CIT DR सुनवाई की तारीख/Date of Hearing : 06.11.2024 घोषणा की तारीख /Date of Pronouncement : 07.11.2024 आदेश/O R D E R PER BENCH: A bunch of appeal was filed by the revenue against the order of the ld. Commissioner of Income-tax (Appeals), Kolkata-20, [in brevity ‘the learned CIT (A)’], order passed under Section 250 of the Income-tax Act, 1961 (in brevity, ‘the Act’) for A.Ys. 2014-15 & 2015-16. The impugned order was emanated from the orders of the learned ACIT, Circle 1(2), Kolkata (in brevity, ‘the learned AO’), order passed under Section 153A of the Act. 2. The appeals were filed with a delay of 17 days. The revenue filed condonation of delay. That after a detailed discussion, the bench considered the condonation and accordingly, the delay for 17days is condoned. The ld. AR has also not made any objection on condonation of delay. Accordingly, the delay for 17 days is condoned and appeals were taken for adjudication. 3. In the outset, we find that all the appeals are same nature of fact and having common issue. All the appeals are taken together, heard together and disposed of together. ITA No. 116/Kol/2024 is taken as lead case. IT(SS)A No. 116/KOL/2024 for A.Y. 2015-16 Page | 3 A.Ys. 2014-15 & 2015-16 IT(SS)A Nos.116 to 124/KOL/2024 4. Revenue has raised following grounds of appeal:- “1. That on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 22,62,074/-made u/s 68 of the Income Tax Act, 1961, on account of bogus Long Term Capital Gain, holding that are not linked to incriminating documents considering the judgement of Hon'ble Apex Court in case of M/s Abhisar Buildwell Pvt. Ltd, ignoring the word \"material\" used by Hon'ble Apex Court and not the word \"documents\" as used by CIT(A). 2 That on the facts and circumstances of the case, Ld. CIT(A) erred in not considering that \"incriminating material\" can be in any form which could suggest that any documents/transactions claimed or submitted by assessee were not genuine or it had submitted misrepresented/suppressed/non- existent facts. 3 That on the facts and circumstances of the case, Ld. CIT(A) erred in not considering that the assessee failed to discharge its onus to prove the genuineness of the transactions in light of the principle of preponderance of human probabilities, as held by the Hon'ble Supreme Court in Sumati Dayal vs. CIT [1995] 2014 ITR 801(SC), where a host of documentary evidences were discarded. 4. That the revenue reserves its rights to substantiate, modify, delete supplement and/or alter the grounds at any time of the appeal proceedings.” 5. We heard the rival submissions and considered the documents available on records. The Revenue has filed the appeal by challenging the order of the ld. CIT (A). The search was conducted by the Investigation wing, Mumbai and unearthed the bogus Long Term Capital Gain (in short LTCG). During assessment the ld. AO noticed that assessee earned LTCG amount of ₹22,62,074/- by selling the share script “Sunstar Reality Development Ltd”. The ld. AO treated this sale as bogus transaction and added back the gain with total income of the assessee by the order U/s 153A of the Act. The assessee challenged the validity of the impugned assessment order before Page | 4 A.Ys. 2014-15 & 2015-16 IT(SS)A Nos.116 to 124/KOL/2024 the ld. CIT(A). The ld. CIT(A) allowed the appeal of the assessee. The revenue challenged the impugned appeal before us. During the argument the ld. Departmental Representative (in short, the DR) stated that the appeal was allowed by the ld. CIT (A) considering only the legal grounds of the assessee but it is accepted fact that the addition was confirmed by the ld. AO in absence of incriminating document u/s 153A of the Act. 6. The ld. Authorised Representative (in short the AR), Mr. S.M. Surana argued and stated that the assessee is fully covered by the order of the Hon’ble Apex Court in the case of Principal Commissioner of Income-Tax v. Abhisar Buildwell P. Ltd. [2023] 454 ITR 212 (SC). The relevant paragraphs are reproduced as below: - “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 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO 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 Page | 5 A.Ys. 2014-15 & 2015-16 IT(SS)A Nos.116 to 124/KOL/2024 be made by the AO 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. No costs.” 7. Mr. Surana further argued that no incriminating documents was found during the search and the assessment u/s 153A of the Act was framed without considering any incriminating documents. So the assessment U/s 153A is beyond jurisdiction. So prayed for upholding the order of the ld. CIT (A). The ld. AR invited our attention to para 4.3. of appeal order and the same read as under:- “4.3 Decision: I have carefully considered the facts of the case and submission of the appellant. Assessee had filed original return of income u/s.139(1) of the I.T. Act and no proceedings were pending in respect of the said return. Time for selecting the case for scrutiny was over long before the date of search. Thus, the current assessment year falls in the category of un-abated assessment year/completed assessment year. Appellant has cited several judicial decisions which have held that additions in search assessment could not be made in respect of any incriminating material found during search in the case of un- abated/completed assessment. Nature of additions in the current year reveals that the decisions are based on the information reflected in the return of income/Audit report and not on the basis of any incriminating evidences found during search. No incriminating evidence appears to have been found during search on this issue. This issue was raised before the A.O. as well. It appears that A.O. has acknowledged that no incriminating evidences were found during search but he has rejected assessee’s contentions on some other basis. According to the A.O. section 153A does not restrict Page | 6 A.Ys. 2014-15 & 2015-16 IT(SS)A Nos.116 to 124/KOL/2024 assessment in search proceedings to the incriminating evidence found during search. However, A.O’s views are not acceptable as there are several judicial pronouncements, some of which are quoted by the appellant in his submission which have held that additions without incriminating evidence found during search, in the cases of completed assessments, are not sustainable.” 8. In our considered view, we find that the assessment was completed without considering any incriminating document u/s 153A of the Act. Notice u/s 153A of the Act was issued without considering any incriminating material which is beyond jurisdiction. The addition of the bogus LTCG is not the part of incriminating material. We note that the assessment u/s 153A of the Act is linked with the search and requisition u/s 132 and 132A of the Act. Insertion of section 153A is being under income tax act to unearth the undisclosed income which is found during the course of search or pursuant to search or requisition. So therefore, only in a case where the undisclosed income is found and basis of incriminating material. The ld. AO assumed the jurisdiction to assess or reassess the total income of the assessee in case of unabated assessment. Here the assessment of the assessee was completed / unabated for impugned assessment year. So, the incriminating document is the primary issue for issuance of notice U/s 153A of the Act. Without considering the incriminating document the notice issued u/s 153A of the Act is void ab initio and accordingly, the assessment is infructuous. We find no infirmity in the impugned appeal order. Accordingly, the ground of the Revenue is dismissed. 9. As the rival parties argued only on legal ground. The merit of the case is not pressed before the bench. Page | 7 A.Ys. 2014-15 & 2015-16 IT(SS)A Nos.116 to 124/KOL/2024 10. Appeals of the Revenue in ITA No. 116/KOL/2024, is adjudicated against the ground of the revenue so the other appeals in ITA no. 117 to 124/KOL/2024 are mutatis mutandis applicable and followed accordingly. 11. In the result, the appeals of the Revenue in ITA Nos. 116 to 124/KOL/2024 are dismissed. Order pronounced in the Court on 7th November, 2024 at Kolkata. Sd/- Sd/- (RAKESH MISHRA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Kolkata, Dated 07.11.2024 *SS, Sr.Ps आदेश की प्रतततिति अग्रेतषत/Copy of the Order forwarded to : 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. संबंतित आयकर आयुक्त / Concerned Pr. CIT 4. आयकर आयुक्त ( अिीि ) / The CIT(A)- 5. तवभागीय प्रतततनति , अतिकरण अिीिीय आयकर , कोिकाता/DR,ITAT, Kolkata, 6. गार्ड फाईि / Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Sr. PS/ Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Kolkata "