AI Insights
The case involves a series of appeals and cross objections related to the assessments made under Section 153A of the Income Tax Act following a search operation on the premises of M/s. Shriniwas Education Society and other associated entities. The search was conducted in June 2011, and subsequent assessments for the years 2006-07 to 2009-10 were challenged. The main legal issue was whether the additions made by the Assessing Officer were justified in the absence of incriminating material found during the search. The Tribunal examined various precedents and the legal framework under Section 153A, ultimately concluding that the additions were not supported by any incriminating evidence and thus, the original assessments should be reiterated.
Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 122555 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 year(s) 11 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
10-01-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
18-09-2022
Assessment Year
2007-2008
Appeal Filed On
23-01-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER& SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I .T .( SS ) A . N o s. 2 2 4 , 2 2 5 , 2 2 6 & 2 2 7 / I n d /2 0 1 6 A / w . C O N o s . 0 5 , 0 6 , 0 7 & 0 8 /I n d /2 0 1 7 ( A s se ss m e n t Y e a r s : 2 0 0 6 - 0 7 , 2 0 0 7 - 0 8 , 2 0 0 8 - 0 9 & 2 0 0 9 -1 0 ) D e pu t y C o m m i ss io ne r o f In c o m e T a x ( C e n t r a l ) - I, B h o p a l V s. M / s. S hr i niw a s E d uc a t i o n So c ie t y E - 5 , 3 r d F lo o r , T a w a C o m p le x , B i tt a n M a r k e t , B h o p a l PA N N o .A A A S7 0 6 0 B (Appellant/Respondent) .. (Respondent/Cross Objector) & I .T .( SS ) A . N o . 2 1 9 / I n d /2 0 1 6 A / w . C O N o . 0 4 /I n d /2 0 1 7 ( A s se ss m e n t Y e a r : 2 0 0 9 - 1 0 ) D e pu t y C o m m i ss io ne r o f In c o m e T a x ( C e n t r a l ) - I, B h o p a l V s. M / s. S. D . B a ns a l I r o n & St e e l P v t . L t d. E - 5 , 3 r d F lo o r , T a w a C o m p le x , B i tt a n M a r k e t , B h o p a l PA N N o .A A K C S6 4 0 9 C (Appellant/Respondent) .. (Respondent/Cross Objector) & I .T .( SS ) A . N o s. 2 1 6 & 2 1 7 /I n d /2 0 1 6 A / w . C O N o . 0 1 & 0 2 / I n d /2 0 1 7 ( A s se ss m e n t Y e a r s : 2 0 0 8 - 0 9 & 2 0 0 9 - 1 0 ) IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 2 - D e pu t y C o m m i ss io ne r o f In c o m e T a x ( C e n t r a l ) - I, B h o p a l V s. M / s. A y u sh m a n D i a g no st i c P v t . L t d. E - 5 , 3 r d F lo o r , T a w a C o m p le x , B i tt a n M a r k e t , B h o p a l PA N N o . A A B C A 2 5 6 0 P (Appellant/Respondent) .. (Respondent/Cross Objector) Assessee by : Shri Anil Khabya, A.Rs. Revenueby: Shri P. K. Mitra, CIT.D.R. D a t e o f H e a r i ng 19.09.2022& 15.12.2022 D a t e o f P r o no un c e m e nt 11.01.2023 O R D E R PER BENCH: The bunch of appeals filed by the Revenue and Cross Objections filed by three different assessees are directed against the orders passed by the Commissioner of Income Tax (Appeals)-3, Bhopal (in short ‘CIT(A)’) all dated 31/08/2016 arising out of the orders passed by the DCIT Central, Bhopalunder Section 153A r.w.s. 143(3), dated 27.03.2014 (in case of M/s. Shriniwas Education Society& M/s. S. D. Bansal Iron & Steel Pvt. Ltd.) & 20/03/2014 (in case of M/s. Ayushman Diagnostic Pvt. Ltd.). 2. Since, the entire set of appeals are arising out of the common search, and issues are identical, these are heard analogously and are being disposed of by a common order. IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 3 - IT(SS)A No. 224/Ind/2016 (Revenue’s appeal in case of M/s. Shriniwas Education Society for A.Y. 2006-07) 3. The brief facts leading to this case is this that as per the assessment order are that search under Section 132 of the Act was conducted on the business premises of the appellate society as well as on the premises of other concerns / business associates in June 2011. Since the various concerns and individuals are inter connected and have business associations, they have been clubbed under the overall name Bansal Group. The appellate society is a member of Bansal group of Bhopal. The group is engaged in the business of civil construction, real estate, manufacturing and export of soya oil, manufacturing of steel, news channel etc. The group is also running various educational institutions at Bhopal and Indore under this appellate society. The flagship concern of the group is Bansal Construction Works is engaged in the business of civil construction. The main persons of the group are Shri. Sunil Bansal and Shri. Anil Bansal. Consequently, notices u/s 153 A of the Act, dated 19.12.2012 were issued to the assessee to file the return for A.Ys. 2006-07 to 201 1-12. In response to notices u/s 153 A for A.Ys. 2006-07 to 201 1-12, the assessee has filed return from A.Y. 2006-07 to 2010-11 on 17- 01-2013. The details of returns filed from A.Y. 2006-07 to 2009-10 are as under:- A.Y. Date of filing of return u/s 139(1) Returned income (In Rs.) Date of filing of return by the assessee against notice u/s 153 A Declared income in Return u/s 153A Income (In Rs.) 2006-07 31/10/2006 NIL 07/01/2013 NIL 2007-08 31/10/2007 NIL 07/01/2013 NIL IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 4 - 2008-09 29/09/2008 NIL 07/01/2013 NIL 2009-10 30/09/2009 NIL 07/01/2013 NIL 4. The Ld. A.O. upon considering the entire aspect of the matter made addition, which was, in turn, deleted by the First Appellate Authority. While deleting the addition, First Appellate Authority observed as follows: “The appellant has submitted that if there is no incriminating document then the assumption of jurisdiction u/s 153 A is bad in law. I do not agree with this assertion of the appellant. Assumption of jurisdiction u/s 153A is solely determined by the fact that whether search u/s 132 was conducted in that particular case or not. There is no dispute or claim made by the appellant that search u/s 132 was not conducted in its case. This aspect of the matter is fairly well settled in favor of revenue. The appellant has also raised the issue with respect to the legal requirement of limiting the assessments under section 153 A of the Act to the extent of incriminating material found and seized during the course of search and for this purpose he has relied upon several case laws also. 7. The issue, therefore, which really arises here is the scope of the assessment. Scope of the assessment means after the assumption of jurisdiction u/s 153 A on account of search u/s 132 of the Act whether the AO is competent to make a de novo assessment covering any and every aspect of the matter or the assessment has to remain restricted in scope to just the incriminating material found and seized during the course of search. One of the most comprehensive authority dealing with this controversy is Hon'ble Delhi High Court judgment in the case of Kabul Chawla. ... 11. Coming back to the facts of the case it is undisputed that no material, leave alone incriminating material, found and seized during the course of search has been referred by the A.O in the assessment order. This leads to the inescapable conclusion that the additions made by the A.O are not based on the incriminating documents. 12. Considering the aforesaid judicial view on the scope of search assessments in the unabated cases which is consistently followed by jurisdictional Tribunal and several other High Courts and Tribunals, I have no option but to respectfully follow the view that in search cases where assessments have not abated, scope of assessments is confined to only incriminating documents found and seized during the course of the search. IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 5 - 13. In the aforesaid backdrop the additions made by the A.O have to be necessarily analyzed vis a vis the incriminating material found and seized as the return of income in this case was originally filed on 31.10.2006 for A.Y. 2006-07, on 31.10.2007 for A.Y. 2007-08, on 29.09.2008 for AY 2008-09 and for AY 2009-10 on 30.09.2009 and as the search u/s 132 was conducted in June 2011 leading to the assessment being final and unabated for these four assessment years. Perusal of the material on records, more specifically the assessment order, indisputably reveals that the additions made on valuation difference were not based on any incriminating document. The additions made by the A.O. for all the A.Ys. 2006-07, 2007-08, 2008-09 and 200910 are, therefore, deleted.” It was, in turn, deleted by the First Appellate Authority. Hence, the instant appeal before us. 5. At the outset, proceedings before us, Learned Counsel appearing for the assessee submitted before us that the orders passed by the Ld. AO deserves to be deleted as the same was not having any reference to any incriminating material found during the course of search, particularly, when the assessment is an unabated one. In view of the very many judgments passed by different judicial forums including Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, reported in 380 ITR 573 (Del),Hon’ble Delhi High Courtin the case of PCIT vs. Meeta Gutgutia, reported in (2017) 395 ITR 526 (Delhi) &Hon’ble Gujarat High Court in the case of PCIT vs. Saumya Construction, reported in (2017) 81 taxmann.com 292 (Guj.) 6. Upon careful consideration of the records, we find that the main contention of the assessee is this that during the course of search no incriminating material was found from the premises of the appellant which have further been considered Ld. CIT(A). We also do not find any mentioning of incriminating material in the order passed by the Ld. AO. IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 6 - 7. It is the contention of the assessee that no addition could be made in case of concluded assessment and/or unabated assessments in the absence of any incriminating material discovered during the course of search. In order to adjudicate this issue, we are conscious of the fact of the position of law propounded in various authoritative judgments regarding the scope of section 153A of the Act. 8. First, we refer to the decision of Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, reported in 380 ITR 573 (Del). Hon’ble Delhi High Court after detailed analysis has summarized the following 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." IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 7 - v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or 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.” 9. Hon’ble Court has specifically observed for the purpose of Section 153A assessment, completed assessments can be interfered with by the AO only on the basis of 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 proceeding. We further find that the Hon’ble Gujarat high Court has also considered the decision of Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra). Hon’ble Gujarat High Court on the identical situation framed the following question of law in the case of PCIT vs. Saumya Construction, reported in (2017) 81 taxmann.com 292 (Guj.): "[A] Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? [B] Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 8 - section 153A? [C] Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search?" 10. Hon’ble Court concurred with the decision of Hon’ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: “16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 9 - 17. In the facts of the present case, a search came to be conducted on 07.10.2009 and the notice was issued to the assessee under section 153A of the Act for assessment year 2006-07 on 04.08.2010. In response to the notice, the assessee filed return of income on 18.11.2010. In terms of section 153B, the assessment was required to be completed within a period of two years from the end of the financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition as well as the copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 10 - the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of JayabenRatilalSorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed.” 11. Apart from that the Hon’ble Delhi High Courtin the case of PCIT vs. Meeta Gutgutia, reported in (2017) 395 ITR 526 (Delhi) on the identical issue has held as under: “Sec. 153A is titled "Assessment in case of search or requisition". It is connected to s. 732 which deals with 'search and seizure'. Both these provisions, therefore, have to be read together. Sec. 153A is indeed an extremely potent power which enables the Revenue to reopen at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under s. 132 incriminating material justifying the reopening of the assessments for six previous years is found that the invocation of s. 153A qua each of the assessment years would be justified. If no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under ss. 153A and 153C.—CITvs. Kabul Chawla (2015) 281 CTR (Del) 45 : (2015) 126 DTR (Del) 130: (2016) 380ITR 573 (Del) followed.(Paras 56 & 60) There is no statement In the present case which can be said to constitute an admission by the assessee of a failure to record any transaction in the accounts of IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 11 - the assessee for the assessment years in question. On the contrary, the assessee herein stated that, she is regularly maintaining the books of accounts. The disclosure made in the sum of Rs. 1.10 crores was only for the year of search and not for the earlier years. As already noticed, the books of accounts maintained by the assessee in the present case have been accepted by the AO. In response to question No. 16 posed to PG, he stated that there was no possibility of manipulation of the accounts. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the assessment year for which he sought to make additions of franchisee commission. The Tribunal was justified in holding that the invocation of s. 153A by the Revenue for the asst. yrs. 2000-01 to 2003-04 was withoutany legal basis as there was no incriminating material qua each of those assessment years.— - Smt. Dayawanti through LH Smt. Sunita Gupta vs. CIT (2016) 290 CTR (Del) 361 : (2016) 143 DTR (Del) 209 : (2017) 390 ITR 496 (Del) distinguished. (Paras 67, 69 & 71) Conclusion : It is only if during the course of search under s. 132 incriminating material justifying the reopening of the assessments for six previous years is found that the invocation of s. 153A qua each of the assessment years would be justified; if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under s. 153A.” 12. Recently, ITAT, Mumbai Bench in the case of Jasmin K. Ajmera Vs. DCIT, in ITA No.983/Mum/2020 in its order dated 02.11.2021 has considered the scope of section 153A of the Act wherein the Tribunal discussed proposition of law laid down by the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra), and decision of Hon’ble Gujarat High Court in the case of CIT vs. Saumya Construction (supra)and finally since no incriminating material was unearthed during the search, no additions could have been made to income already assessed and concluded was of the finding of the Bench. The relevant discussion in this regard is as follows: “7. We have carefully heard the rival submissions and perused relevant material on record including the documents seized by the department from the assessee group during the course of search operations. We find that the assessee had filed original return of income on 20/07/2011 and search operations were carried out on IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 12 - assessee group on 25/07/2013. It is quite evident that on the date of search, no assessment proceedings were pending against the assessee and no notice u/s 143(2) was ever issued to the assessee till the date of search. The time limit for issuance of such notice had already expired on 30/09/2012 i.e. within 6 months from the end of relevant assessment year. Thus, AY 2011-12 was a non-abated year. In such a case, the additions which could be made has necessarily to be on the basis of incriminating material found by the department during the course of search operations as held by Hon'ble Bombay High Court in CIT V/s Continental Warehousing Corporation [2015 374 ITR 645]. In other words, unless any incriminating material was unearthed, no additions could be sustained in the hands of the assessee. So far as the arguments of revenue that intimation u/s 143(1) would not constitute an assessment, is concerned, we find that the factual matrix in decision rendered by Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398 05/10/2015) was similar wherein the original return was processed u/s 143(1) and the time limit for issuing notice u/s 143(2) had already expired. The Hon'ble Court chose to follow its own decision rendered in CIT Vs. Continental Warehousing Corporation [2015 374 ITR 645]. Therefore this argument would not hold much water which is also fortified by subsequent decision of Hon'ble Bombay High Court in CIT V/s Deepak Kumar Agarwal (398 ITR 586 11/09/2017) which held as under: - 20. At the outset, and since heavy reliance is placed by the Revenue on the Supreme Court judgment in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra), it would be proper to note the facts in the same. 21. There, the Assistant Commissioner of Income Tax challenged the correctness of the decision rendered by a Division Bench of the Gujarat High Court. That Division Bench judgment allowed the Writ Petition/Special Civil Application of the assessee. 22. The respondent-assessee, a private limited company, filed its return of income for the assessment year 2001-2002 on October 30, 2001, declaring total loss of Rs.2,70,85,105/-. That return was proposed under Section 143(1) of the IT Act accepting the loss returned by the respondent. A notice was issued under Section 148 of the IT Act on the ground that the claim of bad debts as expenditure was not acceptable. On 12th May, 2004, a return of income declaring the loss at the same figure as declared in the original return was filed by the respondent-assessee under protest. A copy of the reasons recorded was furnished by the Revenue on the request of the assessee sometime in November, 2004. The assessee raised various objections, both on jurisdiction and the merits of the subject matter recorded in the reasons. The Revenue disposed of these objections on 4th February, 2005 holding that the initiation of reassessment proceedings was valid and it had jurisdiction to undertake such an exercise. The notice under Section 148 of the IT Act dated 12th May, 2004 was challenged by the respondent-assessee. IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 13 - 23. That Writ Petition was allowed and hence, the Revenue was in Appeal. 24. Mr. Ahuja's argument overlooks this factual aspect and when he relies upon the observations of the Hon'ble Supreme Court, and particularly in paragraph 13, he forgets that they were made in the context of a challenge to the notice under Section 148 of the IT Act. The Supreme Court, in paragraph 13 of this judgment, noted that intimation under Section 143(1)(a) was given without prejudice to the provisions of Section 143(2). Though technically this intimation issued was deemed to be a demand notice issued under Section 156, that did not per se preclude the Assessing Officer to proceed under Section 143(2). The right preserved was not taken away. The Hon'ble Supreme Court referred to the period between April 1, 1989 and March 31, 1998, and the second proviso to Sub-section (1) Clause (a) of Section 143 and its substitution with effect from 1st April, 1998. The sending of intimation between 1st April, 1998 and 31st May, 1999 under Section 143(1)(a) was mandatory. That requirement continued until the second proviso was substituted by the Finance Act, 1997, which was operative till 1st June, 1999. 25. The Hon'ble Supreme Court therefore, relied upon these amendments and, tracing their history, held that the intimation under Section 143(1)(a) cannot be treated to be an order of assessment. That is how it referred to the Division Bench Judgment of the High Court at Delhi and explained the legal position. There was thus no assessment under Section 143(1)(a) and therefore, the question of change of opinion did not arise. A reference to Section 147 therefore, was made in the context of the Assessing Officer being authorized and permitted to assess or re- assess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. Before us, such is not the position, and even if this judgment of the High Court had been brought to the notice of the Division Bench deciding the Continental Warehousing Corpn. and All Cargo Global Logistics (supra), there would not have been any difference. Similar view has been expressed by Hon'ble Delhi High Court in CIT Vs. Kabul Chawla (380 ITR 573). 8. The Ld. CIT-DR has placed on record material seized from the assessee during search proceedings. The copies of the Panchnamas (page 1 to 6 of assessee's paper-book) have also been placed on record. Upon combined reading of all these documents, it could be gathered that none of the documents show that the share transactions carried out by the assessee were sham transactions done in collusion with tainted group of Shri Shirish C. Shah. There is no evidence of cash movement, in any manner. The documents seized from the assessee are in the nature of Share holding, holding stock summary, Ledger extracts etc. which are already part of assessee's regular books of accounts and have not been referred to by Ld. AO while making impugned additions in the hands of the assessee. In the assessment order, IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 14 - the long-term capital gains earned by the assessee have been held to be bogus in nature, however the same are not corroborated, in any manner, by the seized material. The allegations of Ld. AO are primarily based on the search findings in the case of Shri Shirish C. Shah and his group entities whereas no incriminating material has been seized from the assessee. In fact, in the remand report dated 09/01/2017 (page nos. 196 to 199) filed by Ld. AO during first appellate proceedings, it has categorically been admitted by Ld. AO that there was no incriminating material in the case of the assessee. Nothing has been shown to us to controvert these findings of Ld. AO. Therefore, the ratio of cited decisions as referred to in para-6 is quite applicable to the facts of the case. 9. So far as the admission in the form of assessee's own statement is concerned, we find that this statement has been retracted by the assessee by way of on affidavit on 02/08/2013 (page nos. 7 to 10 of assessee's paper book) and therefore, in the absence of any corroborative evidence / material supporting the admission made by the assessee, the addition would become unsustainable in the eyes of law. The additions made merely on the basis of retracted statement without there being any corroborative evidence / material, in our considered opinion, is not sustainable in law since the same run contrary to CBDT Circular F. No.286/2/2003-IT(Inv.), dated 10/03/2003 which has clearly stated that no attempt should be made to obtain confession / surrender as to the undisclosed income during search. Such confession, if not based on credible evidence, when retracted, would not serve useful purpose and an therefore, the authorities should focus 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 department. Further, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income and the addition should be made only on the basis of material gathered during search operations. Any action on the contrary has to be viewed adversely. The subsequent Circular F.NO.286/98/2013-IT (INV.II)] dated 18/12/2014 emphasizes upon need to focus on gathering evidences during search / survey and to strictly avoid obtaining admission of undisclosed income under coercion / undue influence. Therefore, the action of Ld. AO could not be said to be in line with these circulars issued by CBDT. 10. Proceeding further, it is settled legal proposition that the confession need corroboration with evidences. Though admission is an important piece of evidence but it is not conclusive and it is open to the assessee to show that it is incorrect. Therefore, retracted admission, in the absence of any incriminating material, would not be sustainable. In order to make a genuine and legally sustainable addition on the basis of surrender during search, it is sine-qua-non that some incriminating material must have been found to correlate the undisclosed income with such statement. The Hon'ble Delhi High Court in CIT V/s Harjeev Aggarwal (70 Taxmann.com 95; 10/03/2016) held that the statement recorded u/s 132(4) may IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 15 - 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 sustain additions on the basis of recorded statement. Similar is the view of Hon'ble High Court in an earlier judgment of CIT V/s Sunil Aggarwal ( 379 ITR 367; 2016) and also the decision of Hon'ble Andhra Pradesh High Court in CIT v. Shri Ramdas Motor Transport (238 ITR 177) wherein Hon'ble Court refused to give any evidentiary value to the statement made by the assessee u/s 132(4) as the department could not find any unaccounted money, article or thing or incriminating document either at the premises of the company or at the residence of managing director or other directors. In such circumstances, the finding of the Tribunal that the statement of managing director recorded patently u/s 132(4) did not have any evidentiary value, was upheld. The ratio of all these decisions makes it clear that the surrendered income must be correlated with some incriminating material found during the course of search action so as to justify the addition. We find that there is no such incriminating material in the case of the assessee which would show that the transactions under consideration were sham transactions and there was any connection / nexus between the assessee and the group entities of Shri Shirish C. Shah. 11. We also find that this legal issue stood covered in assessee's favor by the decision of SMC bench of Tribunal rendered in the case of another assessee of the group i.e. Smt. Reena A. Ajmera V/s DCIT (ITA No.982/Mum/2020 dated 09/02/2021). The relevant observations were as under: - **** ***** **** 13. The Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla (supra) held that - "completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment. Pursuant to search carried out in case of the assessee, a notice under section 153A(1) was issued. In course of assessment, Assessing Officer made addition to assessee's income in respect of deemed dividend. It was undisputed that assessment for assessment years in question had already been completed on date of search. Since no incriminating material was unearthed during the search, no additions could have been made to income already assessed. Consequently, the impugned addition was to be deleted". **** ***** **** IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 16 - 16. In all the above decisions of various Hon'ble High Court's, the legal position is that no addition can be made in case of an unabated assessment if no incriminating material is found in the course of search. On a perusal of the Assessment Order I noticed that there was no reference to any of the incriminating material found and seized in the premises of the assessee in the course of the search proceedings. The Assessing Officer in the Assessment Order refers to the seized incriminating material in the case of one Shri Shirish C. shah and the post search enquiries made in his case to make an addition in the hands of the assessee denying the long term capital gain claimed by the assessee. I also noticed from the remand report dated 09.01.2017 furnished by the Dy. CIT, CC-2(2), Mumbai to the Ld.CIT(A) -48 in the course of appeal proceedings wherein the Assessing Officer stated as under: - "Sir, in the present case under consideration, though no incriminating material was found, the assessee admitted undisclosed Income in his statement u/s.132(4) of the Income Tax Act 1961. It is totally immaterial that the assessee later on retracted the statements recorded u/s 132(4) of the Income Tax Act 1961. Therefore assessment of AY 2011-12 and AY 2012-13 which was made on the basis of undisclosed income admitted during the course of search is totally valid assessment and does not get affected by the decision of Hon'ble Bombay High Court in the case of Continental Warehousing (Supra)". 17. In this case it appears that except the statement of the assessee u/s. 132(4) agreeing for the addition there is no seized incriminating material found in the premises of the assessee in the course of assessment proceedings. When there is no incriminating material found in the course of search in assessee's premises the addition/disallowance cannot be made merely on the statements recorded in the course of the search proceedings. The facts in the above case are quite identical to the case before us since the additions permeates from same search action and similar additions were made in the case of this assessee. Therefore, the ratio of above decision is quite applicable here and we see no reason to deviate from the same. 12. Finally, on the given facts and circumstances, we concur with the submissions of Ld. AR that in the absence of any incriminating material, the additions could not be made in the hands of the assessee as per settled legal proposition. Accordingly, the impugned additions stand deleted. We order so. Since legal grounds raised by the assessee have been allowed, the adjudication on merits have been rendered merely academic in nature. The legal ground raised by the assessee stand allowed. The appeal stand allowed. 13. Facts as well as issues are quite identical in all the other appeals. The assessment orders as well as appellate orders are on similar lines. Aggrieved, the assessee is in further appeal before us with similar grounds of appeal. Facts being IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 17 - pari-materia, the same, our adjudication as above shall mutatis-mutandis apply to all these appeals. Accordingly, the legal grounds raised in all these appeals stand allowed and the impugned additions as made therein stand deleted. All these appeals stand allowed.” Considering the ratio laid down in the judgments cited above and the facts of the case, we find substance in the case made out by the assessee. In the absence of incriminating material found during the course of course the addition is not found to be justified. 13. After careful reading of the order passed by the Ld. CIT(A) we find that the assessee’s main contention of not having any incriminating material in the possession of the Ld. AO found during the course of search of the premises of the assessee which ought to have been the main basis of reopening of an unabated assessment has been addressed properly. In addition to that addition has been made without due process of law has also been taken into consideration in its proper perspective. We further note that the ratio laid down in the judgment passed by the Hon’ble Gujarat High Court in the case of Saumya construction (supra) and the judgment passed by the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) found to be rightly applicable under the facts and circumstances of the case in hand. In our considered opinion quashing of the proceeding initiated under Section 153A against the assessee by the Ld. CIT(A) applying the ratio laid down by the judicial forums as discussed hereinabove is, therefore, just and proper so as to warrant interference. Hence, on this ground also the appeals preferred by the Revenue are, therefore, found to be devoid of any merit and thus, dismissed. IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 18 - 14. The same will also apply in remaining appeals mutatis mutandis. CO Nos. 5 to 8/Ind/2017 for A.Ys. 2006-07 to 2009-10 in Revenue’s appeals in I.T.(SS)A. Nos.224 to 227/Ind/2016 15. The assessee has filed certain Cross Objections to the appeals filed by the Revenue. The main contention of the assessee before us in regard to the cross objection filed by them is this that the Ld. CIT(A) erred in not adjudicating Ground Nos. 4 to 19 of the appeal memo on merit, even though, Ground Nos. 1 to 3 raising the preliminary objection to the maintainability of the proceeding has been allowed in favour of the assessee by him. The Ld. AR also drew our contention to the Ground Nos. 4 to 19 of the appeal preferred before the Ld. CIT(A) which as follows: “4. That the learned A.O. erred in adopting figure of Nil as Income shown in return as against correct figure of Rs. (-) 3,91,29,480 - as per return. 5. That the reference to the DVO u/s 142A to determine cost of construction of College Buildings at Mandideep,Umaria Indore and Office block at Bittan Market, Bhopal was bad in law and use of the such report as evidence in the proceeding of assessment was also had in law as the same was obtained in violation of provision of Order XXVI-18B of Code of Civil Procedure. 6. That the learned A.O. erred in utilizing in evidence reports of DVO without and addressing the objections of the assessee and further without allowing any opportunity of cross examination. 7. That the learned A.O. erred in making addition u/s 69B of the Act of Rs.1,49,63,416/- on account of alleged excess cost of construction of College Building at Umaria. Indore determined on the basis of report of DVO. 8. That the learned A.O. erred in making addition LI'S 69B of the Act of Rs 60,79,881/- on account of alleged excess cost of construction of College Building at Mandideep determined on the basis of report of DVO. 9. That the learned A.O. erred in using the advisory report of DVO as bindingon him without addressing several objections raised before him time to time. IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 19 - 10. That the learned A.O. erred in applying PAR rates of CPWD in preference to published rates of State PWD in determining cost of construction of College Buildings referred for valuation. 11. That in the facts and circumstances of the case, the learned A.O. erred in allowing rebate for self supervision only @2.5% as against standard practice to allow rebate @7.5%. 12. That the learned A.O. erred in estimating cost of extra items on merely adhoc basis. 13. That in the facts and circumstances of the case, the learned A.O. erred in further loading the cost of construction by consultancy charges and external service charges without evidence of any actual payment. 14. That the learned A.O. erred in not computing depreciation on extra cost of construction added by him as per report of DVO calculated at Rs 10,52,165/-. 15. That the learned A.O. erred in not allowing deduction u/s 11 & 12 of the extra cost of construction of Rs.2.10.43.300. - as the same is utilized for the objects of the Society. 16. That the learned A.O. erred in not allowing set-off of brought over ... from previous years. 17. That the learned A.O. erred in charging interest u/s 234A at Rs.2,06,988/-. 18. That the learned A.O. erred in charging interest u/s 234B at Rs.66,23,627/-. 19. That the learned A.O. erred in charging interest u/s 234D at Rs.1,10,136/-.” 16. On the other hand, Ld. DR relied upon the order passed by the Ld. AO. 17. Having heard the Ld. Counsel appearing for the parties and having regard to the facts and circumstances of the matter, particularly, having admitted the position of non adjudication of the Ground Nos. 4 to 19 by the Ld. CIT(A) as pressed before us by the Ld. Counsel appearing for the assessee, we find it fit and proper to send the same to the file of the Ld. CIT(A) for adjudication, of the same on merit. We further direct the Ld. CIT(A) while adjudicating the matter, opportunity of being heard to be given IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 20 - to the appellant by the Ld. CIT(A). He is further directed to consider the evidence already on record or any other evidence which the appellant may choose to file at the time of hearing of the appeal. We also make it clear that the appellant would not ask for unnecessary adjournment in the appellate proceeding and would endeavour full cooperation to the Ld. CIT(A) in adjudicating the matter for the ends of justice. The Ld. CIT(A) is directed to pass order strictly in accordance with law. 18. The same will also apply in remaining Cross Objections mutatis mutandis. 19. In the result, all the Revenue’s appeals are dismissed and Assessee’s Cross Objections are allowed. This Order pronounced on 11/01/2023 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 11/01/2023 S. K. Sinha, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Indore 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Sr.PS) ITAT, Indore IT(SS)A Nos. 224/Ind/2016 & Ors. (Shriniwas Education Society & Ors.) - 21 - 1 . D a t e o f d i c t a t i o n o n 0 2 . 0 1 . 2 0 2 2 & 0 3 . 0 1 . 2 0 23 2 . D a t e o n w h i c h t h e t y p e d d r a f t i s p l a c e d b e f o r e t he D i c t a t i n g M e m b e r 0 3 . 0 1 . 2 0 2 3 3 . D a t e o n w h i c h t h e a p p r o v e d d r a f t c o m e s t o t h e S r .P . S . / P . S . 4 . D a t e o n w h i c h t h e f a i r o r d e r i s p l a c e d b e f o r e t h e D i c t a t i n g M e m b e r f o r p r o n o u n c e m e n t 5 . D a t e o n w h i c h t h e f a i r o r d e r c o m e s b a c k t o t h e S r. P . S . / P . S 6 . D a t e o n w h i c h t h e f i l e g o e s t o t h e B e n c h C l e r k 7 . D a t e o n w h i c h t h e f i l e g o e s t o t h e H e a d C l e r k ... ... ... .... 8 . T h e d a t e o n w h i c h t h e f i l e g o e s t o t h e A s s t t . R e gi s t r a r f o r s i g n a t u r e o n t h e o r d e r ... ... ... ... ... ... ... ... 9 . D a t e o f D e s p a t c h o f t h e O r d e r ... ... ... Date on which the typed draft is placed before the Dictating Member 19.12.2019 1. Other Member..................Date on which the approved draft comes to
