DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2), KOLKATA, KOLKATA V. MAAN STEEL AND POWER LIMITED, KOLKATA

ITSSA 3/KOL/2024

AI Insights

The case involves the Deputy Commissioner of Income Tax, Central Circle-1(2), Kolkata as the appellant and Maan Steel and Power Limited as the respondent. The appeals and cross objections were related to the additions made under Section 68 of the Income Tax Act, 1961, concerning alleged bogus share capital and premium received by the assessee. The primary legal contention revolved around whether the additions were justified in the absence of incriminating material found during the search and seizure operations. The Tribunal referenced several Supreme Court and High Court judgments, particularly focusing on the principle that completed assessments cannot be disturbed without incriminating evidence.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 41257 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-10-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-08-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 08-01-2024
• Other Referred Cases: PCIT v. Abhisar Buildwell Pvt. Ltd., Kabul Chawla v. CIT, Saumya Construction v. CIT, Rashmi Infrastructure Ltd. v. PCIT, Kurele Paper Mills Pvt. Ltd. v. CIT, Veerprabhu Marketing Limited v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside; Reassessment proceedings; Document seized; Documents seized; TDS; Search and seizure; Accommodation entries; Block assessment; Source of fund; Bogus Share capital; Bogus
• Section: 143(3); 142(1); 143(2); 250; 153; 132; 153A; 139(1); 68; 131; 22; 133(6); 113; 13; 153C; 73; 264; 20

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Shri SANJAY GARG, JUDICIAL MEMBER & Shri MANISH BORAD, ACCOUNTANT MEMBER I.T. (SS) A. Nos. 1,2,3/KOL/2024 Assessment Years: 2012-13, 2016-17, 2015-16 Dy. Commissioner of Income Tax, Central Circle-1(2), Kolkata R.NO. 310, 3rd Floor, Aaykar Bhavan Poorva, 110, Shanti palli, Kolkata-700 107 , West Bengal …………………………………………………. Appellant vs. Maan Steel and Power Limited 58/1, maanheruka Building, Sarat Bose Road, Kolkata-700 025 , West Bengal [PAN: AACCG1590N] ………………………………………. Respondent CO Nos. 07, 08, 09/KOL/2024 (Arising in ITA Nos. 1,2 & 3/KOL/24 for A.Ys. 12-13, 16-17 & 15-16) Maan Steel and Power Limited 58/1, maanheruka Building, Sarat Bose Road, Kolkata-700 025 , West Bengal …………………………………………………. Appellant vs. Dy. Commissioner of Income Tax, Central Circle-1(2), Kolkata R.NO. 310, 3rd Floor, Aaykar Bhavan Poorva, 110, Shanti palli, Kolkata-700 107 , West Bengal …………………………………………………. Respondent Appearances by: Assessee represented by: Shri A.K. Tulsyan, AR Department represented by: Shri Subendu Datta, DR Date of concluding the hearing: 27.08.2024 Date of pronouncing the order: 21.10.2024 ORDER PER BENCH: Captioned appeals by Revenue and Cross Objection by Assessee are directed against the different orders of Commissioner of Income-tax (Appeals)- 20 [learned CIT (A)] dated 17.11.23, 10.11.23, which is arising out of the assessment orders under Section 153C/143(3) of the Income-tax Act, 1961 (the Page | 2 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 Act) dated 31.12.19, 28.01.20 for A.Y. 2012-13, 2015-16 & 2016-17 respectively. 02. As the issue raised are common except quantum and pertains to same assessee, these appeals have been heard together and being disposed of by this common order for sake of convenience and brevity. 03. Revenue’s appeal for A.Y. 2012-13 in IT(SS)A No. 1/KOL/2024, has raised following grounds of appeal:- “1. Whether in the facts and circumstances of the case, Hon'ble CIT(A)-20. Kolkata is correct in holding that the addition made on protective basis amounting to Rs. 17,00,00,000/- out of Rs. 19,61,00,000/-, u/s 68 of the Income Tax Act. 1961 on account of bogus share capital are not linked to the incriminating documents and hence not sustainable, in view of the decision of Hon'ble Supreme Court in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd, contrary to the incriminating documents seized in the course of Search and Seizure action which clearly suggests that there is clear connection/relevance of seized material with the assessee. 2. Whether in the facts and circumstances of the case, Hon'ble CIT(A)-20, Kolkata is correct in deleting the addition of Rs. 17,00,00,000/- made on protective basis, where the Identity and creditworthiness of the share applicants were dubious in light of the non-availability of the concerned share applicants at their respective disclosed addresses. 3. Whether, in the facts and circumstances of the case, Hon'ble CIT(A)-20, Kolkata is correct in deleting the addition of Rs. 17,00,00,000/- made on protective basis, where it has been established in the fund-trail prepared in the course of Search and post search proceedings that unaccounted fund brought in the books of the assessee company through share capital and premium ultimately channeled to the actual beneficiary M/s. Maan Steel & Power Ltd. in a tortuous way starting from the raising of share capital in the books of assessee company, investment of the impugned sum in unquoted shares of companies of little worth and subsequent utilization of the fund realized in sale of such investment in share capital and premium of the successor company, M/s. Maan Steel & Power Ltd. Page | 3 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 4. Whether, Ld. CIT(A)-20, Kolkata is correct in deleting the addition of Rs. 2,61,00,000/- made on substantive basis on account of balance of unsubstantiated receipt of share capital & premium u/s. 68 of the Income Tax Act, 1961 relying on documents regarding the financials of the share applicant companies without taking into cognizance the findings of the Search and Seizure action that the Identity, Genuineness and creditworthiness of the share applicant companies are dubious.” 04. Assessee’s appeal for A.Y. 2012-13 in its CO No. 7/KOL/2024 has raised following grounds of appeal: - “That the Ld. CIT(A) erred in not allowing the assessee's objections regarding issuing notice u/s 153C dt. 24.09.2019, u/s 142(1) dt. 23.10.2019 and u/s 143(2) dt. 21.10.2019 in the name of M/s Pawanshiv Shoppers Pvt. Ltd. a non-existent company which has merged with M/s Maan Steel and Power Ltd. w.e.f. 01.04.2016 vide order of Hon’ble NCLT dt. 01.01.2018. As such, notice issued to initiating proceedings u/s 153C and assessment by issuing notice u/s 143(2) against the non-existent company is bad in law and consequent to that passing of Assessment order u/s 153C/143(3) is void-ab-initio and needs to be quashed. 2. That the Ld. CIT(A) erred in confirming the initiation of proceedings u/s 153C of the Act without any incriminating material or assets relating to assessee was found / seized in the course of search. As such, the date of search it is a completed assessment. The addition made on account of share capital raised in the order u/s 153C/143(3) which is part and partial of regular books of account not a part of incriminating material or assets found/seized in the course of search. Hence, the proceedings taken u/s 153C of the Act in absence of any incrimination material or assets relating to assessment is bad in law and consequent assessment order is needs to be quashed.”” 05. Revenue appeal for A.Y. 2015-16 in IT(SS)A No. 3/KOL/2024 has raised following grounds of appeal: - “1. Whether in the facts and circumstances of the case, Hon'ble CIT(A)-20, Kolkata is correct in holding that the additions of Rs. 13,50,00,000/- made u/s. 68 of the Income Tax Act, 1961 on account of Bogus share capital are not linked to incriminating documents and hence not sustainable in view of the decision of Hon'ble Supreme Court in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd, contrary to the Page | 4 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 incriminating documents seized in the course of Search and Seizure action which clearly suggests that there is clear connection/relevance of seized material with the assessee. 2. Whether in the facts and circumstances of the case, Hon'ble CIT(A)-20, Kolkata was correct on deleting the addition of Rs. 85,00,000/- made u/s. 68 of the Income Tax Act, 1961, on account of bogus unsecured loan, claimed to have been taken from M/s. Anjali Tradelink Pvt. Ltd., where the assessee failed to prove the Identity and creditworthiness of the loan creditor and genuineness of the loan transaction. 3. Whether in the facts and circumstances of the case, Hon'ble CIT(A)-20, Kolkata is correct in holding that the additions of Rs. 3,48,585/- made u/s. 36(1)(va) r/w. section 2(24)(x) of the Income Tax Act, 1961 on account of delayed payment of PF & ESI is not sustainable for the reason that no incriminating documents were found in the course of Search and Seizure contrary to the decision of Hon'ble Spupreme Court in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd. which states that in case of any incriminating material is found /unçarthed, even in case of unabated/completed assessment, the AO would assume the jurisdiction to assessee's 'total income' taking into consideration such incriminating material and other material available with the AO. 4. That the revenue reserves its rights to substantiate, modify, delete supplement and/or alter the grounds at any time of appeal proceedings.”” 06. Assessee appeal for A.Y. 2015-16 in its CO No. 9/KOL/2024 has raised following grounds of appeal:- “1. That the assessee has filed relevant documents before the CIT(A) as well as the AO proving the identity, genuineness and creditworthiness of the share applicant M/s Pawanshiv Shoppers Pvt Ltd. The share applicant was a body corporate assessed to tax. The share applicant M/s Pawanshiv Shoppers Pvt Ltd is a group company and has merged with the assessee company from AY 2016-17. Further, proceedings u/s 1530 were initiated in the case of share applicant for AY 2015-16 but no addition was made. It is evident from the Order of the CIT(A) u/s 250 that the CIT(A) after verification of all the details and documents submitted before him deleted the addition on the merits of the case as well. Page | 5 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 2. That the assessee has filed copy of loan confirmation, bank statement, ledger account, etc of the loan creditor M/s Anjani Tradelinks Pvt Ltd before the CIT(A) as well as before the AO. The loan has been repaid in the same financial year in which it was received along with interest after deduction of TDS. The loan was taken and repaid through normal banking channel. The assessee has proved the identity and creditworthiness of loan creditor and genuineness of transaction before the CIT(A). It is evident from the Order of CIT(A) u/s 250 of the Act that the CIT(A) after due verification of the documents submitted before him deleted the addition of Rs. 85,00,000/- on the merit of the case as well.”” 07. Revenue appeal for A.Y. 2016-17 in IT(SS)A No. 2/KOL/2024 has raised following grounds of appeal: - ““1. Whether in the facts and circumstances of the case, Hon'ble CIT(A)-20, Kolkata is correct in holding that the additions of Rs. 3,50,00,000/- made u/s. 68 of the Income Tax Act, 1961 on account of Bogus share capital are not linked to incriminating documents and hence not sustainable in view of the decision of Hon'ble Supreme Court in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd, contrary to the incriminating documents seized in the course of Search and Seizure action which clearly suggest that there is clear connection/relevance of seized material with the assessee. 2. 2. Whether in the facts and circumstances of the case, Hon'ble CIT(A)-20, Kolkata is correct in holding that the additions of Rs. 1,81,115/- made u/s. 36(1)(va) r/w. section 2(24)(x) of the Income Tax Act, 1961 on account of delayed payment of PF & ESI is not sustainable for the reason that no incriminating documents were found in the course of Search and Seizure contrary to the decision of Hon'ble Supreme Court in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd. which states that in case of any incriminating material is found /unearthed, even in case of unabated/completed assessment, the AO would assume the jurisdiction to assessee's 'total income' taking into consideration such incriminating material and other material available with the AO. That the revenue reserves its rights to substantiate, modify, delete supplement and/or alter the grounds at any time of appeal proceedings.” 08. Assessee appeal for A.Y. 2016-17 in its CO No. 8/KOL/2024 has raised following grounds of appeal:- Page | 6 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 ““1. That the assessee has filed relevant documents before the CIT(A) as well as the AO proving the identity, genuineness and creditworthiness of the share applicant M/s Pawanshiv Shoppers Pvt Ltd. The share applicant was a body corporate assessed to tax. The share applicant M/s Pawanshiv Shoppers Pvt Ltd is a group company and has merged with the assessee company from AY 2016-17. Further, proceedings u/s 1530 were initiated in the case of share applicant for AY 2016-17 but no addition was made. It is evident from the Order of the CIT(A) u/s 250 that the CIT(A) after verification of all the details and documents submitted before him deleted the addition on the merits of the case as well. 2. That the assessee craves to leave or add, alter, amend or withdraw any or all of the ground(s) of appeal before or at the time of hearing.” 09. Perusal from the grounds, it reveals that protective addition u/s 68 of the Act has been made for A.Y. 2012-13 and substantive addition has been made for A.Y. 2015-16 and 2016-17. 010. At the outset, the ld. Counsel for the assessee submitted that the case of the assessee is squarely covered by the judgment of the Hon'ble Apex Court in the case of PCIT v. Abhisar Buildwell P. Ltd. (2023) 149 taxmann.com 399 (SC) (dtd. 24.04.2023) as no incriminating material was found during the course of search and the years under appeal are completed and non-abated assessment years. He also submitted that the share capital and share premium was received during the A.Y. 2012-13 and thereafter funds have moved between other companies/ concerns, in lieu of making investment in equity shares or giving loans and advances and subsequently, the funds have again been realized during the A.Ys. 2015-16 and 2016-17, for which AO has made the addition. Per contra, the ld. DR vehemently argued supporting the order of the Assessing Officer. 011. We have heard the rival contentions and perused the records placed before us. We first take up the common issue raised in the revenue’s appeal in IT(SS)A No. 1/KOL/2024 for A.Y. 2012-13. We notice that the facts of the case has been duly noted by ld. CIT (A) in Para 3.1 of the appellate order for A.Y. 2012-13 and the same read as under:- Page | 7 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 ““3.1 Original return of income was filed by erstwhile assessee, M/s Pawanshiv Shoppers Pvt. Ltd. on 14.01.2013 declaring total income of 640. Order u/s 143(3) of the IT Act was passed on 31.03.2015 at income of Rs. 54,100/-. Subsequently, w.e.f. 01.04.2016, M/s Pawanshiv Shoppers Pvt. Ltd. had merged with M/s Maan Steel & Power Ltd. A search and seizure action u/s 132(1) of the IT Act, 1961 was conducted on 08.02.2018 on Maanheruka Group. Assessee belongs to the said group. Proceedings u/s 153C were initiated against the assessee on the basis of alleged incriminating material found during search at the premises of other group concerns. In response to notice u/s 153C of the IT Act, assessee filed return of income declaring income of Rs. 640/-. M/s Pawanshiv Shoppers Pvt. Ltd. was incorporated in financial year 2011-12. M/s Pawanshiv Shoppers Pvt. Ltd., had raised huge share capital, along with share premium during the financial year 2011-12. Funds raised through share capital were invested in shares of other unlisted companies. However, large part of share capital was alleged to be bogus and the investments made out of these share capital by M/s Pawanshiv Shoppers Pvt. Ltd. were also alleged to be bogus. During assessment proceedings u/s 153C r.w.s. 143(3), letters were issued to the parties from which M/s Pawanshiv Shoppers Pvt. Ltd. had raised share capital. However, 6 letters were returned unserved by the Postal Department under various remarks. As the identity of these 6 Subscribers entities was not established, it is held that the amounts received from such entities by M/s Pawanshiv Shoppers Pvt. Ltd. is not genuine. M/s Pawanshiv Shoppers Pvt. Ltd. had raised share capital from the 13 parties. However, share capital received from following 6 parties were held to be bogus, as these parties were not found at their addresses. Page | 8 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 AO has further mentioned that money received as share capital was applied for purchase of various unquoted shares. These investments were subsequently sold to various entities in the F.Y. 2014-15 and 2015-16 and amount realised was invested in shares of M/s Maan Steel & Power Ltd. However, the sale of investments does not appear to be genuine, as per incriminating material seized during search under ID Mark MSB/1 (P. No. 19) and MSB/2 (P. No. 57 & 59). AO alleges that on the date of search, shares were still held by M/s Pawanshiv Shoppers Pvt. Ltd. but fund movement had taken place against claim of transfer of those investments. M/s Maan Steel & Power Ltd. had received share capital of Rs. 13.5 Crores and 3.5 Crores from M/s Pawanshiv Shoppers Pvt. Ltd. in A.Y. 2015-16 and 2016-17 respectively and the source of these funds in the hands of M/s Pawanshiv Shoppers Pvt. Ltd. was the sale of its investments in various unquoted shares. AO further mentions that a cash trail was prepared which revealed that cash was initially deposited in the accounts of various entities which was finally routed to the account of M/s Pawanshiv Shoppers Pvt. Ltd. As the identity of 6 subscriber companies to shares of M/s Pawanshiv Shoppers Pvt. Ltd. was not established, AO is of the opinion that the Group has used its own unaccounted cash to bring them back in their books in the form of bogus share capital. During post search enquiry cash trail was prepared which revealed cash deposit in sixth layer. During assessment proceedings, assessee had denied any connection with the entities at sixth layer but AO is not satisfied with assessee’s reply. As the existence of 6 share subscribers could not be proved, share capital of Rs. 19.61 Crores, contributed by them, was treated to be bogus in nature. As additions of Rs. 13.5 Crores of Rs. 3.5 Crores were made in A.Ys. 2015-16 and 2016-17 respectively in the hands of M/s Maan steel and Power Ltd., whose source was held to be the bogus share capital raised by M/s Pawanshiv Shoppers Pvt. Ltd. in A.Y. 2012-13, addition of Rs. 17 Crores has been made in the hands of M/s Pawanshiv Shoppers Pvt. Ltd. on protective basis and Rs. 2.61 Crores is being added in the hands of assessee Company on substantive basis.” 012. We further observe that the ld. AO has prepared a separate assessment orders but the content is similar mainly focusing about receiving of accommodation entries/ bogus share capital from shell/ paper companies during F.Y. 2011-12. Ld. AO has also made certain observations about some cash trail and that the cash deposited in the bank account of same companies but except giving general remarks and based on the theory of preponderance of probability Page | 9 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 no evidence has been put forth by the Revenue authorities about the so called bank account in which cash has been deposited and thereafter being transferred from one to another company and finally received by the assessee company. Before ld. CIT (A), submissions made by the ld. Authorized Representative of the assessee throw light about the contentions of the assessee’s side and the same reads as under:- ““3.2(a) Appellant has challenged the additions both on technical/legal grounds and on merits. On technical/legal grounds it is submitted that no incriminating documents of the assessee company were found during search and none of the additions are based on any incriminating seized document. Additions made in the assessment order are part and parcel of the regular Income Tax Return filed u/s 139(1), the audited Balance Sheet and Profit and Loss Account. It is evident from the assessment order that AO has not relied on any of the seized documents. In the current year, assessee has issued 1,04,84,600 equity shares to 13 share applicants. However, share capital received in respect of 1,96,100 equity shares, issued to 6 share applicants, have been held to be bogus. Total amount of share capital (along with premium) received from these 6 share applicants amounts to Rs. 19,61,00,000/- . Appellant further submits that, law does not permit to make addition of the items of regular assessment in the assessment made u/s 153A of the Act without having any incriminating material found and seized in the course of search and seizure action. During the course of assessment proceedings documents were filed pertaining to identity, creditworthiness and genuineness of transactions with the share applicants. Appellant submits that the share applicants had enough net-worth to make investments in Assessee Company. These facts were scrutinised by the Ld. AO during the course of assessment completed u/s 143(3) vide order dated 31.03.2015. Appellant has provided the following information regarding the net-worth of share applicants: - Page | 10 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 Regarding seized documents with ID Marks MSB/1, P. No. 19 it is submitted that the information contained therein belongs to M/s Pawanshiv Shoppers Pvt. Ltd. and contains the summary sheet of investments held during the F.Y. 2014-15 and F.Y. 2015-16. These are part of regular books of accounts of M/s Pawanshiv Shoppers Pvt. Ltd. for the F.Y. 2014-15 and F.Y. 2015-16. Further, MSB/2, page No. 57 & 59 also belongs to M/s Pawanshiv Shoppers Pvt. Ltd. and contains the details of investments sold during the F.Y. 2014-15 and 2015-16, with the copy of ledgers, details of investments and relevant pages of bank statement. All these are part of regular books of accounts of M/s Pawanshiv Shoppers Pvt. Ltd. Thus, regular books of accounts can in no way be considered as incriminating document found in the course of search. It is further submitted that AO has never pointed out any defect in the explanation to the seized documents submitted during assessment proceedings. Hence, the same cannot be treated as incriminating document belonging to the assessee. 3.2(b) Regarding cash trail, appellant submits that it had asked for the alleged bank account in which cash was deposited. However, AO could not provide details of the same. AO has failed to establish any link as to how assessee has routed its own unaccounted money. Appellant submits that AO should not make wild allegations Page | 11 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 without providing any material/evidence of cash deposited by the assessee. Appellant has referred to Calcutta High Court decision in PCIT v. Rashmi Infrastructure Ltd., ITAT 99 of 2019, GA No. 1211 of 2019 dated 24.02.2020, where the Hon’ble Court dismissed the findings of the AO regarding cash trail in the absence of any evidence to show that, cash had been routed from the assessee company to any of the chain of companies. AO had failed to bring any material on record to demonstrate that the alleged cash deposit made in the bank account of a third party was from the assessee company. Further, no opportunity was provided to cross-examine any of those parties. Only bank statements based on which cash trail was prepared, which are part of disclosed document, cannot held as incriminating material. Appellant further submits that AO has only alleged that cash was deposited in some bank account but no details of bank account or account holder has been provided. There is no statement of any third party in whose bank account, money was deposited. Further, there was no evidence to substantiate that cash was provided by the assessee. Opportunity to cross-examine any of the bank account holders in which cash had been allegedly deposited, was also not provided. Appellant alleges that even the copies of bank statements were not provided. Appellant has referred to the judgement of Hon’ble Supreme Court in the case of Kishin Chand Chellaram v. CIT in 125 ITR 713 (SC) where it is held that burden is on the AO to show that cash deposited in the bank accounts belong to the assessee company by bringing proper evidence on record. 3.2(c) Appellant submits that the current year falls in the category of unabated/completed assessment year. No incriminating material was seized from assessee’s premises relating to share capital. Information collected during search are part of regular books of accounts. Therefore, without any incriminating documents or assets found in the course of search, completed assessment canot be disturbed in view of the following court’s decisions: - 1. CIT v. Singhad Technical Society (2017) 397 ITR 344 (SC) 2. Supreme Court in the case of PCIT V. Saroj Sudhir Kothari (SLP Appeal No. 4077 dated 07.08.2023) 3. Hon’ble Supreme Court in the case of PCIT v. Abhisar Buildwell P. Ltd. (2023) 149 taxmann.com 399 (SC) (dtd. 24.04.2023) Page | 12 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 4. Hon’ble Supreme Court in DCIT v. UK Paints (Overseas Ltd.) (CIT appeal no. 6634 of 2021) (order dtd. 24.04.2023) 5. Hon’ble Calcutta High Court recently in the case of MBL Infrastructure Ltd. v. PCIT in ITA/85/2022 dated 26.04.2023 6. Hon’ble Delhi High Court in the case of CIT(A) v. Kabul Chawla in [2015] 61 taxmann.com 412 (Delhi) 7. Delhi High Court PCIT v. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571 (DEL) 8. High Court in the case of PCIT v. Rashmi Infrastructure Ltd. (ITAT 99 of 2019, G.A No. 1211 of 2019 dtd. 24.02.2020) 9. PCIT v. Salasar Broking Limited (ITAT No. 264 of 2016 order dated 24.08.2016) 10. Jurisdictional High Court in CI v. Veerprabhu Marketing Limited (2016) 73 taxmann.com 149 (Calcutta) 32(d) Appellant has also raised objections regarding notice issued by the Ld. AO, which was in the name of the erstwhile Company, i.e. M/s Pawanshiv Shoppers Pvt. Ltd., as the erstwhile Company had already merged with M/s Maan Steel and Power Ltd., vide order of Hon’ble NCLT dated 01.01.2018, with the appointed date being 01.04.2016. There was no change in shareholders who had subscribed to the shares of the erstwhile company M/s Pawanshiv Shoppers Pvt. Ltd., till the date of merger / amalgamation. After merger, shares of M/s Maan Steel and Power Ltd., has been allotted to the shareholders. Under the circumstances, appellant alleges that AO was wrong in issuing notice u/s 153C dated 24.09.2019 and subsequent notices u/s 142(1) and 143(2), in the name of M/s Pawanshiv Shoppers Pvt. Ltd. Appellant further submits that these facts were brought to the notice of the AO vide reply dated 01.11.2019. However, Ld. AO has continued to issue notices in the name of the erstwhile assessee Company. Hence, initiating proceedings u/s 153C and issuing notice u/s 142(1) against the non-existent company is bad in law and consequent to that passing of assessment order u/s 153C/143(3) is void-ab-initio and needs to be quashed in view of the following decisions: - 1. Hon’ble Supreme Court of in the case of Principal Commissioner of Income-tax v. BMA Capfin Ltd. [2023] 151 taxmann.com 118 (Telangana) Page | 13 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 2. Hon’ble High Court of Telangana in the case of Virtusa Consulting Services (P) Ltd. Polaris Consulting and Services Ltd. v. Union of India [2023] 151 taxmann.com 118 (Telangana) 3. Hon’ble High Court of Gujarat in the case of Kunvarji Fincorp (P.) Ltd. v. Deputy Commissioner of Income Tax [2023] 149 taxmann.com 292 (Gujarat) 4. Hon’ble High Court of Gujarat in the case of Roquette India (P.) Ltd. v. Assistant Commissioner of Income Tax [2023] 153 taxmann.com 347 (Gujarat)” 013. Further, from perusal of the records we notice that the regular returns of income for all the three assessment year in question stood filed for A.Y. 2012- 13. ITR was originally filed on 14th January, 2013 and thereafter, assessment proceedings was also carried out u/s 143(3) of the Act and the order was framed on 31st Mach, 2015. Similarly for A.Y. 2015-16 assessment u/s 143(3) of the Act was completed on 10th August, 2017, for the return of income filed on 28th September, 2015. As far as A.Y. 2016-17 is concerned regular return of income u/s 139(1) of the Act was furnished on 27th September, 2015 and the last day for selecting the case for scrutiny by way of issuance of notice u/s 143(2) of the Act was 30th September, 2017 but no such notice was issued. We observe that the search and seizure operation were carried out u/s 132 of the Act on 8th February, 2018. Therefore, as on the date of search no assessment was pending for the impugned three years and therefore, all the three impugned assessment years are completed and non-abated assessment years and the addition in the assessment carried out to search u/s 132 of the Act can only be made if the ld. AO is able to place nexus of any incriminating material found during the course of search with such addition. We observe that the ld. CIT (A) has dealt with this issue for A.Y. 2012-13 at Para 3.3 as under: - ““3.3(a) I have carefully considered the facts of the case and the submissions of the appellant. Perusal of the assessment order shows that AO has given following references of incriminating material found during search. 1. MSB/1 (P. No. 19) 2. MSB/2 (P. No. 57 and 59) 3. MSB-HD-1 Page | 14 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 Assessee has explained that MSB/1 belongs to M/s Pawanshiv Shoppers Pvt. Ltd. and contains summary sheet of investments held during F.Y. 2014-15 and F.Y. 2015-16. These are part of the regular books of accounts of the said company. Similarly, MSB/2 (P. No. 57 and 59) also belong to M/s Pawanshiv Shoppers Pvt. Ltd. and contains the details of investments sold during the financial year 2014-15 and 2015-16. These pages contain copy of ledger, details of investment sold and relevant pages of bank statement. Information contained in the above mentioned seized documents are part of regular books of accounts of M/s Pawanshiv Shoppers Pvt. Ltd. AO has not explained the reasons for which these are considered as incriminating in nature. Extracts from the books of accounts or details of transactions contained in the books of accounts, which have been audited and return of income on the basis of such books have been filed in the department, cannot be termed as incriminating. Even AO has not said anything on this issue. Similarly, information contained in seized electronic storage device only provides information that form for application to the share capital of Assessee Company had originated on 02.07.2015 in assessee’s office itself. However, AO has not pointed out in what manner this information can be treated as incriminating in nature. M/s Pawanshiv Shoppers Pvt. Ltd., is one of the group concerns of Maanheruka Group. Being Group Company, there is nothing unusual when the form for share application has originated in the office of the M/s Maan Steel & Power Ltd. In any case AO has not pointed out any defect in the share application form or any instance of manipulation or wrong doing on the part of either of the group concerns. Regarding cash trail, it is apparent that this has been prepared during post search enquiry and no evidences have been found during search to support any discrepancy in this regard. Besides, AO has failed to provide the bank statements and the details of the bank accounts and the account holders to the assessee. Under the circumstances, assessee is not expected to submit any explanation. Although, AO has mentioned that at sixth layer cash deposits have been found but he has failed to establish any relation of the assessee or any group company with the entities at various layers of funds movement. AO has not even been able to produce any incriminating statements of any person which may have linked the assessee and/or group companies with the cash deposit. Under the circumstances, it is apparent that, additions regarding share capital are not supported by any incriminating evidences found during search. References regarding incriminating evidences in assessment order are not correct as discussed above. References made in the assessment order Page | 15 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 are part of regular books of accounts and/or having neutral implication. Under the circumstances, it is apparent that additions are not based on any incriminating material found during search. Appellant has cited several decisions where the Hon’ble Courts have held that additions in search assessments without any incriminating material found during search, are not sustainable. Now, let us examine some of such case laws in this regard. 3.3(b) In the case of CIT vs. Kabul Chawla (2016), 380 ITR 573(Delhi) the Hon’ble Delhi High Court has held that once a search takes place, notice u/s. 153A (1) has to be mandatorily issued. Assessment and re-assessment pending on the date of search shall abate. But, an assessment under the section 153A has to be made only on the basis of seized materials. In absence of any incriminating materials, the completed assessment can be only reiterated and assessment can be made only in respect of abated assessment or re-assessment. Completed assessment can be only interfered with by the AO while making the assessment u/s.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 course of search which were not produced or not already disclosed or made known in the course of original assessment. While delivering the judgment; the Hon'ble Delhi High Court followed the judgment of the Bombay High Court in CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645. These two judgments have been followed by various High Courts and Tribunals on this issue. The position as on today is that in respect of completed assessment any addition can be made under proceedings u/s.153A only if any incriminating documents are found. Issue relating to additions being based on incriminating evidences found during search, has been recently examined by the Hon’ble Supreme Court. Several SLPs pending in the Hon’ble Supreme Court were heard together with the lead case in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Civil Appeal No.6580 of 2021, order dated 24-04-2023. While deciding this appeal several judgements of various High Courts were discussed. Lead judgements by Delhi High Court in the case of Kabul Chawla and judgement of Gujarat High Court in the case of Saumya Construction were specifically discussed elaborately. After considering the arguments of the Department and the Assessee’s Advocates, the Hon’ble Supreme Court has upheld the judgement of the Hon’ble Delhi High Court in the case of Kabul Chawla and the judgement of Gujarat High Court in the case of Saumya Construction. Thus, the Hon’ble Supreme Court has held that no addition can be made in respect of completed Page | 16 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 assessment in absence of any incriminating material found during search. The operative part of the judgement is as under : “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 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 fulfillment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. As mentioned above, no incriminating documents have been found during search against the assessee relevant to this particular assessment year. In the current case, additions (disallowances) have been made on the basis of information available in the Audit Report/Return of Income and/or information collected during post search enquiries. Hence, respectfully following the judgments/decisions of various High Courts and the Tribunals, including those of the jurisdictional High Court and ITAT and the judgement of the Hon’ble Supreme Court in PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Civil Appeal No.6580 of 2021, order dated 24-04- 2023, it is held that the disallowances/additions made are not sustainable. Page | 17 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 3.3(c) Appellant has also pointed out that statutory notices were issued in the name of the erstwhile company M/s Pawanshiv Shoppers Pvt. Ltd. However, this entity was not in existence at the time when statutory notices were issued, as it had merged with M/s Maan Steel & Power Ltd. Thus, the statutory notices were erroneous and assessments made in pursuance to these statutory notices are not proper. Appellant has cited several Court decisions, where the Hon’ble Courts have set aside the assessment order which have been concluded on the basis of erroneous notices, i.e. which were not issued in the name of the existing entity with whom the erstwhile entity had merged/amalgamated. Respectively, following the case laws cited by the assessee, it is held that additions are not sustainable due to these reason also. 3.3(d) In view of the discussion above, the disallowances/additions made by the AO vide order u/s.153C read with section 143(3) in this particular assessment year are not sustainable, as these are not linked to any incriminating material found at the time of search. Hence, additions of Rs. 17,00,00,000/- on protective basis and addition of Rs. 2,61,00,000/- on substantive basis are deleted.” 014. As far as for A.Y. 2015-16 and 2016-17 is concerned the finding of the ld. CIT (A) reads as under:- “Finding of ld. CIT (A) for A.Y. 2015-16 3.3(a) I have carefully considered the facts of the case and the submissions of the appellant. Perusal of the assessment order shows that AO has given following references of incriminating material found during search. 1. MSB/1 (P. No. 19) 2. MSB/2 (P. No. 57 and 59) 3. MSB-HD-1 Assessee has explained that MSB/1 belongs to M/s Pawanshiv Shoppers Pvt. Ltd. and contains summary sheet of investments held during F.Y. 2014-15 and F.Y. 2015-16. These are part of the regular books of accounts of the said company. Similarly, MSB/2 (P. No. 57 and 59) also belong to M/s Pawanshiv Shoppers Pvt. Ltd. and contains the details of investments sold during the financial year 2014-15 and 2015-16. These pages contain copy of ledger, details of investment sold and relevant pages of bank statement. Information contained in the above mentioned seized documents are part of regular books of accounts of M/s Pawanshiv Shoppers Pvt. Ltd. AO has not Page | 18 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 explained the reasons for which these are considered as incriminating in nature. Extracts from the books of accounts or details of transactions contained in the books of accounts, which have been audited and return of income on the basis of such books have been filed in the department, cannot be termed as incriminating. Even AO has not said anything on this issue. Similarly, information contained in seized electronic storage device only provides information that form for application to the share capital of Assessee Company had originated on 02.07.2015 in assessee’s office itself. However, AO has not pointed out in what manner this information can be treated as incriminating in nature. The investor company, that is M/s Pawanshiv Shoppers Pvt. Ltd., is one of the group concerns of Maanheruka Group to which assessee company also belongs. Being Group Company, there is nothing unusual when the form for share application has originated in the office of the assessee company. In any case AO has not pointed out any defect in the share application form or any instance of manipulation or wrong doing on the part of either of the group concerns. Regarding cash trail, it is apparent that this has been prepared during post search enquiry and no evidences have been found during search to support any discrepancy in this regard. Besides, AO has failed to provide the bank statements and the details of the bank accounts and the account holders to the assessee. Under the circumstances, assessee is not expected to submit any explanation. Although, AO has mentioned that at sixth layer cash deposits have been found but he has failed to establish any relation of the assessee or any group company with the entities at various layers of funds movement. AO has not even been able to produce any incriminating statements of any person which may have linked the assessee and/or group companies with the cash deposit. Under the circumstances, it is apparent that, additions regarding share capital and unsecured loans are not supported by any incriminating evidences found during search. References regarding incriminating evidences in assessment order are not correct as discussed above. References made in the assessment order are part of regular books of accounts and/or having neutral implication. Additions on account of late deposit of PF/ESI are based on information available in ITR/Audit Report. Under the circumstances, it is apparent that additions are not based on any incriminating material found during search. Appellant has cited several decisions where the Hon’ble Courts have held that additions in search assessments without any incriminating material found during search, are not sustainable. Now, let us examine some of such case laws in this regard. Page | 19 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 3.3(b) In the case of CIT vs. Kabul Chawla (2016), 380 ITR 573(Delhi) the Hon’ble Delhi High Court has held that once a search takes place, notice u/s. 153A (1) has to be mandatorily issued. Assessment and re-assessment pending on the date of search shall abate. But, an assessment under the section 153A has to be made only on the basis of seized materials. In absence of any incriminating materials, the completed assessment can be only reiterated and assessment can be made only in respect of abated assessment or re-assessment. Completed assessment can be only interfered with by the AO while making the assessment u/s.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 course of search which were not produced or not already disclosed or made known in the course of original assessment. While delivering the judgment; the Hon'ble Delhi High Court followed the judgment of the Bombay High Court in CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645. These two judgments have been followed by various High Courts and Tribunals on this issue. The position as on today is that in respect of completed assessment any addition can be made under proceedings u/s.153A only if any incriminating documents are found. Issue relating to additions being based on incriminating evidences found during search, has been recently examined by the Hon’ble Supreme Court. Several SLPs pending in the Hon’ble Supreme Court were heard together with the lead case in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Civil Appeal No.6580 of 2021, order dated 24-04-2023. While deciding this appeal several judgements of various High Courts were discussed. Lead judgements by Delhi High Court in the case of Kabul Chawla and judgement of Gujarat High Court in the case of Saumya Construction were specifically discussed elaborately. After considering the arguments of the Department and the Assessee’s Advocates, the Hon’ble Supreme Court has upheld the judgement of the Hon’ble Delhi High Court in the case of Kabul Chawla and the judgement of Gujarat High Court in the case of Saumya Construction. Thus, the Hon’ble Supreme Court has held that no addition can be made in respect of completed assessment in absence of any incriminating material found during search. The operative part of the judgement is as under : 14. In view of the above and for the reasons stated above, it is concluded as under: Page | 20 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 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 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 fulfillment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. As mentioned above, no incriminating documents have been found during search against the assessee relevant to this particular assessment year. In the current case, additions (disallowances) have been made on the basis of information available in the Audit Report/Return of Income. Hence, respectfully following the judgments/decisions of various High Courts and the Tribunals, including those of the jurisdictional High Court and ITAT and the judgement of the Hon’ble Supreme Court in PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Civil Appeal No.6580 of 2021, order dated 24-04-2023, it is held that the disallowances/additions made are not sustainable. In view of the facts narrated and the discussion above the disallowances/additions made by the AO vide order u/s.153A read with section 143(3) in this particular assessment year are not sustainable, as these are not linked to any incriminating Page | 21 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 material found at the time of search. Hence, additions of Rs. 13,50,00,000/-, Rs. 85,00,000/- and Rs. 3,48,584/- are deleted. 4. Grounds of Appeal No. 2 & 3 4.1 Appellant has filed written submission, on merits in, respect of addition of Rs. 13,50,00,000/- u/s 68 of the IT Act. Appellant submits that M/s Pawanshiv Shoppers Pvt. Ltd. was also covered under search and seizure action, being one of the group companies. AO has not pointed out any cash deposit in the accounts of M/s Pawanshiv Shoppers Pvt. Ltd. During assessment proceedings, assessee had pointed out that share capital was raised from M/s Pawanshiv Shoppers Pvt. Ltd., which is a body corporate assessed to tax and payments were made through proper banking channels. However, disregarding the same AO has made addition on alleged cash trail without providing the name of the bank account holders where cash has been deposited. Neither has the AO provided the evidence that the cash belongs to the assessee. The said share applicant company merged with the assessee company in the next A.Y. 2016-17. Further, proceedings u/s 153C of the Act were initiated in the case of M/s Pawanshiv Shoppers Pvt. Ltd. for A.Y. 2015-16 but no addition was made by the AO in the Assessment Order of M/s Pawanshiv Shoppers Pvt. Ltd. Net-worth of the said company during A.Y. 2015-16 was Rs. 49.45 Crores. This was also verified by the AO during the course of assessment completed u/s 143(3) vide order dated 10.08.2017. Thus, assessee challenges the action of the Ld. AO on the very basis of making addition without unearthing any documents in the course of search and seizure operation. On the second count, assessee submits that in the entire order the Ld. AO has made allegation based on his own assumptions. Order lacks specific findings. AO has made the allegation that cash was deposited in the sixth layer. However, names mentioned in the sixth layer, is in no way related to the assessee company. Ld. AO has not brought anything on record to prove the allegations made by him. Neither has he provided any documents or bank statement based on which he made such additions. Appellant, further, submits that all the investments made by M/s Pawanshiv Shoppers Pvt. Ltd. in the assessee company is by way of sale of investments, as reflected in the audited accounts of the said company. Appellant, further, submits that it had submitted all the documents which prove the identity and creditworthiness of the share subscriber and the genuineness of the transactions. Thus, it had discharged its onus in view of the following judicial decisions: - Page | 22 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 1. PCIT v. M/s Agson Global (P.) Ltd in [2022] 134 taxmann.com 256 (Delhi) dated 19.01.2022. 3. PCIT v. Adamine Construction (P.) Ltd in [2019] 107 taxmann.com 85 (SC) dated 14.09.2018 ;2. 4. Manju Credit Pvt Ltd v. ITO in ITA No. 351/Kol/2019 dated 13.01.2023 DCIT v. Jagannath Banwarilal Texofabs Pvt. Ltd. in ITA No. 1762/Kol2016 dated 26.10.2018 4.2 I have carefully considered the facts of the case and the submissions of the appellant. In this case order u/s 143(3) has been passed on 10.08.2017. However, the AO did not raise any doubts on the genuineness of share capital received from M/s Pawanshiv Shoppers Pvt. Ltd. In order u/s 153A r.w.s. 143(3), AO has made additions by alleging that incriminating evidences were found during search. However, I have already discussed in preceding Para that no incriminating evidences were found on this issue. During post search enquiries cash trail was prepared and it is alleged that at sixth layer cash was deposited and the same money was routed through different layers to M/s Pawanshiv Shoppers Pvt. Ltd., as share application money in A.Y. 2012-13. However, AO did not provide the bank details and the details of the account holders and their role in arranging bogus share capital for M/s Pawanshiv Shoppers Pvt. Ltd. Neither has the AO discussed anything about evidences regarding cash being given by the assessee group for arranging bogus share capital. Neither is there any reference to adverse statement of any person alleging arrangement of share capital by giving cash. In the current assessment proceedings, it appears that AO had issued notices u/s 133(6) to share subscribers of M/s Pawanshiv Shoppers Pvt. Ltd. in A.Y. 2012-13. These parties were not found at their addresses. Hence, the notices were returned unserved. On that basis AO has concluded that share capital raised by M/s Pawanshiv Shoppers Pvt. Ltd. in A.Y. 2012- 13 was not genuine. As the share capital was invested in the shares of unlisted shares, it has been alleged that the investments in those shares were not genuine. In the current year some of such investments have been sold and money received by M/s Pawanshiv Shoppers Pvt. Ltd. has been invested in the share capital of the assessee company. Under these circumstances it is held that share capital received by the assessee company is not genuine. From the discussion above it can be noticed that AO has not done any enquiry in respect of investments, in unlisted shares, sold by M/s Pawanshiv Shoppers Pvt. Ltd. Page | 23 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 in the current year. Rather, AO is concentrating only on the issue regarding source of funds in the hands of M/s Pawanshiv Shoppers Pvt. Ltd. in A.Y. 2012-13. In the current year, source of share capital in the hands of assessee company is the share subscription from M/s Pawanshiv Shoppers Pvt. Ltd. Hence, AO should have paid more attention on the source of funds in the books of M/s Pawanshiv Shoppers Pvt. Ltd. in the current year, rather than only focusing on the transactions which happened three years back. It is evident that the immediate source of share subscription money was from sale of investments of M/s Pawanshiv Shoppers Pvt. Ltd. The said company is a group company only. If there was any apprehension that the funds received on account of sale of investments by M/s Pawanshiv Shoppers Pvt. Ltd. was not genuine then additions should have been made in its hands. Simultaneously, proceedings u/s 153C were also initiated for the said company for current year. However, In order u/s 153C r.w.s. 143(3) dated 31.12.2019 in the case of M/s Pawanshiv Shoppers Pvt. Ltd., since merged with M/s Maan Steel and Pvt. Ltd., no additions have been made on the pretext that additions are being made in the hands of the assessee company. Besides, regular assessment was done in the case of M/s Pawanshiv Shoppers Pvt. Ltd. But in order u/s 143(3) dt 10.08.2017, no additions were made. From the above discussion it is apparent that AO has not enquired into the immediate source of funds in the hands of the share subscriber company, that is M/s Pawanshiv Shoppers Pvt. Ltd. Nothing adverse has been brought on record to suggest that the funds invested in the share capital of the assessee company are from undisclosed sources. The subscriber company M/s Pawanshiv Shoppers Pvt. Ltd. has submitted all the documents regarding its identity and creditworthiness. AO has not pointed out any discrepancy in its claim that the funds invested in the share capital of the assessee company have been raised through sale of its investments in unlisted shares. Under the circumstances, there is no justification for additions u/s 68. AO has only discussed about some alleged manipulation which happened three years back but even for that AO has not been able to bring on record sufficient evidence to support his findings. Just because notices u/s 133(6) could not be served at the addresses of parties with whom M/s Pawanshiv Shoppers Pvt. Ltd. had financial transaction more than three years back, this sole fact cannot be a criteria to hold the transactions as not genuine. In any case, in the current year, source of funds for investing in share capital of assessee Company is from sale of investments in unquoted shares. AO has not discussed anything about these transactions. Identity Page | 24 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 and creditworthiness of the parties have not been verified. No enquiries have been made. In the absence of any such efforts, AO’s observation that transactions are not genuine, is not justified. In view of the above discussion, additions u/s 68 in respect of share capital is not sustainable. Hence, addition of Rs. 13,50,00,000/- is deleted, on merits as well. Appellant submits that it had taken loans of Rs. 85,00,000/- from Anjani Tradelinks Pvt. Ltd. Appellant had filed copy of loan confirmation. Loans were taken through banking channel. Appellant has also paid interest to the said party after deduction of TDS. Moreover, loan has been repaid, leaving no room to create any asset. Appellant further, submits that the bank statement of the lender does not show any cash deposit before giving loan to assessee Company. AO has not brought on record any statement of any lender admitting that the company has routed unaccounted money in the form of loan. Appellant has not paid any cash to anybody or received any cash. Loans are genuine and repaid during the same year along with interest after deduction of TDS. AO has made addition only for the reasons that notice u/s 133(6) to the lender was unserved. Appellant submits that there may be various reasons for not serving the notice u/s 133(6). However, AO has ignored all other documents submitted before him during the course of assessment. Appellant submits that non-compliance to notices u/s 133(6) or non-appearance before the AO cannot be made a basis for making the addition. Appellant submits that non-compliance to notices u/s 133(6) or non-appearance before the AO cannot be the basis for making the addition, as held in CIT v. Orissa Corporation Pvt. Ltd. 159 ITR 078 (SC). Appellant further, submits that M/s Anjani Tradelinks Pvt. Ltd. had net-worth of Rs. 20.22 crores in the year. Loan applicant is a body corporate and registered with ROC. Accounts of the loan applicant were duly audited. Loan was received through proper banking channels and loan creditor had sufficient fund. Loan confirmations were filed and loan creditor was regularly assessed to tax. Hence, in view of the decision of Kolkata ITAT in the case of ITO v. Shri. Jamuna Das Gupta, ITA No. 692/K/2010, no additions should have been made. Once creditworthiness of the source was proved, assessee was not responsible for proving source of source. This view has been upheld by Hon’ble Calcutta High Court. Appellant submits that as the identity creditworthiness and the genuineness of transactions were established no additions should have been made in view of the following case laws: - Page | 25 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 1. Overtop Marketing (P.) Ltd. V. PCIT [2023] 148 taxmann.com 94 (Calcutta) 2. Ambe Tradecorp (P) Ltd. v. PCIT [2022] 145 taxmann.com 27 (Gujarat) 3. Hon’ble Supreme Court in the case of CIT v. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC) 4. ACIT v. H.K. Pujara Builders (2019) 178 DTR 97. ITAT, Mumbai. Appellant further, submits that loans have been repaid in the same year. Loans were received and repaid through banking channels and complete details of the creditors were given. Hence, no addition should have been made in view of the judgement of Hon’ble Gujarat High Court in DCIT v. Rohini Builders (2002) 256 ITR 360 (Gujarat). I have carefully considered the facts of the case and the submissions of the appellant. Perusal of Assessment Order shows that addition has been made for the only reason that notice issued u/s 133(6) was returned unserved as loan creditor was not found at the address. There could be many reasons for non service of the notice. Hence, addition should not have been made solely for this reason. AO should have made further enquiries and also looked into the creditworthiness of the loan creditor. There are several judicial decisions where, it is held that non-compliance to notices u/s 133(6) or to summons u/s 131 of the IT Act cannot be the sole basis for additions. In this case, loans have been repaid in the same year and assessee had provided loan confirmations and all other details relating to the loan transactions. Loan creditor appears to have sufficient net-worth for giving those loans. Under the circumstances, without bringing adverse material on record and without examining the creditworthiness and genuineness of transactions, AO is not justified in making the addition. It appears that AO has not even tried to ascertain the alternative addresses of the loan creditor. Under these circumstances, addition is not justified. Hence, AO is directed to delete the addition of Rs. 85,00,000/-, even on merits. Grounds of Appeal No. 5 Addition of Rs. 3,48,585 on account of delayed deposit of employee contribution to PF and ESI has been deleted on technical/legal grounds for the reasons that no incriminating material was found during search. No comments are made on the merits of the issue. Page | 26 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 Finding of ld. CIT (A) for A.Y. 2016-17 4.1 Appellant has filed written submission, on merits in, respect of addition of Rs. 3,50,00,000/- u/s 68 of the IT Act. Appellant submits that M/s Pawanshiv Shoppers Pvt. Ltd. was also covered under search and seizure action, being one of the group companies. AO has not pointed out any cash deposit in the accounts of M/s Pawanshiv Shoppers Pvt. Ltd. During assessment proceedings, assessee had pointed out that share capital was raised from M/s Pawanshiv Shoppers Pvt. Ltd., which is a body corporate assessed to tax and payments were made through proper banking channels. However, disregarding the same AO has made addition on alleged cash trail without providing the name of the bank account holders where cash has been deposited. Neither has the AO provided the evidence that the cash belongs to the assessee. The said share applicant company merged with the assessee company in the A.Y. 2016-17. Further, proceedings u/s 153C of the Act were initiated in the case of M/s Pawanshiv Shoppers Pvt. Ltd. for A.Y. 2016-17 but no addition was made by the AO in the Assessment Order of M/s Pawanshiv Shoppers Pvt. Ltd. Net-worth of the said company during A.Y. 2016-17 was Rs. 49.46 Crores. Thus, assessee challenges the action of the Ld. AO on the very basis of making addition without unearthing any documents in the course of search and seizure operation. On the second count, assessee submits that in the entire order the Ld. AO has made allegation based on his own assumptions. Order lacks specific findings. AO has made the allegation that cash was deposited in the sixth layer. However, names mentioned in the sixth layer, is in no way related to the assessee company. Ld. AO has not brought anything on record to prove the allegations made by him. Neither has he provided any documents or bank statement based on which he made such additions. Appellant, further, submits that all the investments made by M/s Pawanshiv Shoppers Pvt. Ltd. in the assessee company is by way of sale of investments, as reflected in the audited accounts of the said company. Appellant, further, submits that it had submitted all the documents which prove the identity and creditworthiness of the share subscriber and the genuineness of the transactions. Thus, it had discharged its onus in view of the following judicial decisions: - 1. PCIT v. M/s Agson Global (P.) Ltd in [2022] 134 taxmann.com 256 (Delhi) dated 19.01.2022 2. PCIT v. Adamine Construction (P.) Ltd in [2019] 107 taxmann.com 85 (SC) dated 14.09.2018 Page | 27 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 3. Manju Credit Pvt Ltd v. ITO in ITA No. 351/Kol/2019 dated 13.01.2023 4. DCIT v. Jagannath Banwarilal Texofabs Pvt. Ltd. in ITA No. 1762/Kol?2016 dated 26.10.2018 4.2 I have carefully considered the facts of the case and the submissions of the appellant. In order u/s 153A r.w.s. 143(3), AO has made additions by alleging that incriminating evidences were found during search. However, I have already discussed in preceding Para that no incriminating evidences were found on this issue. During post search enquiries cash trail was prepared and it is alleged that at sixth layer cash was deposited and the same money was routed through different layers to M/s Pawanshiv Shoppers Pvt. Ltd., as share application money in A.Y. 2012-13. However, AO did not provide the bank details and the details of the account holders and their role in arranging bogus share capital for M/s Pawanshiv Shoppers Pvt. Ltd. Neither has the AO discussed anything about evidences regarding cash being given by the assessee group for arranging bogus share capital. Neither is there any reference to adverse statement of any person alleging arrangement of share capital by giving cash. In the current assessment proceedings, it appears that AO had issued notices u/s 133(6) to share subscribers of M/s Pawanshiv Shoppers Pvt. Ltd. in A.Y. 2012- 13. These parties were not found at their addresses. Hence, the notices were returned unserved. On that basis AO has concluded that share capital raised by M/s Pawanshiv Shoppers Pvt. Ltd. in A.Y. 2012-13 was not genuine. As the share capital was invested in the shares of unlisted shares, it has been alleged that the investments in those shares were not genuine. In the current year some of such investments have been sold and money received by M/s Pawanshiv Shoppers Pvt. Ltd. has been invested in the share capital of the assessee company. Under these circumstances it is held that share capital received by the assessee company is not genuine. From the discussion above it can be noticed that AO has not done any enquiry in respect of investments, in unlisted shares, sold by M/s Pawanshiv Shoppers Pvt. Ltd. in the current year. Rather, AO is concentrating only on the issue regarding source of funds in the hands of M/s Pawanshiv Shoppers Pvt. Ltd. in A.Y. 2012-13. In the current year, source of share capital in the hands of assessee company is the share subscription from M/s Pawanshiv Shoppers Pvt. Ltd. Hence, AO should have paid more attention on the source of funds in the books of M/s Pawanshiv Shoppers Pvt. Ltd. in the current year, rather than only focusing on the transactions which Page | 28 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 happened three years back. It is evident that the immediate source of share subscription money was from sale of investments of M/s Pawanshiv Shoppers Pvt. Ltd. The said company is a group company only. If there was any apprehension that the funds received on account of sale of investments by M/s Pawanshiv Shoppers Pvt. Ltd. was not genuine then additions should have been made in its hands. Simultaneously, proceedings u/s 153C were also initiated for the said company for current year. However, In order u/s 153C r.w.s. 143(3) dated 31.12.2019 in the case of M/s Pawanshiv Shoppers Pvt. Ltd., since merged with M/s Maan Steel and Pvt. Ltd., no additions have been made on the pretext that additions are being made in the hands of the assessee company. From the above discussion it is apparent that AO has not enquired into the immediate source of funds in the hands of the share subscriber company, that is M/s Pawanshiv Shoppers Pvt. Ltd. Nothing adverse has been brought on record to suggest that the funds invested in the share capital of the assessee company are from undisclosed sources. The subscriber company M/s Pawanshiv Shoppers Pvt. Ltd. has submitted all the documents regarding its identity and creditworthiness. AO has not pointed out any discrepancy in its claim that the funds invested in the share capital of the assessee company have been raised through sale of its investments in unlisted shares. Under the circumstances, there is no justification for additions u/s 68. AO has only discussed about some alleged manipulation which happened three years back but even for that AO has not been able to bring on record sufficient evidence to support his findings. Just because notices u/s 133(6) could not be served at the addresses of parties with whom M/s Pawanshiv Shoppers Pvt. Ltd. had financial transaction more than three years back, this sole fact cannot be a criteria to hold the transactions as not genuine. In any case, in the current year, source of funds for investing in share capital of assessee Company is from sale of investments in unquoted shares. AO has not discussed anything about these transactions. Identity and creditworthiness of the parties have not been verified. No enquiries have been made. In the absence of any such efforts, AO’s observation that transactions are not genuine, is not justified. In view of the above discussion, additions u/s 68 in respect of share capital is not sustainable. Hence, addition of Rs. 3,50,00,000/- is deleted, on merits as well. 015. Now, from the finding of the ld. CIT (A) for A.Ys. 2012-13, 2015-16 and 2016-17 and also taking into note that except the audited financial statement Page | 29 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 chart, assessee had already submitted with its original return of income, the ld. AO has not referred to any specific incriminating material. Even though the ld. CIT (A) has dealt extensively on the legal aspect, We at the cost of repetition would like to observe that the Hon'ble Apex Court in the case of Abhisar Buildwell Pvt. Ltd. (supra), has laid down the ratio that in absence of any incriminating material found and seized during the course of search, the ld. AO cannot make addition for completed/ unabated assessment years. The relevant part of the judgement of the Hon'ble Apex Court is reproduced below: - ““5. We have heard learned counsel for the respective parties at length. The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i.e., whether any addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132 A of the Act, 1961 or not. 6. It is the case on behalf of the Revenue that once upon the search under section 132 or requisition under section 132A, the assessment has to be done under section 153A of the Act, 1961 and the AO thereafter has the jurisdiction to pass assessment orders and to assess the 'total income' taking into consideration other material, though no incriminating material is found during the search even in respect of completed/unabated assessments. 7. At the outset, it is required to be noted that as such various High Courts, namely, Delhi High Court, Gujarat High Court, Bombay High Court, Karnataka High Court, Orissa High Court, Calcutta High Court, Rajasthan High Court and the Kerala High Court have taken the view that no addition can be made in respect of completed/unabated assessments in absence of any incriminating material. The lead judgment is by the Delhi High Court in the case of Kabul Chawla (supra), which has been subsequently followed and approved by the other High Courts, referred to hereinabove. One another lead judgment on the issue is the decision of the Gujarat High Court in the case of Saumya Construction (supra), which has been followed by the Gujarat High Court in the subsequent decisions, referred to hereinabove. Only Page | 30 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 the Allahabad High Court in the case of Pr. CIT v. Mehndipur Balaji 2022 SCC Online All 444/[2023] 147 taxmann.com 201/ [2022] 447 ITR 517 has taken a contrary view. 7.1 In the case of Kabul Chawla (supra), the Delhi High Court, while considering the very issue and on interpretation of section 153A of the Act, 1961, has summarised the legal position as under: Summary of the legal position 38. 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 153A(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 postsearch 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 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. 7.2 Thereafter in the case of Saumya Construction (supra), the Gujarat High Court, while referring the decision of the Delhi High Court in the case of Kabul Chawla Page | 31 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 (supra) and after considering the entire scheme of block assessment under section 153A of the Act, 1961, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no additional can be made by the AO and the AO has no jurisdiction to re-open the completed assessment. In paragraphs 15 & 16, it is held as under: \"15.On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the' assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby; it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year, falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under subsection (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says, that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the, six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A, of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of, the Act is annulled in appeal or any other proceeding. 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 Page | 32 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 Court in the case of Jai Steel (India) v. Asst. CIT (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. 8. For the reasons stated hereinbelow, 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), taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. 9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under section 158BA of the Act, 1961. The erstwhile scheme of block assessment under section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the 'undisclosed income' was chargeable to tax at a special rate of 60% under section 113 whereas income other than 'undisclosed income' was required to be assessed under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the 'undisclosed' income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under section 153A are triggered by conducting of a valid search under section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under sections Page | 33 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: \"153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132-A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment 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 Page | 34 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 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 Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, section 153-B and section 153- C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.\" 11. As per the provisions of Section 153A, in case of a search under section 132 or requisition under section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment 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 Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, Page | 35 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course 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 rewriting 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 Page | 36 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 High Courts taking the view that no addition can be made in respect of 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 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 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.” 016. Examining the facts of the instant case in the light of the above judgement, we find that the ld. AO on one hand made protective the addition for A.Y. 2012-13 u/s 68 of the Act alleging that assessee has received bogus share capital and share premium and on the other hand, had made substantive addition for A.Ys. 2015-16 and 2016-17. We find that the funds which were received by the assessee during A.Y. 2012-13 on account of share application money has subsequently been invested in other equity shares and loans and advances during A.Ys. 2015-16 & 2016-17, the brought forward investment / loans and advances have been liquidated and Page | 37 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 funds received. Therefore, for A.Y. 2015-16, 2016-17, no addition u/s 68 of the Act is called for because there is no fresh unsecured loan or fresh credit during the year and therefore, no substantive addition was called for. As far as A.Y. 2012-13 is concerned, as we have referred above that the original return of income was filed much prior to the date of search and assessment has also been completed u/s 143(3) of the Act prior to search and there being no incriminating material found with regard to the impugned addition in the course of search, in light of the judgement of the Hon'ble Apex Court in case of Abhisar Buildwell Pvt. Ltd. (supra), the ld. AO was not justified in making any addition for the completed/ unabated assessment years. The ratio of Hon'ble Apex Court which applies for A.Y. 2012-13, applies with equal force for A.Y. 2015-16 and 2016- 17. Under this going facts and circumstances, we fail to find any infirmity in the finding of the ld. CIT (A) deleting the addition made u/s 68 of the Act on protective basis for A.Y. 2012-13 and for substantive basis for A.Ys. 2015-16 and 2016-17. All the grounds of appeal raised by the Revenue stands dismissed. Appeal of the Revenue for A.Y. 2012-13, 2015-16 and 2016-17 is dismissed. 017. As regards cross Objection raised by the assessee is concerned, since, we have affirmed the finding of the ld. CIT (A), dealing with the grounds raised in the cross objection would be merely academic in nature and therefore, ground raised in the cross objection are rendered infructuous. 018. In the result, all the Revenues appeal in IT(SS)A No. 1,2,3/Kol/2024 are dismissed and CO Nos. 7, 8 & 9/KOL/2024 of the Assessee are dismissed as infructuous. Order pronounced at Kolkata, the 21st October, 2024. Sd/- Sd/- [SANJAY GARG] [MANISH BORAD] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 21.10.2024. SS, Sr. PS Page | 38 IT(SS)A Nos. 1,2 &3/KOL/2024 & CO No.7,8,9/Kol/2024 Maan Steel and Power Limited; A.Y. 12-13, 16-17 & 15-16 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "