DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2), KOLKATA, KOLKATA V. RAGHUNATH PAPER MILLS PVT. LTD., KOLKATA

ITSSA 88/KOL/2024

AI Insights

The case involves Raghunath Paper Mills Pvt. Ltd., which was subjected to a search and seizure operation under Section 132 of the Income Tax Act, 1961. Following the operation, the Assessing Officer issued a notice under Section 153A and added Rs. 95 Lakh to the company's income as unexplained cash credit under Section 68 of the Act. The CIT(A) reversed this addition, leading to the Revenue's appeal to the ITAT. The ITAT dismissed the Revenue's appeal, citing the absence of incriminating material related to the assessee during the search, and upheld the CIT(A)'s decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 46776 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 09-07-2024
• Other Referred Cases: PCIT vs. Abhisar Buildwell (P.) Ltd. [2023] 454 ITR 212 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: I.T. S.S. A. NO
• Keywords: Set aside; Unexplained cash credit; Document seized; Documents seized; Tax effect; Capital Gains; Search and seizure; Block assessment; CHAPTER XIVB
• Section: 250; 153; 132; 153A; 68

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'सी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA श्री राजेश क ुमार, लेखा सदस्य एवं श्री प्रदीप क ुमार चौबे, न्याधयक सदस्य क े समक्ष Before SRI RAJESH KUMAR, ACCOUNTANT MEMBER & PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.(S.S.)A. No.: 88/KOL/2024 Assessment Year: 2011-12 DCIT, Central Circle-1(2), Kolkata………………………………………Appellant Vs. Raghunath Paper Mills Pvt. Ltd............................................Respondent [PAN: AADCR7608B] Appearances: Department represented by: Praveen Kishore, CIT, DR. Assessee represented by: Robin Maheshwari, ACA. Date of concluding the hearing : September 24th, 2024 Date of pronouncing the order : November 29th, 2024 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the Revenue pertaining to the Assessment Year (in short ‘AY’) 2011-12 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income-tax (Appeals)- 20, Kolkata [in short ld. ‘CIT(A)’] dated 22.01.2024 arising out of the assessment order framed u/s 153A of the Act dated 28.12.2017. 1.1. The ld. Counsel for the revenue before entering into the merits of the case has pressed his condonation petition as the delay of 109 days in filing of appeal. The ld. Counsel for the revenue submits that: I.T.(S.S.)A. No.: 88/KOL/2024 Assessment Year: 2011-12 Raghunath Paper Mills Pvt. Ltd. Page 2 of 7 “With due respect this is to inform you that in the above-mentioned case, appeal order was received in this office on 22.01.2024. On 02.02.2024, Appeal Scrutiny Report was called for from the office of the Principal Commissioner of Income-Tax, Central-1, Kolkata in this case including the many other cases related to this group. Utmost effort has been made to prepare all the desired ASRs of this group including the present case during the crucial period of time-barring assessment which was finally submitted on 08.02.2024, in the office of the Additional Commissioner of Income-Tax, Central, Range-1, Kolkata. PCIT, Central-1, Kolkata vide letter dated 19/04/2024 has asked the comments of the undersigned in this case, in view of the CBDT circular no. 5/2024 dated 15/03/2024 as the case was below the tax limit for filing appeal before the Hon’ble ITAT, Kolkata. The undersigned had submitted comments on ASR on 23/04/2024 and suggested for filing appeal, irrespective of tax effect, before the Hon’ble ITAT, Kolkata as the case falls under exceptional clause (h) laid down under the para 3.1 of the CBDT circular no. 05/2024 dated: 15/03/2024. Thereafter, vide letter dated 05.07.2024 the Ld. PCIT, Central-1, Kolkata has directed to file second appeal before the Hon’ble ITAT. Therefore, your honour is requested to kindly condone 109 (One Hundred & Nine) days delay for filing appeal.” 1.2. The assessee did not raise objection on the point of condonation of delay. Keeping in view the facts as stated in the petition as well as considering the law the case should be decided on merit, the delay is hereby condoned. 2. The brief facts of the case of the appellant are that the assessee belongs to Unitech Group filed return of income on 14.10.2011 disclosing total loss of Rs. 1,04,268/-. A search and seizure operation was conducted on Unitech Group on 06.10.2015 at various premise including the office premises of the assessee company. Notice u/s 153A of the Act was issued and served upon the assessee company asking to file its return of income. In response to the notice, the assessee filed return disclosing total loss of Rs. 1,04,266/-. The case of the assessee is that during the relevant period i.e. AY 2011-12 there was no business done by the assessee. The case was discussed and heard with the ld. AR of the assessee and in conclusion the Assessing Officer (hereinafter referred to as ld. 'AO') alleged share capital raised amounting to Rs. 95 Lakh is added back to the total income of the assessee u/s 68 of the Act by holding that the said amount in the nature of unexplained cash credit. The said order of the Ld. AO has been placed by the assessee before the Ld. CIT(A) wherein Ld. CIT(A) after considering the facts of the case as well as the I.T.(S.S.)A. No.: 88/KOL/2024 Assessment Year: 2011-12 Raghunath Paper Mills Pvt. Ltd. Page 3 of 7 judgment of the Hon'ble Apex Court and other Tribunal has allowed the appeal of the assessee and directed the A.O.to delete the addition of Rs. 95 Lakh. Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred. 2.1. The ld. Counsel appeared on behalf of the revenue challenges the impugned order thereby submitting that Ld. CIT(A) in the facts and circumstances of the case has misconstrued the judgment of the Hon'ble Supreme Court passed in PCIT vs. Abhisar Buildwell (P.) Ltd. reported in [2023] 454 ITR 212 (SC) and directed the Ld. AO to delete the addition though in the course of search statement of the key persons recorded and they disclosed the real facts. The ld. Counsel for the assessee further submits that the Ld. CIT(A) erred in not considering the incriminating material can be in any form which could suggest that any documents/transactions claimed or submitted by the assessee. The ld. Counsel for the assessee further submits that Ld. CIT(A) did consider the statement of the key persons which he could not do and wrongly allowed the appeal of the assessee that is liable to be set aside. 2.2. Contrary to that, it has been argued by the ld. Counsel for the assessee that in the present case the Ld. AO in its order has clearly stated that during the search there was no incriminating material related to the present assessee has been found and the present case is entirely covered with the judgment of Hon'ble Supreme Court passed in Abhisar Buildwell (P.) Ltd. (supra). The ld. Counsel for the assessee has submitted that Ld. CIT(A) has considered the facts of the case of the assessee, judgment of the Hon'ble Apex Court and other Tribunal and thereafter, allowed the appeal of the CIT and the judgment of the Ld. CIT(A) do not require any interference. 2.3. Upon hearing the Counsel of the respective parties, we have perused the record and find that it is the definite case of the assessee that assessee has filed return of income disclosing loss of Rs. 1,04,266/-, a search and seizure action u/s 132(1) of the Act was confirmed, notice u/s 153 of the Act was issued. In response to the notice the assessee appeared and submitted I.T.(S.S.)A. No.: 88/KOL/2024 Assessment Year: 2011-12 Raghunath Paper Mills Pvt. Ltd. Page 4 of 7 his response before the Ld. AO It is important to mention here that in course of search and seizure no incriminating documents of the assessee company were found and seized during the search proceeding. It is also not in dispute that none of the additions are pressed on any incriminating seized documents. We further find that assessee had issued 95,000 equity shares at Rs. 100/- each including premium of Rs. 90/- per share and the net worth of the share subscribers are depicted as under: Sl. Name Net Worth (Rs.) 1 Swastik Securities & Finance Ltd. 37,56,09,293/- 2 Rohan Finance & Securities Ltd. 38,87,62,077/- 3 Sanskar Vincom Pvt. Ltd. 13,19,53,663/- 4 Divyprakash Suppliers Pvt. Ltd. 34,68,53,145/- 5 Reality Barter Pvt. Ltd. 10,23,08,681/- 6 Tirupati Commodities Pvt. Ltd. 3,81,30,297/- 7 Transtrade Vinimay Pvt. Ltd. 12,71,53,928/- 2.4. It is also important to mention here that with reference to the share applicants, assessee had submitted relevant document before the Ld. AO to establish the identity, creditworthiness of the transaction and the documents filed before the Ld. AO included ITR acknowledgement of the share applicants, audited accounts, bank statement, copy of the ledger account of the investor, ROC master data etc. On perusal of the assessment order, it is apparent from the observation made by the Ld. AO regarding incriminating evidence and the Ld. CIT(A) has also discussed the said observation in its order which is reproduced herein below: ““G. Section 153A envisages that once search u/s 132 is conducted, the AO shall call for Return for six assessment years and assess or reassess the income for the six years. This provision is in variance with the provision of the earlier block Assessment as per Chapter XIVB which is replaced by section 153A w.e.f. 01/06/2003. The Apex Court, appreciating the difference between provisions of Section 153A vis-a-vis Section 153BC had admitted the SLP in the case of CIT Vs Continental Warehousing (Nhava Sheva) and in the case of Dayawanti Vs CIT. H. The statement of Shri Sailesh Gupta recorded, is also an evidence which was recorded in the course of the search. Now at the conclusion of assessment proceeding he retracts from the same by filling a written letter. The stance of Shri Gupta seems to vary according to the stage of the investigation and cannot be trusted or taken cognizance of. Even Though no I.T.(S.S.)A. No.: 88/KOL/2024 Assessment Year: 2011-12 Raghunath Paper Mills Pvt. Ltd. Page 5 of 7 incriminating evidence regarding share capital was found in the course of search it may be noted that inferences are to be drawn in respect of undeclared income based on material found as well as statement recorded of Shri Sailesh Gupta. Therefore. These cannot be dismissed as baseless. Assessing authorities have to draw inferences based on materials which may be scanty (as one habitually concealing income or including in clandestine operations can hardly be expected to maintain meticulous books for long and in all probability be anxious to do away with such evidence at the shortest possibility) hence the element of guess work is to have some reasonable nexus with the statements recorded and the documents seized. Documents seized vide DNG/05, DNG/06, DNG/08 and DNG/09 are clearly indicative of the anxiousness of the promoter Directors of the assessee to keep matters as opaque as possible for investigative agencies. The entries recorded therein do not follow accounting norms and have been so coded that only the person in the know of the matters is able to decipher the entries. These diaries indicate generation of undisclosed profits and routing the same in books in form of share capital and capital gains is the proof of deployment of the same.\" There are references to certain seized documents. However, A.O. has not elaborated about contents of these documents. During the assessment proceedings, assessee had submitted explanation regarding all the seized documents but A.O. does not appear to have found any incriminating information in these submissions. Assessee has explained that none of the seized documents are in respect of share capital raised by the assessee. Further the notings in these seized documents are reflected in the regular books of accounts of the assessee and respective group companies. Hence, these can not be considered as incriminating in nature. Perusal of the assessment order shows that A.O. has relied mainly on the statement of the director, Shri Sailesh Gupta, recorded u/s.132(4) of the I.T. Act during search proceedings and the cash trail prepared during post search enquiries. However, it is pertinent to mention here that the statement of Shri Sailesh Gupta was retracted. A.O. has also referred to the statement of Shri Dilip Kr. Agarwal, entry operator. However, assessee has denied any connection with Shri Dilip Kr. Agarwal. Further no opportunity of cross examination has been provided. Although statement of Shri Sailesh Gupta was retracted after a long gap of time but it appears that no incriminating evidences were found during search to support the self incriminating statement and finally even the statement has been retracted.” 3. We have gone through the judgment passed in Abhisar Buildwell (P.) Ltd. (supra) by the Hon'ble Apex Court in which the Hon'ble Court has held as under: “14. In view of the above and for the reasons stated above, it is concluded as under: I.T.(S.S.)A. No.: 88/KOL/2024 Assessment Year: 2011-12 Raghunath Paper Mills Pvt. Ltd. Page 6 of 7 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; Hi) 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.” 3.1. It is clear and admitted fact that no incriminating documents have been found during the search against the assessee relevant to this particular assessment year, additions have been made on the basis of the statement recorded u/s 132(4)/131 of the Act. Keeping in view the verdict of the Hon'ble Apex Court on this issue we do not find any merit in this appeal. The Ld. CIT(A) in its order has not only discussed the facts of the case, rather discussed the judgment and thereafter, allowed the appeal of the assessee. We do not find any material to interfere in the order of the Ld. CIT(A). 4. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 29th November, 2024. Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 29.11.2024 Bidhan (P.S.) I.T.(S.S.)A. No.: 88/KOL/2024 Assessment Year: 2011-12 Raghunath Paper Mills Pvt. Ltd. Page 7 of 7 Copy of the order forwarded to: 1. DCIT, Central Circle-1(2), Kolkata. 2. Raghunath Paper Mills Pvt. Ltd., 53A, Rafi Ahmed Kidwai Road, Kolkata, West Bengal, 700016. 3. CIT(A)-20, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "