AI Insights
The case revolves around the appeal by the revenue against the decision of the CIT(A) which had deleted the additions made by the Assessing Officer (AO) under section 68 of the Income Tax Act, 1961, concerning unexplained share capital and premium received by Supreme Polymers Pvt. Ltd. from M/s GRG Mercantile Pvt. Ltd. The revenue contended that these were accommodation entries, a fact allegedly admitted by the director of M/s GRG Mercantile Pvt. Ltd. during a statement recorded under section 132(4) of the Act. However, the CIT(A) and the Tribunal found that the additions were not supported by any incriminating material found during the search at the assessee's premises, and thus, the additions were deleted.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 714192 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-08-2025
Appeal Filed By
Department
Order Result
Allowed
Assessment Year
2015-2016
Judgement Text
" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 189/JP/2025 fu/kZkj.k o\"kZ@Assessment Year : 2015-16 DCIT, Central Circle-03, Jaipur cuke Vs. Supreme Polymers Pvt. Ltd. 137-138, Industrial Area, Jhotwara, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCS 5773 P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Gaurav Nahata, CA jktLo dh vksj ls@ Revenue by : Mrs. Anita Rinesh, JCIT, Sr. DR lquokbZ dh rkjh[k@ Date of Hearing : 09/07/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 06/08/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM Feeling dissatisfied with the order of the Commissioner of Income Tax (Appeals), Jaipur -4 [ for short CIT(A) ] dated 11/12/2024 for assessment year 2015-16 the revenue preferred the present appeal. The ld. CIT(A) passed that order because the assessee challenged the order of the assessment dated 31.05.2021 passed under section 153A of the Printed from counselvise.com 2 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. Income Tax Act, 1961 [ for short Act ] by ACIT, Central Circle-03, Jaipur [ for short AO]. 2. Revenue assailed the present appeal on the following grounds: - Ground 1. Whether on the facts and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs.1,70,00,000/- in respect of unexplained share capital/premium received from M/s GRG Mercantile Pvt. Ltd which is factually an accommodation entry and the same fact was admitted by Sh. Satish Monga, director M/s GRG Mercantile Pvt. Ltd. in his statement recorded u/s 132(4) of the Act. Ground 2. Whether on the facts and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 3,40,000/-made by the A.O. on account of commission paid for obtaining accommodation entry in the form of share premium disregarding the fact that the same fact was admitted by Sh. Satish Monga, director M/s GRG Mercantile Pvt. Ltd. in his statement recorded u/s 132(4) of the Act. Ground 3. The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2.1 Vide application dated 08.07.2025 revenue filed an additional ground which reads as under ; “1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is justified in deciding the case on technical ground only and in not adjudicating the merits of the case ignoring the fact that this is the matter of organized tax evasion through obtaining accommodation entries. 3. Succinctly, the fact as culled out from the records is that in this case, original return of income was e-filed on 13.09.2015 for the A.Y. 2015-16 declaring Nil income by the assessee. Consequent to the search conducted on 09.07.2018 in the case of Supreme Group, Jaipur to which the assessee Printed from counselvise.com 3 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. belongs, various assets/books of account and documents were found and seized as per annexure prepared while search. Accordingly, notice u/s 153A of the Act, for the assessment year 2015-16 was issued on 11.02.2019 and duly served upon the assessee. In compliance with the notice u/s 153A of the IT Act, 1961, return of income was e-filed on 19.03.2019 for the A.Y. 2015-16 declaring Nil income. 3.1 Thereafter notice u/s 143(2) of the IT Act, 1961 was issued on 01.02.2021, which was duly served upon the assessee. Notice u/s 142(1) of the IT Act, 1961 was issued on 30.12.2020 along with questionnaire & Annexure requiring certain details/ information, which was duly served upon the assessee and the same complied with by the assessee. Based on the information in possession of the revenue that a search & seizure action u/s 132 of the Act was carried out in the case of Supreme Group on 09.07.2018, which was involved in taking bogus and ingenuine share premium from the company M/s GRG Merchantiles Pvt. Ltd., thereby the in the assessment proceeding the assessee was asked vide questionnaire dated 30.12.2020 to substantiate the creditworthiness and genuineness of the investment of Rs.1,70,00,000/- made by the company M/s GRG Merchantiles Pvt. Ltd. The assessee filed the reply. Ld. AO noted that the reply filed by the assessee is considered but not found acceptable because Printed from counselvise.com 4 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. as he noted that the assessee-company has issued shares of face value of Rs.10 at exorbitantly high premium of Rs.240 per share during the A.Y. 2015-16 to a company viz. GRG Merchantiles Pvt. Ltd. The total quantum of share capital and premium shown to have been invested by M/s GRG Merchantiles Pvt. Ltd in the assessee-company is of Rs. 1,70,00,000/-. M/s GRG Merchantile Pvt. Ltd has been struck-off from RoC rolls in 2017. During the course of search action in the case of Supreme Group, the residence and office premises of Shri Satish Monga, one of the director of GRG Merchantiles Pvt. Ltd., were also searched at D-84, South City-1, Gurgaon. Statement on oath u/s 132(4) of the Act was recorded of Shri Satish Monga on 09.07.2018. In his statement, Shri Satish Monga had admitted that the investment made through M/s GRG Merchantiles Pvt. Ltd in M/s Supreme Polymers Pvt. Ltd was nothing but an accommodation entry on commission basis. Thus, Shri Satish Monga, Sh. Kamlesh Kumar Gupta & Sh. Shashikant Khetan clearly admitted that the investment made through M/s GRG Merchantiles Pvt. Ltd in M/s Supreme Polymers Pvt. Ltd is nothing but an accommodation entry on commission basis. Therefore, in view of the facts discussed the share equity / premium shown to have been received by M/s Supreme Polymers Pvt. Ltd of 1,70,00,000 in F.Y. 2014-15 was considered as bogus accommodation entries in the form of share Printed from counselvise.com 5 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. premium/investment. Record reveals that the assessee company has received a share premium from M/s GRG Merchantiles Pvt. Ltd of Rs. 1,70,00,000/- during the Financial year 2014-15. The assessee company was required to establish the genuineness of the transaction and the creditworthiness of the source. As noted that the company M/s GRG Merchantile Pvt. Ltd has been struck-off from RoC rolls and director of the company has admitted the accommodation entries. It is clear that the entity has no sources of income to justify the amount of investment made in the assessee company. It is further noteworthy that as on date of search i.e. 09.07.2018 the entity had no Tangible or Intangible Assets. Even in the post-search proceedings, Shri Sanjay Jain was confronted with all the evidences relating to bogus share premium and was confronted with the statements of the entry operators Shri Satish Monga, Sh. Kamlesh Kumar Gupta & Sh. Shashikant Khetan who have admitted on oath that they have provided accommodation entries to Supreme Group companies. During the course of search & post-search proceedings, Shri Sanjay Jain, key person of the group, was requested various times to cross examine to statements of Shri Satish Monga but Shri Sanjay Jain was reluctant to cross examine with Shri Satish Monga. During the course of recording of his statement u/s 131 of the Income-tax Act on 31.10.2018, Shri Sanjay Jain had sought an Printed from counselvise.com 6 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. opportunity to cross-examine Shri Satish Monga. Copies of statements of the three entry operators Shri Satish Monga, Shri Kamlesh Gupta and Shri Shashikant Khetan were handed over to Shri Sanjay Jain at his request on 31.10.2018. In his statement dated 31.10.2018, Shri Sanjay Jain had assured that he will ensure the attendance of the three entry operators namely Shri Satish Monga, Shri Kamlesh Gupta and Shri Shashikant Khetan in Jaipur for cross-examination. However, no subsequent communication was received for over one month from Shri Sanjay Jain on the subject matter of bringing Shri Satish Monga and others to Jaipur for cross-questioning. Therefore, the office of investigation unit had made arrangements for Shri Sanjay Jain to cross-examine Shri Satish Monga in Gurgaon on 13.11.2018. Citing health problems, Shri Satish Monga expressed his inability to attend Income-tax Office for cross-examination, and he suggested the venue of cross-examination to be at his office in Gurgaon. However, on 10.12.2018, Shri Sanjay Jain expressed his inability to attend cross-examination on the said date and sought adjournment on health grounds. Considering the request of Shri Sanjay Jain, the cross- examination of Shri Satish Monga was re-scheduled to 17.12.2018 at 11:30 AM. Cross-examination of Shri Kamlesh Gupta was also scheduled to be held at 3:30 PM on 17.12.2018. It is important to mention that the date of Printed from counselvise.com 7 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 17.12.2018 was chosen after ascertaining positively from Shri Sanjay Jain that he was available for cross-examination on the said date. Shri Sanjay Jain was ready for cross-examination on 17.12.2018 till as late as on 14.12.2018, when his A/R had filed a letter in this office seeking presence of advocate during cross-examination. In this letter, the A/R had also sought copies of certain documents seized from Shri Satish Monga which were referenced by him in his statement on oath recorded on 10.07.2018. It was mentioned that Shri Sanjay Jain was not confronted with these documents in any statement recorded from him during post-search proceedings. In light of the same, the Income-tax Department was not obligated to provide him copies of these documents. Also, the copy of statement of Shri Satish Monga was provided to Shri Sanjay Jain over 45 days ago on 31.10.2018. However, he did not seek copies of these seized documents until the very last day before the date of cross-examination. Considering his request, the photocopies of the records were made by this office were made available to Shri Sanjay Jain. Ld. AO noted that on Saturday, 15.12.2018, Shri Sanjay Jain submitted a letter by means of e-mail seeking adjournment for cross- examination which was already fixed for 17.12.2018. In the above letter, Shri Sanjay Jain has mentioned one reason for seeking adjournment being Printed from counselvise.com 8 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. that the documents and statements provided to him have not been certified to be true copies. On that ld. AO noted that certification of true copies of documents is required only when such documents are proposed to be filed as evidence before a Court of Law. It is also relevant to mention that Shri Sanjay Jain was in possession of the statements of Shri Satish Monga for over 45 days during which he could have obtained certification of true copy at any time, however he chose not to do so. In fact, certification of documents as true copies is a formality which could have been done during cross-examination at Gurugram or even after the cross-examination. There was no bonafide requirement for Shri Sanjay Jain to post-pone cross- examination which was arranged after ensuring the availability of all persons concerned just on this ground. Shri Sanjay Jain had also asked for legible and complete documents to be provided to him. However, he has not mentioned any specific document / statement which is illegible or incomplete. As already mentioned above, it is the responsibility of the assessee concerned to make copies of documents that is required by him. All documents submitted to the assessee were legible and complete. Shri Sanjay Jain has stated that the mandate for attending summons is incomplete / unclear. It is not understood as to how the mandate is unclear when the purpose of the summons has clearly been mentioned in bold at Printed from counselvise.com 9 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. the centre of the very summons itself. Clearly, the purpose of the summons has been clearly and legibly mentioned in bold as \"Cross Examination of Shri Satish Monga\". Therefore, it is evident that the claim of Shri Sanjay Jain that the mandate of the summons was unclear to him is nothing but a ploy to evade cross examining the witness. Ld. AO noted that the very purpose for which the summons was issued to Shri Sanjay Jain was to provide access to him to cross-examine Shri Satish Monga which is being done at his insistence. The fact that Shri Sanjay Jain is raising technical issues on this ground at the last minute when the entire exercise is being conducted within the established procedures of law only at his request to begin with clearly implies that he is not actually interested in cross- examination of Shri Satish Monga. As is evident that Shri Sanjay Jain was given two opportunities to cross-examine Shri Satish Monga i.e. on 13.12.2018 and subsequently on 17.12.2018. He was also given an opportunity to cross-examine Shri Kamlesh Gupta on 17.12.2018. It was previously confirmed with Shri Sanjay Jain that the date of 17.12.2018 was acceptable to him for cross-examination. However, without reasonable cause Shri Sanjay Jain had avoided cross examining Shri Satish Monga and Shri Kamlesh Gupta on 17.12.2018. Therefore, the Revenue is not obligated to Shri Sanjay Jain to arrange for cross-examination of Shri Satish Printed from counselvise.com 10 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. Monga and Shri Kamlesh Gupta again during the search assessment proceedings. Ld. AO went on to note that this is a case of bogus paper entity lacking of creditworthiness, he also noted that the assessee company has not filed ITR of investor company for A. Y. 2015-16. Apprantely the company was running on papers only and their bank account were used for layering of funds. Thus, ld. AO considering the decision of the apex court in the case of PCIT Vs NRA Iron and Stell Private Limited stated that the assessee is since failed to prove the criteria as mentioned in the provision of section 68 of the Act and thereby he added a sum of Rs. 1,70,00,000 being the amount received from GRG Merchantiles Private Limited as unexplained cash credit and added as income of the assessee. Ld. AO also noted that the assessee paid commission @ 2 % for providing the accommodation entries and thereby a sum of Rs. 3,40,000/- [ 2 % of Rs. 1,70,00,000 ] was added considering it as unexplained expenditure. 4. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: 5.8 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the order, the report Printed from counselvise.com 11 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. and the rejoinder submitted by the appellant. The contentions/submissions of the appellant are being discussed and decided as under:- The brief facts on the issue as noted in the assessment order are that share premium has been received by the assessee-company during A.Y. 2015-16, the details of which are as under.- Date of Allotment No. of Shares Amount Invested (Rs.) 01.11.2014 20,000 50,00,000 07.01.2015 16,000 40,00,000 21.01.2015 12,800 32,00,000 27.02.2015 200 50,000 25.03.2015 19,000 47,50,000 Total (in) 1,70,00,000 Further as noted by the Id. AO, during the assessment proceedings, the assessee was asked vide questionnaire dated 30.12.2020 to substantiate the creditworthiness and genuineness of the investment of Rs. 1,70,00,000/- made by the company M/s GRG Merchantiles Pvt. Ltd. During the financial year 2014-15, the assessee company has raised Share capital of including Share premium of Rs. 1,70,00,000/-from GRG Mercantile Private Limited @ 250/- per share. Ld. AO has stated that statement on oath u/s 132(4) of the Act was recorded of Shri Satish Monga on 09.07.2018. As finding given by the Id. AO, in his statement, Shri Satish Monga (Director in M/s GRG Merchantiles Pvt. Ltd.) had admitted that the investment made through M/s GRG Merchantiles Pvt. Ltd in M/s Supreme Polymers Pvt. Ltd was nothing but an accommodation entry on commission basis. Shri Satish Monga, Sh. Kamlesh Kumar Gupta & Sh. Shashikant Khetan clearly admitted that the investment made through M/s GRG Merchantiles Pvt. Ltd in M/s Supreme Polymers Pvt. Ltd is nothing but an accommodation entry on commission basis. Ld. AO has also noted that during post-search proceedings. Shri Sanjay Jain was confronted with all the evidences relating to bogus share premium which have been discussed above. He was also confronted with the statements of the entry operators Shri Satish Monga, Sh. Kamlesh Kumar Gupta & Sh. Shashikant Printed from counselvise.com 12 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. Khetan who have admitted on oath that they have provided accommodation entries to Supreme Group companies. The appellant has contended that the appellant filed its return of income for the year under consideration on 13.09.2015 declaring Nil Income. The Intimation Order u/s 143(1) was processed on 09-12-2015 wherein the returned income was accepted. Thereafter on 09.07.2018, search action was conducted in case of appellant and other entities of Supreme Group, Jaipur. On the date of search, no assessment proceeding was pending. The time limit for issuance of notices under section 143(2) was completed on 30th September 2016 i.e. within 6 months from the end of the month in which return was furnished. The assessment for the year under consideration, thus, achieved finality even before the search operation was carried out in view of the fact that the intimation order u/s 143(1) had been passed, the time limit for issuing notice had expired and no proceeding was pending on the date of search. The case on hand was therefore of unabated assessment by virtue of second proviso to section 153A of the Act. The appellant has contended that consequent to the search carried out on 09-07- 2018, assessment u/s 153A of the Act was initiated and various notices were issued to which responses were given by appellant time to time. The impugned Assessment Order u/s 153A was passed making addition of Rs. 1,70,00,000/- u/s 68 of the Act in respect of the share capital / premium received by appellant during the year under consideration alleging that the same represents accommodation entry and bogus /unverifiable share capital/premium. Further, addition of Rs. 3,40,000/- being 2% of Rs. 1,70,00,000/- was made alleging that the commission of the said amount was paid by appellant in respect of the said accommodation entry. The additions have been made in absence of any incriminating material found during the course of search at appellant's premises. No document was found during the course of search at the premises of appellant which could be said to be incriminating in relation to such share capital / premium transaction. Ld. AO himself, in the impugned Assessment Order, has not stated as to which document found during the course of search at appellant's premises was of incriminating nature in this regard. Appellant has contended that addition has been made relying on the statements of Sh Satish Monga recorded u/s 132(4) during search at his premises located in Gurgaon was a separate search. Printed from counselvise.com 13 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. Appellant has made submission that statements of the said party Sh Satish Monga is outside the search action carried out in case of appellant and as no incriminating material is found during the course of search at the premises of appellant, such third party statements cannot be used for making assessment u/s 153A of the Act for the AY 2014-15 being an unabated assessment year. Search action at D-84, South City-I, Gurgaon being the residential address of Mr. Satish Monga was carried out in the case of Sh. Satish Monga only. No search action at the said place was carried out in case of the appellant company. The appellant has also referred to material seized like pen drive from such search. Without prejudice to the same, appellant has stated that even if the said statements of Mr. Satish Monga are treated as incriminating material, yet the same could not be used to make assessment u/s 153A of the Act in absence of any incriminating material found during the course of search at the premises of appellant. Such statement of Mr. Monga, if for the sake of argument, were considered to be an incriminating material yet the same, being a third party document, could, at maximum have been be used to make assessment u/s 153C of the Act and not section 153A of the Act. Appellant has also contended that the assessment u/s 153A of the Act has only to be based on and not beyond such incriminating material as found during the search. Against the remand report, the appellant has contended that the entire case of the revenue is based on such third party statement of Mr. Satish Monga which, being a third party statement, cannot be used to carry out assessment u/s 153A of the Act in case of appellant for the year under consideration being an unabated assessment year especially where no incriminating material was found during the course of search action carried out in case of appellant. In this context the appellant has referred to the dictionary meaning of the word incriminating and contended that in context of search action carried out under the Income Tax Act, an incriminating material, therefore, shall be the document/material detected during the course of search which has effect of revealing the unaccounted income of appellant which has not been disclosed and offered to tax the accounted documents and assets, the documents like share transfer forms, share certificates etc, the data contained in which are duly found recorded in books of accounts do not have effect of exposing and revealing any undisclosed income of assessee and therefore, such accounted documents, Printed from counselvise.com 14 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. assets forms etc. cannot constitute the incriminating material. The appellant has also referred to the following paras from the judgement of Hon'ble Supreme Court in the case of Abhisar Buildwell (supra):- “Thus, the foundation for making search assessments under sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search... [Para 9.1] ....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... [Para 12) Appellant has also contended that no unaccounted document or any cash voucher or loose paper etc. containing the details of cash in lieu of cheque transactions in respect of the concerned share capital transactions which could have effect of exposing/revealing that the concerned transactions were in fact the accommodation entry transactions as alleged was found during the course of search action carried out at the premises of appellant Appellant has also argued that the statement recorded during search does not represent any material existing prior to search and which gets detected as a result of search. The term 'incriminating material for the purpose of section 153A/153C is therefore contemplated with an idea of there being a document/asset etc. which has not been accounted and disclosed to the department but which / the existence of which gets detected by department during the course of search. Appellant has argued that there is nothing in statement of Mr. Sanjay Jain which has effect of incriminating and exposing appellant company to any malpractice or activity against the law or suppression of income done by it. Mr. Sanjay Jain was confronted many times during the course of search action as well as during the course of post search proceeding with regard to the concerned share capital transactions and each and every time, he stated and reiterated that the concerned transactions did not represent any accommodation entry transaction. Therefore, he explicitly denied the allegation of the said transactions being the accommodation entry transactions. Therefore, the statement of Mr. Sanjay Jain recorded is not incriminating to appellant to the effect that the concerned transactions are accommodation entry transactions. Printed from counselvise.com 15 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. Regarding the statement of Mr. Sanjay Jain dated 31-10-2018 u/s 131 during the post search proceeding, the appellant has contended that it cannot be equated with the material/ incriminating material that existed prior to and was detected during the course of search action. Therefore, such statement cannot be the foundation of assessment u/s 153A of the Act for the unabated assessment year in absence of any incriminating material found in form of unaccounted document/ asset during the course of search. The appellant has referred to the specific questions and replies of the statement and argued that there is nothing in such statements recorded of Mr. Sanjay Jain during the post search proceeding that incriminates the appellant to any clandestine transaction in connection with the concerned share capital transactions. In fact, Mr. Sanjay Jain has explicitly denied of obtaining any accommodation entry transaction in course of the concerned share capital transaction. In the order under appeal the addition has been made by treating the share capital received by the appellant company as unexplained. In the appeal the appellant has raised a technical ground that the addition has been made in the assessment order without the incriminating material from the search and seizure action of the appellant and that the material relied upon by the learned AO was collected in different search action and was collected in proceedings other than the search and seizure action of the appellant. And the appellant has contended that in view of the ratio of the judgement of honourable Supreme Court in the case of Abhisar Buildwell, the addition cannot be sustained. In the remand report calling for the copy of the incriminating material found during the course of search action on the appellant, the Id. AO has provided the two documents, namely, (i) Statement dated 31.10.2018 of Sh. Sanjay Jain, (ii) Statement dated 09.07.2018 of Sh. Satish Monga. In the remand report the Id. AO has submitted that in this case, addition was made on account of accommodation entry. Shri Satish Monga, Director of GRG Merchantiles Pvt Ltd, in his statement had admitted that the investment made through M/s GRG Merchantiles Pvt Ltd in Mis Supreme Polymers Pvt Ltd was nothing but an accommodation entry on commission basis. In view of the statement of Shri Satish Monga, it was incumbent upon the assessee to discharge the onus of proof which had been shifted on him. No unaccounted document or any cash voucher or loose paper etc. containing the details of cash in lieu of cheque transactions in respect of the concerned Printed from counselvise.com 16 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. share capital transactions or any other material which could have effect of exposing /revealing that the concerned transactions were in fact the accommodation entry transactions as alleged was found during the course of search action on the appellant despite the step of search having been carried out at the premises of appellant. The contention of the appellant that the statement recorded during search cannot be treated as incriminating material is examined here under. As per principles emanating from the judgements of Hon'ble High Courts and Hon'ble Supreme Court the addition in assessment u/s 153Ashould be connected with something found during the search or requisition and that in such a scenario the Id. assessing authority while determining the total income may also make addition on other issues even if not emanating from incriminating material found in search. Hon'ble Delhi High Court in the case of Bhagirath Aggarwal vs. CIT (351 ITR 143) (Delhi) held that an addition in assessee's income relying on statements recorded during search operations cannot be deleted without proving statements to be incorrect. Hon'ble Delhi High Court in the case of CIT vs. M.S. Aggarwal [2018] 93 taxmann.com 247 (Delhi) held that where in course of block assessment proceedings, AO made addition to assessee's undisclosed income in respect of gift, in view of fact that assessee did not even know donor personally and, moreover, he himself in presence of his Chartered Accountant had made a statement under sec 132(4) admitting that said gift was bogus, impugned addition was to be confirmed. It is important to note that in the judgements i.e. CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573 (Delhi) and Pr. CIT v. Saumya Construction (P.) Ltd. [2017] 81 taxmann.com 292/[2016] 387 ITR 529 (Guj.) the scope of \"incriminating material is not restricted to the \"seized material. The judgements refer to \"something found during the search or requisition and \"some incriminating material unearthed during the course of search or requisition of documents\" and \"undisclosed income or property discovered in the course of search\". Printed from counselvise.com 17 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. These judgements have been approved by Hon'ble Supreme Court in Abhisar Buildwell (supra) and conclusion is stated in para 14(iii) of the judgement. Thus whether the statement recorded is incriminating or not shall depend upon the factors like contents of the statement made by the person being searched upon, admission by such person in the statement, other connected material found from the search action on such person, etc. In other words, the statement recorded u/s 132(4) of the Act is evidence however whether the same represents incriminating evidence or not depends upon the nature and content of replies given by the person in his statement. Statement of Sh. Satish Monga u/s 132(4) of the Act and the documents found during search action on him cannot be considered as the incriminating material unearthed during search action on the appellant. There is no material placed on record in the assessment order or in the remand report in this regard. The panchnama in case of Sh. Satish Monga has been provided by the Id. AO on 26/11/2024. This is confirmed by the fact that in the panchnama of the search action on Sh. Satish Monga the name of the appellant is not mentioned. In the case of Bijender Singh Lohia vs JCIT (OSD), Central Circle-26, New Delhi. ITAS No. 1528 & 1529/Del/2022, it has been held as under:- 11. Further reliance is placed on the decision Delhi High Court in the case of PCIT, (Central) - 3 Vs. Anand Kumar Jain (HUF) [ITA 23, 26-31/2021] dated 12.02.2021 for the proposition that even if a search was conducted upon the premises of the assessee, if the AO was relying upon the incriminating material found from the search of third party. then the same can not be used for assessment u/s 153A and AO should have resorted to section 153C of the Act. We consider it pertinent to reproduce the part of judgment relied by Ld. AR, 6 herein below; ………………. 12. Ld. AR has further relied on the Judgment in Delhi bench of Tribunal in the case of DCIT v. Shivali Mahajan [ITA 5585 to 5590/Delhi/2015] dated 19.03.2019; Delhi High Court in the case of PCIT, (Central) - 3 Vs. Anand Kumar Jain (HUF) [ITA 23, 26-31/2021] dated 12:02.2021; ITAT Bench, Delhi in the case of ACIT VS. K.G. Finvest (P.) Ltd. [2017] 88 taxmann.com 627 (Delhi - Trib.); ITAT Bench, Mumbai in the case of Unique Star Developers Vs. DCIT [2017] 83 taxmann.com 83 (Mumbai Trib.); ITAT Bench, Ahemdabad in the case of Dr. Mansukh Kanjibhai Shah Vs. ACIT: 129 ITD 376 (Ahd.), for the same proposition of law. …………………….. Printed from counselvise.com 18 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 21. Now what can be concluded is that the manual cash book contained entries related to cash withdrawals and expenses of Company which were duly recorded and reconciled with its books of account, as also cash introduced, withdrawn and expenses on behalf of the appellant. Thus we are of the considered view that once Ld. CIT(A) has endorsed the findings of Ld. AO that based on this manual cash book, of the Company, no substantive addition is required to be made in the hands of Company and as the cash inwards and outwards are found to be from known sources and existing books, which have been considered final in the assessment of Company, then same set of books of the Company, including the manual cash book found at the premises of the Company, cannot be considered to be incriminating material for the purpose of Section 153A of the Act to make addition in hands of assessee as a searched person, as the two AYs before us are of concluded assessments. The corollary to aforesaid being that to consider the said seized document of transactions of appellant reflected in manual cash book in the hands of appellant, provisions of Section 153 C of the Act should have been invoked at the first instance. Thus the change of head of the addition by Ld. CIT(A), has resulted in vitiating the exercise of jurisdiction u/s 153A of the Act and 153C of the Act In the case of A.C.I.T. vs. M/s. Real Marketing Private Limited IT(SS) A No.128 to 133/Ahd/2021 it has been held as under:- \"11.1 With regard to fact that no addition can be made in absence of incriminating material we find that it has been settled by various Hon'ble Court including Hon'ble Jurisdictional High Court that the completed/ unabated assessments cannot be disturbed in the absence of any incriminating materials/documents whereas the assessment/ reassessment can be made with respect to abated assessment years. The word 'assess in Section 153A/153C of the Act is relatable to abated proceedings (ie. those pending on the date of search) and the word 'reassess to the completed assessment proceedings. The Hon'ble Gujarat High Court in the case of Saumya Construction reported in 81 taxmann.com 292 has held that there cannot be any addition of regular items shown in the books of accounts until and unless there were certain materials of incriminating nature found during the search. The word incriminating has not been defined under the Act but it refers to those materials/ documents/ information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee. Now coming to the case on hand, we note that there was no incriminating document of whatsoever found from the premises A-301, Wall Street II, Ellisbridge and 24, Jogeshwari Park against which panchanama was drawn in the name of respondent assessee. The AO in the assessment order while making the addition in the hands of assessee nowhere referred any material of incriminating nature found from the above 2 premises of assessee regarding Printed from counselvise.com 19 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. credit of share capital along with premium and unsecured loan with reference to the year under consideration which would have made basis for the addition in the assessment. The AO for making the addition referred the material found from the premises of the third parties Shri Shrish Chandrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah. We find that these parties are unconnected to the assessee and search carried on their premises were an independent search. Likewise, the AO also referred the materials found from the premises of Shri Ashit Vohra marked as annexure A/5, A/6 and A/7 and from the office of Anil Hiralal Shah situated at B-406, Wall Street-II Ellisbridge, Ahmedabad marked as page 247 of annexure A-1. In this regard, we note that though the search was carried on same date on the premises of Shri Ashit Vohra and A/7 and the office of Shri Anil Hiralal Shah and it was alleged to be part of the group to which respondent assessee belongs. However, the search Panchama drawn on above premises of Shri Ashit Vohra and the office of Anil Hiralal Shah does not include the name of the respondent assessee which establishes search at those premises are independent from the search carried on the premises of the assessee. ……………. 11.4 Coming to the utilization of materials found during the search proceeding from the premises of the third parties. In the case on hand, the materials found from unconnected search at the premises of Shri Shrish Chandrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah or the material found from the premises of Shri Asit Vohra and from the office of Shri Anil Hiralal Shah situated at B-406, Wall Street-II Ellisbridge which do not belong to the assessee as the name of assessee was not found in the panchanama drawn on theses premises. The law is fairly settled that the proceedings under section 153C of the Act can be initiated in a situation where the documents/materials belonging/pertaining to the assessee were recovered from the premises of the 3rd party during search proceedings under section 132 of the Act. Then, the AO of the search party has to record the satisfaction by observing that the documents found in the course of search from the premises of the 3rd party belongs/ pertains to the person other than the searched person and he will hand over such satisfaction along with the necessary documents to the AO of such other person who was not subject to search. The AO of the other person has again will record his satisfaction that the documents found from the premises of the 3rd party during search has bearing on the income of the assessee. The question arises what the fate of the case would be where there was search in the case of the assessee as well as in the case of the other party under the provisions of section 132 of the Act and the document was found from the premises of the 3rd party. This issue has been answered by the order of this Tribunal in the case of Shri Rajesh Sundardas Vaswani & others in IT(SS)A No. 95/Ahd/2019 & others where the coordinate bench vide order dated 12-11-2020 quashed the assessment order passed under section 143(3) r.w.s. 153A of the Act. The relevant finding of the ITAT is extracted from paras 29 to 38, pages 32 to 48 of the relevant order. Printed from counselvise.com 20 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 11.5 Likewise, the coordinate of bench of Kolkata ITAT in case of Krishna Kumar Singhania reported in 88 taxmann.com 259 where search under section carried on Cygnus Group of Cases comprising of various companies and individuals on 23-12 2014 at various residential premises / offices. The assessee Shri Krishna Kumar Singhania was one of the key persons of the group and his personal premises was also subject to the search as on 23-12-2014 but no incriminating material was found from his premises. However, the AO made the addition of bogus long term capital gain based on material found from the office premises of the group companies but panchanama drawn on such office premises does not include the name of the assessee i.e. Shri Krishna Kumar Singhania. In such facts and circumstances the coordinate bench held that the seized documents from the office premises of group of companies in which assessee was a director, said material could not be used under section 153A of the Act against assessee. The relevant finding of the bench reads as under. ……………. 11.6 Based on the above, we hold that the revenue has to follow the procedures laid down under the provisions of section 153C of the Act in a situation where the documents were found from the premises of the 3rd party irrespective of the fact that the other party was also subject to the search. In other words, the process as provided under section 153C of the Act has to be followed by the revenue for the purpose of making the addition based on the documents found in the course of search from the premises of the 3rd party. …………….. 48.6 The remaining addition of Rs. 61.46 Lacs, Rs. 1.6 crores and Rs. 20 crores respectively are made based on certain document found from the residence of Shri Ashit Vohra part of Barter-Group to which the assessee company belong. However, we note that the panchanama drawn regarding material seized from his residential premises does not include the name of the assessee company. Therefore, the search carried at the premises of Shri Ashit Vohra Is an independent search for the assessee company. Hence, the material found from the residence of Shri Ashit Vohra cannot be utilized for making addition in the hands of the assessee company in the proceeding under section 153A of the Act unless and until procedure prescribe under section 153C of the Act is followed. We have given identical finding vide paragraph no 11 to 11.7 of this order in case of group concern namely Real Marketing Pvt Ltd bearing IT(SS) A No. 128/AHD/2021. For detailed discussion, please refer the afore-said paragraph of this order.\" the case of Shri Krishna Kumar Singhania -vs- DCIT, CC-3(3), Kolkata (SS).A Nos. 109 & 110/Kol/2017 for A.Y. 2009-10 & 2012-13 it has been held as der:- Printed from counselvise.com 21 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 10. We have heard the rival submissions. We find that it is not in dispute that there were no documents that were seized from the premises of the assessee except loose sheets vide seized document reference KKS /1 comprising of 8 pages for which satisfactory explanation has been given by the assessee and no addition was made by the Id AO on this seized document. The seized document used by the Id AO for making the addition in section 153A assessment is CG/1 to 11 and CG/HD/1 which were seized only from the office premises of Cygnus group of companies in which assessee is a director. In this regard, it would be pertinent to note that as per section 292C of the Act, there is a presumption that the documents, assets, books of accounts etc found at the time of search in the premises of a person is always presumed to be belonging to him / them unless proved otherwise. This goes to prove that the presumption derived is a rebuttable presumption. Then in such a scenario, the person on whom presumption is drawn. has got every right to state that the said documents does not belong to him/them. The Id AO if he is satisfied with such explanation, has got recourse to proceed on such other person (ie the person to whom the said documents actually belong to) in terms of section 1530 of the Act by recording satisfaction to that effect by way of transfer of those materials to the AO assessing the such other person. This is the mandate provided in section 153C of the Act. In the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon'ble Delhi High Court in the case of CIT vs Pinaki Misra and Sangeeta Misra reported in (2017) 392 ITR 347 (Del) dated 3.3.2017, wherein it was held that, no addition could be made on the basis of evidence gathered from extraneous source and on the basis of statement or document received subsequent to search. Hence we hold that the said materials cannot be used in section 153A of the Act against the assessee. This opinion is given without going into the merits and veracity of the said seized documents implicating the assessee herein. 10.1. Hence now the only issue which is left to be addressed is the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2009-10 was not selected for scrutiny and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceeding, as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not Printed from counselvise.com 22 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. confer any power on the id AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. The provisions of section 153A of the Act are reproduced hereunder for the sake of convenience…………” In the case of Pavitra Realcon (P.)Ltd. v. Assistant Commissioner of Income-tax. Central Circle-32, New Delhi [2017] 87 taxmann.com 142 (Delhi-Trib.) (04-10- 2017) it has been held 'Where only in independent search of accommodation entry provider, alleged incriminating material was found doubting assessee's transactions but extensive search operation on assessee had not yielded any incriminating material and further, no notice under section 153C had been issued on assessee for period under consideration, no addition could be made in hands of assessee'. The headnote is as under:- 153C, read with sections 132 and 292, of the Income-tax Act. 1961-Search and seizure - Assessment of income of any other person (Corroboration of incriminating materials) - Assessment year 2011-12-Whether provisions of section 292C creates presumption only to person from whose possession said documents were found and, therefore, same will not be applicable qua assessee Whether presumptions and surmises, however strong may be, could not be basis for any addition Held, yes In independent search action in case of one alleged accommodation entry provider SKJ, alleged incriminating material was found doubting assessee's transactions Extensive search operation on assessee had not yielded any incriminating material Neither statement of SKJ was brought on record nor said documents were independently corroborated Assessing Officer recorded satisfaction on basis of statement of Directors of assessee company under section 132(4) No notice under section 153C had been issued on assessee for period under consideration and, thus, procedure prescribed under section 153C had not been followed Whether since in instant case both Assessing Officer and Commissioner (Appeals) were looking for proof beyond doubt which was not possible and they were basing their decision on an element of suspicion, Commissioner (Appeals) was not justified in confirming addition made by Assessing Officer Held, yes [Para 24] [In favour of assessee). In the case of PCIT, (Central) - 3 Vs. Anand Kumar Jain (HUF) [ITA 23, 26- 31/2021 [Delhi High Court] it has been held as under:- 10. Now, coming to the aspect viz the invocation of section 153A on the basis of the statement recorded in search action against a third person. We may note that the AO has used this statement on oath recorded in the course of search conducted in the case of a third party (i.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section Printed from counselvise.com 23 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 153C, if this statement was to be construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in Section 153A). then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the ITAT. Therefore, we do not find any substantial question of law that requires our consideration. In view of the ratio of the above judgements the material unearthed during the course of search and seizure action on some other person cannot be considered the material unearthed during the search and seizure action on the assessee even if in his case the proceedings u/s 153A are pending. Thus the material unearthed during the search action on Sh. Satish Monga, cannot be treated to have been unearthed during the course of search action on the appellant. Even though the statement of director Sh. Sanjay Jain as recorded during the search action was not treated as incriminating material by the Id: AO in the remand report, however the search statement has been perused. The appellant has made detailed submission in this regard. From the perusal of the replies of the director of the company it is noted that during the search statement queries were raised to the director on the issue of accommodation entries, which are the subject matter of the addition in the assessment order, however the director of the company stated that the investment was actual investment and denied taking any accommodation entry and also denied giving any commission. There is no admission of accommodation entry in the statement. There is no incriminating finding or admission in the staternent of the director pertaining to the issue of addition in the assessment order under appeal. It cannot be said that any new or additional material on the issue involved, irrespective of whether incriminating or not, was unearthed in the search statement. The question of, whether new material or new information in statement is incriminating or not, is to be seen subsequently. The statement of Sh Sanjay Jain director of the company which was recorded during under section 131 of the Act after the search and seizure action cannot be considered as the incriminating material unearthed during the course of search Printed from counselvise.com 24 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. and seizure action of the appellant as this is a statement recorded under the summons issued after the search and seizure action and it is not a statement which was recorded during the course of search and seizure action. It is not the case that incriminating material on the issue was found in search on appellant and the impugned statement is the continuation of such incriminating findings during search action on the appellant. Further in this statement also the director of the company has denied taking any accommodation entry and has made statements that the transactions are genuine. The conclusion to be arrived at is that during the course of search action carried out in case of appellant, no incriminating material was found which could form the basis of the or in support of the addition in assessment that the concerned share capital/premium transaction was in fact an accommodation entry transaction representing the undisclosed income of appellant and rather during the search statement the allegation was specifically denied by the director of the company. In the judgement in the case of Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC)/[2023] 454 ITR 212 (SC)[24-04-2023], the Hon'ble Supreme Court in para 14 has held as under- \"14. In view of the above and for the reasons stated above, it is concluded as under (i)………. (ii)………….. (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 Printed from counselvise.com 25 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.\" (emphasis supplied) On the issue there is similar judgement of Hon'ble Supreme Court in the case of Deputy Commissioner of Income-tax v. U. K. Paints (Overseas) Ltd. (2023) 150 taxmann.com 108 (SC)/([2023] 454 ITR 441 (SC)[25-04-2023). The judgement has been carefully considered. In para 1 and 3 the Hon'ble Supreme Court has held as under- 1. In this batch of appeals, the assessments in case of each assessee were under section 153-C of the Income-tax Act, 1961 (for short, the Act'). As found by the High Court in none of the cases any incriminating material was found during the search either from the Assessee or from third party. In that view of the matter, as such, the assessments under section 153-C of the Act are rightly set aside by the High Court. However, Shri N Venkataraman, learned ASG appearing on behalf of the Revenue, taking the clue from some of the observations made by this Court in the recent decision in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC), more particularly. paragraphs 11 and 13, has prayed to observe that the Revenue may be permitted to initiate re- assessment proceedings under section 147/148 of the Act as in the aforesaid decision, the powers of the re-assessment of the Revenue even in case of the block assessment under section 153-A of the Act have been saved. ........................... 3. However, so far as the prayer made on behalf of the Revenue to permit them to initiate the reassessment proceedings is concerned, it is observed that it will be open for the Revenue to initiate the re-assessment proceedings in accordance with law and if it is permissible under the law. (emphasis supplied) In para 11 of the order in case of Principal Commissioner of Income-tax, Central- 3 v. Abhisar Buildwell (P.) Ltd. (Supra), the Hon'ble Supreme Court inter-alia has held as under- \"11………….However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to Printed from counselvise.com 26 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 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.\" The assessment order and submissions of the appellant in the appeal and the remand report on the issue and the rejoinder reply of the appellant on the remand report, all have been duly and carefully considered. Neither in the assessment order nor in the remand report there is any reference to incriminating material unearthed during the course of search and seizure action in the case of the assesse appellant for the year under appeal w.r.t. the additions made in the assessment order. The status of assessments before issuance of notice u/s 153A is found to be not-pending / not-abated on the date of search and the time to issue notice u/s 143(2) of the Act had expired already. As mentioned in the assessment order the assessee had filed his regular return u/s 139 of the Act on 13.09.2015 and thus the time to issue notice u/s 143(2) of the Act had expired in Sep. 2016. The search & seizure operation under section 132(1) of the Income-tax Act, 1961 was carried out on 09.07.2018. There is no reference by the AO or by the appellant to any other pending assessment proceedings as on date of search. Thus on the date of search as per section 153A of the Act no assessment proceedings were pending. Accordingly, the judgement of Hon'ble Supreme Court in the case of Abhisar Buildwell (supra) and U. K. Paints (supra) are squarely applicable to the facts of the case. Accordingly, following the judgment of honorable Supreme Court it is held that the Id. AO rightly issued notices u/s 153A of the Act and at the same time the impugned addition made in assessment order u/s 153A cannot be sustained and is hereby deleted as the same is without basis of incriminating material unearthed during the search action on the appellant. Therefore, normally, the impugned addition could have been done by the learned assessing officer in re-assessment proceedings by issuance of notice under section 147/148. CBDT (ITJ Section) has issued Instruction No. 1 of 2023 dated 23-08-2023 vide F.No. 279/Misc./M-54/2023-ITJ on the subject \"Implementation of the judgment of the Hon'ble Supreme Court in the case of Pr.CIT (Central-3) Printed from counselvise.com 27 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. v/s Abhisar Buildwell Pvt. Ltd. (Civil Appeal No. 6580 of 2021)-Instruction regarding. However these findings and directions are subject to discussion and findings in the following paragraphs. There is merit in the alternative argument of the appellant that even if for the sake argument, the documents found and seized during the search action carried out at the premises of Mr. Satish Monga, his statements recorded during search and statements of other persons are treated as 'incriminating material, yet, based on such third party materials, the assessment could be finalized only u/s 153C of the Act and not u/s 153A of the Act after recording of necessary satisfaction by the AO of searched party and the party of appellant. Reference in this regard is also made to judgement in case of Shyam Sunder Khandelwal v. Assistant Commissioner of Income-tax [2024] 161 taxmann.com 255 (Rajasthan)[19-03- 2024] As per the legal position if in the case of completed/unabated category of case the additions in the assessment order has only been made on the basis of material found and seized from the search action on the other assessee in that case the learned AO should have initiated the proceedings under section 153C of the Act for making the additions. As per the ratio of the judgement in the case of Tirupati Construction Company v. Income-tax Officer [2024] 165 taxmann.com 176 (Rajasthan)/[2024] 465 ITR 611 (Rajasthan) (21-03 2024], collection after search of further additional details relating to search would not mean collection of new incriminating material and information independent of the incriminating material and information collected during search proceedings. It is noted in the present case that there is incriminating material from the search on other assessee le. Sh. Satish Monga and further from the connected post search inquiries on the issue. Since in the present case, there is incriminating material from the search on other person in the from of documents, digital documents and data, statements recorded etc., the impugned addition could have been done by the learned assessing officer in proceedings u/s 153C of the Act. The Id. AOs of the searched persons (Sh. Satish Monga) and of the appellant shall be at liberty to proceed against the appellant in accordance with law. Reference in this regard is also made to judgement of Shyam Sunder Khandelwal (supra). It is held in the case of Shyam Sunder Khandelwal (supra) as under:- 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition, the AO has to proceed under Section 153C. The two pre-requisites are that the AO dealing Printed from counselvise.com 28 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. with the assessee on whom search was conducted or requisition made, being satisfied that seized material belongs or relates to other assessee shall hand over it to AO having jurisdiction of such assessee. Thereafter, the satisfaction of AO receiving the seized material that the material handed over has a bearing for determination of total income of such other person for the relevant preceding years. On fulfillment of twin conditions the AO shall proceed in accordance with the provisions of Section 153A. 26. Special procedure is prescribed under Section 153A to 1530 for assessment in cases of search and requisition. There cannot be a quibble with the proposition that the special provision shall prevail over the general provision. To say it differently the provisions of Section 153A to 153D have prevalence over the regular provisions for assessment or reassessment under Section 143 & 147/148. 27. Section 153A and 153C starts with non-obstante clause. The procedure for assessment/reassessment in Section 153A, 153C in cases of search or requisition has an overriding effect to the regular provisions for assessment or reassessment under Sections 139, 147, 148, 149, 151 8 153. ………………….. 30. The argument that by enactment of Section 153A to 153D has not eclipsed Section 148 does not enhance the case of respondent to initiate the proceedings under Section 148. On fulfillment of two conditions for invoking Section 153C the proceeding in accordance with Section 153A are to be initiated. The operating field of and Section 153A to 153D and Section 148 are different. Applicability of Section 153C in cases where the seized material related to or belonged to person other than on whom search is conducted or requisition made does not render Section 148 otiose. Section 148 shall continue to apply to the regular proceedings and also in cases where no incriminating material is seized during the search or requisition. 32. The argument that Section 153C can be invoked in case there is incriminating material for all the relevant preceding years and otherwise Section 148 is to be resorted to, is misplaced. On satisfaction of the twin condition for proceedings under Section 153C, the AO has to proceed in accordance with Section 153A. Notice is to be issued for filing of the returns for relevant preceding years and thereupon proceed to assessee or re-assessee the total income. It is not obligatory on the AO to make assessment for all the years, the earlier orders passed may be accepted. But once there is incriminating material seized or requisitioned belonging or relatable to the person other than on whom search was conducted, Section 153C is to be resorted to.\" This ground of appeal of the appellant is allowed in the above terms. Printed from counselvise.com 29 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 5. The above finding of the ld. CIT(A) was not accepted by the revenue and thereby the revenue challenges that finding of the ld. CIT(A) before this tribunal on the grounds as reiterated herein above in para 2 and 2.1. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. AO. The ld. DR also serviced the additional ground stating that the ld. CIT(A) should not decide the appeal only on the technical ground and should have decided the merits of the disputed as in detailed discussed by the ld. AO wherein the ld. AO has discussed the organized tax evasion though the accommodation entry by paper companies and thereby the overall view of the matter is required to be taken. However, we note that the ld. DR did not bring on record any judicial ruling to support her view that was different to what has been considered by the ld. CIT(A) but at the same time ld. DR vide her letter dated 16.07.2025 requested 10 days’ time to submit the factual report and submit the evidence on the additional ground raised after the matter was heard and order was reserved. The relevant submission as well as prayer of the ld. DR made vide letter dated 16.07.2025 reads as follows Printed from counselvise.com 30 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. “May it please your Honours, The present appeal has been filed by the Department. It is respectfully submitted that additional grounds of appeal were filed on 08.07.2025, raising the issue that the Ld. CIT(A) erred in deciding the case on a technical ground alone without adjudicating the merits of organized tax evasion through accommodation entries. During the hearing, the Revenue submitted that the books of account of the assessee were seized during the search, and the entries therein relating to share premium and commission were later admitted by the Director, Shri Satish Monga, under Section 132(4) to be accommodation entries. Subsequently, the assessee filed a cross-objection challenging the validity of the proceedings under Section 153A on 14/07/2025. In this context, the Hon'ble Bench provided time for submission till 17/07/2025 and on being requested by we, assured to put the matter on clarification if required. A communication to this effect has already been issued by the undersigned to the Jurisdictional Assessing Officer vide letter dated 14.07.2025, requesting the requisite factual report and supporting documents, which are to be filed before the Hon'ble Bench. It is respectfully submitted that the concerned officer is currently engaged in search duty, from 14/07/2025 and the factual report is expected shortly. Accordingly, it is most respectfully prayed that the Hon'ble Bench may kindly grant 10 days' time to the Department to place the factual report and rejoinder on record. We sincerely regret the inconvenience caused to the Hon'ble Bench and the respondent, and assure that the matter will be appropriately complied with at the earliest in the interest of justice.” Though this request was considered but as there was no submission from the ld. DR even after passage of 15 days instead of 10 days prayed the bench proceeded to decide this appeal based on the material placed on record and arguments made at the time of hearing of the present appeal. Printed from counselvise.com 31 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 6. On the other hand, ld. AR of the assessee supported the order of the ld. CIT(A). He further submitted the written submission which reads as follows: In connection with the ongoing appellate proceeding, we are making this short submission in support of our contention that the statement of a third party alone cannot be the base of addition and cannot be considered as incriminating material for the purpose of invoking provisions contained u/s 153A of the Act in case of assessee. Therefore, the reliance placed by the Ld. AO on the statement of third party Mr. Satish Monga for the purpose of initiating proceeding u/s 153A of the Act and making addition in case of appellant for the concluded A.Y. 2014-15 was not valid in law where no incriminating material was found during the course of search action carried out at the premises of appellant. The said contention is supported by the recent judicial decision pronounced by Hon'ble Jurisdictional High Court in case of Principal Commissioner of Income-tax v. Esspal International (P.) Ltd. [2024] 166 taxmann.com 722 (Rajasthan) the head note of which is as under: Section 68 of Income-tax Act, 1961 Cash credit (Share application money) -Assessment year 2014-15-During a search conducted upon one SCS, it was found that he was engaged in providing accommodation entries of share capital, share premium, share application money, unsecured loans, long term capital gains, short term capital gains etc. in lieu of cash received by him and that it had also provided one-time entry of certain amount towards share application money to assessee-company through a broker and such transaction was not genuine - Assessing Officer made addition under section 68 to income of assessee on account of same -It was noted that Tribunal had noted that assessee had furnished each and every document required for proving identity, creditworthiness of share applicants and genuineness of transactions, however, Assessing Officer had not been able to brought on record any evidence to show that cash was paid by assessee to any person for obtaining accommodation entries in form of share application money -Further, on a glance at materials on record, it was found that Assessing Officer assessed assessee under section 143(3) only on basis of statement given by SCS-However, it was a matter of record that SCS had retracted his statements given before Assessing Officer Whether, on facts, impugned addition made by Assessing Officer was without any basis - Held, yes [Para 14] [In favour of assessee) Also, the relevant extract of the said decision is reproduced as under: \"....2. This Income Tax Appeal has been filed under section 260-A of the Income Tax Act, 1961 and the following substantial questions of law have been framed…. Printed from counselvise.com 32 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. (iii) Whether on the facts and in the circumstances of the case and in law, the Id. ITAT was justified in dismissing the appeal of Revenue in not considering the issue on merit especially when Shri Shirish Chandrakant Shah in his statement recorded under section 132(4) of the Act dated 11.06.2013, in reply to question no.5, he had clearly stated that till 31.03.2012 he had provided one-time accommodation entries aggregating to Rs. 15,00,04,53,100/-to various beneficiaries which were identified by him as Annexure to his statement?\" 9. Applying the aforesaid test, we find that the question sought to be raised in this Income Tax Appeal is not even a question of law. The ground taken by the appellant that the findings recorded by the Tribunal are contrary to records seems to have been raised just for the sake of creating a ground; nothing has been shown to this Court on this point. The findings recorded by the oppellate Authority and the Tribunal are in consonance with the law of evidence and the Income Tax Act, in particular. On a glance at materials on record, we find that the Assessing Officer assessed M/s Esspal International Pvt. Ltd. under section 143(3) of the Income Tax Act, 1961 only on the basis of the statement given by Shirish Chandrakant Shah, though he has recorded that the assessment order is being passed after considering the \"totality of the facts and circumstances the case\" 11. Now it is a matter of record that Shirish Chandrakant Shah had retracted his statements given before the Assessing Officer. Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition. Therefore, the substantial questions of law framed by the appellant pertained to an open issue which stands concluded by the decision of the Hon'ble Supreme Court; one such decision was rendered in \"M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another\" [1973] 19 ITR 18...\" Similar is the case on hand and based on the statement of third party statement i.e. statement of Mr. Satish Monga, the proceeding u/s 153A was initiated and addition was made by the Ld. AO despite the fact that the year under consideration was unabated assessment year and no incriminating material was found during the course of search action carried out at the premises of appellant. Therefore, the Ld. CIT(A) has rightly held the said action of Ld. AO as invalid and deleted the addition. In view of above, we request your Honor to kindly sustain the Order passed by the Id. CIT(A). The copy of the above discussed decision is attached herewith vide Annexure-1. Printed from counselvise.com 33 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 7. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: Sr. No. Particulars Page No. 1. Written Submission made before Ld. CIT(A) dated 13-06-2023 1 to 59 2 Copy of Remand Report dated 09-10-2024 60 to 91 3 Written Submission made before Ld. CIT(A) submitted on 22-10-2024 - Comments On Remand Report Dated 07-10-2024 92 to 117 4 Written Submission - Rejoinder before Ld. CIT(A) submitted on 22-11- 2024 118 to 123 5 Copy of Panchnama drawn in respect of search action carried out in case of appellant 124 to 128 6 Documents related to share application transactions as submitted during the course of Assessment Proceeding u/s 153A. which include balance Sheet of GRG Mercantiles Pvt. Ltd., Board Resolution for investment in appellant company, its Certificate Incorporation, its confirmation , Share Application Form, Bank Account Statement, and other forms as per Companies Act in respect of such share capital transactions 129 to 187 7 Copy of statement of Mr. Sanjay Jain , director of appellant company 188 to 265 8 Principal Commissioner of Income Tax, Central-3 Versus Abhisar Buildwell P. Ltd. CIVIL APPEAL NO. 6580 OF 2021 (SC) 266 to 324 9 Jai Steel (India) v. Asstt. CIT [201.3] 36 taxmann.com 523/219 Taxman 223 (Raj) 325 to 334 10 Principal Commissioner of Income-tax, Delhi-2 v. Best Infrastructure (India) (P.) Ltd. [2017] 84 taxmann.com 287 (Delhi) 335 to 348 11 Copy of computation of income , audited financial statements and tax audit report for the year under consideration 349 to 392 12 Bijender Singh Lohia vs. JCIT (OSD) ITAs No.1528 & 1529/Del/2022 393 to 406 Printed from counselvise.com 34 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 13 Joint Commissioner of Income Tax vs. M/s. Sangani Industries Pvt . Ltd. I.T.(SS)A. No. 63/Ahd/2021 407 to 414 8. The ld. AR filed a written submission on the additional ground raised by the revenue which reads as follows: Submission on Additional Ground of Appeal raised by the department The revenue has raised following additional ground of appeal before your Honour on 08-07-2025 which is as under: 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is justified in deciding the case on technical ground only and in not adjudicating the merits of the case ignoring the fact that this is the matter of organized tax evasion through obtaining accommodation entries. In this regard, we wish to state that the year under consideration is undisputedly the unabated assessment year. Further, during the course of search action conducted in case of appellant, no incriminating material was found and thus, the addition made was not based on any incriminating material. The same is the categorical finding of Id. CIT(A) in the order passed u/s 250 of the Act which was 10/3 passed after calling for the remand report of the AO. Also, on perusal of the grounds of appeal raised by the revenue in Form 36, it is evident that it is not even the case made out by department that any incriminating material was found during the course of search at the premises of appellant. The revenue's entire reliance is on the statement recorded of third party Mr. Satish Monga which cannot be the base of assessment u/s 153A in case of appellant in view of the fact that the year under consideration is unabated and no incriminating material was found during the course of search in case of appellant. The case of appellant is squarely covered by the decision pronounced by Hon'ble Supreme Court in case of Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC) and following the said decision, Id. CIT(A) rightly held that the assessment finalized u/s 153A of the Act in absence of any incriminating material for the concerned unabated assessment year was not valid and therefore, the addition was rightly deleted on the said legal ground. As the assessment finalized u/s 153A and addition made therein were held to be invalid on above discussed legal ground, the other grounds pertaining to the merit were rendered academic. Therefore, Ld. CIT(A) rightly did not adjudicate the grounds on merits as it was not required. Hence, there is not merit in the additional ground raised by the revenue. Printed from counselvise.com 35 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. Prayer: In view of above, we request your Honour to kindly not draw any adverse inference against appellant based on such additional ground raised by department as the matter stands squarely covered and CIT(A) has correctly disposed of the appeal due to lack of incremating material. 9. We have heard the rival contentions, perused the material placed on record and gone through the orders of the lower authorities. Vide Ground no. 1 the revenue challenges the deletion of the addition of Rs.1,70,00,000/- in respect of unexplained share capital/premium received from M/s GRG Mercantile Pvt. Ltd which is factually an accommodation entry and the same fact was admitted by Sh. Satish Monga, director M/s GRG Mercantile Pvt. Ltd. in his statement recorded u/s 132(4) of the Act and vide ground no 2 it challenges the action of the ld. CIT(A) in directing to delete the addition of Rs. 3,40,000/-made by the A.O. on account of commission paid for obtaining accommodation entry in the form of share premium disregarding the fact that the same fact was admitted by Sh. Satish Monga, director M/s GRG Mercantile Pvt. Ltd. in his statement recorded u/s 132(4) of the Act. Vide additional ground raised by the revenue it was contended that ld. CIT(A) was not justified in deciding the case on technical ground only and in not adjudicating the merits of the case ignoring the fact that this is the matter of organized tax evasion through obtaining accommodation entries. Printed from counselvise.com 36 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. The brief facts of the case are that for the year consideration the assessee has on various dates allotted shares to M/s GRG Merchantiles Pvt. Ltd for an amount of Rs. 1,70,00,000/-. In the assessment proceeding ld. AO asked the assessee to prove the the creditworthiness and genuineness of the investment of Rs. 1,70,00,000/- made by the company M/s GRG Merchantiles Pvt. Ltd. During the financial year 2014-15, the assessee company has raised Share capital of including Share premium of Rs. 1,70,00,000/-from GRG Mercantile Private Limited @ 250/- per share. Ld. AO has stated that statement on oath u/s 132(4) of the Act was recorded of Shri Satish Monga on 09.07.2018 wherein he admitted that the investment made through M/s GRG Merchantiles Pvt. Ltd in M/s Supreme Polymers Pvt. Ltd was nothing but an accommodation entry on commission basis. Shri Satish Monga, Sh. Kamlesh Kumar Gupta & Sh. Shashikant Khetan clearly admitted that the investment made through M/s GRG Merchantiles Pvt. Ltd in M/s Supreme Polymers Pvt. Ltd is nothing but an accommodation entry on commission basis. In the post search proceeding Shri Sanjay Jain was confronted with all the evidences relating to bogus share premium. He was also confronted with the statements of the entry operators Shri Satish Monga, Sh. Kamlesh Kumar Gupta & Sh. Shashikant Printed from counselvise.com 37 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. Khetan who have admitted on oath that they have provided accommodation entries to Supreme Group companies. Record reveals that return of income for the year under consideration was filed on 13.09.2015 and was processed on 09-12-2015 as such. Thereafter search action was conducted on 09.07.2018. Thus, as per the record for the year under consideration no assessment proceeding was pending. The time limit for issuance of notices under section 143(2) was completed on 30th September 2016 i.e. within 6 months from the end of the month in which return was furnished. The assessment for the year under consideration, thus, achieved finality even before the search operation was carried out. Thus, so far as proceeding u/s. 153A of the Act is concerned same was required to be completed qua the seized incriminating material. As is evident from the set of facts that there is no merits in the contention of the revenue that they raised the additional ground and that ground is not technical ground requires various facts. Having admitted that additional ground there no material whatsoever in the nature of incriminating material were serviced at the time of hearing and thereafter till the time allowed to revenue to make the submission on the issue or that of presenting any material. Thus, now based on the facts presented before us the assessment is required to be framed qua the incriminating material and not Printed from counselvise.com 38 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. on the material or transaction already recorded in the books. Record further reveal that, during the course of search action conducted in case of appellant, no incriminating material was found and thus, the addition made was not based on any incriminating material even this facts were confirmed while the proceeding before the ld. CIT(A) in the remand proceedings and is categorically mentioned by the ld. CIT(A). The bench also noted that from the grounds of appeal raised by the revenue that in Form 36, it is evident that it is not even the case made out by department that any incriminating material was found during the course of search at the premises of assessee-appellant. The revenue's entire reliance is on the statement recorded of third party Mr. Satish Monga which cannot be the base of assessment u/s 153A in case of appellant in view of the fact that the year under consideration is unabated and no incriminating material was found during the course of search in case of appellant. Therefore, the issue of making the addition in search case dehors the incriminating material set right by the apex court while dealing with the case of revenue named Principal Commissioner of Income Tax, Central-3 Vs. Abhisar Buildwell (P) Ltd. [ 149 taxmann.com 399 (SC) ]; 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 Printed from counselvise.com 39 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 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 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 Printed from counselvise.com 40 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. only one assessment order in respect of each of the six AYs \"in which both the disclosed and the undisclosed income would be brought to tax\". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment \"can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.\" v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or 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 (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 Printed from counselvise.com 41 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 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 sub-section (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 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 Printed from counselvise.com 42 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 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 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 Printed from counselvise.com 43 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 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 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 Printed from counselvise.com 44 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 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, 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 Printed from counselvise.com 45 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. 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 High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. Respectfully following the decision of the apex court we considered the arguments of the assessee that no addition can be made in respect of the completed assessment in the absence of any incriminating material. Since the ld. CIT(A) has categorically discussed the facts of the case and called for the remand report from the AO and since no material whatsoever having nature of incriminating we do not find any infirmity in the finding of the ld. CIT(A) and the addition was rightly deleted on the said legal ground. Therefore, the assessment finalized u/s 153A and addition made therein were held to be invalid on above discussed legal ground, the other grounds pertaining to the merit becomes academic in the absence of any supportive material or that of the additional ground fails and become academic without any supportive material or facts. Even otherwise when the AO has in the remand proceeding before the ld. CIT(A) confirmed that there was no incriminating material on the issue of addition disputed before us also there is silence on the issue we do not see any infirmity in the finding of the ld. Printed from counselvise.com 46 ITA No. 189/JP/2025 DCIT vs. Supreme Polymers Pvt. Ltd. CIT(A) and therefore, the grounds of appeal raised by the revenue are dismissed based on the above findings. In the results the appeal of the revenue stands dismissed. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 06/08/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 06/08/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- DCIT, Central Circle-03, Jaipur 2. izR;FkhZ@ The Respondent- Supreme Polymers Pvt. Ltd., Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 189/JP/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar Printed from counselvise.com "
Other Referred Cases
PCIT Vs NRA Iron and Steel Private Limited, Abhisar Buildwell (P.) Ltd. vs. Principal Commissioner of Income-tax, Central-3, Kabul Chawla vs. Principal Commissioner of Income-tax, Saumya Construction (P.) Ltd. vs. Principal Commissioner of Income-tax, Shyam Sunder Khandelwal vs. Assistant Commissioner of Income-tax, Real Marketing Private Limited vs. Assistant Commissioner of Income-tax, Bijender Singh Lohia vs. JCIT (OSD), Central Circle-26, New Delhi, Mansukh Kanjibhai Shah vs. ACIT, Unique Star Developers vs. DCIT, Anand Kumar Jain (HUF) vs. Principal Commissioner of Income-tax, Central-3
Laws Referred To
Income Tax Act, 1961
Tax Holiday Secrets for Startups
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1:1 Consultation on Tax Litigation
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1:1 Consultation on SME Listing
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Initial LLP Agreement
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Form AOC-2 - Disclosure of Related Party Transaction
Mehul₹50
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