DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4), KOLKATA, KOLKATA V. SNOWTEX TRADELINK PVT LTD, KOLKATA

ITSSA 143/KOL/2023

AI Insights

The case involves multiple appeals by the Revenue against Snowtex Tradelink Pvt. Ltd., concerning the assessment years 2012-13 to 2017-18. The appeals were based on additions made under Section 68 of the Income-tax Act, 1961, which pertained to alleged bogus sales of investments and accommodation entries. The primary contention was whether the additions were justified in the absence of incriminating material found during a search operation under Section 132 of the Act. The Tribunal's decision relied heavily on precedents set by the Supreme Court and various High Courts, which emphasized that completed assessments cannot be disturbed without incriminating material directly linked to the assessments in question.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 39547 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 18-08-2023
• Other Referred Cases: CIT vs. Kabul Chawla, PCIT v. Abhisar Buildwell P. Ltd., Reckitt Colman of India Vs. ACIT, CIT, Kolkata \/ Veerprabhu Marketing Ltd., Principal Commissioner Of Income Tax vs M/s. Salasar Stock Broking Ltd., PCIT, Central-I, Kolkata Vs. Rashmi Infrastructure Ltd., CIT vs. Abdul Razak, Surjeet Singh Chhabra vs. UOI, Rakesh Mahajan vs. CIT, Sterling Machine Tools Vs CIT, PCIT Central Jaipur Vs Roashan Lal Sancheti, Kailashben Manharlal Chokshi v. CIT, Harjeev Aggarwal, Saumya Construction, Jai Steel (India) v. Asst. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT KUNDU; PRAKASHNATH BARNWAL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Set aside; Reassessment proceedings; Question of law; Unexplained cash credit; Income from undisclosed sources; Document seized; Documents seized; Retraction; Search and seizure; Accommodation entries; Block assessment; Liquidation; Bogus
• Section: 143(3); 142(1); 143(2); 143(1); 192; 48; 153; 132; 153A; 139(1); 68; 22; 113; 13; 153C; 73; 191; 264; 260A; 20

Judgement Text

" आयकर अपीलीय अधिकरण न्यायपीठ, कोलकाता । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER & SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. Nos. 140/KOL/2023, 141 to 143/KOL/2023 Assessment Years: 2012-13, 2015-16 to 2017-18 DCIT, Central Circle-1(4), 110, Shgantipally, Aaykar Bhavan Poorva, 3rd Floor, Kolkata-700 107 West Bengal Vs Snowtex Tradelink Pvt. Ltd. 18G Everest House, 46C, Chowringhee Road, Kolkata-700 071 [PAN : AAECS3864K] अपीलार्थी/ (Appellant) प्रत्‍ यर्थी/ (Respondent) Assessee by : Shri Miraj D. Shah, AR Revenue by : Shri Abhijit Kundu, CIT DR & Shri Prakash Nath Barnwal, CIT DR सुनवाई की तारीख/Date of Hearing : 11.06.2024 & 14.10.2024 घोषणा की तारीख /Date of Pronouncement : 18.10.2024 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER: The captioned appeals filed by the Revenue, pertaining to assessment years 2012-13 to 2017-18 are directed against the orders passed by the Learned Commissioner of Income Tax (Appeals) – 20, Kolkata (hereinafter referred to as the ‘ld. CIT(A)’) even dated 13th July, 2024, which is arising out of the different assessment orders under Section 153A/143(3) of the Income-tax Act, 1961 (the Act) dated 24.03.2022, 26.03.2023. 2. Since the issues raised in the instant four appeals are common and pertains to same assessee all these appeals have Page | 2 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 been taken together and are being disposed off by this common order for the sake of convenience and brevity. For the purpose of adjudication, we will take up the facts for 2012-13 for deciding the common issue and our decision shall apply mutatis mutandis on the remaining appeal. 3. Grounds of appeal raised by the Revenue for A.Y. 2012-13 as under:- “1. Whether on the facts and circumstance of the case and on materials available, 14. CIT(A) was erroneous in not appreciating the addition made of an amount of Rs.13,81,79,000/- u/s. 68 being Bogus Sale of Investments of unlisted companies by way of accommodation entries for which the identity of the creditors, creditworthineness of the creditors and genuineness of the transaction was not proved. 2. Whether on the facts and circumstance of the case and on materials available, the 14. CIT(A) has erred in not appreciating the statement of the Entry operator Shri Mukesh Banka, who provided the accommodation entries and also not appreciating the facts that Director of the Jalan Group has given the statement wherein he accepted the fact that they had generated undisclosed income of Rs.30 Crores and would offer the same for taxation during the course of search proceeding, as incriminating in nature. 3. Whether on the facts and circumstance of the case and on materials available, the ld. CIT(A)was correct in not going into the facts of the case and materials available and deciding only on lack of incriminating material 4. Whether on the facts and circumstance of the case and on materials available, the Hyden's rule of interpretation has been judicially accepted and applied by Calcutta High Court in Reckitt Colman of India Vs. ACIT(2001) 252 ITR 550(Cal). Wherein \"Incriminating material\" can be in any form, such as evidence in the nature of i) A document, content of any document, ii) an entry in books of accounts, iii) an asset; iv) statement given on oath, v) absence of any fact claimed earlier but coming to notice during search; vi) absence of books being found during search or vii) absence of the office/business premises as claimed during returns filed of any other documents, etc. 5. That the department craves leave to add, alter or modify any grounds of appeal in the course of appellant proceedings.” 4. Brief facts are that the assessee is a private limited company engaged in business. Regular return of income for A.Y. 2012-13 was furnished on 13th September, 2012, declaring income of ₹5,16,930/-. The return was processed u/s 143(1) of the Act. The assessee is part of the Jalan Group of companies which was subjected to search and seizure operation u/s 132 of the Income- Page | 3 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 tax Act, 1961 (the Act) carried out on 7th December, 2020. Subsequent to the search notice u/s 153A of the Act was issued after validly serving notices issued and in response the assessee furnished the return of income on 11th March, 2022, again offering the same income of ₹5,63,930/-. This return was picked up for scrutiny by validly serving notices u/s 143(2) and 142(1) of the Act. During the course of assessment proceedings the ld. AO made reference to the search carried out on 18th June, 2018 on Kolkata based alleged entry operator Mr. Mukesh Banka. Reference was also made to the statement of Mr. Mukesh Banka. The ld. AO also observed that the assessee company received share capital and share premium to the tune of ₹39.14 crore during F.Y. 2006-07. After few years, Mr. Nishant Bhalotia and Mr. Ajay Mohan Jalan, who are the part of the Jalan Group became the director/ authorized signatory on 10th November, 2011. The ld. AO also observed that the funds which were received at during F.Y. 2006- 07, have subsequently being routed through shell companies and brought into the business funds of the group. The ld. AO observed that the companies through which the assessee company received the share capital and share premium during F.Y. 2006-07, and thereafter, the realisation of funds by way of sale of shares and liquidating of loans and advances has been carried out through paper / shell companies. Based on this observations and coupled with the statement of key persons of Jalan Group, the ld. AO made the addition u/s 68 of the Act of ₹13,81,79,000/-. However, for making the impugned addition, the ld. AO has not referred to any incriminating material found and seized during the course of search. 5. Assessee preferred the appeal before the ld. CIT (A) and placed reliance on plethora of judgments including that of Hon'ble Page | 4 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 Delhi High Court in the case of CIT vs. Kabul Chawla (2016), 380 ITR 573(Delhi) and judgment of Hon'ble Apex court in case of PCIT v. Abhisar Buildwell P. Ltd. (2023)454 ITR 212(SC). It was also claimed before ld. CIT (A) that the assessment years in question are completed and non-abated assessment years and additions for these years can only be made if incriminating material giving rise to such additions is found and seized during the course of search. The ld. CIT (A) based on the facts of the case and the absence / reference to any incriminating material found during search relied on the judgment of Hon'ble Apex Court in the case of Abhisar Buildwell P. Ltd. (supra), and allowed the assessee’s appeal deleting the impugned addition. The ld. CIT (A) gave relief to the assessee considering the facts of the case and also examining the same in light of judicial precedents observing as follows:- “4.3 Observations and Decision: 4.3(a) I have carefully considered the facts of the case and submission of the appellant. Perusal of the assessment order shows that AO had not referred to any specific incriminating material seized during search. AO has only made general statement regarding evidences gathered post search enquiries. A.O. has also referred to post search enquiries and statements of entry operators, some of which were recorded prior to search on assessee. Hence, to get a better understanding, letter dated 17.02.2023 was sent to the AO for his clarification. Main contents of the letter are as under: “Appeals have been filed on 22-04-2022 against order u/s.153A dated 26- 03-2022. In response to the notices for hearing, appellant has made written submission of 17 pages on technical grounds relevant to the above mentioned assessment years. A copy of appellant’s submission is being forwarded for your perusal. You are requested to go through the appellant’s submission and offer your comments within 10 days of receipt of this letter. These appeals have been taken up for priority disposal on direction of the Hon’ble Calcutta High Court. Hence, necessary report should be sent within the time as indicated above.” But A.O. has not replied to this letter till date. No comments have been offered on assessee’s contention that no incriminating material was found during search. 4.3(b) Now, let us see the views expressed by the Hon'ble Jurisdictional High Court of Calcutta and other Courts/Tribunals on issue relating to additions made in search assessments without any incriminating material found during search. (a) In the case of CIT, Kolkata – III Vs. Veerprabhu Marketing Ltd.(2016) 73 taxmann.com 149 (Cal), Hon'ble High Court has held as under: Page | 5 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 “6. Mr. Nizamuddin, learned advocate, appearing for the revenue-appellant submitted that it is true that section 153C read with section 153A proceeds on the basis of search under section 132 or requisition under section 132A. There is no reference to any survey under section 133A. He, therefore, did not dispute the submission made by Mr.Jain that power under section 153C read with section 153A could only have been exercised in the case of a search and requisition. He, however, added that there was, in fact, a search as also a requisition. He submitted that there has been survey in addition thereto. Therefore, it cannot be said that exercise of power was bad. Admittedly, there was search as also requisition. 7. With respect to the second submission advanced by Mr. Jain, we called upon Mr. Nizamuddin in vain to show us the incriminating material, if any, found either during the search or during the requisition or even during the survey which is or may be relatable to the assessee. Mr. Nizamuddin as unable to show that any such incriminating material was unearthed at any of the three stages pertaining to the assessee. 8. We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. 9. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. 10. We find no infirmity in the aforesaid act of the learned Tribunal. The appeal is, therefore, dismissed. (b) In the case of Principal Commissioner Of Income Tax vs M/s. Salasar Stock Broking Ltd. order dated 24 August, 2016 G.A. No. 1929 of 2016 I.T.A.T. No. 264 of 2016 (Cal) the Hon'ble High Court has held as under: “Subject matter of challenge is a judgement and order dated 18th December, 2015 by which the learned Tribunal dismissed an appeal preferred by the Revenue registered as ITA No.1775/Kol/2012 and allowed a cross-objection registered as CO30/Kol/2013 both pertaining to the assessment year 2005- 06. The learned Tribunal was of the opinion that the Assessing Officer had no jurisdiction under Section 153A of the Income Tax Act to reopen the concluded cases when the search and seizure did not disclose any incriminating material. In taking the aforesaid view, the learned Tribunal relied upon a judgement of Delhi High Court in the case of CIT[A] vs. Kabul Chawla in ITA No.707/2014 dated 28th August, 2014. The aggrieved Revenue has come up in appeal. Mr. Bagaria, learned Advocate appearing for the assessee, submitted that more or less an identical view was taken by this Bench in ITA 661/2008 [CIT vs. Veerprabhu Marketing Ltd.] wherein the following views were expressed – \"We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre- requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the Page | 6 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances.\" In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed. (c) In the case of PCIT, Central-I, Kolkata Vs. Rashmi Infrastructure Ltd. in ITAT No.99 of 2019, G.A. No.1211 of 2019 dated 24.02.2020, the Hon'ble High Court of Calcutta has held as under: “This is an appeal under Section 260A of the Income Tax Act, 1961 against the order of the tribunal dated 5th December, 2018. We have much appreciated the conviction with which learned counsel for the revenue has tried to impress us that we should admit this appeal. The question is whether the assessee had unexplained cash credit in their books which could be charged to income tax in the previous year in question ? We find on scrutiny of paragraphs 10 and 10.2 of the order of the tribunal that questions of fact and evidence were discussed and adjudicated upon by it. We set out paragraphs 10 and 10.2 of the impugned order of the tribunal is as follows : \"10. Coming to the alleged cash trail, none of the material gathered by the Assessing Officer by way of bank account copies of various companies supposed to be part of the chain of companies was not confronted to the assessee. The alleged statements that were recorded from directors of these companies which formed this alleged chain were also not brought on record. Only a general statement has been made. There is no evidence whatsoever that cash has been routed from the assessee company to any of these chain of companies. There is no evidence that any cash was deposited by the assessee company. Moreover, there is no material whatsoever brought on record to demonstrate that the alleged cash deposit made in the bank account of a third party was from the assessee company. No opportunity to cross- examine any these parties was provided to the assessee. The bank statements based on which the cash trail was prepared are part of the disclosed documents and cannot be held as incriminating material. 10.2. Thus, none of these material gathered by the Assessing Officer can be categorized as incriminating material found during the course of search or found during the course of any other operation under the Act. Thus, we hold that the additions in question are not based on any incriminating material. The ld. CIT(A) on page 38 of his order held as follows: \" I have considered the findings of the AO in the assessment order, different case laws was brought on record and appeal orders passed by my predecessors on this legal issue. I find from the assessment order that during the search & seizure operations conducted u/s 132 of the IT Act, 1961, incriminating documents/papers were not seized. At least addition made by AO in the assessment order passed u/s 153A/143(3) are not based of any incriminating documents/papers seized during the search operation. It would also not to be out of context to mention here that in this case, on the date of search, no assessment for this year was pending. Therefore, keeping in view the ratio decided by the jurisdictional bench of Kolkata tribunal in case referred above and the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd(Supra) in the light of CBDT's decision of not filing SLP in this case in the Supreme Court and keeping in view the Apex Court's decision to dismiss SLP on the similar Page | 7 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 issue in the case of Pr CIT vs Kurele Paper Mills Pvt. Ltd: SLP (C) No. 34554 of 2015 dt. 07.12.2015, I am of this view that in order to maintain judicial continuity on this issue and respectfully following the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (Supra), assessee's appeal on ground no 1 is allowed and as such I am not inclined to adjudicate appeal on ground no. 2 on merit.\" The tribunal is the final fact finding authority. A plausible adjudication on facts has been made. We cannot reopen the facts any more in this jurisdiction. No questions of law far less any substantial question of law is involved. For those reasons, the appeal (ITAT No.99 of 2019) and the connected application (GA No.1211 of 2019) are dismissed.” (d) In the case of CIT (Central) – III Vs. CIT vs. Kabul Chawla (2015), 61 taxmann.com 412 (Delhi)……. In the case of CIT vs. Kabul Chawla (2016), 380 ITR 573(Delhi) the Hon’ble Delhi High Court has held that once a search takes place, notice u/s. 153A (1) has to be mandatorily issued. Assessment and re-assessment pending on the date of search shall abate. But, an assessment under the section 153A has to be made only on the basis of seized materials. In absence of any incriminating materials, the completed assessment can be only reiterated and assessment can be made only in respect of abated assessment or re-assessment. Completed assessment can be only interfered with by the AO while making the assessment u/s.153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in course of search which were not produced or not already disclosed or made known in the course of original assessment. While delivering the judgment; the Hon'ble Delhi High Court followed the judgment of the Bombay High Court in CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645. These two judgments have been followed by various High Courts and Tribunals on this issue. The position as on today is that in respect of completed assessment any addition can be made under proceedings u/s.153A only if any incriminating documents are found. As mentioned above, no incriminating documents have been found during search against the assessee. In the current case, additions (disallowances) have been made on the basis of information available in the Audit Report/Return of Income. Hence respectfully following the judgments / decisions of various High Courts and the Tribunals, including those of the jurisdictional High Court and ITAT, the disallowances made are not sustainable. The legal position was thereafter summarized by the Delhi High Court in Kabul Chawla's case (supra), as under : \"37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned of 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 assessment year in which the search takes place. Page | 8 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. iii. The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years \"in which both the disclosed and the undisclosed income would be brought to tax\". iv. Although section 153A 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 Assessing Officer 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 have 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 153A 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 assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. vii. Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 4.3(c) As can be seen from the above, the Hon'ble Calcutta High Court and Kolkata ITAT have, time and again, reiterated their view that the additions in the case of search assessments can be made on the basis of incriminating material only. Issue relating to additions being based on incriminating evidences found during search, has been recently examined by the Hon’ble Supreme Court. Several SLPs pending in the Hon’ble Supreme Court were heard together with the lead case in Pr. CIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Civil Appeal No.6580 of 2021, order dated 24-04- 2023. While deciding this appeal several judgements of various High Courts were discussed. Lead judgements by Delhi High Court in the case of Kabul Chawla and judgement of Gujarat High Court in the case of Saumya Construction were specifically discussed elaborately. After considering the arguments of the Department and the Assessee’s Advocates, the Hon’ble Supreme Court has upheld the judgement of the Hon’ble Delhi High Court in the case of Kabul Chawla and the judgement of Gujarat High Court in the case of Saumya Construction. Thus, the Hon’ble Supreme Court has held that no addition can be made in respect of Page | 9 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 completed assessment in absence of any incriminating material found during search. The operative part of the judgement is as under: “14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re- opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.” As mentioned above, no incriminating documents have been found during search against the assessee relevant to this particular assessment year. In the current case, additions (disallowances) have been made on the basis of information available in the Audit Report/Return of Income and some evidences gathered during post search enquiries and assessment proceedings. Hence, respectfully following the judgments/decisions of various High Courts and the Tribunals, including those of the jurisdictional High Court and ITAT and the judgement of the Hon’ble Supreme Court in PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Civil Appeal No.6580 of 2021, order dated 24-04-2023, it is held that the disallowances/additions made are not sustainable. In view of the facts narrated and the discussion above the disallowances/additions made by the AO vide order u/s.153A read with section 143(3) in this particular assessment year are not sustainable, as these are not linked to any incriminating material found at the time of search. Hence, additions of Rs.13,81,79,000/- are deleted. No observations are being made on the merits of the issue involved, as on technical ground it has been held that the additions made in proceedings u/s.153A are not sustainable, in the absence of incriminating material found during search. Besides, assessee has also not filed any submission on merits. 5. In the result, the appeal is ALLOWED.” 6. Aggrieved Revenue is now in appeal before this Tribunal, challenging the finding of ld. CIT (A) deleting the addition made u/s 68 of the Act for the impugned assessment years. Page | 10 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 7. The ld. DR stated that the alleged addition is on account of funds received from paper/ shell/ jamakharchi companies and also key persons of the companies have accepted it in the statement recorded u/s 132(4) of the Act. Ld. DR also referred to the following written submissions:- “Above analysis clearly establish that the cash loan given by Jalan Group concerns and individuals amounting to Rs. 13,60,00,000/- unaccounted and undisclosed in nature. 5.4 With regard to declining statement as incriminating materials, in this regard, the undersigned humbly submit that:- The primary thrust of the Search and Seizure action is to collect evidences of tax evasion which otherwise could not have surfaced and brought to tax. Section 132(4) of the act has been put in place by the legislature consciously so as to enable the authorized officer to collect such evidences by recording statements during the course of search. It is for this purpose that the Section 132(4) of the act empowers the Authorized Officer, to examine and record a statement under oath of any person who is found to be in possession or control of any books of account, documents, money, bullion, jewelry or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Income-tax Act, Direct Tax Law (Amendment) Act\"1987 w.e.f. 01-4-1989. inserted an explanation to Section 132(4), which reads as under:- \"Explanation-For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act\". The statements u/s 132(4) are recorded by administering oath, which is presumed to be carrying truth in view of the provisions of section 181 and section 193 of the Indian Penal Code which provide for imprisonment if a false statement is given. Therefore, there is a considerable importance of statements recorded u/s 132(4) during search and seizure operations, which is clear from the intent of Legislature as it thought fit to include a separate sub-section 132(4) for recording of statement during a search operation. Presumption is raised under section 132(4A) about the correctness of the evidence found. Hence, the statement given under sections 132(4) in presence of witnesses hold their evidentiary value if not rebutted by the assessee by submitting cogent evidence. Any retraction of a clear admission made has to be on the ground of it being either erroneous or factually incorrect or one made under threat or coercion. Now a question arises whether the statement recorded u/s 132(4) of the act can be retracted, if yes, then under what circumstances? The Thumb Rule to address this issue is to understand the legal principle that though an admission u/s 132(4) of the act is an extremely important piece of evidence, but it cannot be said that it is conclusive and it is open to the person, who made it, to show it that the impugned statement has incorrectly been made.As the statement recorded under section 132(4), is statutorily deemed to have evidentiary value; it cannot be retracted at the mere will of the party. Admission as has been often held is the best evidence on a point in issue and though not conclusive but the same is decisive of the matter Page | 11 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 unless successfully withdrawn or proved erroneous. Such statement, has to be taken as true unless there is contra evidence to dispel such assumption.A self- serving retraction, without anything more cannot dispel the statutory presumption. However, the presumption u/s 132(4) can be rebutted by proving that the admission or confession was caused by inducement, threat or promise, thereby making the admission irrelevant. At the same time, it has to be kept in mind that merely because a statement is retracted, it cannot become as statement which is involuntarily or unlawfully obtained. For any retraction to be successful in the eyes of law, the maker of statement has to show that earlier admissions: (i) were untrue having being the statement was given under duress, coercion; (ii) the statement was given under misconception of facts and law; (iii) the statement was not correct in the view of facts or material/evidence on record; and (iv) such other facts, material/evidence that come to light at a later stage show that the statement was not correct. Therefore, whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence as the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest point of time. When by a sworn statement or affidavit facts admitted, in an earlier statement which was recorded on oath, are retracted, the Assessing Officer may like to examine the maker carefully. Regarding the retraction made by way of an affidavit it is important to note that mere filing of an affidavit even before the Court will not conclusively make the earlier admissions ineffective because an affidavit is only a statement in respect of the matter in the personal knowledge and in respect of affidavit the deponent is liable to be cross- examined. On furnishing of an affidavit, the Authorized Officer is entitled to cross examine the deponent and the assessee can be required to produce the deponent in person for cross examination. If the assessee fails to comply affidavit can be ignored. However, if the Officer fails to cross-examine the deponent the statement made in the affidavit becomes unchallengeable in view of the decision of Supreme Court in the case of Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 wherein it held that it will not be open to the revenue to challenge the statements made by the deponent in their affidavits later on, if no cross examination with reference to the statements made in the affidavits is done. Further, for the retraction to be capable of overturning the earlier admission, such retraction has to be within reasonable time. The predominant judicial view is that it is not open to the assessee to change the stand it has already taken after a significant elapse of time and thus cause the situation in his favour by inducing the department not to investigate or enquire into the matter on the seized documents. In the course of practice, it is seen that the assessee\"s subjected to search and seizure action and after having tendered a statement u/s 132(4), generally sits over such statement till the commencement of assessment proceedings. If any retraction has to be made, it has to be made at the earliest. By seeking to retract at a later stage, the assessee scuttles the investigation that might have been resorted by the Investigation wing had the statement bring retracted earlier. This is also due to the fact that with passage of time, the evidence which the department could have collected may no longer be available; they might be manipulated, fabricated or destroyed. Further, the power of authorized officer to investigate is far wide and intense as compared to the power of Assessing Officer. By making the declaration before the authorized officer and admitting concealment and thereafter retracting it before the Assessing Officer, means practically closing the investigation by the investigation wing of the department. The predominant judicial view negates such retractions made at a later stage being an afterthought. Thus, any retraction sought to be made by the assessee after several months of declaration and admission under section 132(4) is only a well thought out device to shut the department from collecting the evidence to unearth unaccounted income. Page | 12 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 The above principles are based on analysis of following decisions of the SC/HC discussed herein under; - I Whether the statement recorded on oath can be used as Evidence for assessment under the Income Tax Act? In CIT Vs. Abdul Razak [2012] 20 taxmann.com 48 (Ker.) the court held that admission has been often held is the best evidence on a point in issue and though not conclusive is decisive of the matter unless successfully withdrawn or proved erroneous. In case of Surjeet Singh Chhabra vs. UOI [1997] 1 SCC 508, the Hon'ble SC held that revenue officers are not police officers and confession, though retracted, is an admission and binding on petitioner. In the case of Rakesh Mahajan vs. CIT 214 CTR 218 (P&H), it has been held that \"It is well settled that admissions constitute best piece of evidence because admission are self-harming statements made by the maker believing it to be based on truth. It is well known that no one will tell a lie especially harming one's own interest unless such a statement is true.\" In the case Sterling Machine Tools Vs CIT 122 ITR 926 the court held that the legal value of an admission is that it is the best evidence that an opposite party can rely upon, and though not conclusive, is decisive of the mater unless unsuccessfully withdrawn or proved erroneous. In PCIT Central Jaipur Vs Roashan Lal Sancheti (Rajasthan HC) in its order dated 30/10/2018 has once again after analysis of all the decisions on the issue and once again upheld that the admission u/s 132(4) is of great evidentiary value and such statement cannot be discarded just because assessee has belatedly retracted by an affidavit and the duration of time when such retraction is made assumes significance. In this case retraction was made after 8 months. It has been held in the case of Baban Singh vs. Jagdish Singh AIR 1967 SC 68 that where a false affidavit is sworn, the offence would fall u/s 191 and 192 of the Indian Penal Code 1860. Hence a notarized affidavit or a statement on oath has to be considered as a piece of evidence. 6. Issue in a nut shell: The assessee involved in a large scale of tax evasion by introducing its undisclosed and unaccounted funds into regular books of accounts. The above Jalan Group first gave cash loan (which are nothing but unaccounted and undisclosed) to finance broker viz. Anil Kumar Kasera and others. The evidence of cash loan is clear from the above Rukkas and statement of the finance brokers. Thereafter, the finance broker infused those funds in the guise of bogus sale of shares to the assessee and others group of companies with the help of exit providers. The whole mechanism was put before the key person of Jalan Group, Sri Ajay Mohon Jalan who could not answer satisfactorily along with substantive documentary evidences. Consequently, Sri Ajay Mohon Jalan disclosed an amount of Rs. 30 Crores which further make the ground more robust and concrete. It also corroborates the fact that the disclosure/entries in the regular books of the assessee is nothing but a subterfuge to conceal the true nature of the transactions represented by sale of bogus investments. Against the said backdrop, the regular books itself are Page | 13 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 incriminating in nature, a fact confirmed by the director, Ajay Mohon Jalan in his sworn statement. In a recent judgement of Hon'ble Jurisdictional Calcutta High Court in Principal Commissioner of Income-Tax Vs BST Infratech Ltd.[2024] 161 tasmann.com 668 (Calcutta), the ratio laid down was that modus operandi adopted by the assessee to introduce unaccounted money in regular books was construed as incriminating, with the Hon'ble Court relying on the substance of a bogus transaction rather than on its form where apparently transactions were undertaken through banking channels to circumvent the provisions of the Act. 7. In case, the above mentioned statements (Sri Ajay Mohon Jalan, Mukesh Bank, Anil Kumar Khemka etc) are not treated as incriminating materials and the case is decided on the basis of Abhishar Buildwell Judgement, then it is solicited to kindly not consider the issues on merits so that corrective measure may be taken and remedial recourses may be initiated to consider the instant issues as per provision of Income Tax Act.”” 8. On the other hand, the ld. counsel for the assessee vehemently argued, supporting the finding of the ld. CIT (A) stating that case of the assessee is squarely covered by the judgment of Hon'ble Apex Court in the case of Abhisar Buildwell P. Ltd. (supra). He also submitted that additions cannot be made only on the basis of the statement recorded u/s 132(4) of the Act and the same needs to be corroborated with any incriminating material found during the course of search. For this proposition reliance was placed on the judgment of Hon'ble Delhi High Court in case of PCIT vs Pavitra Realcon Pvt. Ltd. 2024 (5) TMI 1408 (Delhi) dated 29 May, 2024. 9. We have heard the rival contentions and perused the materials available on record. The common grievance of the Revenue is against the finding of ld. CIT (A) deleting the addition made by the ld. AO u/s 68 of the Act, for the alleged credits received from paper / shell companies. We observe that the assessee company was subjected to search operation u/s 132 of the Act carried out on 7th December, 2020. The observations made by the ld. AO for the impugned years reveals that the regular return of income u/s 139(1) of the Act for A.Y. 2012-13, 2015-16, 2016-17 and 2017-18 were filed u/s 139(1) of the Act on 30th Page | 14 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 September, 2012, 30th September, 2015, 23rd September, 2016 and 31st October, 2017 declaring income of ₹563930, ₹965490, loss of (-)₹2557183 and ₹3470530/- respectively. It is also an undisputed fact that as on the date of search no assessment was pending for the impugned assessment years. It is also admitted fact that for all the four assessment years, referred above, no notice u/s 143(2) of the Act was issued for the purpose of selecting the assessee’s case for scrutiny. Thus, it can be safely inferred that as on the date of search all the four assessment years in question falls in the category of completed / non-abated assessment years. 10. Further, from going through the assessment orders, we notice that the ld. AO has not referred to any seized material incriminating in nature found during the course of search. Perusal of the assessment order indicates that the ld. AO has only referred to certain transaction which already stands disclosed in the audited financial statement attached with the income tax return filed by the assessee in the past. The ld. AO has also referred to the statement of one Mr. Mukesh Banka, which was taken on 8th June, 2016, who is alleged to be a entry operator but having no connection with search carried out on assessee. We would like to make reference to Para 2, 3 and 4 of the assessment order for A.Y. 2012-13 and the same is read as under:- “2. During the course of search operation it was seen that the assessee company, on 21.04.2007 Ltd had raised share capital amounting to Rs. 39,12,00,000/- by allotting 9,78,000 shares at face value of Rs. 10/- and premium of Rs. 390/-, (Table of allotment containing name of allottee, PAN, address etc are famished below). On perusal of the list of allottees, it was seen that most of these allottee companies appear in the database of shell companies. ITR analysis of these companies also revealed that these companies have no creditworthiness to invest in the share of the company at such an exorbitant price. Thereafter, the company was taken over by Jalan Group by appointing its persons Shri Nishant Bhalotia and Sri Ajay Jalan as director/ authorized signatory on 10.11.2011. 3. The fund raised as share capital/ premium was initially invested in the form of unlisted equities, but once the company was taken over by the Jalan Group, there has been sale / liquidation of shares over the years and the amount so realized has Page | 15 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 been utilized as short term loans and advances to related parties/investment in mutual funds/ investment in properties/long term loans and advances and others etc. Relevant portion of the financial analysis of the assessee company is as below: Page | 16 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 “ 4. M/s. Snowtex Tradelink Pvt Ltd is/ was originally a paper/shell company under control and management of well known Kolkata based entry operator Sri Mukesh Banka. A Search and seizure operation was conducted by the department on Bank group on 08/06/2018 and during the course of search operation, his statement was recorded and again his deposition was recorded during the course of PO operation in the post search proceedings. In his dseposition, he had provided a list of all the paper/ shell companies having significant capital which was acquired by some beneficiary concern/ group and this list includes the name of company Snowtex Tradelink Pvt Lid at Sl No:22 in his reply to question no:22 of the deposition. The relevant portion of his statement is as below:” 11. We also notice that in one of the assessment year that for the A.Y. 2017-18, the ld. AO has given reference to the details of share premium and share capital received by the assessee company during the F.Y. 2006-07, and the theory developed by the AO for the alleged assessment years is based on the funds received by the assessee company during the F.Y. 2006-07, which has subsequently been routed by sale of shares, re-investing into equities of other companies, liquidation of loans and advances and then again giving fresh loans and finally the funds have been utilized by the assessee company in its other group of companies. We therefore, reproduce below the detail mentioned by the ld. AO at page no.2,3,4,5 for A.Y. 2017-18:- Page | 17 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 Page | 18 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 Page | 19 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 12. Now, going through the above details and the observations of the ld. AO, we note that the basis of the alleged addition is the statement recorded u/s 132(4) of the Act and the theory developed by the ld. AO based on the past transactions of the assessee company and co-relating the same with the statements of the alleged entry operator Mr. Mukesh Banka. We also notice that apart from referring the financial transactions, duly reported in the audited financial statement of the assessee company as well as its group companies which duly stands filed with the income tax return filed u/s 139(1) of the Act, the ld. AO has not referred to any incriminating material found and seized during the course of search. 13. Now, so far as the contention of ld. DR that the key persons of the assessee company has accepted the existence of accommodation entry transactions in the statement recorded u/s 132(4) of the Act, though, before us the ld. counsel for the assessee has stated that there is no such admission of the director of the assessee company in the statement u/s 132(4) of the Act of the Page | 20 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 assessee company being engaged in receiving the accommodation entries. But, even otherwise, it has been held time and again that the additions cannot be made solely on the basis of admission made in the statement recorded u/s 132(4) of the Act and the existence of incriminating material giving rise to such addition in sine qua non. We draw support from the judgment of the Hon'ble Delhi High Court in case of Pavitra Realcon Pvt. Ltd. (supra) and the same read as under:- “17. We have heard the learned counsels appearing on behalf of the parties and perused the record. 18. The primary grievance which arises in the present appeals pertains to whether the ITAT was right in deleting additions made under Section 68 of the Act by holding that no assessment could have been made on mere presumption of existence of incriminating material. 19. Undisputedly, during the period of search, no incriminating material appears to have been found. However, the Revenue proceeded to issue notice under Section 143(2) of the Act on the pretext of the statements of the Directors of the respondent- assessee companies recorded under Section 132(4) of the Act and material seized from the search conducted on Jain group of companies. The assessment order was also passed under Section 143(3) read with Section 153C of the Act making additions under Section 68 of the Act. 20. However, it is an undisputed fact that the statement recorded under Section 132(4) of the Act has better evidentiary value but it is also a settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements. 21. In the case of Kailashben Manharlal Chokshi v. CIT1, the Gujarat High Court held that the additions could not be made only on the Signature 1 Not Verified 2008 SCC OnLine Guj 436 Digitally Signed By:MAANAS JAJORIA Signing Date:29.05.2024 16:29:11 B basis of admissions made by the assessee, in the absence of any corroborative material. The relevant paragraph no. 26 of the said decision has been reproduced hereinbelow: - 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary state ment, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbelieve the retrac tion made by the Assessing Officer and explanation duly supported by the evidence. We are, Page | 21 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has com mitted an error in ignoring the retraction made by the assessee. [Emphasis supplied] 22. Further, the position with respect to whether a statement recorded under Section 132(4) of the Act could be a standalone basis for making assessment was clarified by this Court in the case of CIT v. Harjeev Aggarwal2, wherein, it was held that merely because an admission has been made by the assessee during the search operation, the same could not be used to make additions in the absence of any evidence to corroborate the same. The relevant paragraph of the said decision is extracted herein below: \"20. In our view, a plain reading of section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words \"evidence found as a result of search\" would not take within its sweep statements recorded during search and seizure operations. However, the Signature 2 Not Verified 2016 SCC OnLine Del 1512 Digitally Signed By:MAANAS JAJORIA Signing Date:29.05.2024 16:29:11 B statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to section 132(4) of the Act. However, such statements on a stand alone basis without reference to any other material discovered during search and seizure operations would not empower the Assessing Officer to make a block assessment merely because any admission was made by the assessee during search operation. [Emphasis supplied] 23. In our opinion, the Act does not contemplate computing of undisclosed income solely on the basis of statements made during a search. However, these statements do constitute information, and if they relate to the evidence or material found during the search, they can be used in proceedings under the Act, as specified under Section 132(4) of the Act. Nonetheless, such statements alone, without any other material discovered during the search which would corroborate said statements, do not grant the AO the authority to make an assessment.” 14. Now, coming to the second fold of argument that because of completed and non-abated assessment years, no addition can be made for such years unless and until the Revenue authorities are able to lay their hands on the incriminating material found and seized during the course of search and the same are being referred and nexus drawn prior to making the addition in the hands of the assessee. As referred above, we find that the returns of income for all the alleged assessment years stood filed prior to the due dates prescribed u/s 139(1) of the Act, i.e. prior to date of search which Page | 22 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 was conducted on 7th December, 2020. Admittedly, original return filed for the impugned assessment years were not selected for scrutiny by issuance of notice u/s 143(2) of the Act. Therefore, the impugned assessment years are completed and non-abated assessment years. Now, ld. DR has not controverted this fact that no seized material/incriminating material found during the course of search has been referred by the ld. AO prior to making the impugned addition. Under the given facts, we find that the judgment of Hon'ble Apex court in the case of Abhisar Buildwell P. Ltd. (supra) is squarely applicable against the Revenue. Ratio laid down by Hon'ble Apex court reads as under:- “5. We have heard learned counsel for the respective parties at length. The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i.e., whether any addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132 A of the Act, 1961 or not. 6. It is the case on behalf of the Revenue that once upon the search under section 132 or requisition under section 132A, the assessment has to be done under section 153A of the Act, 1961 and the AO thereafter has the jurisdiction to pass assessment orders and to assess the 'total income' taking into consideration other material, though no incriminating material is found during the search even in respect of completed/unabated assessments. 7. At the outset, it is required to be noted that as such various High Courts, namely, Delhi High Court, Gujarat High Court, Bombay High Court, Karnataka High Court, Orissa High Court, Calcutta High Court, Rajasthan High Court and the Kerala High Court have taken the view that no addition can be made in respect of completed/unabated assessments in absence of any incriminating material. The lead judgment is by the Delhi High Court in the case of Kabul Chawla (supra), which has been subsequently followed and approved by the other High Courts, referred to hereinabove. One another lead judgment on the issue is the decision of the Gujarat High Court in the case of Saumya Construction (supra), which has been followed by the Gujarat High Court in the subsequent decisions, referred to hereinabove. Only 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: Page | 23 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 Summary of the legal position 38. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six AYs \"in which both the disclosed and the undisclosed income would be brought to tax\". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other postsearch material or information available with the AO which can be related to the evidence found, it does not mean that the assessment \"can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.\" v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 7.2 Thereafter in the case of Saumya Construction (supra), the Gujarat High Court, while referring the decision of the Delhi High Court in the case of Kabul Chawla (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 Page | 24 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 has no jurisdiction to re-open the completed assessment. In paragraphs 15 & 16, it is held as under: \"15.On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the' assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby; it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year, falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under subsection (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says, that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the, six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A, of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of, the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading \"Assessment in case of search or requisition\". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the, section can be regarded as a key to the interpretation of the operative portion of, the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning From the heading of section 153, the intention of the Legislature is clear, viz, to provide for assessment in case of search and requisition. When, the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue Page | 25 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 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 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 Page | 26 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: \"153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132-A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub- section pending on the date of initiation of the search under section 132 or making of requisition under section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, section 153-B and section 153- C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.\" 11. As per the provisions of Section 153A, in case of a search under section 132 or requisition under section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding Page | 27 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 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 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 Page | 28 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re- opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. 15. Examining facts of the instant case in the light of the judgment of Hon'ble Apex Court in the case of Abhisar Buildwell P. Ltd. (supra), we find that same is squarely applicable because the ld. AO has made the addition for the completed and unabated assessment years impugned before us without placing any nexus with any incriminating material found during the course of search u/s 132 of he Act. Therefore, no infirmity is called for in the finding of the ld. CIT (A) deleting the impugned addition. Hence, the effective grounds of appeal raised by the Revenue for A.Y. 2012-13 are dismissed. 16. As far as remaining appeal in ITA nos. 141 to 143/KOL/2023 for A.Y. 2015-16 to 2017-18 are concerned, since the issue raised and facts are verbatim, except the change in figures and this fact Page | 29 ITA Nos.140 to 1143/Kol/2023 Snowtex Tradelink (P.) Ltd.; A.Y. 12-13 to 2017-18 being not controverted by the learned Departmental Representative, we apply our decision of ITA No. 140/KOL/2023 mutatis mutandis on the remaining appeals in ITA nos. 141 to 143/KOL/2023 for A.Y. 2015-16 to 2017-18 and confirm the finding of ld. CIT (A) and all the grounds of appeal raised by the Revenue for A.Y. 2015-16 to 2017-18 are dismissed. 17. In the result, all the appeals of the Revenue in ITA No. 140 to 143/KOL/2023 are dismissed Order pronounced in the Court on 18th October, 2024 at Kolkata. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 18.10.2024 *SS, Sr.Ps आदेश की प्रतततिति अग्रेतषत/Copy of the Order forwarded to : 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. संबंतित आयकर आयुक्त / Concerned Pr. CIT 4. आयकर आयुक्त ( अिीि ) / The CIT(A)- 5. तवभागीय प्रतततनति , अतिकरण अिीिीय आयकर , कोिकाता/DR,ITAT, Kolkata, 6. गार्ड फाईि / Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Sr. PS/ Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Kolkata "