ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(2), NAGPUR V. M/S ANSHUL IMPEX PVT. LTD, NAGPUR

ITA 45/NAG/2021

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0902 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-06-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 03-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADIBA H. CHIMTHANWALA
• Keywords: Question of law; Set aside; Bogus
• Section: 68; 132; 69C; 143(3); 153A; 40(a)(ia); 143(1); 143(2); 13; 153; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI K.M. ROY, ACCOUNTANT, MEMBER ITA no.45/Nag./2021 (Assessment Year : 2011–12) Asstt. Commissioner of Income Tax Central Circle–1(2), Nagpur ................ Appellant v/s M/s. Anshul Impex Pvt. Ltd. 50/51, Baji Prabhu Nagar Ram Nagar, Nagpur 440 033 PAN – AABCA2325C ................ Respondent Assessee by : Ms. Adiba H. Chimthanwala Revenue by : Shri Kailash C. Kanojiya Date of Hearing – 13/06/2024 Date of Order – 18/07/2024 O R D E R PER K.M. ROY, A.M. The instant appeal has been filed by the Revenue challenging the impugned order dated 24/03/2021, passed by the learned Commissioner of Income Tax (Appeals)–3, Nagpur, [“learned CIT(A)”], for the assessment year 2011–12, arising against the order dated 18/03/2016, passed under section 143(3) r/w section 153A of the Income Tax Act, 1961 ("the Act") by the Asstt. CIT, Central Circle–1(2), Nagpur. 2. The Revenue has raised following grounds of appeal:– “1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by AO on account of disallowance of financial expenses in proportion of purchase from bogus companies to total purchases of Rs.25,25,934/- inspite of fact that the Ld. CIT(A) in the same M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 2 order has held that the assessee had done circular transactions which were not genuine. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by AO on account of disallowance of financial expenses in proportion of purchase from bogus companies to total purchases of Rs.25,25,934/-inspite of fact that the Ld. CIT(A) in the same order has uphold the disallowance of loss relating to circular paper transactions of Rs.8,33,594/- made by the Assessing Officer. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.4,00,00,000/- made by AO on account of unexplained share premium and capital inspite of the fact the two investor companies M/s Bindhachal Yyapar Pvt. Ltd. and M/s Anandmoyee Trade Links Pvt. Ltd. were shell companies having no business activities. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.4,00,00,000/- made by AO on account of unexplained share premium and capital inspite of the fact the address of the investor companies provided by the assessee was incorrect and the notice u/s 133(6) could not be served. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.4,00,00,000/- made by AO on account of unexplained share premium and capital inspite of the fact the assessee failed to give the present postal address of the investor companies and produce the representatives of the investor companies with documentary support of the source of share premium and capital. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the companies from whom the share capital along with share premium was received did not have the credit worthiness nor the genuineness of the transaction is proved. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the ground realities that the documents in the case of shell companies are always in order so that they can act as a conduit in aiding tax evasion. 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the fact that the primary onus of establishing the Identity, Creditworthiness and Genuineness of transactions has not been discharged by the assessee, as companies which have provided the share capital along with share premium have been found to be shell companies. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition u/s 68 of the Act, on the ground that share application money had been returned in the next year, without appreciating the fact that mere return of share application money does not absolve the assessee of the its responsibility to establish the identity, creditworthiness of the investor and genuineness of the transaction. 10. The appellant craves leave to add, amend, vary and/or alter any of the above grounds, as and when deemed necessary.” M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 3 3. As evident from the facts of the case, the assessee himself has admitted that it had resorted to circular transaction only to raise Bank finance which was required for his business genuine needs. The loss incurred on this transaction for ` 8,33,594, was confirmed by the learned CIT(A). The assessee has not agitated against the same before us. The learned CIT(A) had remarked that since these were managed transactions, the loss were fabricated. As regards the disallowance of proportionate financial expenditure amounting to ` 25,25,934, it is important to refer to the relevant portion of the learned CIT(A)’s order:– “4.5 Though with introduction of section 158BI of the Act provision of cechapter XIVB are made inapplicable to proceedings u/s 153A/153C of the Act. The above principle propounded by Supreme Court in above discussion is embedded in section 153A & 153C which does not limit the authority of Assessing Officers to material found during search as held in the case CIT vs Gopal Lai Bhadruka, supra. Therefore, AO has rightly considered all the material available on record while framing assessment u/s 153A. 4.6 It is the 'assessment of total income' which is required to be made u/s 1534. The total income as defined u/s 2(45) would be the total income computed as per section 5 of the Act. The word 'assessment' cannot have a different meaning for different purposes under the same Act, unless restricted by specific provisions. The process of assessment for the purposes of the Act is wide enough to include every kind of enquiry/examination for discovery, quantification and assessment of any income wholly or partly for the purposes of the Act. Hence, the process of assessment of total income' u/s 153A can neither be restrictive nor have a different connotation for assessment under section 153A vis a vis 143(3) ог 147.” 4. However, we find that the Co–ordinate Bench of the Tribunal, Nagpur Bench, in Gupta Domestic Fuels Nagpur Ltd., ITA no.308/Nag./2016, A.Y. 2011–12, order dated 05/04/2022, has subscribed to the view that the Assessing Officer has duly applied his mind and has disallowed the expenditure to the extent of paper transaction not backed by actual business. In fact, in the assessment order, the Assessing Officer has specifically noted by way of an office note which reads as follows:– M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 4 “Office Note:- 1) The disallowance of financial expenses in proportion to the interest expenses on account of cash credit/L.C. and addition on account of loss incurred due to the corresponding sale and purchase transactions are the only items which have direct nexus with the circular transactions carried out by the assessee. The other items of expenses debited in the profit & loss account were not found to have any nexus with such circular trading/transaction and hence no disallowance regarding any part of the other items of the expenses debited in the profit and loss account has been made.” 5. The learned CIT(A) had disallowed the loss on circular transaction holding it to be artificial and managed and losses are fabricated, but on the other hand, he found that the financial charges to be incurred for the purpose of business, hence, to be allowed. The assessee has pleaded that the funds were required for working capital. But in case of paper transaction, there is no requirement of capital at all because there was neither any purchase nor was there any sale. However, the assessee has adopted this route to raise higher finance from the circular transaction. Since the discounting charges on letter of credits have been paid to bank, the genuinity is sacrosanct. The funds so raised have been used to augment the working capital required for delivery based business. The assessee had used the platform of circular trading to draw higher finance from the bank. There is no instance of any diversion of funds as pointed out by the Assessing Officer. The funds from the discounted letter of credits are used for the purpose of business and is allowable under section 36(1)(iii) of the Act. There is no ground to interfere with the conclusions of the learned CIT(A). Hence, the ground raised by the Revenue is dismissed. 6. Now, the next question for our determination is, whether or not the amount of share application money of ` 4 crore, can be considered to be M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 5 satisfied the requirement of provisions of section 68 of the Act. The learned A.R. has pleaded that the order of the learned CIT(A) need not be interfered with and has relied upon the following judgment:– i) ACIT v/s Krishna Gupta, ITA no.223/Nag./2013, order dated 22/05/2015; ii) S.A. Builders Ltd. v/s CIT(A) & Anr., [2007] 288 ITR 001 (SC); iii) CIT v/s Lovely Exports Pvt. Ltd.[2009] 319 ITR 005 (SC); iv) CIT v/s Veedhata Tower Pvt. Ltd., [2018] 403 ITR 415 (Bom.); v) CIT v/s Gangandeep Infrastructure Pvt. Ltd., [2017] 394 ITR 680 (Bom.); vi) CIT v/s Creative World Telefilms Ltd., [2011] 333 ITR 100 (Bom.); vii) PCIT v/s AMI Industries (India) Pvt. Ltd., [2020] 424 ITR 219 (Bom.); viii) ACIT v/s Swiftsol India Pvt. Ltd., [2018] 171 ITD 577 (Nag. Trib.); ix) DCIT v/s Saral Metallurgicals Pvt. Ltd., [2022] TaxPub(DT) 7381 (Nag. Trib.); x) Samruddhi Overseas Trading Co. v/s DCIT, [2021] TaxPub (DT) 2345 (Ahd. Trib.). 7. The addition has been made for the assessment year 2011–12. Such year is an abated assessment year as on the date of search on 24/10/2013, because the date of issuance of notice under section 143(2) of the Act was on 30/09/2012, and since no such notice was issued till that date, no assessment was pending on the date of initiation of search under section 132 of the Act. Thus, the assessment year 2011–12 is clearly on unabated assessment year since no proceeding were pending on the date of search. Accordingly, it is essential to understand the scope of addition under section 153A of the Act in respect of unabated assessment years in line with the binding judgments of the Hon’ble Apex Court. M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 6 “(a) Respondent can assume jurisdiction to assess or re-assess income under section 153A/153C of the Act in cases where assessment proceedings have not abated, if and only if any incriminating material relating to petitioner has been found during the course of proceedings under section 132 of the Act in the case of the person in whose case proceedings under section 132 of the Act have been taken. In Abhisar Buildwell Pvt. Ltd. 454 ITR 212, the Apex Court held that where no incriminating material is found/unearthed during the search, the assessing officer cannot assess or re-assess taking into consideration the other materials in respect of unabated/completed assessments. Paragraphs 5 to 7.1, 8 and 11 to 14 in Abhisar Buildwell Pvt. Ltd. (Supra) read as under: 5. That 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 assessing officer 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 assessing officer 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 assessing officer 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: (2022) 447 ITR 517 (All): 2022 Tax Pub(DT) 4549 (All-HC) 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. 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: M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 7 (1) 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 assessment years immediately preceding the previous year relevant to the assessment year 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 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 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 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 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 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 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. 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. xxxxxxxxxxxxxxxxx M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 8 11. As per the provisions of section 153A, in case of a search under section 132 or requisition under section 132A, the assessing officer gets the jurisdiction to assess or reassess the total income in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re- assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. As per sub-section (2) of section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the assessing officer 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 assessing officer 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 assessing officer 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 assessing officer 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 assessing M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 9 officer 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 re-writing 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. 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 assessing officer 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 assessing officer 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 assessing officer including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the assessing officer 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 assessing officer 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 assessing officer 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. (emphasis supplied) Therefore, no addition can be made by the assessing officer in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act.” 8. In this case, the addition is not based on any incriminating evidences as evident from the assessment order. All the transactions were reflected in M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 10 regular books of account. No incriminating evidences were unearthed. Neither there is any statement under section 132(4) of the Act nor any corroborative evidences which goes against the assessee. Accordingly, no addition is sustainable in the absence of any incriminating document. Further, we place reliance on the following judgments passed by different jurisdictional High Courts, which are listed below:– i) Pr. CIT (Central)-2 v. S.S. Con Build (P.) Ltd. [2023] 151 taxmann. com 316 (Delhi); Where no incriminatory material was found during search operations pertaining to relevant assessment year in question, the Assessing Officer could not have proceeded to frame assessment under section 153A. The issues involved in the present petitions were squarely covered against revenue in view of the decision of the Supreme Court in Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399/293 Taxman 141/454 ITR 212 (SC); ii) Principal CIT (Central-2) v. S. S. Con Build (P.) Ltd. [2023] 151 taxmann.com 316 (Delhi); The search operations at the premises of the assessee were conducted and pursuant to the notice issued under section 153A, the assessee filed return of income declaring nil income, as against which assessment under section 153A/143(3) was made by making an addition of Rs. 7 crores under section 68 towards unverifiable expenses. The Commissioner (Appeals) as well as the Tribunal relying upon judgment in CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573 (Delhi) deleted addition made by the Assessing Officer on the ground that no incriminatory material was found during search operations pertaining to this particular assessment year, hence, the Assessing Officer could not have proceeded to frame assessment under section 153A. Held that since additions were not based on seized material, instant case was admittedly covered by the decision of Kabul Chawla case (supra) and, therefore, no substantial question of law arose for the consideration. iii) Principal CIT v. Saroj Sudhir Kothari [2023] 154 taxmann.com 127 (Bom.) The assessment of the assessee was completed. Thereafter, a search was conducted at the premises of the assessee resulting in addition by the As- sessing Officer. The Tribunal deleted the said addition by holding that no incriminating material was unearthed during search, and therefore, the Assessing Officer could not make additions under section 153A in respect of completed/abated assessment. Revenue filed instant appeal against the said order. M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 11 Held that in view of the order passed by this Court on 18-4-2022 in Principal CIT v. Saroj Sudhir Kothari [2023] 154 taxmann.com 359 (Bom.) appeal was to be dismissed. iv) Principal CIT v Swetaben Ghanshyambhai Patel [2023] 152 taxmann. com 404 (Guj.); S. M. Kamal Pasha v. Dy. CIT [2023] 153 taxmann. com 144/454 ITR 157 (Kar.); Principal CIT v. Rajesh Mohanbhai Patel [2023] 152 taxmann.com 353/294 Taxman 279 (Guj.); Principal CIT. Kaushik Devjibhai Patel [2023] 152 taxmann.com 462 (Guj.) The assessment of the assessee for relevant assessment year was com- pleted. Subsequently, a search was conducted at premises of the assessee. In pursuance of said search Assessing Officer passed assessment order under section 143(3) read with section 153A(1)(b) and made addition under section 68 on account of alleged bogus long-term capital gain. Held that since no incriminating material was found during course of search with regard to issue of addition made in assessment order, no addition could be made in respect of completed assessment and thus, impugned addition was to be deleted. v) ACIT v. Saluja Construction Co. Ltd. [2023] 155 taxmann.com 545/295 Taxman 529 (Delhi) The assessment of the assessee for relevant assessment year was completed under section 143(3). Subsequently, a search was conducted at the premises of the assessee. In pursuance of the said search, the Assessing Officer passed assessment order under section 143(3) read with section 153A and made addition of certain amount under section 68 as according to him the said amount represented undisclosed income. Held that since no incriminating material was found during the course of search with regard to issue of addition made in assessment order, no addition could be made in respect of completed assessment and, thus, impugned addition was to be deleted. vi) Principal CIT v. Shardaben Arvindbhai Patel [2023] 152 taxmann. com 535 (Guj.) Pursuant to a search conducted upon the assessee, an assessment order was passed under section 153A making addition under section 68 on account of alleged bogus long-term capital gain and an addition under section 69C on account of expenses on bogus long-term capital gain. Held that since no incriminating evidence was found during search conducted upon the assessee, impugned assessment order passed under section 153A making additions under section 68 and such section 69C was without jurisdiction and the same was to be set aside. vii) Principal CIT v. Saroj Sudhir Kothari [2023] 154 taxmann.com 359 (Bom.) Where pursuant to the issue of notice under section 153A assessments are abated, Assessing Officer retains original jurisdiction as well as jurisdic- tion conferred on him under section 153A for which assessments shall be made for each of six assessment years separately. Thus, no addition can be made in respect of the unabated assessments which have become final if no incriminating material is found during the search. M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 12 Case review: SLP dismissed in Principal CIT v. Saroj Sudhir Kothari [2023] 154 taxmann.com 360/294 Taxman 598 (SC). viii) Underwater Services Company Ltd. v. Asstt. CIT [2023] 146 taxmann. com 541/[2022] 448 ITR 691 (Bom.) The notice issued under section 153A should mention whether seized ma- terial was under section 132 or books of account, other documents or any assets are requisitioned under section 132A. Where pursuant to search a notice under section 153A was issued upon assessee, since said notice was bereft of any incriminating material found/seized during search and did not mention basis for issuance of such notice so that the assessee could comply with said notice, same was to be set aside. ix) Principal CIT v. Shyama Power India Ltd. [2023] 154 taxmann.com 403/294 Taxman 652 (Gauhati) The authorized officer conducted a search under section 132 upon the asses- see and seized copy of the ledger account of subcontractor expenditure. For the relevant assessment year 2011-12, the Assessing Officer completed the original assessment of the assessee under section 143(1) and time limit for issuance of notice under section 143(2) had expired on the date of search. The Assessing Officer examined the ledger account of subcontractor expenditure and found entry pertaining to an account of one M in the books of assessee for the assessment year 2011-12 showing credit of Rs. 15.46 crores and the assessee did not deduct tax at source in respect of the said amount issued a notice under section 153A to the assessee to show cause as to why the amount of Rs. 15.46 crores which was credited in the account of M should not be disallowed under section 40(a)(ia). The assessee in reply to the notice submitted that there were eight Naga subcontractors who had independently carried out the works and the bills were raised by the subcontractors through Mas agent-cum-contractor of the assessee. The Assessing Officer in order to verify the correctness of submissions summoned the eight Naga parties and M produced four subcontractors and their statements were recorded. The Assessing Officer held that the assessee's claim that the contract work was executed by individuals belonging to the scheduled tribes and not by M was incorrect. In fact M was a subcontractor of the assessee and not an agent. He invoking the provisions of section 40(a)(ia) disallowed the amount of Rs. 15.46 crores and added the same to the assessee's income. The Commis- sioner (Appeals) held that the Assessing Officer failed to disprove the claim of the Naga parties subcontractors by bringing anything on record during the assessment and deleted the disallowance of Rs. 15.46 crores. The Tribunal, on appeal filed by the revenue, held that the provisions of section 132 relied upon by the revenue would be relevant only for the purpose of conducting the search action and initiating proceeding under section 153A. Hence, the said assessment was unabated/concluded assessment on the date of search and deserved to be undisturbed in the absence of any incriminating material found in the course of search and accordingly the disallowance made under section 40(a)(ia) required to be deleted. Held that the assessee had not kept its income undisclosed for the assessment year 2011-12. The statements of the subcontractors belonging to the Naga tribe were recorded and their statements have not been contradicted or controverted by the Assessing Officer. It was also not controverted that since M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 13 the work was done by the Naga subcontractors, there was no requirement of deduction of tax at source, as their income is exempted under section 10(26). The subcontractors, through their statements both oral and written, have affirmed that the work was done by them for the assessee through with the understanding to pay 2 per cent commission from the payment of the assessee. Through concurrent decisions by the Commissioner (Appeals) as well as by the Tribunal it was held that no incriminating material was found in the course of search. The Tribunal was justified in deleting the disallowance of Rs. 15.46 crores made under section 40(a)(ia) by holding that the assessment order under section 143(1) is concluded and unabated and it cannot be disturbed as the copy of ledger account of subcontractor expenditure seized during the search does not constitute incriminating material. In view of the above, the order of the Tribunal deserves to be upheld. Chief CIT V. R.J. Corp. Ltd. [2023] 147 taxmann.com 61 (Delhi) The Assessing Officer made assessment of the assessee for assessment year 2010-11 under section 153A and made disallowance of advertisement expen- diture and also made disallowance under section 14A. The Tribunal having noticed that said assessment was not pending as on date of search and the Assessing Officer could not show that any of these disallowances were made on basis of incriminating material found during course of search held that disallowance, which was not based on incriminating material found during course of search, could not be made basis for assessment under section 153A and deleted addition. Held that the Tribunal was right in its view. x) Principal CIT v. LKG Builders (P.) Ltd. [2023] 154 taxmann.com 188 (Delhi) Once a search takes place under section 132, notice under section 153A(1) will have to be mandatorily issued to person searched requiring him to file returns for six assessment years immediately preceding previous year relevant to the assessment year in which search takes place and assessments and reassessments pending on date of search shall abate. The completed assessments could be interfered with by the Assessing Officer while making 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 course of search which were not produced or not already disclosed or made known in course of original assessment. Where assessment of the assessees had attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search, no addition could be made under section 153A as cases of the assessees were of non-abated assessments. Principal CIT v. King Buildcon (P.) Ltd. [2023] 154 taxmann.com 189/456 ITR 770 (SC) Where the assessment of the assessee had attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search, no addition could be made under section 153A as cases of the assessee were of non-abated assessments. On appeal before the Supreme Court, both sides submitted that issue involved in this appeal was squarely covered by the decision of the Supreme Court in Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399/293 Taxman 141/454 ITR M/s. Anshul Impex Pvt. Ltd. ITA no.45/Nag./2023 Page | 14 212 and in the light of dictum laid down thereunder and in view of indisputable fact that during search no incriminating material was found, this appeal must fail. However, in view of the decision in Abhisar Buildcon (P.) Ltd.'s case (supra), completed/unabated assessments could be re-opened by the Assessing Officer in exercise of powers under section 147/148, subject to the fulfilment of conditions envisaged under section 147/148 and hence, such powers are saved in terms of the said judgment. Case review: Pr. CIT v., LKG Builders (P.) Ltd. [2023] 154 taxmann.com 188 (Delhi) (para 5) affirmed. 9. The learned Departmental Representative only pleaded that addition of ` 4 crore may be confirmed as transactions were not genuine. He, however, failed to pinpoint any incriminating evidence upon which the additions were made. Thus, all the grounds raised by the Revenue are dismissed. 10. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 18/07/2024 Sd/- V. DURGA RAO JUDICIAL MEMBER Sd/- K.M. ROY ACCOUNTANT MEMBER NAGPUR, DATED: 18/07/2024 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur