AI Insights
The case involves multiple appeals by the revenue against various companies of the Rashmi Group, including M/s Khushboo Complex Pvt. Ltd. and M/s Daffodil Plaza Pvt. Ltd., concerning the assessment years 2014-15 to 2018-19. The appeals were based on the additions made by the Assessing Officer (AO) following a search and seizure operation conducted on January 24, 2020. The AO had added substantial amounts to the income of these companies, citing suspicious transactions and the involvement of shell companies. However, the CIT(A) deleted these additions, leading to the revenue's appeal to the Tribunal. The Tribunal, referencing the Supreme Court's decision in PCIT vs. Abhisar Buildwell Pvt. Ltd., upheld the CIT(A)'s decision, emphasizing that additions in unabated assessments require incriminating material, which was absent in this case.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 128169 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
11 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
04-09-2023
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
15-05-2023
Assessment Year
2015-2016
Appeal Filed On
28-09-2022
Judgement Text
आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘ए’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी ͬगरȣश अĒवाल, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member I.T(SS)A. Nos.73 to 77/Kol/2022 Assessment Years: 2014-15 to 2018-19 DCIT, Central Circle-2(2), Kolkata.................................................Appellant vs. M/s Khushboo Complex Pvt. Ltd.................................................... Respondent 1A, Grant Lane, Kolkata-700012. [PAN: AADCK5294L] I.T(SS)A. Nos.78 to 79/Kol/2022 Assessment Years: 2015-16 & 2017-18 DCIT, Central Circle-2(2), Kolkata.................................................Appellant vs. M/s Daffodil Plaza Pvt. Ltd.............................................................. Respondent Buddhadev Mukherjee, C/o. Lakshmi Kanta Ghosh, Radhunathpur, Jhargram, Paschim Medinipur -721507. [PAN: AADCD0206F] I.T(SS)A. Nos.82 to 83/Kol/2022 Assessment Years: 2015-16 & 2017-18 DCIT, Central Circle-2(2), Kolkata.................................................Appellant vs. M/s Heaven Dealmark Pvt. Ltd........................................................... Respondent 127, N.S. Road, Burra Bazar, Kolkata-1. [PAN: AACCH5422Q] I.T(SS)A. Nos.87 to 88/Kol/2022 Assessment Years: 2015-16 & 2016-17 DCIT, Central Circle-2(2), Kolkata.................................................Appellant vs. M/s Reach Infocom Technology Pvt. Ltd........................................... Respondent 9, Ideal Centre, A.J.C Bose Road, Kolkata-700007. [PAN: AAGCR5410G] I.T(SS)A. Nos.89 to 91/Kol/2022 Assessment Years: 2015-16, 2016-17 & 2018-19 DCIT, Central Circle-2(2), Kolkata.................................................Appellant I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 2 vs. M/s Ashtvinayak Sales Pvt. Ltd........................................................... Respondent 3 rd Floor, West Range, Kolkata-700017. [PAN: AAKCA3651Q] I.T(SS)A. Nos.95 to 96/Kol/2022 Assessment Years: 2015-16 & 2017-18 DCIT, Central Circle-2(2), Kolkata.................................................Appellant vs. M/s Sumangal Infraprojects Pvt. Ltd................................................. Respondent 125/1, Burra Bazar, Kolkata-1. [PAN: AAKCA3651Q] I.T(SS)A. No.97/Kol/2022 Assessment Year: 2015-16 DCIT, Central Circle-2(2), Kolkata.................................................Appellant vs. M/s Regal Vincom Pvt. Ltd.............................................................. Respondent 11, Clive Row, 5 th Floor, C-508, Kolkata-1. [PAN: AADCR9366C] I.T(SS)A. No.99/Kol/2022 Assessment Year: 2015-16 DCIT, Central Circle-2(2), Kolkata.................................................Appellant vs. M/s Rashmi Metaliks Ltd.................................................................. Respondent 39, Shakespeare Sarani, Premlata, Kolkata-700017 [PAN: AACCR7183E] I.T(SS)A. No.100/Kol/2022 Assessment Year: 2015-16 DCIT, Central Circle-2(2), Kolkata.................................................Appellant vs. Sanjib Patwari.................................................................................... Respondent Flat No.6A, 6 th Floor, Banyan Tree, 3A, Rowden Street, Kolkata-700017. [PAN: AFRPP9205L] I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 3 Appearances by: Shri Amit Chowdhury, ACA, appeared on 01.09.2023 and A. K. Tulsiyan, FCA, appeared on 16.05.2023 on behalf of the appellant. Shri S. Dutta, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : September 01, 2023 Date of pronouncing the order : September 05, 2023 आदेश / ORDER Per Bench: The captioned appeals have been preferred by the revenue against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-20, Kolkata (hereinafter referred to as the Ld. CIT(A)”] for the AY 2014-15 to 2018-19.Since these appeals by the revenue have been filed against the different assesses of the same Rashmi Group covered under same search action conducted on 24.01.2020 involving common facts and issues, therefore these appeals are being decided and disposed of by this common order for the sake of convenience and brevity. Revenue’s appeal ITA(SS) No.74/Kol/2022 A.Y.2015-16 is taken as lead case for the purpose of narration of facts. ITA(SS) No.74/Kol/2022 A.Y.2015-16 2. At the time of hearing we observe from the notings on the appeal folder that the appeal of the revenue is barred by limitation by 5 days. A separate application for condonation of delay has been filed. Considering the pleadings in the application and shortness of delay, the delay in filing the present appeal is hereby condoned. 3. The only common issue raised in the various grounds of appeal by the revenue is against the order of Ld. CIT(A) deleting the addition on the ground that the addition has been made by the AO in an unabated I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 4 (completed) assessment year without there being any incriminating material found and seized during the course of search action. 4. The brief facts of the case are that the assessee filed original return of income on 29.09.2015 declaring the total income of Rs.41,410/-. The assessment was completed u/s 143(3) of the Act on 18.12.2017 accepting the returned income. A search & seizure operation was conducted u/s 132 of the Act on 24.01.2020 and subsequent dates by the Investigation Wing, Kolkata at the business as well as residential premises of the “Rashmi Group” at Kolkata and other places. Assessment u/s 153A/143(3) was completed on 30.09.2021 determining Total Income of Rs. 24,10,34,227/- inter-alia making addition of Rs. 24,09,92,817/-. During the course of assessment proceedings, the AO observed that the assessee had received Rs. 25,76,42,817/-) on account of sale of shares. However, the identity and financial credentials of the entities purchasing the investments was suspicious in nature. The AO observed from the share holdings pattern of the company as per the details available on ROC website as well as assessment records of various assessees belonging to Rashmi group, that the assessee was acquired at a nominal price from various shell companies which were flagged in the Departmental data base as shell companies as maintained by Investigation Wing of Directorate. The AO discussed modus operandi of the shell companies by citing that these companies were formed by making some staff and relatives as directors. The Capitals were brought through some long channelized and long layering ways and these shell companies were primarily advancing bogus share capital/ bogus unsecured loans to the desired beneficiaries and these shell companies were intermediaries for laundering of I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 5 unaccounted income/cash/fund of beneficiaries. The AO, after relying on the decisions of Hon’ble Supreme Court in the case of CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and PCIT vs. NRA Iron & Steel Pvt. Ltd. (2019) 412 ITR 161 (SC), added sum of Rs. 24,09,92,817/- (after reducing IDS figure of Rs. 1,66,50,000/- from the total addition of Rs. 25,76,42,817/-)on the ground that the assessee has failed to prove the genuineness of the transactions and creditworthiness of the entities purchasing the investments in the assessment framed u/s 153A of the Act dated 30.09.2021. Pertinent to note that the AO allowed credit of Rs. 1,66,50,000/- in respect of IDS filed by the assessee and a net addition of Rs. 24,09,92,817/- was made out of the total receipt of Rs. 25,76,42,817/- on account of sale of shares/investments. 6. The Ld. CIT(A) allowed the appeal of the assessee on the legal and jurisdictional issue by holding that this being an unabated assessment year on the date of search and there being no incriminating seized material during the course of search. The ld. CIT(A) observed that the addition made on the basis of records and submissions of the assessee filed during the course of assessment proceedings was without jurisdiction and was accordingly deleted. The Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under: “4.3(a) I have carefully considered the facts of the case and submission of the appellant. Assessee had filed original return u/s.139(1) on 29.09.2015. Thereafter, assessment was completed u/s. 143(3) vide order dated 18.12.2017. No proceedings were pending before the AO on the date of search in respect of current assessment year. It seems that current assessment year is an unabated assessment year. Perusal of the assessment order shows that AO has not referred to any incriminating seized materials while making additions. AO has referred to seized material marked as SFGO/9 (Page 1 to 41) as incriminating material. But assessee has clarified that these documents are I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 6 extracts from its books of accounts. Assessee's submissions are found to be correct. Reference is also made to the statements u/s.132(4) of Shri Sanjib Kumar Patwari and Shri K. K. Varma for making additions. However, even these statements were retracted on the very next day by filing an affidavit before the judicial magistrate. A copy of the affidavit was also given to the ADIT(Inv). However, no further action was taken on receipt of affidavit for retraction of statements made by Shri Sanjib Kumar Patwari and Shri K. K. Varma. Now let us first examine what the Courts have to say on the statements recorded u/s.132(4) of the Income- tax Act. 1961. Whether additions can be made in proceedings u/s.153A solely on the basis of statements recorded u/s, 132(4) and more so on the basis of retracted assessment, when no supporting material was found on the basis of which statements were extracted. In the assessment order, A.O. has referred to the statements of ShriSanjib Kumar Patwari, one of the key persons of the group and the statement of Sri K.K. Verma, accountant of the group. Their statements were recorded u/s. 132(4) of the I.T. Act, 1961. In the statement u/s. 132(4) ShriSaniib Kumar Patwari had declared undisclosed income of Rs. 3,68,66,31,194/-, However, on conclusion of search proceedings, both these persons had retracted their statements on the very next day by filing an affidavit before the Judicial Magistrate. Apart from the statement u/s. 132(4), A.O. has not referred to any incriminating material found during search based on which additions could have been made in proceedings u/s.153A. Hence, during appellate proceedings, A.O. was again asked to refer to the records and to point out incriminating material, other than those discussed in the assessment order, which might have been discovered during search proceedings. In response, A.O. has submitted letter dated 04-07- 2022. Perusal of the report submitted by the A.O. shows that whatever relevant information was available against the assessee, these have been utilized while framing the assessment order. As is apparent from the assessment order addition in respect of sale consideration of shares are not based on any seized incriminating material. In its submission, appellant had pointed out that even the declaration made in the statement u/s,132(4) was not based on any seized material. Rather the information contained in the books of accounts were presented before Shri Sanjib Kumar Patwari and he was forced to declare some of the transaction as undisclosed income. Prima-facie assessee appears to be justified in its submission. It is a fact that no incriminating material has been found or seized during search proceedings which may have any bearing on the additions made. Assessee had already filed its return of income and the transaction relating to sale of unquoted shares were already declared in the return of income and all I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 7 these transactions were reflected in the books of accounts. Search proceedings have not yielded any incriminating evidence in respect of these transactions. Now, the only issue remains whether statements given u/s.132(4) could be construed as incriminating evidence discovered during search. In the first place, I would like to point out that these statements were retracted on the very next day by filing an affidavit before Judicial Magistrate and copy of the affidavit was also submitted before the ADIT (Inv.). However, the Investigation Wing did not take any action even after the fact relating to retraction was communicated to it. Now, let us examine whether statement u/s.132(4) in itself can be considered as incriminating evidence in the light of several judicial pronouncements. This matter was considered by the Hon'ble Delhi High Court in the case of CIT Vs. Harjeev Agarwal 241 taxman.com 199 (Delhi). Hon'ble High court had held that the statement recorded u/s. 132(4) do not themselves constitute incriminating material if these are not by based upon any seized/incriminating material. The operating part of the judgement is as under: “19. In view of the settled legal position. the first and foremost issue to be addressed is whether a statement recorded under Section 132 (4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing or 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 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 standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all maters relevant for the purposes of any investigation connected with any I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 8 proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 22. In CIT v. ShriRamdas Motor Transport [1999] 238 ITR 177/102 Taxman 300, a Division Bench of Andhra Pradesh High Court, reading the provision of Section 132(4) of the Act in the context of discovering undisclosed income, explained that in cases where no unaccounted documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. The relevant passage from the aforesaid judgment is quoted below:- "A plain reading of sub-section (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person With regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such per son under the Act. Thus, the question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account But in this case. it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any Other valuable articles or things, nor any unaccounted documents nor any such incriminating material ether from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 9 persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section 132(4) of the Act does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub-section (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle." 23. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of the Act which expressly provides that the scope of examination under Section 132(4) of the Act is not limited only to the books of accounts or other assets or material found during the search. However, in the context of Section 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 25. In CIT V. Naresh Kumar Agawal [2014] 369 ITR 171/2015] 53 taxmann.com 306, a Division Bench of Telangana and Andhra Pradesh High Court held that a statement recorded under Section 132(4) of the Act which is retracted cannot constitute a basis for an order under Section 158BC of the Act. The relevant extract from the said judgement is quoted below: "17. The circumstances under which a statement is recorded from an assessee, in the course of search and seizure, are not difficult to imagine. He is virtually put under pressure and is denied of access to external advice or opportunity to think independently. A battalion of officers, who hardly feel any limits on their I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 10 power, pounce upon the assessee, as though he is a hardcore criminal. The nature of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under section 94 of the Code of Criminal Procedure by operation of sub-section (13) of section 132 of the Act. The objective may be genuine, and the exercise may be legal. However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non- existent." "18. It is not without reason that Parliament insisted that the recording of statement must be in relation to the seized and recovered material, which is in the form of documents, cash, gold, etc. It is, obviously to know the source thereof. on the spot. Beyond that, it is not a limited licence, to an authority, to script the financial obituary of an assessee." "19. At the cost of repetition, we observe that if the statement made during the course of search remains the same, it can constitute the basis for proceeding further under the Act even if there is no other material. If, on the other hand, the statement is retracted, the Assessing Officer has to establish his own case. The statement that too, which is retracted from the assessee cannot constitute the basis for an order under section 158BC of the Act.' This decision was reiterated by the Hon'ble Delhi High Court in the case of Pr. CIT vs. Best Infrastructure (I) Pvt. Ltd. 397 ITR 182 (Delhi). The relevant findings of the Hon'ble High Court mis reproduced as under: "35. As noted in Meeta Gutgutia (supra), several other High Courts have also come to a similar conclusion either by following Kabul Chawla (supra) or otherwise. This includes the decisions of the Gujarat High Court in Pr. CIT V. Soumya Construction (P) Ltd. [2016] 387 ITR 529/[2017] 81 taxmann.com 292 (Guj); Pr. CIT v. Devangi alias Rupa [Tax Appeal Nos. 54, 55 to 57 of 2017, dated 2-2-2017]; the Karnataka High Court in CIT V. IBO Knowledge Park (P) Ltd. [2016] 385 ITR 346/69 taxmann. com 108 (kar.); the Kolkata High Court in Pr. CIT V. Salasar Stock Broking Ltd. [GA No. 1929 of 2016, dated 24-8-2016] and the Bombay High Court in CIT V. Gurinder Singh Bawa [2016] 386 ITR 483/[2017] 79 taxmann.com 398. In Meeta Gutgutia (supra) the entire gamut of the case law had been analysed and the legal position was reiterated that there is incriminating material qua each of the AYs in which additions are sought to be made, pursuant to search and seizure operation, the assumption of jurisdiction under Section 153A of the Act would be vitiated in law. This is one more occasion for the Court to reiterate that legal position. I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 11 36. Turning to the facts of the present case, it requires to be noted that the statements of Mr. Anu Aggarwal, portions of which have been extracted hereinbefore, make it plain that the surrender of the sum of Rs. 8 crores was only for the AY in question and not for each of the six AYs preceding the year of search. Secondly, when Mr. Anu Aggarwal was confronted with A-1, A-4 and A- 11 he explained that these documents did not pertain to any undisclosed income and had, in fact been accounted for. Even these, therefore, could not be said to be incriminating material qua each of the preceding AYs. 37. Fourthly, a copy of the statement of Mr. Tarun Goyal, recorded under Section 132 (4) of the Act, was not provided to the Assessees. Mr. Tarun Goyal was also not offered for the cross-examination. The remand report of the A0 before the CIT(A) unmistakably showed that the attempts by the AO, in ensuring the presence of Mr. Tarun Goyal for cross-examination by the Assessees, did not succeed. The onus of ensuring the presence of Mr.Tarun Goyal, whom the Assessees clearly stated that they did not know, could not have been shifted to the Assessees. The onus was on the Revenue to ensure his presence. Apart from the fact that Mr. Tarun Goyal has retracted his statement, the fact that he was not produced for cross- examination is sufficient to discard his statement. 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts n the present case are different from the facts in Smt Dayawanti Gupta (supra) where the admission by the Assessees themselves on critical aspects failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, Ís non- existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine Operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by M Anu Agganwal or Mr. Harjeet Singh contained any such admission. 39. For all the aforementioned reasons, the Court is of the view that the ITAT Was fully justified in concluding that the assumption of jurisdiction under Section 153A of the Act qua the Assessees herein was not justified in law. Further, Hon'ble High Court of Delhi in the case of PCIT vs M/s Agson Global (P.) Ltd in [2022] 134 taxmann.com 256 (Delhi) dated 19.01.2022 held as under: Section 68, read with section 69C, of the Income-tax Act, 1961 - Cash credits (Share capital money) - Assessment years 2012-13 to 2017-18 - Assessee- company received share capital and share premium money from several I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 12 investors – Assessing Officer made addition in respect of same on account of unaccounted income under section 68 on basis of recorded statement of managing director of assessee-company - Whether since assessee placed sufficient documentary evidence to establish that money which assessee had paid to investors was routed back to it in form of share capital/share premium and identity, creditworthiness and genuineness of investors was proved, there was no justification to make addition under section 68 - Held, yes [Paras 11.4, 11.5 and 14.4] [In favour of assessee] II. Section 69C of the Income-tax Act, 1961 Unexplained expenditure (Bogus sales/purchases)- Assessment years 2012-13 to 2014-15- Assessee-company was engaged in business of selling dry fruits - Assessing Officer on basis of statement of director of assessee-company which was recorded during search held that assessee booked bogus purchases in its books of account to inflate expenses and to reduce its taxable profits, and made an addition at rate of 25 per cent of such purchases - It was noted that said additions were made without conducting any enquiry - Furthermore, entire purchase and sale transactions were duly recorded in regular books of account of all parties concerned and were routed through regular banking channels - Also, in original assessments, all these details were verified and assessments were framed under section 143(3) - Whether, in view of above facts, since no incriminating evidences were found, impugned addition was to be deleted - Held, yes [Para 15.1] [In favour of assessee" Thus it is apparent that Statements u/s.132(4) by itself are not incriminating evidences, if these are not supported by incriminating material found during search. In appellant's case, even these statements were retracted on the very next day by filing affidavit before judicial magistrate. 4.3(b) As discussed above, the statements recorded u/s.132(A) were not supported by any incriminating material found during search and even these statements were retracted on the very next day by filing an affidavit before the judicial magistrate and a copy of the affidavit was filed before the ADIT(Inv). No action was taken on the basis of the affidavit for retraction. Under the circumstances, it is apparent that additions in respect of sale consideration of shares have not been made on the basis of any incriminating evidences found during search. Rather information contained in the return of income and the books of account have been used to make additions. There are a plethora of judgements of various courts including the jurisdictional High Court of Calcutta which have held that additions in search assessments which are not based on any incriminating material found during search, are not sustainable. Some of such judgements are discussed as under: I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 13 (a) In the case of CIT (Central) – l| 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 Honble Delhi High Court followed the judgment of the Bombay High Court in CIT vs Continental Warehousing Corporation (NhavaSheva) 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 me returns for six AYs 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 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 I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 14 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." (b) In the case of ACIT, Central Circle-1(3), Kolkata vs Narula Educational Trust, (2021) 126 taxmann.com158 (Kolkata ITAT), the Hon'ble Tribunal has held as under: 26. We also find that the Hon'ble Jurisdictional High Court in the case of Pr. CIT V. Salasar Stock Broking Ltd. [G.A. No. 1929 of 2016, dated 24-8-2016] endorsed the aforesaid view of Hon'ble Delhi High Court in Kabul Chawla's case (supra). The Hon'ble High Court also placed reliance on their own decision in the case of ClT V. Veerprabhu Marketing Ltd. (2016] 73 taxmann. com 149/388 ITR 574 (Cal.) and held as follows: "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 CO-30/Ko/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 I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 15 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] V. Kabul Chawla in ITA No. 707/2014 dated 28th August, 2014. The aggrieved Revenue has Come up in appeal. Mr. Bagaria, leaned Advocate appearing for the assessee, submitted that more or less an identical view was taken by this Bench in ITA 661/2008 [CIT v. 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 153 C 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 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" 27. Considering the judicial precedents (supra) on the subject, particularly the decision of the Hon’ble jurisdictional Calcutta High Court in the case of Salasar Stock Broking Ltd (supra) which is binding upon this Tribunal as well as the Hon'ble Apex Court decision in CIT V. Sinhgad Technical Education Society [2017] 84 taxmann.com 290/250 Taxman 225/397 ITR 344, we hold that in the case of unabated assessments of an assessee, no addition is permissible in the order u/s. 153A of the Act unless it is based on any tangible, cogent and relevant incriminating material found during the course of search qua the assessee and qua the AY. 26. In view of the above legal position, let us now proceed to examine whether the additions/disallowances which the AO made in the orders impugned in this appeal [AY 2008-09 to AY 2012-13] was based on or made with reference to any Incriminating material/document found in the course of search. We note that n the assessment orders for AY 2008-09 to AY 2012-13, the AO have not referred to any material un-earthed during search conducted on 13-3-2014 in the orders impugned to justify the additions. There is no whisper/mention of any material leave alone any incriminating material seized during search to justify the addition in these un-abated assessments other than the in-valid valuation report as discussed supra. The valuation report of DVO in the facts discussed cannot be held to be incriminating material, since it is not a fall out of I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 16 any incriminating material un-earthed during search to suggest any investment in building which is over and above the investment shown by the assessee in its audited books. And as found by us, the search party pursuant to search u/s 132 of the Act did not even visited the educational institution which fact is evident from the perusal of panchnama which shows that the search team has only searched the administrative office situate at "Dwarika Building", 7, Sarat Bose Road, Kolkata-700020 and not at the campus of educational institution situated at Nilgunj Road, Panihati, Kolkata-700 114. So, from the perusal of panchnama and the assessment orders, it can be safely inferred that the reference made by DDIT (Inv.) for valuation of the properties on 1-4-2014 was without any incriminating materials found during search [oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction] Therefore, no addition was permissible in the assessment order u/s 153A of the Act in the case of un-abated assessments unless it is based on relevant incriminating material found during the course of search qua the assessee and qua the AY. Thus the assessee succeeds in its cross-appeals on the legal issue raised in respect of appeals pertaining to AY 2008-09 to AY 2012-13. Consequently appeal of assessee pertaining to these assessment years are allowed." 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: 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 or 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. Nizamuddinas unable to show that any such incriminating material was unearthed at any of the three stages pertaining to the assessee. I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 17 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. (d) 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 1.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 CO-30/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 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." I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 18 (e) The Hon'ble ITAT, Kolkata in the case of M/s. Adhunik Gases Ltd. & others Vs. DCIT, CC-XXX in its order dated 06.01.2017 considered several case laws as under: (i) M/s MSP Steel & Power Ltd. IT(SS)A No.156-158/Kol/2014, order dated 02.12.2016 : 7. We have heard the rival submissions. We find it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the Act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessments for the Asst Years 2007-08 & 2008-09 were originally completed u/s 143(1) of the Act and time limit for issuance of notice u/s 143 (2) of the Act had expired on the date of search and hence it falls under concluded proceeding, as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed w/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to those concluded years, the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and those proceedings were not pending on the date of search to get themselves abated. We find that the Co-ordinate Bench of this IT(SS)A No. 47,49,50,51,52, 54, 55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09,07- 08, 05-06,07-08,07-08,10-11 & 07-08 tribunal in the case of Rahee Track Technologies Pvt Ltd vs DCIT in IT(SS)A Nos. 08 to 13/Kol/2015 dated 7.10.2016 had elaborately dealt with this issue by duly considering the decisions of Hon'ble Delhi High Court in the case of Kabul Chawla and Hon'ble Jurisdictional High Court in the case of Salasar Stock Broking Ltd, among other decisions had held as 2.11. We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and initiating proceedings w/s 153A of the Act. Once the proceedings w/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search), fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 19 unless there is an incriminating material found in the search to disturb the said concluded assessment. In Our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act, as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. Hence the arguments advanced by the ld DR in this regard deserves to be dismissed. Respectfully following the aforesaid decision, we hold that the additions made in the assessments framed u/s 153A of the Act for the Asst Years 2007-08 and 2008-09 in the absence of incriminating materials found in the course of search relatable to those assessment years, deserve to be deleted. Accordingly, the Ground No. 1 for Asst Years 2007-08 and 2008-09 raised by the assessee are allowed." ii) Salasar Stock Broking Ltd., G.A.No.1929 of 2016 & ITA No.264 of 2016, dated 24.08.2016 : "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 lT(SS)A No. 47,49,50,51, 52, 54, 55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08, 08-09, 07-08, 05-06,07-08, 07-08,10-11, & 07-08 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." iii) Veerprabhu Marketing Ltd., [2016] 73 taxmann.com 149 (Calcutta) : "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 I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 20 such disallowances were not contemplated by the provisions contained under section 153C read with section 1534, The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." iv) M/s Howrah Gases Limited, IT(SS)A No. 26&27/Kol/2015, order dated 18.11.2016 : 5. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the impugned disallowance of order dated Rs 41,14,917/- under section 40(a)(ia) was made by the Assessing Officer in the assessment originally completed under section 143(3) vide an 31.12.2007, which had already become final before the search and seizure action took place in the case of the assessee on 06.10.2010. the said assessment thus did not abate as a result of search conducted in the case of the assessee not going by the limited scope of proceedings under section 153A which is only to reassess the income of the assessee for the year under consideration on the basis of incriminating material found during the course of the search, it was not permissible to the assessee to raise the issue relating to the disallowance under section 40(a)(ia) made in the assessment originally completed under section 143(3), which had already become final. We, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) upholding the action of the Assessing Officer n not allowing any relief to the assessee on the issue of disallowance u/s. 40(a)(ia) made in the IT(SS)A No. 47,49,50,51,52, 54, 55,94,95,96/Kol/2015 A.Y.s 09-10,06-07,07-08,08-09, 07-08, 05-06,07-08,07- 08,10-11, &07-08 assessment, originally completed under section 143(3), which had become final and upholding the same on this issue, we dismiss this appeal filed by the assessee for A.Y.2005-06." v) Budhiya Marketing Pvt. Ltd., (2015) 154 ITD 0650 Kolkata: "22. In view of the decision of Special Bench in the case of All Cargo Global Logistics Ltd. (supra ), no doubt the addition in the case of the assessee can be made by the Assessing Officer only on the basis of incriminating material found during the course of search under section 153A as in the case of the assessee the assessment was not abated for the impugned assessment years in respect of which proceedings were taken under section 153A. 25. We noted that in the case of the assessee, the addition has been made in each of the assessment years on account of the share capital and the share premium as well as the disallowance of the expenses. During the course of the search taken place in the case of the assessee, we noted that no incriminating material was found in respect of the additions made by the Assessing Officer in each of the assessment years. The only material which was found was the I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 21 Bank account which the assessee was having with the banker. The said Bank account was duly disclosed in the income-tax return filed by the assessee. The said Bank account can also not be regarded to be the incriminating material. Even the Assessing Officer has also not made any addition on the basis of said bank account in each of the assessment years. The banker has made the Pay Order in respect of the balance of the Bank account in favour of the Re venue as per the order of ADIT and only that Pay Order was seized. It is not the case that the Bank account was not disclosed except the Bank account, no other assets, documents or material were brought to our knowledge by the ld. D.R., which has been found or seized by the Department., so that it could be regarded to be the incriminating material in respect of the share capital and the share premium as well as the disallowance of the expenses in respect of which the addition has been made in the assessment completed under section 153A. Since there was no incriminating material found in the course of the search and brought to our knowledge by the ld. D.R. in respect of the share capital and share premium, therefore, we are of the view that no addition on this account can be made in the case of the assessee in each of the assessment years." vi) Shanti Kumar Surana, (2015) CCH 0241 Kol Trib: "In view of the facts in entirety and the legal principles enunciated by Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (NhavaSheva) Ltd., supra, of Hon'ble Allahabad High Court in the case of Shaila Agarwal, supra and Mumbai Special Bench decision in the case of All Cargo Global Logistics, supra, we are of the view that there is no incriminating material found during the course of search in the present case for IT(SS)A No. 47,49,50, 51, 52, 54,55,94,95,96/Kol2015 A.Y.s 09-10,06-07,07-08,08-09,07- 08,05-06, 07-08,07-08, 10-11, & 07-08 these assessment years, except the statement of one Shri Sambhu Kr More, as admitted by the AO in his remand report dated 23.09.2011 and despite number of opportunities revenue could not produce any incriminating material before the Bench and the assessments are already completed for these assessment years originally, the assessments framed u/s. 153A of the Act is invalid and hence, quashed. (Para 15). (f) After considering the case laws as mentioned in sub para (e) above, the Tribunal in the case of M/s. Adhunik Gases Ltd. has held as under; "9. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the judgments of jurisdictional ITAT and Hon'ble High Courts. Ld. AR has pointed out that no incriminating documents was found either during survey or during search procedure. The statement of Shri Naresh Kumar Chhaparia I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 22 should not be relied on, because he is a double speaking person. The assessment proceedings were completed before the date of search. Besides, the time limit to issue notices. 143(2) was also expired. In order to initiate assessment proceedings /s. 153A, there should be a new or incriminating document. The assessment which is already completed u/s.143(3)/143(1) should not be reopened. Therefore, considering the scheme of Section 132 and Section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of Section 153A. Ld. DR for the revenue had pointed out that there is a direct nexus among the companies, which has been established by the statement of Mr. Naresh Kumar Chhaparia, which cannot be relied on, as he was a double speaking person. Therefore, considering the factual position and the judgments cited by ld. AR, we are of the view that the additions made by the A u/s. 153A and confirmed by the ld. CIT(A) needs to be deleted. Therefore, we delete the addition." (g) 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 contributed 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 I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 23 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 his case in the Supreme Court and keeping in view the Apex Court's decision to dismiss SLP on the similar 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 (1TAT No. 99 of 2019) and the connected application (GA No.1211 of 2019) are dismissed (h) Hon'ble Supreme Court of India dismissing the SLP of revenue in [2018] 96 taxmann.com 468 (SC) dated 02.07.2018 against the decision of Hon'ble Delhi High Court in the Case of PCIT VS Meeta Gutgutia in [2017] 82 taxmann.com 287 (Delhi) where it was held as under- Il. Section 69, read with sections 132 and 153A, of the Income-tax Act, 1961 - Undisclosed investment (Franchisee fees) - Assessment years 2001-02 to 2004- 05 - During course of search, assessee made a disclosure on account of change I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 24 in method of accounting of franchisee fees and undisclosed franchisee fees for relevant year - On basis of said statement, Assessing Officer opined that number of outlets for which franchisee fee was received must have more or less remained same in all assessment years from 2001-02 to 2006-07 and estimated undisclosed income at a certain percentage of amount of disclosure made by assessee in her statement under section 132(4) - Whether since no incriminating material was unearthed to show that there was failure by assessee to disclose franchisee income, addition made by TPO was unjustified- Held, yes [Para 52] [In favour of assessee]" (i) Hon'ble Supreme Court of India, dismissing the SLP of revenue in S.L.P (C) No- 34554 of 2015[ 2016] 380 ITR (st) 64-Edn-against the judgement of the Delhi High Court in PCIT Vs. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571(DEL). The relevant Para as mentioned in the ITR is reproduced as under. "Their Lordships Madan B. Lokur and SA.Bobde JJ dismissed the Department's Special leave petition against the judgement dated July 06,2015 of the Delhi High Court in 1.TA No 369 of 2015 whereby the High Court held that no substantial question of law arose since there was a factual finding that no incriminating evidence related to share capital issued was found during the course of search and that the assessing officer was not justified in invoking section 68 of the Act for the purpose of making additions on account of share capital" (j) Hon'ble Delhi High Court in the Case of PCIT VsMeeta Gutgutia in [2017] 82 taxmann.com 287 (Delhi) where it was held as under:- "II. Section 69, read with sections 132 and 153A. of the Income-tax Act, 1961 - Undisclosed investment (Franchisee fees) - Assessment years 2001-02 to 2004- 05- During course of search, assessee made a disclosure on account of Change in method of accounting of franchisee fees and undisclosed franchisee fees for relevant year - On the basis of said statement, Assessing Officer opined that number of outlets for which franchisee fee was received must have more or less remained same in all assessment years from 2001-02 to 2006-07 and estimated undisclosed income at a certain percentage of amount of disclosure made by assessee in her statement under section 132(4) - Whether since no incriminating material was unearthed to show that there was failure by assessee to disclose franchisee income, addition made by TPO was unjustified - Held, yes [Para 52] [In favour of assessee]" The aforesaid decision of PCIT vs Meeta Gutgutia was upheld by Hon'ble Supreme Court by dismissing the SLP of revenue in [2018] 96 taxmann.com 468 (SC) dated 02.07.2018 I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 25 (k) Hon'ble Orissa High Court in the case of Smt. Jami Nirmalavs Principal Commissioner of Income-tax, Bhubaneswar in [2021] 132 taxmann.com 267 (Orissa) dated 10.08.2021. "13. In the present case, the impugned assessment order does not refer to any document unearthed during the course of the search on 26th February, 2016. Therefore, the assumption of jurisdiction under section 153A of the Act for reopening the assessment for the AY 2015-16 was without legal basis. The impugned assessment order refers only to the cash book found during the survey purportedly conducted on 12th February, 2016 i.e. two weeks prior to the date of search. The Panchanama of the search proceedings unambiguously shows that nothing incriminating was recovered in the course of the search. Even in the counter affidavit of the Opposite Parties does not dispute this position. 14. In view of the settled legal position the Court has no hesitation in concluding that the impugned assessment order is entirely without jurisdiction." (l) Hon’ble High Court of Delhi in the case of PCIT vsJaypee Financial Services Ltd in [2021] 130 taxmann.com 218 (Delhi) dated 20.07.2021. 6. We have perused the record Both the CITIA) as well as the ITAT have held in the instant case that the addition is not based on any incriminating material found during the course of search and the assessment was not pending on the date of search. The observations of the Assessing Officer relied upon by Mr. Sharma do not give us any insight or clue about the incriminating material' which is claimed to be in existence. In the proceedings before the CIT(A) as well as the ITAT, the Revenue has not made any attempt so as to disclose the incriminating material. Even in the present appeal, the revenue is unable to explain or give us any indication about the same. 7. The findings of facts returned by CITA) and ITAT are not be interfered with lightly. The view taken by the tax authorities based on the decision of Kabul Chawla (supra) cannot be held to be perverse. The questions of law proposed by the Revenue are squarely covered by the aforesaid judgment. 8. In view of the above, no question of law, much less a substantial question of law, arises for our consideration. Accordingly, the present appeal, along with pending application, is dismissed." (m) Hon'ble Bombay High Court in the case of CIT vs SKS Ispat& Power Ltd in (2018] 99 taxmann.com 424 (Bombay) dated 12.07.2017. I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 26 "5. We have considered the arguments canvassed by the learned counsel for the respective parties. On perusal of section 153A of the Act, it is manifest that it does not make any distinction between assessment conducted under section 143(1) and 143(3). This court had occasion to consider the scope of section 153A of the Act in the case of Gurinder Singh Bawa and in the case of Continental Warehousing Corpn. (NhavaSheva) Ltd. (referred to supra). It has been observed that section 153A cannot be a tool to have a second inning of assessment either to the Revenue or the assessee. Even in the case of Gurinder Singh Bawa (referred to supra) the assessment was under section 143(1) of the Act and the court held that the scope of assessment after search under section 153A Would be limited to the incriminating evidence found during the search and no further. In the said judgment, the judgment of this court in Continental Warehousing Corpn. (NhavaSheva) Ltd. (referred to supra) has been followed. 6. Considering the authoritative pronouncements of this court in the above referred cases one of which is also with regard to assessment under section 143(1), the issue is no longer res integra and stands concluded in the above referred judgments. 7. In the light of the above, the appeals being sans substantial question of law stand dismissed. No costs." (n) Hon'ble Gujarat High Court in the case of PCIT vs RameshbhaiJivraj Desai in [2020] 121 taxmann.com 333 (Gujarat) dated 18.09.2020. 6. Thus, having regard to the materials on record, the Tribunal is right in holding that once it is held that the assessment has attained finality, then, the Assessing Officer. while passing independent assessment order under section 153A read with section 143(3) of the Act cannot disturb the assessment/reassessment, which has attained finality unless the materials gathered in the course of the proceedings under section 153A of the Act establish that the reliefs granted in the final assessment/reassessment were contrary to the facts coming during the course of section 153A proceedings. 7. The Tribunal noticed that there was no record to indicate that any material was unearthed during the course of section 153A proceedings and in such circumstances, the Assessing Officer, while passing the order under section 153A read with section 143(3) of the Act, 1961 could not have disturbed the assessment order. 8. We are in complete agreement with the line of reasoning assigned by the Tribunal. In our opinion, the question as proposed by the Revenue cannot be termed as substantial question of law. I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 27 9. In the result, this appeal fails and is hereby dismissed. " (o) Hon'ble High Court of Delhi in the case of PCIT Vs Agson Global (P.) Ltd in [2022] 134 taxmann.com 256 (Delhi)dated 19.01,2022. "11.2 Furthermore, as noticed above, based on past precedents, the Tribunal noted that the photocopies of documents such as blank share transfer forms, blank receipts and blank power of attorney did not constitute incriminating material. Mr Sharma was not able to draw our attention to any authority, which has taken a contrary view. According to the Tribunal, even in those cases where originals of such documents were found, they were nof construed as incriminating material, based on which assessment could be made under section 153(A) read with section 143(3) of the Act. Significantly, the revenue chose not to examine those, who had ostensibly executed these documents. It was not argued before us that the finding returned by the Tribunal on this aspect of the matter was perverse. 11.3 Thus, having regard to the aforesaid, we concur with the view of the Tribunal that assessments concluded in respect of AYs 2012-2013, 2013-2014 and 2014-2015 under section 143(3) of the Act could not be disturbed, as no incriminating material was found. 18.1 We agree with the Tribunal, as observed above, that since no incriminating material was found qua AYs 2012-2013 to 2014-2015 vis-à-vis share capital/share premium, the addition under section 68 could not have been made, apart from the fact that the revenue was unable to dislodge the conclusion arrived by the Tribunal that the money invested in the assessee was the assessee's own money.” (p) Hon’ble High Court of Orissa in the case of Smt. Smrutisudha Nayak vs Onion of Indian [2022] 136 taxmann.com 162 (Orissa) dated 27.10.2021. 17. In the present cases, with there being absolutely no incriminating materials found of seized at the time of search, there was no justification for the initiation of assessment proceedings under section 153A. On this ground therefore the writ petitions ought to succeed. 18. Accordingly, the impugned notices issued to the Petitioners for the AYs 2002-03 and 2008-09 under section 153A(1) read with section 143(3) of the Act are hereby quashed. The writ petitions are allowed but in the circumstances, with no order as to costs. " I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 28 (q) Hon'ble High Court of Bombay in the case of PCIT VsJignesh P. Shahin (2018] 99 taxmann.com 111 (Bombay) dated 26.09.2018. "7. After setting out this principle in great details, the Members of the Tribunal rendered their opinion that factually there was no incriminating material found during the course of search relating to the addition made on account of deemed dividend. The very fact that Section 132 was resorted requiring the Assessing Officer to record the necessary satisfaction, was lacking in this case. The assessment, which had gained finality, in the absence of any material termed as incriminating having thus been subjected to assessment/re-assessment, the Tribunal held in favour of the assessee. We do not think that the Tribunal's understanding of the legal provisions in the backdrop of these peculiar facts suffers from such legal infirmity or perversity necessitating our interference in further Appellate jurisdiction. 8. We are of the firm opinion that the present Appeals do not raise any substantial questions of law. They are accordingly dismissed, but without any order as to costs. (r) Hon'ble High Court of Gujarat in the case of PCIT vs Sunrise Finlease (P.) Ltd in [2018] 89 taxmann.com 1 (Gujarat) dated 28.09.2017. "6. This court in the case of Saumya Construction (P.) Ltd. (supra), has held that in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made. However, any addition or disallowance can be made only on the basis of material collected during the search or requisition. 7. In the facts of the present case, the Tribunal has recorded a finding of fact to the effect that no incriminating material had been found during the course of the search proceedings and that the statement of the director which is stated to have been recorded during the course of search under section 131 of the Act, and which forms the basis for the impugned addition was recorded much later on 7.12.2009. In the light of the above cited decision, it was not permissible for the Assessing Officer to make any addition under section 153A of the Act when no incriminating material had been found during the course of the search (s) Hon'ble High Court of Bombay in the case of CIT Vs Deepak Kumar Agarwalin [2017] 86 taxmann.com 3 (Bombay) dated 11.09.2017. I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 29 Section 153A, read with sections 132 and 143 of the Income-tax Act, 1961 – Search and seizure – Assessment in case of (Scope of) – Whether assessment under section 153A can be made only on the basis of incriminating material found in search under section 132 – Held yes – whether only income related to incriminating documents found during search under section 132 can be considered in assessment under section 153A - Held. yes - Assessing Officer as a result of search conducted under section 132 on assessee framed assessment of assessee under section 143(3) read with section 153A and made additions under sections 68 and 14A to his income - Tribunal held that additions were made beyond Scope of section 153A, as no incriminating material in support of additions made under section Whether in peculiar 68 and under section 14A was brought on record by revenue – whether in peculiar facts and circumstances of case, no substantial question of law arose from order of Tribunal - Held, yes [Paras 32 and 34] [n favour of assessee" 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. Similarly, the Hon'ble High Courts of Delhi, Bombay, Rajasthan, Orissa, Karnataka, Madhya Pradesh and several other High Courts as well have expressed the similar views, Initially, the SLPs filed by the Department in the Supreme Court against the orders of the High Courts on this issue were dismissed by the Hon'ble Supreme Court. Thus, the SLP filed against the orders of the Hon'ble Delhi High Court in the cases of CIT (Central) I|I Vs. CIT Vs. Kabul Chawla (2015), 61 taxmann.com 412 (Delhi), PCIT Vs. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571 (Delhi) and PCIT Vs. Meeta Gutgutia (2017) 82 taxmann.com 287 (Delhi) were dismissed by the Hon'ble Supreme Court. However, recently the Hon'ble Supreme Court has admitted the SLPs filed by the Department on the same issue. Some of such reported cases are as under: 1. PCIT Vs. Anand Kumar Jain (2021) 133 taxmann.com 289 (SC) (Against the Order of Hon'ble Delhi High Court) 2. PCIT Vs. GauravArora (2021) 133 taxmann.com 293 (SC) ) (Against the Order of Hon'ble Delhi High Court) 3. PCIT Vs. Param Dairy Ltd. (2021) 133 taxmann.com 148 (SC) ) (Against the Order of Hon'ble Delhi High Court) 4. PCIT, Central-4 Vs. Dhananjay International Ltd. (2020) 114 taxmann.com 351 (SC) (Against the Order of Hon'ble Bombay High Court) However, the Hon'ble Supreme Court has not stayed any of the orders of Hon'ble High Courts even if SLPs of Department have been admitted. Further, in I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 30 the case of Veerprabhu Marketing Ltd. (Supra) Department decided not to file SLP against the order of the Hon'ble Calcutta High Court and this was communicated by letter No.ADG(L&R)-II/EZ/PCIT(C)/Kol/1184/2016/770 dated 07/08.02.2017. In view of the above discussion, the situation remains that additions in search assessments without incriminating evidences found during search would not be sustainable. AO has referred to some judgements of Kerala High Court and a few other decisions wherein it has been held that additions can be made in search assessments even without any incriminating material found during search. However, there are overwhelming number of recent judgements which have held that the additions in search assessments can be made only on the basis of incriminating material found during search. These judgements include the judgements of the Hon'ble Calcutta High Court as discussed above, and we are bound to follow the same. Hence, in view of discussion above, it is held that additions made during proceedings u/s.153A are not sustainable as no incriminating evidence was found during search in respect of these additions. Hence, AO is directed to delete the addition of Rs.24,09,92,817/-(Excluding Rs.1,66,50,500/- offered in IDS). 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.” 7. Being aggrieved by the said order of the CIT(A), the revenue has come in appeal before us. 8. It is to be noted here that in exactly identical set of facts and circumstances in the cases of other concerns of the Rashmi Group of Companies covered in the same search action, the ld. CIT(A) has deleted the additions with the identically worded findings as extracted above except the variation in figures of the amount involved. The revenue had preferred appeals in the said cases also, which came for adjudication before the Coordinate ‘B’ Bench of this Tribunal. The Coordinate ‘B’ Bench of Kolkata Tribunal has adjudicated the said bunch of appeals I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 31 by common order dated 31.08.2023 with the lead case titled as “DCIT, CC-2(2), Kolkata Vs. M/s Positive Traders Pvt. Ltd.” I.T.A. Nos. 84/Kol/2022Assessment Year- 2015-16, has upheld the order of the CIT(A) observing as under: “7. The Ld. A.R vehemently submitted before us that the issue involved in the present appeal is squarely covered by the latest decision by the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. [2023] 149 taxmann.com 399 (SC) dated 24.04.2023 and DCIT vs. UK Paints (Overseas Ltd.) (Civil Appeal No. 6634 of 2021)order dated 24.04.2023. The Ld. A.R submitted that the assessee has filed original return of income u/s 139(1) of the Act on 28.03.2017 and the period within which the statutory notice u/s 143(2) of the Act could have been issued had already expired before the date of search action. The Ld. A.R submitted that accordingly the assessment in an instant case has attained finality as no proceedings were pending on the date of search and consequently this is an unabated assessment within the meaning of section 153A of the Act. The Ld. A.R, while referring to the assessment order framed by the AO in an instant case, submitted that the addition in respect of proceeds of sale of shares/investments amounting to Rs. 8,26,30,000/- was made on the basis of books of account and submissions of the assessee filed during the assessment proceedings. The ld AR while referring to the investments tally/ stock tally submitted that shares/investments/stocks, the sale proceeds whereof were added to the income of the assessee ,in fact, comprised of opening balances and purchases during the year and closing balance in hand. The ld AR submitted that balance brought forward from the preceding years were accepted by the revenue in the earlier assessment years even in the assessment proceedings. The ld further contended that the purchases of investments/stocks during the year were also not doubted. The ld. AR ,therefore ,argued that how sale of investments/shares/stocks can be stated to be suspicious on being sold during the year when the opening balance and purchases during the year were fully accepted out of which the sales of investments/stocks were effected. But confined his arguments to the legal issue of non existence of incriminating searched materials , the ld AR contended that the AO has not made any reference to any incriminating material seized during the search action while making the addition. The Ld. A.R stated that AO has referred to SFGO/9 page 1 to 41 as incriminating materials however the assessee stated that these documents were extracted from the books of accounts of the assessee and were not in fact incriminating seized materials. The ld AR submitted that regular contemporaneous business documents forming part of the books of accounts of the assessee can not constitute the incriminating materials to justify the addition in an unabated assessment. In I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 32 defense of his arguments, the ld AR relied on the following decisions of the coordinate benches: a) ACIT Vs Majestic Commercials (P) Ltd. 116 taxmann.com 412(Kol Tri) b)Daffodil VincomPvt Ltd. Vs DCIT ITA Nos.(SS) 95 & 96 /Kol/2018 dated 28.06.2019 c)HBN Insurance Agencies Vs ACIT ITA No.3783 & 3784/Del/2014 dated 23.12.2019 d)ACIT Vs Goldstone Cements Ltd ITA 126 to 131/Gau/2020 dated 10.12.2021 7.1. The Ld. A.R submitted that the reference to the statement recorded u/s 132(4) of the Act ShriSanjiv Kr. Patwari and Shri K. K. Verma for making the addition has no evidentiary value as the statement was retracted very next day by filing Affidavit before the Judicial Magistrate, a copy of which was filed before ADIT (Inv). The Ld. A.R argued that apart from the statement u/s 132(4) of the Act, the AO has not referred to any incriminating material found during the course of search. The Ld. A.R contended that the statement u/s 132(4) by itself does not constitute any incriminating evidences unless these are supported by the substantive corroborating material found during the course of search. In defense of his arguments the Ld. A.R relied on the CBDT Instruction F. NO. 286/2/2003-IT (Inv.II) dated 10.03.2003 and Circular No. F No. 286/98/2013-IT (Inv.II) dated 18.12.2014. Finally the Ld. A.R prayed before the Bench that the addition made by the AO may kindly be deleted as without any jurisdiction as same was not backed by any incriminating material found and seized during the course of search. 8. The ld AR also argued that the AO has passed two assessment orders. The ld AR while referring to the order uploaded on the portal of the department submitted that the said order contained only six pages with DIN duly mentioned however the said order is a non-speaking and cryptic order whereas the second assessment order passed containing 52 pages by the ld AO was undated and without DIN. The ld AR argued that the first assessment order which is non speaking and cryptic is bad in law and has to be quashed In defense of his arguments , he relied on the following decisions: a)Vishal Ashwin Patel Vs. ACIT (2022) 136 taxmann.com 372 (SC) b)Vellaian Selvaraj Vs NFAC (2022) 138 taxmann.com 122(Mad) c) Tala Teleservices (Maharashtra) Ltd Vs DCIT(TDS) (2018) 90 taxmann.com 1(Bom) I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 33 d) Indian Minerals and Granite Co. Vs DCIT (2022) 137 taxmann.com 119(Kar) 9. The ld AR further submitted that the second order which is a detailed order but the same was undated and without any DIN. Ld. AR brought to our notice that non-mentioning of DIN is fatal and goes to the root of the matter as it is mandatory and has to be mentioned in the assessment order passed u/s 143(3) r.w.s. 153A of the Act . Ld. A/R while referring to the CBDT Instruction no. 19/2019 dated 14.08.2019 para 2 argued that it specifically provided that no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person on or after the 1 st day of October 2019 unless a computer generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. Ld. A/R further submitted that in para 4 of the said Instruction it is provided that any communication which is not in conformity with para 2 & 3 of the said Circular/Instruction shall be treated as invalid and shall be deemed to have been never issued. Ld. A/R also stated that certain exceptions have carved out in the said Instruction where the mentioning of DIN in the communication/orders has been dispensed with. Ld. A/R submitted that the case of the assessee is not covered in the exceptions provided. Ld. A/R while referring to provisions of Section 119(2)(a) of the Income Tax Act, 1961 (in short the 'Act') submitted that instructions have to be followed by the Departmental officers and CBDT issued Instruction u/s 119(1) of the Act to issue orders/instructions u/s 119(2)(a) of the Act which the authorities below shall follow. Ld. A/R referred and relied the decision of Hon’ble Delhi High court in the case of CIT(IT-1) Vs Brandix Mauritius Holdings Ltd. (2023) 149 taxmann.com 238 (Delhi) and on two decisions of Coordinate Benches in the case of Tata Medical Centre Trust Vs. CIT in ITA No. 238/KOL/2021 order dated 18.07.2022 and in the case of Smt. Sunita Agarwal Vs. ITO in ITA No. 432/KOL/2020order dated 22.11.2022. Ld. A/R therefore, prayed that the revisionary order passed by Ld. Pr. CIT without generation of DIN and mentioning the same on the said revisionary order renders it to be invalid and non-est in the eyes of law and may kindly be quashed. 10. The Ld. D.R on the other hand strongly relied on the order of AO by submitting that the assessee has acquired these companies having huge share investments from other shell companies at a very meagre price in the earlier years and during the year received huge sale proceeds by selling these share investments/part of these investments to other shell companies, the credentials whereof were suspicious , not genuine and identities were also not proved. The Ld. D.R contended that the genuineness of these transactions were in doubt as these companies were having huge investments in shares which were sold I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 34 during the year yielding huge sales proceeds while these companies were acquired at a very nominal price in the preceding years. The Ld. D.R argued that ,though candidly agreeing that the assessee company was acquired at a very nominal price with huge investments in shares and securities. , the mere fact that in the scrutiny proceedings, these investments or part thereof were accepted would not made the dubious transactions as sacrosanct. The ld DR argued that the search action was conducted on concrete information that assessee is involved in purchasing the shell companies with huge investments at very low price and therefore the argument of the AR that there was no incriminating materials seized during the search is devoid of any merit. The Ld. D.R therefore prayed that the order passed by the Ld. CIT(A) holding that there is no incriminating material to make the said addition is wrong and deserved to be reversed and the order of AO may kindly be restored. 11. We have heard the rival contentions and perused the material on record. The undisputed facts are that a search action was conducted on the Rashmi Group of companies including the assessee company on 24.1.2020. The assessee filed original return of income on 28.03.2017 declaring total income of Rs. 5,74,150/- and admittedly there was no pending proceedings as on the date of search. Besides time period for issuing notice u/s 143(2) of the Act has already expired on the date of search. Therefore the instant assessment is an unabated assessment on the date of search as it had attained finality in terms of provision of Section 153A of the Act. Section 153A is complete code in itself and provides that where search is conducted u/s 132(1) of the Act, the AO is empowered to reopen and reassess the income u/s 153A of the Act with respect to six preceding assessment years but the condition is that the addition has to be based on the basis of incriminating material found and seized during the course of search meaning thereby that if the AO intends to make an addition in the unabated assessment years then there has to be incriminating seized material in support of addition and not otherwise. In the present case the AO has observed on the basis of records and the submissions of the assessee that assessee has received huge sale proceeds by selling investments in shares held by the assessee and accordingly the addition was made to the income of the assessee on the ground that the identity and credential of the buyers of these investments were not genuine. A perusal of the order of AO clearly reveals that there was no reference to any incriminating seized material qua the sale of investments. We note that there was a reference to the seized material as SFGO/9 as incriminating material but these are the extract stakes from the books of account of the assessee. In our opinion, the extract of the books of account of the assessee are not incriminating material seized during the course of search as these are the books maintained by the assessee in the ordinary course of business. The case of the assessee finds support from the following decisions namely a) ACIT Vs Majestic Commercials (P) Ltd. (supra), I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 35 b)DaffodilVincomPvt Ltd. Vs DCIT (supra), c)HBN Insurance Agencies Vs ACIT (supra) and d)ACIT Vs Goldstone Cements Ltd (supra) wherein it has been held that the documents or records which are part of books of accounts of the assessee do not constitute incriminating materials. 12. We observe that the revenue has not doubted the opening balances of investments/stocks, which were even accepted in the scrutiny proceedings in the earlier assessment years, purchases during the year whereas the sales of the investments/stocks were held to be suspicious. In our opinion how the sales can be doubted where the purchases/stocks are treated as genuine. 13. We also note that the AO has referred to the statement of two individuals recorded u/s 132(4) of the Act i.e. Shri Sanjib Kr. Patwari, the key person of the group and another one Shri K. K. Verma. Accountant of the company. However, we note that both these persons withdrew and retracted their statements by filing Affidavits before the Judicial Magistrate the very next day when these were recorded. These copies of retraction were filed before the ADIT(Inv) and ADIT(Inv)did not take any action against these two individuals. In our opinion, the statement u/s 132(4) of the act has no evidentiary value unless corroborating material was brought on record. The case of the assessee finds support from CBDT Instruction F. NO. 286/2/2003-IT (Inv.II) dated 10.03.2003 and Circular No. F No. 286/98/2013-IT (Inv.II) dated 18.12.2014wherein it has been provided that addition can be made on the basis of statements recorded u/s 132(4) of the Act where there is corroborating material brought on records. 14. We have perused the order of Ld. CIT(A) who has passed detailed and speaking order after discussing the facts at great length and after following the various decisions passed by various judicial forums and thus deleted the addition. In our opinion, the said decision is in accordance with the provisions of Act. Based on the above discussion , we are of the considered view that there is no incriminating seized materials qua the sale of investments by the assessee and consequently the addition by the AO is without jurisdiction. The issue has been settled by the latest decision of Hon’ble Apex Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. (supra) and DCIT vs. UK Paints (Overseas Ltd.) (supra). Whereas the Hon’ble Apex Court has held that in case of unabated assessment, the addition can only be made on the basis of incriminating material found and seized during the course of search and not otherwise. Accordingly respectfully following the ratio laid down by the Hon’ble Apex Court, we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue. 15. The legal issue raised in other appeals of the revenue in ITA(SS)A No. 84 & 86/Kol/2022, ITA(SS)A No. 80& 81/Kol/2022, ITA(SS)A No. I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 36 98/Kol/2022,ITA(SS)A No. 92 to 94/Kol/2022 is similar one as decided by us in ITA(SS)A No. 85/Kol/2022(supra) wherein we have dismissed the appeal of the assessee by upholding the order of the ld CIT(A) affirming that no addition can be made in an assessment which is unabated on the date of search in absence of any incriminating searched material. We observe all these assessees were covered in the same search and facts are also similar. We have carefully perused and examined the facts involved in these appeals and find that in all the above appeals, the assessments are unabated on the date of search and the additions were made by the AO on account of sale proceeds of investments/shares on account of these transactions being doubts &suspicious. We observe that the facts of these appeals are similar to one as decided by us in ITA No. 85/Kol/2022. Accordingly our decision in ITA No. 85/Kol/2022 would, mutatis mutandis, apply to these appeals as well. Consequently all the above appeals of the revenue are dismissed. 16. In the result, all the appeals of the revenue are dismissed.” 9. The entire facts and issues involved in this appeal are exactly identical to that of the facts and issues involved in the above referred to decision and we are in agreement with the findings arrived at by the Coordinate ‘B’ Bench of the Tribunal in the given facts and circumstances and we have nothing more to add in arriving at the conclusion in this appeal. Therefore, following the above reproduced decision of the Coordinate Bench of the Tribunal, the present appeal of the revenue is hereby dismissed. 10. Since the facts and issues raised in other appeals of the revenue in all the captioned appeals are identical to the ITA(SS)A No. 74/Kol/2022 as adjudicated above wherein we have dismissed the appeal of the revenue by upholding the order of the ld CIT(A) affirming that no addition can be made in an assessment which is unabated on the date of search in absence of any incriminating searched material. The issue being squarely covered by the recent decision of the Hon’ble Supreme Court in the case of “PCIT vs. Abhisar Buildwell Pvt. Ltd.” I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 37 (supra).All the captioned cases are outcome of the same search action and facts and issues are also identical. Both the Ld. Representatives of the parties have also categorically admitted that the facts and issues involved in all the appeals are identical. Therefore, our above decision arrived in ITA No. 74/Kol/2022 would, mutatis mutandis, apply to all the captioned appeals as well. Consequently all the above appeals of the revenue are hereby dismissed. 11. In the result, all the captioned appeals are hereby dismissed. Kolkata, the 5 th September, 2023. Sd/- Sd/- [ͬगरȣश अĒवाल/Girish Agrawal] [संजय गग[/Sanjay Garg] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 05.09.2023. RS Copy of the order forwarded to: 1. DCIT, Central Circle-2(2), Kolkata 2. (i) M/s Khushboo Complex Pvt. Ltd (ii) M/s Daffodil Plaza Pvt. Ltd (iii) M/s Heaven Dealmark Pvt. Ltd (iv) M/s Reach Infocom Technology Pvt. Ltd (v) M/s Ashtvinayak Sales Pvt. Ltd (vi) M/s Sumangal Infraprojects Pvt. Ltd (vii) M/s Regal Vincom Pvt. Ltd (viii) M/s Rashmi Metaliks Ltd (ix) Sanjib Patwari 3.CIT (A)- 4. CIT- , 5. CIT(DR), I.T(SS)A. Nos.73 to 77/Kol/2022 M/s Khushboo Complex Pvt. Ltd, I.T(SS)A. Nos.78 to 79/Kol/2022 M/s Daffodil Plaza Pvt. Ltd, I.T(SS)A. Nos.82 to 83/Kol/2022 M/s Heaven Dealmark Pvt. Ltd, I.T(SS)A. Nos.87 to 88/Kol/2022 M/s Reach Infocom Technology Pvt. Ltd., I.T(SS)A. Nos.89 to 91/Kol/2022 M/s Ashtvinayak Sales Pvt. Ltd, I.T(SS)A. Nos.95 to 96/Kol/2022 M/s Sumangal Infraprojects Pvt. Ltd, I.T(SS)A. No.97/Kol/2022 M/s Regal Vincom Pvt. Ltd, I.T(SS)A. No.99/Kol/2022 M/s Rashmi Metaliks Ltd, I.T(SS)A. No.100/Kol/2022 Sanjib Patwari 38 //True copy// By order Assistant Registrar, Kolkata Benches
Other Referred Cases
PCIT vs. Abhisar Buildwell Pvt. Ltd., DCIT vs. UK Paints (Overseas Ltd.), ACIT vs. Majestic Commercials (P) Ltd., Daffodil Vincom Pvt Ltd. Vs DCIT, HBN Insurance Agencies Vs ACIT, ACIT vs. Goldstone Cements Ltd, Veerprabhu Marketing Ltd., Salasar Stock Broking Ltd., M/s. Adhunik Gases Ltd. & others Vs. DCIT, CC-XXX, CIT vs. Kabul Chawla, CIT vs. Veerprabhu Marketing Ltd., CIT vs. Salasar Stock Broking Ltd., PCIT vs. Kurele Paper Mills Pvt. Ltd., PCIT vs. Meeta Gutgutia, PCIT vs. Jaypee Financial Services Ltd, PCIT vs. Rameshbhai Jivraj Desai, PCIT vs. Agson Global (P.) Ltd
Laws Referred To
Income Tax Act, 1961
Consultation on Entity Formation
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1:1 Consultation on Tax Litigation
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1:1 Consultation on Tax Litigation
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HUF Deed
Mehul₹500
Rectification Letter - Application for rectification of mistake under Section 154 of I.T. Act
Mehul₹0
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