Sri Vijay Kumar Singhania, Kolkata V. DCIT, C.C.-3(3), Kolkata, Kolkata

ITSSA 108/KOL/2017

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3564 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 09-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: S M SURANA SHRI SUNIL SURANA
• Keywords: Search and seizure; Document seized; Earning of tax free income; Reason to believe; Documents seized
• Section: 143(3); 142(1); 153A; 14A; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] I.T.(SS).A NOS. 109 & 110/KOL/2017 ASSESSMENT YEARS : 2009-10 & 2012-13 SHRI KRISHNA KUMAR SINGHANIA -VS- DCIT, CC-3(3), KOLKATA [PAN: ALQPS 8424 F] (APPELLANT) (RESPONDENT) I.T.(SS).A NO. 105/KOL /2017 ASSESSMENT YEAR : 2012-1 3 SHRI AJAY KUMAR SINGHANIA -VS- DCIT, CC-3(3), KOLKATA [PAN: AKOPS 8396 R] (APPELLANT) (RESPONDE NT) I.T.(SS).A NO. 104/KOL /2017 ASSESSMENT YEAR : 2012-1 3 SMT. KASAK SINGHANIA -VS- DC IT, CC-3(3), KOLKATA [PAN: BFLPS 0588 A] (APPELLANT) (RESPONDENT) I.T.(SS).A NOS. 111 & 112/KOL/2017 ASSESSMENT YEARS : 2009- 10 & 2012-13 SMT. NIRMALA DEVI SINGHANIA -VS- DCIT, CC-3(3), KOLKATA [PAN: ALUPS 4433 Q] (APPELLANT) (RESPONDENT) I.T.(SS).A NOS. 107 & 108/KOL/2017 ASSESSMENT YEARS : 2009- 10 & 2012-13 SHRI VIJAY KUMAR SINGHANIA -VS- DCIT, CC-3(3), KOLKATA [PAN: ATCPS 9111 K] (APPELLANT) (RESPOND ENT) I.T.(SS).A NOS. 106/KOL/2017 ASSESSMENT YEAR : 2012-1 3 SMT. RUCHI SINGHANIA -VS- DCIT, CC-3(3), KOLKATA [PAN: ADZPC 6523 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.M. SURANA, ADVOC ATE SHRI SUNIL SURANA, FCA FOR THE REVENUE : SHRI G. MALLIKARJUNA, CIT DR DATE OF HEARING : 28.11.2017 DATE OF PRONOUNCEMENT : 06.12.2017 2 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 2 ORDER PER BENCH: 1. ALL THESE APPEALS OF THE ASSESSEE ARE DIRECTED A GAINST THE INDEPENDENT ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 21, KOLKATA [ IN SHORT THE LD CITA] IN APPEAL NOS. 10841 & 10866 /CC-3(3)/CIT(A)-21/KOL/16 -17 DATED 6.7.2017 FOR ASST YEARS 2009-10 AND 2012-13 RESPECTIVELY IN THE CASE OF KRI SHNA KUMAR SINGHANIA AGAINST THE INDEPENDENT ORDER OF ASSESSMENTS FRAMED UNDER SECTI ON 153A / 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASST YEARS 2009-10 AND 2012-13 DATED 28.12.2016 ; APPEAL NO. 10867 /CC-3(3)/CIT(A)-21/KOL/16-17 DATED 6.7.2017 IN THE CASE OF AJAY KUMAR SINGHANIA AGAINST THE ORDER OF ASSESSMENT FRAMED U/ S 153A/143(3) OF THE ACT FOR THE ASST YEAR 2012-13 DATED 29.12.2016 ; APPEAL NO. 10779 /CC-3(3)/CIT(A)-21/KOL/16-17 DATED 6.7.2017 IN THE CASE OF SMT KASAK SINGHANIA AGAINST THE ORDER OF ASSESSMENT FRAMED U/ S 153A/143(3) OF THE ACT FOR THE ASST YEAR 2012-13 DATED 20.12.2016 ; APPEAL NOS. 10766 & 10785 /CC-3(3)/CIT(A)-21/KOL/16 -17 DATED 6.7.2017 FOR ASST YEARS 2009-10 AND 2012-13 RESPECTIVELY IN THE CASE OF SMT NIRMALA DEVI SINGHANIA AGAINST THE INDEPENDENT ORDER OF ASSESSMENTS FRAMED UNDER SECTI ON 153A / 143(3) OF THE ACT FOR THE ASST YEARS 2009-10 AND 2012-13 DATED 23.12.2016 ; 3 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 3 APPEAL NOS. 10770 & 10781 /CC-3(3)/CIT(A)-21/KOL/16 -17 DATED 6.7.2017 FOR ASST YEARS 2009-10 AND 2012-13 RESPECTIVELY IN THE CASE OF VIJ AY KUMAR SINGHANIA AGAINST THE INDEPENDENT ORDER OF ASSESSMENTS FRAMED UNDER SECTI ON 153A / 143(3) OF THE ACT FOR THE ASST YEARS 2009-10 AND 2012-13 DATED 13.12.2016 AND 28.1 2.2016 RESPECTIVELY; APPEAL NO. 10784 /CC-3(3)/CIT(A)-21/KOL/16-17 DATED 6.7.2017 IN THE CASE OF SMT RUCHI SINGHANIA AGAINST THE ORDER OF ASSESSMENT FRAMED U/ S 153A/143(3) OF THE ACT FOR THE ASST YEAR 2012-13 DATED 20.12.2016. 2. IT WAS PLEADED BY THE LD AR THAT IN VIEW OF IDE NTICAL FACTS INVOLVED IN ALL THE AFORESAID APPEALS, THE APPEAL OF SHRI KRISHNA KUMAR SINGHANIA FOR THE ASST YEAR 2009- 10 MAY BE TAKEN AS THE LEAD CASE WHICH WAS ALSO AGR EED BY THE LD DR AND THE DECISION RENDERED THEREON WOULD APPLY WITH EQUAL FORCE FOR O THER APPEALS ALSO AS LISTED ABOVE EXCEPT WITH VARIANCE IN FIGURES AND ASSESSMENT YEAR . 3. THE PRELIMINARY ISSUE TO BE DECIDED IN THIS APPE AL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITIONS IN THE SEARCH ASSESSMENT FRAMED U/S 153A/143(3) OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIA L FOUND DURING THE COURSE OF SEARCH TO THAT EFFECT. 4. THE BRIEF FACTS OF THIS ISSUE IS THAT THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE ACT ON THE CYGNUS GROUP OF CASES COMPRISING OF VARIOUS COMPANIES AND INDIVIDUALS ON 23.12.2014 AT VARIOUS RESIDENTIAL PREMISES / OFFICES. THE 4 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 4 ASSESSEE IS ONE OF THE KEY INDIVIDUALS IN THE SAID GROUP. SEARCH WARRANT WAS EXECUTED IN THE NAME OF THE ASSESSEE. THE LD AO OBSERVED THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, BOOKS OF ACCOUNTS AND INCRIMINAT ING DOCUMENTS HAVING IDENTIFICATION MARKS CG/1 TO CG/11 & CG/HD/1, KKS/1 WERE SEIZED. CONSEQUENT TO THE SEARCH, NOTICE U/S 153A OF THE ACT WAS ISSUED ON 7.10.2015, IN RESPONSE TO WHICH , THE ASSESSEE FILED HIS RETURN ON 14.12.2015. THE ASSESSEE HAD F ILED HIS ORIGINAL RETURN OF INCOME ON 10.2.2010. THE ASSESSEE STATED THAT THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT FOR THE ASST YEAR 2009-10 IN RESPECT OF THE ORI GINAL RETURN FILED ON 10.2.2010 HAD EXPIRED ON 28.2.2011 AND HENCE AS ON THE DATE OF SE ARCH, THAT YEAR (I.E ASST YEAR 2009- 10) WOULD FALL UNDER THE CATEGORY OF UNABATED ASSE SSMENT AND HENCE THE INCOME ASSESSED ORIGINALLY THEREON EITHER U/S 143(3) OR U/ S 143(1) OR THE RETURNED INCOME, AS THE CASE MAY BE, COULD NOT BE DISTURBED UNLESS THERE I S ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH RELATABLE TO SUCH ASSESSMENT Y EAR. 5. THE LD AO OBSERVED THAT THE INCRIMINATING MATER IALS WERE INDEED FOUND IN THE COURSE OF SEARCH ON 23.12.2014 VIDE SEIZED DOCUMENT REFERE NCE CG / 1 TO 11 AND CG/ HD /1 WHICH REFLECTED THAT THE ASSESSEE HAD HIS GROUP WER E INDULGED IN PURCHASING BOGUS LONG TERM CAPITAL GAINS BY CONVERTING THEIR UNDISCLOSED INCOME. IN OTHER WORDS, THE LD AO WAS OF THE OPINION THAT THE ASSESSEE HAD CONVERTED HIS UNACCOUNTED CASH AND BROUGHT THE SAME IN THE FORM OF LONG TERM CAPITAL GAINS WHICH W AS SHOWN AS EXEMPT INCOME IN CONNIVANCE WITH THE SHARE BROKERS AND THE CALCUTTA STOCK EXCHANGE LTD. IN RESPONSE TO THIS, THE ASSESSEE APART FROM ADDRESSING THE ISSUE ON MERITS STATED THAT THE SEIZED DOCUMENT RELIED UPON BY THE LD AO VIZ CG /1 TO 11 A ND CG/HD/1 WAS NOT SEIZED FROM THE PREMISES OF THE ASSESSEE DURING THE COURSE OF S EARCH ON 23.12.2014. THE SAME WERE 5 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 5 FOUND AND SEIZED IN THE BUSINESS PREMISES OF CYGNUS EQUIPMENT & RENTALS PVT LTD AND OTHER COMPANIES IN THE COURSE OF SEARCH ON 23.12.20 14 PURSUANT TO AN INDEPENDENT SEARCH WARRANT ISSUED ON THEM AS COULD BE EVIDENT F ROM THE PANCHANAME DRAWN IN THE NAME OF THE SAID COMPANIES. THE ASSESSEE SUBMITTED THAT THE ONLY DOCUMENT WHICH WAS SEIZED FROM HIS PREMISES WAS KKS /1 COMPRISING OF 8 PAGES IN THE FORM OF LOOSE SHEETS AND THERE WAS NOTHING INCRIMINATING IN THE SAME AS ADMITTEDLY THE SAME ONLY CONTAINS DETAILS OF AMOUNT SPENT IN THE SUMS OF RS 93,500/- AND RS 225/- TOWARDS PURCHASE OF TV AND WHICH IS DULY COVERED BY THE DRAWINGS OF THE AS SESSEE. IT WAS PLEADED THAT THE DOCUMENTS FOUND IN THE PREMISES OF CYGNUS GROUP OF COMPANIES ARE TO BE EXAMINED ONLY IN THE HANDS OF THE SAID COMPANIES SEARCH ASSE SSMENTS AND NOT IN THE HANDS OF THE INDIVIDUALS. IT WAS ARGUED THAT ADMITTEDLY NO IN CRIMINATING MATERIALS WERE FOUND FOR ASST YEAR 2009-10 AND 2012-13 IN THE COURSE OF SEAR CH WITH REGARD TO ANY LONG TERM CAPITAL GAINS AND ANY OTHER ITEMS FROM THE PREMISES OF THE ASSESSEE AT THE TIME OF SEARCH. ACCORDIGNLY IT WAS PLEADED BEFORE THE LD AO FOR NOT DISTURBING THE ORIGINAL INCOME ALREADY DETERMINED WHICH IS SAME AS THE RETURNED IN COME. THE LD AO HOWEVER DID NOT HEED TO THE CONTENTIONS OF THE ASSESSEE AND PROCEED ED TO FRAME THE ASSESSMENTS U/S 153A OF THE ACT BY DISALLOWING LONG TERM CAPITAL GA INS OF RS 12,39,892/- AND ADDITION TOWARDS SHORT TERM CAPITAL GAIN DUE TO DISALLOWANCE OF DEVELOPMENT CHARGES IN THE SUM OF RS 18,58,883/- ON THE PLEA THAT THE ASSESSMENTS TO BE FRAMED U/S 153A OF THE ACT CLEARS ALL THE DECKS AND WOULD ENABLE THE LD AO TO ASSESS OR REASSESS THE TOTAL INCOME AS PER THE PROVISIONS OF THE ACT IRRESPECTIVE OF INCRI MINATING MATERIALS FOUND IN THE SEARCH. 6. THE LD CITA UPHELD THIS ACTION ON THE LEGAL GRO UND BY OBSERVING AS UNDER:- 6 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 6 I HAVE CONSIDERED ARGUMENTS PUT FORWARD BY THE AR IN THE WRITTEN SUBMISSION FILED AND DIFFERENT CASE LAWS BROUGHT ON RECORD ON THIS ISSUE . I HAVE ALSO CONSIDERED FINDINGS OF THE AO IN THE ASSESSMENT ORDER ON THIS ISSUE. IN TH E VERY FIRST PARAGRAPH OF THE ASSESSMENT ORDER OF THE AO HAS BROUGHT IT ON RECORD AS UNDER: DURING THE COURSE OF SEARCH AND SEIZURE OPERATION BOOKS OF ACCOUNTS AND INCRIMINATING DOCUMENTS HAVING IDENTIFICATION MARKS CG/1 TO CG/11 & CG/HD/1, KKS/1 HAVE BEEN SEIZED. A NUMBER OF LOCKERS WERE FO UND IN THE NAMES OF THE FAMILY MEMBERS OF THE ASSESSEE AND THOSE LOCKERS WERE ALSO COVERED U/S 132 OF THE INCOME TAX ACT, 1961 AND VALUATION OF THE JEWELLERY AND OTHER VALUABLE ITEMS WERE DONE BY REGISTERED VALUER. IN CONSEQUENCE OF SEARCH, SURVEY OPERATIONS WERE ALSO CONDUCTED IN THE OFFICE PREMISES OF (I) M/S SUNWAY INFRASTRUCTUR E SERVICES PVT. LTD. AT A-44/45, DLF IT PARK, TOWER C, SECTOR-62, NOIDA WHERE DOCUMENTS HAVING IDENTIFICATION MARKS LP- 1, A-1 TO A-17, A-18 (MAIN SERVER), HD-1 & HD-2 WER E IMPOUNDED AND (II) M/S CYGNUS SPLENDID LIMITED AT 1009, 10 TH FLOOR, ARUNACHAL BUILDING, BARAKHAMBHA ROAD, NEW DELHI-110001 WHERE DOCUMENTS HAVING IDENTIFICATION MARKS A-1, A-2(HD) WERE IMPOUNDED. I HAVE CONSIDERED FINDINGS OF THE AO IN THE ASSESSM ENT ORDER AND THE WRITTEN SUBMISSIONS FILED BY THE AR ON THIS ISSUE. FROM THE ASSESSMENT ORDER IT IS CLEAR THAT MANY PAPERS, INCRIMINATING DOCUMENTS, CDS AND INCRI MINATING COMPUTERIZED DATA WERE FOUND AND SEIZED DURING THE SEARCH OPERATIONS AND I N SURVEY/SEARCH OPERATIONS CONDUCTED IN DELHI AND NOIDA MANY INCRIMINATING DOC UMENTS WERE FOUND AND SEIZED/IMPOUNDED. THE AO HAS CONSIDERED ALL SUCH IN CRIMINATING DOCUMENTS AND ONLY AFTER THAT HE HAS FRAMED ASSESSMENT ORDER. THEREFOR E, THE ARGUMENT OF THE ASSESSEE THAT NO INCRIMINATING DOCUMENT WAS FOUND OR CONSIDERED W HILE FRAMING THE ASSESSMENT ORDERS IS NOT CORRECT. ACCORDINGLY, ASSESSEES APPE AL ON GROUNDS NO. 1 AND 2 ARE DISMISSED. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO MAKING THE ADDITIONS WHILE COMPLETING THE ASSESSMENT U/S 153A WHEN NO INCREMENTING DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND IN T HE COURSE SEARCH, NOR ANY SUCH DOCUMENT HAVE BEEN RELIED ON WHILE COMPLETING THE ASSESSMENT OR MAKING THE ADDITIONS AND AS SUCH THE ASSESSMENT COMPLETED U/S 153A/143(3) IS BAD IN LAW AND FURTHER MORE THE SEIZED DOCUMENTS CG/1 TO C G/11 AND CG/HD/1, HD/1 7 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 7 AND HD/2 WERE NOT SEIZED FROM THE ASSESSEE AND THER E WAS NO INCRIMINATING MATERIAL IN KKS -1. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO IN MAKING ADDITION FROM THE ISSUES WHICH WERE DISCLOSED IN TH E ORIGINAL RETURN FILED AND WERE SUBJECT MATTER OF THE REGULAR ASSESSMENT WHICH ASSESSMENT WAS NOT ABATED. 3. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO IN ADDING BACK THE GENUINE LONG TERM CAPITAL GAIN OF RS. 12,3 9,892/- AS BOGUS LTCG IGNORING THE EVIDENCE SUBMITTED DISCARDING THE ONUS THAT LAY UPON THE ASSESSEE AND THE AO FAILED TO BRING ON RECORD ANY EVIDENCE T O THE CONTRARY. 4. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO IN DISALLOWING THE GENUINE EXPENSES FOR DEVELOPMENT OF THE LAND WH ICH WAS SOLD AFTER DEVELOPMENT, EVIDENCE WHEREOF WAS FILED AND THERE W AS NO JUSTIFICATION TO TREAT THE EXPENSES AS BOGUS. 8. THE LD DR ARGUED THAT THE EXPRESSION INCRIMINAT ING MATERIAL IS NOT FOUND IN THE PROVISIONS OF THE ACT AND IT IS ONLY THE HONBLE CO URTS WHICH HAD IMPORTED THOSE WORDS WHILE RENDERING THE DECISIONS. HE STATED THAT THE H ONBLE COURTS ARE DIVIDED ON THIS ISSUE AND PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT CO VS DCIT REPOR TED IN (2014) 49 TAXMANN.COM 98 (KAR HC) WHEREIN IT WAS HELD THAT SEARCH ASSESSMENTS COULD BE FRAMED EVEN WITHOUT THE EXISTENCE OF INCRIMINATING MATERIALS FOUND IN T HE COURSE OF SEARCH. HE ARGUED THAT THE BASIC FOUNDATION FOR CONDUCTING THE SEARCH IS G OVERNED BY THE PROVISIONS OF SECTION 132 OF THE ACT WHICH HAS TO BE READ HARMONIOUSLY WI TH SECTION 153A OF THE ACT. THERE ARE THREE CONDITIONS BASED ON WHICH A SEARCH ACTION COULD BE INITIATED U/S 132 OF THE ACT ON AN ASSESSEE. THEY ARE :- 8 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 8 SECTION 132(1) - IF THE CONCERNED AUTHORITY HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEVE THAT - (A) WHERE A PERSON FAILS TO PRODUCE THE BOOKS OF ACCOUN TS AND OTHER DOCUMENTS IN RESPONSE TO NOTICE U/S 142(1) OR SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (B) WHERE A PERSON FAILS TO COMPLY WITH THE REQUIREMENT S OF SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (C) WHERE A PERSON IS IN POSSESSION OF ANY MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH ASSETS REPRESENT S EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN , OR WOULD NOT BE, D ISCLOSED FOR THE PURPOSES OF THE ACT (HEREINAFTER REFERRED TO AS THE UNDISCLOSE D INCOME OR PROPERTY) ; THEN THE OFFICER , SO AUTHORIZED COULD CONDUCT A SE ARCH AND PROCEED AS PER THE REQUIREMENTS LAID DOWN IN THE SAID SECTION. HE AR GUED THAT THE AFORESAID THREE PRIMARY CONDITIONS FOR INVOKING SEARCH PROCEEDINGS CANNOT B E GIVEN A GO BY WHILE FRAMING SECTION 153A ASSESSMENTS AND THE INSTANT CASE FALLS UNDER SECTION 132(1)(C ) OF THE ACT. THE PROVISIONS OF SECTION 153A OF THE ACT USE THE E XPRESSION ASSESS OR REASSESS TOTAL INCOME AND HENCE THE SEARCH ASSESSMENT COULD BE FR AMED U/S 153A OF THE ACT IRRESPECTIVE OF ANY INCRIMINATING MATERIALS. HE FURTHER ARGUED THAT THE DOCUMENTS SEIZED IN THE BUSINESS PREMISES OF THE GROUP COMPANIES OF THE ASSESSEE ALSO COULD BE VERY WELL U SED IN THE SECTION 153A PROCEEDINGS OF THE ASSESSEE, WHICH HAS BEEN RIGHTLY DONE BY THE LD AO IN THE INSTANT CASE. 9 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 9 9. IN RESPONSE TO THIS, THE LD AR STATED THAT AS ON THE DATE OF SEARCH, THE ASSESSMENT FOR THE ASST YEAR 2009-10 HAD BEEN COMPLETED IN VIEW OF TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAD ALREADY EXPIRED THEREON. HE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES WITH REGARD TO FRAMING OF ADDITIONS IN SECTION 153A ASSESSMENTS WITHOUT ANY INCRIMINATING MATERIAL FOUN D THEREON. HE FURTHER STATED THAT THE ONLY SEIZED DOCUMENT FOUND IN THE ASSESSEES PR EMISES WAS KKS / 1 COMPRISING OF 8 PAGES AND THE EXPLANATION GIVEN THEREON EXPLAINING ITS CONTENTS HAD BEEN DULY ACCEPTED BY THE LD AO AND NO ADDITION WAS MADE IN SECTION 15 3A ASSESSMENTS. HE ARGUED THAT THE MATERIALS FOUND AND SEIZED FROM THE PREMISES OF ANY OTHER COMPANY SHOULD BE CONSIDERED IN THEIR RESPECTIVE SEARCH ASSESSMENTS I N VIEW OF PRESUMPTION PROVIDED IN SECTION 292C OF HE ACT. HE ARGUED FURTHER THAT IF AT ALL SUCH MATERIALS ARE TO BE USED AGAINST THE ASSESSEE, THEN THE LD AO OF THE OTHER P ERSON (I.E THE PARTY FROM WHOSE PREMISES MATERIALS WERE SEIZED) SHOULD RECORD A SAT ISFACTION IN TERMS OF SECTION 153C OF THE ACT AND TRANSFER THOSE MATERIALS TO THE AO OF T HE ASSESSEE AND THE AO OF THE ASSESSEE SHOULD HAVE INITIATED PROCEEDINGS U/S 153C OF THE ACT ON THE ASSESSEE ON THE VERY SAME MATERIAL. IN THE INSTANT CASE, THE MATE RIALS USED IN THIRD PARTY PREMISES HAD BEEN USED AGAINST THE ASSESSEE IN SECTION 153A ASSE SSMENTS WHICH IS NOT TENABLE AS PER LAW. THE ASSESSEE PLACED RELIANCE ON VARIOUS CASE LAWS IN SUPPORT OF HIS ARGUMENTS. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOT IN DISPUTE THAT THERE WERE NO DOCUMENTS THAT WERE SEIZED FROM THE PREMISE S OF THE ASSESSEE EXCEPT LOOSE SHEETS VIDE SEIZED DOCUMENT REFERENCE KKS /1 COMPR ISING OF 8 PAGES , FOR WHICH SATISFACTORY EXPLANATION HAS BEEN GIVEN BY THE ASSE SSEE AND NO ADDITION WAS MADE BY THE LD AO ON THIS SEIZED DOCUMENT. THE SEIZED DOCUMEN T USED BY THE LD AO FOR MAKING 10 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 10 THE ADDITION IN SECTION 153A ASSESSMENT IS CG/1 TO 11 AND CG/HD/1 WHICH WERE SEIZED ONLY FROM THE OFFICE PREMISES OF CYGNUS GROUP OF CO MPANIES IN WHICH ASSESSEE IS A DIRECTOR. IN THIS REGARD, IT WOULD BE PERTINENT TO NOTE THAT AS PER SECTION 292C OF THE ACT, THERE IS A PRESUMPTION THAT THE DOCUMENTS , ASSETS, BOOKS OF ACCOUNTS ETC FOUND AT THE TIME OF SEARCH IN THE PREMISES OF A PERSON IS ALWAY S PRESUMED TO BE BELONGING TO HIM / THEM UNLESS PROVED OTHERWISE. THIS GOES TO PROVE T HAT THE PRESUMPTION DERIVED IS A REBUTTABLE PRESUMPTION. THEN IN SUCH A SCENARIO, T HE PERSON ON WHOM PRESUMPTION IS DRAWN , HAS GOT EVERY RIGHT TO STATE THAT THE SAID DOCUMENTS DOES NOT BELONG TO HIM / THEM . THE LD AO IF HE IS SATISFIED WITH SUCH EXPL ANATION , HAS GOT RECOURSE TO PROCEED ON SUCH OTHER PERSON (I.E THE PERSON TO WHOM THE SA ID DOCUMENTS ACTUALLY BELONG TO) IN TERMS OF SECTION 153C OF THE ACT BY RECORDING SATIS FACTION TO THAT EFFECT BY WAY OF TRANSFER OF THOSE MATERIALS TO THE AO ASSESSING THE SUCH OTHER PERSON. THIS IS THE MANDATE PROVIDED IN SECTION 153C OF THE ACT. IN T HE INSTANT CASE, IF AT ALL, THE SEIZED DOCUMENTS REFERRED TO IN CG/1 TO 11 AND CG/HD/1 IS STATED TO BE BELONGING TO ASSESSEE HEREIN, THEN THE ONLY LEGAL RECOURSE AVAILABLE TO T HE DEPARTMENT IS TO PROCEED ON THE ASSESSEE HEREIN IN TERMS OF SECTION 153C OF THE ACT . IN THIS REGARD, WE WOULD LIKE TO PLACE RELIANCE ON THE RECENT DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS PINAKI MISRA AND SANGEETA MISRA REPORTED IN (201 7) 392 ITR 347 (DEL) DATED 3.3.2017 , WHEREIN IT WAS HELD THAT, NO ADDITION COULD BE M ADE ON THE BASIS OF EVIDENCE GATHERED FROM EXTRANEOUS SOURCE AND ON THE BASIS OF STATEMENT OR DOCUMENT RECEIVED SUBSEQUENT TO SEARCH. HENCE WE HOLD THAT THE SAID MATERIALS CANNOT BE USED IN SECTION 153A OF THE ACT AGAINST THE ASSESSEE. THIS OPINION IS GIVEN WITHOUT GOING INTO THE MERITS AND VERACITY OF THE SAID SEIZED DOCUMENTS IM PLICATING THE ASSESSEE HEREIN. 11 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 11 10.1. HENCE NOW THE ONLY ISSUE WHICH IS LEFT TO BE ADDRESSED IS THE PRELIMINARY ISSUE OF WHETHER THE ADDITION COULD BE FRAMED U/S 153A OF TH E ACT IN RESPECT OF A CONCLUDED PROCEEDING WITHOUT THE EXISTENCE OF ANY INCRIMINATI NG MATERIALS FOUND IN THE COURSE OF SEARCH. THE SCHEME OF THE ACT PROVIDES FOR ABATEM ENT OF PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IT IS NOT IN DISPUTE THAT THE ASSE SSMENT FOR THE ASST YEAR 2009-10 WAS NOT SELECTED FOR SCRUTINY AND THE TIME LIMIT FOR IS SUANCE OF NOTICE U/S 143(2) OF THE ACT HAD EXPIRED AND HENCE IT FALLS UNDER CONCLUDED PROC EEDING , AS ON THE DATE OF SEARCH. WE HOLD THAT THE LEGISLATURE DOES NOT DIFFERENTIATE WHETHER THE ASSESSMENTS ORIGINALLY WERE FRAMED U/S 143(1) OR 143(3) OR 147 OF THE ACT. HENCE UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH RELATABLE TO SUCH CONCLUDED YEAR, 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 SUCH PROCEEDING WAS NOT PENDING ON THE DATE OF SEARCH TO GET ITSELF ABATED. THE PROVISIONS OF SECTION 153A OF THE ACT ARE REPRODUCE D HEREUNDER FOR THE SAKE OF CONVENIENCE :- '[ASSESSMENT IN CASE OF SEARCH OR REQUISITION 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN S ECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN T HE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF A CCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER T HE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNIS H WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOM E IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VE RIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SU CH RETURN WERE A RETURN 12 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 12 REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS:' 10.2. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF ACIT VS KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 REPORTED IN 2016- TIOL-167-ITAT-KOL HAD EXPLAINED THE AFORESAID PROVISIONS AS BELOW:- '6.4 IN OUR OPINION, THE SCHEME OF ASSESSMENT PROCE EDINGS SHOULD BE UNDERSTOOD IN THE FOLLOWING MANNER PURSUANT TO THE SEARCH CONDUCT ED U/S. 132 OF THE ACT :- (A) NOTICE U/S. 153A OF T HE ACT WOULD BE ISSUED ON THE PERSON ON WHOM THE WARRANT OF AUTHORIZATION U/S. 132 OF THE ACT WAS IS SUED FOR THE SIX ASSESSMENT YEARS PRECEDING THE YEAR OF SEARCH AND ASSESSMENTS THEREON WOULD BE COMPLETED U/S. 153A OF THE ACT FOR THOSE SIX ASSESS MENT YEARS. (B ) IN RESPECT OF THE YEAR OF SEARCH, NOTICE U/S. 143(2 ) OF THE ACT WOULD BE ISSUED AND ASSESSMENT THEREON WOULD BE COMPLETED U/S. 143( 3) OF THE ACT. (C) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YE AR OF SEARCH, NO ADDITION COULD BE MADE IN THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCRIMIN ATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE RELEVANT ASSESSMENT YEAR. (D) PURSUANT TO THE SEARCH U/S. 132 OF THE ACT, THE PEN DING PROCEEDINGS WOULD GET ABATED. IN RESPECT OF ABATED ASSESSMENTS, THE TOTAL INCOME NEEDS TO BE DETERMINED AFRESH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AND OTHER PROVISIONS OF THE ACT. 6.4.1 THE CONCLUDED ASSESSMENTS FOR THE PURPOSE OF SECTION 153A OF THE ACT SHALL BE - 13 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 13 (I) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMPLETED U/S. 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF TH E ACT HAS EXPIRED OR; (II) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMP LETED U/S. 143(3) OF THE ACT ; UNLESS THEY ARE REOPENED U/S. 147 OF THE ACT FOR SO ME OTHER PURPOSE IN BOTH THE SCENARIOS STATED ABOVE. 6.4.2 THE SCHEME OF ASSESSMENT PROCEEDINGS CONTEMPL ATED U/S. 153A OF THE ACT ARE TOTALLY DIFFERENT AND DISTINCT FROM THE PROCEEDINGS CONTEMPLATED U/S. 147 OF THE ACT AND THESE PROCEDURES OF ASSESSMENT OPERATE IN DIFFE RENT FIELDS AND HAVE DIFFERENT PURPOSES TO BE FULFILLED ALTOGETHER. 6.4.3 THE EXPRESSION 'ASSESS OR REASSESS' STATED IN SECTION 153A(1)(B) HAS TO BE UNDERSTOOD AS BELOW:- 'ASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF ABATED ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER THERE ARE ANY INCR IMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO RELEVANT ASSES SMENT YEARS ; 'REASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPEC T OF CONCLUDED ASSESSMENT YEARS WHERE INCRIMINATING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR.' 10.3. WE ALSO FIND THAT RECENTLY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HELD 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 AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SEC TION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE P ERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDI NG THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. (II) ASSESS MENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. 14 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 14 THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE LD AOS AS A FRESH EXERCISE. (III) THE LD AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE LD AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS S HOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE LD AO WH ICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN A SSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTI ON 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. T HOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO C OMPLETE ASSESSMENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EA CH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXIST ING OR BROUGHT ON THE RECORD OF THE LD AO. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE LD AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 15 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 15 38. THE PRESENT APPEALS CONCERN AYS 2002-03, 2005-0 6 AND 2006-07, ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPL ETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 10.4. WE FIND THAT THE DECISION RELIED UPON BY THE LD DR IN THE CASE OF CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) DOES NOT IN ANY MANNER ADVANCE THE CASE OF THE REVENUE AS ADMITTEDLY THE HONBLE D ELHI HIGH COURT IN PARA 24 OF ITS ORDER HAD HELD AS UNDER:- 24. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCR IMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN B E INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN. 10.5. THE LD DR ALSO RELIED ON THE RECENT DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF E.N.GOPAKUMAR VS CIT REPORTED IN (2016) 75 TAXMANN.COM 215 (KERALA) IN SUPPORT OF HIS CONTENTIONS. WE FIND THAT THE DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HAD DULY CONSIDERED THE DECISIONS OF CIT VS ANIL KUMAR BHATI A REPORTED IN (2013) 352 ITR 493 (DEL) ; CIT VS CHETAN DAS LACHMAN DAS REPORTED IN (2012) 211 TAXMAN 61 (DEL HC) ; MADUGULA VENU VS DIT REPORTED IN (2013) 215 TAXMAN 298 (DEL HC) ; CANARA HOUSING DEVELOPMENT CO. VS DCIT REPORTED IN (2014) 49 TAXMANN.COM 98 (KAR HC) ; FILATEX INDIA LTD VS CIT REPORTED IN (2014) 229 TAX MAN 555 (DEL HC) ; JAI STEEL (INDIA) VS ACIT REPORTED IN (2013) 219 TAXMAN 223 (DEL HC) ; CIT VS MURLI AGRO PRODUCTS LTD REPORTED IN (2014) 49 TAXMANN.COM 172 (BOM HC) ; CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD REPORTED IN (2015) 374 ITR 645 (BOM 16 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 16 HC) AND ALL CARGO GLOBAL LOGISTICS LTD VS DCIT REPO RTED IN (2012) 137 ITD 287 (MUM ITAT) (SB). WE ALSO FIND THAT AGAINST THE DECISION OF THE HONB LE DELHI HIGH COURT IN 380 ITR 573 (DEL) , THE REVENUE PREFERRED SPECIAL LEAVE PETITIO N BEFORE THE HONBLE SUPREME COURT AND THE SAME WAS DISMISSED BY THE HONBLE APEX COUR T WHICH IS REPORTED IN 380 ITR (ST.) 4 (SC). HENCE IT COULD BE SAFELY CONCLUDED THAT THE DECISION OF HONBLE DELHI HC IN THE CASE OF KABUL CHAWLA SUPRA WOULD HAVE TO BE CONSIDERED ON THE IMPUGNED ISSUE AND IN ANY CASE, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS VEGETAB LE PRODUCTS LTD REPORTED IN 88 ITR 192 (SC) HAD HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE, THAT CONSTRUCTION WH ICH FAVOURS THE ASSESSEE MUST BE ADOPTED. 10.6. WE ALSO FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT RECENTLY IN THE C ASE OF PRINCIPAL CIT VS M/S SALASAR STOCK BROKING LTD IN G .A.NO. 1929 OF 2016 ITAT NO. 264 OF 2016 DATED 24.8.2016 HAD ENDORSED THE AFORESAID VIEW OF HONBLE DELHI H IGH COURT IN KABUL CHAWLAS CASE AND ALSO PLACED RELIANCE ON ITS OWN DECISION IN THE CASE OF CIT VS VEERPRABHU MARKETING LTD REPORTED IN (2016) 73 T AXMANN.COM 149 (CAL HC) . 10.7. WE FIND THAT THE PROVISIONS OF SECTION 132 O F THE ACT RELIED UPON BY THE LD DR WOULD BE RELEVANT ONLY FOR THE PURPOSE OF CONDUCTIN G THE SEARCH ACTION AND INITIATING PROCEEDINGS U/S 153A OF THE ACT. ONCE THE PROCEEDI NGS U/S 153A OF THE ACT ARE INITIATED, WHICH ARE SPECIAL PROCEEDINGS, THE LEG ISLATURE IN ITS WISDOM BIFURCATES DIFFERENTIAL TREATMENTS FOR ABATED ASSESSMENTS AND UNABATED ASSESSMENTS. AT THE COST OF REPETITION, WE STATE THAT IN RESPECT OF ABATED ASSE SSMENTS (I.E PENDING PROCEEDINGS ON THE 17 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 17 DATE OF SEARCH) , FRESH ASSESSMENTS ARE TO BE FRAME D 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 MAT ERIALS DOES NOT HAVE ANY RELEVANCE. HOWEVER, IN RESPECT OF UNABATED ASSESSMENTS, THE LE GISLATURE HAD CONFERRED POWERS ON THE LD AO TO JUST FOLLOW THE ASSESSMENTS ALREADY CO NCLUDED UNLESS THERE IS AN INCRIMINATING MATERIAL FOUND IN THE SEARCH TO DISTU RB THE SAID CONCLUDED ASSESSMENT. IN OUR CONSIDERED OPINION, THIS WOULD BE THE CORRECT U NDERSTANDING OF THE PROVISIONS OF SECTION 153A OF THE ACT , AS OTHERWISE, THE NECESSI TY OF BIFURCATION OF ABATED AND UNABATED ASSESSMENTS IN SECTION 153A OF THE ACT WOU LD BECOME REDUNDANT AND WOULD LOSE ITS RELEVANCE. HENCE THE ARGUMENTS ADVANCED B Y THE LD DR IN THIS REGARD DESERVES TO BE DISMISSED. 10.8. IN VIEW OF THE AFORESAID FINDINGS AND RESPECT FULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSMEN T ALREADY DEEMED TO HAVE BEEN COMPLETED FOR THE ASST YEAR 2009-10, WHICH WAS UNAB ATED / CONCLUDED ASSESSMENT, ON THE DATE OF SEARCH, DESERVES TO BE UNDISTURBED IN T HE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND ACCORDIN GLY NO FRESH ADDITION COULD BE MADE THEREON WITHOUT THE EXISTENCE OF ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE. SINCE T HE ISSUE IS ADDRESSED ON PRELIMINARY GROUND OF ABSENCE OF INCRIMINATING MATERIALS, WE RE FRAIN TO GIVE OUR FINDINGS ON THE MERITS OF THE ADDITIONS FOR THE ASST YEAR 2009-10 I N THE CASE OF KRISHNA KUMAR SINGHANIA. ACCORDINGLY THE PRELIMINARY GROUND RAIS ED BY THE ASSESSEE IN THIS REGARD IS ALLOWED. 18 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 18 11. THE AFORESAID DECISION RENDERED IN THE CASE OF KRISHNA KUMAR SINGHANIA FOR ASST YEAR 2009-10 WOULD APPLY FOR ASST YEAR 2012-13 ALSO FOR THAT ASSESSEE AND ALSO FOR OTHER ASSESSEES INVOLVED SUPRA FOR VARIOUS ASSESSME NT YEARS IN VIEW OF IDENTICAL FACTS AND CIRCUMSTANCES EXCEPT WITH VARIANCE IN FIGURES. IT IS NOT IN DISPUTE THAT FOR BOTH THE ASST YEARS 2009-10 AND 2012-13 , THE ASSESSMENTS WE RE DEEMED TO BE COMPLETED AS ON THE DATE OF SEARCH FOR ALL THE ABOVEMENTIONED ASSES SEES AS ADMITTEDLY THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAD EXPIRE D IN ALL THE ABOVEMENTIONED CASES. THUS THEY HAD BECOME CONCLUDED ASSESSMENTS ON THE D ATE OF SEARCH. THE BASIC FACTS OF FILING THE ORIGINAL RETURN OF INCOME BY OTHER ASSES SEES AND THE TIME LIMIT AVAILABLE FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT ARE AS UND ER:- ASST YEAR 2009-10 NAME OF THE PERSON DATE OF FILING THE ORIGINAL 14 3(2) TIME LIMIT RETURN OF INCOME EXPIRED ON KRISHNA KUMAR SINGHANIA 10.2.2010 29.2.2011 VIJAY KUMAR SINGHANIA 11.1.2010 31.1.2011 NIRMALA DEVI SINGHANIA 8.1.2010 31.1.2011 ASST YEAR 2012-13 NAME OF THE PERSON DATE OF FILING THE ORIGINAL 14 3(2) TIME LIMIT RETURN OF INCOME EXPIRED ON 19 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 19 KRISHNA KUMAR SINGHANIA 30.6.2012 30.9.2013 VIJAY KUMAR SINGHANIA 30.6.2012 30.9.2013 NIRMALA DEVI SINGHANIA 30.6.2012 30.9.2013 KASAK SINGHANIA 30.6.2012 30.9.2013 RUCHI SINGHANIA 5.7.2012 30.9.2013 AJAY KUMAR SINGHANIA 30.6.2012 30.9.2013 12. THE COMMON ADDITION MADE FOR ALL THE ASSESSEES FOR VARIOUS ASSESSMENT YEARS AS MENTIONED ABOVE IS TOWARDS DISALLOWANCE OF LONG TER M CAPITAL GAINS CLAIMED BY THE ASSESSEE. THIS LONG TERM CAPITAL GAIN WAS CLAIMED AS EXEMPT BY THE ASSESSEE IN HIS ORIGINAL RETURN OF INCOME ITSELF. HENCE THE DECISI ON RENDERED ABOVE FOR ASST YEAR 2009- 10 IN THE CASE OF KRISHNA KUMAR SINGHANIA WOULD APP LY FOR OTHER ASSESSEES ALSO EXCEPT WITH VARIANCE IN FIGURES. APART FROM THIS LONG TE RM CAPITAL GAINS ADDITION, THERE WERE CERTAIN OTHER ADDITIONS MADE IN THE ASSESSMENTS OF VARIOUS PERSONS AS UNDER:- I. KRISHNA KUMAR SINGHANIA ASST YEAR 2009-10 B OGUS DEVELOPMENT EXPENSES THIS WAS PART OF THE CLAIM IN THE ORIGINAL RETURN O F INCOME. KRISHNA KUMAR SINGHANIA ASST YEAR 2012-13 PERQU SITES U/S 17(2)(IV) OF THE ACT THE REMUNERATION WAS PART OF THE ORIGINAL RETURN OF INCOME. THIS WAS A FRESH ADDITION MADE TOWARDS INSUFFICIENT DRAWINGS IN THE SECTION 153A A SSESSMENT WHICH IS NOT BACKED BY ANY SEARCH MATERIAL FOUND IN THE COURSE OF SEARCH. 20 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 20 II. VIJAY KUMAR SINGHANIA ASST YEAR 2012-13 PER QUSITES U/S 17(2)(IV) OF THE ACT THE DIRECTORS REMUNERATION WAS PART OF THE ORIGINA L RETURN OF INCOME. THIS WAS A FRESH ADDITION MADE TOWARDS INSUFFICIENT DRAWINGS IN THE SECTION 153A ASSESSMENT WHICH IS NOT BACKED BY ANY SEARCH MATERIAL FOUND IN THE COURSE O F SEARCH. III. KASAK SINGHANIA ASST YEAR 2012-13 (A) DIFFERENCE BETWEEN CONTRACTUAL RECEIPTS REPORTE D IN RETURN AND THAT SHOWN IN FORM 26AS RS 16,200/- THIS IS PART OF THE RECORDS OF THE DEPARTMENT AND NO SEARCH MATERIAL WAS FOUND AT THE TIME OF SEARCH. THIS WAS A FRESH ADDITION MADE IN SECTION 153A ASSESSMENT. (B) DISALLOWANCE U/S 14A OF THE ACT RS 1,055/- THIS WAS A FRESH ADDITION MADE IN THE SECTION 153A ASSESSMENT WHICH IS NOT BACKED BY ANY SEARCH MATERIAL FOUND IN THE COURSE OF SEARCH. TH IS WAS DELETED BY THE LD CITA. NO APPEAL PREFERRED BY THE REVENUE BEFORE US AGAINST THE SAME . IV. AJAY KUMAR SINGHANIA ASST YEAR 2012-13 (A) PERQUISITES U/S 17(2)(IV) OF THE ACT THE DIRECTORS REMUNERATION WAS PART OF THE ORIGINA L RETURN OF INCOME. THIS WAS A FRESH ADDITION MADE TOWARDS INSUFFICIENT DRAWINGS IN THE SECTION 153A ASSESSMENT WHICH IS NOT BACKED BY ANY SEARCH MATERIAL FOUND IN THE COURSE O F SEARCH. (B) ADDITION TOWARDS UNSECURED LOANS RS 21,79,580 /- 21 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 21 THIS SUM REPRESENTS NEW LOAN RECEIVED DURING THE YE AR FOR WHICH NO CONFIRMATION WAS FILED BEFORE THE LD AO BY THE ASSESSEE AND HENCE ADDED BY THE LD AO WHICH IS NOT BACKED BY ANY SEARCH MATERIAL FOUND IN THE COURSE OF SEARCH. THI S ADDITION WAS DELETED BY THE LD CITA. NO APPEAL PREFERRED BY THE REVENUE BEFORE US AGAINST T HE SAME. 13. IN VIEW OF THE AFORESAID FINDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ASSESSMENTS FOR THE ASST YEARS 2009-10 AND 2012 -13 FALL UNDER THE CATEGORY OF COMPLETED ASSESSMENTS AND HENCE THE ADDITIONS MADE BY THE LD AO WHICH ARE CONTESTED BEFORE US BY THE ASSESSEE CANNOT BE MADE IN THE ASSESSMENTS FRAMED U /S 153A OF THE ACT AS THEY ARE NOT BACKED BY ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH . ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE FOR ALL THE APPEALS ARE ALLOWED. 14. IN THE RESULT, ALL THE APPEALS OF THE VARIOUS ASSESSEES AFORESAID ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 06.12.2017 SD/- SD/- [N.V. VASUDEVAN] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 06.12.2017 SB, SR. PS 22 IT(SS)A NOS.109&110/KOL/2017 IT(SS)A NO.105/KOL/2017 IT(SS)A NO.104/KOL/2017 IT(SS)A NOS. 111&112/KOL/2017 IT(SS)A NOS.107&108/KOL/2017 IT(SS)A NO. 106/KOL/2017 KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, KASA K SINGHANIA, NIRMALA DEVI SINGHANIA,VIJAY KUMAR SINGHANIA, RUCH I SINGHANIA ASST. YEARS: 2009-10 & 2012-13 22 COPY OF THE ORDER FORWARDED TO: 1. KRISHNA KUMAR SINGHANIA, AJAY KUMAR SINGHANIA, K ASAK SINGHANIA, NIRMALA DEVI SINGHANIA, VIJAY KUMAR SINGHANIA, RUCHI SINGHANIA, ALL ARE RESIDING AT 51, NALINI SETH ROAD, KOLKATA-700007 2. DCIT, CC-3(3), KOLKATA, 110, SHANTI PALLY, E.M. BYPASS, NEAR RUBY HOSPITAL, KOLKATA-700107 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S