The DCIT, Central Circle-1, Baroda V. M/s. Guruprasad Infrastructure Pvt. Ltd., Baroda

ITSSA 13/AHD/2020

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted the addition of Rs.6,85,51,000 on account of undisclosed investment in share capital by M/s. Guruprasad Infrastructure Pvt. Ltd. The Assessing Officer had made the addition during the assessment proceedings under section 153A of the Income Tax Act, following a search operation. The CIT(A) found that the assessment year was unabated as the time limit for issuing notice under section 143(2) had expired before the search, and no incriminating material was found during the search to justify the additions. The Tribunal supported the CIT(A)'s decision, referencing various High Court decisions that reinforced the principle that in the absence of incriminating material, no addition can be made in unabated assessment years.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131553 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-04-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 02-01-2020
• Other Referred Cases: PCIT vs. Saumya Construction Pvt. Ltd., CIT vs. Kabul Chawla, CIT vs. Rameshbhai Jivraj Desai, Sunrise Finlease (P.) Ltd., Desai Construction (P.) Ltd., PCIT vs. Devangi, M/s. Garg Brothers Pvt. Ltd. Vs DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Assessment record; Set aside
• Section: 131; 68; 132; 143(3); 153A; 143(2); 153C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e DCIT, Central Circle-1, 607,6 t h F lo or, Aaykar Bh avan, Race Co urse Circle, Vadodara-39000 7 (Appellant) Vs M/s. Guruprasad Infra structure Pvt. Ltd., 5, Shri Ram Nagar, Beh in d RTO, Warasia Colony, Vadodara PAN: AAD CG6787 C (Resp ondent) Asses see b y : Shri Pa rin Shah, A. R. Revenue by : Shri S udhendu Das, CIT-D. R. Date of hearing : 17-04 -2 023 Date of pronouncement : 21-04 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-12, Ahmedabad, in proceeding u/s. 250 vide order dated 23/10/2019 passed for the assessment year 2010-11. 2. The Department has taken the following grounds of appeal:- IT(SS)A No. 13/Ahd/2020 Assessment Year 2010-11 I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 2 “1. On the facts and in the circumstances of the case and in law, the Id, CIT(A) has erred in deleting the addition of Rs.6,85,51,000/- on account of undisclosed investment in share capital, by not appreciating the fact involved in this case that the assessee could not explain the source and creditworthiness of investors. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in relying on various decisions of the Hon'ble Court including the decision of Hon'ble High Court of Gujarat in the case of Pr. CIT Vs Saumya Construction Pvt. Ltd., when the facts involved in this case are distinguishable for the reason that all the referred decisions cover the situation where assessment for a particular year was completed. However, in the instant case no assessment for A.Y.2010-11 was completed. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment U/S.153A has to be confined to the incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no such stipulation in sec. 153A I.T. the Act. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or reassessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 5. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec. l53A and sec. 158BI specifically states that the provisions of Chapter-XIV-B, under which sec. 158BB falls, would not be applied where a search was initiated u/s.132 after 31/5/2003. 6. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s.132 is conducted in the case of the assessee, and that if the interpretation of the ld.CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 3 7. It is, therefore, prayed that the order the Ld. CIT(A)-12, Ahmedabad may be set aside and that of the AO may be restored to the above extent. 8. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 3. The brief facts of the case are that a search action u/s. 132 of the Act was carried out in the Dhanjimama group cases including the case of the assessee as on 03-07-2012. Consequent to the search action, the proceedings u/s. 153A of the Act were initiated. Accordingly, notice u/s. 153A was issued on 10-09-2013 and in compliance thereto, the assessee filed return of income for impugned assessment year declaring total income of Rs. 2 crores. Thereafter, the Assessing Officer issued notice u/s. 143(2) of the Act and called for various details during the course of assessment proceedings. The Assessing Officer during the course of assessment proceedings observed that during the year under consideration, the assessee company had issued 20 lakh shares with face value of Rs. 10 each amounting to Rs. 2 crores. Apart from this amount of Rs. 2 crores received for the purpose of share allotment, the assessee company received a sum of Rs. 4,85,51,000/- as share application money. Thus, the total capital received by the assessee company for allotment of shares is Rs. 6,85,51,000/- as mentioned in the balance sheet during the assessment year 2010-11. The assessee was asked to substantiate the creditworthiness and identity of the investors. In response thereto, the assessee furnished a chart/list of people who had applied for shares of the assessee company and submitted before the Assessing Officer that the assessee company had issued 2,62,000 shares with face value of Rs. 10 each amounting to Rs. 26,20,000/- issued at a premium of Rs. 90 per share. The Assessing Officer sought for further details regarding the share capital I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 4 received by the assessee amounting to Rs. 6,85,51,000/- and called for accounts of the investors, confirmation letters of the investors and proof of creditworthiness of such persons from whom the share application was received. The assessee furnished certain details before the Assessing Officer, however, the Assessing Officer was of the view that the assessee has not been able to explain the genuineness of the transaction and creditworthiness of the persons who have invested in shares of the assessee company. The Assessing Officer accordingly made an addition of Rs. 6,85,51,000/- to the income of the assessee company on the ground that the premium on share is being treated as made through sham transaction by the assessee itself to introduce its own undisclosed money in the form of share capital invested by companies having no creditworthiness, most of the whom had filed return of loss or “nil” income during the relevant period. While making the additions, the Assessing Officer observed as under:- “6.7 Moreover it is worthwhile to mention that the majority of investors of shares in the Assessee Company are same as those investing in the other Companies of the Dhajiama Group. The peculiar nature of investment/sale by the investors in shares of the Assessee Company was devoid of the human probability. The Assessee Company could not satisfactorily explain the source/purpose of the investors and how they were contacted and convinced to invest in the newly incorporated Companies of the Dhanjimama group which does not have any profit/surplus or proven record of profit. There is a predictable similar trend of investment made by these investors which are being summarized as follows: i. All of these investors have invested in the month of March 2010. ii. All of these investors have invested at a premium of nine value of share. iii. All these investors are not identifiable and did not respond to the queries. iv. All these investors have dubious nature of financial dealings and have unidentifiable financial sources. v. All these investors could not be produced/identified by the Assessee Company that signifies that the Directors of the Assessee Company are not acquainted with the investors, I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 5 vi. All these investors have not bothered to receive any income in whatsoever form (interest or dividend) out of this investment made. vii. What prompted all these investors to invest in a newly incorporated Company which does not have any profit/surplus or proven record of profit, could not be justified. viii. Even there was no proven record of the promoters/ directors to run a Company efficiently. ix. Subsequently most of the big and faraway pulled investors pulled out of the Company incurring heavy loss by selling the Shares at one-twentieth the price on which acquired earlier.” 4. The assessee filed appeal before the CIT(A) challenging the aforesaid additions made by the ld. Assessing Officer. The primary contention of the assessee before ld. CIT(A) was firstly that the assessee has been able to adequately demonstrate the identity, creditworthiness and genuineness of the transactions and hence no addition is called for u/s. 68 of the Act in respect of the aforesaid transaction. The second contention of the assessee was that this is a case of an unabated assessment year wherein the time limit for issuance of notice of assessment year had already expired before the date of search and hence no addition could be made to the income of the assessee de-hors any incriminating material found during the course of search. The submission of the assessee was that the material on the basis of which the additions were made were not unearthed during the course but were already a part of the assessment records in the form of balance sheet and other books of accounts maintained by the assessee. Therefore, since the additions were not made on the basis of any incriminating material found during the course of search such, additions are not sustainable in 153A proceedings. The ld. CIT(A) allowed the appeal of the assessee by holding that the impugned assessment year under consideration was an unabated assessment year since the time limit of issue of notice u/s. 143(2) was 30-09-2011 and such time limit had elapsed on the date of search (30-07-2012) and following the I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 6 decision of CIT vs. Kabul Chabla (Delhi High Court) and PCIT vs. Saumya Construction Pvt. Ltd. (Gujarat High Court), the Assessing Officer could not have made any addition to the total income without there being any incriminating material found during the course of search. Further, the CIT(A) held that the aforesaid additions were not based on any incriminating materials found during the course of search but was made with respect to share application money received on issue of share capital as duly corroborated in the balance sheet for the year under consideration. Therefore, clearly additions regarding the share application money received by the assessee company during the year under consideration was not based on any incriminating material found during the course of search conducted. The CIT(A) held that the list of shares share holding cannot be incriminating material by itself which otherwise was also very much part of the books of accounts and audited annual report of the assessee company. Even otherwise, ld. CIT(A) held that the assessee has shifted its onus u/s. 68 by establishing the identity and creditworthiness of the share holders and the genuineness of the transactions. Accordingly, the ld. CIT(A) allowed the appeal of the assessee. While deleting the additions, the ld. CIT(A) made the following observations:- “28.7 With respect to the date of search being July 2012, A.Y. 2010 11 in appeal under consideration is an unabated assessment year as the time limit of issue of notice u/s 143(2) being 30/09/2011 had elapsed on the date of search and following the case laws relied upon by the appellant and mentioned above, the AO could not have made any addition to the total income without there being related incriminating material found during the course of search. 28.8 In view of the assertion of the appellant that there was no incriminating material found during the search which could have been relied upon by the AO for making investigation and the addition to the total income vide letter No. I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 7 CIT(A)-12/RR/Gipl/2019-20 dated September 13, 2019 was written to the DCIT, CC-1 to Report whether the impugned addition added on the basis of incriminating material found during the course of search. The AO's Report vide BRD/DCIT/CC-1 /APPEAL/GIPL/2019-20 dated 01/10/2019 was received on 07/10/2019 (and was provided to the appellant for comments if any). 28.9 In the Remand Report it has been stated that "In the instant case, the impugned of Rs.6,85,51,000/- was made on the issue of share application money received by the assessee company as corroborated as related to the balance sheet for the year under consideration. The assessee was unable to explain the source and credit worthiness of investors and supporting documents / evidences during course of assessment proceedings. Thus the said addition was made accordingly. However on verification of case records, it was noted that the above referred impugned addition regarding share application money was not based on incriminating material found during the course of search conducted." 28.10 Thus the assertion of the appellant that the addition, the subject matter of appeal, is without the basis of any incriminating material found during the course of "search'. 28.11 However in the Remand Report dated 01/10/2019 the AO has also asserted. that the AO is empowered to assess or re-assess the total income (which includes the disclosed or undisclosed income of 6 years i.e. six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted). For the purpose the AO has relied upon the judgments in the cases of CIT Vs Kolkata Knitwears 362 ITR 673 (Supreme Court), and CIT Vs Tara Agencies 292 ITR 444 (Supreme Court) in general and the judgments in the cases of CIT Vs St. Francis Clay Decor Tiles 240 taxman 168, E N Gopakumar Vs CIT(Central) 75 taxman.corn 215 (Kerala) and CIT Vs Anilkumar Bhatia (Delhi High Court) dated 10/08/2012 in particular in die context of proceedings u/s 153A. The AO has also mentioned that as per the website of Hon'ble Supreme Court of India and SLP filed by the Department against the decision of Gujarat High Court in CIT Vs Saumya Construction Pvt. Ltd. has been "disposed and dismissed" vide order dated 24/04/2018 and that there is no speaking order as searched as to why it has been dismissed and therefore the legel question regarding interpretation of scope of section 153A of the Act is still open. 28.12 The AO's Report vide BRD/DCIT/CC-1/APPEAL/GIPL/2019-20 dated 01/10/2019 was provided to the appellant for comments if any in response to which the appellant filed the written rejoinder on 22/10/2019 which has already been reproduced before. The crux of the appellant's rejoinder is that the assessment year being unabated and there being no incriminating material found during the course of search or undisclosed income disclosed during the search no addition could have been made by the AO. The reliance has been placed on CIT Vs Continental Ware Housing Corporation (Nava Sheva) Ltd. 58 taxmann.com 78 (Mum), PCIT Vs Saumya Construction Pvt. Ltd. 387 ITR 529 (Guj). The rejoinder I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 8 also deals with various case laws mentioned by the AO in his Remand Report dated 01/10/2019. It is the prayer of the appellant that the addition of Rs.6,85,51,000/- deserves to be deleted. 28.13 Though 1 as CIT(A) am bound by the decisions of jurisdictional ITAT, Ahmedabad and jurisdictional High. Court of Gujarat which have held in host of cases including the leading case of Saumya Construction Pvt. Ltd., I still feel it appropriate that in view of the AO's Remand Report dated 01/10/2019 and that appellant's rejoinder dated 22/10/2019 the decision of the Kerala High Court in E N Gopakumar (order dated 3/10/2016 in ITA No. 31 of 2016) mentioned by the AO in his report should be narrated. The decision of the Kerala High Court in the case is in favour in the Revenue on the issue of assessment u/s 153A without there being incriminating material found during the course of search. The argument and the decision of the Kerala High Court are that "In so far as the issue as to whether it is necessary that incriminating materials should be unearthed in a search under section 132 to sustain a notice issued under section 153A(l)(a), it is opined that for the issuance of a notice under section 153A(l)(a), it is not necessary that the search on which it was founded should have necessarily yielded any incriminating material against the assesses or the person to whom such notice is issued. [Para 7], Once a return is filed in answer to such a notice, the Explanation to section 153A provides, among other things, that all provisions of the Act will apply to the assessment made under section 153A of the Act. This is the manner in which the provisions in sections 153A, 153B and 153C would regulate. Once that is done, it is well within the jurisdiction of the assessing authority to proceed with any lawful modes of assessment as prescribed in the Act. Therefore, the assessment proceedings generated by the issuance of a notice under section 153A(l)(a) can be concluded against the interest of the assesses including making additions even without any incriminating material being available against the assessee in the search under section 132 on the basis of which the notice was issued under section 153A(l)(a) of the Act. [Para 8} 28.14 In this regard I am of the considered view that the Supreme Court having rejected the Department's SLP in various cases including the cases of Sinhgad (Technical Education Society (Order dtd. 29/08/2017) and Saumya Construction Pvt. Ltd. (Order dated 24/08/2018), the decisions of the respective High Courts have become final and that the decisions have not been found to suffer any infirmity that should have called for any speaking order from the Hon'ble Supreme Court. Further in this regard, Taxman's Law Relating to Assessment in Search Cases (September 2019) by Shri G C Das and K Chandrahas has been referred to wherein the authors are of the view that "a perusal of various decisions of High Courts and the Tribunals shows that the pre dominant view is that no addition can be made without incriminating evidence being found during the course of search in the case of concluded assessments. The other view which is in minority is that when a search takes place, assessment for the 6 assessment years are open and there should be no restriction on the powers of the AO to I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 9 make the assessments whether or not any incriminating evidence is found in the course of search," Thus I am of the view that the AO is not justified in placing reliance on cases outside the jurisdiction of IT AT Ahmedabad and High Court of Gujarat. 28.15 1 shall be failing in duty if the earlier letter dated 16.06.2017 of the AO (BRD/DCIT/CC-1/RR-GIPL/2017-18 dated 16.6.2017) is not dealt with wherein the AO has reported that incriminating materials were seized (page 20 of Annexure 165 which contained the details of share capital issued to 15 persons, amounting to Rs.2,60,00,000/-) and that the AY 010-11 was not unabated as the case was selected for scrutiny through CASS and that assessment u/s. 143(3) was pending on the date of search. However, these facts are neither mentioned in the assessment order nor found to be evidenced in the assessment record as reported by the AO in his remand report. However, even if. it is so, mere list of shareholding cannot be incriminating by itself which other otherwise also would be very much part of books of account and audited annual report. While the AO attached a copy of seized page-20 of Annexure-165, no copy of notice u/s. 143(2) if issued was annexed with his report dated 16.06.20lTlNo proof of issue of notice u/s. 143(2) has .been found which could have commenced the assessment proceedings. The appellant in its rejoinder to the said report/of the AO has denied receipt of any notice u/s. 143(2) and knowledge of commencement of assessment proceedings. Thus, the earlier report dated 16.06.2017 by the AO lacks credibility and seriousness. However, even if the AY 2010-11 is conceded to be abated, it is seen that the appellant has discharged its onus u/s. 68 by establishing the identity and creditworthiness of the shareholders and the genuineness of transactions. The subsequent report dated 01.10.2019 by the AO has dealt the issues with due diligence and seriousness. 28.16 Thus relying upon the decisions of jurisdictional IT AT of Ahmedabad and High Court of Gujarat the addition made in the assessment order impugned in the appeal has to be quashed because there was no related incriminating material found during the course of search and the assessment year was unabated on the date of search. As the addition become void ab initio the submissions made by the appellant on the merits of the issue and the related Remand Reports of the AO become mere academic and are not required to be dealt with. 28.17 It is noted that the appellant, in spite of its first year of operation and no incriminating material/undisclosed assets found during the course of search filed the return of income (in response to notice u/s.!53A) at total income of Rs.2.00 crores on account of additional income disclosed during the course of search. A question arises whether in such a case also the appellant shall be eligible for protection by dint of the case laws like Kabul Chawla and Saumya Construction Pvt. Ltd. It is my considered view that the disclosure of additional income whether related to any incriminating material/any unaccounted assets or not is an issue of adequacy of such income vis-avis the related incriminating evidences found I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 10 during the search. It has no bearing on the legal proposition that the AO, in the case of unabated assessment years, can make additions only on the basis of related incriminating materials found during the search. In the case, it is not the case of AO that the additional income offered was short. In my view, the decision in para before shall hold good even if the appellant had made any disclosure during the search. 28.18 However the case being related to share application, the appellant's submission and the AO's Remand Report have been gone through for the merits of the issues, evidences of the appellant and influences by the AO and it is seen that the appellant has placed all the evidences related to identity and credit worthiness of the share applicants and the genuineness of the transactions which were provided to the Assessing Officer for verification and examination. Though in few of the cases the AO has not been satisfied of the evidences furnished during the appeal proceedings on account of certain documents incomplete or missing, I find that those missing/incomplete documents, if at all, are not material for necessarily drawing adverse inference against the appellant because with the documentary evidences furnished for each of the share applicants, the primary onus of the appellant u/s 68 has been adequately discharged. It is also noted that most of the individual shareholders are family members and relatives of the directors of the Company/the Group. It is true that the subscription of shares of a new company at huge premium (of Rs.90 per share) defies commercial/investment prudence, but such proposition by itself cannot be the sole basis for addition of share application amount u/s. 68. It may be worth pointing out that over and above the evidences submitted before my predecessors which have been examined by the AO, the Id. ARs have also made submission in the background of various case laws such as Nova Promoters & Finlease (P) Ltd., Navodaya Castle (P) Ltd., Hindusthan Tea Trading Co. Ltd., Nipun Builders & Developers P. Ltd.., NR Portfolio Pvt. Ltd. & etc. including that of NRA Iron & Steel Pvt. Ltd. I also note that out of 37 share holders only 9 share applicants are companies out of which 1 share holder. M/s Nova Gold Petro Resources Ltd. (which has made investment of Rs. 20,00,000/- for 20000 shares; face value Rs.2,00,000/- and premium Rs. 18,00,000/-) appears in the list of shell companies and at the best any disallowance if at all could have been of Rs.20,00,000/- only. However in view of the appellant being protected by the case laws related to legality of assessment proceedings u/s- 153A and addition in such assessments, no addition can be sustained. 29. The appeal is allowed.” 5. The Department is in appeal before us against the order passed by ld. CIT(A) giving relief to the assessee. Before us, the ld. Departmental Representative placed reliance on the observations made by the Assessing I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 11 Officer in the 153A order. In response, the counsel for the assessee submitted that the case of the assessee is covered in its favour in view of the decision of the Gujarat High Court in the case of Saumya Construction 387 ITR 529 (Gujarat High Court) and various other decisions of the Ahmedabad ITAT which have held that in case of unabated assessment year, no addition can be made to the income of the assessee in absence of any incriminating material found during the course of search. In the present case, the search on the assessee was carried out on 03-07-2012, whereas the time limit for issuance of notice u/s. 142 of the Act had already elapsed on 30-09-20211. Accordingly, this is a case of unabated assessment year. Further, the counsel for the assessee submitted that in this case, the additions were made purely on account of share application money received by the assessee company pursuant to allotment of shares and the additions were not based on any incriminating material found during the course of search. Accordingly, it was submitted that the ld. CIT(A) has correctly deleted the additions made by the Assessing Officer in the instant set of facts. 6. We have heard the rival contentions and perused the material on record. We observe that this is a case of unabated assessment year wherein the time limit of issuance of notice u/s. 143(2) of the Act (30-09-2011) had already elapsed as on the date of search which was conducted on 03-07- 2012. Therefore, this is clearly a case of unabated assessment year wherein on the date of search, the time limit for initiation of assessment proceedings had already expired. We are of the considered view that the case of the assessee is clearly covered by the decision of the Jurisdictional High Court in the case of PCIT vs. Saumya Construction Pvt. Ltd. 387 ITR 529 I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 12 (Gujarat High Court) and also by the case of CIT vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) (Delhi High Court) which held that in case of unabated assessment year if no incriminating material is found during search, no addition can be made on the basis of material collected after search. The Gujarat High Court in the of PCIT v. Rameshbhai Jivraj Desai [2020] 121 taxmann.com 333 (Gujarat) held that where no incriminating material in respect of an earlier assessment year for which assessment had already attained finality was unearthed during course of proceedings under section 153A, Assessing Officer while completing assessment under said section could not disturb completed assessment of assessee in respect of such earlier assessment year. In the case of Sunrise Finlease (P.) Ltd. [2018] 89 taxmann.com 1 (Gujarat), the Gujarat High Court held that where no incriminating evidence against assessee was found or seized during course of search so as to attract provisions of section 153A proceedings, no additions could be made on basis of statement of director of assessee company which were recorded under section 131 much later after search. In the case of Desai Construction (P.) Ltd. [2017] 81 taxmann.com 271 (Gujarat), the Gujarat High Court held that in absence of any incriminating material found during search, Assessing Officer, in assessment under section 153A, would not be entitled to interfere with assessee's claim for deduction under section 80-IA, which was part of original assessment proceedings and such assessment had abated. In the case of PCIT v. Devangi [2017] 88 taxmann.com 610 (Gujarat), after the search conducted at the assessee's premises, the Assessing Officer initiated proceedings under section 153A of the Act on the basis of the incriminating material seized for the period of the assessment year 2004-05 onwards, and I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 13 made the addition for the assessment years 2000-01 to 2004-05. The Tribunal deleted the addition holding that only undisclosed income and undisclosed assets deducted during the search could be brought to tax and in assessee's case no incriminating material was found with respect to the assessment years 2000-01 to 2004-05, at the time of search. The Gujarat High Court held that the Tribunal was correct in law in holding that the scope of section 153A was limited to assessing only search related income. 7. Further, we are also of the view that ld. CIT(A) has not erred in holding that the share application money received by the assessee pursuant to allotment of search cannot be construed as incriminating material found during the course of search and hence additions cannot be made in the hands of the assessee u/s. 153A of the Act in case of unabated assessment year in absence of any incriminating material unearthed during the course of search. In the case of M/s. Garg Brothers Pvt. Ltd. Vs DCIT (ITAT Kolkata) in ITA No.2519/Kol/2017, the ITAT held that no addition in Section 153A assessment for unexplained share capital in absence of incriminating material. 8. Accordingly, in the light of the above facts and the decision of the Jurisdictional High Court in the case of Saumya Construction Pvt. Ltd. supra and various other judicial precedents reproduced above, we are of the considered view that ld. CIT(A) has not erred in facts and in law in deleting the additions made by the Assessing Officer u/s. 68 of the Act, in the instant set of facts. In the result, the appeal of the Department is dismissed. I.T(SS).A No. 13/Ahd/2020 A.Y. 2010-11 Page No. DCIT vs. M/s. Guruprasad Infrastructure Pvt. Ltd. 14 9. In the result, the appeal of the Department is dismissed. Order pronounced in the open court on 21-04-2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 21/04/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद