ACIT, CC-3(2), Kolkata, Kolkata V. M/s Zest Merchants pvt. Ltd, Kolkata

ITSSA 14/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9860 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING
• Assessee Lawyers: A K TULSIYAN
• Keywords: Bogus Share capital; Income from undisclosed sources; Search and seizure; Accommodation entries; Reason to believe
• Section: 143(3); 142(1); 153A; 133(6); 68; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & HONBLE S HRI S.S.VISWANETHRA RAVI, JM] I.T.(SS).A NO. 14/KOL /2017 ASSESSMENT YEAR : 2012-1 3 DCIT, CC-3(2), KOLKATA -VS- M/S ZEST MER CHANTS PVT. LTD. [PAN: AAACZ 5286 E] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI G. HANGSHING, CIT DR FOR THE RESPONDENT : SHRI A.K. TULSIYAN, FCA DATE OF HEARING : 19.09.2018 DATE OF PRONOUNCEMENT : 26.09.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-21, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO. 202/DCIT,CC-3(2)/CIT(A)-21/KOL/2016-17 DATED 23.03. 2017 PASSED BY THE DCIT, CC-3(2), KOLKATA [ IN SHORT THE LD AO] UNDER SECTI ON 153/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29.03.2016 F OR THE ASSESSMENT YEAR 2012-13. 2. THE FIRST EFFECTIVE ISSUE INVOLVED IN THIS APPEA L IS AS TO WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CITA WAS JUSTIFIE D IN DELETING THE ADDITION MADE TOWARDS SHARE APPLICATION MONEY IN THE SUM OF RS 70 ,00,000/- FOR WANT OF INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH RELATAB LE TO SUCH ISSUE. THE INTER CONNECTED 2 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 2 ISSUE THEREON TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION MADE IN THE SUM OF RS 35,000/- ON ACCOUNT OF COMMISSION FOR GETTING ACCOM MODATION ENTRIES , FOR WANT OF INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH RELATABLE TO SUCH ISSUE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2012-13 U/S 139 OF THE ACT ON 9.2.2013 DECLARI NG TOTAL LOSS OF RS 60/-. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE ACT ON 7.11.2013 AT THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE DOLLAR GROU P AT KOLKATA AND OTHER PLACES. CONSEQUENT TO THE SEARCH, NOTICE U/S 153A OF THE AC T WAS ISSUED ON 13.4.2015 SEEKING RETURN FOR THE ASST YEAR 2012-13. IN RESPONSE TO TH E SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL LOSS OF RS 60/- ON 6.5.2015. THE ASSESSEE STATED THAT THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT FOR THE ASST YEAR 2012-13 IN RESPECT OF THE ORIGINAL RETURN FILED ON 9.2.2013 HA D EXPIRED ON 30.9.2013 AND HENCE AS ON THE DATE OF SEARCH, THE YEAR UNDER CONSIDERATION (I.E ASST YEAR 2012-13) WOULD FALL UNDER THE CATEGORY OF UNABATED ASSESSMENT AND HENCE THE INCOME ASSESSED ORIGINALLY THEREON COULD NOT BE DISTURBED UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH RELATABLE TO SUCH ASSESSMENT YEAR. 3.1. THE ASSESSEE COMPANY RECEIVED THE FOLLOWING PA YMENTS AGAINST SHARE APPLICATION DURING THE FINANCIAL YEAR 2011-12 RELEVANT TO ASST YEAR 2012-13 TO THE TUNE OF RS 70,00,000/-. IN THE COURSE OF ASSESSMENT PROCEEDIN GS , NAME AND ADDRESS OF SHARE APPLICANTS, NUMBER OF SHARES ALLOTTED AND AMOUNT AL ONG WITH FORM NO. 2 FILED WITH REGISTRAR OF COMPANIES WERE SUBMITTED BEFORE THE LD AO. THE LD AO OBSERVED THAT THE NOTICES ISSUED U/S 133(6) OF THE ACT TO THE SHARE S UBSCRIBING INVESTORS DULY FILED THEIR REPLY IN RESPONSE TO THE SAID NOTICE U/S 133(6) OF THE ACT CONFIRMING AND SUBSTANTIATING THE INVESTMENT MADE BY THEM IN THE ASSESSEE COMPANY . THE REQUISITE DOCUMENTS AND 3 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 3 DETAILS SUCH AS BANK STATEMENTS, INCOME TAX RETURN ACKNOWLEDGEMENT, AUDITED ACCOUNTS, SOURCE FOR MAKING INVESTMENTS WERE DULY SUBMITTED B EFORE THE LD AO. 3.2. THE LD AO HELD THAT :- CASH DEPOSITS WERE MADE BY SMALL FIRMS INTO THEIR OWN ACCOUNT. CHEQUES WERE ISSUED TO PAPER COMPANIES. THE SAID PAPER COMPANIES PASSED THE AMOUNT THROUGH OTHER PAPER COMPANIES TO THE ASSESSEE COMPA NY. THE RECEIPT OF MONEY WAS FORMALLY GIVEN THE STAMP OF SHARE CAPITAL / SHA RE APPLICATION MONEY RECEIVED. IT MAY BE MENTIONED HERE THAT FINANCIAL CRIMES ARE NOT COMMITTED AS SPUR OF THE MOMENT BUT THEY ARE EXECUTED AS A RESULT OF WELL PL ANNED AND THOUGHT OUT STRATEGY AFTER CONSIDERING VARIOUS ASPECTS AND LEGA L OBLIGATIONS OF ALL STAKE HOLDERS. THEREAFTER, THERE IS NO SURPRISE THAT THE PAPER FORMALITIES OF FILING STATUTORY RETURNS WITH DIFFERENT DEPARTMENTS, GETTI NG ACCOUNTS AUDITED, ROUTING THE FUND ULTIMATELY THROUGH CHEQUES MAY BE IN ORDER . BUT THIS CANNOT JUSTIFY OR PROVE THE GENUINENESS OF THE INVESTMENT WHEN THE TR ANSACTION IS CONSIDERED IN TOTALITY. EACH STEP IN THE WHOLE PROCESS MAY BE LE GALLY CORRECT, BUT WHEN THE WHOLE CHAIN OF EVENTS AS PER NORMAL PROCEDURE OF TH E INVESTMENT WITH HUMAN PROBABILITY IS TAKEN INTO ACCOIUNT, IT BECOMES QUIT E APPARENT THAT THE INVESTMENT IS PART OF A STRATEGY TO INTRODUCE UNACCOUNTED FUND S IN THE FORM OF SHARE CAPITAL. IN THIS CIRCUMSTANCES, THE ABOVE FACTS LEAD TO THE CONCLUSION THAT THIS WAS AN ARRANGEMENT OF INDUCTION OF UNACCOUNTED MONEY THROU GH MISLEADING LAYERS TO THE BENEFICIARIES OF ASSESSEES. 3.3. IT WAS ARGUED THAT ADMITTEDLY NO INCRIMINATING MATERIALS WERE FOUND FOR ASST YEAR 2012-13 IN THE COURSE OF SEARCH WITH REGARD TO SHAR E CAPITAL AND SHARE APPLICATION MONEY AND ACCORDINGLY PLEADED NOT TO DISTURB THE ORIGINAL LY ASSESSED INCOME, WHICH IS SAME AS THE RETURNED INCOME. THE LD AO HOWEVER DID NOT HEE D TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO FRAME THE ASSESSMENTS U/S 153A OF THE ACT BY MAKING AN ADDITION TOWARDS SHARE APPLICATION MONEY U/S 68 OF THE ACT I N THE SUM OF RS 70,00,000/- 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 TO TAL INCOME AS PER THE PROVISIONS OF THE ACT IRRESPECTIVE OF INCRIMINATING MATERIALS FOU ND IN THE SEARCH. IN THE SAID 4 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 4 ASSESSMENT, HE ALSO MADE ADDITION OF RS 35,000/- TO WARDS COMMISSION PAID ON ACCOUNT OF UNACCOUNTED INCOME ( I.E THE SHARE CAPITAL RECEI VED) THROUGH ACCOMMODATION ENTRIES. FURTHER DISALLOWANCE OF RS 1,700/- WAS MADE TOWARDS PRELIMINARY EXPENSES WRITTEN OFF IN THE SAID ASSESSMENT. THE LD AO COMPLETED THE AS SESSMENT U/S 153A / 143(3) OF THE ACT ON 29.3.2016 DETERMINING THE TOTAL INCOME AT RS 70,36,640/- AS AGAINST THE RETURNED LOSS OF RS 60/-. 4. THE ASSESSEE STATED NO INCRIMINATING MATERIALS RELATING TO THE SHARE CAPITAL OR SHARE APPLICATION MONEY OR SHARE PREMIUM WERE FOUND DURIN G THE COURSE OF SEARCH. SIMILAR ARGUMENTS WERE ADVANCED FOR ADDITION MADE TOWARDS C OMMISSION PAID ON ACCOUNT OF ALLEGED BOGUS SHARE CAPITAL AND PRELIMINARY EXPENS ES WRITTEN OFF. IT WAS SUBMITTED THAT FROM THE DOCUMENTS FILED PERTAINING TO THE SHARE SU BSCRIBERS, IT COULD BE SEEN THAT THEY HAD SUFFICIENT SOURCES FOR MAKING INVESTMENTS IN TH E ASSESSEE COMPANY. HENCE IT WAS PLEADED THAT THE ASSESSEE COMPANY HAD DULY PROVED T HE NECESSARY THREE INGREDIENTS I.E IDENTITY OF THE SHARE SUBSCRIBERS, GENUINENESS OF T RANSACTIONS AND CREDITWORTHINESS OF TRANSACTIONS WITHIN THE MEANING OF SECTION 68 OF TH E ACT AND PRAYED FOR DELETION OF THE ADDITION MADE IN THE SUM OF RS 70,00,000/-. THE O THER ADDITION OF RS 35,000/- TOWARDS ALLEGED COMMISSION PAYMENT IS ONLY CONSEQUENTIAL TO THE FIRST ADDITION OF SHARE APPLICATION MONEY. 5. THE LD CITA DELETED THE ADDITIONS MADE IN THE S EARCH ASSESSMENT U/S 153A OF THE ACT ON THE GROUND THAT THERE WAS ABSOLUTELY NO INCR IMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WITH REGARD TO THE IMPUGNED ISSUES ADDED IN THE SAID ASSESSMENT. HE OBSERVED AS UNDER:- I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASS ESSMENT ORDER, DIFFERENT CASE LAWS BROUGHT ON RECORD AND APPEAL ORDERS PASSED BY MY PR EDECESSORS ON THIS LEGAL ISSUE. I FIND FROM THE ASSESSMENT ORDER THAT DURING THE SEAR CH AND SEIZURE OPERATIONS CONDUCTED U/S 132 OF THE I T ACT, 1961, INCRIMINATING DOCUMEN TS / PAPERS WERE NOT SEIZED DURING THE SEARCH OPERATION. IT WOULD ALSO NOT 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 BEN CH OF KOLKATA TRIBUNAL IN CASES 5 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 5 REFERRED ABOVE AND THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARKETING LTD (SUPRA) IN THE LIGHT OF C BDTS DECISION OF NOT FILING SLP IN THIS CASE IN THE SUPREME COURT AND KEEPING IN VIEW THE APEX COURTS DECISION TO DISMISS SLP ON SIMILAR ISSUE IN THE CASE OF PR CIT VS KUREL E PAPER MILLS PVT LTD : SLP NO. 34554 OF 2015 DT. 07-12-2015, I AM OF THIS VIEW TH AT IN ORDER TO MAINTAIN JUDICIAL CONTINUITY ON THIS ISSUE AND RESPECTFULLY FOLLOWING THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARK ETING LTD (SUPRA), ASSESSEES APPEAL ON GROUNDS NO. 1 IS ALLOWED AND AS SUCH I AM NOT INCLINED TO ADJUDICATE APPEAL ON GROUND NO. 2 AND 3 ON MERIT. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6. WITH REGARD TO THE PRELIMINARY ARGUMENT OF THE L D AR THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WITH REG ARD TO THE ISSUE OF SHARE CAPITAL, SHARE APPLICATION MONEY AND SHARE PREMIUM, THE LD D R ARGUED THAT THE EXPRESSION INCRIMINATING MATERIAL IS NOT FOUND IN THE PROVIS IONS OF THE ACT AND IT IS ONLY THE HONBLE COURTS WHICH HAD IMPORTED THOSE WORDS WHILE RENDERING THE DECISIONS. HE STATED THAT THE HONBLE 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 REPORTED IN (2014) 49 TAXMAN N.COM 98 (KAR HC) WHEREIN IT WAS HELD THAT SEARCH ASSESSMENTS COULD BE FRAMED EVEN WITHOUT THE EXISTENCE OF INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEAR CH. HE ARGUED THAT THE BASIC FOUNDATION FOR CONDUCTING THE SEARCH IS GOVERNED BY THE PROVISIONS OF SECTION 132 OF THE ACT WHICH HAS TO BE READ HARMONIOUSLY WITH 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 :- 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 6 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 6 (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 MATEIALS. 7. IN RESPONSE TO THIS, THE LD AR STATED THAT THE A SSESSMENT FOR THE ASST YEAR 2012-13 WAS ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AS T HE CASE WAS NOT SELECTED FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT ON OR B EFORE 30.9.2013. HE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES WITH REGARD TO FRAMING OF ADDITIONS IN SECTION 153A ASSESSMENTS WITHOUT ANY INCRIMINATING MATERIAL FOUND THEREON. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS:- (A) CIT VS VEERPRABHU MARKETING LTD REPORTED IN (20 16) 73 TAXMANN.COM 149 (CAL HC) (B) DECISION OF THIS TRIBUNAL IN THE CASE OF ACIT V S KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 (C ) CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 ( DELHI HC) (D)CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAV A SHEVA) LTD AND ALL CARGO GLOBAL LOGISTICS LTD REPORTED IN (2015) 374 ITR 645 ( BOM) 7 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 7 (E) DECISION OF HONBLE APEX COURT IN THE CASE OF K ABUL CHAWLA REPORTED IN 380 ITR (ST.) 64 (SC) WHEREIN SLP OF THE REVENUE WAS DISMIS SED. 8. 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 EXIST ENCE 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 ASSESSMENT FOR THE ASST YEAR 2012-13 WAS ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AND THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAD EXPIRE D AND HENCE IT FALLS UNDER CONCLUDED PROCEEDING , AS ON THE DATE OF SEARCH. WE HOLD THA T 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 FO UND DURING THE COURSE OF SEARCH RELATABLE TO SUCH CONCLUDED YEAR, THE STATUTE DOES NOT CONFER ANY POWER ON THE LD AO TO DISTURB THE FINDINGS GIVEN THEREON AND INCOME DETER MINED 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 SEC TION 153A OF THE ACT ARE REPRODUCED 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 THE CA SE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OT HER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 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 INCOME IN RE SPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SI X ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN TH E PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING F ORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SH ALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRE D TO BE FURNISHED UNDER SECTION 139; 8 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 8 (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N 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 ASSESS MENT YEARS:' 8.1. WE FIND THAT THE CO-ORDINATE BENCH OF DELHI TR IBUNAL IN THE CASE OF DY. CIT V. AGGARWAL ENTERTAINMENT (P.) LTD REPORTED IN [2016] 72 TAXMANN.COM 340 (DELHI - TRIB.) HAD ADDRESSED THIS ASPECT. THE RELEVANT HEADNOTES IS REPRODUCED BELOW: 'SECTION 153A, READ WITH SECTION 143, OF THE INCOME -TAX ACT, 1961-SEARCH AND SEIZURE - ASSESSMENT IN CASE OF (IN CASE OF SECTION 143(1) AS SESSMENT)-ASSESSMENT YEAR 2004-05- WHETHER ASSESSMENT IN RESPECT OF WHICH RETURN HAS B EEN PROCESSED UNDER SECTION 143(1), CANNOT BE REGARDED AS PENDING FOR PURPOSE OF SECTIO N 153A AS ASSESSING OFFICER IS NOT REQUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN AND, THUS, SAID ASSESSMENT CANNOT BE REOPENED IN EXERCISE OF POWER OF SECTION 153A-HELD YES (PARAS 10 AND 12) (IN FAVOUR OF ASSESSEE).' 8.2. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRI BUNAL 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 CONDUCTED U /S. 132 OF THE ACT :- (A) NOTICE U/S. 153A OF THE ACT WOULD BE ISSUED ON TH E PERSON ON WHOM THE WARRANT OF AUTHORIZATION U/S. 132 OF THE ACT WAS ISSUED FOR THE SIX ASSESSMENT YEARS PRE CEDING THE YEAR OF SEARCH AND ASSESSMENTS THEREON WOULD BE COMPLETED U/S. 153A OF THE ACT FOR THOSE SIX ASSESSMENT 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) O F THE ACT. (C) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YEAR OF SEARCH, NO ADDITION COULD BE MADE IN THE RELEVANT ASSESSMENT YEAR UNLESS ANY INC RIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE REL EVANT ASSESSMENT YEAR. (D) PURSUANT TO THE SEARCH U/S. 132 OF THE ACT, THE P ENDING 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. 9 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 9 6.4.1 THE CONCLUDED ASSESSMENTS FOR THE PURPOSE OF SECTION 153A OF THE ACT SHALL BE - (I) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY CO MPLETED U/S. 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT HAS EXPIRED OR; (II) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY CO MPLETED 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 CONTEMP LATED U/S. 147 OF THE ACT AND THESE PROCEDURES OF ASSESSMENT OPERATE IN DIFFERENT FIELD S 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 ASSESSMEN T 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.' 8.3. 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 AFOREMENTIONE D DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVI OUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED 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 TAK ES PLACE. THE LD. AO HAS THE PO WER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF TH E AFOREMENTIONED SIX YEARS IN 10 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 10 SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEAR S. 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 BROUG HT 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 SEARCH , OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE LD. AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASS ESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COM PLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MA DE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I .E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETE ASSESSM ENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ME RGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE LD. AO. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY T HE LD. AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATIN G MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE O F ORIGINAL ASSESSMENT.' 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 COMPLETED . SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAV E BEEN MADE TO THE INCOME ALREADY ASSESSED. 8.4. WE FIND THAT THE DECISION RELIED UPON BY THE L D 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 DELHI 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 TH E ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED E VEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN. 11 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 11 8.5. THE LD DR ALSO RELIED ON THE RECENT DECISION O F 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 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 APEX COURT WHICH IS REPORTED IN 380 ITR (ST.) 4 (SC). HENCE IT COULD BE SAFELY CONCLUDED THAT THE DECISIO N OF HONBLE DELHI HC IN THE CASE OF KABUL CHAWLA SUPRA WOULD HAVE TO BE CONSIDERED ON T HE 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 WHICH FAVOURS THE A SSESSEE MUST BE ADOPTED. 8.6. 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). 12 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 12 8.7. 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 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 DATE OF SEARCH) , FRESH ASSESSMENTS ARE TO BE F RAMED 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 ASSESS MENTS, THE LEGISLATURE HAD CONFERRED POWERS ON THE LD AO TO JUST FOLLOW THE ASSESSMENTS ALREADY CONCLUDED 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. 8.8. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTF ULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSMEN T FRAMED U/S 143(1) OF THE ACT FOR THE ASST YEAR 2012-13, WHICH WAS UNABATED / CONCLUD ED ASSESSMENT, ON THE DATE OF SEARCH, DESERVES TO BE UNDISTURBED IN THE ABSENCE O F ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND ACCORDINGLY THE ADDITION M ADE ON ACCOUNT OF SHARE APPLICATION MONEY AND SHARE PREMIUM U/S 68 OF THE ACT IS HEREBY DIRECTED TO BE DELETED. IT IS NOT IN DISPUTE THAT THERE WAS ABSOLUTELY NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE INSTANT CASE WITH REGARD TO THE ISSUE OF SHARE CAPITAL, SHARE PREMIUM AND THE LD AO HAD ONLY TRIED TO EXPLAIN THE VARIOUS LAY ERS THROUGH WHICH THE MONIES ULTIMATELY REACHED THE ASSESSEE COMPANY. THE OTHER ADDITION OF COMMISSION OF RS 13 IT(SS)A NO.14/KOL/2017 M/S ZEST MERCHANTS PVT. LTD. A.YR. 2012-13 13 35,000/- IS ONLY CONSEQUENTIAL TO THE FIRST ADDITIO N. SINCE THE ISSUE IS ADDRESSED ON PRELIMINARY GROUND OF ABSENCE OF INCRIMINATING MATE RIALS, WE REFRAIN TO GIVE OUR FINDINGS ON THE MERITS OF THE ADDITION U/S 68 OF TH E ACT FOR THE ASST YEAR 2012-13 AND THE COMMISSION OF RS 35,000/-. ACCORDINGLY THE GRO UNDS RAISED BY THE REVENUE IN THIS REGARD ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 26.09.2018 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BAL AGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 26.09.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. DCIT, CC-3(2), KOLKATA, AAYAKAR BHAWAN POORVA, 1 10, SHANTIPALLY, KOLKATA- 700107. 2. M/S ZEST MERCHANTS PVT. LTD., 32, J.L. NEHRU ROA D, OM TOWER, 12 TH FLOOR, KOLKATA- 700071. 3..C.I.T.(A)- 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