DCIT, Central Circle, Sambalpur V. Basukinath Roadways Pvt. Ltd., Sundargarh

ITSSA 141/CTK/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5240 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K TULSIYAN
• Keywords: Unexplained cash credit; Bogus Share capital; Gift; Depreciation; Search and seizure; Document seized; Peak credit; Retrospective amendment; Bad and doubtful debts; Block assessment; Capital receipt; Onus to prove; Sham transactions; Revised return; Documents seized; Reassessment proceedings; Set aside; CHAPTER XIVB
• Section: 143(3); 153A; 143(1); 201; 143(2); 264; 192; 64; 158BC; 43; 48; 13; 153; 158BD; 22; 153C; 147; 68; 148; 263; 132; 2; 15; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM ( ) / IT(SS) A NO S . 1 41 & 142 /CTK/201 8 ( / ASSESSMENT YEAR : 20 09 - 2010 & 2010 - 2011 ) DCIT, CENTRAL CIRCLE, SAMBALPUR VS. M/S BASUKINATH ROADWAYS PRIVATE LIMITED, OF OM NIWAS, BARSUAN, SUNDERGARH, ODISHA - 770041 ./ PAN NO. : A A D C B 4165 B AND . /CO NO S . 2 0 & 2 1 /CTK/201 9 (ARISING OUT OF IT (SS) A NOS. 14 1 & 14 2 /CTK/201 8 ) ( / ASSESSMENT YEARS : 2009 - 2010 & 2010 - 2011 ) M/S BASUKINATH ROADWAYS PRIVATE LIMITED, OM NIWAS, BARSUAN, SUNDERGARH, ODISHA - 770041 VS. DCIT, CENTRAL CIRCLE, SAMBALPUR ./ PANNO. : A ADCB 4165 B ( / APPE LLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI S.M.KESHKAMAT, CIT - DR /ASSESSEE BY : SHRI S.K.TULSIYAN, ADVOCATE / DATE OF HEARING : 14 / 01 /20 20 / DATE OF PRONOUNCEMENT : 20 / 02 /20 20 / O R D E R PER BENCH : TH ESE ARE THE TWO APPEALS FILED BY THE REVENU E AGAINST THE ORDER OF CIT( A ) - 2 , BHUBANESWAR , DATED 26.06.2018 . THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS AGAINST THE ABOVE ORDER OF CIT(A). 2. OUT OF THE ABOVE TWO AP PEALS, IT(SS)A NO.141/2018 (AY: 2009 - 2010) IS BARRED BY 22 DAYS . IN THIS REGARD, LD. D R HAS FILED AN IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 2 APPLICATION FOR CONDONATION OF DELAY. WE HAVE PERUSED THE APPLICATION FOR CONDONATION OF DELAY, TO WHICH THE LD. A R DID NOT OBJECT, AND FOUND THAT THE REVE NUE HAS STATED SUFFICIENT REASON FOR CONDONATION OF DELAY. THEREFORE, WE CONDONE THE DELAY OF 22 DAYS IN FILING THE ABOVE APPEAL AND BOTH THE APPEALS OF THE REVENUE WERE HEARD ALONG WITH THE CROSS OBJECTIONS OF THE ASSESSEE FINALLY. 3. SINCE THE CROSS OBJ ECTIONS FILED BY THE ASSESSEE RELATES TO LEGAL ISSUE INVOLVED CHALLENGING THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE MATERIALS REFERRED BY THE AO WAS RECORDED IN THE BOOKS OF ACCOUNTS AND THE LD.CIT(A) HAS DELETED THE A DDITIONS AS PER SECTION 292C OF THE ACT, THEREFORE, FIRST WE SHALL TAKE UP THE CR OSS OBJECTIONS OF THE ASSESSEE AND THE GROUNDS RAISED THEREIN ARE AS UNDER : - GROUNDS RAISED IN CO NO.20/CTK/2019 (A.Y.: 2009 - 2010) : 1. THAT, THE LD. C.L.T.(A) ERRED IN DISMI SSING THE LEGAL GROUND OF THE ASSESSEE THAT THERE BEING NO INCRIMINATING MATERIAL FOUND IN COURSE OF THE SEARCH OPERATION, NO ADDITION CAN BE MADE IN RESPECT OF UNABATED YEAR IN RELATION TO THE SHARE CAPITAL OF RS. 14,73,00,000/ - . 2. THAT, THE ORDER OF TH E LD. C.I.T.(A) REJECTING THE ABOVE LEGAL GROUND ON THE ALLEGED STAND THAT AS PER SEC. 153A THERE IS NO NEED OF INCRIMINATING MATERIAL FOR MAKING ADDITIONS U / S .153A OF THE ACT IS DIRECTLY IN CONTRADICTION WITH SEVERAL JUDGMENTS OF HON'BLE HIGH COURTS AND T RIBUNAL, INCLUDING THE DECISIONS OF HON'BLE ITAT, CUTTACK IN THE CASES OF E - CITY PROJECTS LUCKNOW P. LTD., ORDER DATED 28.02.2018 AND MIDAS CAPITAL PVT. LTD., ORDER DATED 23.03.2018 RELIED UPON BEFORE HIM. 3. THAT, THE LD. C.I.T.(A) BEING OFFICER SUBORDIN ATE TO HON'BLE ITAT, CUTTACK BENCH WAS DUTY BOUND TO ACCEPT THE AUTHORITIES RELIED UPON BY THE ASSESSEE AND THUS HE ERRED IN NOT HAVING ACCEPTED THE IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 3 SAME, MORE SO WHEN THE HON'BLE SUPREME COURT IN THE CASE OF ASSTT. COLLECTOR OF CENTRAL EXCISE VS. DUNLOP I NDIA LTD. (154 ITR 172) HAS HELD THAT THE BETTER WISDOM OF THE COURT BELOW MUST YIELD TO THE HIGHER WISDOM OF THE COURT ABOVE, WHICH IS THE STRENGTH OF THE HIERARCHICAL JUDICIAL SYSTEM. GROUNDS RAISED IN CO NO. 21 /CTK/2019 (A.Y.: 20 10 - 201 1 ) : 1. THAT, THE LD. C.L.T.(A) ERRED IN DISMISSING THE LEGAL GROUND OF THE ASSESSEE THAT THERE BEING NO INCRIMINATING MATERIAL FOUND IN COURSE OF THE SEARCH OPERATION, NO ADDITION CAN BE MADE IN RESPECT OF UNABATED YEAR IN RELAT ION TO THE SHARE CAPITAL OF RS.5,41,00 ,000/ - . 2. THAT, THE ORDER OF THE LD. C.I.T.(A) REJECTING THE ABOVE LEGAL GROUND ON THE ALLEGED STAND THAT AS PER SEC. 153A THERE IS NO NEED OF INCRIMINATING MATERIAL FOR MAKING ADDITIONS U / S .153A OF THE ACT IS DIRECTLY IN CONTRADICTION WITH SEVERAL JUDGMENTS OF HON'BLE HIGH COURTS AND TRIBUNAL, INCLUDING THE DECISIONS OF HON'BLE ITAT, CUTTACK IN THE CASES OF E - CITY PROJECTS LUCKNOW P. LTD., ORDER DATED 28.02.2018 AND MIDAS CAPITAL PVT. LTD., ORDER DATED 23.03.2018 RELIED UPON BEFORE HIM. 3. THAT, THE LD. C.I.T. (A) BEING OFFICER SUBORDINATE TO HON'BLE ITAT, CUTTACK BENCH WAS DUTY BOUND TO ACCEPT THE AUTHORITIES RELIED UPON BY THE ASSESSEE AND THUS HE ERRED IN NOT HAVING ACCEPTED THE SAME, MORE SO WHEN THE HON'BLE SUPREME COURT IN THE CASE OF ASSTT. COLLECTOR OF C ENTRAL EXCISE VS. DUNLOP INDIA LTD. (154 ITR 172) HAS HELD THAT THE BETTER WISDOM OF THE COURT BELOW MUST YIELD TO THE HIGHER WISDOM OF THE COURT ABOVE, WHICH IS THE STRENGTH OF THE HIERARCHICAL JUDICIAL SYSTEM. 4. BRIEF FACTS OF THE CASE ARE THAT A SEARC H & SEIZURE OPERATION U/S.132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN THE BUSINESS AND OFFICE PREMISES OF THE ASSESSEE - COMPANY, M/S. BASUKINATH ROADWAYS PVT. LTD. AT BARSUAN AND ROURKELA ON 25.02.2014. DURING THE COURSE OF SEARCH, VERACIOUS DOCUMENT W ERE FOUND AND SEIZED BY THE SEARCH TEAM. IN RESPONSE TO SEARCH PROCEEDINGS, NOTICE U/S.153A OF THE ACT DATED 28.01.2015 WAS ISSUED TO THE ASSESSEE FOR FILING INCOME TAX RETURN U/S.153A OF THE ACT FOR THE ASSESSMENT YEAR 2009 - 2010 ON OR BEFORE IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 4 THE SPECIFIED DATE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED RETURN OF INCOME ON 02.03.2015 DISCLOSING TOTAL INCOME AT RS.1,08,48,050/ - AND SUBSEQUENTLY THE JURISDICTION WAS CHANGED U/S.127 OF THE ACT AND NECESSARY COMPLIANCE WAS MADE BY BOTH THE SIDES. IT WA S ALSO NOTED BY THE AO THAT THE ASSESSEE COMPANY HAD FILED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29.09.2009 U/S.139(1) OF THE ACT ASSESSING TOTAL INCOME OF RS.98,44,850/ - . DURING THE COURSE OF ASSESSMENT, THE AO REFERRED THOSE DOCUMENTS WHIC H WERE FOUND DURING THE COURSE OF SEARCH AND SEIZURE AND IT WAS ALSO NOTED BY THE AO THAT THE DISPUTED AMOUNT WAS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN THIS REGARD, THE ASSESSEE SUBMITTED HIS WRITTEN SUBMISSIONS AND RELIED ON VARIOUS DOCUME NTS IN SUPPORT OF HIS CLAIM. ACCORDINGLY, THE COMPLETED THE ASSESSMENT BY MAKING VARIOUS ADDITIONS AND DETERMINED TOTAL INCOME AT RS.15,84, 80, 145/ - . 5. AGGRIEVED FROM THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE THE CIT(A). THE ASSESSEE ALSO SUBMITTED HI S WRITTEN SUBMISSIONS AND RELIED ON VARIOUS CASE LAWS. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS FINDINGS OF AO, REJECTED THE LEGAL GROUNDS RAISED BY THE ASSESSEE REGARDING NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH BUT THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AS PER SECTION 292C OF THE ACT ON THE OTHER GROUNDS RAISED BY THE ASSESSEE ON MERITS. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 5 6. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE HAS FILED THE PRESENT APPEAL S BEFORE THE INCOME TAX APPELLATE TRIBUNAL, WHEREAS THE ASSESSEE ALSO FILED CROSS OBJECTIONS CHALLENGING THE REJECTION OF THE LEGAL GROUND RAISED BY THE ASSESSEE BEFORE THE CIT(A). 7. AT THE OUTSET, DURING THE COURSE OF HEARING, LD. AR SUBMITTED THAT THERE WAS NO INCRIMINATING MATERIAL FO UND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS BY THE REVENUE AUTHORITIES. WHATEVER NOTED BY HIM IN THE ASSESSMENT ORDER BY THE AO, THOSE WERE RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. ACCORDINGLY, LD. CIT(A) HAS DELETED THE ADDITION AS P ER SECTION 292C OF THE ACT HOLDING THAT THERE WAS NO ANY UNDISCLOSED INCOME BY THE ASSESSEE. LD. AR FURTHER SUBMITTED THAT THE DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH AND SEIZURE WHICH WERE ALREADY RECORDED IN THE BOOKS OF ACCOUNTS CANNOT BE TREAT ED AS INCRIMINATING MATERIALS. IT WAS ALSO SUBMITTED THAT THERE IS NO DEFINITION OF INCRIMINATING MATERIAL IN THE INCOME TAX ACT BUT THE VARIOUS COURTS HAVE OBSERVED THAT THOSE DOCUMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS MAY BE TREATED AS INC RIMINATING MATERIAL WHICH WAS UNDISCLOSED IN THE REGULAR BOOKS OF ACCOUNTS AS WELL AS THE FINANCIAL STATEMENTS. LD. AR REFERRING TO THE JUDICIAL DECISIONS, HAS FILED WRITTEN SUBMISSIONS, WHICH READ AS UNDER : - NOW BASED ON ALL THE FACTS OF THE CASE OF TH E APPELLANT AND ALSO BASED ON THE CIT(A) ORDER AND THE DEPARTMENTAL APPEAL AND THE CROSS OBJECTIONS FILED AGAINST THE SAME, ALL AS DETAILED ABOVE, IT IS SUBMITTED IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 6 THAT IT CONSIDERED IMPORTANT TO FIRST DEAL WITH THE CROSS OBJECTION OF THE APPELLANT WHICH RELATES TO THE ASSESSMENT U / S 153A OF THE ACT FOR CONCLUDED ASSESSMENT, NOT BEING BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, ARE INVALID AND ILLEGAL. I. CROSS OBJECTION FILED BY THE APPELLANT: ASSESSMENT UIS 153A OF THE ACT FOR CONCLUDED ASSESSMENT, NOT BEING BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, ARE INVALID AND ILLEGAL. 1. THE CROSS - OBJECTION FILED BY THE APPELLANT BEING THE BASIC LEGAL ISSUE BEFORE YOUR HONOURS FOR THE A. Y.S 2009 - 10 AND 10 - 11 IS THAT THE ENTIRE ASS ESSMENT U/S 153A FOR THE SAID YEARS BEING THE UNABATED YEARS, NOT BEING BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, THE SAID ASSESSMENT PROCEEDINGS WERE INVALID AND ILLEGAL. 2. HOWEVER AT THIS JUNCTURE, BEFORE GOING ON TO THE PARTICULAR DE TAILED FACTS OF THE ADDITION, IT IS FIRST RELEVANT TO DISCUSS THE HISTORY OF THE LEGISLATIONS IN RELATION TO SEARCH PROCEEDINGS AND ASSESSMENTS, THE SPECIFIC PROVISIONS OF THE SECTION 153A OF THE ACT, ITS SCOPE, ITS IMPLICATIONS AND ALSO THE VARIOUS JUDI CIAL DECISIONS ON THE SUBJECT. 3. GOING BRIEFLY INTO THE HISTORY OF THE LEGISLATIONS IN RELATION TO SEARCH PROCEEDINGS AND ASSESSMENTS, IT IS STATED THAT SINCE THE COMMENCEMENT OF THE INCOME TAX ACT, 1961 THERE WAS NO SEPARATE PROCEDURE FOR ASSESSME NT O F SEARCH CASES. PRIOR TO 31 ST MAY 1995 THERE WERE NO SPECIAL PROVISIONS FOR ASSESSMENT OF SEARCH CASES. ASSESSMENTS WERE GOVERNED BY THE REGULAR PROVISION OF THE I.T. ACT AS APPLICABLE TO RELEVANT ASSESSMENT YEAR AS PREVAILING THEN. ASSESSMENTS WERE USED TO BE REOPENED HAVING RECOURSE TO THE PROVISION OF SECTION 147 OF THE ACT. HOWEVER A PROVISIONAL ORDER U/S 132(5) USED TO BE PASSED FOR RELEASE OF SEIZED ASSETS. THEREAFTER, WITH EFFECT FROM 1ST JUNE 1995, SCHEME OF BLOCK ASSESSMENT IN SECTION 158BC AND 158BD AS PER CHAPTER XIVB OF THE ACT WAS INTRODUCED. THE MAIN PURPOSE OF INTRODUCING BLOCK ASSESSMENT SCHEME WAS EARLY FINALIZATION OF SEARCH ASSESSMENT AND REDUCTION IN MULTIPLICITY OF PROCEEDINGS. IN THIS SCHEME, THE ASSESSMENT WAS TO BE MADE ON THE BASI S OF SEIZED DOCUMENTS ONLY. THERE WAS NO SCOPE FOR DISTURBING REGULAR ASSESSMENTS. ALTHOUGH THERE WERE SOME ANALOGIZES AND DIFFERENCES OF OPINION IN SOME OF THE PROVISIONS OF THE SCHEME, HOWEVER, WITHIN THE SPAN OF ABOUT EIGHT YEARS MOST OF THE ANALOGIZE S AND DISPUTES WERE SETTLED BY VARIOUS JUDGMENTS OF HON'BLE COURTS AND TRIBUNALS BUT AFTER SETTLING OF MOST OF THE ISSUES, THE GOVERNMENT OF INDIA WITHDREW THIS SCHEME IN RESPECT OF SEARCHES MADE FROM 1ST JUNE 2003 AND INSERTED NEW SECTIONS 153A, 153B, 153 C AND 153D IN CHAPTER XIV FOR POST SEARCH ASSESSMENT PURPOSE. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 7 IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL 2003, IT WAS OBSERVED THAT THE EXISTING PROVISION (AT THAT TIME) FOR SINGLE ASSESSMENT OF UNDISCLOSED INCOME FOR BLOCK PERIOD WERE I NTRODUCED FOR AVOIDANCE OF DISPUTES, EARLY FINALIZATION OF SUCH ASSESSMENTS AND REDUCTION IN MULTIPLICITY OF PROCEEDINGS. HOWEVER, SINCE THERE WERE PARALLEL PROCEEDINGS, NAMELY, REGULAR ASSESSMENT PROCEEDINGS AS WELL AS ASSESSMENT OF BLOCK ASSESSMENTS FOR UNDISCLOSED INCOME HAD AMOUNTED TO MULTIPLICITY OF PROCEEDINGS. IN ORDER TO AVOID MULTIPLICITY OF PROCEEDINGS, A SCHEME OF SINGLE ASSESSMENT IN RESPECT OF ASSESSMENT YEARS FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING, SECTION 153A TO SECTION 153C OF THE AC T WERE PROPOSED TO BE INTRODUCED. THE FINANCE ACT 2012, HAS INSERTED THIRD PROVISO TO SECTION 153A(1) OF THE ACT, EMPOWERING THE CENTRAL GOVERNMENT TO' MAKE RULE IN RESPECT OF THE ASSESSMENT YEAR EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT .HAS ABATED, SPECIFY THE CLASS OR CLASSES OF CASES WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. MEMORANDUM EXPLAINING THE PROVISIONS OF THE FINANCE BILL 2012 STATES THAT UNDER THE EXIST ING PROVISIONS OF SEARCH 153A OF ACT, IT IS MANDATORY TO ISSUE A NOTICE FOR FILING OF TAX RETURNS FOR 6 ASSESSMEN T YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A. 5. NOW EXPLAINING THE SPECIFIC PROVISIONS OF THE SECTION 153A OF THE ACT, IT WOULD B E RELEVANT TO FIRST MAKE A REFERENCE TO THE PROVISIONS OF THE SECTION 153A OF THE ACT AND THE OBSERVATION OF THE APEX COURT IN A CASE, AS UNDER: 5.1. THE SECTION 153A OF THE INCOME TAX ACT, 1961, READS AS UNDER: '* 153A.ASSESSMENT IN CASE OF SEARCH OR REQUISITION *(1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY AS SETS 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 FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EAC H ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED 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 SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 ' IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 8 (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS 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 ' PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS **REFERRED TO IN THIS SUB - SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL AB ATE. ' **(2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUB - SECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1) OR SECTION 153, THE ASS ESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB - SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER.' PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, - (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECTION 1 53B AND SECTION 1 53 C , ALL OTHER PROVISIONS OF THIS ACT S HALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR.' THE HON'BLE S UPREME COURT IN THE CASE OF PARSHURAM POTTERY W ORKS CO. LTD. VS ITO, C IRCLE - I, WARD A, RAJKOT 106 ITR 1 (SC) HAS OBSERVED AS UNDER. - 'IT HAS BEEN SAID THAT THE TAXES ARE THE PRICE THAT WE PAY FOR CIVILIZATION. IF SO, IT IS ESSENTIAL THAT THOSE WHO ARE EN TRUSTED WITH THE TASK OF CALCULATING AND REALISING THAT PRICE SHOULD FAMILIARISE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL VERSED WITH THE LAW ON THE SUBJECT. ANY REMISSNESS ON THEIR PART CAN ONLY BE AT THE COST OF THE NATIONAL EXCHEQUER AND MUST NECESSARILY RESULT IN LOSS OF REVENUE. AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STATE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 9 TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI- JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. )) IT WOULD NOT BE OUT OF PLACE TO MENTION HERE THAT AS PER THE PROVISIONS OF ARTICLE 141 OF THE CONSTITUTION OF INDIA, 1949, THE LAW DECLARED BY SUPREME COURT SHALL BE BINDING ON ALL COURTS WITHIN THE TERRITORY OF INDIA AND ACCORDINGLY, IT IS THE LAW OF LAND. 5.2. A PLAIN READING OF THE RELEVANT SECTION AS LAID OUT ABOVE LAYS DOWN THAT SECTION 153A WOULD BE APPLI CABLE WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A OF THE ACT AFTER 31ST MAY, 2003. THEREFORE, BEFORE INVOKING THE PROVISIONS OF SECTION 153A OF THE ACT IT WOULD BE NECESSARY TO COMPLY WITH THE PROVISIONS CONTAINED UNDER SECTION 132(1) OF THE ACT. ONCE THE WARRANT OF AUTHORIZATION OR REQUISITION IS ISSUED AND SEARCH IS CONDUCTED, PANCHANAMA IS DRAWN, THE COMPLETED ASSESSMENTS FOR ALL THE RELEVANT YEARS WOULD GET REOPE NED IRRESPECTIVE OF WHETHER ANY INCRIMINATING MATERIAL IS FOUND OR NOT IN RELATION TO A PARTICULAR ASSESSMENT YEAR. 5.1. IT IS CLEARLY INSCRIBED IN THE LAW THAT AN ASSESSMENT U/S 153A IS DIFFERENT FROM REGULAR ASSESSMENT. THE SECTION COMES INTO PLAY ONLY WHEN A SEARCH IS INITIATED U/S 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S 132A AFTER 31.5.2003. ALSO TO BE HIGHLIGHTED THAT IT IS DURING THE COURSE OF SEARCH ITSELF, SUCH GENERALLY INCRIMINATING DOCUMENTS OR PAPERS ETC. O R UNACCOUNTED ASSETS ARE FOUND. IF THE AO IS ALLOWED TO ASSESS / REASSESS THE TOTAL INCOME FOR ALL SIX ASSESSMENT YEARS AS PER FIRST PROVISO TO SECTION 153A IN CONTRADICTION OF THE SECOND PROVISO, PARTICULARLY WHEN THERE IS NO INCRIMINATING MATERIAL ETC. , THEN THE SAME WILL NOT ONLY MULTIPLY ASSESSMENT PROCEEDINGS BUT WILL MULTIPLY EVEN THE APPELLATE PROCEEDINGS. OBVIOUSLY THIS CAN NEVER BE THE INTENTION OF THE LEGISLATURE. 5.2. THE PROVISION OF SECTION 153A STARTS WITH NON - OBSTANTS CLAUSE WITH REFERENC E TO SECTIONS 139, 147,148,149,151 AND 153. SEC. 153A CONTEMPLATES ISSUE OF NOTICE FOR 6 YEARS PRECEDING THE SEARCH BUT NOT FOR THE YEAR OF SEARCH OR REQUISITION AND THUS NO RETURN IS REQUIRED TO BE FILED FOR THE YEAR OF SEARCH U/S. 153A. ONLY REGULAR RETU RN U/S 139 TO BE FILED. FIRST PROVISO IS REITERATION OF THE PROVISION CONTAINING CLAUSE (B) OF SECTION 153A (1) THAT THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THE SIX ASSESSMENT YEARS. THE SECOND PROVISO CONTEMPLATES THAT IF ANY OF TH E AFORESAID SIX ASSESSMENTS IS PENDING ON THE DATE OF INITIATION OF THE SEARCH OR REQUISITION, THE SAME SHALL ABATE. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 10 5.3. EXPLAINING THE SECOND PROVISO OF THE SECTION, IT IS STATED THAT THE SECOND PROVISO PROVIDES THAT IF ON THE DATE OF INITIA TION OF SEA RCH OR REQUISITION U/ S 132 OR ULS132A, ANY ASSESSMENT / REASSESSMENT PROCEEDING RELATING TO' ANY A Y FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS, IS INITIATED AND THE SAME IS PENDING, THEN THE PENDING PROCEEDINGS OF THE REGULAR ASSESSMENT SHALL STAND ABATED AND THE FRESH ASSESSMENT OF THE SAME CAN BE DONE U / S 153A OF THE ACT. THIS PROVISO IS ENACTED SPECIFICALLY TO AVOID TWO PARALLEL PROCEEDINGS OF ASSESSMENT OF A PARTICULAR YEAR OF THE SAME PERSON, I.E., ONE AS REGULAR ASSESSMENT AND ANOTHER AS ASSES SMENT U / S 153A OF THE ACT. 5.4. THE WORD 'ABATEMENT' IS REFERABLE TO SOMETHING, WHICH IS PENDING ALIVE, OR IS SUBJECT TO DEDUCTION, THE ABATEMENT REFERS TO SUSPENSION OR TERMINATION OF THE PROCEEDINGS EITHER OF THE MAIN ACTION, OR THE PROCEEDINGS ANCILLA RY OR COLLATERAL TO IT. THE PROCEEDINGS, WHICH HAVE ALREADY TERMINATED ARE NOT LIABLE FOR ABATEMENT UNLESS STATUTE EXPRESSLY PROVIDES FOR SUCH CONSEQUENCE THEREOF 5.5. THE WORD 'PENDING' OCCURRING IN THE SECOND PROVISO TO SECTION 153A OF THE ACT, IS ALSO SIGNIFICANT. IT IS QUALIFIED BY THE WORDS 'ON THE DATE OF INITIATION OF THE SEARCH', AND MAKES IT ABUNDANTLY CLEAR THAT ONLY SUCH ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE LIABLE TO ABATE. IN OTHER WORDS, ASSESSMENTS WHICH ARE NOT PENDING I.E. COMPLETED ASSESSMENTS AS ON THE DATE OF SEARCH WOULD HOLD THEIR BASE AND WOULD NOT ABATE. 5.6. THUS WHAT EMERGES IS THAT ONLY PENDING ASSESSMENTS AS ON THE DATE OF SEARCH SHALL ABATE. THE LEGISLATURE IS CLEAR THAT ANY APPEAL, REVISION OR RECTIFICATION PROCEEDINGS, IF PENDING AS ON THE DATE OF SEARCH SHALL NOT ABATE. ACCORDINGLY, AS FAR AS COMPLETED ASSESSMENTS ARE CONCERNED, THEY DO NOT ABATE AND PENDING APPEALS ETC. IN RESPECT THEREOF CONTINUE TO EXIST NOTWITHSTANDING THE FACT THAT THE SEARCH HAS BEEN MADE. THUS A COMPLETED ASSESSMENT BECOMES FINAL UNLESS SOME INCRIMINATING MATERIAL IS FOUND IN THE COURSE OF SEARCH. OTHERWISE THE AO WILL BE EMPOWERED TO UNDO WHAT HAS ALREADY BEEN COMPLETED AND HAS BECOME FINAL. 5.7. IT IS IMPORTANT HERE TO NOTE THAT ALL REASSES SMENT SUCH AS UNDER SECTION 147,263 ETC. HAVE TO BE MADE WITHIN WELL - DEFINED LIMITS SUBJECT TO SATISFACTION OF PRE - CONDITIONS AND, THEREFORE, SIMILAR LIMITATION MAY HAVE TO BE READ IN THE INSTANT PROVISION. THEREFORE, MAKING ANY ASSESSMENT WHICH IS ALREADY COMPLETED WILL ALSO REQUIRE THE SATISFACTION OF PRE - CONDITIONS AS CONTEMPLATED IN SECTION 153A, ITS FIRST PROVISO, ITS SECOND PROVISO READ WITH SECTION 132. THE ASSESSMENT U / S 153A DEALS WITH SEARCH CASES AND THEREFORE, THE CONCEPT OF UNDISCLOSED INCOME U / S 132(1)(C) WILL COME INTO PLAY. 5.8. THE SECOND PROVISO TO SECTION 153A IS INTENDED TO AVOID TWO ASSESSMENTS FOR THE SAME YEAR. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 11 SECTION 153A DOES NOT AUTHORIZE THE MAKING OF A DE NOV O ASSESSMENT. AN ASSESSMENT U/ S 153A IS NOT MEANT TO UNSETTLE THE IN COME SHOWN IN THE REGULAR RETURN IN RESPECT OF WHICH THE ASSESSMENT IS COMPLETE. SECTION 15 - 3A DOES NOT LEAD TO A WHOLE EXERCISE OF ASSESSMENT TO BE MADE AFRESH IN RESPECT OF COMPLETED ASSESSMENTS. THEREFORE IN PROCEEDINGS U / S 153A, NO NEW DISALLOWANCE CAN BE MADE BY THE AO. WHERE ADMITTEDLY THE REGULAR ASSESSMENTS ARE SHOWN AS COMPLETED ASSESSMENTS ON THE DATE OF INITIATION OF ACTION U / S 132. IN RELATION TO THE YEARS WHOSE ASSESSMENT IS COMPLETED, IT IS LAID DOWN BY LAW THAT IN SUCH SITUATIONS OF COMPLET ED ASSESSMENTS, ASSESSMENT U / S 153A OF THE ACT HOWEVER SHALL BE TO THE EXTENT OF INCOME ESCAPING ASSESSMENT WHICH COMES TO THE KNOWLEDGE OF THE AO DURING THE COURSE OF SEARCH WITH REFERENCE TO THE VALUABLE ARTICLES OR THINGS FOUND OR DOCUMENTS SEIZED DURIN G THE SEARCH WHICH ARE NOT DISCLOSED IN THE ORIGINAL ASSESSMENT. THE POWER GIVEN BY THE 1 ST PROVISO TO 'ASSESS' INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLO SED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. WHEN NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS CANNOT BE DISTURBED. ITEMS OF REGULAR ASSESSMENT CANNOT BE' ADDED BACK IN THE PROCEEDIN GS U/S 153A WHEN NO INCRIMINATING DOCUMENTS WERE FOUND IN THE SEARCH PROCEEDINGS. A SEARCH ASSESSMENT UNDER SECTION 153A SHOULD BE EVIDENCE BASED. SECTION 153A OF THE ACT IS A SEPARATE AND SPECIAL PROVISION T HAT HAS BEEN SPECIALLY ENACTED TO UNDERTAKE SE ARCH RELATED ASSESSMENTS. A SEARCH U/S 132 OF THE ACT, IS AUTHORIZED TO UNEARTH UNDISCLOSED ASSETS OR TRANSACTIONS RESULTING IN INCOME WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT OF A PERSON. THEREFORE, A SEARCH PUTS IN MOTION THE PROCESS OF ASSESSMENT OF THE UNDISCLOSED INCOME OF A TAX PAYER WHICH IS NOT DISCLOSED TO THE DEPARTMENT BEFORE THE DATE OF SEARCH. THUS SECTION 153A IS LIMITED TO THE ASSESSMENTS OF INCOME WHICH ARE DISCOVERY OF SEARCH. 5.9. THEREFORE, PROPER CONSTRUCTION WOULD BE THAT IN RES PECT OF COMPLETED ASSESSMENTS, THE ASSESSMENT SHALL BE MADE ONLY IF INCRIMINATING DOCUMENTS ETC. ARE FOUND. THEREFORE, THE TERM 'ASSESS AND REASSESS' APPEARING IN SECTION 153(1)(B) MEANS THAT ASSESSMENT SHALL BE MADE IN CASE OF PENDING ASSESSMENTS AND RE ASSESSMENTS SHALL BE MADE IN RESPECT OF COMPLETED ASSESSMENTS WHERE INCRIMINATING MATERIAL IS FOUND. 6. HAVING UNDERSTOOD THE LEGAL POSITION AS LAID OUT BY THE LAW ITSELF, WE NOW MOVE ON TO ANALYSE THE POSITION AS LAID OUT BY THE FOLLOWING DECISIONS: (CO PIES ALL ENCLOSED IN SEPARATE PAPERBOOK CONTAINING DECISIONS) IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 12 COMMISSIONER OF INCOME TAX VS. CONTINENTAL WAREHOUSING CORPORATION, ALL CARGO GLOBAL LOGISTICS LTD./2015] 374 ITR 645 (BOM) UNDER SECTION 153A OF THE INCOME - TAX ACT, 1961, WHICH ENABLES CA RRYING OUT OF SEARCH OR EXERCISE OF POWER OF REQUISITION, ASSESSMENT IN FURTHERANCE THEREOF IS CONTEMPLATED. THERE IS A MANDATE TO ISSUE NOTICES UNDER SECTION 153(1)(A) AND ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THUS, THE CRUCIAL WORDS 'SEARCH' AND 'REQUISITION' APPEAR IN THE SUBSTANTIVE PROVISION AND THE PROVISOS. THAT WOULD THROW LIGHT ON THE ISSUE OF APPLI CABILITY OF THE PROVISION. TRUE IT IS THAT THE ASSESSMENT WHICH HAS TO BE MADE IN PURSUANCE OF THE NOTICE IS IN RELATION TO THE SIX YEARS. AN ORDER WILL HAVE TO BE MADE IN THAT REGARD. WHILE MAKING THE ORDER, THE INCOME OR THE RETURN OF INCOME FILED FOR AL L THESE ASSESSMENT YEARS IS TO BE TAKEN INTO ACCOUNT. A REFERENCE WILL HAVE TO BE MADE TO THE INCOME DISCLOSED THEREIN. HOWEVER, THE SCOPE OF ENQUIRY THOUGH NOT CONFINED ESSENTIALLY REVOLVES AROUND THE SEARCH OR THE REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE. THE PROVISION DEALS WITH THOSE CASES WHERE ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO THE ASSESSMENT YEARS FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION 153A WERE PENDING. IF THEY WERE PENDING ON THE DATE OF THE INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE, THEY ABATE. IT IS ONLY PENDING PROCEEDINGS THAT WOULD ABATE AND NOT WHERE THERE ARE ORDERS MADE OF ASSESSMENT OR REASSESSMENT A ND WHICH ARE IN FORCE ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF THE REQUISITION. HELD, DISMISSING THE APPEALS, (I) THAT THE NOTICE UNDER SECTION 153A WAS FOUNDED ON SEARCH. IF THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH THEN THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE POWER UNDER SECTION 153A BEING NOT EXPECTED TO BE EXERCISED ROUTINELY, SHOULD BE EXERCISED IF THE SEARCH REVEALED ANY INCRIMINATING MATERIAL. IF THAT WAS NOT FOUND THEN IN RELATION TO THE SECOND PHASE OF THREE Y EARS, THERE WAS NO WARRANT JAR MAKING AN ORDER WITHIN THE MEANING OF THIS PROVISION. (II) COMMISSIONER OF INCOME TAX VS. KABUL CHAWLA ON 28.08.2015 380 ITR 573 (DEL) THE LEGAL POSITION THAT EMERGES ON A PERUSAL OF SECTION 15JA AND SECTION 132 OF THE INCOME - TAX ACT, 1961, IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(L) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON IN IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 13 RESPECT OF WHOM SEARCH WAS CONDUCTED REQUIRING HIM TO FILE RETURNS FOR SI X ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COMPUTED BY THE ASSESSING OFFICERS AS A FRESH EXERCISE. (III) THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFIC ER HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS, THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IN WHICH BOTH THE DI SCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF THE SEIZED MATERIAL. (V) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I . E., THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. (VI) 1N SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INT O ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY JAR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. HELD ACCORDINGLY, THAT THE MATTER RELATED TO THE ASSESSMENT Y EARS 2002 - 03, 2005 - 06 AND 2006 - 07. ON THE DATE OF THE SEARCH THE ASSESSMENTS ALREADY STOOD C OMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 14 PRINCIPAL COMMISSIONER OF INCOME - TAX V.KURELE PAPER MILLS P. LTD. 2016J 380 ITR 571 (DEL)JULY 6, 2015. HELD, DISMISSING THE APPEAL, THAT THE ORDER OF THE COMMISSIONER (APPEALS) REVEALED THAT THERE WAS A FACTUAL - FINDING THAT NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS WAS MANIFEST FROM THE ORDER OF THE ASSESSI NG OFFICER. CONSEQUENTLY, IT WAS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE INCOME - TAX ACT, 1961, FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL. THERE WAS NOTHING TO SHOW THAT THE FACTUAL DETERMINATIO N WAS PERVERSE. [THE SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT AGAINST THIS JUDGMENT : [2016J 380 ITR (ST.) 64 - ED.J PR. CIT - 2 V. SALASAR STOCK BROKING LTD. (G.A. NO. 1929 OF2016IITAT NO. 264 OF2016) DATED 2410812 016 CALCUTTA HIGH COURT (COPY ENCLOSED) IN THE SAID CASE, THE LEARNED TRIBUNAL WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURISDICTION UNDER SECTION 153A OF THE INCOME TAX ACT TO REOPEN THE CONCLUDED CASES WHEN THE SEARCH AND SEIZURE DID NOT DI SCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIEW, THE LEARNED TRIBUNAL RELIED UPON A JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT(A) VS. KABUL CHAWLA REPORTED IN 380 ITR 573. THE AGGRIEVED REVENUE APPEALED BEFORE THE HON'BLE HIGH COURT . THE HON'BLE HIGH COURT DISMISSED THE APPEAL BY OBSERVING AS UNDER: 'WE ARE IN AGREEMENT WITH THE VIEWS EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE - REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED UNDER SECTION153C READ W ITH SECTION 153A. IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS MADE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED UNDER SECTION 15 3C READ WITH SECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES. ' IN THAT VIEW OF THE MATTER, WE ARE UNABLE TO ADMIT THE APPEAL. THE APPEAL IS, THEREFORE, DISMISSE D . SMT. SUNITA BAI VERSUS DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - I, BELGAUM2015 (3) TMI 397 - ITAT PANAJI - TMI - COPY ENCLOSED 'WHERE AN ASSESSMENT ORDER HAS ALREADY BEEN PASSED FOR A YEAR OR YEARS WITHIN THE RELEVANT SIX ASSESSMENT YEARS, THEN THE AO IS DUTY BOUND TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME BUT BY TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY, UNEARTHED DURING THE SEARCH. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 15 THE EXPRESSION' 'UNEARTHED DURING THE SEARCH' IS QUITE SIGNIFICANT TO DENOTE THAT IN RES PECT OF COMPLETED OR NON - PENDING ASSESSMENT, THE A O ALBEIT DUTY BOUND TO ASSESS OR REASSESS THE TOTAL INCOME BUT IF THERE IS SCOPE FOR ADDITIONS IN SUCH ASSESSMENT, ON THE BASIS OF INCOME 'UNEARTHED DURING THE SEARCH ', HE CAN MAKE THE ADDITION. IN OTHER WORDS, THE DETERMINATION OF 'TOTAL INCOME' IN RESPECT OF THE ASSESSMENT YEARS FOR WHICH THE ASSESSMENTS ARE ALREADY COMPLETED ON THE DATE OF SEARCH, SHALL NOT BE INFLUENCED BY THE ITEMS OF INCOME OTHER THAN THOSE BASED ON THE MATERIAL UNEARTHED DURING THE COURSE OF SEARCH. HOWEVER, THE SCOPE OF SUCH DETERMINATION OF TOTAL INCOME IS DIFFERENT IN RESPECT OF THE YEARS FOR WHICH THE ASSESSMENTS ARE PENDING VIS - A - VIS THE YEARS FOR WHICH ASSESSMENTS ARE NON - PENDING. THE TOTAL INCOME SHALL BE DETERMINED IN RE SPECT OF ASSESSMENT YEAR FOR WHICH ORIGINAL ASSESSMENTS HAVE ALREADY BEEN COMPLETED ON THE DATE OF SEARCH BY RESTRICTING ADDITIONS ONLY TO THOSE WHICH' FLOW FROM INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IF NO INCRIMINATING MATERIAL IS FOUN D IN RESPECT OF SUCH COMPLETED ASSESSMENT, THEN THE TOTAL INCOME IN THE' PROCEEDINGS U / S 153A SHALL BE COMPUTED BY CONSIDERING THE ORIGINALLY DETERMINED INCOME. IF SOME INCRIMINATING MATERIAL IS FOUND IN RESPECT OF SUCH ASSESSMENT YEARS FOR WHICH THE ASS ESSMENT IS NOT PENDING, THEN THE 'TOTAL INCOME' WOULD BE DETERMINED BY CONSIDERING THE ORIGINALLY DETERMINED INCOME PLUS INCOME EMANATING FROM THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN RESPECT OF ASSESSMENT PENDING ON THE DATE OF S EARCH WHICH GOT ABATED IN TERMS OF SECOND PROVISO TO SECTION I53A(1), THE TOTAL INCOME SHALL BE COMPUTED AFRESH UN INFLUENCED BY THE FACT WHETHER OR NOT THERE IS ANY INCRIMINATING MATERIAL.' SUNCITY ALLOYS (P) LTD. VS. ACIT [2009J 124 TTJ 674, JODHPUR BENCH OF THE ITAT 'UPON THE PERUSAL OF SECOND PROVISO BELOW SECTION I53A, IT IS FOUND CLEARLY LAID THAT ASSESSMENT OR REASSESSMENT REFERRED TO IN SECTION I53A THAT ARE PENDING ON THE DATE OF INITIATION OF SEARCH OR MAKING REQUISITION U/S I32A SHALL ABATE . THE STATUTE DOES NOT SAY THAT THE ASSESSMENT OR REASSESSMENTS THAT HAVE ALREADY BEEN MADE BEFORE THE DATE AS AFORESAID SHALL ALSO ABATE. IT IS ALSO NOT CORRECT THAT ALL THE PROCEEDINGS OR RETURNS FILED SHALL ALSO ABATE. IN FACT THE ASSESSING AUTHORITY IS THE CUSTODIAN OF ALL SUCH RETURNS INCLUDING THE RETURNS RELATABLE TO PENDING ASSESSMENTS THAT STAND ABATED SUB - SECTION (2) OF SECTION I53A MANDATES THAT IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESSMENT MADE U/ S S (1) RELATING TO ANY ASSESSMENT YEAR WHICH HAS BEEN ABATED UNDER THE SECOND PROVISO TO IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 16 SECTION 153A SHALL STAND REVIVED FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE CIT THUS THE ENTIRE OVERTHROW OR DESTRUCTION OR TERMINATION OF PENDING ASSESSMENTS BEFORE THE ASSESSING AUTHO RITY WHO CAN TAKE ORIGINAL COGNIZANCE IS ONLY TO AVOID TWO PARALLEL PROCEEDINGS OF ASSESSMENT OF A PARTICULAR YEAR OF THE SAME PERSON, I.E., ONE AS REGULAR ASSESSMENT AND ANOTHER AS ASSESSMENT U / S 153A OF THE ACT AND NOT THE WHOLE EXERCISE OF ASSESSMENT TO BE MADE AFRESH IN RESPECT OF COMPLETED ASSESSMENTS. ' ACIT VS M/ S DELHI HOSPITAL SUPPLY PVT LTD (ITA 3996 / DEI / 2011) - COPY ENCLOSED '7. KEEPING IN VIEW OF THE AFORESAID FINDINGS GIVEN BY THE LD. CIT(A), WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) H AS RIGHTLY HELD THAT IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE SEARCH, AS A RESULT, NO DISALLOWANCE / ADDITIONS CAN BE MADE IN THE ASSESSMENT U / S. 153A OF THE I.T. A CT. EVEN OTHERWISE, WE FIND FORCE IN THE LD. COUNSEL'S SUBMISSIONS THAT THE ISSUE IN DISPUTE IS ALSO COVERED BY THE DECISION OF THE HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT(CENTRAL)- III VS. KABUL CHAWLA IN ITA NO. 707, 709, 713 / DEL / 2014 WHEREIN THE HON 'BLE HIGH COURT HAS HELD THAT IF THE ADDITIONS ARE MADE, BUT NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION, THEN THESE ADDITIONS WERE NOT SUSTAINABLE IN THE EYES OF LAW. IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS RIGHTLY ADJUDICATED THE ISSUE IN DISPUTE AND ACCORDINGLY RIGHTLY DELETED THE ADDITIONS IN DISPUTE. KEEPING IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE LD. CIT(A)'S ORDER WHICH IS A WELL REASONED ORDER AND THEREFORE, THE SAME DOES NOT NEED ANY INTERFERENCE ON OUR PART AND ALSO BY RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICT IONAL HIGH C OURT IN THE CASE OF C I T(CENTRAL) - III . KABUL CHAWLA (SUPRA), WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY ITA NO. 3996 / DEL / 2011 DELETED THE ADDITIONS IN DISPUTE. ACCORDINGLY, THE ISSUES IN DISPUTE ARE DECIDED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. ' IN A VERY RECENT DECISION OF THE DELHI HIGH COURT IN THE CASE OF PR CIT VS. MEETU GUTGUTIA, ITA NO. 306/2017, ORDER PRONOUNCED ON 25TH MAY, 2017 (COPY ENCLOSED), THE ENTIRE LAW WAS EXPLAINED ON WHETHER CONCLUDED A SSESSMENTS CAN BE REOPENED U/ S 153A EVEN IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH IN THE LIGHT OF THE APPARENTLY CONFLICTING VERDICTS IN CIT VS. KABUL CHAWLA 380 ITR 573 (DEL) (SUPRA) AND DAYAWANTI GUPTA V. CIT 390 ITR 496 (DEL). HERE, DEROUTING IT WOULD BE OF RELEVANCE TO BRIEFLY QUOTE THE DECISION OF THE DELHI HIGH COURT IN DAYAWANTI GUPTA VS. C I T [390 ITR 496 (DEL)](COPY ENCLOSED) WHEREIN THE HIGH COURT DEALT WITH THE ISSUE WHETHER AN ASSESSMENT U/S 153A CAN BE MADE EVEN IF NO INCRIMINATING MA TERIAL HAS BEEN FOUND DURING S. 132 SEARCH PROCEEDINGS. IN THE SAID CASE IT WAS HELD AS UNDER: IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 17 ' (I) THAT THE ASSESSMENT UNDER SECTION 153A WAS NOT ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE VARIOUS SEIZED MATERIALS IN THE FORM OF DOCUMENT S, AGREEMENTS, INVOICES AND STATEMENTS IN THE FORM OF ACCOUNTS AND CALCULATIONS, SINCE THE ASSESSMENT UNDER THE SECTION COULD BE MADE ONLY ON THE BASIS OF THE SEIZED MATERIAL. THE STATEMENTS MADE UNDER OATH BY THE ASSESSEE AND HER FAMILY MEMBERS WERE PART OF THE RECORD AND CONTINUED TO BE SO. THEY WERE NEVER REASONABLY EXPLAINED AND THEIR PROBATIVE VALUE WAS UNDENIABLE. THE OCCASION FOR MAKING THEM AROSE BECAUSE OF THE SEARCH AND SEIZURE THAT OCCURRED AND THE SEIZURE OF VARIOUS DOCUMENTS POINTED TO THE UND ECLARED INCOME. (H) THAT THE INFERENCES DRAWN IN RESPECT OF UNDECLARED INCOME WERE PREMISED ON THE MATERIALS FOUND AS WELL AS THE STATEMENTS RECORDED BY THE ASSESSEES. THEREFORE, THE ADDITIONS WERE NOT BASELESS. THE ASSESSING AUTHORITIES IN SUCH CASES HA D TO DRAW INFERENCES, BECAUSE OF THE NATURE OF THE MATERIALS, SINCE THEY COULD BE SCANTY. THE ELEMENT OF GUESS WORK HAD TO HAVE SOME REASONABLE NEXUS WITH THE STATEMENTS RECORDED AND DOCUMENTS SEIZED. THE DIFFERENCES OF OPINION BETWEEN THE COMMISSIONER (AP PEALS) ON THE ONE HAND AND THE ASSESSING OFFICER AND THE APPELLATE TRIBUNAL ON THE OTHER HAND COULD NOT BE THE SOLE BASIS FOR DISAGREEMENT WITH WHAT WAS ESSENTIALLY A FACTUAL SURMISE THAT WAS LOGICAL AND PLAUSIBLE. THE FINDINGS OF THE APPELLATE TRIBUNAL DI D NOT REVEAL ANY FUNDAMENTAL ERROR CALLING FOR INTERFERENCE. N OW COMING BACK TO THE CASE UNDER REFERENCE IT IS STATED THAT IN THE SAID CASE, AFTER DISCUSSING ELABORATELY THE CASE OF CIT VS. KABUL CHAWLA [380 ITR 573 (DEL)] AS WELL AS SEVERAL OTHER CASES AS REFERRED THEREIN, THE DISTINGUISHING FEATURES OF THE CASE DAYAWANTI GUPTA V. CIT [390 ITR 496 (DEL)] WERE SPELT OUT AS UNDER: THERE WAS A CLEAR ADMISSION BY THE ASSESSEES IN DAYAWANTI GUPTA (SUPRA) THERE THAT THEY WERE NOT MAINTAINING REGULAR BOOKS OF ACCOUNTS AND THE TRANSACTIONS WERE NOT RECORDED THEREIN. THERE WAS A CHART PREPARED CONFIRMING THAT THERE HAD BEEN A YEAR - WISE NON - RECORDING OF TRANSACTIONS. HAVING OBSERVED AS ABOVE, THE HON'BLE DELHI HIGH COURT HELD AS UNDER: ' BY CONTRAST, TH ERE IS NO SUCH STATEMENT IN THE PRESENT CASE WHICH CAN BE SAID TO CONSTITUTE AN ADMISSION BY THE ASSESSEE OF A FAILURE TO RECORD ANY TRANSACTION IN THE ACCOUNTS OF THE ASSESSEE FOR THE AYS IN QUESTION . (XIV) WHAT WEIGHED WITH THE COURT IN THE ABOVE DEC ISION WAS THE 'HABITUAL CONCEALING OF INCOME AND INDULGING IN CLANDESTINE OPERATIONS' AND THAT A PERSON INDULGING IN SUCH ACTIVITIES 'CAN HARDLY BE ACCEPTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG.' THESE FACTORS ARE ABSENT IN THE PRESENT CASE. TH ERE WAS NO JUSTIFICATION AT ALL FOR THE AO TO PROCEED ON SURMISES AND ESTIMATES WITHOUT THERE BEING ANY IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 18 INCRIMINATING MATERIAL QUA THE A Y FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRANCHISEE COMMISSION. (XV) THE ABOVE DISTINGUISHING FACTORS IN DAYAWANTI GUPTA (SUPRA), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POSITION IN KABUL CHAWLA (SUPRA) WHICH HAS BEEN FOLLOWED NOT ONLY BY THIS COURT IN ITS SUBSEQUENT DECISIONS BUT ALSO BY SEVERAL OTHER HIGH COURTS. (XVI) FOR ALL OF THE AFOREMENTIONED REASO NS, THE COURT IS OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT THE INVOCATION OF SECTION 153A BY THE REVENUE FOR THE AYS 2000 - 01 TO 2003 - 04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMINATING MATERIAL QUA EACH OF THOSE A YS. ' IT WOULD B E FURTHER RELEVANT TO NOTE AT THIS JUNCTURE THAT THE HON'BLE SUPREME COURT VIDE ITS RECENTLY PRONOUNCED DECISION ON 3RD OCTOBER, 2017 HAS STAYED THE OPERATION OF THE JUDGEMENT OF THE DELHI HIGH COURT IN DAYAWANTI GUPTA VS. CIT [390 ITR 496 (DEL) WHEREIN T HE HIGH COURT DEALT WITH TH E ISSUE WHETHER AN ASSESSMENT U/ S 153A CAN BE MADE EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING S. 132 SEARCH PROCEEDINGS. COPY OF THE DECISION OF THE APEX COURT PRONOUNCED ON 3RD OCTOBER, 2017 IS ENCLOSED HEREWITH. THUS, IT STANDS AS AN UNDISPUTED FACT THAT THE DECISION IN THE CASE OF KABUL CHAWLA [380 ITR 573 (DEL)] HOLDS GOOD AND THE DECISION IN THE CASE OF DAYAWANTI GUPTA V. CIT [390 ITR 496 (DEL)] HAS NO OPERATION IN PUBLIC DOMAIN. IN A VERY RECENT JUDGEMEN T OF THE HON'BLE APEX COURT DATED 29/0812017 IN THE CASE OF CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY, (2017) TAX PUB (DT) 3941 (SC) IN CONNECTION TO SECTION 153A/153C OF THE ACT IT WAS LAID OUT AS UNDER: THE SEIZED INCRIMINATING MATERIAL HAVE TO PERTA IN TO THE AY IN QUESTION AND HAVE C O - RELATION, DOCUMENT - WISE, WITH THE AY THIS REQUIREMENT ULS 153C IS ESSENTIAL AND BECOMES A JURISDICTIONAL FACT. IT IS AN ESSENTIAL CONDITION PRECEDENT THAT ANY MONEY, BULLION OR JEWELLERY OR OTHER VALUABLE ARTICLES OR THING OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN S. 153A. KAMLESHBHAI DHARAMSHIBHAI PATEL 31 TM . COM 50 (GUJ) APPROVED. SSP AVIATION 20 TM COM 214 (DEL) DISTINGUISHED THE BO M HC IN THE SAID CASE QUOTED IN 378 ITR 84 ON MARCH 25, 2015 HELD AS UNDER:. IN TERMS OF SECTION 153C OF THE INCOME - TAX ACT, 1961, THE ASSESSING OFFICER SHOULD BE SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THING OR BOOKS OF AC COUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG OR BELONGS TO A PERSON OTHER THAN THE PERSON IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 19 REFERRED 10 IN SECTION 153A OF THE ACT AND HE CAN HAND OVER THE SEIZED DOCUMENTS TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THAT PERSON. HELD, DISMISSIN G THE APPEALS, THAT THE REASONS ASSIGNED BY THE ASSESSING OFFICER IN THE SATISFACTION NOTE WERE SILENT ABOUT THE ASSESSMENT YEAR IN WHICH SPECIFIC INCRIMINATING INFORMATION OR UNACCOUNTED OR UNDISCLOSED HIDDEN INFORMATION WAS DISCOVERED OR SEIZED BY THE RE VENUE FROM THE ASSESSEE. IN THE CIRCUMSTANCES, THE GENERAL SATISFACTION AND AS RECORDED IN THE NOTE WAS NOT ENOUGH. THERE WAS ABSOLUTELY NOTHING TO INDICATE AS TO IN WHICH EDUCATIONAL COURSES, THE EDUCATION WAS IMPARTED AND INSTITUTION - WISE, WHETHER THE A DMISSIONS WERE GRANTED TO THE TECHNICAL COURSES MERIT - WISE OR ON THE BASIS OF MARKS OBTAINED IN XII STANDARD HSC EXAM. WHETHER ANY FEE STRUCTURE WAS APPROVED AND CASH COMPONENT WAS, THEREFORE, COLLECTED OVER AND ABOVE THE SANCTIONED FEES WERE MATTERS WHICH OUGHT TO HAVE BEEN GONE INTO AND THERE COULD NOT BE A GENERAL OR VAGUE SATISFACTION. THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ASSESSMENTS. NEXT, RELYING UPON A VERY RECENT DECISION OF THE RANCHI IT AT, JUDGED BY YOUR HONOURS ITSELF, WE REFER TO THE CASE OF SHRI KAMAL DEO SHARMA AND SMT. TRIPTA SHARMA VIDE IT(SS)A NOS.34 TO 40LRANI2019 AND IT(SS)A NO. 27 TO 331RANI2019 (COPY ENCLOSED). IT WAS HELD BY YOUR HONOURS AS UNDER: '14. ON PERUSAL OF THE ABOVE OBSERVATIONS OF THE AO, WE FIND TOTAL ABSEN CE OF REFERENCE TO ANY INCRIMINATING MATERIAL WHICH MAY HAVE ANY BEARING TO IMPUGNED ADDITIONS / DISALLOWANCES. AS A COROLLARY, IT IS MANIFEST THAT ADDITIONS / DISALLOWANCES HAVE BEEN MADE WITHOUT REFERENCE TO ANY SPECIFIC INCRIMINATING MATERIAL/ DOCUMENT FOUND AS A RESULT OF SEARCH AND SEIZURE ACTION UNDER S.132 OF THE ACT AND IS BASED ON RE - APPRECIATION OF FACTS UNCONNECTED TO SEARCH. ACCORDINGLY, WE ARE O F THE VIEW THAT VARIOUS ADDITIONS / DISALLOWANCES MADE BY THE AO ON THE BASIS OF TEP OR FINANCIAL STATEMEN TS ARE CLEARLY BEYOND THE SCOPE OF AUTHORITY VESTED UNDER S.153A O(THE ACT OWING TO ABSENCE OF ANY INCRIMINATING MATERIAL OR EVIDENCE DEDUCED AS A RESULT OF SEARCH. NO REFERENCE OF SUCH INCRIMINATING MATERIAL, IF ANY, IS FOUND IN ANY O(THE ASSESSMENT ORDER S FOR THE PURPOSES OF MAKING VARIOUS ADDITIONS / DISALLOWANCES. IN THIS REGARD, WE WOULD LIKE TO PLACED RELIANCE ON THE DECISION OF ITAT DELHI BENCH OF THE TRIBUNAL IN THE CASE OF M / S AERENS BUILDWELL LTD. VS. ACIT, ITA NO.5073IDELI2016, ORDER DATED 21.12. 2018, WHEREIN THE TRIBUNAL AFTER RELYING ON THE DECISION OF HON 'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (2016) 380 ITR 573 (DEL), HAS OBSERVED AS UNDER : - 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ASSESSMENT AS W ELL AS IMPUGNED ORDER AND THE SUBMISSIONS AND CASE LAWS FILED BY BOTH THE PARTIES. WE FIND THAT THE CASE LAWS RELIED UPON BY IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 20 THE LD. DR ARE ON THE MERITS OF THE CASE, HOWEVER, THE GROUND ARGUED BEFORE THE TRIBUNAL BY THE LD. COUNSEL FOR THE ASSESSEE IS REL ATING TO ABSENCE OF INCRIMINATING MATERIAL HAVING BEEN FOUND DURING THE COURSE OF SEARCH, ADDITION COULD NOT HAVE BEEN MADE BY THE AO, HENCE, THE CASE LAWS RELIED UPON BY THE LD. CIT(DR) ARE ON DISTINGUISHED FACTS AND DOES NOT HELP THE REVENUE. THOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS ARGUED THE CASE ON LEGAL GROUND AS WELL AS ON MERITS OF THE CASE, BUT WE ARE ONLY DEALING WITH LEGAL ISSUE I.E. ABSENCE OF INCRIMINATING MATERIAL DURING THE SEARCH. WE HAVE ALSO GONE THROUGH THE PAPER BOOK CONTAINING PAGES 1 TO 335, AS DISCUSSED ABOVE. WE FIND THAT THE ADDITIONS MADE BY THE AO ARE BEYOND THE SCOPE OF SECTION 153A OF THE INCOME TAX ACT, 1961, BECAUSE NO INCRIMINATING MATERIAL OR EVIDENCE HAD BEEN FOUND DURING THE COURSE OF SEARCH SO AS TO DOUBT THE TRANSACTIO NS. IT WAS NOTICED THAT AS ON THE DATE OF SEARCH I. E. 17. 8. 2011, NO ASSESSMENT PROCEEDINGS WERE PENDING FOR THE YEAR UNDER CONSIDERATION AND THE AO WAS NOT JUSTIFIED IN DISTURBING THE CONCLUDED ASSESSMENT WITHOUT THERE BEING ANY INCRIMINATING MATERIAL B EING FOUND IN SEARCH. IN FACT, IN THE ENTIRE ASSESSMENT ORDER, THE AO HAS NOT REFERRED TO ANY SEIZED MATERIAL OR OTHER MATERIAL FOR THE YEAR UNDER CONSIDERATION HAVING BEING FOUND DURING THE COURSE OF SEARCH IN THE CASE OF ASSESSEE, LEAVE ALONE THE QUESTIO N OF ANY INCRIMINATING MATERIAL FOR THE YEAR UNDER APPEAL. PERUSAL OF THE ASSESSMENT ORDERS FRAMED U/S. 153A R.W.S. 143(3) DATED 30.3.2014 WOULD REVEAL THAT THE ADDITION MADE IN RESPECT OF SHARE CAPITAL AND PREMIUM DOES NOT PERTAIN TO ANY INCRIMINATING MAT ERIAL FOUND DURING THE COURSE OF SEARCH. IT IS ONLY FOR THE REASON OF MAKING ENQUIRIES AFTER THE CONDUCT OF SEARCH AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS CARRIED OUT IN PURSUANCE TO SECTION 153A, THE AO FORMED AN OPINION EXPRESSING HIS DOUBT REGAR DING GENUINENESS OF SHARE CAPITAL AND CREDITWORTHINESS OF ENTITIES - WHICH HAVE INVESTED SHARE CAPITAL WITH THE ASSESSEE, THEREFORE, THE SAME HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE. THEREFORE, IN OUR CO NSIDERED OPINION, THE ACTION OF THE AO IS BASED U PON CONJECTURES AND SURMISES AND HENCE, THE ADDITIONS MADE IS NOT SUSTAINABLE IN THE EYES OF LAW, BECAUSE THIS ISSUE IN DISPUTE IS NOW NO MORE RES - INTEGRA, IN VIEW OF THE DECISION DATED 28.8.2015 OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KABUL CHAWLA (2016)380 ITR 573(DEL.) AND APPEAL FILED BEFORE THE HON'BLE SUPREME COURT OF INDIA BY THE DEPARTMENT IN THE CASE OF CIT VS. KABUL CHAWLA HAS BEEN DISMISSED IN CIVIL APPEAL NO. 6415 OF 2016 VIDE ORDER DATED 17. 9. 2018. THE RE LEVANT FINDING OF THE HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA ARE REPRODUCED UNDER: - '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED ITA N OS. 707, 709 AND 713 OF 2014 OF DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (L) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO F ILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 21 ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY T HE AOS AS A FRESH EXERCISE. W. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX Y EARS 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 15 3 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASS ESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ITA NOS. 707, 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. ' V. IN ABSENCE OF ANY INCRIMI NATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I. E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASI S OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AD. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 38. THE PRESENT APP EALS CONCERN AYS, 2002 - 03, 2005 - 06 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 HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. ' 6 . RESPECTFULLY FOLLOWING THE PRECEDENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA, AS AFORESAID, WE ALLOW THE APPEAL OF THE ASSESSEE, BECAUSE AO HAS COMPLETED THE ASSESSMENT AND MADE THE ADDITION IN DISPUTE WITHOUT ANY INC RIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPERATION AND THE ADDITION IN THIS CASE WAS PURELY BASED ON THE MATERIAL ALREADY AVAILABLE ON RECORD. HENCE, THE ADDITION IN THE CASE IS DELETED AND THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL AR E ALLOWED. 15. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DR. SUKANTA CHANDRA MALLICK, IN IT(SS)A NOS.86 - 91 / CTK / 2018, ORDER DATED 08.07.21019, WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER : - ' IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 22 12. IN THE PRESENT CASE, WE FIND THAT THERE IS NOTHIN G ON RECORD TO SUGGEST THAT ANY MATERIAL WAS FOUND IN THE COURSE OF SEARCH WHICH WOULD SHOW ANY CONNECTION ON ADDITION MADE BY AD WITH THE SEIZED MATERIAL WHICH IS THE SUBJECT MATTER OF DISPUTE IN ASSESSMENT ORDER. NOTHING IS FOUND CONTRARY TO THE STATED P OSITION OF THE ASSESSEE. WE ALSO FIND THAT THERE IS NO MATERIAL REFERRED TO BY THE AD TO SAY THAT ANY INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH. THEREFORE, IN THE FACTUAL BACKGROUND, WE DO NOT FIND ANY JUSTIFICATION FOR THE AO TO MAKE THE IMPU GNED ADDITIONS/DISALLOWANCE IN AN ASSESSMENT FINALIZED U/S 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL HAVING BEEN FOUND DURING THE COURSE OF SEARCH, QUA THE IMPUGNED ADDITIONS MADE IN ASSESSMENT ORDER. RESPECTFULLY, FOLLOWING THE RATIO OF DECISION OF THE HON 'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), WHEREIN, THE HON'BLE HIGH COURT AFTER DETAIL ANALYSIS CONCLUDED THAT, WHERE THERE IS NO INCRIMINATING MATERIAL QUA EACH OF THE ASSESSMENT YEAR ROPED IN UNDER SECTION 153A OF TH E ACT, THEN, NO ADDITION CAN BE MADE WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT. THE AFORESAID PRINCIPLE AND RATIO ARE CLEARLY APPLICABLE ON THE FACTS OF THE PRESENT CASE ALSO, AS ADMITTEDLY NO INCRIMINATING MATERIAL RELATING TO THESE ASSES SMENT YEARS OR AS A MATTER OF FACT FOR ANY OF THE ASSESSMENT YEARS WERE FOUND DURING THE COURSE OF SEARCH AND ACCORDINGLY, WE SET ASIDE THE ORDERS OF BOTH THE AUTHORITIES BELOW AND HELD THAT WHEN NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE O F SEARCH THEN, NO ADDITION CAN BE MADE WHILE FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT. THUS, THE GROUNDS RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010 - 2011 ARE ALLOWED. 16. IN THE INSTANT CASE, ON PERUSAL OF THE ASSESSMENT ORDER, IT WAS NOTICED THAT THE A O HAS NOT DISALLOWED ANY SPECIFIC AMOUNT OF EXPENSES ON ACCOUNT OF ANY INCRIMINATING MATERIALS FOUND AT THE TIME OF SEARCH. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME ON THE BASIS OF AUDITED TRADING PROFIT A ND LOSS ACCOUNT AND BALANCE SHEET. THE A O HAS MADE ADDITION ONLY ON THE BASIS OF TAX EVASION PETITION FILED BY SOMEBODY ELSE. COPY OF THE TAX EVASION PETITION IS PLACED ON RECORD AT PAGE NOS. 1 02 TO 107. 17. IT IS PERTINENT TO MENTION HERE THAT COMPLETE D ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A OF THE ACT ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. HOWEVER, IN THE CASE IN HAND, THE A O HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH WHILE FRAMING THE ASSESSMENT. SECTION 153 A OF THE ACT, 1961 PROVIDES FOR THE SCHEME OF ASSESSMENT OF INCOME IN CASE OF A SEARCHED PERSON. FOR THE SAKE OF COMPLETENESS OF OUR ORDER, WE WOULD LIKE TO REPRODUCE THE PROVISIONS OF SECTION 153A O F THE ACT, WHICH READ AS UNDER - IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 23 [ASSESSMENT IN CASE OF SEARCH OR REQUISITION 153A. [(1)J NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INI TIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING . FROM THE ABOVE PROVISIONS OF SECTION 153A OF THE ACT, IT IS CLEAR THAT THE ASSESSING OFFICER, WHILE FRAMING. ASSESSMENT UNDER SECTION 153A OF THE. ACT CANNOT MAKE THE ADDITION/DISALLOWANCE DEHORS ANY 'INCRIMINATING/ MATERIAL: IN THIS REGARD, RELIANCE CAN ALSO BE PLACED ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF K.SE RA SERA P RODUCTIONS LTD. VS. DCI T, [2017/ 87 TAXMANN.COM 249 (MUMBAI - TRIB), WHEREIN THE TRIBUNAL HAS HELD AS UNDER : - '. '8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN ORDER TO APPRECIATE THE CONTROVERSY, IT IS PERTINENT TO OBSERVE THAT SECTION I53A O F THE ACT POSTULATES AN ASSESSMENT IN CASE OF SEARCH OR REQUISITION UNDER SECTION 132 OR UNDER SECTION 132A OF THE ACT RESPECTIVELY. THE SAID SECTION ENVISAGES THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IM MEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED. THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT ALSO PRESCRIBES THAT ASSESSMENT OR RE - ASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN T HE PERIOD OF SIX YEARS REFERRED TO IN SUB- SECTION(1) OF SECTION 153A OF THE ACT, WHICH IS PENDING ON THE DATE OF INITIATION OF SEARCH OR MAKING OF REQUISITION, AS THE CASE MAY BE, SHALL ABATE. THUS, IN SO FAR AS THE PENDING ASSESSMENTS ARE CONCERNED, THE COMPETENCE OF THE ASSESSING OFFICER TO MAKE THE ORIGINAL ASSESSMENT CONVERGES WITH THE ASSESSMENT TO BE MADE UNDER SECTION 153A OF THE ACT, I. E. ONLY ONE ASSESSMENT SHALL BE MADE FOR SUCH ASSESSMENT YEARS, BASED ON THE FINDINGS OF THE SEARCH AS WELL AS AN Y OTHER MATERIAL EXISTING OR BROUGHT ON RECORD BY THE ASSESSING OFFICER. NOTABLY, THERE WOULD BE ASSESSMENTS IN THE PERIOD OF THE SIX ASSESSMENT YEARS IDENTIFIED IN SECTION 153A(1) OF THE ACT, WHICH WOULD HAVE BECOME FINAL (I.E. WHICH ARE NOT PENDING ON TH E DATE OF SEARCH),' SUCH ASSESSMENTS DO NOT ABATE IN TERMS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT. THE SCOPE AND AMBIT OF THE ASSESSMENT WHERE THE ORIGINAL ASSESSMENT HAS NOT ABATED IS THE CONTROVERSY BEFORE US. IN THIS CONTEXT, IT WOULD BE PE RTINENT TO REFER TO THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), WHEREIN THE SCOPE OF ASSESSMENT UNDER SECTION 153A OF THE ACT HAS BEEN CONSIDERED. ONE OF THE POINTS ADDRESSED BY THE HON'BLE HIGH COU RT WAS WHETHER THE SCOPE OF ASSESSMENT UNDER SECTION 153A OF THE ACT ENVISAGES ADDITIONS, WHICH ARE OTHERWISE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH IN THE CASE OF THE ORIGINAL ASS ESSMENT NOT ABATING. AS PER HON 'BLE H IGH COURT, NO ADDITION COULD BE MADE IN RESPECT OF THE ASSESSMENT THAT HAD BECOME FINAL, IN THE EVENT WHERE NO INCRIMINATING IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 24 MATERIAL IS FOUND DURING THE COURSE OF SEARCH. THE HON'BLE HIGH COURT ALSO NOTICED ITS EARLIER JUDGMENT IN THE CASE OF CIT V. MURAL I AGRO PRODUCTS LTD. [IT APPEAL NO. 36 OF 2009, DATED 29 - 10 - 2010J AND ELABORATELY CULLED OUT THE SCOPE AND AMBIT OF THE ASSESSMENT AND REASSESSMENT OF TO TAL INCOME UNDER SECTION 153A(1) OF THE ACT READ WITH THE PROVISO THEREOF THE HON'BLE BOMBAY HIGH COUR T HAS RULED OUT THAT AN ASSESSMENT UNDER SECTION 153A(1) IN AN UNABATED YEAR WOULD NOT ENCOMPASS ANY ADDITION FOR WHICH NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, BECAUSE IN SUCH A CASE, THE ORIGINAL ASSESSMENT HAD BECOME FINAL. 8.1 THE AFORESAID PROPOSITION IS ALSO SUPPORTED BY JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF C I T V. KABUL CHAWLA [2015J 61 TAXMANN.COM 412/234 TAXMAN 300/[2016J 380 I TR 573, WHEREIN THE LEGAL PROPOSITION HAS BEEN SUMMARIZED IN THE FOLLOWING WORDS: - 'SUMMARY OF THE LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISO THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED 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 PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE S. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS AFRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PRE VIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKE PLACE. THE 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 ASSESSMEN T 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 SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE 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 A SSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. ' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTIO N 153A IS RELATABLE TO ABATED IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 25 PROCEEDINGS (I. E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER. VII. COMPLETED ASSESSMEN TS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. ' 8.2 IN THIS LEGAL BACKGROUND, WE MAY NOW TURN TO THE ADDITION MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT AND THE MANNER IN WHIC H SUCH ADDITIONS HAVE BEEN MADE. THE FIRST ADDITION IS OUT OF CLAIM OF PRELIMINARY EXPENSES UNDER SECTION 35D OF THE ACT OF RS 10,12,826/ - , AND THE RELEVANT DISCUSSION IN THIS REGARD IS CONTAINED IN PARA 5 OF THE ASSESSMENT ORDER WHICH SHOWS THAT IT - IS BA SED ON THE DISALLOWANCE MADE IN THE ASSESSMENT ORIGINALLY FINALIZED UNDER SECTION 143(3) OF THE ACT DATED 22/11/2006. THE SECOND ADDITION IS THE DISALLOWANCE OF STOCK EXCHANGE LISTING FEE OF RS. 2,00,000/ - AND THE RELEVANT DISCUSSION IS CONTAINED IN PARA - 6 OF THE ASSESSMENT ORDER. THE ADDITION HAS BEEN MADE PRIMARILY IN THE ABSENCE OF EVIDENCE TO SUBSTANTIATE THE EXPENDITURE. THIRDLY, DEPRECIATION O N FURNITURE AND FIXTURES OF RS. 5,94,013/ - HAS BEEN DENIED IN TERMS OF THE DISCUSSION IN PARA - 7 OF THE ASSESSME NT ORDER. THE RELEVANT DISCUSSION SHOWS THAT IN CASE OF SOME OF THE INVOICES OF THE COST OF FURNITURE AND FIXTURES, THE ASSESSEE COULD NOT SUBSTANTIATE THE VALUES AND THUS, DEPRECIATION WAS DENIED ON SUCH VALUE OF THE ASSETS. FOURTHLY, THE ADDITION OF RS. 28,00,000/ - OUT OF EXPENDITURE ON GIFTS HAS BEEN MADE AND THE RELEVANT DISCUSSION IS CONTAINED IN PARA - 9 OF THE ASSESSMENT ORDER. THE DISCUSSION SHOWS THAT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE JUSTIFICATION FOR INCURRENCE OF EXPENDITURE AND OUT OF THE TOTAL EXPENDITURE OF RS. 30,00,000/ - ON GIFTS MADE, HE DISALLOWED AN AMOUNT OF RS.28,00,000/ - . LASTLY, THE ASSESSING OFFICER DISALLOWED THE INTEREST EXPENDITURE OF RS. 10,79,724/ - AS PER THE DISCUSSION CONTAINED IN PARA - 8 OF THE ASSESSMENT ORDER. TH E ONLY REASON ADVANCED IS THE FAILURE OF THE ASSESSEE IS TO PROVE THAT THE CORRESPONDING BORROWINGS WERE MADE FOR THE PURPOSES OF BUSINESS. THE RESPECTIVE DISCUSSION MADE BY THE ASSESSING OFFICER WITH RESPECT TO EACH OF THE ADDITIONS DOES NOT REFLECT REFER ENCE TO ANY INCRIMINATING MATERIAL OR ANY OTHER INFORMATION, WHICH WAS UNEARTHED IN THE COURSE OF SEARCH, SO AS TO JUSTIFY THE ADDITIONS. EVEN AT THE TIME OF HEARING BEFORE US, THERE IS NO REFERENCE TO ANY INCRIMINATING MATERIAL, MUCH LESS ANY MATERIAL FOU ND DURING THE COURSE OF SEARCH IN ORDER TO JUSTIFY THE ADDITIONS MADE IN THE IMPUGNED ASSESSMENT. THUS, ON FACTS, IT HAS TO BE CONCLUDED THAT THE ADDITIONS MADE TO THE RETURNED INCOME BY THE ASSESSING OFFICER IN IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 26 THE IMPUGNED ASSESSMENT IS NOT WITH REFERENC E TO ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. THUS, FOLLOWING THE PARITY OF REASONING LAID DOWN BY HON 'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), THE IMPUGNED ADDITIONS COULD NOT HAVE BEEN MADE IN THE IM PUGNED ASSESSMENT SINCE THE ORIGINAL ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT HAD BECOME FINAL AND DID NOT ABATE. THUS, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE ASSESSING OFFICER IS NOT EMPOWERED TO MAKE THE IMPUGNED ADDITIONS IN AN ASSESSM ENT FINALIZED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT. ACCORDINGLY, ASSESSEE SUCCEEDS ON ITS ADDITIONAL GROUND OF APPEAL NO. 5 (B), AS ABOVE. 8.3 AS A CONSEQUENCE OF ABOVE, ALL THE ADDITIONS MADE TO THE RETURNED INCOME ARE DELETED. THUS, ALL THE OTHE R ISSUES RAISED BY THE ASSESSEE IN ITS APPEAL BECOME INFRUCTUOUS AND ARE NOT BEING ADJUDICATED. 18. FURTHER IN THE CASE OF PRIYA HOLDING (P.) LTD. VS. ACIT, [2018J 90 TAXMANN.COM 408, THE AHMEDABAD BENCH OF THE TRIBUNAL HAS OBSERVED AS UNDER : - 19. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. RAJIV KUMAR [2018J 99 TAXMANN.COM 371, HAS HELD AS UNDER : - 20. HON 'BLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT VS. JIGNESH P. SHAH [2018J 99 TAXMANN.COM 111 HAS HELD AS UNDER : - 21. THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF MALA BUILDERS (P.) LTD. VS. ACIT [2017J 88 TAXMANN.COM 801, HAS OBSERVED AS UNDER : - 22. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSMENT WAS PENDING ON THE DATE OF SEARCH. IF THERE IS NO ANY ASSESSMENT IS PENDI NG BEFORE THE AO, THAT ASSESSMENT ORDER IS UNABATED. IN THIS CASE BEFORE US, THE ASSESSMENT IS NOT PENDING BEFORE THE AO AS SUBMITTED BY THE AR OF THE ASSESSEE WHICH HAS NOT BEEN CONTROVERTED BY THE REVENUE. THE AO HAS NOT REFERRED ANY INCRIMINATING MATE RIALS IF ANY FOUND DURING THE COURSE OF SEARCH WHILE FRAMING THE ASSESSMENT. IT APPEARS THAT THERE WAS NO INCRIMINATING MATERIAL WAS FOUND IN THE CASE OF THE ASSESSEE WHICH CAN BE USED FOR COMPLETING ASSESSMENT. THE ASSESSEE HAD FILED RETURN OF INCOME AS PER SECTION 139 OF THE ACT, WHICH WAS AVAILABLE BEFORE THE AD. THE AO HAS MADE ADDITION ONLY ON THE BASIS OF TEP (TAX EVASION PETITION) FILED BY SOMEBODY ELSE, FINANCIAL STATEMENTS AND RETURN OF INCOME AVAILABLE BEFORE HIM. THERE IS NO ANY IOTA OF SENTE NCE IN THE ASSESSMENT ORDER THAT ANY ANNEXURES PREPARED BY THE SEARCH TEAM IN THE PANCHANAMA HAS BEEN REFERRED IN THE ASSESSMENT ORDER. THE TAX EVASION PETITION HAS BEEN FILED ON 21.11.2016 MUCH AFTER SEARCH TOOK PLACE, WHICH IS NOT COVERED UNDER THE SEARC H AND, THEREFORE, IT CANNOT BE TERMED AS INCRIMINATING MATERIALS FOUND DURING THE COURSE IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 27 OF SEARCH. WE ALSO REFERRED TO THE PANCHANAMA DRAWN BY SEARCH TEAM THE STATEMENT OF SHRI SANJAY PATI, ACCOUNTANT HAS BEEN RECORDED WHICH HAS ALSO NOT BEEN UTILIZED BY THE AO WHILE FRAMING THE ASSESSMENT ORDER. THEREFORE, IT IS CLEAR THAT THERE IS NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. 23. IT IS PERTINENT MENTION HERE THAT AS PER THE PROVISIONS OF SECTION 153A OF THE ACT, THE ASSESSING OFFIC ER ASSESSES OR REASSESSES THE ASSESSMENT FOR IMMEDIATELY PRECEDING SIX ASSESSMENT YEARS FROM THE DATE OF SEARCH. IN THIS CASE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/S.153A OF THE ACT WITHOUT REFERRING ANY DOCUMENT FOUND DURING THE COURSE OF SEARCH AND THE ASSESSMENT HAS BEEN COMPLETED ONLY ON THE BASIS OF TAX EVASION PETITION (TEP) FILED BY SOMEBODY ELSE ON 21.11.2016. IN THE IMPUGNED CASE, EVEN AFTER CALLING REMAND REPORT BY THE CIT(A) FROM THE ASSESSING OFFICER, WHICH IS PLACED ON PAPER BOO K AT PAGES NO.55 TO 75, THE CIT(A) HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER. HOWEVER, WE MAY POINT OUT THAT IN THE REMAND REPORT VIDE DATED 25.07.2018. THE AO HAD REFERRED TO TEP AS INCRIMINATING MATERIAL BUT WE ARE UNABLE TO SEE ANY OBSERVATIONS OF DESCRIPTION REGARDING THE SAME IN THE SAID REMAND REPORT, EXPLAINING OR SUBSTANTIATING THAT THE SO - CALLED INCRIMINATING MATERIAL WAS RELATED OR BELONGING TO THE ASSESSEE. FROM THE SAID REMAND REPORT OR ORDERS OF THE AUTHORITIES BELOW, IT IS ALSO NOT CLE AR OR DISCERNIBLE THAT IN WHICH MANNER IT CAN BE TAGGED OR LEVELLED AS INCRIMINATING MATERIAL BELONGED OR RELATED TO THE ASSESSEE. IN THE INCOME TAX ACT, THE 'ASSESSING OFFICER HAS BEEN DEFINED AS PER SECTION 2(7A) OF THE ACT, WHICH READS AS UNDER= [(7A) 'ASSESSING OFFICER' MEANS THE ASSISTANT COMMISSIONER [OR DEPUTY COMMISSIONER] [OR ASSISTANT DIRECTOR] [OR DEPUTY DIRECTOR] OR THE INCOME - TAX OFFICER WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS OR ORDERS ISSUED UNDER SUB - SECTION (1 ) OR SUB - SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION OF THIS ACT, AND THE [ADDITIONAL COMMISSIONER OR] [ADDITIONAL DIRECTOR OR] [JOINT COMMISSIONER OR JOINT DIRECTOR] WHO IS DIRECTED UNDER CLAUSE (B) OF SUB - SECTION (4) OF THAT SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FUNCTIONS CONFERRED ON, OR ASSIGNED TO, AN ASSESSING OFFICER UNDER THIS ACT ;] ON CAREFUL CONJOINING READING OF PROVISIONS OF SECTION 2(7 A) OF THE ACT AND SECTION 153A OF THE ACT, IT IS CLEAR THAT THE CIT(A) HAS BEEN PRECLUDED. THE AO MUST HAVE REFERRED TO THE INCRIMINATING MATERIAL WHILE FRAMING THE ASSESSMENT FOR UNABATED ASSESSMENT YEAR IN HIS ORDER. RESPECTFULLY FOLLOWING THE JUDICIAL PRONOUNCEMENTS CITED ABOVE, WE HOLD THAT ADDITIONS/DISALLOWANCES MADE WITHOUT ANY NEXUS TO INCRIMINATING MATERIAL FOUND, IF ANY, AS A RESULT OF SEARCH OPERATIONS, ARE NOT SUSTAINABLE IN THE EYES OF LAW IN SECTION 153A OF THE PROCEEDINGS. HENCE, THE ADDITIONS/DISALLOWANCES MADE BY THE AO IN ALL THE CAPTIONED APPEALS REQUIRE TO BE QUA SHED. THUS, WE FIND MERIT IN THE LEGAL GROUND RAISED BY THE ASSESSEE IN GROUND NO.3 AND THE SAME IS ALLOWED. IN THIS IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 28 VIEW OF THE MATTER, WE DO NOT INTEND TO ADJUDICATE VARIOUS ADDITIONS/DISALLOWANCES ON MERITS. THUS, APPEAL OF THE ASSESSEE IN IT(SS)A NO.34 1RAN12019 FOR A.Y.2009 - 2010 IS PARTLY ALLOWED. LAST BUT NOT THE LEAST, RELIANCE IS PLACED ON THE FOLLOWING TWO RECENT JUDGMENTS OF THE JURISDICTIONAL BENCH, WHICH ARE CITED AS UNDER: E - CITY PROJECTS LUCKNOW PVT. LTD. VS. ACIT, CENTRAL CIRCLE, CUTTACK , ITAT-CUTTACK BENCH, AY 2012 - 13, (IT (SS) A NO. 02/CTKJ2018) PRONOUNCED ON 28/02/2018 (ORDER COPY ENCLOSED). IN THIS CASE, SIMILAR TO THE FACTS OF THE ASSESSEE'S CASE, PURSUANT TO SEARCH CONDUCTED ON 06/08/2014, PROCEEDINGS ULS.153A WERE INITIATED ON TH E ASSESSEE, IN SPITE OF THE FACT THERE WAS NO INCRIMINATING SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH AGAINST THE ASSESSEE AND FINALLY, ADDITIONS WERE MADE ULS.68 OF THE ACT DOUBTING THE GENUINENESS OF THE LOANS TAKEN FROM UNIWORTH AGENCIES PVT. LT D. DURING THE A YS 2012 - 13 & 2013 - 14. THE HON'BLE BENCH HELD AS UNDER: '31. WE FIND THAT NONE OF THE DECISION RELIED UPON BY EITHER OF THE PARTIES ARE OF JURISDICTIONAL HIGH COURT. IT IS A WELL SETTLED POSITION OF LAW THAT WHEN THERE ARE CONFLICTING DE CISIONS OF HIGH COURTS NONE OF WHICH IS THE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED. FOR THIS, WE DERIVE SUPPORT FROM THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. [8 8 ITR 192 (SC)). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IN AN ASSESSMENT MADE ULS.153A OF THE ACT FOR AN ASSESSMENT YEAR FOR WHICH ASSESSMENT HAS NOT BEEN ABATED, THEN THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE ADDITION IN SUCH AN ASSESSMENT, IS CONFINED TO SUCH INCRIMINATING SEARCH MATERIAL AND NO ADDITION DEHORS THE SEARCH MATERIAL CAN BE MADE. 32. LN THE INSTANT CASE, WE FIND THAT DURING THE COURSE OF THE RELEVANT SEARCH ONLY TALLY DATA OF THE ASSESSEE COMPANY WAS FOUND WHICH SHOWS THAT T HE ASSESSEE HAS RECEIVED CASH CREDIT FROM MLS.UNIWORTH AGENCIES PVT. LTD. OF RS.6.92 CRORES DURING THE YEAR UNDER CONSIDERATION. THE SAID TALLY DATA DOES NOT SHOW THAT THE SAID CASH CREDIT WAS NON - GENUINE OR BOGUS . WE HAVE, THEREFORE, NO HESITATION IN D ELETING THE IMPUGNED ADDITION OF RS.6.92 CRORES BEING NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AS WELL AS BEING NOT BASED ON ANY ADMISSIBLE, RELIABLE AND RELEVANT MATERIAL. ACCORDINGLY, ADDITION OF RS. 6. 92 CRORES IS DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED.' MIDAS CAPITAL PVT LTD. ACIT, CENTRAL CIRCLE, CUTTACK, ITAT - CUTTACK BENCH, AY 2011 - 12 & 2012 - 2013, (IT (SS) A NO. 04 & OS/CTKJ2018) PRONOUNCED ON 23/0312018 (ORDER COPY ENCLOSED). IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 29 '28. WE FIND THAT NON E OF THE DECISION RELIED UPON BY EITHER OF THE PARTIES ARE OF JURISDICTIONAL HIGH COURT. IT IS A WELL SETTLED POSITION OF LAW THAT WHEN THERE ARE CONFLICTING DECISIONS OF HIGH COURTS NONE OF W HICH IS THE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVO UR OF THE ASSESSEE SHOULD BE FOLLOWED. FOR THIS, WE DERIVE SUPPORT FROM THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. 88 ITR 192 (SC). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IN AN ASSESSMENT MADE ULS.153A OF TH E ACT FOR AN ASSESSMENT YEAR FOR WHICH ASSESSMENT HAS NOT BEEN ABATED, THEN THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE ADDITION IN SUCH AN ASSESSMENT, IS CONFINED TO SUCH INCRIMINATING SEARCH MATERIAL AND NO ADDITION DEHORS THE SEARCH MATERIAL CAN B E MADE. 29. LN THE INSTANT CASE, WE FIND THAT DURING THE COURSE OF THE RELEVANT SEARCH ONLY TALLY DATA OF THE ASSESSEE COMPANY WAS FOUND WHICH SHOWS THAT THE ASSESSEE HAS RECEIVED CASH CREDIT FROM (I)RUNIC H A MERCHANTS PVT LTD., (IT) SANKALP (III) SCOPE V YAPAR, EVENT DEVELOPERS PVT LTD., (V) SCOPE VYAPAR, HARMAN HIRE PURCHASE PVT LTD. (VI) SCOPE VYAPAR SARWATI VINCOM LTD., (VI) SCOPE ALFHA PROPERTIES PVT LTD., (VII) SIGNET VINIMAY PVT LTD., (VIII) SIGNET COUNTRY WIDE TRADECOM PVT LTD., (IX) SRIJAN VYPAR PV T LTD., (X) SRIJAN VYAPAR CAPLIN MARKETING PVT LTD., (XI) SRIJAN TANTIA AGROCHEMICALS PVT. LTD., (XII) WEST LINE, ECONOMY ADVISORY SERVICES PVT LTD., (XIII)WINALL VINIMAY PVT LTD., (XIV) WINALL ELECTRA COCK FUELS PVT LTD AND (XV)YOGIRAJ AGGREGATING TO RS. 9, 94, 50,000/ - FOR THE ASSESSMENT YEAR 2011 - 12 AND RS.15, 00, 000/ - FOR THE ASSESSMENT YEAR 2012 - 13. 30. IN THE INSTANT CASE, WE FIND THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE SOLE GROUND THAT AMOUNT RECEIVED ON SALE OF INVESTMENT OF RS .9,94,50,000 / - FOR THE ASSESSMENT YEAR 2011 - 12 AND RS.15,00,0001 - FOR THE ASSESSMENT YEAR 2012 - 13 WERE UNEXPLAINED CASH CREDIT OF THE ASSESSEE. THUS, THERE IS NO REFERENCE TO ANY SEARCH MATERIAL BY THE ASSESSING OFFICER BASED ON WHICH SUCH ADDITIONS WERE M ADE IN THE HANDS OF THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION O F RS.9,94,50, 000 / - FOR THE ASSESSMENT YEAR 2011 - 12 ANDRS.15, 00 , 000 / - FOR THE ASSESSMENT YEAR 2012 - 13, RESPECTIVELY AND ALLOW THE GROUNDS OF A PPEAL OF THE ASSESSEE . THUS FROM ALL THE ABOVE DECISIONS IT EMERGES THAT IT IS THE ESTABLISHED POSITION OF LAW THAT IN CASES OF SEARCH, WHILE MAKING ASSESSMENTS U/S 153A OF THE ACT, COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE A.O. ONLY ON THE BAS IS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGIN AL ASSESSMENT. ISSUES OF ORIGINAL ASSESSMENT WHICH HAVE NO RELATION TO THE SEARCH CANNOT IN ANY WAY FORM BASIS OF ASSESSMENT OF ANY COMPLETED ASSESSMENTS. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 30 7. IN CONTINUATION TO THE ABOVE DISCUSSION IT WOULD BE OF RELEVANCE HERE TO DETERMINE WHAT 'CONCLU DED/COMPLETED' ASSESSMENTS ARE. 7.1. AS ALSO DISCUSSED EARLIER ABOVE, COMPLETED ASSESSMENTS AS ON THE DATE OF SEARCH, WOULD BE CASES WHERE ASSESSMENT U/S 143(3) OF THE ACT IS DONE. THE LEGISLATURE IS CLEAR THAT ANY APPEAL, REVISION OR RECTIFICATION PROCE EDINGS IN CONNECTION TO THE COMPLETED ASSESSMENTS, IF PENDING AS ON THE DATE OF SEARCH SHALL NOT MAKE ASSESSMENTS INCOMPLETES ABATE. 7.2. HOWEVER IN CASES WHERE THE RETURN OF INCOME IS FILED AND IS PROCESSED U/S 143(1) OF THE ACT BUT NOTICE U/S 143(2) OF THE ACT IS NOT SERVED ON THE ASSESSEE WITHIN THE STIPULATED TIME PERIOD, THEN ALSO THE ASSESSMENT WOULD BE TERMED AS 'CONCLUDED ASSESSMENT' I.E. NO PROCEEDINGS ARE PENDING. IN SUPPORT OF THE ABOVE ARGUMENT, RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VIPIN KHANNA VS CIT [255 ITR 220(PH)]; - 'THERE/ORE, IN A CASE WHERE A RET URN IS FILED AND IS PROCESSED U/ S 143(1)(A) OF THE ACT AND NO NOTICE UNDER SUB SECTION (2) OF SECTION (143) THEREAFTE R IS SERVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD OF 12 MONT HS, THE ASSESSMENT PROCEEDING U/ S 143 COME TO AN END AND THE MATTER BECOMES FINAL. THUS, ALTHOUGH TECHNICALLY NO ASSESSMENT IS FRAMED IN SUCH A CASE, YET THE PROCEEDINGS FOR ASSESSMENT STAN D TERMINATED. ' RECENT JUDGMENT OF THE HON'BLE IT AT KOLKATA IN THE CASE OF SMT YAMINI AGARWAL VS DCIT (ITA NOS.97 & 98/KOL/20 15) - PRONOUNCED ON 19 - 04 - 2017 WHEREIN THE ISSUE OF WHETHER THE ASSESSMENT IS PENDING OR CONCLUDED AS ON THE DATE OF SEARCH WAS DISCUSSED IN DETAIL AND IT WAS HELD THAT, 'WE THEREFORE HOLD THAT THE SCOPE OF THE PROCEEDINGS U/S.153A 'IN RESPECT OF ASSESSMENT YEAR FOR WHICH ASSESSMENT HAVE ALREADY BEEN CONCLUDED AND WHICH DO 'NOT ABATE U/S.153A OF THE ACT, THAT THE ASSESSMENT WIL L HAVE TO BE CONFINED TO ONLY INCRIMINATING MATERIAL FOUND AS A RESULT A/SEARCH. THE NEXT ASPECT TO BE CONSIDERED IS AS TO WHEN RETURNS OF INCOME FILED ULS.139 OF THE ACT ARE SHOWN TO HAVE BEEN ACCEPTED WITHOUT AN INTIMATION ULS.143(1) OF THE ACT OR WITH O UT ANY NOTICE ISSUED ULS.143(2) OF THE ACT WITHIN THE TIME LIMIT CONTEMPLATED BY THE PROVISO THERETO, CAN BE SAID TO BE ASSESSMENT PROCEEDINGS CONCLUDED THAT HAVE NOT ABATED ULS.153A OF THE ACT. SECTION 153A OF THE ACT, USES THE EXPRESSING 'PENDING ASSESSM ENT OR REASSESSMENT'. WHEN A RETURN IS FILED AND WHEN NEITHER AN ACKNOWLEDGEMENT OR INTIMATION ULS.143(1)OF THE ACT IS ISSUED NOR A NOTICE ULS.143(2) OF THE ACT IS ISSUED WITHIN THE TIME LIMIT LAID DOWN IN THE PROVISO TO SEC.143(2) OF THE ACT, THE PROCEEDI NGS INITIATED BY FILING THE RETURN ARE CLOSED. IN THE PRESENT CASE, IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 31 THE PERIOD FOR ISSUING THE NOTICE U/S 143(2) ELAPSED THEREFORE THE PROCESS HAS ATTAINED THE FINALITY WHICH CAN ONLY BE ASSAILED U/S 148 OR 263 OF THE ACT. IT CAN THUS BE CONCLUDED THAT MAK ING OF AN ADDITION IN AN ASSESSMENT UNDER SECTION 153A OF THE ACT, WITHOUT THE BACKING OF INCRIMINATING MATERIAL, IS UNSUSTAINABLE EVEN IN A CASE WHERE THE ORIGINAL ASSESSMENT ON THE DATE OF SEARCH STOOD COMPLETED BY ABSENCE OF ISSUE OF INTIMATION UNDER SE CTION 143 ( 1 ) OF THE ACT OR BY NOT ISSUING NOTICE U/S.143 (2) OF THE ACT WITHIN THE TIME LIMIT LAID DOWN IN THE PROVISO TO SEC. 143 (2) OF THE ACT, RESULTS IN AN ASSESSMENT PROCEEDINGS AND WHERE SUCH ASSESSMENT PROCEEDINGS ARE COMPLETED PRIOR TO THE DATE O F SEARCH THEN THEY DO NOT ABATE IN TERMS OF THE SECOND PROVISO TO SECTION 153A(L) OF THE ACT. THE DECISION OF THE ITAT KOLKATA BENCH RENDERED IN THE CASE OF SHRI BISHWANATH GARODIA (SUPRA) ON IDENTICAL FACTS OF THE CASE AS THAT OF THE ASSESSEE IN THE PRESE NT CASE, CLEARLY SUPPORTS OUR CONCLUSIONS AS ABOVE. 26. IN THE LIGHT OF THE DISCUSSION ABOVE, OUR CONCLUSION IS THAT IN THE PRESENT CASE, THE ISSUE DEALT WITH BY THE AD IN THE ASSESSMENT ORDER ULS.153A OF THE ACT, COULD NOT AND OUGHT NOT TO HAVE BEEN EXA MINED BY THE AD IN THE ASSESSMENT PROCEEDINGS ULS.153A OF THE ACT AS THE SAID ISSUE STOOD CONCLUDED WITH THE ASSESSEE'S RETURN OF INCOME BEING ACCEPTED PRIOR TO THE DATE OF SEARCH AND NO NOTICE HAVING BEEN ISSUED ULS.143(2) OF THE ACT WITHIN THE TIME LIMIT LAID DOWN IN THAT SECTION. SUCH ASSESSMENT DID NOT ABATE ON THE DATE OF SEARCH WHICH TOOK PLACE ON 28.3.2008. IN RESPECT OF ASSESSMENTS COMPLETED PRIOR TO THE DATE OF SEARCH THAT HAVE NOT ABATED, THE SCOPE OF PROCEEDINGS ULS.153A OF THE ACT HAS TO BE CONF INED ONLY TO MATERIAL FOUND IN THE COURSE OF SEARCH. SINCE NO MATERIAL WHATSOEVER WAS FOUND IN THE COURSE OF SEARCH, THE ADDITIONS MADE BY THE A O IN THE ORDER OF ASSESSMENT FOR BOTH THE ASSESSMENT YEARS COULD NOT HAVE BEEN SUBJECT MATTER OF PROCEEDINGS ULS .153A OF THE ACT. CONSEQUENTLY, THE SAID VARIOUS ADDITIONS MADE IN THE ORDERS OF ASSESSMENT OUGHT NOT TO HAVE OR COULD NOT BE MADE BY THE A O . GR.NO.1 RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE ACCORDINGLY ALLOWED 27. IN VIEW OF THE ABOVE CONCLUSIONS, THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS, DO NOT REQUIRE ANY CONSIDERATION. ' 7.3. NOW DISCUSSING WHAT CONSTITUTES THE STIPULATED TIME PERIOD, IT IS STATED THAT THE PROVISO TO SECTION 143(2) OF THE ACT STIPULATES THE TIME PERIOD FOR ISSUING OF THE NOTICE U / S 143(2) OF THE ACT AND IT READ AS FOLLOWS: PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED} THEREFORE, THE PRESCRIBED TIME LIMIT TO ISSUE NOTICE U/S 143(2) OF THE ACT IS SIX (6) MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 32 8. NOW, APPLYING ALL OF T HE ABOVE TO THE FACTS OF THE CASE OF THE APPELLANT, IT IS SUBMITTED THAT NO PR OCEEDINGS WERE PENDING FOR THE A.V.S 2009 - 10 AND 2010 - 11, B EING THE YEARS UNDER APPEAL BEFORE YOUR HONOURS. IN OTHER WORDS, ASSESSMENT FOR THE SAID A.YS BEING THE SUBJECT ASSESSMENT YEARS, STOOD CONCLUDED AND THUS UNABATED AS ON THE DATE OF SEARCH I.E 25/9 2/2014. THE POSITION OF THE SAID A.Y.S, AS ON THE DATE OF SEARCH BEING 25/02 /20 14 WAS AS FOLLOWS A.Y.2009 - 10: INCOME RETURNED ON 29/09/2009 AT RS.98,44,850/ - INCOME ASSESSED U/S 143(3) OF THE ACT VIDE ORDER DATED 16/12/2011 AT RS.1,08,48,050/ - A. Y.2010 - 11: INCOME RETURNED ON 16/09/2010 AT RS.1,04,95,320/- INTIMATION U/S 143(1) OF THE ACT RECEIVED NO NOTICE U/S 143(2) ISSUED. TIME LIMIT FOR ISSUANCE OF 143(2) IS 30/09/2011, BEING PERIOD ENDING 6 MONTHS FROM THE END OF THE FINANCIAL YEAR OF FIL ING OF RETURN (31/03/2011) HENCE, IT STANDS AS A MATTER OF FACT THAT THE ASSESSMENT FOR THE RELEVANT AY.S 2009 - 10 AND 2010 - 11 STOOD CONCLUDED AND THUS UNABATED AS ON THE DATE OF SEARCH AND WAS NOT PENDING AS ON THAT DATE. 9. LASTLY, BEFORE CONCLUDING T HIS GROUND, IT IS TO BE SEEN WHETHER ANY OF THE ADDITIONS MADE BY THE ID. A.O. IN THE SAID CONCLUDED YEARS WERE BASED ON ANY INCRIMINATING DOCUMENTS/INFORMATION THAT WERE FOUND DURING THE COURSE OF THE SEARCH ON THE APPELLANT GROUP. 9.1. THE ADDITIONS MA DE IN THE SAID YEARS WERE AS UNDER: AY 2009 - 10 2010 - 11 2011 - 12 2012 - 13 TOTAL I SHARE CAPITAL INTRODUCED 14,73,00,000 5,41,00,000 20,14,00,000 II NEGATIVE CASH BALANCE 3,32,095 49,91,258 28,69,748 81,93,101 III TRANSPORTATION EXPENSES 1,47,45,7 75 98,41,416 2,45,87,191 IV BAD DEBT WRITTEN OFF 18,18,674 18,18,674 V PERIPHERAL DEVELOPMENT EXPS TOTAL ADDITIONS 14,76,32,095 5,90,91,258 1,47,45,775 1,45,29,838 23,59,98,966 FROM THE ABOVE, IT IS SEEN THAT THE ADDITIONS MADE ON ACCOUNT OF ADDITION OF SHARE CAPITAL, TRANSPORTATION EXPENSES, BAD DEBTS WRITE OFF AND DISALLOWANCE OF THE PERIPHERAL EXPENSES, WERE ALL BORNE OUT OF THE REGULAR ACCOUNTS. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 33 IN CONNECTION TO THE SHARE CAPITAL, THE ID. A.O. HAS RELIED UPON SEIZED DOCUMENT BNRO - 4, PAGE S 15 TO 21 WHEREIN AS PER THE A.O. HIMSELF THE RECEIPT OF THE SHARE APPLICATION MONEY ALONG WITH SHARE PREMIUM IS RECORDED. THE SAID RECEIPTS ARE ALL PART OF THE REGULAR BOOKS OF ACCOUNT AND NOTHING INCRIMINATING WAS FOUND RECORDED IN THEM. THUS THERE IS ABSOLUTELY NO SEIZED MATERIAL WHICH POINTS TO ANY INFIRMITY IN THE SAID DEDUCTIONS/EXPENSES CLAIMED BY THE APPELLANT. ALL THE DISALLOWANCES BY THE ID. A.O. ARE ONLY AND ONLY BORNE OUT OF THE REGULAR BOOKS OF ACCOUNTS AS FILED BY THE APPELLANT. THEREFORE, UNDOUBTEDLY, THE SAID ADDITIONS ARE NOT BASED ON ANY INCRIMINATING MATERIAL / DOCUMENTS OR INFORMATION AS FOUND DURING THE COURSE OF THE SEARCH PROCEEDINGS. . THE GROUND RELATING ,TO THE ADDITION ON ACCOUNT OF THE NEGATIVE PEAK IS BORNE OUT OF THE SEIZED M ATERIAL BNRO - 21 BUT IT IS SUBMITTED THAT ALL THE UNDISCLOSED INCOME ARISING OUT OF THE SAID MATERIAL IS ALL DULY OFFERED AS THE UNDISCLOSED INCOME IN THE INDIVIDUAL HANDS OF SHRI BAJRANG KUMAR AGARWAL, AND THE SAME HAS BEEN ACCEPTED AS SUCH BY THE ID. A.O. THUS THE ADDITION MADE HERE AGAIN IN THE HANDS OF THE APPELLANT COMPANY IS UNDUE AND UNJUST. A DETAILED NOTE ON THIS ADDITION IS MADE OUT BY THE APPELLANT IN LATTAR PART OF THIS SUBMISSION. 9.2. THUS, TAKING INTO CONSIDERATION THE ABOVE, IT STANDS PROVE D BEYOND DOUBT THAT THE LD. AO, IN THE CASE OF THE APPELLANT IN MAKING THE ABOVE ADDITIONS IN HIS ASSESSMENT ULS 153A OF THE ACT, FOR THE SAID CONCLUDED A. Y S., WAS NOT IN POSSESSION OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH RELATING TO THE CONTESTED ADDITIONS / DISALLOWANCES AND THUS THE SAME CANNOT BE MADE. IT IS THUS SUBMITTED BEFORE YOUR HONOURS THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND IN COURSE OF SEARCH, THE LD. AO IS NOT EMPOWERED TO DISTURB THE CONCLUDED ASSESSMENTS A S ON DATE OF SEARCH BEING THE A.YS 2009 - 10 AND 2010 - 11 AND FRAME FRESH ASSESSMENTS U / S 153A OF THE ACT THEREBY MAKING ADDITION ON ITEMS OF REGULAR ASSESSMENT. 10. NOW BEFORE CONCLUDING ON THIS GROUND OF CROSS OBJECTION, IT WOULD BE PERTINENT TO ANALYSE THE ACTION OF THE ID. CIT(A) WHEREIN DISMISSING THE GROUND AS RAISED BY THE APPELLANT, THE ID. CITCA) HELD AS UNDER: CAT PARA 5.5 AND 5.6) 5.5. THE PLAIN READING OF SECTION 153A CLEARLY INDICATES THAT THERE IS NO NEED OF INCRIMINATING MATERIAL FOR FRAMIN G THE ASSESSMENT AND FOR MAKING THE ADDITIONS U/S.153A OF THE INCOME TAX ACT, 1961. WHEN THE LANGUAGE OF A STATUTE IS CLEAR AND UNAMBIGUOUS, THE COURTS ARE TO INTERPRET THE SAME IN ITS LITERAL SENSE AND NOT GIVING A MEANING WHICH WOULD CAUSE VIOLENCE TO TH E PROVISIONS OF THE STATUTE, AS HELD IN B RITANIA INDUSTRIES LTD. VS. CL T (2005) 278 - ITR - 546 AT 547 (SC). IT IS A WELL SETTLED PRINCIPLE OF LAW THAT THE COURT CANNOT READ ANYTHING INTO A STATUTORY PROVISION OR STIPULATE A CONDITION, WHICH IS PLAIN AND UNAM BIGUOUS. A STATUTE IS AN EDICT OF THE LEGISLATURE. THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATIVE FACTOR OF LEGISLATIVE INTENTION. WHILE INTERPRETING THE IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 34 PROVISION THE COURT ONLY INTERPRETS THE LAW AND CANNOT LEGISLATE IT. IF A PROVISION OF LAW IS INCORRECT, IT IS FOR THE LEGISLATURE TO AMEND, MODIFY OR REPEAL IT, IF DEEMED NECESSARY. LEGISLATIVE CASES OMISSUS CANNOT BE SUPPLIED BY JUDICIAL INTERPRETATIVE PROCESS. 5.6 CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF BRITANIA INDUS TRIES LTD. (SUPRA) AND OF HON'BLE HIGH COURT OF KERALA AND OF HON'BLE HIGH COURT OF ALLAHABAD (SUPRA), EVEN IF THERE WAS NO INCRIMINATING MATERIAL, ASSESSING OFFICER IS EMPOWERED TO MAKE ADDITIONS IS AN ASSESSMENT FRAMED U/S.15 3A OF THE INCOME TAX ACT, 19 61. FROM THE ABOVE IT IS SEEN THAT THE ID. CITCA) HAS RELIED UPON THE DECISION OF THE KERELA H.C. IN THE CASE OF E.N.GOPAKUMAR V COMMISSIONER OF INCOME - TAX (CENTRAL) [2016J 75 TAXMANN.COM 215 (KERELA) AND OF THE ALLAHABAD H.C. IN THE CASE OF COMMISSIONER OF INCOME - TAX CENTRAL, KANPUR VS RAJ KUMAR ARORA [2014J52 TAXMANN.COM (ALLAHABAD). IN CONNECTION TO THE ABOVE IT IS SUBMITTED BEFORE YOUR GOODSELF THAT THE ABOVE TWO DECISIONS RELIED UPON BY THE ID. CITCA) HAVE NO RELEVANCE IN THE WAKE OF THE LATER DEC ISION OF THE DELHI HIGH COURT IN THE CASE OF PR CIT VS. MEETU GUTGUTIA, ITA NO. 30612017, ORDER PRONOUNCED ON 25TH MAY, 2017CSUPRA) WHEREIN THE ENTIRE LAW WAS EXPLAINED ON WHETHER CONCLUDED ASSESSMENTS CAN BE REOPENED U / S 153A EVEN IN THE ABSENCE OF INCRIM INATING MATERIAL FOUND DURING THE SEARCH IN THE LIGHT OF THE APPARENTLY CONFLICTING VERDICTS IN CIT VS. KABUL CHAWLA 380 ITR 573 (DEL) (SUPRA) AND DAYAWANTI GUPTA V. CIT 390 ITR 496 (DEL). ALSO IT IS SUBMITTED HERE THAT IT IS A WELL SETTLED PRINCIPLE OF LAW THAT WHEN ARE CONFLICTING DECISIONS OF THE HIGH COURTS, NONE OF WHICH IS THE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVOUR OF THE ASSESSEE IS TO BE FOLLOWED. IN THE SAID MATTER THE DECISION OF THE HON'BLE APEX C OURT IN THE CASE OF CIT VS VEGET ABLE PRODUCTS LTD. (88ITR 192) SC IS RELIED UPON. 11. THUS, BASED ON ALL OF THE ABOVE, CONCLUDING OUR SUBMISSION ON THE CROSS OBJECTION, IT IS SUBMITTED BEFORE YOUR HONOURS THAT FOR THE SAID A.Y.S 2009 - 10 AND 10 - 11, BOTH BEING UNABATED YEARS OF ASSESSMEN T AND THERE BEING NO INCRIMINATING MATERIAL FOUND DURING SEARCH, THE 153A PROCEEDINGS AS INITIATED BY THE A.O. AND UPHELD BY THE LD. CITCA) IS BAD IN LAW AND THUS INVALID AND ILLEGAL. 11. ADDITION ON ACCOUNT OF SHARE CAPITAL (ON MERITS) DEPARTMENT AL APP EAL - GROUNDS NO.(III) TO (XVIII) 1. THE GROUNDS OF APPEAL RAISED BY THE DEPARTMENT ON THIS HEAD FOR THE A.Y.S 2009 - 10 AND 2010 - 11 READ AS UNDER: FOR A.Y. 2009 - 10 VIDE IT (SS) A NO. 1411CTKL2018 RE: SHARE CAPITAL (ON MERITS) IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 35 (III) THAT, THE LD. CL' T (APPEALS) ERRED IN LAW AS WELL AS FACT ~N DELETING THE ADDITION OF RS.14, 73,00,0001 - MADE BY A. 0 AS UNEXPLAINED SHARE CAPITAL. (IV) THAT, THE LD. CL'I' (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE WAS FAILED TO FURNISH THE COPY OF THE AP PLICATION FORMS SUBMITTED BY THE SHARE APPLICANTS THOUGH THE SAME WAS ASKED FOR BY THE A. 0. (V) THAT, THE LD. CL'T (APPEALS) HAS FAILED TO NOTICE THE FACT THAT COPY OF INCORPORATION CERTIFICATE FURNISHED BY THE ASSESSEE BEFORE A.O IN RESPECT OF THE SUBS CRIBED COMPANIES DID NOT BEAR THE SIGNATURE OF THE REGISTRAR NOR BEAR HIS OFFICE SEAL. SIMILARLY THE COPIES OF MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION FILED BEFORE A.O IN RESPECT OF THE SUBSCRIBED COMPANY DID NOT BEAR THE SIGNATURE OF THE SUB SCRIBERS AND THE WITNESSES AND IT WAS NOT CERTIFIED BY ANY DIRECTOR. (VI) THAT, THE LD. C I T (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT VERIFICATION LETTERS ULS.133(6) OF THE I T ACT WERE ISSUED BY A.O TO ALL SHARE APPLICANT COMPANIES AND MOST OF TH E LETTERS WERE RETURNED BACK AS UNSERVED AND NO REPLY WAS RECEIVED FROM THE BALANCE CASES WHERE THE LETTERS WERE NOT RETURNED BACK. (VII) THAT, THE LD. CLT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT THE A.O GAVE OPPORTUNITY TO THE ASSESSEE TO PROVE GENUINENESS OF ITS CLAIM BY ESTABLISHING PHYSICAL EXISTENCE OF THE SHARE APPLICANT COMPANIES WITH DOCUMENTARY EVIDENCE AND THE ASSESSEE FAILED TO DO SO BY STATING THAT THE ASSESSEE COMPANY HAD NO INFORMATION FOR THE SHIFT OF OLD ADDRESS OR CLOSURE OF OLD SHARE APPLICANTS THOUGH ALL THE SHARES ISSUED BY ASSESSEE COMPANY TO VARIOUS KOLKATA BASED SHARE APPLICANT COMPANIES HAD BEEN BOUGHT BACK BY THE GROUP COMPANIES / CONCERNS OF THE ASSESSEE COMPANY LATER ON. (VIII) THAT, THE LD. C IT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT SOME OF THE SHARE APPLICANT COMPANIES WERE FUNCTIONING FROM THE SAME ROOM (AS PER ADDRESS GIVEN BY THE ASSESSEE COMPANY) WHICH IS PRACTICALLY NOT POSSIBLE. (IX) THAT, THE LD. C IT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COMPANY COULD NOT JUSTIFY THE REASON BEFORE A. 0 AS TO HOW IT DESERVED HIGH PREMIUM ON SHARES WHICH WAS FOUR TIMES THE COST PER SHARE THOUGH IT HAD NOT RUN ITS BUSINESS FOR A FULL YEAR. (X) THAT, THE LD. C I T (APPEALS) HAS FAILED TO NOTICE T HE FACT THAT THE ASSESSEE COMPANY FAILED TO FURNISH COPY OF BOARD MEETING RESOLUTION BEFORE RAISING SHARE APPLICATION FUND, MINUTES BOOK REGARDING DECISION OF BOARD MEETING, COPY OF FORM NO. 5 SUBMITTED BEFORE ROE FOR INCREASING SHARES AND OTHER NECESSARY DOCUMENTS WHICH ARE REQUIRED TO BE MAINTAINED BY THE COMPANIES FOR INCREASING SHARE CAPITAL. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 36 (XI) THAT, THE LD. C IT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE COMPANY HAS BOUGHT BACK THE S HARES AT A CONSIDERATION OF RS. 5/ - THOUGH IT WAS SO LD BY THE ASSESSEE COMPANY @ RS.I0/ - AS COST PER SHARE AND PREMIUM OF RS. 40/ - PER SHARE TWO YEARS BACK. THE SAME IS TOTALLY ILLOGICAL IN RESPECT OF A PRUDENT INVESTOR WHO HAD BOUGHT THE SHARES JUST TWO YEARS BACK. (XII) THAT, THE LD. C IT (APPEALS) HAS F AILED TO NOTICE THE FACT THAT THE A.O HAD VERIFIED THE BANK STATEMENTS OF THE SHARE APPLICANT COMPANIES AS SUBMITTED BY ASSESSEE COMPANY AND THE A.O FOUND THAT THEIR ACCOUNTS HAD BEEN CREDITED WITH SUBSTANTIAL AMOUNT EITHER ON THE DATE OF ISSUE OF CHEQUES OR ONE DAY OR TWO DAYS BEFORE THE DATE OF ISSUE OF CHEQUE FOR SHARES. (XIII) THAT, THE LD. C IT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE DOES NOT MAINTAIN REGULAR BOOKS OF A/ CS WITH RELATED BILLS AND VOUCHERS AND HAD NOT PRODUCED THE SAME BEFORE A. 0 DURING THE ASSESSMENT PROCEEDING. (XIV) THAT, THE LD. C IT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT IT IS FOUND BY THE A.O FROM THE BANK A/ C OF THE ASSESSEE COMPANY IN WHICH SHARE APPLICATION MONEY RECEIVED FROM DIFFERENT SHARE APPLICANTS THAT SUBSTANTIAL AMOUNT WAS WITHDRAWN FROM THE ALE EITHER ON THE SAME DAY OR TWO OR THREE DAYS AFTER CREDIT OF THE SHARE APPLICATION AMOUNT MOSTLY BY SELF CHEQUES OR SELF PAID CHEQUES. (XV) THAT, THE LD. C IT (APPEALS) HAS JAILED TO APPRECIATE THE TOTALI TY OF THE FACT THAT SHARE APPLICANT COMPANIES DID NOT HAVE SUCH FUND TO SUPPORT THEIR CREDIT WORTHINESS AND THE SHARE APPLICANT COMPANIES ARE NOTHING BUT ACCOMMODATION ENTRY OPERATORS AND FINANCIAL STATEMENTS WERE PREPARED AND SHAM BANK TRANSACTIONS WERE M ADE TO SHOW THE INVESTMENTS AS GENUINE. (XVI) THAT, IN THE SIMILAR CASES OF (A) YAGYA TECHNO SOLUTIONS PVT. LTD. VS ACIT (ITA NO.4955 / DEL / 2016 DTD. 31 - 05 - 2017) AND (B) ITO, WARD 5(3) , KOLKATA VS BLESSING COMMERCIAL (P) LTD., HON 'BLE ITAT SUSTAINED THE ADDITIONS MADE U/S.68 OF THE IT ACT ON A /C OF SHARE CAPITAL HOLDING THE VIEW THAT THE GENUINENESS OF TRANSACTIONS AND OR CREDIT WORTHINESS OF PARTIES WERE NOT PROVED. (XVII) THAT, THE ADDITIONS MADE BY THE A.O ARE LAWFUL AND JUSTIFIED AND THOSE NEED TO B E SUSTAINED / FULL. (XVIII) THAT, THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALTER ANY GROUND OF APPEAL AT THE TIME OR BEFORE HEARING OF APPEAL. FOR A.Y. 2010 - 11 VIDE IT (SS) A NO. 142/CTKL2018 IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 37 (III) THAT, THE LD. C IT (APPEALS) ERRED IN LAW AS WEL L AS FACT IN DELETING THE ADDITION OF RS.5,41,00,000 / - MADE BY A.O AS UNEXPLAINED SHARE CAPITAL. (IV) THAT, THE LD. C IT ' (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE WAS FAILED TO FURNISH THE COPY OF THE APPLICATION FORMS SUBMITTED BY THE SH ARE APPLICANTS THOUGH THE SAME WAS ASKED FOR BY THE A. 0. (V) THAT, THE LD. C IT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT COPY OF INCORPORATION CERTIFICATE FURNISHED BY THE ASSESSEE BEFORE A.O IN RESPECT OF THE SUBSCRIBED COMPANIES DID NOT BEAR THE SI GNATURE OF THE REGISTRAR NOR BEAR HIS OFFICE SEAL. SIMILARLY THE COPIES OF MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION FILED BEFORE A.O IN RESPECT OF THE SUBSCRIBED COMPANY DID NOT BEAR THE SIGNATURE OF THE SUBSCRIBERS AND THE WITNESSES AND IT WA S NOT CERTIFIED BY ANY DIRECTOR. (VI) THAT, THE LD. C IT ' (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT VERIFICATION LETTERS U/S.133(6) OF THE IT ACT WERE ISSUED BY A.O TO ALL SHARE APPLICANT COMPANIES AND MOST OF THE LETTERS WERE RETURNED BACK AS UNSE RVED AND NO REPLY WAS RECEIVED FROM THE BALANCE CASES WHERE THE LETTERS WERE NOT RETURNED BACK. (VII) THAT, THE LD. C IT ' (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT THE A.O GAVE OPPORTUNITY TO THE ASSESSEE TO PROVE GENUINENESS OF ITS CLAIM BY ESTABL ISHING PHYSICAL EXISTENCE OF THE SHARE APPLICANT COMPANIES WITH DOCUMENTARY EVIDENCE AND THE ASSESSEE FAILED TO DO SO BY STATING THAT THE ASSESSEE COMPANY HAD NO INFORMATION FOR THE SHIFT OF OLD ADDRESS OR CLOSURE OF OLD SHARE APPLICANTS THOUGH ALL THE SHA RES ISSUED BY ASSESSEE COMPANY TO VARIOUS KOLKATA BASED SHARE APPLICANT COMPANIES HAD BEEN BOUGHT BACK BY THE GROUP COMPANIES / CONCERNS OF THE ASSESSEE COMPANY LATER ON. (VIII) THAT, THE LD. C IT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT SOME OF T HE SHARE APPLICANT COMPANIES WERE FUNCTIONING FROM THE SAME ROOM (AS PER ADDRESS GIVEN BY THE ASSESSEE COMPANY) WHICH IS PRACTICALLY NOT POSSIBLE. (IX) THAT, THE LD. C IT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COMPANY COULD NOT JUST IFY THE REASON BEFORE A. 0 AS TO HOW IT DESERVED HIGH PREMIUM ON SHARES WHICH WAS FOUR TIMES THE COST PER SHARE THOUGH IT HAD NOT RUN ITS BUSINESS FOR A FULL YEAR. (X) THAT, THE LD. C IT ' (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE COMPANY F AILED TO FURNISH COPY OF BOARD MEETING RESOLUTION BEFORE RAISING SHARE APPLICATION FUND, MINUTES BOOK REGARDING DECISION OF BOARD MEETING, COPY OF FORM NO. 5 SUBMITTED BEFORE ROE FOR INCREASING SHARES AND OTHER NECESSARY DOCUMENTS WHICH ARE REQUIRED TO BE MAINTAINED BY THE COMPANIES FOR INCREASING SHARE CAPITAL. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 38 (XI) THAT, THE LD. C IT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE COMPANY HAS BOUGHT BACK THE SHARES AT A CONSIDERATION OF RS. 5/ - THOUGH IT WAS SOLD BY THE ASSESSEE COMPANY @ RS.IO / - AS COST PER SHARE AND PREMIUM OIRS.40/ - PER SHARE TWO YEARS BACK. THE SAME IS TOTALLY ILLOGICAL IN RESPECT OF A PRUDENT INVESTOR WHO HAD BOUGHT THE SHARES JUST TWO YEARS BACK. (XII) THAT, THE LD. C IT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE A. 0 HAD VERIFIED THE BANK STATEMENTS OF THE SHARE APPLICANT COMPANIES AS SUBMITTED BY ASSESSEE COMPANY AND THE A.O FOUND THAT THEIR ACCOUNTS HAD BEEN CREDITED WITH SUBSTANTIAL AMOUNT EITHER ON THE DATE OF ISSUE OF CHEQUES OR ONE DAY OR TWO DAYS BEFORE THE D ATE OF ISSUE OF CHEQUE FOR SHARES. (XIII) THAT, THE LD. C IT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE DOES NOT MAINTAIN REGULAR BOOKS OF ALES WITH RELATED BILLS AND VOUCHERS AND HAD NOT PRODUCED THE SAME BEFORE A. O DURING THE ASSESSMENT P ROCEEDING. (XIV) THAT, THE LD. C IT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT IT IS FOUND BY THE A.O FROM THE BANK A / C OF THE ASSESSEE COMPANY IN WHICH SHARE APPLICATION MONEY RECEIVED FROM DIFFERENT SHARE APPLICANTS THAT SUBSTANTIAL - AMOUNT WAS WITHDRA WN FROM THE ALE EITHER ON THE SAME DAY OR TWO OR THREE DAYS AFTER CREDIT OF THE SHARE APPLICATION AMOUNT MOSTLY BY SELF CHEQUES OR SELF PAID CHEQUES. (XV) THAT, THE LD. C IT (APPEALS) HAS FAILED TO APPRECIATE THE TOTALITY OF THE FACT THAT SHARE APPLICANT COMPANIES DID NOT HAVE SUCH FUND TO SUPPORT THEIR CREDIT WORTHINESS AND THE SHARE APPLICANT COMPANIES ARE NOTHING BUT ACCOMMODATION ENTRY OPERATORS AND FINANCIAL STATEMENTS WERE PREPARED AND SHAM BANK TRANSACTIONS WERE MADE TO SHOW THE INVESTMENTS AS GENUI NE. (XVI) THAT, IN THE SIMILAR CASES OF (A) YAGYA TECHNO SOLUTIONS PVT. LTD. VS ACIT (ITA NO. 4955IDEL12016 DTD. 31 - 05 - 2017) AND (B) ITO, WARD 5(3) , KOLKATA VS BLESSING COMMERCIAL (P) LTD., HON 'BLE ITAT SUSTAINED THE ADDITIONS MADE ULS.68 OF THE IT ACT ON A /C OF SHARE CAPITAL HOLDING THE VIEW THAT THE GENUINENESS OF TRANSACTIONS AND OR CREDIT WORTHINESS OF PARTIES WERE NOT PROVED. (XVII) THAT, THE ADDITIONS MADE BY THE A.O ARE LAWFUL AND JUSTIFIED AND THOSE NEED TO BE SUSTAINED / FULL. (XVIII) THAT, THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALTER ANY GROUND OF APPEAL AT THE TIME OR BEFORE HEARING OF APPEAL. 2. A READING OF THE ABOVE GROUNDS SHOWS THAT THE DEPARTMENT IN TOTAL IGNORANCE OF THE PROVISION OF LAW WHICH CLEARLY LAY DOWN THAT THE ASSE SSMENT IN THE CASE OF THE APPELLANT FOR THE A. Y.S 2009 - 10 AND 20010 - 11 WAS INVALID AB INITIO IN AS MUCH AS THERE WAS NO INCRIMINATING MATERIAL AVAILABLE FROM SEARCH WHICH POINTED TO ANY UNDISCLOSED INCOME AND THUS THE UNABATED AND CONCLUDED ASSESSMENTS FO R THE SAID YEAR COULD NOT BE DISTURBED. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 39 3. FURTHER IT IS ALSO TO BE NOTED THAT IT STANDS AS A MATTER OF UNDISPUTED FACT THAT THE ADDITION OF THE SHARE CAPITAL INTRODUCED BY THE APPELLANT COMPANY FROM VARIOUS SHAREHOLDERS WAS A MATTER FULLY ON RECORD IN TH E REGULAR BOOKS OF THE ASSESSEE. NOT A SINGLE INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF THE SEARCH ON THE APPELLANT GROUP WHICH POINTED TO ANYTHING INCRIMINATING IN RELATION TO THE SHARE ISSUE. 3.1. IN FACT IT IS TO BE NOTED HERE THAT THE SEI ZED DOCUMENTS BNRO - 4., PAGE NOS 15 TO 21 WHICH WAS RELIED UPON BY THE ID. A.O. HIMSELF IN MAKING THE SAID ADDITION IN RESPECT TO THE IMPUGNED ADDITION WITH RELATION TO THE SHARE CAPITAL ITSELF IN FACT SUPPORTS THE CASE OF THE APPELLANT THAT THE DISCLOSURE OF THE SHARE CAPITAL RECEIVED AND RECORDED IN THE REGULAR BOOKS OF ACCOUNTS IS TRUE AND CORRECT. THUS THE SEIZED DOCUMENTS IN FACT EVIDENCE SUCH SHARE CAPITAL TRANSACTION. ' 3.2. IN CONNECTION TO THE ABOVE, YOUR HONOURS KIND ATTENTION IS INVITED TO THE S ECTION 292 C OF THE INCOME TAX ACT, 1961, WHICH IS QUOTED AS UNDER: '292C. PRESUMPTION AS TO ASSETS, BOOKS OF ACCOUNT, ETC. - WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE P OSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132, IT MAY, IN ANY PROCEEDING UNDER THIS ACT, BE PRESUMED - (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS/ARE TRUE, AND ( III ) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITING OF ANY PARTICU LAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSON'S HANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTE D OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAV E BEEN SO EXECUTED OR ATTESTED. '. A PERUSAL OF THE SAID SECTION CLEARLY REVEALS THAT THE CONTENT OF THE SEIZED DOCUMENT MAY BE PRESUMED TO BE TRUE AND THAT SUCH BOOKS AND ACCOUNTS AND DOCUMENTS FOUND AND SEIZED SHOULD BE PRESUMED TO BELONG TO THE ASSESSEE. 3.3. IN THE LIGHT OF THE AFORESAID PROVISION OF LAW WHICH HAS BEEN INCORPORATED VIDE THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01 / 10 / 1975, IT IS SUBMITTED THAT NOT ONLY THAT THE REGULAR BOOKS OF ACCOUNTS SUPPORTS THE CLAIM OF THE ASSESSEE, EVEN THE SEIZED DOCUMENT CONFIRMS THE SAME FACT AND THE PRESUMPTION OF LAW ALSO GOES IN FAVOUR OF THE APPELLANT. IN THIS VIEW OF THE MATTER NOW IT IS CONTENDED THAT THERE SHOULD THUS REMAIN NO DOUBT A BOUT THE CLAIM OF THE APPELLANT AND ABOUT THE IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 40 GENUINENESS OF THE SHARE CAPITAL RECEIPT DURING THE AFORESAID A. Y.S WHICH WAS ADDED BY THE LD. A.O. U / S 68 OF THE ACT WITHOUT ANY EVIDENCE TO THE CONTRARY. 4. HOWEVER, WITHOUT PREJUDICE TO THE ABOVE, IT IS S UBMITTED BEFORE YOUR HONOURS THAT GOING BRIEFLY INTO THE MERITS OF THE SAID ISSUE OF THE SHARE CAPITAL, IT IS SUBMITTED THAT THE SAME WAS RECEIVED FROM 171 SHARE APPLICANTS IN THE A.Y2009 - 10 AND FRO M 54 SHARE APPLICANTS IN THE A. Y2010 - 1 1 . IT WAS VERY MUC H AN ADMITTED FACT BY THE ID. A.O. ALSO THAT THE APPELLANT HAD DULY FULFILLED ALL HIS OBLIGATIONS REGARDING THE INITIAL BURDEN OF PROOF WITH REGARD TO IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION BY SUBMITTING THE NAME, ADDRESS, PAN, BANK STATEMENTS AND THE MOA AND THE AOA OF THE SHARE APPLICANTS. ALSO THE AUDITED BALANCE SHEET AND PROFIT & LOSS ACCOUNTS WERE ALL SUBMITTED. THE SHARE APPLICANTS WERE ALL PRIVATE LIMITED COMPANIES AND THE CERTIFICATE OF INCORPORATION WAS ALSO ALL PROVIDED. AL L THE TRANSACTIONS WERE THROUGH THE REGULAR BANKING CHANNELS. IN FACT THE LD. A.O. HAD DEEPLY ANALYSED THE BANK ACCOUNTS OF MOST OF THE SHARE APPLICANTS. IN THE SAID CONNECTION IT IS SUBMITTED THAT THE AMENDMENT TO SECTION 68 OF THE ACT REQUIRING THE ASS ESSEE TO EXPLAIN THE SOURCE OF THE SOURCE CAME INTO EFFECT ONLY FROM THE AY 2013 - 14 AND THE SAME COULD NOT BE APPLIED RETROSPECTIVELY IN THE CASE OF THE APPELLANT FOR THE A. Y S 2009 - 10 AND 2010 - 11, BEING THE YEARS UNDER APPEAL BEFORE YOUR GOODSELF. ALSO IT IS SUBMITTED THAT THE ID. A.O. HAD ALSO ISSUED VERIFICATION LETTERS U / S .133(6) OF THE ACT TO ALL THE SHARE APPLICANTS. HOWEVER FEW OF THEM WERE RETURNED BACK AND THEY WERE, NOT FOUND AT THE ADDRESSES FURNISHED BY THE APPELLANT IN AS MUCH AS THEY WERE THE OLD SHAREHOLDERS BACK IN THE YEAR 2008 AND 2009. THE SHARES HAVING BEEN PURCHASED BY NEW SHARE APPLICANTS, THE APPELLANT WAS NOT IN THE POSSESSION OF THE CURRENT ADDRESSES OF THE APPLICANTS. THE ID. A.O. HAS THROUGH HIS ENTIRE ASSESSMENT ORDER DISCUS SED IN GREAT DETAILS THE VARIOUS ISSUES CONCERNING THE SHARE APPLICATION WHICH ARE ALL TOTALLY IRRELEVANT TO THE CASE OF THE APPELLANT FOR THE TWO SAID YEARS BOTH BEING THE CONCLUDED ASSESSMENT YEARS. 5. IN VIEW OF THE ABOVE FACTS, AS WERE SUBMITTED IN F ULL DETAILS BEFORE THE ID. CIT(A) , THE ID. CIT(A) AFTER FULL ANALYSIS OF THE FACTS OF THE CASE AND THE SEIZED MATERIAL CAME TO HIS CONCLUSION WHICH IS AS BELOW: (VIDE PARA 6.4 OF HIS ORDER) 6.4 I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER AND SUBMISSI ONS OF THE APPELLANT. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 41 I HAVE ALSO PERUSED THE SEIZED MATERIAL. I FIND THAT THERE IS NO INDICATION IN THE SEIZED MATERIAL NAMELY BNRO - 04 THAT THE SHARE CAPITAL IS BOGUS OR IT IS UNDISCLOSED INCOME OF THE APPELLANT. THE SEIZED MATERIAL GIVES THE DETAILS OF SHARE APPLICANTS, NUMBER OF SHARES' PURCHASED, THE RATE AND AMOUNT FOR WHICH HAVE BEEN PURCHASED AND THE RATE OF BUYBACK OF THESE SHARES. IT IS IMPORTANT TO NOTE THAT THIS IS A CASE WHICH SEARCH AND SEIZURE U/S.132 OF THE INCOME TAX ACT, 1961 WAS CONDUC TED AND NO EVIDENCE OF BOGUS SHARE CAPITAL/SHARE PREMIUM OR UNDISCLOSED INCOME WAS UNEARTHED. IT IS SEEN FORM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER ANALYSED THE BALANCE SHEET OF THE PERSONS WHO HAVE PURCHASED THE SHARES. ACCORDING TO THE ASSESS ING OFFICER, THESE SHARE HOLDERS HAVE VERY LOW INCOME, BUT, THEY HAVE PURCHASED SHARES OF SUBSTANTIAL AMOUNT ALONG WITH SHARE PREMIUM. THE ASSESSING OFFICER HAS FURTHER STATED THAT ENQUIRES WERE CONDUCTED IN THE CASE OF SOME OF THE SHARE APPLICANT COMPANIE S BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT BUT THEY REMAINED INCOMPLETE DUE TO LACK OF TIME. ACCORDING, TO THE ASSESSING OFFICER, THE SHARE APPLICANT COMPANIES DON'T DO ANY BUSINESS AND ONLY INVOLVED IN RECEIVING INVESTMENT FROM CERTAIN SIMIL AR COMPANIES. AND THEY ARE MAKING INVESTMENT AS SHARE CAPITAL IN OTHER COMPANIES. THE ASSESSING OFFICER HAS FURTHER STATED THAT THE SHARE PREMIUM IS UNJUSTIFIED AND BUY BACK AT LOWER AMOUNT SUGGEST THAT THESE ARE SHAM/BOGUS TRANSACTIONS. IT IS FURTHER ADDE D BY THE ASSESSING OFFICER THAT THERE IS NO LOGIC JAR THE SHARE APPLICANT COMPANIES FOR MAKING INVESTMENT AND THEY DO NOT HAVE CREDIT WORTHINESS. ACCORDINGLY, TO THE ASSESSING OFFICER, ALL THE DOCUMENTS ARE PREPARED TO SHOW THAT THEY ARE GENUINE, WHEN IN F ACT THEY ARE SHAM TRANSACTIONS. THESE ARE ONLY GENERAL STATEMENTS WITHOUT BACKING OF ANY EVIDENCE. THE ASSESSING OFFICER HAS NOT QUOTED ANY STATEMENT OF ANY SHARE BROKER OR ANY INTERMEDIARY OR DIRECTORS OF SHARE APPLICANT COMPANIES OR DIRECTORS OF APPELL ANT COMPANY, TO SUBSTANTIATE HIS CLAIMS. NO EVIDENCE WAS CONFRONTED BY THE ASSESSING OFFICER TO THE APPELLANT. ON THE CONTRARY, THE APPELLANT HAS SUBMITTED COPIES OF SHARE APPLICATION FORM ROC DETAILS, INCOME TAX PARTICULARS, PROFIT & LOSS ACCOUNT, BALAN CE SHEET AND BANK STATEMENTS. THE LOW PROFIT AND HIGH INVESTMENT AND OTHER ALLEGATIONS MADE BY THE ASSESSING OFFICER, AT BEST, CAN GIVE RISE TO SUSPICION. BUT, SUSPICION CANNOT TAKE THE PLACE OF EVIDENCE. THE SHARE APPLICANT COMPANIES HAVE TRANSACTED THR OUGH BANKING CHANNELS, WHILE RECEIVING INVESTMENT AND AT THE TIME OF MAKING INVESTMENT. MOREOVER, THE DETAILS MAINTAINED IN THE DOCUMENT IN BNR - 04 WHICH IS THE SEIZED MATERIAL, ARE REFLECTED IN THE AUDITED BOOKS OF ACCOUNT OF THE APPELLANT COMPANY AND TH EREFORE THE PRESUMPTION U/S.292C OF THE INCOME TAX ACT, 1961, THAT THE CONTENTS IN THE SEIZED MATERIAL ARE TRUE, IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 42 IS IN FAVOUR OF THE APPELLANT COMPANY. THE - ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO REBUT THIS PRESUMPTION. THUS, THERE IS NO EVIDENCE IN THE SEIZED MATERIAL TO COME TO THE CONCLUSION THAT THE SHARE CAPITAL IS NOT GENUINE. NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SUGGEST THAT THE SHARE CAPITAL IS NOT GENUINE. CONSIDERING THESE ASPECTS, THE ADDITION M ADE' OF RS.14,7 3,00,000/ - BY THE ASSESSING OFFICER IS ORDERED TO BE DELETED. ' 6. LASTLY BEFORE CONCLUDING ON THIS GROUND IT WOULD BE RELEVANT TO STATE HERE THAT THE TWO CASE LAWS BEING (A) YAGYA TECHNO SOLUTIONS PVT. LTD. VS ACIT (ITA NO. 4955 / DEL / 2016 DTD. 31 - 05 - 2017) AND (B) ITO, WARD 5(3) , KOLKATA VS BLESSING COMMERCIAL (P) LTD., RELIED BY THE DEPARTMENT WHEREIN ALLEGEDLY THE HON'BLE IT AT SUSTAINED THE ADDITION S MADE U1S.68 OF THE IT ACT ON A/ C OF SHARE CAPITAL HOLDING THE VIEW THAT THE GENUINENESS OF TRANSACTIONS AND OR CREDIT WORTHINESS OF PARTIES WERE NOT PROVED, ARE COMPLETELY DIFFERENT OF FACTS IN AS MUCH AS THE TWO ASSESSMENTS ARE NOT SEARCH ASSESSMENTS AND THUS THERE AROSE NO SITUATION OF THE PRESENCE OF ANY INCRIMINATING MATERIAL BEING DISCOV ERED PURSUANT TO SUCH SEARCH. ILL. ADDITION ON ACCOUNT OF NEGATIVE CASH BALANCE - DEPARTMENTAL APPEAL - GROUNDS NO.(I) TO (II) 1. THE GROUNDS OF APPEAL RAISED BY THE DEPARTMENT ON THIS HEAD FOR THE A.Y.S 2009 - 10 AND 2010 - 11 READ AS UNDER: FOR A.Y. 20 09 - 10 VIDE IT (SS) A NO. 141 / CTK / 2018 RE: NEGATIVE CASH BALANCE (I) THAT, THE LD. C IT (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.3,32,095 / - MADE BY A.O UNDER THE HEAD NEGATIVE CASH BALANCE ON THE BASIS OF SEIZED DOCUMENT. THE LD. C I T (APPEALS) TREATED THAT THE SAME WAS DISCLOSED BY THE DIRECTOR IN HIS OWN HAND THOUGH THE A. 0 HAD ADJUSTED THE DISCLOSED AMOUNT WITH NEGATIVE CASH BALANCE AMOUNT AND THE UNADJUSTED NEGATIVE CASH BALANCE OF RS. 3,32,095 / - HAD BEEN ADDED BY THE A. O . THE PLEA TAKEN BY THE ASSESSEE BEFORE LD. CLT(APPEALS) OF 'NEGATIVE PEAK THEORY OF THE GROUP' IS NOT APPLICABLE IN THIS CASE. (II) THAT, THE LD. CLT (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.3,32,095 / - MADE BY A. 0 UNDER THE H EAD NEGATIVE CASH BALANCE ON THE BASIS OF SEIZED DOCUMENT IGNORING THE FACT OF THE CASE. A TOTAL NEGATIVE CASH BALANCE OF RS.3,88,93,088 / - WAS FOUND IN THE CASE OF M / S. MAA TARINI & CO., PROP. BAJRANG KUMAR AGARWAL, MRS. BASUKINATH & CO. & M / S. BASUKINATH ROADWAYS PVT. LTD. ON DIFFERENT DATES FROM THE YEAR 2007 - 08 TO 2013 - 14 DURING COURSE OF SEARCH OPERATION OF THIS GROUP. OUT OF THE SAID NEGATIVE CASH BALANCE, A SUM OF RS. 2,26, 50, 5001 - HAD BEEN DISCLOSED IN THE HANDS OF BAJRANG AGARWAL AS ADDITIONAL INC OME ON ACCOUNT OF LAND SAUDA IN THE A.YS. 2008 - 09, 2009 - 10, 2010 - 11 & 2014 - 15 AGAINST THE TOTAL NEGATIVE CASH BALANCE WITH M/ S. BASUKINATH & CO. AND B ASUKINATH ROADWAYS PVT. LTD. FOR DIFFERENT A. YS. FOR A.Y. 2010 - 11 VIDE IT (SS) A NO. 142/CTK / 2018 IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 43 RE: NEGATIVE CASH BALANCE (I) THAT, THE LD. C I T (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.49,91,258 - MADE BY A.O UNDER THE HEAD NEGATIVE CASH B A LANCE ON THE BASIS OF SEIZED DOCUMENT. THE LD. C I T (APPEALS) TREATED THAT THE SAME WA S DISCLOSED BY THE DIRECTOR IN HIS OWN HAND THOUGH THE A. 0 HAD ADJUSTED THE DISCLOSED AMOUNT WITH NEGATIVE CASH BALANCE A MOUNT AND THE UNADJUSTED NEGATIVE CASH BALANCE OF RS.49,91,258/ - HAD BEEN ADDED BY THE A. O . THE PLEA TAKEN BY THE ASSESSEE BEFORE LD. C I T(APPEALS) OF 'NEGATIVE PEAK THEORY OF THE GROUP' IS NOT APPLICABLE IN THIS CASE, (II) THAT, THE LD. C I T (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.49,91,258/ - MADE BY A.O UNDER THE HEAD NEGATIVE CASH BALANCE ON THE BASIS OF SEIZED DOCUMENT IGNORING THE FACT OF THE CASE. A TOTAL NEGATIVE CASH BALANCE OF RS.3,88,93,088/ - WAS FOUND IN THE CASE OF M/S. MAA TARINI & CO., PROP. BAJRANG KUMAR AGARWAL, M/S. BASUKINATH & CO. & M / S. BASUKINATH ROADWAYS PVT. LTD. ON DIFFERENT DATES FROM THE YEAR 2007 - 08 TO 2013 - 14 DURING COURSE OF SEARCH OPERATION OF THIS GROUP. OUT OF THE SAID NEGATIVE CASH BALANCE, A SUM OF RS. 2,26, 50, 500/ - HAD BEEN DISCLOSED IN THE HANDS OF BAJRANG AGARWAL AS ADDITIONAL INCOME ON ACCOUNT OF LAND SAUDA IN THE A.YS. 2008 - 09, 2009 - 10, 2010 - 11 & 2014 - 15 AGAINST THE TOTAL NEGATIVE CASH BALANCE WITH M/S. BASUKINATH & CO. AND B ASUKINDTH ROADWAYS PVT. LTD. FOR DIFFERENT A. YS. I 2. NOW IN CONNECTION TO THE SAID ISSUE, AS ALSO SUBMITTED BEFORE THE ID. CIT(A), IT IS NOW SUB MITTED BEFORE YOUR BEFORE YOUR HONOURS THAT THE ADDITION MADE BY THE ID. A.O. WAS AS UNDER FOR THE FOLLOWING YEARS A.Y. AMT. (RS.) 2009 - 10 3,32,095 2010 - 11 49,91,258 2011 - 12 - 2012 - 13 28,69,748 2013 - 14 5,25,675 TOTAL 87,18,776 3. WITH REFERENCE T O THE SAID ADDITION MADE BY THE ID. A.O. IT WOULD BE OF RELEVANCE TO FIRSTLY UNDERSTAND IN FULL DETAILS, THE NEGATIVE CASH BALANCES ARISING IN THE CASE OF THE BASHUKINATH GROUP AND HOW IT HAS BEEN OFFERED TO TAX. 4. AS STATED EARLIER ALSO, SEARCH & SEIZU RE OPERATION U1S 132 OF THE ACT WAS CONDUCTED ON THE BASUKINATH GROUP ON 25/02/2014 AND VIDE THE PANCHNAMA DRAWN IN THE NAME OF THE APPELLANT, 'BASHUKINATH ROADWAYS PVT. LTD.' AT THE BUSINESS PREMISE BEING OM NIWAS, BARSUAN, SUNDERGARH, A PENDRIVE CONTA INING TALLY DATA FROM THE COMPUTERS OF THE APPELLANT WAS FOUND AND SEIZED, MARKED AS BNRO - 21. IN CONNECTION TO THE SAID TALLY DATA IT WAS SUBMITTED BY THE APPELLANT THAT THE SAME CONTAINED THE COMPUTERISED BOOKS OF ACCOUNTS OF THE IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 44 VARIOUS GROUP CONCERNS. THE COMPUTERISED ACCOUNTS CONTAINED THE CASH ACCOUNT OF THE VARIOUS GROUP CONCERNS. HOWEVER DUE TO CERTAIN CLERICAL ERRORS AND ALSO DUE TO INTER - COMPANY ADJUSTMENTS WITHIN THE GROUP WHICH WERE HOWEVER NOT PROPERLY REFLECTED IN THE INDIVIDUAL ACCOUNTS, THE RE AROSE NEGATIVE CASH BALANCES IN THE GROUP CO NCERNS ON VARIOUS DATES FROM THE F.Y.S 2007 - 08 TO 2013 - 14, AS UNDER: A.Y. F.Y. MAA TARINI & CO (BAJRANG KUMAR AGARWAL) BASHUKINATH & CO. BASHUKINATH ROADWAYS (P) LTD. TOTAL DATE AMOUNT DATE AMOUNT DATE AM OUNT 2008 - 09 2009 - 10 2007 - 08 15 - 07 - 2007 11,47,434 11,47,434 2008 - 09 25 - 08 - 2008 50,54,548 31 - 08 - 2008 8,80,977 06 - 06 - 2008 3,32,095 62,67,620 2010 - 11 2009 - 10 21 - 02 - 2010 29,16,696 29 - 03 - 2010 34,05,302 05 - 05 - 20 09 49,91,258 1,13,13,256 2011 - 12 2010 - 11 15 - 09 - 2010 19,37,463 20 - 04 - 2010 42,37,433 61,74,896 2012 - 13 2013 - 14 2011 - 12 22 - 11 - 2011 43,61,786 18 - 04 - 2011 28,69,748 72,31,534 2012 - 13 05 - 05 - 2012 24,87,480 30 - 03 - 2013 15,59,305 18 - 11 - 2012 5,25,675 45,72,460 2014 - 15 2013 - 14 30 - 05 - 2013 21,85,888 21,85,888 TO TAL 1,79,05,407 1,22,68,905 87,18,776 3,88,93,088 4. THE APPELLANT GROUP VIDE ITS LETTER DATED 15/05/2014, DULY EXPLAINING THE NEGATIVE CASH BALAN CE, IN ORDER TO BUY PEACE OF MIND, OFFERED THE SAME AS THE UN DISCLOSED INCOME OF THE GROUP ARISIN G OUT OF LAND SAUDA DEALS. IT WAS EXPLAINED THAT THE CASH ACCOUNT HAS TO BE TAKEN IN AS A GROUP WHOLE SINCE THE VARIOUS CONCERNS IN THE GROUP WERE ALL INTERC ONNECTED AND SURPLUS CASH IN ONE WAS IMMEDIATELY USED IN THE OTHER CONCERNS. THUS A COMBINED CASH FLOW FOR ALL THE THREE CONCERNS WAS WORKED OUT AND THE NEGATIVE PEAKS WAS OFFERED AS THE UNDISCLOSED INCOME IN THE HANDS OF BAJRANG KUMAR AGARWAL WHO WAS THE PROPRIETOR OF M/S MAA TARINI & CO., PARTNER IN BASHUKINATH & CO. AND DIRECTOR IN BASHUKINATH ROADWAYS P LTD. THUS IN THE DISCLOSURE PETITION THE FOLLOWING DISCLOSURE WAS MADE IN THE HANDS OF BAJRANG KUMAR AGARWAL: (QUOTED IN THE ASSESSMENT ORDER OF BAJRAN G KUMAR AGARWAL) IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 45 A.Y. 2008 - 09 RS. 11,50,000/ - 2009 - 10 RS. 45,00,000/ - 2014 - 15 RS.1,70,00,000/ - RS.2,26,50,000/:. THE ABOVE DISCLOSURE WAS DISCLOSED AND INCORPORATED IN THE 153A RETURN FILED BY SHRI BAJRANG KUMAR AGARWAL 4.1. HOWEVER DURING THE PR OCESS OF ASSESSMENT IT WAS OBSERVED BY THE APPELLANT GROUP THAT CERTAIN DEFICIENCIES STILL AROSE IN THE NEGATIVE CASH PEAK OF THE GROUP FOR THE A. Y.S 2009 - 10 AND 2010 - 11. THUS A REVISED 153A RETURN WAS DULY FILED IN THE CASE OF BAJRANG KUMAR AGARWAL WHERE IN TAKING NOTE OF ALL DEFICIENCIES ARISING OUT OF THE PEAK, REVISED ADDITIONAL INCOME ARISING OUT OF LAND SAUDAS COVERING THE NEGATIVE PEAK WAS OFFERED AS UNDER: A.Y. 2008 - 09 RS. 11,50,000 / - 2009 - 10 RS.45,00,000/ - ADD: RS.26,85,000/ - RS.71,85,000/ - 2010 - 11 NIL ADD: RS.29,81,000/ - RS.29,81,000/ - 2014 - 15 RS. 1,70,00,000/ - LESS: RS.56,66,000/ - RS.1,13,34,000/ - RS.2,26,50,000/ - 4.2. THUS THE DISCLOSURE OF RS.2,26,50,000 / - WAS MADE IN THE HANDS OF BAJRANG KUMAR AGARWAL AS UNDER: AY 2008 - 09 20 09 - 10 2010 - 11 2014 - 15 TOTAL BAJRANG KUMAR AGARWAL (153 A) INCOME FROM LAND SAUDA - NEGATIVE CASH BALANCE (DECLARED IN 153 A RETURN ) 11,50,000 45,00,000 1,70,00,000 2,26,50,000 - DECLARED IN REVISED RETURN 153A RETURN 26,85,00 0 29,81,000 (56,66,000) (FILED ON 2.3.2016) 11,50,000 71,85,000 29,81,000 1,13,34,000 2,26,50,000 5. EXPLAINING THE ABOVE DISCLOSURE AND THE NEGATIVE CASH PEAK CALCULATION, A DETAILED SUBMISSION DATED 09103/2016 WAS FILED IN THE CASE OF BAJRANG KUMAR AGARWAL WHICH HAS BEEN DULY QUOTED IN FULL BY THE A. O. IN THE ASSESSMENT ORDER C COPY OF THE SAME IS ENCLOSED AND CAN BE REFERRED TO). IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 46 IT WAS DULY EXPLAINED AND IS NOW EXPLAINED BEFORE YOUR GOODSELF THAT THE COLUMNS (A) (B) AND (C) ARE THE INDIVI DUAL NEGATIVE PEAKS OF THE THREE CONCERNS. COLUM (D) IS THE TOTAL NEGATIVE PEAK OF THE THREE CONCERNS TOGETHER AND COLUMN C E) IS THE INCREMENTAL TOTAL NEGATIVE PEAK. NOW THE COLUMN (F) IS THE TOTAL OFFER OF THE UNDISCLOSED INCOME ON THIS ACCOUNT WHICH W AS MADE CONSOLIDATED IN THE HANDS OF BAJRANG KUMAR AGARWAL AND WHICH FROM THE CHART BELOW CAN BE SEEN COVERS THE TOTAL JOINT NEGATIVE - PEAK FOR ALL THE THREE CONCERNS. A.Y. MAA TARINI & CO (BAJRANG KUMAR AGARWAL) BASHUKI NATH & CO. BASHUKINA TH ROADWAYS (P) LTD. TOTAL NEGAT IVE PEAK INCREMEN TAL NEGATIVE PEAK ADDITION AL INCOME OFFERED (A) (B) (C) (D)=(A+ B+C) (C) (F) 2008 - 09 11,47,434 11,47,434 11,47,434 11,50,000 2009 - 10 50,44,548 29,55,712 3,32,095 83,32,355 71,84,921 71,85,000 2010 - 11 29,16,696 34,05, 302 49,91,258 1,13,13,256 29,80,901 29,81,000 2011 - 12 19,37,463 42,37.433 61,74,896 2012 - 13 43,61,786 29,04,303 28,69,748 1,01,35,837 2013 - 14 24,87,480 15,59,305 5,25,675 45,72,460 2014 - 15 21,85,888 21,85,888 1,13,34,000 TOTAL 1,78,95,40 7 1,72,47,943 87,18,776 4,38,62,126 2,26,50,000 THUS COVERING AND EXPLAINING THE ENTIRE NEGATIVE CASH PEAK, THE APPELLANT GROUP MADE A DISCLOSURE OF RS.2,26,50,000 / - . IN FACT THE CHART ABOVE WILL SHOW THAT THE HIGHEST GROUP PEAK (TAKING ADDITION OF THE INDIVIDUAL THREE CONCERNS) WAS ONLY TO THE TUNE OF RS.1,13,13,256/ - WHEREAS THE OFFER HAS BEEN MADE TO THE TUNE OF RS.2,26,50,000 / - . ONCE THE PEAK OFRS.1,13,13,256/ - WAS REACHED IN THE YEAR 2010 - 11, THE PEAK FOR THE OTHER YEARS HAVE ALL BEEN BELOW THIS HIG H. THUS AFTER TE DISCLOSURE IN 2010 - 11, NO FURTHER DISCLOSURE WAS NEEDED. I N FACT AT THIS POINT IT WOULD BE OF UTMOST RELEVANCE TO BRING TO YOUR GOODSELVES NOTICE THAT IN THE ABOVE CHART BASED ON WHICH THE DISCLOSURE IS MADE BY THE APPELLANT GROUP, IN FA CT THE 'GROUP' THEORY HAS NOT BEEN FOLLOWED. THE INDIVIDUAL THREE CONCERNS ARE TREATED SEPARATELY AND THEIR HIGHEST NEGATIVE PEAKS DURING THE YEAR HAVE BEEN NOTED AND SUMMED UP. THERE IS IN FACT NO DAY TO DAY GROUPING OF THE NEGATIVES WITH THE POSITIVES. A COMBINED CASH FLOW IS IN FACT ONE IN WHICH THE DAILY NEGATIVES AND POSITIVES ARE ALL CLUBBED TOGETHER, KEEPING THE DAY TO DAY INTRA GROUP TRANSFERS. THE DETAILED CASH FLOW WHICH WAS SUBMITTED BEFORE THE A.O. AT THE VARIOUS STAGES OF ASSESSMENT IS ENCLOSED HEREWITH AND THE SAME WILL REVEAL THAT AT PAGE 14, DATED 27/08 / 2008 ARISES THE HIGHEST NEGATIVE PEAK OF THE GROUP WHICH IS ONLY TO THE TUNE OF RS.59,60,681/ - . THE APPELLANT GROUP AGAINST THIS HAS IN UTMOST GOOD IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 47 FAITH AND IN ORDER TO BUY PEACE AVOIDING ALL LITIGATIONS AND COMPLICATIONS HAS IN FACT MADE AN OFFER OF RS.2,26,50,000 / - WHICH IS WAY IN EXCESS. 6. HOWEVER, IGNORING ALL THE ABOVE, THE ID. A.O., ABSOLUTELY IN TOTAL DISREGARD AND IGNORANCE TO THE 'PEAK THEORY' HAS FOLLOWED A 'TOTAL SUM' THEORY AND OUT OF THE DISCLOSURE OF RS.2,26,50,0001 - HAS ALLOWED FIRSTLY THE TOTAL OF THE YEAR WISE NEGATIVE PEAKS OF BAJRANG KUMAR AGARWAL (ARISING OUT OF MAA TARINI & CO.), THEN ALLOWED THE NEGATIVE PEAKS OF BASHUKINATH & CO. (PARTLY, UPTO THE TOTAL OF RS.2,26,50, 0001 - ) AND THUS ADDED/DISALLOWED THE ENTIRE YEAR WISE NEGATIVE PEAKS IN THE CASE OF THE APPELLANT, BEING BASHUKINATH ROADWAYS P LTD. THE TWO CHARTS BELOW DEPICT IN FULL DETAILS, THE SET OFF ALLOWED BY THE LD . A.O. AND THE DISALLOWANCE MADE BY HIM A.Y. MAA TARINI & CO(BAJRANG KUMAR AGARWAL) NEGATIVE PEAK CUMULATIVE NEGATIVE PEAK( AS ADJUSTED BY THE A.O.) ADDITIONAL INCOME OFFERED BY APPELLANT CUMULATIVE ADDITIONAL INCOME OFFERED BY APPELLANT 2008 - 09 11,47,434 11,47,434 11,50,000 11,50,000 2009 - 10 50,54,548 62,01,982 71,85,000 83,35,000 - 2010 - 11 2011 - 12 29,16,696 91,18,678 29,81,000 1,13,16,000 - 19,37,463 1,10,56,141 - 2012 - 13 2,59,859 41,01,927 1,13,16,000 1,54,17,927 43,61,786 - 2013 - 14 24,87,4 80 1,79,05,407 - 2014 - 15 1,79,05,407 1,13,34,000 2,26,50,000 BASHUKINATH & CO. NEGATIVE PEAK 2009 - 10 8,80,977 1,87,86,384 2010 - 11 34,05,302 2,21,91,686 2011 - 12 4,58,314 37,79,119 2,26,50,000 DISALLOWED BY THE A.O DIS ALLOWED BY DISALLOWED BY THE A.O 42,37,433 2012 - 13 2013 - 14 15,59,305 2013 - 14 21,85,888 IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 48 A.Y. ADDITION AL INCOME OFFERED CUMULAT IVE INCOME OFFERED MAA TARINI & CO(BAJRANG KUMAR AGARWAL) BASHUKINA TH & CO. BASHUKIN ATH ROADWAY S P LTD. 2008 - 09 NEGATIVE PEAK CUMULATIVE NEGATIVE PEAK NEGATIVE PEAK CUMULATIV E NEGATIVE PEAK NEGATIVE PEAK 11,50,000 11,50,000 11,47,434 11,47,434 2009 - 10 71,85,000 83,35,000 50,54,548 62,01,982 8,80,977 1,87,86,384 3,32,095 (DISALLOWED) 2010 - 11 29,81,000 1,13,16,000 29,16,696 91,18,678 34,05,302 2,21,91,686 49,91,258 (DISALLOWED) 2011 - 12 19,37,463 1,10,56,141 4,58,314 2,26,50,000 DISALLOWE D 7. NOW BASED ON THE ABOVE DISCLOSURE MA DE BY THE APPELLANT GROUP AND THE ACTION OF THE ID. A.O., IT IS SUBMITTED THAT THE LD. A.O. HAS CLEARLY AND UTTERLY FAILED IN APPRECIATING THE CONCEPT OF PEAK IN CASH CREDITS. THE ID. A.O. HAS SUMMED UP ALL THE INDIVIDUAL YEARWISE NEGATIVE PEAKS AND SET OF F THE THUS CUMULATIVE PEAK AGAINST THE INCOME OFFERED BY THE APPELLANT GROUP. THE CONCEPT OF PEAK HAS BEEN CLEARLY EXPLAINED BY THE APPELLANT AND IS ALSO PRODUCED BEFORE YOUR HONOURS VIDE PARA 6 ABOVE. 8. THE ID. CIT(A) AFTER ANALYSING ON FULL VERIFICA TION AND APPRECIATION OF THE ENTIRE FACTS OF THE CASE OF THE APPELLANT, ALLOWED FULL RELIEF TO THE APPELLANT AS UNDER (AT PARA 4.3 OF ITS ORDER) '4.3. 1 HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. I HAVE ALSO VERIFIED THE ASSESSMENT ORDERS IN THE CASE OF BAJRANG KUMAR AGARWAL. I FIND THAT BAJRANG KUMAR AGARWAL WHO IS A PROPRIETOR OF MAA TARINI & CO., PARTNER OF BASUKINATH AND CO. AND DIRECTOR OF BASUKINATH ROADWAYS PVT. LTD. HAS OFFERED AND PAID TAX ON NEGATIVE CASH BALANCE ARISING IN THE CASE OF THESE THREE CONCERNS. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.3,32,095 / - IS ORDERED TO BE DELETED. ' 9. CONCLUDING ON THE SAID GROUND, PLACING FULL RELIANCE ON THE ABOVE SUBMISSION, IT IS THUS SUBMITTE D AND REQUESTED BEFORE YOUR HONOURS THAT THE DISCLOSURE MADE BY THE APPELLANT GROUP OF RS.2,26,50, 000/ - BEING MORE THAN SUFFICIENT TO COVER THE PEAK OF THE NEGATIVE CASH BALANCES ARISING OUT OF THE SEIZED PENDRIVE BNRO - 21, NO SEPARATE AND ADDITIONAL ADDITI ON IS TO BE MADE ON THIS HEAD IN THE HANDS OF THE APPELLANT. IV. CONCLUSION: THUS, BASED ON ALL OF THE ABOVE, IT IS HUMBLY PRAYED BEFORE YOUR GOODSELF TO KINDLY GRANT RELIEF TO THE APPELLANT. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 49 8. ON THE OTHER HAND, LD.DR RELIED ON THE ORDER OF CIT(A) AN D SUBMITTED THAT AS PER DECISION S OF THE HONBLE KERALA AND HONBLE ALLAHABAD HIGH COURT, EVEN WITHOUT ANY INCRIMINATING MATERIAL BEING AVAILABLE AGAINST THE ASSESSEE, ASSESSMENT U/S.153A CAN BE CONCLUDED AGAINST THE INTEREST OF THE ASSESSEE, INCLUDING MAK ING ADDITIONS. LD. DR FURTHER SUBMITTED THAT THERE IS NO BAR UPON THE AO AS PER SECTION 153A OF THE ACT FOR PASSING THE SEPARATE ORDER. THE AO HAS PASSED THE ORDER AFTER DEPTH EXAMINATION OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE. THEREFORE, ORDER OF THE AO SHOULD BE RESTORED. 9. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD ALONG WITH THE ORDERS OF AUTHORITIES BELOW, WE FIND THAT THE LD. AR OF THE ASSESSEE HAS CHALLENGED LEGAL ISSUE REGARDING NO INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH BY THE SEARCHED TEAM AND THE ADDITION IS NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL, WHICH HAS BEEN CHALLENGED BY THE ASSESSEE BY WAY OF CROSS OBJECTIONS. IT WAS ALSO AVERRED BY THE LD. AR OF THE ASSESSEE THAT THE CIT(A ) HAS WRONGLY DISMISSED THE LEGAL GROUND CHALLENGED BEFORE HIM. AS, AT THE OUTSET, LD. AR OF THE ASSESSEE HAS ARGUED ONLY ON THE LEGAL GROUND, THEREFORE, WE PROCEED TO DISPOSE OFF THE CROSS OBJECTIONS FILED BY THE ASSESSEE ALONG WITH THE APPEALS OF REVENUE FOR THE ASSESSMENT YEARS 2009 - 2010 & 2010 - 2011. IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 50 10. ON CAREFUL PERUSAL OF THE ORDERS OF BOTH THE AUTHORITIES BELOW, WE OBSERVE THAT THERE IS NO REFERENCE OF ANY INCRIMINATING MATERIAL ON RECORD. IT HAS BEEN OBSERVED BY THE CIT(A) THAT THE ADDITIONS MADE B Y THE AO, HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS, THEREFORE, HE DELETED THE ADDITION AS PER SECTION 292C OF THE ACT. THEREFORE, IT CANNOT BE SAID THAT WHATEVER THE ADDITION MADE BY THE AO WAS ALREADY RECORDED IN THE BOOKS OF ACCOUNTS. THERE IS NO ANY W HISPER IN THE ASSESSMENT ORDER THAT THERE WAS ANY UNDISCLOSED MATERIALS DISCOVERED BY THE SEARCH TEA M . THE ASSESSEE HAS FILED RETURN U/S.139(1) OF THE ACT ON 29.09.2009 AND THE SEARCH WAS TOOK PLACE ON 16.01.2014 AND 25.02.2014. THEREFORE, IT WOULD BE TREA TED AS UNABATED ASSESSMENT AS NO ASSESSMENT WAS PENDING BEFORE THE AO. THEREFORE, WITHOUT REFERRING TO ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE ADDITION CANNOT BE MADE. 11. HOWEVER, THE CIT(A) RELYING UPON THE DECISIONS OF THE HON BLE HIGH COURT OF KERALA IN THE CASE OF E.N.GOPAKUMAR VS. CIT [2016] 75 TAXMANN.COM 215 (KERALA) AND THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR ARORA [2014] 52 TAXMANN.COM 172 (ALLAHABAD) HAS HELD THAT EVEN IF THERE IS N O INCRIMINATING MATERIAL, THE AO IS EMPOWERED TO MAKE ADDITIONS IN AN ASSESSMENT FRAMED U/S.153A OF THE ACT. W E FIND THAT NONE OF THE DECISION RELIED UPON BY EITHER OF THE PARTIES ARE OF JURISDICTIONAL HIGH COURT. IT IS A WELL SETTLED IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 51 POSITION OF LAW THAT WHEN THERE ARE CONFLICTING DECISIONS OF HIGH COURTS NONE OF WHICH IS THE JURISDICTIONAL HIGH COURT, THEN THE DECISION FAVOURING THE ASSESSEE SHOULD BE FOLLOWED. FOR THIS, WE DERIVE SUPPORT FROM THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD . 88 ITR 192 (SC). AFTER CONSIDERING THE CASE LAWS CITED BY BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT MADE U/S.153 A OF THE ACT FOR AN ASSESSMENT YEAR FOR WHICH ASSESSMENT HAS NOT BEEN ABATED AND EVEN NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, IS UNSUSTAINABLE IN THE EYES OF LAW. 12. AS PER THE DECISION OF HONBLE DELHI HIGH COURT IN THE CA SE OF KABUL CHAWLA, [2015] 61 TAXMANN.COM 412 (DELHI), COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A OF THE ACT ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COU RSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. THE RELEVANT OBSERVATIONS OF THE HONBLE DEL HI HIGH COURT ARE AS UNDER : - ON A CONSPECTUS OF SECTION 153A(1), READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN VARIOUS DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 52 REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. (II) AS SESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COMPUTED BY THE ASSESSING OFFICERS AS A FRESH EXERCISE. ( III ) THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSMENT POWE RS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE .STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REI TERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E., THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETE ASSESSMENT PROCEEDINGS. (VI) INSOFAR AS P ENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND A NY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEAR THED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. [PARA 37] THE PRESENT AP PEALS CONCERN ASSESSMENT YEARS 2002 - 03, 2005 - 06 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 HAVE BEEN MADE TO THE INCOME ALREADY AS SESSED. [PARA 38] THE REVENUE'S APPEALS ARE ACCORDINGLY DISMISSED.[PARA 40] IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 53 1 3 . UNDISPUTEDLY, IN THE INSTANT CASE, THE ASSESSMENT FOR THE ASSESSMENT YEARS IN QUESTION HAVE ALREADY BEEN COMPLETED ON THE DATE OF SEARCH AND THE AO HAS NOT REFERRED TO ANY INC RIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE ASSESSMENT ORDER. NOTHING IS FOUND CONTRARY TO THE STATED POSITION OF THE ASSESSEE , THEREFORE, THE ASSESSMENT FRAMED U/S.153A OF THE ACT IS NOT SUSTAINABLE. RESPECTFULLY, FOLLOWING THE RATIO OF D ECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), WHICH CLEARLY APPLICABLE ON THE FACTS OF THE PRESENT CASE ALSO, AS ADMITTEDLY NO INCRIMINATING MATERIAL RELATING TO THESE ASSESSMENT YEARS OR AS A MATTER OF FACT FOR ANY OF THE AS SESSMENT YEARS WERE FOUND DURING THE COURSE OF SEARCH AND ACCORDINGLY, WE QUASH THE ORDERS OF BOTH THE AUTHORITIES BELOW AND HELD THAT WITHOUT REFERRING ANY INCRIMINATING MATERIAL BY THE AO IN THE ASSESSMENT ORDER FOR THE YEARS UNDER CONSIDERATION , STATED TO BE UNEARTHED DURING THE COURSE OF SEARCH, FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT , IS VOID AB INITIO . THUS, THE LEGAL GROUND RAISED BY THE ASSESSEE IN BOTH THE CROSS OBJECTIONS FOR A.Y.2 009 - 2010 & 2010 - 2011 IS ALLOWED. 14 . SINCE, WE HAVE DECIDED THE LEGAL ISSUE RAISED BY THE ASSESSEE IN ITS CROSS OBJECTIONS AND QUASHED THE ASSESSMENT FRAMED BY THE AO U/S.153A OF THE ACT, THEREFORE, THE APPEALS FILED BY THE REVENUE, ARISING OUT OF THE ORDE R PASSED BY THE CIT(A) THEREBY DELETING THE ADDITIONS IT (SS) A NO S . 141&142 /CTK/201 8 CO NOS.20&21/CTK/2019 54 MADE BY THE AO, HAVE NO LEGS TO STAND AND THE SAME ARE HEREBY DISMISSED. 15 . IN THE RESULT, CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED ON LEGAL GROUND AND THE APPEALS OF T HE REVENUE ARE DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 20/02 /20 20 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 20/02 /20 20 PRAKASH KUMAR MISHRA, SR.P .S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) ITAT CUTTACK BENCH, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CU TTACK 6. / GUARD FILE. //TRUE COPY//