Bhaskar Tea and Industries Private Limited. , Kolkata V. ACIT Central, Cir-1(1), Kolkata. , Kolkata

ITSSA 144/KOL/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8205 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-01-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 03-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: . DURING SEARCH PROCEEDINGS; EVIDENCE WERE GATHERED REGARDING UNACCOUNTED SALE OF TEA
• Keywords: Document seized; Block assessment; Retraction; Documents seized; Reassessment proceedings
• Section: 68; 143(3); 133A; 153A; 143(1); 143(2); 264; 192; 48; 73; 13; 153; 153C

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ “बी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.(SS) A. No. 144 & 145 /Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. (PAN: AABCB 4084 F) Vs. ACIT, Central Circle-1(1), Kolkata Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 08.01.2024 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 28.02.2024 For the Appellant/ नधा /रती क$ ओर से Shri S. M. Surana, A.R For the Respondent/ राज व क$ ओर से Shri Abhijit Kundu, CIT ORDER / आदेश Per Rajesh Kumar, AM: These are the appeals preferred by the assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-20, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 25.07.2023 for the AYs2012-13 & 2013-14. 2. First we shall take in IT(SS)A No. 144/Kol/2023 for AY 2012-13. The only issue raised by the assessee is against the order of Ld. CIT(A) upholding the order of AO thereby confirming the addition of Rs. 2,25,00,000/- wherein the AO has treated the sale of investment in shares as unexplained amount received on account of sale of shares. 2 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. 3. Facts in brief are that a search action was conducted on 17.03.2015 in the business premises of the assessee . Accordingly notice u/s 153A of the Act was issued on 7.4.2016 which was duly served upon the assessee and was complied by filing return of income on 23.09.2016 declaring total income of Rs. Nil. During the course of assessment proceedings, the AO noted that the assessee has sold its investments in Alipurduar Enterprises Ltd. for Rs. 2,25,00,000/- and booked long term loss of Rs. 11,51,799/-. The AO noted that the shares were sold to M/s Span Commercial Pvt. Ltd., M/s Symphony Distributors Pvt. Ltd., M/s Glix Securities Pvt. Ltd. and M/s Ecstacy Merchants Pvt. Ltd. The AO also noted that all the companies who have invested in the share capital of different Mohta Group of companies and accordingly issued notices which were not served. Thereafter the AO noted that documents seized during the course of search contained details of records of disinvestments of Bhaskar Tea & Industries Ltd. According to the AO, the Page 42 of SVM-2 states that the cash was paid to director Shri Srivardhan Mohta which was being routed to M/s Bhaskar Tea Industries Pvt Ltd and therefore he added the same to the income of the assessee in the assessment framed u/s 153A/143(3) of the Act vide order dated 28.12.2016. 4. The Ld. CIT(A) simply dismissed the appeal of the assessee on this issue while deleting the addition in respect of other items of additions by following the decision of Hon’ble Apex Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. (149 taxmann.com399). 5. The Ld. A.R ,at the outset, pointed out that the impugned order is an unabated assessment on the date of search as there was no pending assessment on that date as the time required to issue the notice u/s 143(2) of the Act had already expired. The Ld. A.R therefore prayed that the addition in an unabated assessment year can only be made with reference to the seized incriminating material and not otherwise in terms of provisions of Section 153A of the Act. The Ld. A.R stated that the document referred to as seized material by the AO [SVM-2] was not found and seized during the course of search on the assessee but seized during survey proceedings on M/s SVM 3 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. Impex & Finance Pvt. Ltd. and others on 18.03.2015. The Ld. A.R referred to the record of survey proceedings a copy of which is filed at page 32 to 34 of PB and SVM-2 & 3 were specifically mentioned therein which have been placed at page no. 32 to 46 in the paper book. The documents were specifically referred to by the AO while making the addition in respect of sale of share in the hands of assessee. The Ld. A.R submitted that any document seized during the course of survey is not incriminating material seized during the Course of search and therefore addition made by the AO based upon that has to be deleted. The Ld. A.R therefore prayed that the addition made by the AO in respect of sale of shares of Rs. 2.25 crores is without jurisdiction and may kindly be deleted. The Ld. A.R in defense of arguments relied on the decision of Hon’ble Apex Court in the case of PCIT Vs Abhisar Buildwell Pvt. Ltd. in 454 ITR 212 (SC). The Ld. A.R subsequently referred to para 11, 12 and 14 of the said decision and submitted that the Hon’ble Court has held that addition can only be made in case of unabated and completed assessment on the basis of incriminating material found during the course of search and not otherwise. The Hon’ble Court further observed that where no incriminating material has found in case of completed and unabated assessment , the only remedy available to the Revenue would be to initiate reopening and re-assessment proceedings u/s 147/148 of the Act subject to the fulfilment of conditions as mentioned in section 147/148 of the Act as in such a situation the revenue can not be left with no remedy. The Ld. A.R also argued that Hon’ble Court in para 12 clearly stated that if revenue’s contentions is accepted that even where no incriminating material is found during the course of search, even in case of unabated /completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material, in that case, there will be two assessment orders, which shall not be permissible under the Act. The Ld. A.R submitted that in case of any material found at the premises of the any other person other than the assessee during the course of survey/search, the assessment should have been framed u/s 153C of the Act and not u/s 153A of the Act as has been done by the AO. 4 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. The Ld. A.R in defense of argument relied on the decision of Co-ordinate bench in the case of Shri Krishna Kumar Singhania & Ors in IT(SS)A Nos. 109 &110/Kol/2017 and also submitted that similar ratio has been laid down by the Co-ordinate Bench in the case of Real Marketing Pvt. Ltd. in IT(SS)A Nos. 128 to 133/AHD/2021 for AY 2009-10 to 2014-15. The Ld. A.R therefore prayed before the Bench that in view of the above legal position and facts of case, the addition of Rs. 2.25 crores may kindly be deleted for the want of jurisdiction of the AO by setting the appellate order on this issue. 6. The Ld. D.R on the other hand relied heavily on the order of authorities below and submitted that the issue was not raised before the Ld. CIT(A) and only being raised before the Tribunal for the first time. The Ld. D.R submitted that during the search proceeding simultaneously the surveys u/s 133A of the Act were also conducted on the group companies which were part of and consequential to the same search and therefore to claim that the material found during the course of survey was not incriminating material is wrong and should not be accepted. The ld DR also referred to Rule 112 of the Income Tax Rules which deals with the manner of inquiry u/s 132 of the Act. The Ld. D.R submitted that all the materials were collected during search and also during the course of enquiry could be used together to make the addition and prayed that the ground raised by the assessee may be dismissed. 7. After hearing the rival contentions and perusing the material on record, we find that undisputedly the assessment in the instant year is unabated on the date of search as no assessment proceedings were pending on the date of search and also time period of issuing notice u/s 143(2) had already expired. Therefore in order to make addition in unabated assessment year, the AO has to rely and refer to the incriminating seized material during the course of search in absence of which the AO has no jurisdiction to make an addition in the present case. We note that the material as referred by the AO i.e. SVM-2 in which the information qua cash being paid to director Shri Srivardhan Mohta, which was being routed to Bhaskar Tea and Industries Pvt Ltd., was found and seized during the course of survey on M/s SVM Enterprises Pvt. Ltd. on 5 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. 18.03.2015 meaning thereby that the said document was not found during the course of search and does not constitute an incriminating searched material. In our opinion, the addition made by the AO on the basis of said document is not sustainable in the eyes of law as the document marked as SVM-2 was found during the course of survey on group company and not during the search on the assessee. In that scenario where the document was found from the premises of any person other than the assessee during the course of search/survey which pertains to the assessee, then the AO has to frame assessment u/s 153A of the Act after following the correct methodology. The case of the assessee finds support from the decisions which are duly discussed hereunder: i) On the incriminating material not found during search in case of unabated assessee , the Honble Apex Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. (Supra) has held as under: “11. ......................Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfillment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under section 153A of the Act is linked with the search and requisition under sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or 6 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub-section (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.” ii) Where incriminating material was found from the premises of any other persons other than the assessee, the coordinate bench in the case of ACIT vs. M/s Real Marketing Pvt. Ltd. has held as under: 11. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, there was search proceeding under section 132 of the Act dated 4th December 2014 (i.e. during the financial year 2014-15 corresponding to A.Y. 2015-16) carried out in the case of “Barter/Accommodation Entry Provider Group” including the assessee and in consequence to the same, the proceedings under section 153A of the Act were initiated in case of respondent assessee for the A.Y. 2009-10 to 2014-15. The assessment under section 153A r.w.s section 143(3) of the Act for the year under consideration i.e. A.Y. 2009-10 was framed after making addition of Rs. 20,85,36,570/- being bogus accommodation entry in form of share capital, premium, unsecured land and unexplained expenses incurred for taking such accommodation entry. On appeal by the assessee, the learned CIT (A) deleted the addition made by the AO by 7 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. observing that there was no material of incriminating nature found during the search at the premises of the assessee, therefore the year under consideration being unabated/completed assessment years, no addition should be made in the absence of any incriminating material. The learned CIT(A) also observed that the materials referred by the AO for making the addition in hands of the assessee was found in the search proceedings at third parties, therefore the same cannot be utilized against the assessee without complying and invoking the provisions of section 153C of the Act. The learned DR before us vehemently argued that there is no provision under section 153A/153C which restrict the assessment or reassessment in case of search to the extent of incriminating materials only. 11.1 With regard to fact that no addition can be made in absence of incriminating material we find that it has been settled by various Hon’ble Court including Hon’ble Jurisdictional High Court that the completed/ unabated assessments cannot be disturbed in the absence of any incriminating materials/ documents whereas the assessment/ reassessment can be made with respect to abated assessment years. The word 'assess' in Section 153A/153C of the Act is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to the completed assessment proceedings. The Hon’ble Gujarat High Court in the case of Saumya Construction reported in 81 taxmann.com 292 has held that there cannot be any addition of regular items shown in the books of accounts until and unless there were certain materials of incriminating nature found during the search. The word incriminating has not been defined under the Act but it refers to those materials/ documents/ information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee. Now coming to the case on hand, we note that there was no incriminating document of whatsoever found from the premises A-301, Wall Street II, Ellisbridge and 24, Jogeshwari Park against which panchanama was drawn in the name of respondent assessee. The AO in the assessment order while making the addition in the hands of assessee nowhere referred any material of incriminating nature found from the above 2 premises of assessee regarding credit of share capital along with premium and unsecured loan with reference to the year under consideration which would have made basis for the addition in the assessment. TheAO for making the addition referred the material found from the premises of the third parties Shri Shrish Chandrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah. We find that these parties are unconnected to the assessee and search carried on their premises were an independent search. Likewise, the AO also referred the materials found from the premises of Shri Ashit Vohra marked as annexure A/5, A/6 and A/7 and from the office of Anil Hiralal Shah situated at B-406, Wall Street-II Ellisbridge, Ahmedabad marked as page 247 of annexure A-1. In this regard, we note that though the search was carried on same date on the premises of Shri Ashit Vohra and A/7 and the office of Shri Anil Hiralal Shah and it was alleged to be part of the group to which respondent assessee belongs. However, the search Panchama drawn on above premises of Shri Ashit Vohra and the office of Anil Hiralal Shah does not include the name of the respondent assessee which establishes search at those premises are independent from the search carried on the premises of the assessee. 11.2 At the time of hearing, the learned DR has not brought anything on record contrary to the finding of the learned CIT (A) suggesting that additions were made based on incriminating materials found from the premises of the assessee. Accordingly, we hold that there cannot be any addition of the regular items which were disclosed by the assessee in the regular books of accounts in the absence of material/information of incriminating nature found from the premises of the assessee. In holding so, we draw support and guidance from the judgment of Hon’ble Gujarat High Court in case of Saumya Construction (P.) Ltd (supra) wherein it was held as under: Thus, while in view of the mandate of sub-section (1) of section 153A in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such 8 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, the earlier assessment would have to be reiterated. 11.3 In view of the above, we hold that there cannot be any addition to the total income of the assessee of the regular items as made by the AO in the present case. Accordingly, we do not find any infirmity in the finding of the learned CIT (A) to this extent. 11.4 Coming to the utilization of materials found during the search proceeding from the premises of the third parties.In the case on hand, the materials found from unconnected search at the premises of Shri Shrish Chandrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah or the material found from the premises of Shri Asit Vohra and from the office of Shri Anil Hiralal Shah situated at B-406, Wall Street-II Ellisbridge which do not belong to the assessee as the name of assessee was not found in the panchanama drawn on theses premises. The law is fairly settled that the proceedings under section 153C of the Act can be initiated in a situation where the documents/materials belonging/pertaining to the assessee were recovered from the premises of the 3rd party during search proceedings under section 132 of the Act. Then, the AO of the search party has to record the satisfaction by observing that the documents found in the course of search from the premises of the 3rd party belongs/ pertains to the person other than the searched person and he will hand over such satisfaction along with the necessary documents to the AO of such other person who was not subject to search. The AO of the other person has again will record his satisfaction that the documents found from the premises of the 3rd party during search has bearing on the income of the assessee. The question arises what the fate of the case would be where there was search in the case of the assessee as well as in the case of the other party under the provisions of section 132 of the Act and the document was found from the premises of the 3rd party. This issue has been answered by the order of this Tribunal in the case of Shri Rajesh Sundardas Vaswani & others in IT(SS)A No. 95/Ahd/2019 & others where the coordinate bench vide order dated 12-11-2020 quashed the assessment order passed under section 143(3) r.w.s. 153A of the Act. The relevant finding of the ITAT is extracted from paras 29 to 38, pages 32 to 48 of the relevant order. 11.5 Likewise, the coordinate of bench of Kolkata ITAT in case of Krishna Kumar Singhania reported in 88 taxmann.com 259 where search under section carried on Cygnus Group of Cases comprising of various companies and individuals on 23-122014 at various residential premises / offices. The assessee Shri Krishna Kumar Singhania was one of the key persons of the group and his personal premises was also subject to the search as on 23-12-2014 but no incriminating material was found from his premises. However, the AO made the addition of bogus long term capital gain based on material found from the office premises of the group companies but panchanama drawn on such office premises does not include the name of the assessee i.e. Shri Krishna Kumar Singhania. In such facts and circumstances the coordinate bench held that the seized documents from the office premises of group of companies in which assessee was a director, said material could not be used under section 153A of the Act against assessee. The relevant finding of the bench reads as under: 10. We have heard the rival submissions. We find that it is not in dispute that there were no documents that were seized from the premises of the assessee except loose sheets vide seized document reference KKS /1 comprising of 8 pages , for which satisfactory explanation has been given by the assessee and no addition was made by the ld AO on this seized document. The seized document used by the ld AO for making the addition in section 153A assessment is CG/1 to 11 and CG/HD/1 which were seized only from the office premises of Cygnus group of companies in which assessee is a director. In this regard, it would be pertinent to note that as per section 292C of the Act, there is a presumption that the documents , assets, books of accounts etc found at the time of search in the premises of a person is always presumed to be belonging to him / them unless 9 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. proved otherwise. This goes to prove that the presumption derived is a rebuttable presumption. Then in such a scenario, the person on whom presumption is drawn , has got every right to state that the said documents does not belong to him / them . The ld AO if he is satisfied with such explanation , has got recourse to proceed on such other person (i.e the person to whom the said documents actually belong to) in terms of section 153C of the Act by recording satisfaction to that effect by way of transfer of those materials to the AO assessing the such other person. This is the mandate provided in section 153C of the Act. In the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon'ble Delhi High Court in the case of CIT v. Pinaki Misra & Sangeeta Misra [2017] 392 ITR 347 dated 3.3.2017, wherein it was held that, no addition could be made on the basis of evidence gathered from extraneous source and on the basis of statement or document received subsequent to search. Hence we hold that the said materials cannot be used in section 153A of the Act against the assessee. This opinion is given without going into the merits and veracity of the said seized documents implicating the assessee herein. 10.1 Hence now the only issue which is left to be addressed is the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2009-10 was not selected for scrutiny and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceeding , as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. The provisions of section 153A of the Act are reproduced hereunder for the sake of convenience :— "[Assessment in case of search or requisition 153A. [(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 assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each 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; (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:" 10.2 We find that the Co-ordinate Bench of this tribunal in the case of ACIT v. Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016- TIOL-167-ITATKOL had explained the aforesaid provisions as below:— "6.4 In our opinion, the scheme of assessment proceedings should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act :— (a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s. 153A of the Act for those six assessment 10 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. years. (b) In respect of the year of search, notice u/s. 143(2) of the Act would be issued and assessment thereon would be completed u/s. 143(3) of the Act. (c) In respect of concluded assessments prior to the year of search, no addition could be made in the relevant assessment year unless any incriminating material is found during the course of search with respect to the relevant assessment year. (d) Pursuant to the search u/s. 132 of the Act, the pending proceedings would get abated. In respect of abated assessments, the total income needs to be determined afresh in accordance with the provisions of section 153A and other provisions of the Act. 6.4.1 The concluded assessments for the purpose of section 153A of the Act shall be — (i) assessment years where assessments are already completed u/s. 143(1) and time limit for issuance of notice u/s. 143(2) of the Act has expired or; (ii) assessment years where assessments are already completed u/s. 143(3) of the Act ; unless they are reopened u/s. 147 of the Act for some other purpose in both the scenarios stated above. 6.4.2 The scheme of assessment proceedings contemplated u/s. 153A of the Act are totally different and distinct from the proceedings contemplated u/s. 147 of the Act and these procedures of assessment operate in different fields and have different purposes to be fulfilled altogether. 6.4.3 The expression 'assess or reassess' stated in section 153A(1)(b) has to be understood as below:- 'assess' means assessments to be framed in respect of abated assessment years irrespective of the fact whether there are any incriminating materials found during the course of search with respect to relevant assessment years ; 'reassess' means assessments to be framed in respect of concluded assessment years where incriminating materials were found during the course of search in respect of the relevant assessment year." 10.3 We also find that recently the Hon'ble Delhi High Court in the case ofCIT v. Kabul Chawla[2016] 380 ITR 573/[2015] 234 Taxman 300/61 taxmann.com 412 held as under:— '37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the 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. (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 LD AOs as a fresh exercise. (iii) The LD AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The LD AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although Section 153A does not say that additions 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 LD AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an 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 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 complete 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 LD AO. (vii) Completed assessments can be interfered with by the LD AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents 11 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. 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 appeals 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.' 10.4 We find that the decision relied upon by the ld DR in the case of CIT v. Anil Kumar Bhatia[2012] 211 Taxman 453/24 taxmann.com 98 (Delhi) does not in any manner advance the case of the revenue as admittedly the Hon'ble Delhi High Court in para 24 of its order had held as under:- "24. We are not concerned with a case where no incriminating material was found during the search conducted under section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open." 10.5 The ld DR also relied on the recent decision of the Hon'ble Kerala High Court in the case of E. N.Gopakumar v. CIT (Central)[2016] 75 taxmann.com 215 in support of his contentions. We find that the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (supra) had duly considered the decisions of Anil Kumar Bhatia case (supra) CIT v. Chetan Das Lachman Das[2012] 211 Taxman 61/26 taxmann.com 175 (Delhi); Madugula Venu v. DIT[2013] 215 Taxman 298/29 taxmann.com 200 (Delhi); Canara Housing Development Co. v. Dy. CIT[2014] 49 taxmann.com 98 (Kar.); Filatex India Ltd. v. CIT[2014] 229 Taxman 555/[2014] 49 taxmann.com 465 (Delhi); Jai Steel (India) v. Asstt. CIT[2013] 219 Taxman 223/36 taxmann.com 523 (Raj.); CIT v. Murli Agro Products Ltd.[2014] 49 taxmann.com 172 (Bom.); CIT v. Continental Warehousing Corpn. (Nhava Sheva) Ltd.[2015] 374 ITR 645/232 Taxman 270/58 taxmann.com 78 (Bom.) and All Cargo Global Logistics Ltd. v. Dy. CIT[2012] 37 ITD 287/23 taxmann.com 103 (Mum. Trib.) (SB). We also find that against the decision of the Hon'ble Delhi High Court in Kabul Chawla case (supra) (Delhi), the revenue preferred Special Leave Petition before the Hon'ble Supreme Court and the same was dismissed by the Hon'ble Apex Court which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon'ble Delhi HC in the case of Kabul Chawla (supra) would have to be considered on the impugned issue and in any case, the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd.[1973] 88 ITR 192 had held that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. 10.6 We also find that the Hon'ble Jurisdictional High Court recently in the case ofPrincipal CIT v. Salasar Stock Broking Ltd. in G.A.No. 1929 of 2016 ITAT No. 264 of 2016 dated 24.8.2016 had endorsed the aforesaid view of Hon'ble Delhi High Court in Kabul Chawla's case and also placed reliance on its own decision in the case of CIT v. Veerprabhu Marketing Ltd. [2016] 73 taxmann.com 149 (Cal.). 10.7 We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search), fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act, as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. Hence the arguments advanced by 12 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. the ld DR in this regard deserves to be dismissed. 10.8 In view of the aforesaid findings and respectfully following the judicial precedents relied upon hereinabove, we hold that the assessment already deemed to have been completed for the Asst Year 2009-10, which was unabated / concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly no fresh addition could be made thereon without the existence of any incriminating materials found in the course of search from the premises of the assessee. Since the issue is addressed on preliminary ground of absence of incriminating materials, we refrain to give our findings on the merits of the additions for the Asst Year 2009-10 in the case of Krishna Kumar Singhania. Accordingly the preliminary ground raised by the assessee in this regard is allowed. 11.6 Based on the above, we hold that the revenue has to follow the procedures laid down under the provisions of section 153C of the Act in a situation where the documents were found from the premises of the 3rd party irrespective of the fact that the other party was also subject to the search. In other words, the process as provided under section 153C of the Act has to be followed by the revenue for the purpose of making the addition based on the documents found in the course of search from the premises of the 3rd party. 11.7 Coming to the facts of the case on hand, we note that the AO while making the addition in the hands of the assessee under section 68 of the Act nowhere mentioned about any material found from the premises of the assessee. The entire thrust of the AO to treat the credit of share capitals, premiums and loans as bogus and unexplained was based on materials and information collected during the search at third parties being Shri Shrish Chandrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah and the premises of Shri Ashit Vohra and office of Shri Anil Hiralal Shah & others B-406, Wall Street-II Ellisbridge Ahmedabad. Therefore, in the circumstances, the materials could only have been made basis for making addition after following the procedure laid down under the provisions of section 153C of the Act which has not been followed. Thus, we do not find any infirmity in the finding of the learned CIT (A). Hence, the grounds of appeals raised by the Revenue are hereby dismissed.” iii) Similarly in the case of Shri Krishna Kumar Singhania & Ors. Vs. DCIT (supra) the coordinate bench has held as under: 10.7. We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act , as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. Hence the arguments advanced by the ld DR in this regard deserves to be dismissed. 10.8. In view of the aforesaid findings and respectfully following the judicial precedents relied upon hereinabove, we hold that the assessment already deemed to have been completed for the Asst Year 2009-10, which was unabated / concluded assessment, on the 13 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly no fresh addition could be made thereon without the existence of any incriminating materials found in the course of search from the premises of the assessee. Since the issue is addressed on preliminary ground of absence of incriminating materials, we refrain to give our findings on the merits of the additions for the Asst Year 2009-10 in the case of Krishna Kumar Singhania. Accordingly the preliminary ground raised by the assessee in this regard is allowed. In view of the above facts and circumstances and ratio laid down in the above decisions, we are inclined to hold that addition made by the AO of Rs. 2.25 crores in the assessment framed u/s 153A read with Section 143(3) is without jurisdiction and accordingly deleted by setting aside the appellate order on this issue. Accordingly the appeal of the assessee is allowed. IT(SS) A No. 145/Kol/2023 for AY 2013-14 8. Ground no. 1 is not pressed at the time of hearing therefore the ground no. 1 is dismissed as not pressed. 9. Issue involved in ground no. 2 in this appeal is identical one as decided by us in IT(SS)A No. 144/Kol/2023 supra. Therefore our decision on the above appeal would, mutatis mutandis, apply to ground no. 2 of this appeal as well. Accordingly ground no. 2 in this appeal is allowed. 10. Issue raised in ground no. 3 is against the confirmation of addition of Rs. 2,50,00,000/- by the Ld. CIT(A) as made by the AO on account of disclosure made by the assessee during the course of search. 11. Facts in brief are that in the same search ,notice u/s 153A of the Act was issued on 7.4.2016. The assessee filed return of income on 23.09.2016 declaring total income of Rs. 82,34,460/-. The said return included Rs. 2.50 crores. which represented disclosure by Shri Srivardhan Mohta wherein Shri Srivardhan Mohta disclosed Rs. 2.50 crores in the name of M/s Bhaskar Tea Industries Pvt. Ltd. during the course of search. The assessee during the course of assessment proceedings filed another return of income on 2.0.12.2016 withdrawing the said disclosure of Rs. 2.50 14 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. crores made on behalf of the assessee by Mr. Mohta. The AO refused to accept the retraction of disclosure made u/s 132(4) of the Act and added the same to the income of the assessee in the assessment framed u/s 153A/143(3) of the Act dated 28.12.2016. 12. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by observing and holding as under: 6.1 During search proceedings, evidence were gathered regarding unaccounted sale of Tea and scrap. Evidence regarding out of book sale amounting to Rs.2,50,00,000/- were found. During his statement u/s. 132(4) of the I.T. Act, Mr. Srivardhan Mohta offered additional income of Rs.2,50,00,000/- and this amount was also included in the first return filed on 23- 09-2016in response to notice 153A. However, three months later; assessee filed another return after withdrawing the additional amount of Rs.2,50,00,000/-. A.O. has not accepted assessee’s retraction because disclosure was made after due consideration. Assessee had deliberated upon this issue for a long time and then declaration was made. Hence, A.O. has added Rs.2,50,00,000/- to the total income. 6.2 As mentioned above, assessee has not filed any written submission during appellate proceedings. During search proceedings, it appears that incriminating evidence regarding unaccounted sale of tea leaves and scraps were gathered. In view of these incriminating evidences assessee declared Rs.2,50,00,000/- as additional income for the current year. This declaration was made after taking considerable time. This declaration was not made in any hurry. Search had taken place on 17-03-2015. In response to notice u/s.153A, while filing the return, assessee had included the additional income in its return. There was a gap of almost 18 months between the date of search and date of filing of return. Although assessee had filed another return after three months from the filing of first return and retracted declaration of additional income but this action appears to be an afterthought. Assessee had deliberated upon this issue 18 months and then decided to include the undisclosed income in its return. However, for retraction assessee has failed to give any satisfactory reply. Even in the appellate proceedings, assessee has not said anything on this issue. Under the circumstances, it is apparent that admission of the additional income of Rs. 2,50,00,000/- was genuine and on the basis of incriminating evidence found during search. Hence, addition of Rs. 2,50,00,000/- is confirmed.” 13. After hearing the rival contentions and perusing the material on record, we find that undisputedly the assessment was unabated assessment on the date of search as there was no pending assessment proceedings and the time limit for issuing notice u/s 143(2) of the Act had already expired. Mr. Mohta made disclosure in the hands of assessee company during the course of survey/search which was not backed by any incriminating material seized. Therefore after filing the return of income in response to notice issued u/s 153A of the Act on 23.09.2016, the assesse revised the same on 20.12.2016 by retracting Rs. 2.50 crores on the ground that there being no incriminating material found during the course of survey/search and thus the 15 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. retraction was justified by the assessee. In the present case, we note that both the authorities below i.e. the AO as well as Ld. CIT(A) have failed to bring on record any substantive material to corroborate disclosure made by the assessee. In our opinion, it is settled legal position that disclosure made by the assessee during the course of survey cannot be sole ground to make the addition unless there is some corroborating substantive material is brought on record by the AO or by the Ld. CIT(A). The case of the assessee finds support from the decision of the Honble Apex Court in CIT Vs S. Khadher Khan (2013) 352 ITR 480(SC). Therefore the view taken by the ld. CIT appears to be incorrect and cannot be sustained. The ground no. 3 is allowed by setting aside the appellate order on this issue and AO is directed to delete the addition. 14. In the result both the appeals of the assessee are allowed. Order is pronounced in the open court on 28 th February, 2024 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 28 th February, 2024 SM, Sr. PS 16 I.T.(SS)A. Nos. 144 & 145/Kol/2023 Assessment Years: 2012-13 & 2013-14 Bhaskar Tea & Industries Pvt. Ltd. Copy of the order forwarded to: 1. Appellant- Bhaskar Tea & Industries Pvt. Ltd., 6/2, Queens Park, Ballygung, Kolkata-700019 2. Respondent – ACIT, Central Circle-1(1), Kolkata 3. Ld. CIT(A)-20, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata