Sreedeb Commodities Pvt. Ltd., Kolkata V. DCIT, Cir. 2(1), Kolkata

ITSSA 15/KOL/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3416 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-07-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD. GHAYAS UDDIN
• Keywords: Bogus Share capital; Source of fund; Question of law; Documents seized
• Section: 147; 68; 132; 271(1)(c); 143(3); 142(1); 153A; 14A; 133(6); 143(1); 250; 143(2); 264; 139(1); 158BC; 73; 153; 153C

Judgement Text

आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJPAL YADAV, HON’BLE VICE PRESIDENT AND SHRI RAJESH KUMAR, HON’BLE ACCOUNTANT MEMBER I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 158, Lenin Sarani Kolkata - 700013 PAN : AAJCS7065D Vs DCIT, Central Circle-2(1), Kolkata अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Shri S.K. Tulsiyan/Ms. Puja Somani, C.A. Revenue by : Md. Ghayas Uddin, CIT(DR) सुनवाई कᳱ तारीख/Date of Hearing : 05/07/2022 घोषणा कᳱ तारीख /Date of Pronouncement: 26/07/2022 आदेश/O R D E R PER RAJPAL YADAV, VICE PRESIDENT : The present appeal is directed at the instance of the assessee against the order of the learned Commissioner of Income Tax (Appeals) – 20, Kolkata (hereinafter the “ld. CIT(A)”) dt. 18/02/2022, passed u/s 250 of the Income Tax Act, 1961 (“the Act’), for Assessment Year 2007-08. 2. Originally the assessee has taken eight grounds of appeal and thereafter it has raised an additional ground of appeal on the strength of the judgment of the Hon’ble Supreme Court in the case of NTPC Ltd. vs. CIT reported in 229 ITR 383 (SC). The assessee has pleaded that additional ground of appeal contains purely a legal proposition which goes to the root of the case and ultimately affects the taxability of the assessee. Therefore, it is required to be taken on the record for adjudication. The additional ground of appeal raised by the assessee reads as under:- "That on the facts and in the circumstances of the case and in law, admittedly the impugned proceedings pertains to unabated year of assessment requiring presence of incriminating materials or documents found pursuant to search for fastening additions in assessment framed u/s 153A of the Act, the Ld. A0 erred in making I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 2 additions in an unabated assessment year inspite of the fact that no incriminating materials or documents were found pursuant to search and that the learned CIT(A) erred in upholding the said additions.” 2.1. The ld. CIT D/R, on the other hand, contended that the assessee should have raised all the grounds together. 3. We have duly considered the rival contentions and gone through the record carefully. Under the additional ground of appeal, the assessee has raised a legal issue, whereby it has alleged that no addition can be made to the income of the assessee u/s 153A of the Act, unless some incriminating material was founded during the course of search for making such addition. It is the case of the assessee that it is an unabated year. The time limit to issue notice u/s 143(2) of the Act for scrutinizing its return for Assessment Year 2007-08 has elapsed earlier and, therefore, addition u/s 153A can only be made if some incriminating material pertaining to this assessment year is found during the course of search. 3.1. On due consideration of the above plea, we are of the view that this plea can be raised even without a specific pleading by way of raising an additional ground. It is a legal proposition which can be taken up by the assessee even under the original grounds of appeal filed by it. Therefore, we do not have any hesitation in admitting this additional ground of appeal for adjudication. Apart from the additional ground of appeal, it is observed that though the assessee has taken eight grounds of appeal but its grievance in all these grounds revolve around a single issue, namely, that the ld. CIT(A) has erred in confirming the additions made by the Assessing Officer u/s 68 of the Act, regarding receipt of share capital including share premium. 4. The facts of the case are that the assessee has filed its original return of income u/s 139(1) of the Act on 31/10/2007, declaring total income at I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 3 Rs.4,930/-. A search u/s 132 of the Act was carried out in the business premises of the assessee on 03/08/2012. During the course of search, cash of Rs.14,38,270/- was found. Out of that, Rs. 14,00,000/- was seized. Apart from that certain documents marked as AFL/1 to AFL/7 & AFL/HD/1 were found and seized. Similarly, a document inventorized as A-1 was found from Gurgaon office and backup of computers were taken in pen drive. The Assessing Officer had issued notice u/s 153A of the Act on 23/09/2013. The assessee filed its return of income in response to notice u/s 153A on 22/10/2013, declaring total income of Rs.12,572/-. The Assessing Officer has passed an assessment order u/s 143(3) r.w.s. 153A dt. 30/03/2015, determining the taxable income of the assessee at Rs.2,85,94,642/-. The Assessing Officer has mainly made an addition of Rs.2,85,00,000/- on account of share application money. The Assessing Officer further made disallowance u/s 14A of the Act, to the tune of Rs.80,000/- 5. Appeal to the ld. CIT(A) did not bring any relief to the assessee. 6. The ld. Counsel for the assessee took us through the finding of the AO from paragraph no. 3 onwards and submitted that the ld. AO has nowhere made reference to any seized material. He investigated the unsecured loan transaction by issuance of notice u/s 133(6) to the lender companies as if he was passing regular assessment order u/s 143(3) or 147 of the Act. According to ld. Counsel for the assessee this is not a searched year and he is not supposed to make additions in this manner. For buttressing his contention he placed reliance a large number of decisions whose copies have been placed on the record. 6.1. The ld. Counsel for the assessee further relied on the following case-laws:-  PCIT vs. Meeta Gutgutia [2018] 96 taxmann.com 468 (SC)  CIT vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 4  Smt. Yamini Agarwal vs. DCIT, CC-3(3), Kolkata  Lalji Khimjibhai Patel vs. ACIT, Cent. Cir.II in ITA Nos. 712 to 715/RJT/2010 and 388 to 391/RJT/2013; order dt. 21/10/2019 7. On the other hand, the ld. CITDR contended that there were large number of documents found and seized during the course of search. After perusal of all these documents, the Ld. AO culled out specific points which were required to be investigated. Hence he has followed correct procedures. He relied upon the orders of the revenue authorities. 8. We have duly considered rival contentions and gone through the record carefully. Before adverting to the facts and alleged seized material considered by the ld.AO for making the addition in the hands of the present assessees, we deem it appropriate to bear in mind the position of law propounded in various authoritative judgments expounding scope of section 153A of the Act. We are of the view that in this regard, there were large numbers of decisions. First we refer to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla, 380 ITR 573 (Del). Hon'ble Delhi High Court after detailed analysis has summarized the following legal position: 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 153 A(l) will have to be mandatorily issued to the person searched requiring him to fde 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 AOs as a fresh exercise. (iii) 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 I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 5 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 153 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 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 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 AO. (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." ITAT Delhi Bench in the case of DIT Vs. Smt. Shivali Mahajan and others, rendered in ITA No.5585/Del/2015 has considered this aspect in its decision. Thereafter, the Tribunal has specifically held that serial no.(iv) of the above proposition, the Hon'ble Delhi High Court has specifically held that assessment under section 153 A of the Act has to be specifically made on the basis of seized I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 6 material. ITAT Delhi Bench was considering an aspect whether the evidence in the shape of books of accounts, money, bullion, jewellery found during the course of search relates to other person than the searched person, can that be considered while making assessment under section 153A of the Act. ITAT Delhi Bench has specifically held that material recovered from the premises of other person cannot be used in the hands of the searched person. For that purpose an assessment under section 153C or 147 is to be made. At this stage, in order to fortify ourselves, we would like to make reference to the following paragraphs of the ITAT Delhi Bench's order. It reads as under: “15. Thus, when during the course of search of an assessee any books, document or money, bullion, jewellery etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person." Hon'ble Delhi High Court in the case of Subhag Khattar in Tax Appeal No.60 of 2017 has considered the following question of law: "Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the additions made under Section 153A read with Section 143(3) of the Income Tax Act, 1961 in the circumstances of the case, were not justified and supportable in law?" After putting reliance upon its decision in the case of CIT Vs. Kabul Chawla (supra) has replied this question as under: "6. The Assessee went in appeal before the Commissioner of Income Tax (Appeals) who dismissed it by an order dated 27th November, 2014. A further appeal was filed by the Assessee before the IT AT. The IT AT, inter alia, found substance in the contention of the Assessee that the assessment under Section 153(A) of the Act, in I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 7 the absence of any incriminating material found during the search on the premises of the Assessee was not sustainable in law. Reliance was placed on the decision of this Court in Commissioner of Income Tax v. Kabul Chawla, [2016] 380ITR 573. 7. A question was posed to the learned counsel for the Revenue whether in the present case anything incriminating has been found when the premises of the Assessee was searched. The answer was in the negative. The entire case against the Assessee was based on what was found during the search of the premises of the AEZ Group. It is thus apparent on the face of it, that the notice to the Assessee under Section 153A of the Act was misconceived since the so- called incriminating material was not found during the search of the Assessee's premises. The Revenue could have proceeded against the Assessee on the basis of the documents discovered under any other provision of law, but certainly, not wider Section 153A. This goes to the root of the matter." 9. Hon'ble Court has specifically observed for the purpose of section 153A that only seized material is required. However, if there is any other incriminating material belong to the assessee found at the premises of the some other person, then the assessment has to be made under other provisions and not under section 153 A of the Act. 10. Hon'ble Gujarat High Court has also considered the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra). Hon'ble Gujarat High Court framed the following question of law in the case of Pr.CIT Vs. Saumya Construction (supra): "[A] Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? [B] Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 8 [C] Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search? " 35. Hon'ble Court concurred with the decision of Hon'ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: "16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such 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, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 9 17. In the facts of the present case, a search came to be conducted on 07.10.2009 and the notice was issued to the assessee under section 153A of the Act for assessment year 2006-07 on 04.08.2010. In response to the notice, the assessee filed return of income on 18.11.2010. In terms of section 153B, the assessment was required to be completed within a period of two years from the end of the financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition as well as the copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.l 1,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 10 requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed." 11. It is also pertinent to note that, in the case of Kabul Chawla (supra), the Hon’ble Delhi High Court in its concluding paragraph has observed that, on the date of the search, the assessments for assessment years 2002-03, 2005-06 and 2006-07 already stood completed and the returns in these years were accepted under Section 143(1) of the Act and these acceptance of returns processed under Section I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 11 143(1) of the Act was construed by the Hon’ble Delhi Court as completion of assessments and this acceptance of return, according to the Hon’ble Delhi High Court, could be tinkered with if some incriminating material was found at the premises of the assessee. Though, it is not necessary to recite and recapitulate this proposition in other judgments, suffice to say that in the following judgments, unanimous view is taken by Hon’ble High Court as well as ITAT on this point. They concur with the Hon’ble High Court. Just for reference, we note the citations as under:- Sl.No. Particulars 1. CIT vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) 2. PCIT –vs.- Kurele Paper Mills (P) Ltd. [2017] 81 taxmann.com 82 (Delhi) 3. PCIT –vs.- Rashmi Infrastructure Pvt. Ltd. ITAT 99 of 2019, GA No. 1211 of 2019 (Calcutta HC) 4. CIT –vs.- Veerprabhu Marketing Ltd. [2016] 73 taxmann.com 149 (Calcutta) 5. PCIT –vs.- Salasar Stock Broking Ltd. ITAT No. 264 of 2016, GA No. 1929 of 2016 (Calcutta HC) 6. M/s. Mani Square Ltd. –vs.- ACIT [IT(SS)A Nos. 58/KOL/2019 & others 7. ACIT –vs.- Majestic Commercial (P) Ltd. [2020] 116 taxmann.com 412 (Kolkata Trib.) 8. PCIT –vs.- Anand Kumar Jain & Others[ITA 23/2021 & others (Delhi High Court) 9. DCIT –vs.- Bhavya Merchandise (P) Ltd. [2020] 121 taxmann.com 112 (Kolkata Trib.) 10. Sarva Priya Holdings Pvt. Ltd. –vs.- DCIT [IT(SS)A Nos. 97 & 98/KOL/2014 11. Purulia Metal Casting –vs.- DCIT [ITA No. 1217/KOL/2019) 12. DCIT –vs.- Shri Ram Realcon Pvt. Ltd. [IT(SS)A No. 14 & 15/KOL/2017 13. Vikram Financial Services Ltd. –vs.- DCIT [IT(SS)A No. 81/KOL/2010 14. DCIT –vs.- M/s. Bohra G. & NN Brothers Pvt. Ltd. [IT(SS)A No. 89/KOL/2017 I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 12 13. In light of the above, let us examine the facts considered by the Assessing Officer. We deem it proper to take note of the findings recorded by the Assessing Officer from paragraph nos. 2.1. to 3.2., which read as under:- “2.1. A search u/s 132 of the Income-tax Act. 1961 was conducted in the business premises of the assessee at 158, Lenin Saran or and 3" Floor, Kolkata-700013 on 30.08.2012, under the warrant of authorization issued by Panchanamas were drawn in the name of persons including the assessee. The following valuables and documents were found/seized during the course of search: Address of the premises where search was conducted Cash Identification Mark of the documents seized Found Seized 158, Lenin Sarani, 2nd Floor & 3rd Floor, Kolkata – 700013 14,38,270/- 14,00,000/- AFL/1 TO AFL/7 & AFL/HD/1 E-7, 2nd Floor, Opposite Gate No. 1, Pune Market Yard, Pune NIL NIL Backup of computers and pen drive 306, JMD Regent Square, 3rd Floor, DIF Phase – II, Gurgaon-122002 NIL NIL A-1 2.2. Accordingly, notice u/s 153A of the Income-tax Act, 1961 was issued on 23.09.2013. The assessee filed its return of income for the Assessment Year 2007-08 in response to notice u/s 153A of the Income-tax Act, 196l on 22.10.2013 declaring a total income of Rs.12,572/-. Notice u/s 143(2) & 142(1) of the Income-tax Act, 1961 was issued on 07.05.2014. Shri Giriraj Lakhotia, A/R of the assessee appeared in response to the said notices, furnished the documents called for and explained the return. 3.1 During the year under consideration, Assessee Company raised Share Capital. To verify genuineness of transaction Notices u/s 133(6) of Income Tax Act, 1961 were issued to the concerned parties. Subsequently, Summons u/s 131 of Income Tax Act, 1961 was issued to the Directors of some Shareholder Companies, while keeping provisions of CPC in mind. Directors of the following companies did not appear in response to the Summons till the finalization of this order; though the date for appearance mentioned in the Summons expired long ago. AR of assessee confronted with the fact but he could not offer any satisfactory reply to it. As Directors in the following cases, did not appear in response to summon, all the three parameters set by the various Appellate Authorities i.e., Existence, Genuineness of transaction and Credit-worthiness, regarding genuineness of share capital received could not be ascertained in following cases- I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 13 S.No. Name of Shareholder Share Capital (in Rs.) 1. M/s Abhoy Knitwear Pvt. Ltd. 39,50,000 2. M/s. Gadhari Tea Traders Pvt. Ltd. 26,00,000 3. M/s. Krishna Kanhia Combines Pvt. Ltd. 44,50,000 4. M/s. Parasramka Holdings Pvt. Ltd. 24,00,000 5. M/s. Sumit Iron Pvt. Ltd. 20,00,000 6. M/s. Vasudha Electrical & Electronics Pvt. Ltd. 1,31,00,000 Total 2,85,00,000 3.2 Section 68 of Income Tax Act, 1961 states that the nature and source of any sum credited, as share capital, share premium etc. in the books of a closely held company shall in the hands of explained only if the source of funds is also explained by the assessee remains on the person in resident shareholder. The onus of satisfactorily explaining such Credit remains on the person in whose books such sum is credited. If such person or entity fails to offer an explanation or the explanation is not found to be satisfactory, then the sum is added to the total income of the assessee. The Assessee Company could not explain the source of the share Capital/ Premium credited in its Books of Account as Directors of the above mentioned Companies from which Share Capital/ Premium received by the Assessee Company and credited in its Books of Accounts did not appear in response to Summons issued w/s 131 by this office. In the light of above, I did not find explanation from the Assessee regarding credit of fund in the form of Share Capital/ Premium in its Books of Accounts in case of above mentioned 06(Six) Companies satisfactory, hence amount so credited by above mentioned 06(Six) Companies, added to the Total Income of the Assessee u/s 68 of Income Tax Act, 1961. Penalty proceeding /s 271(1)(c) initiated separately. [Addition: 2,85,00,000] 14. A perusal of the above finding would indicate that the Assessing Officer has nowhere made reference to any seized material in the assessment order. The Assessing Officer has been examining the matter as if he is passing a regular assessment order u/s 143(3) or 147 of the Act. Under the scheme of assessment as propounded in the various judgments of the Hon’ble High Courts referred above, an addition can only be made if some incriminating material regarding receipt of bogus share application money was found during the course of search. The Assessing Officer did not make reference to this effect. The ld. CIT(A) is on the same line. The ld. CIT(A) has discussed the issue I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 14 on merits but did not address whether the issue can be examined in an assessment framed u/s 153A of the Act or not. The judgment of the Hon’ble Delhi High Court in the case of Kabul Chawla (supra) is very specific which has been discussed above. The time limit to issue notice u/s 143(2) of the Act has expired long back. Hence, it is an unabated assessment year and this assessment can be tinkered with only if incriminating material pertaining to this year has been found during the course of search. In view of the above discussion and respectfully following the judgments of various Hon’ble High Courts and Co-ordinate Benches, we allow the preliminary ground of the appeal and delete the additions made in the assessment order dt. 30/03/2015 passed u/s 153A r.w.s. 143(3) of the Act. 15. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 26th July, 2022 at Kolkata. Sd/- Sd/- (RAJESH KUMAR) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE-PRESIDENT Kolkata, Dated 26/07/2022 *SC SrPs I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 15 आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata