Kamala Properties Private Limited. , Kolkata V. ACIT,C.C-1(1), KOLKATA. , Kolkata

ITSSA 173/KOL/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2436 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-04-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 17-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 131; 143(3); 133A; 153A; 143(2); 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 सट य एवं ी द प क ु मार चौबे, या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Pradip Kumar Choubey, Judicial Member] I.T.(SS).A. No. 173/Kol/2023 Assessment Year: 2011-12 Kamala Properties Pvt. Ltd. (PAN: AABCK 3217 D) Vs. ACIT, Central Circle-1(1), Kolkata Appellant / )अपीलाथ#( Respondent /( %यथ#) Date of Hearing / स ु नवाई क( त*थ 23.04.2024 Date of Pronouncement/ आदेश उ-घोषणा क( त*थ 09 .05.2024 For the Appellant/ नधा34रती क( ओर से Shri S. M. Surana, A.R For the Respondent/ राज व क( ओर से Shri Abhijit Kundu, CITDR ORDER / आदेश Per Rajesh Kumar, AM: This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-20, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 29.08.2023 for the AY 2011-12. 2 I.T.(SS).A. No.173/Kol/2023 Assessment Year: 2011-12 Kamala Properties Pvt. Ltd. 2. The only common issue raised in the various grounds of appeal is that the Ld. CIT(A) has erred in law and fact in confirming the addition of Rs. 1.00 Cr as made by AO on account of share capital/share premium. 3. Facts in brief are that the search action was conducted on the assessee on 17.03.2015. Consequently notice u/s 153A of the Act was issued on 07.04.2016 which was duly served on the assessee. The assessee filed return of income in compliance thereto on 25.05.2016 declaring total income of Rs. 17,75,030/-. Thereafter the AO issued statutory notice which was also duly served on the assessee. The assessee is engaged in the business of sale of land/flats and wind energy generation etc. The AO observed that during the year the assessee has raised share capital of Rs. 2,40,00,000/- along with a premium of Rs. 60,00,000/- out of which share capital of Rs. 40,00,000/- and share premium of Rs. 60,00,000/- were raised from outside parties. The AO sought the details of the subscribers from the assessee company and summons were also issued u/s 131 of the Act which was returned unserved. The AO noted in the assessment order in para 4 that as per report from the Investigation Wing wherein in the post search of investigation of Mohta group, whereabout the certain subscribing companies were not found. The AO also noted at page 2 para 1 that apart from the documents seized during the search and assessment proceedings in respect of arranging the share capital in lieu of cash through jamakharchi companies, Mr. Srivardhan Mohta, the key person of Mohta Group have also admitted in his statement that entries were taken from jama-kharchi companies. Thereafter the AO issued show cause notice to the assessee which is extracted at page no. 2 para 4.1 of the assessment order in which the AO referred to the documents marked as SVM-2 / SVM-3 which clearly showed that the share capital from different group companies of Mohta Group were raised through entry operators which was replied by the assessee by stating that the money was genuinely arranged for launching wind energy project. Finally the AO made addition by referring to the seized materials marked as SVM/2 and SVM/3 which were found during the course of survey proceeding on M/s SVM Impex and Finance Pvt. Ltd. and others. 3 I.T.(SS).A. No.173/Kol/2023 Assessment Year: 2011-12 Kamala Properties Pvt. Ltd. 4. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal on this issue by confirming the addition to the extent of Rs. 1.00Cr by noting that several incriminating documents seized during the survey proceedings marked as SVM-2 and SVM-3 and thus justified the addition. 5. The Ld. A.R vehemently submitted before us that undisputedly the assessment year under consideration is an unabated assessment year as there is no pending assessment on the date of search. The Ld. A.R also submitted that time limit for issuing notice u/s 143(2) of the Act had already expired on the date of search and therefore the assessment has attained finality on the date of search. The Ld. A.R contended that in order to make addition in an unabated assessment year the AO has to refer to the seized incriminating material found during the course of survey in absence of which the AO has no jurisdiction to make addition. The Ld. A.R also pointed out that the documents referred to as SVM-2and SVM-3 were in fact found during the course of survey on M/s SVM Impex and Finance Pvt. Ltd. a copy of which is filed at page 22-24 paper book. The Ld. A.R also subsequently took the Bench through page 24 which contained the inventory of books of account found from the office of M/s SVM Impex and Finance Pvt. Ltd. and it was duly mentioned that the bunch of loose sheets marked as SVM-2 and SVM-3 were found during the course of survey on 18.03.2015. The Ld. A.R therefore vehemently argued that the addition made with reference to the documents found during the course of survey proceedings at premises of M/s SVM Impex and Finance Pvt. Ltd. marked as SVM-2 and SVM-3 is without jurisdiction as these was not found during the course of search and cannot be considered and treated as incriminating material for the purpose of making addition in an unabated assessment year. The Ld. A.R also stated that identical issue has been decided in the case of group concern in IT(SS)A No. 144 & 145/Kol/2023 for AY 2012-13 and 2013-14 . The Ld. A.R in defense of his arguments also relied on the decision of Co-ordinate Bench in the case of Poonam Mohta vs. ACIT in IT(SS)A No. 155/Kol/2023 for AY 2013-14 dated 7.2.2024 wherein issue of addition on the basis of documents seized during survey u/s 133A of the Act on M/S SVM Impex & 4 I.T.(SS).A. No.173/Kol/2023 Assessment Year: 2011-12 Kamala Properties Pvt. Ltd. Finance Pvt Ltd was decided in favour of the assessee. The Ld. A.R therefore prayed that the order of Ld. CIT(A) may be set aside and AO may be directed to delete the addition. The second alternative plea taken by the assessee during the course of hearing was that since these documents were found from the premises of M/s SVM Impex and finance Pvt. Ltd. during the course of survey and therefore if at all the addition has to be made then assessment has to be framed u/s 153Cof the Act after recording satisfaction by the AO of the other person and also by the AO of the assessee company however this is not the case at hand as the assessment has been done by the AO u/s 153A of the Act. The third plea raised by the assessee is that the statement recorded during the course of search without any corroborative material and/or statement of individual party cannot be considered as incriminating material for the purpose of making addition in an unabated assessment year. In defense of arguments the Ld. A.R relied on the decision of Hon’ble Delhi High Court in the case of PCIT v. Anand Kumar Jain (2021) 432 ITR 384 (Del-HC) and Principal Commissioner of Income-tax, Delhi-2 vs. Best Infrastructure (India) (P.) Ltd.[2017] 397 ITR 82 (Delhi). 6. The Ld. D.R on the other hand fairly conceded that though the issue has been decided by the Co-ordinate Bench in the case of sister concern of the assessee however he strongly relied on the order of authorities below. 7. We have heard the rival contentions and perused the material on record as placed before us. Undisputedly the assessment year under consideration is an unabated one and admittedly during the course of search on the assessee no incriminating material qua the share capital/share premium has been found. We note that the materials referred by the AO while making addition were incriminating material/documents found during the course of survey on 17.03.2015 on M/s SVM Impex and Finance Pvt . Ltd i.e. SVM-2 and SVM-3 copies of which are placed at page 22-24 of PB. Therefore there is no dispute that the documents which was stated to be incriminating in nature were found during the course of survey on 17.03.2015 from the premises of third party. The AO has framed assessment u/s 143(3) read with 5 I.T.(SS).A. No.173/Kol/2023 Assessment Year: 2011-12 Kamala Properties Pvt. Ltd. 153A of the Act vide order dated 21.12.2016 by referring to above material SVM-2 and SVM-3 which in our opinion is not legally sustainable as we are of the considered view that AO can only be made addition on the basis of incriminating material seized during the course of search and not on the basis seized from the premises of third party during the course of search/survey. The right course would have been to frame the assessment u/s 143(3) read with Section 153C of the Act after complying with the necessary formalities as regards satisfaction of AO of the searched/survey other person and also the satisfaction of the AO of assessee. We also find that the case of the assessee is squarely covered by the decision of sister concern in the case of Bhaskar Tea & Industries Pvt. Ltd. (supra) wherein the identical issue has been decided in favour of the assessee. The operative part is reproduced as under: “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 Impex and Finance Pvt. Ltd. on 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 153C of the Act after following the correct methodology. Similar issue has been laid down in the case of Poonam Mohta vs. ACIT (supra) where addition was based upon the documents seized during survey on M/s SVM Impex and Finance Pvt. Ltd. on 18.03.2015 . 7.1. We have also noted that according to AO that Shri Srivardhan Mohta a key person of group has admitted in his statement that entries were taken from jamakharchi company but there is no incriminating materials found during the course of search which corroborate the said statement. In our opinion, the statement given 6 I.T.(SS).A. No.173/Kol/2023 Assessment Year: 2011-12 Kamala Properties Pvt. Ltd. during the course of survey/search cannot be considered as incriminating seized material during search to make addition in an unabated assessment year. The case of the assessee finds support from the decision of Co-ordinate Bench in Bhaskar Tea and Industries Pvt. Ltd . (supra). Considering the above facts of the case and in the light of the decision, we are of the view no addition can be made on the basis of statement. 7.2. Even on the second alternative plea taken by the assessee that these documents referred to by the AO for making addition i.e. SVM-2 & SVM-3 were found from the premises of M/s SVM Impex and finance Pvt. Ltd. during the course of survey and therefore if at all the addition has to be made then assessment has to be framed u/s 153C of the Act after recording satisfaction by the AO of the other person and also by the AO of the assessee company. We note that in the present case the assessment has been framed by the AO u/s 153A of the Act and not u/s 153C of the Act and so even on the second limb of arguments succeed in favour of the assessee. 7.3. We also find merit in the third plea raised by the assessee that the statement recorded during the course of search without any corroborative material and/or statement of individual party cannot be considered as incriminating material for the purpose of making addition in an unabated assessment year. The case of the assessee is squarely covered by the decisions of Hon’ble Delhi High Court in the case of PCIT v. Anand Kumar Jain (supra) and Principal Commissioner of Income-Tax, Delhi-2 vs. Best Infrastructure (India) (P.) Ltd.[Supra) wherein it has been held that statement recorded during search has no corroborate evidentiary value to make addition unless some materials is there to corroborate the same. 7 I.T.(SS).A. No.173/Kol/2023 Assessment Year: 2011-12 Kamala Properties Pvt. Ltd. 8. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 9 th May, 2024 Sd/- Sd/- (Pradip Kumar Choubey / द प क ु मार चौबे) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 9 th May, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Kamala Properties Pvt. Ltd., 6/2, Queens Park, Ballygung, Kolkata- 700019 2. Respondent– ACIT, Central Circle-1(1), Kolkata 3. Ld. CIT(A)-20, Kolkata 4. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata