Unicon Merchants Pvt. Limited, Rourkela V. JCIT,Central Circle, Sambalpur

ITSSA 23/CTK/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4031 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 06-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Document seized; Principle of natural justice; Documents seized
• Section: 144; 143(3); 153A; 153; 153C

Judgement Text

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री अरुण खोड़पऩया ऱेखा सदस्य के समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER IT(SS)A Nos.23&24/CTK/2019 (नििाारण वषा / Asses s m ent Years :2012-2013 & 2013-2014) Unicon Me rchants Pvt . Ltd., P-25, C i vil T o wn shi p, Rourke la P AN No. AAAC U 6 553 H ... ......... ..... A ssessee Versus T he JCIT /ACIT , Ce ntral Ci rc le, Sam ba lpur ... ......... ...... R evenue Shri Firoze B.Andhyarjina, Senior Advocate with Shri Nikhil Jangid, Advocate the assessee Shri M.K.Gautam, CIT-DR for the Revenue Date of Hearing : 08/06/2022 Date of Pronouncement : 08/06/2022 आदेश / O R D E R Per Bench : These two appeals filed by the assessee are against the separate orders of the ld. CIT(A)-2, Bhubaneswar, both dated 19.02.2019 passed in I.T. Appeal Nos.0724/2016-17 and 0727/2016-17, for the assessment years 2012-2013 & 2013-2014. 2. The assessee has filed these two appeals before the Tribunal on 20.05.2019 for both the assessment years under consideration. In appeal IT(SS)A Nos.23&24/CTK/2019 2 for the assessment year 2012-2013, the assessee has raised the following grounds :- The grounds of appeal against the impugned order are mentioned below in brief. These grounds will be further elaborated in the detail petition which will be submitted before the scheduled date of hearing. 1. Because, the impugned order is in violation to natural justice since; it relied upon the remand report dated 24/05/2018 and no opportunity of hearing or clarification of doubts was granted during remand proceedings. Earlier, the original Assessment Order dated 31/12/2016 was also passed within 4 days of issuing notice without giving any opportunity of hearing. 2. Because, the appeal against the previous assessment order dated 26/2/2015 by ITO ward-10(4), Kolkata, towards addition of Rs. 114.03 lakhs, was subjudice before CIT- Appeals, Kolkata-4 in appeal no. 809/2015-16. Hence, Ld. CIT-Appeals-2, Bhubaneswar should not have allowed the addition of same amount over and above the income as per return during pendency of appeal before CIT- Appeals, Kolkata-4. 3. Because, several contents of impugned order are contrary to the documents on records. As per Assessment order, the Company has given loan to other persons/concern up to Rs. 300.04 lakhs for non- business purpose and hence; there was no rational for disallowing entire interest expenditures incurred on loan of Rs. 940.0 lakhs. Because, the proceedings and assessment order u/s 153 © are not valid since; the pre- conditions for invoking 153C was not existing at all. There was no any incriminating document before AO for the relevant year based upon which it recorded satisfaction and preceded in the matter. " 4. Because, the entire interest expenditures of Rs. 134.872 lakhs are for the business purpose including the interest free loan of RS.304 lakhs given in previous years. The Company has derived substantial business benefits and income in subsequent years; which will be submitted in detail petition. These facts are ignored in remand proceedings and Ld. ClT relied upon remand report without due application of judicial mind. 5. Because, the strategic business decision for availing loan from IFCI Factors Ltd and incurring interest cost is purely a strategic business decision arising due to commercial expediency and hence, the disallowance of interest expenditure is unjust. 6. Because, the proceedings were initiated u/s 153C and 143 (3) simultaneously; which is bad in law. The pre-requisite conditions and time limits for both sections are different. Law doesn't permit to proceed simultaneously and then to pick and choose. 7. The assessment for the relevant year is already completed through an order dated 26/02/2015. Hence, the re-assessment u/s 143 (3) is IT(SS)A Nos.23&24/CTK/2019 3 obviously not maintainable. Hence, the initiation of proceeding u/s 143(3) of subject case is in violation of law. 8. The Scrutiny assessment was earlier completed u/s 143 (3) for the relevant year on dated 26/02/2015. Hence, reassessment u/s 153C is permissible in law to the extent of such seized documents; which were seized during search and not available under previous scrutiny assessment. In absence of such situation, entire proceedings are invalid. 9. Because, the proceedings and assessment order u/s 153C are not valid since; the pre- conditions for invoking 153C was not existing at all. There was no any incriminating document before AO for the relevant year based upon which it recorded satisfaction and proceeded in the matter. 10. The Appellant, leave, craves to add/alter the Grounds of Appeal on/before hearing of appeal. 3. In appeal for the assessment year 2013-2014, the assessee has raised the following grounds :- The grounds of appeal against the impugned order are mentioned below in brief. These grounds will be further elaborated in the detail petition which will be submitted before the scheduled date of hearing. 1. Because, the impugned order is in violation to natural justice since; it relied upon the remand report dated 24/05/2018 and no opportunity of hearing or clarification of doubts was granted during remand proceedings. Earlier, the original Assessment Order dated 31/12/2016 was also passed within 4 days of issuing notice without giving any opportunity of hearing. 2. Because, several contents of impugned order are contrary to the documents on records. The remand report is also contrary to documents on record. The Company has not availed any loan of Rs. 300.04 lakhs from IFCI during the year and no loan of Rs. 304.0 lakhs was given by Company, as observed in order. As a result, the adverse conclusion is drawn on presumption and not upon evidence. More examples will be cited in detail petition. 3. Because, the interest free loan given to promoters of Shiva Cement in the previous year was Rs. 304 lakhs and hence; the presumptive loss of interest is Rs.41.80 lakhs out of total interest expenditures of Rs. 98.52 lakhs, as observed. Hence, disallowance of Rs. 93.14 lakhs is unjust. 4. Because, the entire interest expenditures of Rs. 98.52 lakhs are for the business purpose including the interest free loan of Rs.304 lakhs given in previous years. The Company has derived substantial business benefits and income in subsequent years; which will be submitted in detail petition. These facts are ignored in remand proceedings and Ld. CIT relied upon remand report without due application of judicial mind. IT(SS)A Nos.23&24/CTK/2019 4 5. Because, the strategic business decision for availing loan from IFCI Factors Ltd and incurring interest cost is purely a strategic business decision arising due to commercial expediency and hence, the disallowance of interest expenditure is unjust. 6. Because, the matter is dealt in the previous scrutiny Assessment u/s 143 (3) in the order dated 17/02/2016 in which; the facts were considered and the disallowance was limited to Rs. 5.378 lakhs only out of total expenditure of Rs. 98.52 lakhs. Such re- assessment u/s 153C is not based upon any new and incriminating document available and seized by AO. Hence, the re-assessment order is not maintainable. 7. Because, the proceedings were initiated u/s 153C and 143 (3) simultaneously; which is bad in law. The pre-requisite conditions and time limits for both sections are different. Law doesn't permit to proceed simultaneously and then to pick and choose. 8. The assessment for the relevant year is already completed through an order dated 17/02/2016. Hence, the re-assessment u/s 143 (3) is obviously not maintainable. Hence, the initiation of proceeding u/s 143(3) of subject case is in violation of law. 9. The Scrutiny assessment was earlier completed u/s 143 (3) for the relevant year on dated 17/02/2016. Hence, reassessment u/s 153C is permissible in law to the extent of such seized documents; which were seized during search and not available under previous scrutiny assessment. In absence of such situation, entire proceedings are in valid. 10. Because, the proceedings and assessment order u/s 153C are not valid since; the pre- conditions for invoking 153C was not existing at all. There was no any incriminating document before AO for the relevant year based upon which it recorded satisfaction and proceeded in the matter. 11. The Appellant, leave, craves to add/alter the Grounds of Appeal on/before hearing of appeal. 4. Subsequently, on 05.10.2019, the assessee has filed additional grounds for A.Y.2012-2013, which read as under :- 1. In the facts and circumstance of the case & in law, the Pr. Commissioner of Income Tax - 4, Kolkata erred in passing order for transfer of jurisdiction from Kolkata to Sambalpur without giving an opportunity to the Appellant before transfer. Which is a clear violation of section 127 of the Income Tax Act. 2. In the facts and circumstance of the case & in law, the Satisfaction Note must be prepared before transfer of jurisdiction, since it affects the third party rights, in the present case the transfer order was placed on record on December 26,2016, whereas satisfaction note u/s 153C of the third party was recorded on December 27,2016, (Supplementary IT(SS)A Nos.23&24/CTK/2019 5 Paper Book page 23) is without jurisdiction & bad in law & also Void ab initio 3. In the facts and circumstance of the case & in law, the entire assessment was completed within 4 days in great haste from the transfer of jurisdiction and hence the entire order in bad in law and without jurisdiction. 4. In the facts and circumstance of the case & in law, there is no nexus, linkage, connection or corroboration between the seized Materials / documents and the subject additions in the impugned order are not based on the seized materials and hence impugned order is not maintainable in law. 5. In the facts and circumstance of the case & in law, the seized documents as per Satisfaction Note as referred therein are page 67- 93 and 94-97 of SMLO-05 don't belong to and no way related to Appellant. 6. In the facts and circumstance of the case & in law, the seized documents as per Annexure A of the Satisfaction Note is IFCI Factors sanction letter for financial assistance to the Appellant and money received by the SMLO 52 are not Incriminating material I documents. Moreover no Appellant from Shivom Minerals Ltd. during the FY 2011-12 as per additions are made in the assessment order based upon these documents. 7. The AO grossly erred in framing the assessment disregarding the fact that the original assessment u/s 143(3) were "already completed and therefore the assessment does not (abate" and additions could only have been made based on seized materials. Justification 1. The Appellant vide its letter dated December 29,2016 (Paper Book page 35 to 36) had challenged the proceedings initiated u/s 153C of the Income Tax Act 1961 and also challenged the order passed u/s 127 of the Income Tax Act 19161, before the ACIT, Central Circle, Sambalpur. The Appellant stated in the said letter that transfer of jurisdiction to DCIT, Central Circle, Sambalpur without issuing any show cause and without any opportunity of hearing is Ipso Facto illegal and without jurisdiction. The Appellant also stated in the said letter that" Apparently there is no satisfaction recorded by the Assessing Officer while initiating the proceeding u/s 153C of the Income Tax Act 1961 and further since the transfer of the case by the Principal Commissioner of Income Tax - 4, Kolkata has passed the order without issuing any show cause notice and without affording any opportunity of hearing. The initiation of the proceeding by DCIT, Central Circle, Sambalpur is void ab initio." The Appellant applied to the Authorities on dated .June 21, 2019 for certified copies of seized documents. These documents are supplied after the appeal filed, in the meantime the Appellant submitted Appeal Memo cum Paper Book before this Hon'ble Tribunal with addition I alteration of earlier grounds with facts of the case. IT(SS)A Nos.23&24/CTK/2019 6 2. The above mentioned grounds are purely legal issues which goes to the root of the matter and make the assessment order bad in law and void ab initio. The Additional Grounds which are purely based on legal issues be admitted and deliberated by the Hon'ble Tribunal as laid down in various Judicial decisions as duly mentioned herein below: (i) The Pr. Commissioner of Income Tax Central - 3 vis Mls Dreamcity Buildwell Pvt. Ltd. ITA 1152/2017 Delhi High Court; (ii) Noorul Islam Education Trust vis CIT & Ors. Supreme Court; (iii) Vijayasanthi Investment Pvt. Ltd. vis CIT - 1991 187 ITR 405 Andhra High Court; (iv) CIT v/s Calcutta Kintwears (2014) Supreme Court followed and digested in The DY CIT vis Salasar Dewellers Pvt. Ltd. ITA No 5707/MUM/2015 AY 2008-09; (v) Jute Corporation Of India Ltd vis Commissioner of Income Tax & Anr. 1991 AIR 241, 1990 SCR Supl. (1) 340; (vi) National Thermal Power Co. Ltd. vis Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998229 ITR 383 SC, (1997) 7 SCC 489; (vii) Commissioner of Income Tax - Ill, Pune v/s Sinhgad Technical Education Society (2018) 11 SCC 490. 5. Similarly, the assessee has filed additional grounds for the assessment year 2013-2014 on 05.10.2019, which read as under :- 1. In the facts and circumstance of the case & in law, the Pr. Commissioner of Income Tax - 4, Kolkata erred in passing order for transfer of jurisdiction from Kolkata to Sambalpur without giving an opportunity to the Appellant before transfer. Which is a clear violation of section 127 of the Income Tax Act. 2. In the facts and circumstance of the case & in law, the Satisfaction Note must be prepared before transfer of jurisdiction, since it affects the third party rights, in the present case the transfer order was placed on record on December 26, 2016, whereas satisfaction note u/s 153C of the third party was recorded on December 27,2016, (Supplementary Paper Book page 23) is without jurisdiction & bad in law & also Void ab initio. 3. In the facts and circumstance of the case & in law, the entire assessment proceedings u/s 153C read with section 144 of the Income Tax Act 1961 was completed within 4 days in great haste from the transfer of jurisdiction and hence the entire order in bad in law and without jurisdiction. 4. In the facts and circumstance of the case & in law, there is no nexus, linkage, connection or corroboration between the seized Materials/ IT(SS)A Nos.23&24/CTK/2019 7 documents and the subject additions in the impugned order are not based on the seized materials and hence impugned order is not maintainable in law. 5. In the facts and circumstance of the case & in law, the seized documents as per Satisfaction Note as referred therein are page 67- 93 and 94-97 of SMLO-05 don't belong to and no way related to Appellant. 6. In the facts and circumstance of the case & in law, the seized documents as per Annexure A of the Satisfaction Note is IFCI Factors sanction letter for financial assistance to the Appellant and money received by the Appellant from Shivom Minerals Ltd. during the FY. 2011-12 as per SMLO 52 are not Incriminating material I documents. Moreover no additions are made in the assessment order based upon these documents. 7. The AO grossly erred in framing the assessment disregarding the fact that the original assessment u/s 143(3) were already completed and therefore the assessment "abate" and additions could only have been made based on seized materials. Justification 1. The Appellant vide its letter dated December 29, 2016 (Paper Book page 35 to 36) had challenged the proceedings initiated u/s 153C of the Income Tax Act 1961 and also challenged the order passed u/s 127 of the Income Tax Act 19161, before the ACIT, Central Circle, Sambalpur. The Appellant stated in the said letter that transfer of jurisdiction to DCIT, Central Circle, Sambalpur without issuing any show cause and without any opportunity of hearing is Ipso Facto illegal and without jurisdiction. The Appellant also stated in the said letter that" Apparently there is no satisfaction recorded by the Assessing Officer while initiating the proceeding u/s 153C of the Income Tax Act 1961 and further since the transfer of the case by the Principal Commissioner of Income Tax - 4, Kolkata has passed the order without issuing any show cause notice and without affording any opportunity of hearing. The initiation of the proceeding by DCIT, Central Circle, Sambalpur is void ab initio." The Appellant applied to the Authorities on dated June 21, 2019 for certified copies of seized documents. These documents are supplied after the appeal filed, in the meantime the Appellant submitted Appeal Memo cum Paper Book before this Hon'ble Tribunal with addition I alteration of earlier grounds with facts of the case . 2. The above mentioned grounds are purely legal issues which goes to the root of the matter and make the assessment order bad in law and void ab initio. The Additional Grounds which are purely based on legal issues be admitted and deliberated by the Hon'ble Tribunal as laid down in various Judicial decisions as duly mentioned herein below: IT(SS)A Nos.23&24/CTK/2019 8 (i) The Pr. Commissioner of Income Tax Central - 3 vis M/s Dreamcity Buildwell Pvt. Ltd. ITA 1152/2017 Delhi High Court; (ii) Noorul Islam Education Trust vIs CIT & Ors. Supreme Court; (iii) Vijayasanthi Investment Pvt. Ltd. vIs CIT - 1991 187 ITR 405 Andhra High Court; (iv) CIT v/s Calcutta Kintwears (2014) Supreme Court followed and digested in The DY CIT vIs Salasar Dewellers Pvt. Ltd. ITA No 5707/MUM/2015 AY 2008-09; (v) Jute Corporation Of India Ltd vIs Commissioner of Income Tax & Anr. 1991 AIR 241, 1990 SCR Supl. (1) 340; (vi) National Thermal Power Co. Ltd. vIs Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998229 ITR 383 SC, (1997) 7 SCC 489; (vii) Commissioner of Income Tax - Ill, Pune v/s Sinhgad Technical Education Society (2018) 11 SCC 490. 6. Further, on 12.11.2019, the assessee has filed additional grounds for A.Y.2012-2013, which read as follows :- 1. In the facts and circumstance of the case & in law, there is no nexus, linkage, connection or corroboration between the seized Materials / documents and the subject additions in the impugned order are not based on the seized materials and hence impugned order is not maintainable in law. 2. In the facts and circumstance of the case & in law, the seized documents as per Satisfaction Note as referred therein are page 67- 93 and 94-97 of SMLO-05 don't belong to and no way related to Appellant. 3. In the facts and circumstance of the case & in law, no additions are made in the Assessment Order based upon the seized materials as referred in SMLO - 5 & 52. 4. In the facts and circumstance of the case & in law, under any event and circumstances, the documents mentioned in Satisfaction Note & its annexure are not incriminating material, since it is only Sanction Letter of IFCI Factor Bank and money received by the appellant from Shivom Minerals Ltd. 5. The AO grossly erred in framing the assessment disregarding the fact that the original assessment u/s 143(3) were already completed and therefore the assessment does not "abate" and additions could only have been made based on seized materials. Justification IT(SS)A Nos.23&24/CTK/2019 9 1. The Appellant applied to the Authorities on dated June 21, 2019 for certified copies of seized documents. These documents are supplied after the appeal filed, in the meantime the Appellant submitted Appeal Memo cum Paper Book before this Hon'ble Tribunal with addition I alteration of earlier grounds with facts of the case. 2. The above mentioned grounds are purely legal issues which goes to the root of the matter and make the assessment order bad in law and void ab initio. The Additional Grounds which are purely based on legal issues be admitted and deliberated by the Hon'ble Tribunal as laid down in-various Judicial decisions as duly mentioned herein below: (i) National Thermal Power Co. Ltd. v/s Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998 2291TR 383 SC, (1997) 7 SCC 489; (ii) Jute Corporation Of India Ltd v/s Commissioner of Income Tax & Anr. 1991 AIR 241,1990 SCR Supl. (1) 340; (iii) Commissioner of Income Tax-III, Pune V/s Sinhgad Technical Education Society (2018) 11 SCC 490. 7. Similarly, the assessee has filed additional grounds for A.Y.2013- 2014 on 12.11.2019, which read as follows :- 1. In the facts and circumstance of the case & in law, there is no nexus, linkage, connection or corroboration between the seized Materials / documents and the subject additions in the impugned order are not based on the seized materials and hence impugned order is not maintainable in law. 2. In the facts and circumstance of the case & in law, the seized documents as per Satisfaction Note as referred therein are age 67-93 and 94-97 of SMLO-05 don't belong to and no way related to Appellant. 3. In the facts and circumstance of the case & in law, no additions are made in the Assessment Order based upon the seized materials as referred in SMLO - 5 & 52. 4. In the facts and circumstance of the case & in law, under any event and circumstances, the documents mentioned in Satisfaction Note is not incriminating material and do not pertain to relevant Assessment Year, since it is only Sanction Letter of IFCI Factor Bank and money received by Appellant from Shivom Minerals Ltd. 5. The AO grossly erred in framing the assessment disregarding the fact that the original assessment u/s 143(3) were already completed and therefore the assessment does not "abate" and additions could only have been made based on seized materials. Justification IT(SS)A Nos.23&24/CTK/2019 10 1. The Appellant applied to the Authorities on dated June 21, 2019 for certified copies of seized documents. These documents are supplied after the appeal filed, in the meantime the Appellant submitted Appeal Memo cum Paper Book before this Hon'ble Tribunal with addition I alteration of earlier grounds with facts of the case. 2. The above mentioned grounds are purely legal issues which goes to the root of the matter and make the assessment order bad in law and void ab initio. The Additional Grounds which are purely based on legal issues be admitted and deliberated by the Hon'ble Tribunal as laid down in various Judicial decisions as duly mentioned herein below: (i) Jute Corporation Of India Ltd vis Commissioner of Income Tax & Anr. 1991 AIR 241,1990 SCR Sup!. (1) 340; (ii) National Thermal Power Co. Ltd. vis Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998229 ITR 383 SC, (1997) 7 SCC 489; (iii) Commissioner of Income Tax - Ill, Pune v/s Sinhgad Technical Education Society (2018) 11 SCC 490. 8. Further on 04.12.2020, the assessee has filed additional grounds in the appeal for A.Y.2012-2013, which read as under :- 1. In the facts and circumstance of the case & in law, there is no nexus, linkage, connection or corroboration between the seized Materials / documents and the subject additions in the impugned order are not based on the seized materials and hence impugned order is not maintainable in law. 2. In the facts and circumstance of the case & in law, the seized documents as per Satisfaction Note as referred therein are page 67- 93 and 94-97 of SMLO-05 don't belong to and no way related to Appellant. 3. In the facts and circumstance of the case & in law, no additions are made in the Assessment Order based upon the seized materials as referred in SMLO - 5 & 52. 4. In the facts and circumstance of the case & in law, under any event and circumstances, the documents mentioned in Satisfaction Note is not incriminating material and do not pertain to relevant Assessment Year, since it is only Sanction Letter of IFCI Factor Bank and money received by Appellant from Shivom Minerals Ltd. 5. The AO grossly erred in framing the assessment disregarding the fact that the original assessment u/s 143(3) were already completed and therefore the assessment does not "abate" and additions could only have been made based on seized materials. Justification 1. The Appellant applied to the Authorities on dated June 21, 2019 for certified copies of seized documents. These documents are IT(SS)A Nos.23&24/CTK/2019 11 supplied after the appeal filed, in the meantime the Appellant submitted Appeal Memo cum Paper Book before this Hon'ble Tribunal with addition/alteration of earlier grounds with facts of the case. 2. The above mentioned grounds are purely legal issues which goes to the root of the matter and make the assessment order bad in law and void ab initio. The Additional Grounds which are purely based on legal issues be admitted and deliberated by the Hon'ble Tribunal as laid down in various Judicial decisions as duly mentioned herein below: (i) Jute Corporation Of India Ltd vis Commissioner of Income Tax & Anr. 1991 AIR 241, 1990 SCR Sup!. (1) 340; (ii) National Thermal Power Co. Ltd. vis Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998229 ITR 383 SC, (1997) 7 SCC 489; (iii) Commissioner of Income Tax-III, Pune v/s Sinhad Technical Education Society (2018) 11 SCC 490. 9. Similarly, the assessee on 04.12.2020 has filed additional grounds in the appeal for A.Y.2013-2014, which read as under :- 1. In the facts and circumstance of the case & in law, there is no nexus, based on the seized materials and hence impugned order is not linkage, connection or corroboration between the seized Materials / documents and the subject additions in the impugned order are not maintainable in law. 2. In the facts and circumstance of the case & in law, the seized documents in the Assessment Order based upon the seized materials as referred in as per Satisfaction Note as referred therein are page 67-93 and 94-97 of SMLO-05 don't belong to and no way related to Appellant. 3. In the facts and circumstance of the case & in law, no additions are made SMLO - 5 & 52. 4. In the facts and circumstance of the case & in law, under any event and circumstances, the documents mentioned in Satisfaction Note & its annexure are not incriminating material, since it is only Sanction Letter of IFCI Factor Bank and money received by the appellant from Shivom Minerals Ltd. 5. The AO grossly erred in framing the assessment disregarding the fact that the original assessment u/s 143(3) were already completed and therefore the assessment does not "abate" and additions could only have been made based on seized materials. Justification 1. The Appellant applied to the Authorities on dated June. 21, 2019 for certified copies of seized documents. These documents are supplied IT(SS)A Nos.23&24/CTK/2019 12 after the appeal filed, in the meantime the Appellant submitted Appeal Memo cum Paper Book before this Hon'ble Tribunal with addition I alteration of earlier grounds with facts of the case. 2. The above mentioned grounds are purely legal issues which goes to the root of the matter and make the assessment order bad in law and void ab initio. The Additional Grounds which are purely based on legal issues be admitted and deliberated by the Hon'ble Tribunal as laid down in various Judicial decisions as duly mentioned herein below: (i) National Thermal Power Co. Ltd. v/s Commissioner Of Income Tax on 1998 (99) ELT 200 SC, 1998229 ITR 383 SC, (1997) 7 SCC 489; (ii) Jute Corporation Of India Ltd v/s Commissioner of Income Tax & Anr. 1991 AIR 241,1990 SCR Supl. (1) 340; (iii) Commissioner of Income Tax - Ill, Pune vis Sinhgad Technical Education Society (2018) 11 SCC 490. 10. On perusal of the additional grounds taken by the assessee for both the assessment years under consideration on 04.12.2020, we found that these grounds are identical to the additional grounds filed by the assessee in both the appeals separately on 12.11.2019 but the same are unsigned. 11. At the time of hearing, ld. Senior Counsel appeared on behalf of the assessee submitted that he desires to argue only on the additional grounds raised in both the appeals which have been filed on 12.11.2019. And, no other grounds have been argued. 12. It was submitted by the ld. Senior Counsel that there was a search conducted on the premises of Shivom Minerals Ltd. and group cases on 24 th & 25 th September, 2014. In the course of search, certain ledger accounts of the assessee had been found and the same was transferred to the AO of the assessee by the AO of the person searched after recording satisfaction u/s.153C of the Act. Copy of the proforma for IT(SS)A Nos.23&24/CTK/2019 13 recording satisfaction u/s.153C of the Act along with Annexure-A containing the satisfaction recorded by the AO have been placed in the paper book at pages 34 & 35, are as under :- IT(SS)A Nos.23&24/CTK/2019 14 13. It was submitted that the Annexure-A to the satisfaction note refers to the ledger accounts which are nothing but the regular books of accounts of the assessee and consequently, it could not be considered to be incriminating material. It was submitted that the main crux of his argument is that there was no nexus, linkage, connection or corroboration IT(SS)A Nos.23&24/CTK/2019 15 between the seized materials and subject additions. For this proposition, he relied upon the decision of the coordinate bench of the Tribunal in assessee’s own case for A.Ys.2009-2010 & 2010-2011 in ITA Nos.21&22/CTK/2019, dated 21.10.2019, wherein the coordinate bench of the Tribunal following the decision of the Hon’ble Supreme Court in the case of Sinhgad Technical Education Society, reported in [2018] 11 SCC 490/397 ITR 344 as also the decision of the Hon’ble Delhi High Court in the case of Nahid Finlease Pvt. Ltd., in ITA No.1483/2018, order dated 13.05.2019, cancelled the assessment order passed u/s.153C of the Act. It was the submission that the addition in the assessment was in respect of disallowance of interest claimed on the ground that interest bearing loans taken from IFCI Factor Ltd. had been advanced as interest free loans to Shri Rajendra Prasad Gupta and his family members for an amount of Rs.3.40 crores. It was the submission that the seized documents which is the ledger account and which has been referred to by the AO of the searched person without issuing the satisfaction note, did not have any relation whatsoever to the computation of the interest disallowance. It was the further submission that regular books of accounts are not incriminating materials and for this proposition, ld. Sr. Counsel placed reliance on the decision of the Hon’ble Delhi High Court in the case of Param Dairy Ltd., passed in ITA No.37/2021, dated 15.02.2021. It was the further submission that the disallowance of claim u/s.36(1)(iii) of the Act being the deduction of an expenditure cannot be part of an assessment u/s.153C of the Act much less an incriminating material. The IT(SS)A Nos.23&24/CTK/2019 16 ld. Senior Counsel further drew our attention to page Nos.15 & 16 of the paper book, which were the details of the seized material referred to in the satisfaction note being SMLO-05 and SMLO-52. It was the submission that SMLO-05 was in no way connected to the assessee and SMLO-52 contained the letter from IFCI Factor Ltd. to the assessee regarding the financial assistance requested for by the assessee. It was also the submission that these were not incriminating materials and in fact these transactions are very well recorded in the regular books of the assessee. 14. It was further submitted that originally the assessment in the case of the assessee came to be completed u/s.143(3) of the Act for the assessment year 2012-2013 on 26.02.2015, wherein there was a disallowance u/s.14A of the Act. This assessment was the subject matter of an appeal before the ld. CIT(A), who vide his order dated 20.05.2019 had deleted the disallowance. It was, thus, submitted that if at all, the disallowance of the interest could have been done under regular assessment but it could not be treated as permissible under the assessment u/s.153C of the Act, in the absence of any incriminating material. It was submitted that as there was no incriminating material found in the case of the assessee, therefore, the assessment order passed u/s.153C r.w.s.143(3) of the Act for both the assessment years under consideration are liable to be quashed. 15. In reply, ld. CIT-DR submitted that in the case of the assessee decided by the coordinate bench of the tribunal for A.Ys.2010-2011 & 2011-2012 clearly showed in para 9 of the order, that the ld. CIT-DR IT(SS)A Nos.23&24/CTK/2019 17 therein have conceded to the fact that there is no incriminating material found or seized from the searched person and the seized document did not belong to the assessee. It was further the submission that this is not the case present. The seized materials were incriminating documents. It was his further submission that the provision of Section 153C of the Act does not use the word “undisclosed income” nor does it uses the word “incriminating documents”. All that is required under the provisions of Section 153C of the Act is that the AO is satisfied that the documents seized belong to a person other than the person searched. In the present case, it was the submission that the ledger account has been found and it showed that loans have been taken from IFCI Factors Ltd. It was also the submission that consequently the AO had handed over the evidence after recording the satisfaction note to the AO of the assessee. It was the submission that the said ledger did have bearing on the determination of the total income required under the provisions of Section 153C of the Act. It was the submission that the concept of total income included both “disclosed” and “undisclosed” income. He further drew our attention to page 15 of the paper book, which were the extracts of SMLO-05 & SMLO- 52 and the explanation of the assessee in respect of the documents. It was the submission that the fact that a specific transaction in respect of the assessee has been found, there is no question as to whether it is incriminating or not. The AO of the person searched transferred the evidence which was found in the course of search as belonging to the assessee to the AO of the assessee along with the satisfaction note and it IT(SS)A Nos.23&24/CTK/2019 18 was then the duty of the AO of the assessee to scrutinise the same and draw the conclusion thereon. 16. The ld. CIT-DR further drew our attention to the decision of the Hon’ble Delhi High Court in the case of SSP Aviation Ltd. Vs. DCIT, reported in [2012] 20 taxmann.com 214 (Delhi), wherein at para 17, the Hon’ble High Court has categorically mentioned that “AO who has reached the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the AO having jurisdiction over the other person and thereafter it is for the AO having jurisdiction over the other person to follow the procedure prescribed by the Section 153A of the Act in an attempt to ensure that the income reflected by the document has been accounted for by such other person. It was then the submission by the ld. CIT-DR that evidence has been found in respect of the assessee in the course of search conducted in the premises of M/s Shivom Minerals Ltd. and the same having been passed on to the AO having jurisdiction over the assessee and such AO having completed the assessment in accordance with law, therefore, the ld. CIT-DR submitted that the order of the CIT(A) upholding the assessment framed by the AO deserves to be affirmed. 17. In reply to the above submission of the ld. CIT-DR, the ld. Senior Advocate drew our attention to the decision of the Hon’ble Supreme Court in the case of Sinhgad Technical Education Society, reported in (2018) 11 SCC 490, wherein in para 17, the Hon’ble Apex Court has upheld the IT(SS)A Nos.23&24/CTK/2019 19 action of the Tribunal in admitting the additional ground in respect of the jurisdictional issue and has held as follows :- 17. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co- relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. 18. It was submitted that the decision in the case of SSP Aviation Ltd. (supra) had been distinguished in respect of the issue as to whether seized materials can be relied on when the same does not pertain to the assessment year in question. It was the submission that in the present case, the seized material was not incriminating material and these were transactions which were recorded in the regular books and consequently no assessment u/s.153C of the Act is liable to be made. 19. We have considered rival submissions. 20. A perusal of the Annexure-A annexed to the satisfaction note, reproduced hereinabove, by the AO of the person searched shows that in the seized material SMLO-52, there is a ledger which contains the loan IT(SS)A Nos.23&24/CTK/2019 20 taken from IFCI Factors Ltd. to an extent of Rs.9,40,52,064/-. A further perusal of the said Annexure-A shows that out of this amount of Rs.9,40,52,064/- loan taken by the assessee from IFCI Factors, an amount of Rs.3.11 crores has been given as loan to Shri Vikash Gupta and his family members. Admittedly, the ledger account is part of the regular books of the assessee and the same cannot be treated as an incriminating material. However, the information that the loan has been given to Shri Vikash Gupta and his family members out of the said loan taken by the assessee company from IFCI Factors Ltd. has come out of the evidence found in the course of search. The evidence in relation to the impugned assessment years have been found in the course of search on Shivom Minerals Ltd. but relating to the assessee. When evidence relating to the assessee has been found and the same has been made available by the AO of the person searched to the AO of the person in respect of whom the evidence has been found then the AO of the person in respect of whom the evidence has been found would have to examine the same. Here, clearly evidence in the form of ledger and the transactions of giving the loan to Shri Vikash Gupta and his family members have been found and handed over to the AO of the assessee. Whether the said evidence is incriminating or not would have no bearing insofar as the AO of the searched person is concerned, but the evidence having been provided to the AO of the person in respect of whom the evidence has been found, it is the duty of such AO to examine and verify the same. Now, for the purpose of verification the only option available to IT(SS)A Nos.23&24/CTK/2019 21 the AO is to initiate the proceedings u/s.153C of the Act, for that relevant assessment years to which those evidence relate. That is exactly what the AO has done in the present case. Once the assessment is opened u/s.153C of the Act, the provisions of the regular assessments would come into play and such additions and disallowance as is possible under regular assessment would have to be done by the AO. Again that is what the present AO has done. This being so, clearly evidence in relation to the relevant assessment years having been found in the course of search conducted in the premises of M/s Shivom Minerals Ltd. and its group, that such evidence having been provided to the AO of the assessee to whom such evidences were related to, the proceedings initiated u/s.153C of the Act are valid insofar as such evidence relates to the assessment years to which the evidences were found. Once the proceedings u/s.153C of the Act are initiated rightly, the consequential assessment is a forlorn conclusion. In these circumstances, we find no error in the order of the AO and that of the ld.CIT(A) on this issue. In view of the above, the additional grounds filed by the assessee stand rejected. As no other grounds have been argued, therefore, the same are treated as not argued/pressed and are being dismissed as such. 21. One of the argument of the ld. Sr. Advocate is that the issue is squarely covered by the decision of the coordinate bench of the Tribunal in the assessee’s own case for the immediately preceding assessment years, however, a perusal of the said order does not show any of the facts being considered and in the absence of the facts being brought out, in IT(SS)A Nos.23&24/CTK/2019 22 view of the decision of the Hon’ble Madras High Court in the case of M/s Hi Tech Arai Limited, reported in 321 ITR 477 (Mad), we have decided the issue involved in the present case on the facts as available before us and, thus, the additional grounds filed in both the appeals by the assessee on 12.11.2019 are dismissed. 22. In the result, both appeals of the assessee are dismissed. Order dictated and pronounced in the open court on 08/06/2022. Sd/- (अरुण खोड़पऩया) (ARUN KHODPIA) Sd/- (जाजज माथन) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 08/06/2022 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Unicon Me rchants Pvt . Ltd., P-25, C i vil T o wn shi p, Rourke la 2. प्रत्यथी / The Respondent- T he JCIT /ACIT , Ce ntral Ci rc le, Sam ba lpur 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. पिभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यापऩत प्रयत //True Copy//