ACIT, Central Circle - 3(3), Kolkata, Kolkata V. M/s. Adhunik Infrastructure Pvt. Ltd., Kolkata

ITSSA 44/KOL/2017

AI Insights

The case involves multiple appeals by the Revenue against M/s. Adhunik Infrastructure Pvt. Ltd. concerning the additions made under Section 68 of the Income Tax Act, 1961, for the Assessment Years 2009-10 to 2012-13. The primary issues revolved around the claim of deduction under Section 80IA and the treatment of certain payments as bogus. The Tribunal examined whether the additions made by the Assessing Officer were justified, given that no incriminating material was found during the search operation that could substantiate the claims of bogus share capital and other related allegations. The Tribunal's decision was influenced by various precedents and the lack of specific incriminating evidence linking the assessee to the alleged irregularities.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128705 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 22-06-2017
• Other Referred Cases: CIT vs. Kabul Chawla, CIT vs. Veerprabhu Marketing Ltd., PCIT vs. Kurele Paper Mills Pvt Ltd, ACIT vs. M/s. S.S. Commosale Pvt. Ltd., Aditya Himatsingka vs. DCIT, Ramani Infrastructure & Others vs. ACIT, Signature Builders vs. ACIT, Shri Sudip Maheshwari vs. ITO, M/s. Coal Sale Co. Ltd. vs. ITO, M/s. Tanuj Holdings Pvt Ltd vs. DCIT CC-1(2), M/s. Ultimate Builders vs. ACIT, LMJ International Ltd vs. DCIT CC-XXX, Budhiya Marketing Pvt. Ltd. & Ors. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus Share capital; Unexplained expenditure; Search and seizure; Document seized; Corroborative evidences; Deemed dividend; Retraction; Reason to believe; Documents seized; TDS; Set aside
• Section: 68; 148; 132; 271(1)(c); 154; 40A(3); 143(3); 153A; 2(22)(e); 14A; 80IB; 133(6); 250; 80IA; 143(2); 264; 43; 73; 13; 119; 22; 153C

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A” BENCH, KOLKATA श्री राजपाल यादव, उपाध्यक्ष (कोलकाता क्ष े त्र) एवं डॉ. मनीष बोरड, ल े खा सदस्य क े समक्ष Before SRI RAJPAL YADAV, VICE PRESIDENT & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 Assessment Years: 2009-10, 2010-11, 2011-12 & 2012-13 ACIT, Central Circle-3(3), Kolkata............................Appellant Vs. M/s. Adhunik Infrastructure Pvt. Ltd.....................Respondent [PAN: AADCA 1315 L] Appearances by: Sh. Subhrajyoti Bhattacharjee, CIT (D/R), appeared on behalf of the Revenue. Sh. Miraj D. Shah, A/R, appeared on behalf of the Assessee. Date of concluding the hearing : February 2 nd , 2023 Date of pronouncing the order : April 17 th , 2023 ORDER Per Manish Borad, Accountant Member: These appeals filed by the Revenue pertaining to the Assessment Years (in short “AY”) 2009-10, 2010-11, 2011-12 & 2012-13 are directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 2 of 44 Income-tax (Appeals)-21, Kolkata [in short ld. “CIT(A)”] dated 24.04.2017. 2. The Revenue is in appeal before the Tribunal raising the following grounds: I.T.(S.S.)A. No. 41/KOL/2017 for Assessment Year: 2009-10: “1. The Ld CIT(A) has erred in allowing the deduction u/s 80IA ignoring the fact that res-judicata is no applicable and also ignoring the Section 158A when no such undertaking has been filed by the assessee company in Form No 8 u/r 16 of I T Rules 1962 either before the AO or before the Ld CIT(A). 2. The Ld CIT(A) has erred in deciding that there is no incriminating document seized during Search & Seizure Operation when there was several documents seized showing that the assessee group has received back share capital from Jama-Kharchi companies by paying unaccounted income in cash to them and on confrontation the assessee group has accepted the fact and disclosed the unaccounted income u/s 132(4). Also as per Para 3 of the assessment order, the assessee has increased his returned income u/s 153A. 3. Ld CIT (A) has failed to appreciate that the share capital claimed to have raised by the assessee company is through those companies which has been proved to be having no creditworthiness, no actual activity and those are operated by the agents / entry operators: the fact has been accepted by the assessee group by disclosure u/s 132(4) on confrontation with the seized incriminating documents and as such the inference that no incriminating document was there is not at all acceptable. 4. Ld CIT (A) has failed to explain as to why the Judicial decisions mentioned in the assessment order are not applicable in this case. 5. Ld CIT (A) has erred in treating the case as covered by the decision of M/s Veerprabhu Marketing Ltd and M/s Kabul Chawla when in these two cases additions were made u/s 2(22)(e) and when there was no incriminating documents relating to that point whereas here the incriminating document was related to bogus share capital as accepted by the directors and returned income u/s 153A has been increased by the assessee. I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 3 of 44 6. Ld CIT (A) has failed to appreciate that the Judicial Decisions mentioned by him relating to 153C ( Page 13, para 4 & 5) is not related to this case as in this case warrant was executed and proceedings are initiated u/s 153A and there are remarkable difference between the two proceedings u/s 153A & 153C. 7. The Ld CIT(A) has failed to appreciate that if the names of some Jama-kharchi companies are there in the seized documents and on confrontation with the document, the assessee company group has accepted that the share applications from those companies are bogus and disclosed those amounts u/s 132(4), the seized document is a true incriminating one relating to all share capitals received from such Jama-kharchi companies by the group. 8. The Ld CIT(A) has erred in restricting the addition on fake labour charges bills at GP Rate when the related decisions are for undisclosed sales and on wrong finding that the entire labour charges was disallowed when about 3.5% of the labour charges and others was disallowed. 9. The Ld CIT(A) has failed to appreciate that the assessee company has accepted the bills are bogus and cash payment is not allowable u/s 40A(3) that also no name, address PAN of the payees could be filed and no TDS was made on such cash payment also and it is not allowable u/s 40(a)(ia). 10. For that the order of the Ld CIT (A) is otherwise bad and requires to be set aside. 11. The revenue reserves its rights to substantiate, modify, delete, supplement and/or alter the grounds at the time of hearing.” I.T.(S.S.)A. No. 42/KOL/2017 for Assessment Year: 2010-11: “1. The Ld CIT(A) has erred in allowing the deduction u/s 80IA ignoring the fact that res-judicata is no applicable and also ignoring the Section 158A when no such undertaking has been filed by the assessee company in Form No 8 u/r 16 of I T Rules 1962 either before the AO or before the Ld CIT(A). 2. The Ld CIT(A) has erred in deciding that there in no incriminating document seized during Search & Seizure Operation when there was several documents seized showing that the assessee group has received back share capital from Jama-Kharchi companies by paying unaccounted income in cash to them and on confrontation the I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 4 of 44 assessee group has accepted the fact and disclosed the unaccounted income u/s 132(4). 3. Ld CIT (A) has failed to appreciate that the share capital claimed to have raised by the assessee company is through those companies which has been proved to be having no creditworthiness, no actual activity and those are operated by the agents / entry operators: the fact has been accepted by the assessee group by disclosure u/s 132(4) on confrontation with the seized incriminating documents and as such the inference that no incriminating document was there is not at all acceptable. 4. Ld CIT (A) has failed to explain as to why the Judicial decisions mentioned in the assessment order are not applicable in this case. 5. Ld CIT (A) has erred in treating the case as covered by the decision of M/s Veerprabhu Marketing Ltd and M/s Kabul Chawla when in these two cases additions were made u/s 2(22)(e) and when there was no incriminating documents relating to that point whereas here the incriminating document was related to bogus share capital as accepted by the directors. 6. Ld CIT (A) has failed to appreciate that the Judicial Decisions mentioned by him relating to 153C ( Page 13, para 4 & 5) is not related to this case as in this case warrant was executed and proceedings are initiated u/s 153A and there are remarkable difference between the two proceedings u/s 153A & 153C. 7. The Ld CIT(A) has failed to appreciate that if the names of some Jama-kharchi companies are there in the seized documents and on confrontation with the document, the assessee company group has accepted that the share applications from those companies are bogus and disclosed those amounts u/s 132(4), the seized document is a true incriminating one relating to all share capitals received from such Jama-kharchi companies by the group. 8. The Ld CIT(A) has erred in restricting the addition on fake labour charges bills at GP Rate when the related decisions are for undisclosed sales and on wrong finding that the entire labour charges was disallowed when about 3.5% of the labour charges was disallowed. 9. The Ld CIT(A) has failed to appreciate that the assessee company has accepted the bills are bogus and cash payment is not allowable u/s 40A(3) that also no name, address PAN of the payees could be I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 5 of 44 filed and no TDS was made on such cash payment also and it is not allowable u/s 40(a)(ia). 10. For that the order of the Ld CIT (A) is otherwise bad and requires to be set aside. 11. The revenue reserves its rights to substantiate, modify, delete, supplement and/or alter the grounds at the time of hearing.” I.T.(S.S.)A. No. 43/KOL/2017 for Assessment Year: 2011-12: “1. The Ld CIT(A) has erred in allowing the deduction u/s 80IA ignoring the fact that res-judicata is no applicable and also ignoring the Section 158A when no such undertaking has been filed by the assessee company in Form No 8 u/r 16 of I T Rules 1962 either before the AO or before the Ld CIT(A). 2. Ld CIT (A) has erred in deciding that no addition can be made on share capital or disallowance of deduction u/s 80IA in the scrutiny proceedings u/s 153A / 143(3) when the normal scrutiny proceedings u/s 147/143(3) has been abetted due to the search and seizure operation and the reason. 3. The Ld CIT(A) has failed to appreciate that when the proceedings u/s 147/143(3) is abetted due to search & seizure operation and it is mentioned in the assessment order, the AO can make complete assessment in all other points subsequently came to the notice of the AO as per Section 147. 4. Ld CIT (A) has failed to explain as to why the Judicial decisions mentioned in the assessment order are not applicable in this case. 5. Ld CIT (A) has failed to appreciate that the share capital claimed to have raised by the assessee company is through those companies which has been proved to be having no creditworthiness, no actual activity and those are operated by the agents / entry operators: the fact has been accepted by the assessee group by disclosure u/s 132(4) on confrontation with the seized incriminating documents and as such the inference that no incriminating document was there is not at all acceptable. 6. Ld CIT (A) has erred in treating the case as covered by the decision of M/s Veerprabhu Marketing Ltd and M/s Kabul Chawla when in these two cases additions were made u/s 2(22)(e) and when there was no incriminating documents relating to that point whereas here I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 6 of 44 the incriminating document was related to bogus share capital as accepted by the directors. 7. Ld CIT (A) has failed to appreciate that the Judicial Decisions mentioned by him relating to 153C ( Page 5, para 5 & 6) is not related to this case as in this case warrant was executed and proceedings are initiated u/s 153A and there are remarkable difference between the two proceedings u/s 153A & 153C. 8. The Ld CIT(A) has failed to appreciate that if the names of some Jama-kharchi companies are there in the seized documents and on confrontation with the document, the assessee company group has accepted that the share applications from those companies are bogus and disclosed those amounts u/s 132(4), the seized document is a true incriminating one relating to all share capitals received from such Jama-kharchi companies by the group. 9. Ld CIT (A) has erred in accepting the submission of the assessee that the interest on refund of Rs 4,63,848/- is included in the OTHER INCOME disclosed by the assessee company without any verification by the AO under rule 46A of the Income Tax Rules, 1962 as no break up is there on record and it can only be verified by checking the Books of accounts. 10. For that the order of the Ld CIT (A) is otherwise bad and requires to be set aside. 11. The revenue reserves its rights to substantiate, modify, delete, supplement and/or alter the grounds at the time of hearing.” I.T.(S.S.)A. No. 44/KOL/2017 for Assessment Year: 2012-13: “1. The Ld CIT(A) has erred in allowing the deduction u/s 80IA ignoring the fact that res-judicata is no applicable and also ignoring the Section 158A when no such undertaking has been filed by the assessee company in Form No 8 u/r 16 of I T Rules 1962 either before the AO or before the Ld CIT(A). 2. The Ld CIT(A) has erred in deciding that there in no incriminating document seized during Search & Seizure Operation when there was several documents seized showing that the assessee group has received back share capital from Jama-Kharchi companies by paying unaccounted income in cash to them and on confrontation the assessee group has accepted the fact and disclosed the unaccounted income u/s 132(4). I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 7 of 44 3. Ld CIT (A) has failed to appreciate that the share capital claimed to have raised by the assessee company is through those companies which has been proved to be having no creditworthiness, no actual activity and those are operated by the agents / entry operators: the fact has been accepted by the assessee group by disclosure u/s 132(4) on confrontation with the seized incriminating documents and as such the inference that no incriminating document was there is not at all acceptable. 4. Ld CIT (A) has failed to explain as to why the Judicial decisions mentioned in the assessment order are not applicable in this case. 5. Ld CIT (A) has erred in treating the case as covered by the decision of M/s Veerprabhu Marketing Ltd and M/s Kabul Chawla when in these two cases additions were made u/s 2(22)(e) and when there was no incriminating documents relating to that point whereas here the incriminating document was related to bogus share capital as accepted by the directors. 6. Ld CIT (A) has failed to appreciate that the Judicial Decisions mentioned by him relating to 153C ( Page 13, para 4 & 5) is not related to this case as in this case warrant was executed and proceedings are initiated u/s 153A and there are remarkable difference between the two proceedings u/s 153A & 153C. 7. The Ld CIT(A) has failed to appreciate that if the names of some Jama-kharchi companies are there in the seized documents and on confrontation with the document, the assessee company group has accepted that the share applications from those companies are bogus and disclosed those amounts u/s 132(4), the seized document is a true incriminating one relating to all share capitals received from such Jama-kharchi companies by the group. 8. The Ld CIT(A) has erred in restricting the addition on fake labour charges bills at GP Rate when the related decisions are for undisclosed sales and on wrong finding that the entire labour charges was disallowed when about 1% of the labour charges was disallowed. 9. The Ld CIT(A) has failed to appreciate that the assessee company has accepted the bills are bogus and cash payment is not allowable u/s 40A(3) that also no name, address PAN of the payees could be filed and no TDS was made on such cash payment also and it is not allowable u/s 40(a)(ia). I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 8 of 44 10. Ld CIT (A) has erred in accepting the submission of the assessee that the interest on refund of Rs 6,99,642/- is included in the OTHER INCOME disclosed by the assessee company without any verification by the AO under rule 46A of the Income Tax Rules, 1962 as no break up is there on record and it can only be verified by checking the Books of accounts. 11. I or that the order of the Ld CIT (A) is otherwise bad and requires to be set aside. 12. The revenue reserves its rights to substantiate, modify, delete, supplement and/or alter the grounds at the time of hearing.” 3. As the issues raised in these appeals are common and the facts are identical, therefore, as agreed by both the parties, they are heard together and disposed off by way of this common order for the sake of convenience and brevity. 4. The first common issue for our consideration is addition for bogus share capital. The facts in brief are that during the course of search u/s 132 of the Act conducted at Adhunik Group of companies on 17 & 18/12.2014. Certain incriminating materials were found and seized. The assessee company was also subjected to search. In compliance to notice u/s 153A of the Act, return of income was filed and assessment proceedings were carried out for AY 2009-10 to AY 2012-13. While conducting assessment proceedings, ld. AO referring the seized material bearing no. AIPL/4 pages 4, 5, 6 & 7 noticed that the assessee has surrendered income in the form of unexplained share capital received from various companies spread over various assessment years from AY 2009-10 to AY 2014-15. Referring to the names of alleged share applicants ld. AO came to a conclusion that the share capital received by the assessee company from such share applicants though not surrendered by the assessee but since the Group has I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 9 of 44 accepted the alleged shareholders as accommodation entry providers and offered the share capital received for tax, applying the similar analogy the share capital received by the assessee company during AY 2009-10 to AY 2012-13 amounting to Rs. 2.03 Cr, 6.19 Cr, Rs. 3.90 Cr & Rs. 0.90 Cr, respectively also deserves to be added u/s 68 of the Act. 5. When the assessee carried the matter before ld. CIT(A) he came to a conclusion that the seized materials referred by ld. AO was not containing any information about the assessee and therefore, it cannot be considered as incriminating material for the purpose of making addition in the hands of the assessee for non- abated/completed assessment years. Ld. CIT(A) referring to various judgments including that of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla [2016] 380 ITR 573 (Delhi), CIT vs. Veerprabhu Marketing Ltd. [2016] 73 taxmann.com 149 (Calcutta) deleted the alleged addition for bogus share capital on the legal ground itself without going into the merits of the case giving the following finding: “I have considered the findings of the AO in the assessment order, different case laws brought on record and appeal orders passed by my predecessors on this legal issue. I find from the assessment order that during the search and seizure operations conducted u/s 132 of the I T Act, 1961, incriminating documents/papers were not seized. At least, additions made by the AO in the assessment order passed u/s 153A/143(3) are not based on any incriminating documents/ papers seized during the search operation. It would also not be out of context to mention here that in this case, on the date of search, no assessment for this year was pending. Therefore, keeping in view the ratio decided by the Jurisdictional bench of Kolkata Tribunal in cases referred above and the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra) in the light of CBDT’s decision of not filing SLP in this case in the Supreme Court I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 10 of 44 and keeping in view the Apex Court’s decision to dismiss SLP on similar issue in the case of Pr CIT vs Kurele Paper Mills Pvt Ltd : SLP (C) No.34554 of 2015 dt.07-12-2015, I am of this view that in order to maintain judicial continuity on this issue and respectfully following the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra), assessee’s appeal on grounds no 7 is allowed as such I am not inclined to adjudicate appeal on merit.” 6. Aggrieved, the Revenue is now in appeal before this Tribunal. Ld. D/R vehemently argued supporting the order of ld. AO. 7. On the other hand, ld. Counsel for the assessee apart from referring to the submissions made before ld. CIT(A), relied on the finding of ld. CIT(A) and also placed reliance on the decision of this Tribunal in the case of assessee’s another group companies ACIT vs. M/s. S.S. Commosale Pvt. Ltd. in IT(SS)A No. 51/KOL/2017 order dated 09.05.2022 and also on the decision of this Tribunal in the case of Aditya Himatsingka vs. DCIT in IT(SS)A No. 27/KOL/2022 order dated 09.09.2022. 8. We have heard rival contentions and perused the records placed before us. Revenue is aggrieved with the finding of ld. CIT(A) deleting the addition made by ld. AO towards unexplained bogus share capital u/s 68 of the Act on the ground that since no incriminating material was found during the course of search regarding the alleged addition and the year under consideration are completed and non-abated assessment years, no addition was called for. 9. We observe that the search proceedings were carried out on the assessee on 17 th to 18 th December, 2014. On the conclusion of search the assessee group namely Adhunik group of companies I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 11 of 44 made a surrender of Rs. 17,00,69,041/- and the details of the said surrender reads as follows: Sl. No. Description of Undisclosed Income Disclosed in the Hands of Document Reference No. Financial Year Amount (Rs.) 1. Share Capital CAS Properties (P) Ltd. AIPL/4 PQ.4&7 2011- 2012 12,00,000/- 2. Share Capital RTC Financial Services (P) Ltd. AIPL/4 Pg. 4 &-6 2012- 2013 2^2,00,000/- 3. Share Capital SS Commosale (P) Ltd. AIPL/4 Pg.4&5 2012- 2013 1,36,90,000/- 4. Share Capital SS Commosale (P) Ltd. AIPL/4 Pg.4&5 2013- 2014 2.27,60,000/- 5. Cash Rebates, cash discounts and other payments received from various parties Adhunik Infrastructure s (P) Ltd. AIPL/4 Pg. 3 2014- 2015 4,05,00,000/- 6. Payments made to various parties not recorded in books Adhunik Infrastructure s (P) Ltd. AS/1 Pg. 2 2009- 2010 1,29,41,180/- 7. Payments made to various parties not recorded in books Adhunik Infrastructure s (P) Ltd. AS/1 pg. 2 2011- 2012 3,28,97,861/- 8. Payments made to various parties not recorded in books Adhunik Infrastructure s (P) Ltd. AS/1 Pg. 2 2014- 2015 6,00,000/- 9. Cash amount received from various parties Adhunik Infrastructure s (P) Ltd. AS/1 Pg. 26 2014- 2015 45,00,000/- 10. Cash amount received from various parties Adhunik Infrastructure s (P) Ltd. AS/1 Pg. 42 2014- 2015 75,00,000/- 11. Cash amount received from various parties Adhunik Infrastructure s (P) Ltd. AS/1 Pg. 45 2014- 2015 69,00,000/- 12. Sale of Cement Bags Adhunik Infrastructure s (P) Ltd. AS/1 Pg-26 2014- 2015 5000/- 13. Misc. Income Sanjay Sureka --- 2014- 2015 2,25,000/- 14. Misc. Income Anand Sureka --- 2014- 2015 1,50,000/- TOTAL 17,00,69,041/- I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 12 of 44 10. The above working of surrendered income was enclosed with the following submissions made on behalf of the Adhunik group: “08. The above undisclosed income was earned out of Income from cash rebates, discounts and other amount received in cash from various parties which were not recorded in the regular books till the date of search. 09. The undisclosed income was partly utilised for buying jewellery and ornaments as well as making charges including various remodelling of jewellery and ornaments, conversion cost of jewellery and ornaments by. members of our family. Sir, the amount shown in page no.4 to 7 of seized document no. AIPL/4 has been invested as share capital in M/s RTC Financial Services (P) Ltd. SS Commosale (P) Ltd. and CAS Properties (P) Ltd. in the guise of accommodation entries and hence for buying peace we have decided to disclose the said undisclosed income in the name of the respective company. 10. Sir, we are a law abiding citizen and therefore, we have made disclosure of said amount to avoid litigation and buy peace on the basis of seized documents. We hope that you shall provide immunity to us from penalty u/s 271AAB and 271(1)(c) of income tax Act, 1961 as well as from prosecution as per various provisions of the Income Tax Act, 1961. We also request your honour’s that the above disclosure of income can be further modified or rectified for any technical or arithmetical error.” 11. Further, we notice that during the course of search four sheets bearing no. AIPL/4 pages 4, 5, 6 & 7 were found which contained the names of the share applicants, the amount received and the financial year during which the said sum was received. These sheets were typed and the details contained therein are extracted below: Investment in share capital of M/s. SS Commosale Private Limited Sl. No. Name of the Applicant Amount (Rs.) Financial Year 1 Ayushman Vanijya (P) Ltd. 4,050,000.00 2012-13 2 Colen Chemicals (P) Ltd. 1,000,000.00 2012-13 3 Dhanwanti Projects (P) Ltd. 1,504,000.00 2012-13 I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 13 of 44 4 Genuine Distributors (P) Ltd. 2,980,000.00 2012-13 5 Manimudra Investments (P) Ltd. 2,720,000.00 2012-13 6 Northstar Agencies (P) Ltd. 500,000.00 2012-13 7 Palpit Tie-up (P) Ltd. 936,000.00 2012-13 Total 13,690,000.00 1 Barclay Vinimay (P) Ltd. 2,360,000.00 2013-14 2 Colen Chemicals (P) Ltd. 2,500,000.00 2013-14 3 Excelsior Trades (P) Ltd. 5,800,000.00 2013-14 4 Northstar Agencies (P) Ltd. 4,560,000.00 2013-14 5 Palpit Tie-up (P) Ltd. 3,080,000.00 2013-14 6 Pandora Tie-up (P) Ltd. 1,520,000.00 2013-14 7 Three Stars Consultants (P) Ltd. 2,840,000.00 2013-14 Total 22,760,000.00 Investment in share capital of M/s. RTC Financial Services Private Limited Sl. No. Name of the Applicant Amount (Rs.) Financial Year 1 Ayushman Vanijya (P) Ltd. 2,500,000.00 2011-12 2 Colen Chemicals (P) Ltd. 7,000,000.00 2011-12 3 Dhanwanti Projects (P) Ltd. 2,500,000.00 2011-12 4 Excelsior Trades (P) Ltd. 2,500,000.00 2011-12 5 Genuine Distributors (P) Ltd. 1,700,000.00 2011-12 6 Morrisons Traders & Developers (P) Ltd. 3,500,000.00 2011-12 7 Northstar Agencies (P) Ltd. 3,400,000.00 2011-12 8 Palpit Tie-up (P) Ltd. 1,200,000.00 2011-12 9 Three Stars Consultants (P) Ltd. 1,900,000.00 2011-12 Total 26,200,000.00 Investment in share capital of M/s. CAS Properties Private Limited Sl. No. Name of the Applicant Amount (Rs.) Financial Year 1 Pandora Tie-up (P) Ltd. 1,200,000.00 2011-12 Total 1,200,000.00 12. Now, after perusing the above seized material, we notice that there were certain investments received from various share subscribers by other group companies namely, M/s. SS Commosale Private Limited, M/s. RTC Financial Services Private I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 14 of 44 Limited, M/s. CAS Properties Private Limited and the total amount of share capital received by these companies during the year mentioned against the amount of share capital forms part of the total surrender of Rs. 17.01 Cr approx which is extracted above. 13. Now, in the above referred seized material the name of the assessee i.e. M/s. Adhunik Infrastructure Pvt. Ltd. is not appearing. There is no dispute in this respect. Now, ld. AO based on the said seized material concluded that the shareholder companies who have invested into the share capital of other group companies of the Adhunik group have also invested in the assessee company and therefore, the share capital received by the assessee from such accepted bogus shareholders needs to be treated as bogus share capital in the hands of the assessee. It has been held consistently that the additions in the assessment carried out u/s 153A or 153C of the Act, for non-abated/completed years or the year for which time limit for issue notice 143(2) of the Act stands expired as on the date of search, then for such years, additions can be made only on the basis of incriminating material evidencing that the income is undisclosed/unaccounted i.e. not offered to tax by the assessee. 14. We would like to take note of the decision of this Tribunal in the case of other group concerns of the assessee group i.e. ACIT vs. M/s. S.S. Commosale Pvt. Ltd. in IT(SS)A No. 51/KOL/2017 for AY 2011-12 order dated 09.05.2022 in the case of which seized material was found but in that seized material which is extracted (supra), the addition was made by ld. AO for other assessment years also which were not indicated in the seized material and this I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 15 of 44 Tribunal considering the settled judicial precedence deleted the additions made u/s 68 of the Act observing as follows: “7. We have heard rival contentions and perused the records place before us. Through this appeal Revenue has challenged the finding of the ld. CIT(A) deleting the addition made by the ld. AO u/s 68 of the Act for the alleged bogus share application money. We observe that during the year, the assessee received share application money of Rs. 1.71 Cr. from the following five companies namely i) M/s. Northstar Agencies (P) Ltd. - Rs. 35,00,000/-, ii) M/s. Manimudra Investments (P) Ltd. - Rs. 39,00,000/-, iii) M/s. Palpit Tie-up (P) Ltd. - Rs. 40,00,000/-, iv) M/s. Excelsior Traders (P) Ltd. - Rs. 27,50,000/- and v) M/s. Pandora Tie-up (P) Ltd. - Rs. 29,50,000/-. 8. We further notice that the assessee was subjected to search proceedings u/s 132 of the Act on 17th & 18th December, 2014. During the course of search, various documents were seized. The one being referred by the ld. AO for the year under appeal is the document bearing no. AIPL/4 to 7. On going through these documents placed at page 38 to 40 of the paper book there is details of investment in share capital of the assessee company by various share applicants which have been invested in various financial years. In the seized documents it is hand-written that cash paid for accommodation entries. In this seized material reference to FY 2011-12, 2012-13 & 2013-14 is given. Ld. Counsel for the assessee stated before the Tribunal that all the amounts mentioned in the alleged seized documents towards share application money have been offered to tax by the assessee in the income of relevant financial year. However, ld. AO on going through the name of the share applicants appearing in the seized documents further observed that in the year under appeal some of these companies have invested in the share capital of the assessee company. Based on the analogy that since the share applicant company appeared in the seized documents are accommodation entry provider and the assessee having accepted the same and offered it to tax then the share capital received during the AY 2011-12 also needs to be treated as bogus share capital and ld. AO accordingly made the addition u/s 68 of the Act at Rs. 1.71 Cr. Further, we find that ld. CIT(A) after examining the facts of the case also observed that reference of AY 2011-12 (FY 2010-11) was nowhere in the alleged seized material and since there is absence of any incriminating material found during the course of search for the year under appeal i.e. AY 2011-12, ld. AO cannot assume jurisdiction I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 16 of 44 to assess the income of the assessment year which is a completed and non-abated year. To arrive at this finding, ld. CIT(A) referred to various decisions observing as follows: “3. During the course of appellate proceedings the AR submitted his written submission. 4. I have considered the finding of the AO in the assessment order and the written submission as well as oral submission made by the AR during the appellate proceedings. 5. Appeal on grounds no 1 and 2 are general in nature. 6. Appeal on ground no 3 & 4 is against the addition of Rs. 17100000/- as bogus share capital. From the assessment order it is found that the AO has disallowed share capital on the ground that share capital from same companies were disclosed in some other cases where incriminating documents were found. But here in this case the AO has disallowed the entire amount of Rs.1.71 crore without bringing/correlating any incriminating document/paper etc on record. That the AR during the appellate proceedings has brought it on record that as per the recent judgement of Hon hie Calcutta High Court in cases of M/s Salasar Investment Pvt Ltd and M/s Birpraphu Company Ltd, no addition can be made in assessment passed u/s 153A without bringing correlating incriminating documents on record. The written submission filed by the AR is as under: "In continuation to our submission, we would like to draw your honour’s attention to the following recent judgements wherein the jurisdictional High Court and Tribunal had held that no addition can be made during the course of assessment proceedings u/s 153A without bringing correlating incriminating documents seized during the course of search and seizure operations u/s 132 of the I. T. Act, 1961. CIT, Kolkata-III Vs. Veerprabhu Marketing Ltd. [2016] 73 taxmann.com 149 (Calcutta): In this case The Hon’ble Calcutta High Court expressed the following views: "We are in agreement with the views of the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 17 of 44 In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances.” Considering the above facts, the Hon’ble High Court did not admit the appeal filed by the Department.” PCIT-2. Kolkata Vs. Salasar Stock Broking Limited (ITAT No. 264 of 2016) dated 24.08.2016 (Calcutta): “In this case, the Hon’ble High Court observed that the Ld. ITAT, Kolkata was of the opinion that the assessing officer had no jurisdiction u/s 153A of the I.T. Act to reopen the concluded cases when the search & seizure did not disclose any incriminating material. In taking the aforesaid view, the Ld. ITAT relied upon the judgments of Delhi High Court in the case of CIT(A) Vs. Kabul Chawla in ITA No. 707/2014 dated 28.08.2014. The Court also observed that more or less an identical view has been taken by this Bench in ITA No. 661/2008 in the case of CIT Vs. Veerprabhu Marketing Limited.” I have considered the findings of the AO in the assessment order and the written submission as well as different case laws brought on record by the AR. The main argument of the AR is that additions made by the AO in the assessment order passed u/s 153A/143(3) are not based on any incriminating documents/papers seized during the search operation. The AR has brought on record many case laws decided by the Jurisdictional Kolkata bench of ITAT and Jurisdictional Calcutta High Court on this issue. Calcutta High Court has time and again reiterated its view that the additions in case of the search assessments has to be made on the basis of incriminating material. Some of the recent decision of the Hon’ble Jurisdictional High Court are discussed hereunder. PCIT-2, Kolkata Vs, Salasar Stock Broking Limited (ITAT No. 264 of 2016) dated 24.08.2016 (Calcutta): In this case, the Hon’ble High Court observed that the Ld. ITAT, Kolkata was of the opinion that the assessing officer had no jurisdiction u/s 153A of the I.T. Act to reopen the concluded cases when the search & seizure did not disclose any incriminating material. In taking the aforesaid view, the Ld. ITAT relied upon the I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 18 of 44 judgments of Delhi High Court in the case of CIT(A) Vs. Kabul Chawla in ITA No. 707/2014 dated 28.08.2014. The Court also observed that more or less an identical view has been taken by this Bench in ITA No. 661/2008 in the case of CIT Vs. Veerprabhu Marketing Limited. Considering the above facts, the Hon’ble High Court did not admit the appeal filed by the Department. CIT, Kolkata-III Vs. Veerprabhu Marketing Ltd. [20161 73 taxmann.com 149 (Calcutta): In this case The Hon’ble Calcutta High Court expressed the following views: “We are in agreement with the views of the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A.' In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances.” The Hon’ble Kolkata High Court in the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573 (Del) Search and seizure— New scheme of assessment in search cases—Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies—Search was also carried out in the premises of the assessee—Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns— As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1),assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies—AO declined to rectify the assessments—CIT also held that addition need not be restricted only to the seized material—ITAT on appeal however deleted addition on grounds that the additions made for relevant AY’s u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law—Issue I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 19 of 44 was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search—Held, present appeals concerned 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—Question framed by the Court was answered in favour of the assessee and against the Revenue - Revenue's appeal dismissed. I further find that in this regard the Hon’ble ITAT Kolkata has time and again reiterated its view that the additions in case of the search assessments has to be made on the basis of incriminating material and any deviation from the same would render the assessment order invalid. Some of the recent decision of the Hon’ble Jurisdictional Tribunal is discussed hereunder. M/s Adhunik Gases Ltd. 6b Others vs. DCIT CC-XXX, IT(SS)A No. 47/Kol/2015, IT(SS)A No. 49/Kol/2015, IT(SS)A No. 50-2/Kol/2015, IT(SS)A No. 54/Kol/2015, IT(SS)A No. 55/Kol/2015, IT(SS)A No. 94- 96/Kol/2015 order dated 06.01.2017 (ITAT Kolkata): In this case it is held that no addition u/s 68 of the I.Tax Act for the Share Capital can be made in absence of any incriminating material. The concluding Para of the Hon'ble ITAT’s order is as under. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the Ld. AR for the assessee are supported by the judgments of jurisdictional ITAT and Hon’ble High Courts. Ld. AR has pointed out that no incriminating documents was found either during survey or during search procedure. The statement of Shri Naresh Kumar Chhaperia should not be relied on, because he is a double speaking person. The assessment proceedings were completed before the date of search. Besides, the time limit to issue notice u/s 143(2) was also expired. In order to initiate assessment proceedings u/s 153A, there should be a new or incriminating document. The assessment which is already completed u/s 143(3)/143(1) should not be reopened. Therefore, considering the scheme of section 132 and section 153A, we are of the view that there should be some new document/ incriminating document to invoke the I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 20 of 44 provisions of section 153A. Ld. DR for the revenue had pointed out that there is a direct nexus among the companies, which has been established by the statement of Mr. Naresh Kumar Chhapperia, which cannot be relied on, as he was a double speaking person. Therefore, considering the factual position and the judgments cited by Id. AR, we are of the view that the additions made by the AO u/s 153A and confirmed by the Id. CIT(A) needs to be deleted. Therefore, we delete the addition.” Furthermore, the decision of the jurisdictional tribunal in the case of M/s Tanuj Holdings Pvt Ltd Vs. DCIT CC-1(2), Kolkata vide ITAT No. 360 to 363/Kol/2015 dated 20.01.2016 is important. The relevant portion of the order is reproduced as under: “We also find that no incriminating materials were found during the search in the respect of the issue of deemed dividend. Hence it cannot be the subject matter of addition in 153C proceedings in respect of completed assessments. We hold that when an addition could not be made as per law in section 153C proceedings, then the said order cannot be construed as erroneous warranting revision jurisdiction u/s 263 of the Act.” Shri. Manish Mundhra Vs. ACIT-CC-XXX in ITA-469-470/Kol/2013 Dt. 16.12.2015 (ITAT Kolkata): We also are of the view that in the light of the admitted fact that no incriminating material was found in the course of search the impugned addition could not have been made in the proceedings u/s 153A of the Act. The decision of the ITAT, Delhi Bench in the case of ACIT vs M/s. Delhi Hospital Supply Pvt. Ltd. (supra) followed the decision of Hon’ble Delhi High Court in the case of Kabul Chawla (supra) supports the plea of the assessee in this regard” ACIT-CC-XXV1I Vs Kanchan Oil Industries Ltd, in ITA-725/Kol/2011 Dt. 09.12.2015 (ITAT Kolkata): “In view of the aforesaid findings and judicial precedent relied upon, we hold that the denial of deduction u/s 80IB of the Act in the assessments framed u/s 153A of the Act for the Asst Years 2003-04 and 2004-05 without any incriminating materials found during the course of search with respect to those assessment years is not warranted and held as not in accordance with law. Accordingly, the grounds raised by the revenue in this regard for the assessment years 2003-04 and 2004-05 are dismissed. I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 21 of 44 We hold that the same decision would be applicable for the disallowance made by the Learned AO u/s 14A of the Act and accordingly no disallowance u/s 14A of the Act could be made for the Asst Year 2004-05 by the Learned AO in the assessment framed u/s 153A of the Act in the absence of any incriminating materials found during the course of search with regard to the relevant assessment year and with regard to the relevant issue. With regard to the claim of deduction u/s 80IB of the Act for the Asst Years 2007-08 and 2008-09 are concerned, we find that the same is only consequential in nature and once the assessee has been granted deduction u/s 80lB of the Act for the initial assessment year i.e. Asst Year 2003-04, the grant of deduction under the said section in respect of the same unit is only academic and hence the assessee is entitled for deduction u/s 80IB of the Act for the Asst Years 2007-08 and 2008-09. Accordingly, the ground raised by the revenue in this regard for the assessment years 2007-08 and 2008-09 are dismissed.” Since the decisions are rendered by us on legal grounds, we refrain to give our decision on the merits of the issues.” Budhiya Marketing Pvt. Ltd. & Ors. Vs. ACIT in ITA Nos- 1545-1546/ Kol/2012 [reported in (2015) 44 CCH 0344/dt. 10.07.2015 (ITAT Kolkata): The issue whether the addition in an assessment framed under section 153A can be made on the basis of the incriminating material found during the course of the search where the assessment has not been abated, has not been considered or decided by this Tribunal. Therefore, this decision, in our opinion will not assist the revenue while disposing, of the plea of the assessee that since no incriminating material is found during the course of the search relating to the share capital and the share premium, therefore, no addition can be made while making an assessment under section 153A of the Income Tax Act. No contrary decision was brought to our knowledge by the Id. D.R. In view of the aforesaid discussion and the decision of the Hon'ble Special Bench, Bombay High Court, as well as Hon'ble Delhi High Court, we confirm the order of the CIT(Appeals) deleting the addition made in each of the assessment years as we hold that the Assessing Officer was not correct in law in making the addition in the assessment made under section 153A read with section 143(3) when no incriminating material was found during the course of the search I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 22 of 44 in respect of the addition made by him. We accordingly partly allowed the Cross Objections taken by the assessee.” ACIT Vs. Shanti Kumar Surana & Ors. in IT(SS)A Nos. 12 to 20 and CO Nos. 13 to 20 (reported in 44 CCH 241) order dt. 22.06.2015 (ITAT Kolkata): “In view of the facts in entirety and the legal principles enunciated by Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (NhavaSheva) Ltd., supra, of Hon'ble Allahabad High Court in the case of Shaila Agarwal, supra and Mumbai Special Bench decision in the case of All Cargo Global Logistics, supra, we are of the view that there is no incriminating material found during the course of search in the present case for these assessment years, except the statement of one Shri Sambhu Kr More,,, as admitted by the AO in his remand report dated 23.09.2011 and despite number of opportunities revenue could not produce any incriminating material before the Bench and the assessments are already completed for these assessment years originally, the assessments framed u/s. 153A of the Act is in valid and hence, quashed.” Trishul Hitech Industries Ltd Vs. DCIT-CC-XI. IT(SS)A84-86/Kol/2011 dt. 24.09.2014 (ITAT Kolkata): From the above various discussions and precedence we are of the considered view that assessment in the impugned assessment years have been completed u/s 143(3) of the Act. Hence the assessment for the concerned assessment year does not abate. Hence de horse any incriminating material, AO cannot make any addition in these cases. Accordingly we hold that assessment u/s 153C of the Act in these cases de horse any incriminating material is not sustainable. Hence we set aside the orders of the authorities below and decide the issue in favor of assessee. Since we are quashing the appeals on jurisdiction we are not adjudicating the merits of the appeal as the same is now only of academic interest.” DCIT Vs. Merlin Project Ltd. IT(SS)A No-138/Kol/2011 Dt. 14.11.2013 (ITAT Kolkata): “We have heard the rival submissions and perused the material available on record. The undisputed fact about this case is that the original assessment in this case was completed under section 143(3) in which deduct ion was allowed in entirety under sect ion 80IB of the Act inter alia on the amount of interest income. It is also undisputed I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 23 of 44 that no incriminating material was found during the course of search casting doubt about the allowability or otherwise of such deduction under sect ion 80IB. This fact has been fairly admitted by Id. D.R. during the course of proceedings before us as well. The Mumbai Bench of the Tribunal in the case of ACIT vs. Pratibha Industries (2013) 141 ITD 151 (Mum.) has held, inter alia, that having done original assessment u/s 143(3), if no incriminating material is found during the course of search, then it is permissible to make any addition in the assessment under section 153A pursuant to search act ion. The Special Bench of the Tribunal in the case of All Cargo Global Logistics Limited vs. DCIT (2012) 137 ITD 217 (SB)(Mum.) has also held to the same extent. In view of the foregoing discussion, we are of the considered opinion that no exception can be found to the view taken by CIT(Appeals) for deciding this issue in assessee’s favour. Before parting with this matter, we want to make it clear that our decision is based in the backdrop of the facts that the deduct ion under sect ion 80IB could not have been tinkered with because no incriminating material was found during the course of search on this issue when original assessment granting deduct ion on this issue was completed under sect ion 143(3). We have not expressed any opinion on the merits of the case about the allow ability or otherwise of deduct ion under section 80IB on interest income arising in the present facts and circumstances. In the result, the appeal filed by the Revenue stands dismissed.” LMJ International Ltd Vs. DCIT (2008) 119 TTJ (Kol) 214. (ITAT Kolkata): “Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed; items of regular assessment cannot be added back in the proceedings under s. 153A/153C when no incriminating documents were found in respect of the disallowed amounts in the search proceedings. Furthermore, The Hon'ble Supreme Court has dismissed department’s special leave petition (SLP) against the judgment dt.06-07-2015 of the Delhi High Court in ITA No.369 of 2015 where the High Court held that no substantial question of law arose since there was factual findings that no incriminating evidence relate to share capital issued I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 24 of 44 was found during the course of search. The AR has filed a written submission on this issue which is as under: "Sir, the Apex Court had dismissed the department's special leave petition (SLP) against the judgment dt.06-07-2015 of the Delhi High Court in ITA No.369 of 2015 by stating as under: Whether section 68 could be invoked where no incriminating evidence related to share capital found.’ 7-12-2015 : Their Lordships MADAN B LOKUR and S A BOBDE JJ dismissed the Department's special leave petition against the judgment dated July 6, 2015 of the Delhi High Court in ITA No.369 of 2015, whereby the High Court held that no substantial question of law arose since there was a factual finding that no incriminating evidence related to share capital issued was found during the course of search and that the Assessing Officer was not justified in invoking section 68 of the Act for the purposes of making additions on account of share capital Pr. CIT v Kurele Paper Mills P Ltd, SLP (C) No.34554 of 2015". It was also informed/brought on record that the order passed by the Hon’ble Calcutta High Court has attained finality as the CBDT in its letter No. ADO(L&R)-II/FZ/Pr.CIT(A)/ 1/Kolkata/l 184/2016/729 dt.07/ 08-02-2017 has intimated that the proposal to file SLP In above case has not been approved by the Board". Apart from above mentioned case laws brought on record, appeal orders in different cases passed by my three esteemed predecessors on the same issue wherein they have discussed in length and arrived at conclusion that additions in search assessments u/s 153A/153C cannot be made except on the basis of the incriminating material found in the search. REFERENCE a) appeal no.442/CC-3(l)/CIT(A)-21/14-15, date of order 05-12-2014 b) appeal no.440/CC-3(l)/CIT(A)-21/14-15, date of order 15-01-2015 c) appeal no.547/CC-3(l)/CIT(A)-21/14-15, date of order 10-04-2015 d) appeal no. 129/CC-XVII/CIT(A)-I/09-10, date of order 23-09-2010 I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 25 of 44 e) appeal no.292/CC-VI/CIT(A)-C-VI/11-12, date of order 23-10- 2013. I have considered the findings of the AO in the assessment order, different case laws brought on record and appeal orders passed by my predecessors on this legal issue. I find from the assessment order that during the search and seizure operations conducted u/s 132 of the I T Act, 1961, incriminating documents/papers were not seized. At least, additions made by the AO in the assessment order passed u/s 153A/143(3) are not based on any incriminating documents/ papers seized during the search operation. It would also not be out of context to mention here that in this case, on the date of search, no assessment for this year was pending. Therefore, keeping in view the ratio decided by the Jurisdictional bench of Kolkata Tribunal in cases referred above and the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra) in the light of CBDT’s decision of not filing SLP in this case in the Supreme Court and keeping in view the Apex Court’s decision to dismiss SLP on similar issue in the case of Pr. CIT vs Kurele Paper Mills Pvt Ltd : SLP (C) No.34554 of 2015 dt.07-12-2015, I am of this view that in order to maintain judicial continuity on this issue and respectfully following the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra), assessee’s appeal on grounds no 3 & 4 is allowed as such I am not inclined to adjudicate appeal on merit. 7. Appeal on ground no 5 is general in nature. 8. In the result, assessee’s appeal is dismissed.” 9. From going through the above finding of the ld. CIT(A) and also the settled judicial precedence and on examining the facts of the case and the alleged seized material it remains an undisputed fact that there is no reference of AY 2011-12 (FY 2010-11) in the said seized material. Only FY 2011-12, 2012-13 & 2013-14 are mentioned in the printed sheet and the amounts indicated against the share applicants has been offered to tax by the assessee. Now for the ld. AO to assume jurisdiction u/s 153A of the Act to assess the income for AY 2011-12, ld. AO should possess incriminating material found during the course of search pertained to AY 2011-12 which indicates that the assessee has entered into a transaction which is not disclosed for a particular assessment year and the income/asset shown in such document has not been disclosed in the regular return of income. I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 26 of 44 10. The alleged seized material contains the specific details of the share applicants, amounts received, year for which amount has been received and based on the said seized material the assessee has duly offered the amount for tax. But nowhere in the said seized material reference of FY 2010-11 (AY 2011-12) is there. The first hurdle before the ld. AO in the instant case is that there is no incriminating material available on record for the year under appeal. AY 2011-12 is completed and non-abated assessment year and the addition for this year could be made only on the basis of the incriminating material. Various judgments and case records have been referred by the ld. CIT(A) in the impugned order. Consistent view has been taken by coordinate Benches and Hon’ble Courts subsequent to search proceedings additions can be made in the assessment u/s 153A r.w.s. 143(3) of the Act for the completed and non-abated assessment years only if there is any incriminating material found during the course of search. Coordinate Bench of Indore in the case of Ramani Infrastructure & Others (supra) on similar issue observed as follows: “19. From perusal of finding of Ld. CIT(A) and the facts placed before us it is clear that firstly surrender of Rs.25,00,00,000/- was on an estimate/tentative basis since no reference was made to specific assessment year, any undisclosed asset or unexplained expenditure or seized records. Secondly, disclosure of Rs.25,00,00,000/- was made before M/s Ramani Group could get the copies of seized records. Thirdly, after analyzing and examining the seized records M/s. Ramani Group has offered undisclosed income of Rs.24,27,91,005/- (almost around Rs.25 cr.) and paid tax of Rs.8.11 Cr. (Appro.) in the name of five assessees namely M/s. Ramani Ice- cream Company Ltd., Shri Girish Awatramani, Shri Vijay Hariramani, M/s. Windsor Infra & M/s. Ishaan Builders and Developers. Fourthly, the impugned addition is made merely on the basis of statement given u/s 132(4) of the Act without making any reference or placing any nexus with any incriminating material found during the course of search u/s 132 of the Act. 20. Now question before us is that in case no incriminating material was found during the course of search whether the Assessing Officer can make addition merely on the basis of statement u/s 132(4) of the Act. Although Ld. CIT(A) has referred to various judicial precedence, this tribunal in the case of M/s. Signature Builders in IT(SS)A.No. 184 to 186/Ind/2018 & others dated 08.01.2021 adjudicated similar issue and the relevant finding is reproduced below: I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 27 of 44 70. We have heard rival contentions and perused the records placed before us and carefully gone through the records and submissions made before us. The assessee namely M/s Signature Infrastructure has raised the common issue for Assessment Year 2013-14 and 2014-15 with regard to the addition of Rs.50,00,000/-and Rs.3,00,00,000/- confirmed by the Ld. CIT(A) which was made by the Ld. A.O on the basis of income declared by the assessee in the statement given u/s 132(4) of the Act. We observe that in the case of assessee’s appeal M/s Signature Builders similar issue was raised for Assessment Year 2013-14 and 2014-15 for the addition made on the basis of income declared by the assessee u/s 132(4) of the Act during the course of search carried out on 29.01.2014. Income was declared by the authorised representative of the Signature group under the name of various concerns in the statement made u/s 132(4) of the Act. Subsequently when the assessee was required to file return of income in response to notice u/s 153A of the Act the impugned income was not shown in the Income Tax Return on the basis of the assessee’s observation that there was no incriminating material seized during the course of search which could support the impugned amount. During the course of assessment proceedings also the addition made by the Ld. A.O was purely on the basis of statement given during the course of search. Nowhere in the assessment order the Ld. A.O has brought on record any incriminating material or loose paper seized during the course of search having its nexus with the addition made on the basis of statement. We further observe that in one of the group concern M/s Ultimate Builders TTA No. 134/Ind/2019 order dated 9.8.2019 similar issue came for adjudication and this Tribunal on the basis of the facts of the case as well as relying on the judicial pronouncements deleted the addition since the same were made without referring to the incriminating material found during the course of search. The finding of this Tribunal in the case of M/s Ultimate Builders has been reproduced in the preceding paras while dealing with the similar issue raised in the case of M/s Signature Builders. Since the issue and facts remains the same Ld. Departmental Representative did not controvert this fact that the impugned addition was not based on incriminating material found during the course of search and is just on the basis of the statement given u/s 132(4) of the Act. We in the case of M/s Signature Builders have held in para 21 of this order as follows: 21. From perusal of the above finding of this Tribunal in the case of M/s Ultimate Builders (supra), we find that the common issue raised in Ground No. 3 of M/s Signature Builders is identical to the issue I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 28 of 44 raised and adjudicated in the case of M/s Ultimate Builders (supra). We therefore respectfully following the same and also in view of the identical fact that impugned addition of Rs.25,00,000/- and Rs.3,00,00,000/- made by the Ld. A.O was purely based on the statement given u/s 132(4) of the Act and there was no reference to any incriminating material found during the course of search which could support the impugned addition. We therefore delete the addition of Rs.25,00,000/- for Assessment Year 2013-14 and Rs.3,00,00,000/- for Assessment Year 2014-15 and set aside the action by both the lower authorities and accordingly allow Ground No.3 of assessee’s appeal for Assessment Years 2013-14 and 2014- 15 raised in TTA No. 185-186/Ind/2018. 71. We therefore respectfully following the decision of this Tribunal in the case of M/s Ultimate Builders (supra) and also other facts of the case are of the considered view that the finding of Ld. CTT(A) deserves to be set aside and addition of Rs.50,00,000/- and Rs.3,00,00,000/- made for Assessment Year 2013-14&> 2014-15 is directed to be deleted. Accordingly Ground No. l raised by the assessee for Assessment Year 2013-14 (IT(SS)A No. 187/Ind/2019) and for Assessment Year 2014-15 (IT(SS)A No. 188/Ind/2019) are allowed. 21. Similar view was taken in the case of M/s Ultimate Builders in ITA 134/2019 dated 09.08.2019 and AC1T vs. Shri Sudip Maheshwari in ITA 524/IND/2013 dated 13/02/2019. 22. In the case of Shri Sudip Maheshwari (supra) this Tribunal relied on the judgment of Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 TTR 18 (SC), wherein the Hon'ble Court has held “admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect”. Reliance was also placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CTT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat). Similarly reliance was also placed on the judgment of Hon'ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.), wherein it was held that “merely on the basis of admission, the assessee could not have been subject to additions, unless and until some corroborative evidence is found in support of such admission”. Reliance was also placed on Hon'ble Jharkhand High Court in the case of Shree Ganesh Trading Co. V/s Commissioner of Income-tax, Tax Case No. 8 of 1999 order dated 03.01.2013. I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 29 of 44 24. We, therefore, in the given facts and circumstances of the case and following the decision of this Tribunal in the case of Signature Builders (supra) and also respectfully following the decisions referred hereinabove find no inconsistency in the finding of Ld. CIT(A) which is based on the examination of facts, settled judicial precedence and direction given in circular issued by Central Board of Direct Taxes and thus hold that he has rightly deleted the addition made by the Ld. AO solely based on the statement given u/s 132(4) of the Act without referring or placing any nexus to the incriminating material seized during the course of search u/s 132(4) of the Act. Thus, revenue fails to succeed in the sole ground raised in ITANo. 211/Ind/2019. Ground no.l of revenue’s appeal stands dismissed. 25. As regards the remaining appeals at the instance of Revenue vide ITANo.212 to 214 /Ind/2019 in the case of assessee(s) namely Aaditya Food Products, Smt. Seema Hariramani, Shri Harish Hariramani challenging the deletion of addition of Rs.2,00,00,000/- in each case and in the case of Arun Hariramani in ITANo.216/Ind/2019 challenging the deletion of addition of Rs. 1,50,00,000/- made by the Assessing Officer, we find that the the impugned additions are made solely on the basis of surrender of undisclosed income made in the statement given during the course of search u/s 132(4) of the Act but without referring to any incriminating material seized during search. Since we have already decided this common issue under the identical facts in the case of another group concern namely Ramani Infrastructure in ITANo.211/Ind/2019 in the preceding paras, we hereby apply the same decision and confirm the finding of Ld. CIT(A) deleting the impugned additions which needs no inference. Thus revenue fails to succeed. The Grounds of appeals raised by the Revenue in all these four appeals also stands dismissed. 26. In the result, all appeals of the Revenue in the case of assessee(s) namely M/s. Ramani Infrastructure, Aaditya Food Products, Smt. Seema Hariramani, Shri Harish Hariramani & Shri Arun Hariramani vide ITANos.211 to 214/Ind/2018, & ITANo.216/Ind/2019 respectively are dismissed.” 11. Further this view of the ld. AO that since the alleged share applicants have been accepted by the assessee as bogus in other assessment years, it should be treated as bogus for the year under appeal. We find that this Tribunal in the case of M/s. Coal Sale Co. Ltd. (supra) dated 17.12.2021 while dealing with the issue of re- I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 30 of 44 opening observed that without any other material the conclusion drawn by the ld. AO merely on receipt of an information does not muster the requirement of law to validly form the reason to believe escapement of income. The relevant portion of this decision reads as under: “25. So on the strength of the aforesaid reasons recorded the AO has assumed jurisdiction to reopen the assessment made u/s 143(3) of the Act dated 2.12.2016. So when we have to adjudicate as to whether the AO had validly assumed the reopening jurisdiction, then we have to examine the 'reasons recorded' by him as it is on a standalone basis and see whether the reasons stated therein are relevant and have a bearing on the matter in regard to which he is required to entertain the belief before he assumed the reopening jurisdiction by issuance of notice u/s 148 of the Act. And the essential test is when we examine the reasons recorded by the AO to reopen, if we find that there is no rational and intelligible nexus between the reasons and the belief, the conclusion would be inevitable that AO could not have reason to believe that any part of the assessee’s income had escaped assessment. Keeping this principle also in mind when we examine the validity of jurisdiction of the AO to re-open we have to see whether there was ‘reasons to believe* (escapement of income). Reason to believe postulates a foundation based on information and a belief based on reasons. After a foundation based on information, is made, there still must be some reason which should warrant holding a belief that income chargeable to tax has escaped assessment. So firstly we have to see whether in the reasons recorded by the AO there was any information on which a foundation could be based upon; and if this condition is satisfied i.e. a foundation based on information is there, then the next step, is to see whether there is reasons which should warrant holding the belief that income chargeable to tax has escaped assessment. Here, it has to be kept in mind the assessee's scrutiny assessment u/s 143(3) was completed on 02.12.2016 and the information which the AO relies on is the statement of Shri Ajit Kumar Jindal was recorded as early as on 29.10.2014 (i.e. 2 years before). A reading of the reason recorded by the AO as discussed and analysed reveals that information from the Investigation Wing only says about the statement of Shri Ajit Kumar Jindal who on 29.10.2014 has admitted before them, that he is providing accommodation entry through his entities which includes M/s. Bridge & Building Pvt. Ltd. Accordingly to Shri Ajit Kumar Jindal his entities gives bogus bills in lieu of commission and the cheques given by the beneficiaries are returned back as cash. Taking note of I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 31 of 44 this statement which was recorded when the Income Tax Department searched him along with “Bathwal Group" he has made the admission of being an entry provider. The Investigation Wing on the strength of his admission has taken out the transaction made by Shri Ajit Kumar Jindal's entities viz. M/s. Bridge & Building Pvt. Ltd. and found that assessee had transaction with M/s. Bridge & Building Pvt. Ltd., so this information was passed on to the AO. who on receipt of it has jumped to the conclusion that since assessee had transacted with M/s. Bridge & Building Pvt. Ltd. and then assessee is a beneficiary who availed for the bogus bills which was paid through bank to it and later got it back as cash as per the modus- operandi admitted by Shri Ajit. According to us. from the discussion made, we note from the reasons recorded that nowhere assessee’s name has been said by specifically said by Shri Ajit Kumar Jindal adversely. And since the assessee had transacted with M/s B & B Ltd. which is through banking channel, the AO relying on Shri Ajit Kumar Jindal's general statement that he is also an entry provider, has assumed that assessee is a beneficiary of accommodation entry. According to us. when the AO receives information of such nature from investigation wing it certainly raises suspicion. Then the AO cannot and should not straight away issue notice u/s 148 of the Act and assume jurisdiction to reopen the assessment. Why because, there is subtle difference between ‘reason to suspect' and ‘reason to believe'. Information adverse may trigger “reason to suspect" then the AO to make reasonable enquiry and collect material, which would make him believe that there is in fact an escapement of income. However the essential condition precedent to re-open, the requirement of law is "Reason to believe" and not "Reasons to suspect". So when AO receives, such information, then it can be the starting point of preliminary enquiry and the AO cannot straight away assume jurisdiction to reopen, so according to us. the AO erred in jumping to the conclusion that assessee's income has escaped assessment on receipt of the information that a company run by Shri Ajit Jindal had transaction with assessee. Simply because the assessee had transaction with M/s B & B Pvt. Ltd., cannot be the basis to believe escapement of income, unless there is any material there to suggest that so called assessee's transaction was bogus & the cheque given by assessee had been returned as cash to assessee. Thus in the facts discussed and based on the analysis of the reason recorded by the AO according to us. the AO could not have formed a belief that income chargeable to tax has escaped assessment. Simply because Shri Ajit stated once that he is an entry provider doesn't mean that all his I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 32 of 44 actions through his controlled companies are doing only wrong things. It has to be kept in mind that the maxim "Falsus in uno falsus in omnibus' meaning false in one thing is false in everything has no application in India as held by Hon'ble Supreme Court in Gangadhar Behera vs. State of Orissa (2002) 8 SCC 381. Here in this case the information from Investigation Wing is only that Shri Ajit has admitted to be providing accommodation entry to "Bathwal Group" and to beneficiaries. However, when we examine the jurisdiction of AO. we have to look at the ‘reasons recorded’ on a standalone basis. So in the absence of the list of beneficiaries attached to the reasons recorded on the statement of Shri Ajit. we do not find the name of assessee as beneficiary. Just because, the assessee had transaction with M/s B & B Pvt. Ltd., cannot be a ground to believe that assessee's income has escaped assessment. Without any other material as discussed the conclusion drawn by the AO merely on receipt of the aforesaid information does not muster the requirement of law to validly form the reason to believe escapement of income. According to our considered opinion the jurisdictional requirement ‘reason to believe’ escapement of income has not been met in the reason recorded in the instant case. Therefore, the assessee succeeds in its legal challenge, so we quash it. 26. In the result, the appeal of the revenue is dismissed and the cross- objection of the assessee is allowed.” 12. We, therefore, under the given facts and circumstances of the case and respectfully following the judgments and decisions referred herein above, are of the considered view that since search team failed to find any incriminating material during the course of search relevant to AY 2011-12 and the addition made by the ld. AO is purely based on the seized material pertaining to other financial years/assessment years, but not for AY 2011-12 the jurisdiction assumed by ld. AO to carry out assessment proceedings u/s 153A r.w.s. 143(3) of the Act are bad in law and has been rightly quashed by ld. CIT(A) in light of the ratio laid down by the Hon’ble Calcutta High Court in the case of Veerprabhu Marketing Ltd. (supra). Thus, we find no infirmity in the finding of the ld. CIT(A) deleting the addition made u/s 68 of the Act at Rs. 1.71 Cr. Thus, all the grounds raised by the Revenue are dismissed.” 15. Similar view was taken in the case of Aditya Himatsingka vs. DCIT in IT(SS)A No. 27/Kol/2022 order dated 09.09.2022 wherein I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 33 of 44 also for non-abated and completed assessment year it was held that addition can only be made based on the incriminating material and for arriving at this decision reliance was placed on various judgments which are mentioned in page 19 of this order passed by this Tribunal reads as follows: 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 16. After going through the settled judicial precedence, we notice that the year under appeal before us are AY 2009-10, AY 2010-11, AY 2011-12 & AY 2012-13 and the time limit for issuance of notice u/s 143(2) of the Act was 30 th September, 2010, 2011, 2012 & 2013 and the date of search is 17 th to 18 th December, 2014. As on I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 34 of 44 the date of search the time limit for issuance of notice u/s 143(2) of the Act stood expired and no assessments were pending which could be abated. Therefore, all the impugned assessment years before us are completed and non-abated assessment years and addition during these years can be made only based on the incriminating material evidencing that the income mentioned in such seized material has not been disclosed by the assessee. Since in the instant case there is no mention of the name of the assessee company in the seized material bearing no. AIPL/4 pages 4, 5, 6 & 7, therefore, this presumption of ld. AO that the share capital received by the assessee from share subscriber companies referred in the said seized material can be treated as bogus share capital is bad in law and not justified. 17. Thus, respectfully following the judicial precedence and under the given facts and circumstances of the case, we fail to find any infirmity in the finding of ld. CIT(A) deleting the addition u/s 68 of the Act made by ld. AO towards bogus share capital for AY 2009-10 to AY 2012-13. 18. Since we have held that additions made by ld. AO towards bogus share capital is not based on any incriminating material and other additions are also based on post search enquiry or other material which were already disclosed by the assessee in its regular books of accounts, therefore, such assessment proceedings deserve to be quashed as bad in law and dealing with the other ground will be merely academic in nature. However, since a finding of fact has been recorded by ld. CIT(A) on the remaining issues also we decide to deal with the same. I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 35 of 44 19. The second common issue for our consideration is regarding disallowance of labour contract expenditure. Facts in brief are that the assessee for carrying out the project work gave contract to M/s. Sakshi Trade Link Pvt. Ltd. (in short ‘STPL’). Ld. AO based on the seized material bearing no. AIPL/4 pages 16 in the form of ledger of STPL and information received from Service Tax authorities came to a conclusion that STPL is engaged in issuing fake bills without doing any work and thus, disallowed the claim of labour contract expenditure at Rs. 1,81,08,448/- observing as follows: “The relevant portion of the show-cause made by the Service Tax Authority as scanned and stated above, was also given to the assessee with the show cause. In response to that the assessee submitted that they have done the labour contract work with some other parties who were pressing for cash receipt and as the assessee could not pay it by cash they brought M/s STPL in between to get the amount by cheque through M/s STPL and fake bill. It is seen that in other works also like Garia -Mathurapur works and Behala works also the assessee has taken bogus bills from STPL. The Submission of the assessee is not accepted as the assessee did not submit who are the persons through whom it got its labour contract work done and no supporting evidence could be filed. It is also not explained why for different works done at distant places also the bills were taken from STPL. Hence It cannot be that the actual labour contractors have brought STPL and the assessee has arranged the colourable transaction. During the search and seizure operation also incrimination documents were seized vide AIPL/4, page-3 and AS/1 pages 26, 42 & 45 where it was seen that the assessee company received heavy cash in F Y 2014-15 against bogus bill entry taken and also disclosed the unaccounted income in that year. The assessee also submitted one statistics showing that if the entire labour contract payment to the M/s STPL is treated as bogus then how the execution of work is completed as how the project is completed without the labour work. But, it is seen that apart from M/s STPL the assessee has made labour contract payment to other parties also of Rs 3,53,28,649/- being the difference of total labour & Service charges debited as per Schedule 16, Operational Expenses, Rs 5,34,37,097/- and bogus bill from STPL Rs 1,81,08,448/-. When the I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 36 of 44 assessee itself has accepted that the payment was made to M/s STPL not for doing any work how the payment made to M/s STPL can be allowed as deduction. In view of the above Rs 1,81,08,448/- debited in the name of M/s STPL in this F Y is disallowed being bogus expenditure claimed and added to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of I T Act, 1961 is initiated for furnishing of inaccurate-particulars of income.” 20. Aggrieved, the assessee preferred appeal before ld. CIT(A) and filed complete details about the project work carried out and the expenses incurred on labour and the project work being completed as per the satisfaction of the State Government awarding the work projects. Ld. CIT(A) after considering the submissions held that without incurring the labour expenditure carrying out the contract work was not possible and even if the genuineness of the existence of M/s. Sakshi Trade Link Pvt. Ltd. is doubtful then also disallowing the total expenditure of labour charges would not be justified and he sustained the disallowance to Rs. 14,03,405/-. 21. Aggrieved, the Revenue is now in appeal before this Tribunal. Ld. D/R vehemently argued supporting the order of ld. AO and also referred to the information and show cause notice issued by the Service Tax Department and asserted that M/s. Sakshi Trade Link Pvt. Ltd. has accepted to provide bogus bills for labour charges. 22. On the other hand, ld. Counsel for the assessee reiterated the submissions filed before ld. CIT(A) and also relied on the finding of ld. CIT(A). 23. We have heard rival contentions and perused the records placed before us. Deletion of disallowance of labour contract expenses paid to M/s. Sakshi Trade Link Pvt. Ltd. are in disputed I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 37 of 44 before us. Ld. AO has observed that M/s. Sakshi Trade Link Pvt. Ltd. is an accommodation entry provider and is not carrying out any actual work and it provides bogus bills to the assessee through which the assessee has claimed excess expenditure in order to reduce its income. Ld. Counsel for the assessee has submitted that the transaction may be suspicious in nature but it cannot lead to a conclusion that the transaction is actually bogus and in absence of any material evidence under ld. AO’s possession it should not be presumed on mere allegation that the assessee is also engaged in such bogus activities. Reference made to the payments made to M/s. Sakshi Trade Link Pvt. Ltd. during FY 2008-09, 2009-10 & 2011-12 at Rs. 1.81 Cr, 2.14 Cr & 0.36 Cr approx and further, our attention was drawn to the percentage of total cost of labour project being incurred by payment to M/s. Sakshi Trade Link Pvt. Ltd. and the details for AY 2009-10 to AY 2012-13 is mentioned below: Assessment Year Name of Project Transaction with Sakshi as a % of Total Cost of Labour Project Percentage of labour cost of the project by turnover of the project Percentage of labour cost of the Co by turnover of the Co 2009-10 M D ROAD 81.77% 11.52% 15.70% 2010-11 GMRP 93.25% 26.50% 32.03% 2010-11 KEIP 27.26% 31.53% 32.03% 2012-13 M D ROAD 95.47% 38.33% 33.38% 24. From perusal of the above detail of the total labour charges payment made by the assessee we observe that without incurring the labour cost the projects could not be completed. It is not in dispute that the aforesaid projects were allotted by the State Government and completion certificates have been obtained. Even I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 38 of 44 for sake of argument it is considered that the assessee has arranged fake bill but then also the fact remains that project work has been completed and to carry out such project work labour charges have to be incurred. Ld. CIT(A) has applied the similar analogy and sustained the disallowance to Rs. 14,03,405/- for AY 2009-10 observing as follows: “I have considered findings of the AO in the assessment order and the written submission filed by the AR during the appellate proceedings. From this discussion certain facts emerged, they are i) That, the AO has disallowed the entire labour charges paid to STPL. ii) That, the assessee has undertaken only government contracts. iii) Different govt, agencies have issued completion certificates of project completed by the assessee. iv) In case, the entire amount of labour charges is disallowed, then how come the assessee completed such projects. Thus, it seems that the assessee has paid labour charges to STPL which may or may not exist, but there is no deny the fact that the assessee has paid to labourers because only after making payments to labourers work contract could be completed. However, the objection of the AO regarding genuineness of labour charges to M/s STPL can also not be ignored. It is because the very genuineness of the existence of M/s STPL is doubtful. Under such circumstances I think the best option is to take the average of GP ratio shown by the assessee* in different years which comes to around 7.75%. Accordingly, disallowance of labour charges is restricted to Rs. 1403405/-. Thus, assessee’s appeal on ground no 4 is partly allowed.” 25. The above finding of ld. CIT(A) remains uncontroverted and the same is further, supported by the decision of Coordinate Bench Mumbai in the case of Ratnagiri Stainless Pvt. Ltd. vs. ITO in ITA No. 4463/MUM/2016 order dated 04.04.2017 wherein it has been held that “If the assessee has not discharged the onus of producing I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 39 of 44 the documentation and the suppliers, the AO is entitled to estimate the gross profit. The GP estimate should be fair, honest and rational and cannot be arbitrarily applied at the discretion of the AO. Industry comparisons or other rational comparability vis-a-vis preceding years GP ratio should be brought on record. The books should be rejected.” 26. Similarly, in the case of Ashwini Purushotom Bajaj vs. ITO in ITA No. 4736/MUM/2014 order dated 14.12.2016 it has been held that “Though Section 133(6) of the Act notices were returned unserved and the assessee could not produce the alleged bogus hawala suppliers, the entire purchases cannot be added as undisclosed income. The addition has to be restricted by estimating Gross Profit ratio on the purchases from the alleged accommodation entry providers.” 27. On perusal of the above decisions we find that ld. CIT(A) has rightly held that for completing the Government contracts labour charges had to be paid and the action of ld. AO disallowing total labour charges paid to M/s. Sakshi Trade Link Pvt. Ltd. which account for to almost 80.77% of the total labour cost cannot be disallowed. Thus, no infirmity is called for in the finding of ld. CIT(A) sustaining the disallowance of labour charges to Rs. 14,03,405/- considering the gross profit ratio of the assessee company at around 7.75%. Similarly, the finding of ld. CIT(A) for the other assessment years under appeal before us on this issue of disallowance of labour contract charges is confirmed and the grounds of the Revenue are dismissed. I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 40 of 44 28. At this juncture, we also notice that ld. AO had invoked the provisions of Section 40A(3) of the Act treating that the assessee had made the payments by cheque to M/s. Sakshi Trade Link Pvt. Ltd. and received back the cash from M/s. Sakshi Trade Link Pvt. Ltd. and incurred the expenditure in cash which calls for disallowance u/s 40A(3) of the Act. We fail to find any merit in such observation. Since we have already deleted the addition made towards bogus contract expenses and have accepted the book results prepared by the assessee, therefore, there remains no merit in the observation of ld. AO invoking the provisions of Section 40A(3) of the Act without the support of any evidence. 29. The third common issue for our consideration is regarding assessee’s eligibility to claim deduction u/s 80IA of the Act. Since the issues are common for AY 2009-10 to AY 2012-13, we will take the facts for AY 2009-10. The facts in brief are that the assessee is a private limited company engaged in the business of civil contracts. Search and seizure action u/s 132 of the Act was conducted at Adhunik Group on 17 th & 18 th December, 2014. In compliance to the notice u/s 153A of the Act the assessee filed the return on 05.11.2015 declaring total income of Rs. 2,55,01,100/- after claiming deduction u/s 80IA of the Act at Rs. 50,20,101/-. The assessee has made the same claim in the return filed u/s 139(1) of the Act filed on 30.09.2009. Ld. AO after considering the submissions of the assessee came to a conclusion that the assessee is a work contractor and not a developer and, therefore, not eligible for deduction u/s 80IA of the Act. The assessee challenged the action of ld. AO and got relief from ld. CIT(A). Aggrieved, the Revenue is now in appeal before this Tribunal. I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 41 of 44 30. At the outset, ld. Counsel for the assessee submitted that the issue as to whether the assessee is a developer or a work contractor came for adjudication before this Tribunal in assessee’s own case for AY 2010-11 and this Tribunal in ITA No. 1281/KOL/2015 dated 23.05.2018 held that the assessee is a developer and not a work contractor and is eligible for deduction u/s 80IA of the Act. 31. On the other hand, ld. D/R though supported the order of ld. AO but could not controvert the contention made by ld. Counsel for the assessee that the matter being squarely covered by the decision of this Tribunal. 32. We have heard rival contentions and perused the records placed before us. We notice that the assessee is engaged in civil contract business and mainly carries out the projects awarded by Public Works Department. Claim u/s 80IA of the Act is being made consistently. Audit report as statutorily required under the Act has duly been procured and filed along with the return of income. We find that this Tribunal in assessee’s own case for AY 2010-11 has dealt the issue in detail about the assessee being eligible for claim of deduction u/s 80IA of the Act and after considering the facts of the case and settled judicial precedence as held by the Coordinate Bench of Ahmedabad in the case of Sugam Construction (P.) Ltd. vs. ITO [56 SOT 45], Coordinate Bench of Hyderabad in the cases of Koya and Co. Construction (P.) Ltd. vs. ACIT [51 SOT 203], M/s. GVPR Engineers Ltd. vs. ACIT [51 SOT 0207 (Hyd) (URO)] and also the decision of Indore Tribunal in the case of Sanee Infrastructure Pvt. Ltd. vs. ACIT [138 Income Tax Department 433] decided in I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 42 of 44 favour of the assessee holding it to be a developer eligible for deduction u/s 80IA of the Act. The finding of this Tribunal in para ‘9.6’ of the order in ITA No. 1281/KOL/2015 dated 23.05.2018 reads as follows: “9.6. Thus from the above, it is clear that the fact that the assessee had received payments from the Government in progress of its work has no bearing on eligibility of deduction u/s 80IA of the Act. Further, the Revenue has contended that the contracts entered into by the assessee were merely 'construction contracts' since the assessee is not exposed to any entrepreneurial and investment risk. We do not agree with this view of the Revenue. We find that on reading of the above it is clear that the contention of the ld. AO that the assessee had not undertaken any entrepreneurial and investment risk is an incorrect interpretation of the facts. The assessee deploying its resources i.e. finance, technical expert, human resources, material, machinery, labour etc. in the construction work clearly exhibits the risks undertaken by the assessee. The assessee was to indemnify the employer of any losses/damage caused to any property/life in course of execution of works. Further, it was responsible for the correction of defects arising in the works at its cost. Thus, it cannot be said that the assessee had not undertaken any risk. It is clear that the assessee was not a works contractor simplicitor and was a developer and hence Explanation to section 80IA(13) of the Act does not apply to the assessee. Further, in addition to developing the infrastructure facility, the assessee was even operating and maintaining the same. Thus, clearly the assessee is eligible for deduction u/s 80IA of the Act. In our considered view, we do not find any reason to uphold the order of ld. CITA. We therefore hold that the assessee was entitled to deduction u/s 80IA of the Act.” 33. Since the above finding of this Tribunal has not been controverted by ld. D/R by placing any other binding precedence and since the issue has been dealt and decided in assessee’s own case, we therefore, respectfully following the same, are inclined to hold that the assessee is a developer and not a works contractor and therefore, Explanation to Section 80IA(13) of the Act would not apply to the assessee. Thus, no infirmity is called for in the finding I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 43 of 44 of ld. CIT(A) allowing deduction u/s 80IA of the Act to the assessee. Accordingly, this common issue raised by the Revenue regarding deduction u/s 80IA of the Act is dismissed. 34. The last issue is ground no. 9 for AY 2011-12 and ground no. 10 for AY 2012-13 through which the Revenue is aggrieved with the finding of ld. CIT(A) accepting the submission of the assessee that interest on refund of Rs. 4,63,848/- & Rs. 6,99,642/- is offered to tax as income under the head “Income from other sources” for AY 2011-12 & AY 2012-13, respectively. We have perused the finding of ld. CIT(A) and notice that the complete facts has been examined that the alleged interest on refund has been disclosed by the assessee under the head ‘Income from the other sources’ in the computation of income for respective assessment years and the same does not call for any interference. Therefore, this issue raised by the Revenue is dismissed. 35. In the result, all the effective grounds of appeal raised by the Revenue are dismissed. Thus, Appeals filed by the Revenue in IT(SS)A Nos. 41, 42, 43 & 44/KOL/2017 are dismissed. Kolkata, the 17 th April, 2023 Sd/- Sd/- [Rajpal Yadav] [Manish Borad] Vice President Accountant Member Dated: 17.04.2023 Bidhan (P.S.) I.T.(S.S.)A. Nos.: 41, 42, 43 & 44/KOL/2017 AYs: 2009-10, 2010-11, 2011-12 & 2012-13 M/s. Adhunik Infrastructure Pvt. Ltd. Page 44 of 44 Copy of the order forwarded to: 1. ACIT, Central Circle-3(3), Kolkata 2. M/s. Adhunik Infrastructure Pvt. Ltd., Kamalaya Centre, Unit 307 & 308 156, Lenin Sarani, Kol-700 013. 3. CIT(A)-21, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata