The ACIT, Central Circle-1(2), Ahmedabad V. Rajesh Mohanbhai Patel, Ahmedabad

ITSSA 466/AHD/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4037 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH
• Keywords: Loose papers; Question of law; Accommodation entries; Reason to believe; Documents seized; Set aside; Capital Gains
• Section: 147; 68; 148; 132; 90; 69C; 143(3); 153A; 143(1); 143(2); 139(1); 158BC; 13; 153; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER& Ms. MADHUMITA ROY, JUDICIAL MEMBER I .T .( SS ) A . N o s . 44 8 &4 65 /A hd /2 01 9 ( A s s e s s me nt Y ea r s : 2 0 11 -1 2 & 20 1 2 - 1 3) AC I T C e ntr a l C ir c le - 1 ( 2 ), Ah me da bad - 3 80 00 9 Vs . S h ar d ab e n A r v in d b ha i P a t el A - 9 0 1, Su r ya k et u T o w e r , N r. S a m b ha v Pr e ss , B o d ak d e v , A h m e d a b ad - 4 00 0 5 7 [P AN N o.A D GP P 6 87 1P] (Appellant) .. (Respondent) I .T .( SS ) A . N o s . 45 1 &4 50 /A hd /2 01 9 ( A s se ss m e nt Y e a r s : 20 1 1 - 1 2 & 2 0 1 2- 1 3 ) AC I T C e ntr a l C ir c le - 1 ( 2 ), Ah me da bad - 3 80 00 9 Vs . K a us hik D ev j i bh a i Pa t el 2 1, H ar ih a r sh r a y, O p p. S u kr uti , 1 0 0 Ft . R o ad , Th a lt e j , Ah me da ba d - 4 00 05 7 [P AN N o.A C TP P8 3 80 R] (Appellant) .. (Respondent) I .T .( SS ) A . N o s . 45 2 &4 63 /A hd /2 01 9 ( A s se ss m e nt Y e a r s : 20 1 2 - 1 3 & 2 0 1 1- 1 2 ) AC I T C e ntr a l C ir c le - 1 ( 2 ), Ah me da bad - 3 80 00 9 Vs . A m ita A r v in d b ha i Pa te l A -9 0 1, Su r ya k et u T o w e r , N r. S a m b ha v Pr e ss , Pr e mc han d N a gar , B o da k d e v , A h m e d a b ad - 4 00 0 5 7 [ P AN N o. A Q ZP P8 3 16 M ] (Appellant) .. (Respondent) I .T .( SS ) A . N o . 4 5 3/ A h d/ 2 0 19 ( A s se ss m e nt Y e a r : 20 11- 1 2 ) AC I T C e ntr a l C ir c le - 1 ( 2 ), Ah me da bad - 3 80 00 9 Vs . G h a n s h ya m Mo h a n b ha i Pa te l A - 9 0 1, Su r ya k et u T o w e r , N r . S a mb h av P r e s s , P re mc ha nd n a g a r , S a te ll ite , A h m e d a b ad - 4 00 0 5 7 [P AN N o.A B B P P 54 03 G] (Appellant) .. (Respondent) IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 2 - I .T .( S S ) A . N o s . 4 5 4 & 46 6 / Ah d/ 20 19 ( A s se ss m e nt Y e a r s : 20 1 1 - 1 2 & 2 0 1 2- 13 ) AC I T C e ntr a l C ir c le - 1 ( 2 ), Ah me da bad - 3 80 00 9 V s. R a j es h Mo ha nb h a i Pa t el 3 1, S u j an B u ng lo w, S h r e ya s Te k r a , Nr . Sh r e ya s Fo un da tio n, A m ba w a di, A h m ed a ba d-40 00 5 7 [ P AN N o. A Q ZP P8 3 16 M ] (Appellant) .. (Respondent) I .T .( SS ) A . N o . 4 6 4/ A h d/ 2 0 19 ( A s se ss m e nt Y e a r : 20 11- 1 2 ) AC I T C e ntr a l C ir c le - 1 ( 2 ), Ah me da bad - 3 80 00 9 Vs . S w e ta b e n G h a n s h ya m b ha i P at e l , A- 9 0 1, S u r ya k et u To we r , N r . S a m b ha v Pr e ss , P re mc ha nd N a g ar R o ad , S at e l lite , A h m ed a b a d [ P AN N o. A B AP P7 5 9 3 G ] (Appellant) .. (Respondent) Assessee by: Shri Vartik Choksi, C.A. with Shri Biren Shah, A.R. Revenue by: Shri A.P. Singh, CIT DR D a t e of H ea r i ng 27.04.2022 D a t e of P r o no u n ce me nt 08.06.2022 O R D E R PER MADHUMITA ROY, JM: The bunch of appeals preferred by the Revenue are directed against the orders dated 02.07.2019, 03.07.2019, 01.07.2019 passed by the Ld. CIT(A)-11, Ahmedabad arising out of the orders passed by the ACIT, Central Circle-1(2), Ahmedabad dated 27.12.2016& 26.12.2016 under Section 143(3) r.w.s. 153A(1)(b) of the Income Tax Act, 1961(hereinafter referred to as “the Act”) for A.Ys. 2011-12 & 2012-13 respectively. Since IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 3 - issues involved in these appeals are identical, these are heard analogously and are being disposed of by a common order. IT(SS)A No. 448/Ahd/2019 is taken as the lead case. 2. The grounds raised by the Revenue in IT(SS)A No. 448/Ahd/19 is as under: “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that no addition which is not based on any incriminating material found during the course of search on the assessee’s premises could be made u/s. 153A in this case? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made of Rs.94,33,504/- on bogus exempt long term capitals on sale of shares of Shree Ganesh Spinners Ltd. (SGSL) when the entries found in the seized material of Shrish Chandrakant Shah showed that the prices of scrip were raised exponentially, the counter-parties were controlled by Shri Shah and hence transactions of purchase itself were non-genuine? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made of Rs.94,33,504/- on bogus exempt long term capital gains on sale of shares of Shree Ganesh Spinners Ltd. (SGSL) when the sales made by assessee corroborates with cash and commission/angadiya charges’ entries made in date seized from Shirish Chandrakant Shah, an accommodation entry provider who controlled scrip of Shree Ganesh Spinners Ltd. (SGSL)? 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made of Rs.94,33,504/- on bogus exempt long term capital gains on sale of shares of Shree Ganesh Spinners Ltd. (SGSL) ignoring consistent, detailed statements of Shirish Shah and Pradeep Birewar at various points of time when accommodation entries arising from these statements? 5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made of Rs.2,54,130/- being commission charge for obtaining accommodation entries of Long Term Capital Gain as the transactions were non-genuine? 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 7. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. Ground Nos. 1 to 4 are basically on the common issue of addition of Rs. 94,33,504/- on bogus exempt long term capital on sale of shares. Thus, these are taken up and decided together. IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 4 - 4. The brief facts leading to the case is this that the appellant, an individual, mainly having income from share from partnership firm and also having income from interest, commission etc. filed its return of income under Section 139(1) of the Act on 30.09.2016 declaring income at Rs.3,38,875/-. Subsequently a search operation was conducted in the case of Accommodation Entry Provider Group on 04.12.2014. Consequently warrant of authorization under Section 132 of the Act was issued in the case of the assessee. Copies of loose papers were also seized from the residence of the appellant. Accordingly, a notice under Section 153A was issued whereupon the appellant filed the return of income of Rs.3,35,875/- on 21.11.2016. The Ld. AO initiated assessment proceeding and finally concluded with the addition of Rs.94,33,504/- as Cash credit under Section 68 of the Act and addition of Rs.2,54,130/- under Section 69C of the Act which was, in turn, deleted by the Ld. CIT(A). Hence, the instant appeal before us by the Revenue. 5. The relevant fact behind the reopening of assessment under Section 153A of the Act is this that during the Financial Year 2012-2013 to 2014- 15, investigation directorates at Mumbai and Ahmedabad searched a group of persons who were engaged in providing accommodation entries through various routes of share capital, preferential allotment and long-term capital gain etc. Accordingly, one Shri Sirish Chandra Shah, (in short ‘SCS’) situated Mumbai was also searched. As per the search team, some documents were found which was connected with the appellant. One Shri Pradeep Birewar of Ahmedabad was also searched who has stated to have admitted in indulging the activity of providing accommodation entries. In IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 5 - view of the search operation carried out at the premises of the above- mentioned two persons, a warrant under Section 132 was issued and the premises of the appellant was searched on 04.12.2014. It is the case of the appellant that the investigating team could not find any incriminating material from the premises of the appellant with regard to the alleged bogus accommodation entries and the AO has made addition merely on the basis of material found at the premises of other searched parties. 6. In the return of income the assessee claimed Rs.84,71,004/- as Long Term Capital Gain on sale of shares of M/s. Shree Ganesh Spinners Ltd., (in short ‘SGSL’) presently known as Yantra Natural Resources Ltd. The Ld. AO co-related this long term capital gain with the transaction of purchase or sale of shares of this company controlled and managed by SCS. Upon going through the records as per the data recorded in the seized document on 08.03.2011 1,00,000 shares of SGSL have been purchased by SCS through his companies @31.20 per share and pay out aggregating to Rs.31,20,00,000/- has been received in the account of clients who have sold the shares. The payout made by SCS to the clients on purchase of shares cash has been received by him and therefore, the payout received by the clients on the sale of shares is not genuine sale of shares but accommodation entry obtained from SCS through Pradeep Birewar. In fact, the Ld. AO was beyond doubt that the scrip of SGSL was completely managed and controlled by SCS where shares were sold and purchased as per his instruction through synchronized traders and therefore this long term capital gain in question from sale of scripts of SGSL is nothing but accommodation entries opted in lieu of payment of unaccounted cash and the payout IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 6 - received on sale of shares of Rs.94,33,504/- is treated as unaccounted cash credit under Section 68 of the Act. Further commission is being charged for providing/arranging capital gains to various parties ranging from 0.5% to 3% in such type of accommodation entries being provided and therefore an amount of Rs.2,54,130/- being 3% of Rs.84,71,004/- has been added to the income of the assessee under Section 69C of the Act. 7. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that no incriminating material was found from the premises of the appellant during the course of search under Section 132 of the Act and there is no mention of any such material in the assessment order too. Moreso, the Ld. AO admitted in the assessment order as the transaction completed long way back there would have been no reason to keep any incriminating material with the assessee. In support of his submission the Ld. Counsel appearing for the assessee relied upon the judgement passed by the Hon’ble Jurisdictional High Court in the case of PCIT vs. Saumya Construction Pvt. Ltd., reported in (2017) 81 taxmann.com 292 (Guj). He further relied upon the judgement passed by the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, reported in 380 ITR 573(Del). Relying upon the ratio laid down by the Hon’ble Courts in the judgements relied above, the Ld. Counsel contended that the additions and the disallowance made by the Ld. AO in an unabated assessment in the absence of incriminating material is bad in law and therefore rightly quashed by the Ld. CIT(A). The Ld. DR relied upon the order passed by the Ld. AO in support of the disallowance. IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 7 - 8. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record including the orders passed by the authorities below. 9. The gist of the matter as it appears from the entire document placed before us and the argument advanced by the parties is this that the appellant sold shares of M/s. Shri Ganesh Spinners Ltd. now known as Yantra Natural Resources Ltd. which were purchased by the appellant off market directly from the company “SGSL” by way of preferential issue for Rs.35,87,501/- and partly sold for Rs.94,33,504/- by making cross A/c payee cheques totaling to Rs. 35,87,501/- on 30.11.2009, 23.12.2009 & 18.07.2010 drawn on Central Bank of India, Ahmedabad Stock Exchange Branch, Ahmedabad. The appellant thereby earned capital gains of Rs.84,71,004/- on this sale of shares which has been claimed as exempt under Section 10(38) of the Act. On the other hand, during the course of search at the premises of SCS, several documents were found showing that SCS received cash from Sri Pradeep Birewar, the middleman for providing accommodation entries totaling Rs.70.01 crores during the period from 11.02.2010 to 29.07.2011. Parallelly documents were seized from Pradeep’s premises upon search containing details of cash transfer to SCS in Mumbai. Further that in the statement recorded under section 132(4) the said Pradeep Birewar, he admitted to have arranged clients for providing accommodation entries and earned commission for the services. However, he could not remember the beneficiaries of this accommodation entries but stated that the same were provided in the scrips of M/s. Prraneta Industries Ltd. and Shri Ganesh IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 8 - Spinners Ltd. Further enquiry revealed that (SGSL now named as Yantra Natural Resources Ltd.) no activity of the company namely SGSL were conducted at the premises at Hyderabad office, the said companies having meager profit and profession and its share price was abnormal. Furthermore, SEBI suspended the share trading of the said company by and under the order dated 25 th August, 2015. On this premises the Ld. AO concluded that SGSL was controlled by SCS and the share prices were artificially managed by him. The appellant got accommodation entry of LTCG through Satish Chandra Shah and Pradeep Birewar by paying cash and therefore, the LTCG shown by the appellant was not considered as genuine and addition was made. 10. The main contention of the assessee is this that during the course of search no incriminating material was found from the premises of the appellant which we have further been considered Ld. CIT(A). We also do not find any mentioning of incriminating material in the assessment order. On the contrary, at page 76 of the assessment order the Ld. AO stated “it is noted here that the transactions took place in Financial Year 2009-10 to 2011-12 and search action in assessee’s case was in F.Y. 2014-15 i.e. about four years after the transactions. It is seen that since the transaction has been completed long way back why assessee would retain any incriminating material with her”. Suffice to say that the Ld. AO admitted this fact of not having any incriminating material being found during search in the assessee’s premises. 11. It is the contention of the assessee that no addition could be made in case of concluded assessment and/or unabated assessments in the absence of IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 9 - any incriminating material discovered during the course of search. In order to adjudicate this issue, we are conscious of the fact that the position of law propounded in various authoritative judgments regarding the scope of section 153A of the Act. First, we refer to the decision of Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, 380 ITR 573 (Del). Hon’ble Delhi High Court after detailed analysis has summarized the following legal position: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 10 - vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.” 12. Hon’ble Court has specifically observed for the purpose of section 153A assessment completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Hon’ble jurisdictional high Court has also considered the decision of Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra). Hon’ble Gujarat High Court framed the following question of law in the case of Pr.CIT vs. Saumya Construction (supra): "[A] Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? [B] Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? [C] Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 11 - Ltd. v. CIT-IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search?" 13. Hon’ble Court concurred with the decision of Hon’ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: “16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 17. In the facts of the present case, a search came to be conducted on 07.10.2009 and the notice was issued to the assessee under section 153A of the Act for assessment year 2006-07 on 04.08.2010. In response to the notice, the assessee filed return of income on 18.11.2010. In terms of section 153B, the assessment was required to be completed within a period of two years IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 12 - from the end of the financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition as well as the copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 13 - assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of JayabenRatilalSorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed.” 14. Recently, ITAT, Mumbai Bench in the case of Jasmin K. Ajmera Vs. DCIT, in ITA No.983/Mum/2020 order dated 02.11.2021 has considered scope of section 153A of the Act wherein the Tribunal discussed proposition of law down by the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra), and decision of jurisdictional High Court in the case of CIT vs. Saumya Construction (supra)and since no incriminating material was unearthed during the search, no additions could have been made to income already assessed and concluded. “7. We have carefully heard the rival submissions and perused relevant material on record including the documents seized by the department from the assessee group during the course of search operations. We find that the assessee had filed original return of income on 20/07/2011 and search operations were carried out on assessee group on 25/07/2013. It is quite evident that on the date of search, no assessment proceedings were pending against the assessee and no notice u/s 143(2) was ever issued to the assessee till the date of search. The time limit for issuance of such notice had already expired on 30/09/2012 i.e. within 6 months from the end of relevant IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 14 - assessment year. Thus, AY 2011-12 was a non-abated year. In such a case, the additions which could be made has necessarily to be on the basis of incriminating material found by the department during the course of search operations as held by Hon'ble Bombay High Court in CIT V/s Continental Warehousing Corporation [2015 374 ITR 645]. In other words, unless any incriminating material was unearthed, no additions could be sustained in the hands of the assessee. So far as the arguments of revenue that intimation u/s 143(1) would not constitute an assessment, is concerned, we find that the factual matrix in decision rendered by Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398 05/10/2015) was similar wherein the original return was processed u/s 143(1) and the time limit for issuing notice u/s 143(2) had already expired. The Hon'ble Court chose to follow its own decision rendered in CIT Vs. Continental Warehousing Corporation [2015 374 ITR 645]. Therefore this argument would not hold much water which is also fortified by subsequent decision of Hon'ble Bombay High Court in CIT V/s Deepak Kumar Agarwal (398 ITR 586 11/09/2017) which held as under: - 20. At the outset, and since heavy reliance is placed by the Revenue on the Supreme Court judgment in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra), it would be proper to note the facts in the same. 21. There, the Assistant Commissioner of Income Tax challenged the correctness of the decision rendered by a Division Bench of the Gujarat High Court. That Division Bench judgment allowed the Writ Petition/Special Civil Application of the assessee. 22. The respondent-assessee, a private limited company, filed its return of income for the assessment year 2001-2002 on October 30, 2001, declaring total loss of Rs.2,70,85,105/-. That return was proposed under Section 143(1) of the IT Act accepting the loss returned by the respondent. A notice was issued under Section 148 of the IT Act on the ground that the claim of bad debts as expenditure was not acceptable. On 12th May, 2004, a return of income declaring the loss at the same figure as declared in the original return was filed by the respondent-assessee under protest. A copy of the reasons recorded was furnished by the Revenue on the request of the assessee sometime in November, 2004. The assessee raised various objections, both on jurisdiction and the merits of the subject matter recorded in the reasons. The Revenue disposed of these objections on 4th February, 2005 holding that the initiation of reassessment proceedings was valid and it had jurisdiction to undertake such an exercise. The notice under Section 148 of the IT Act dated 12th May, 2004 was challenged by the respondent-assessee. IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 15 - 23. That Writ Petition was allowed and hence, the Revenue was in Appeal. 24. Mr. Ahuja's argument overlooks this factual aspect and when he relies upon the observations of the Hon'ble Supreme Court, and particularly in paragraph 13, he forgets that they were made in the context of a challenge to the notice under Section 148 of the IT Act. The Supreme Court, in paragraph 13 of this judgment, noted that intimation under Section 143(1)(a) was given without prejudice to the provisions of Section 143(2). Though technically this intimation issued was deemed to be a demand notice issued under Section 156, that did not per se preclude the Assessing Officer to proceed under Section 143(2). The right preserved was not taken away. The Hon'ble Supreme Court referred to the period between April 1, 1989 and March 31, 1998, and the second proviso to Sub-section (1) Clause (a) of Section 143 and its substitution with effect from 1st April, 1998. The sending of intimation between 1st April, 1998 and 31st May, 1999 under Section 143(1)(a) was mandatory. That requirement continued until the second proviso was substituted by the Finance Act, 1997, which was operative till 1st June, 1999. 25. The Hon'ble Supreme Court therefore, relied upon these amendments and, tracing their history, held that the intimation under Section 143(1)(a) cannot be treated to be an order of assessment. That is how it referred to the Division Bench Judgment of the High Court at Delhi and explained the legal position. There was thus no assessment under Section 143(1)(a) and therefore, the question of change of opinion did not arise. A reference to Section 147 therefore, was made in the context of the Assessing Officer being authorized and permitted to assess or re- assess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. Before us, such is not the position, and even if this judgment of the High Court had been brought to the notice of the Division Bench deciding the Continental Warehousing Corpn. and All Cargo Global Logistics (supra), there would not have been any difference. Similar view has been expressed by Hon'ble Delhi High Court in CIT Vs. Kabul Chawla (380 ITR 573). 8. The Ld. CIT-DR has placed on record material seized from the assessee during search proceedings. The copies of the Panchnamas (page 1 to 6 of assessee's paper-book) have also been placed on record. Upon combined reading of all these documents, it could be gathered that none of the IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 16 - documents show that the share transactions carried out by the assessee were sham transactions done in collusion with tainted group of Shri Shirish C. Shah. There is no evidence of cash movement, in any manner. The documents seized from the assessee are in the nature of Share holding, holding stock summary, Ledger extracts etc. which are already part of assessee's regular books of accounts and have not been referred to by Ld. AO while making impugned additions in the hands of the assessee. In the assessment order, the long-term capital gains earned by the assessee have been held to be bogus in nature, however the same are not corroborated, in any manner, by the seized material. The allegations of Ld. AO are primarily based on the search findings in the case of Shri Shirish C. Shah and his group entities whereas no incriminating material has been seized from the assessee. In fact, in the remand report dated 09/01/2017 (page nos. 196 to 199) filed by Ld. AO during first appellate proceedings, it has categorically been admitted by Ld. AO that there was no incriminating material in the case of the assessee. Nothing has been shown to us to controvert these findings of Ld. AO. Therefore, the ratio of cited decisions as referred to in para-6 is quite applicable to the facts of the case. 9. So far as the admission in the form of assessee's own statement is concerned, we find that this statement has been retracted by the assessee by way of on affidavit on 02/08/2013 (page nos. 7 to 10 of assessee's paper book) and therefore, in the absence of any corroborative evidence / material supporting the admission made by the assessee, the addition would become unsustainable in the eyes of law. The additions made merely on the basis of retracted statement without there being any corroborative evidence / material, in our considered opinion, is not sustainable in law since the same run contrary to CBDT Circular F. No.286/2/2003-IT(Inv.), dated 10/03/2003 which has clearly stated that no attempt should be made to obtain confession / surrender as to the undisclosed income during search. Such confession, if not based on credible evidence, when retracted, would not serve useful purpose and an therefore, the authorities should focus on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax department. Further, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income and the addition should be made only on the basis of material gathered during search operations. Any action on the contrary has to be viewed adversely. The subsequent Circular F.NO.286/98/2013-IT (INV.II)] dated 18/12/2014 emphasizes upon need to focus on gathering evidences during search / survey and to strictly avoid obtaining admission of undisclosed income under coercion / undue influence. Therefore, the action of Ld. AO could not be said to be in line with these circulars issued by CBDT. IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 17 - 10. Proceeding further, it is settled legal proposition that the confession need corroboration with evidences. Though admission is an important piece of evidence but it is not conclusive and it is open to the assessee to show that it is incorrect. Therefore, retracted admission, in the absence of any incriminating material, would not be sustainable. In order to make a genuine and legally sustainable addition on the basis of surrender during search, it is sine-qua- non that some incriminating material must have been found to correlate the undisclosed income with such statement. The Hon'ble Delhi High Court in CIT V/s Harjeev Aggarwal (70 Taxmann.com 95; 10/03/2016) held that the statement recorded u/s 132(4) may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to sustain additions on the basis of recorded statement. Similar is the view of Hon'ble High Court in an earlier judgment of CIT V/s Sunil Aggarwal ( 379 ITR 367; 2016) and also the decision of Hon'ble Andhra Pradesh High Court in CIT v. Shri Ramdas Motor Transport (238 ITR 177) wherein Hon'ble Court refused to give any evidentiary value to the statement made by the assessee u/s 132(4) as the department could not find any unaccounted money, article or thing or incriminating document either at the premises of the company or at the residence of managing director or other directors. In such circumstances, the finding of the Tribunal that the statement of managing director recorded patently u/s 132(4) did not have any evidentiary value, was upheld. The ratio of all these decisions makes it clear that the surrendered income must be correlated with some incriminating material found during the course of search action so as to justify the addition. We find that there is no such incriminating material in the case of the assessee which would show that the transactions under consideration were sham transactions and there was any connection / nexus between the assessee and the group entities of Shri Shirish C. Shah. 11. We also find that this legal issue stood covered in assessee's favor by the decision of SMC bench of Tribunal rendered in the case of another assessee of the group i.e. Smt. Reena A. Ajmera V/s DCIT (ITA No.982/Mum/2020 dated 09/02/2021). The relevant observations were as under: - **** ***** **** 13. The Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla (supra) held that - "completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on basis of some incriminating material unearthed during course of search which was IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 18 - not produced or not already disclosed or made known in course of original assessment. Pursuant to search carried out in case of the assessee, a notice under section 153A(1) was issued. In course of assessment, Assessing Officer made addition to assessee's income in respect of deemed dividend. It was undisputed that assessment for assessment years in question had already been completed on date of search. Since no incriminating material was unearthed during the search, no additions could have been made to income already assessed. Consequently, the impugned addition was to be deleted". **** ***** **** 16. In all the above decisions of various Hon'ble High Court's, the legal position is that no addition can be made in case of an unabated assessment if no incriminating material is found in the course of search. On a perusal of the Assessment Order I noticed that there was no reference to any of the incriminating material found and seized in the premises of the assessee in the course of the search proceedings. The Assessing Officer in the Assessment Order refers to the seized incriminating material in the case of one Shri Shirish C. shah and the post search enquiries made in his case to make an addition in the hands of the assessee denying the long term capital gain claimed by the assessee. I also noticed from the remand report dated 09.01.2017 furnished by the Dy. CIT, CC-2(2), Mumbai to the Ld.CIT(A) -48 in the course of appeal proceedings wherein the Assessing Officer stated as under: - "Sir, in the present case under consideration, though no incriminating material was found, the assessee admitted undisclosed Income in his statement u/s.132(4) of the Income Tax Act 1961. It is totally immaterial that the assessee later on retracted the statements recorded u/s 132(4) of the Income Tax Act 1961. Therefore assessment of AY 2011-12 and AY 2012-13 which was made on the basis of undisclosed income admitted during the course of search is totally valid assessment and does not get affected by the decision of Hon'ble Bombay High Court in the case of Continental Warehousing (Supra)". 17. In this case it appears that except the statement of the assessee u/s. 132(4) agreeing for the addition there is no seized incriminating material found in the premises of the assessee in the course of assessment proceedings. When there is no incriminating material found in the course of search in assessee's premises the addition/disallowance cannot be made merely on the statements recorded in the course of the search proceedings. IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 19 - The facts in the above case are quite identical to the case before us since the additions permeates from same search action and similar additions were made in the case of this assessee. Therefore, the ratio of above decision is quite applicable here and we see no reason to deviate from the same. 12. Finally, on the given facts and circumstances, we concur with the submissions of Ld. AR that in the absence of any incriminating material, the additions could not be made in the hands of the assessee as per settled legal proposition. Accordingly, the impugned additions stand deleted. We order so. Since legal grounds raised by the assessee have been allowed, the adjudication on merits have been rendered merely academic in nature. The legal ground raised by the assessee stand allowed. The appeal stand allowed. 13. Facts as well as issues are quite identical in all the other appeals. The assessment orders as well as appellate orders are on similar lines. Aggrieved, the assessee is in further appeal before us with similar grounds of appeal. Facts being pari-materia, the same, our adjudication as above shall mutatis- mutandis apply to all these appeals. Accordingly, the legal grounds raised in all these appeals stand allowed and the impugned additions as made therein stand deleted. All these appeals stand allowed. 15. After careful reading of the order passed by the Ld. CIT(A) we find that the assessee’s main contention of not having any incriminating material in the possession of the Ld. AO found during the course of search of the premises of the assessee which ought to have been the main basis of reopening of an unabated assessment and on the contrary addition has been made without due process of law has been taken into consideration in its proper perspective. The ratio laid down in the judgement passed by the Hon’ble jurisdictional High Court in the case of Saumya construction (supra) and the judgement passed by the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) has been applied rightly by the CIT(A) in the case in hand keeping in view of the particular fact that even the Ld. AO admitted the fact of not having any incriminating material found during the search of the assessee’s premises. In our considered opinion quashing of the proceeding by the Ld. CIT(A) initiated under Section 153A IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 20 - against the assessee applying the ratio laid down by the judicial forums as indicated hereinabove is just and proper so as to warrant interference. Hence, the appeal preferred by the Revenue is, therefore, found to be devoid of any merit and thus, dismissed. 16. Ground No. 5:- Since the entire reassessment proceeding initiated under Section 153A of the Act has been quashed by the Ld. CIT(A) and also by us this ground of appeal relating to commission charge and obtaining accommodation entries of Long Term Capital Gain becomes infructuous and therefore, dismissed as infructuous. Hence, this ground of appeal is dismissed as infructuous. IT(SS)A No. 465/Ahd/2019(A.Y. 2012-13):_ 17. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 18. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 451/Ahd/2019(A.Y. 2011-12):_ 19. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 21 - therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 20. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 450/Ahd/2019(A.Y. 2012-13):_ 21. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 22. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 452/Ahd/2019(A.Y. 2012-13):_ 23. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 24. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 22 - the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 463/Ahd/2019(A.Y. 2011-12):_ 25. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 26. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 453/Ahd/2019(A.Y. 2011-12):_ 27. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 28. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 23 - IT(SS)A No. 454/Ahd/2019(A.Y. 2011-12):_ 29. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 30. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 466/Ahd/2019(A.Y. 2012-13):_ 31. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 32. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 464/Ahd/2019(A.Y. 2011-12):_ 33. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No.448/Ahd/2019& 09 others Shardaben Arvindbhai Patel(others) vs. ACIT Asst.Years –2011-12, 2012-13 - 24 - 34. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 35. In the combined results, all the appeals filed by the Revenue are dismissed. This Order pronounced in Open Court on 08/06/2022 Sd/- Sd/- (WASEEM AHMED) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 08/06/2022 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation: Dictated in dragon 2. Date on which the typed draft is placed before the Dictating Member 03.06.2022 & 06.06.2022 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .06.2022 5. Date on which the fair order is placed before the Dictating Member for pronouncement .06.2022 6. Date on which the fair order comes back to the Sr.P.S./P.S 08.06.2022 7. Date on which the file goes to the Bench Clerk 08.06.2022 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................