M/s. Anushree Textiles Pvt. Ltd., , Kolkata V. DCIT, Central Circle - 3(4), Kolkata , Kolkata

ITSSA 48/KOL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0438 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 13-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: S M SURANA
• Keywords: Bogus Share capital; Search and seizure; Reason to believe
• Section: 143(3); 142(1); 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & SHRI M.BAL AGANESH, AM ] I.T.(SS)A NO. 48/KOL/ 2018 ASSESSMENT YEAR : 2010-1 1 M/S ANUSHREE TEXTILES PVT. LTD. -VS- DCIT, C C-3(4), KOLKATA [PAN: AAECA 5673 Q] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI S.M. SU RANA, ADVOCATE FOR THE REVENUE : SHRI ROBIN CHOWDHUR Y, ADDL. CIT DR DATE OF HEARING : 27.08.2018 DATE OF PRONOUNCEMENT : 05.09.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-21, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO. 10837/DCIT/CC-3(4)/CIT(A)-21/KOL/2017-18 DATED 14.0 6.2018 AGAINST THE ORDER PASSED BY THE DCIT, CC-3(4), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 153A / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) DATED 31.12.2017 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ONLY EFFECTIVE ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN CONFIRMING THE ADDITION MADE TOWARDS S HARE APPLICATION MONEY IN THE SUM OF RS 3,75,00,000/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS A COMPANY CARRYING ON BUSINESS OF MANUFACTURING AND TRADING OF COTTON PRINTED SAREES. THE ASSESSEE MAINTAINS PROPER BOOKS OF ACCOUNTS AND THE SAME WERE SUBJECTED TO AU DIT BY CHARTERED ACCOUNTANTS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASST YE AR 2010-11 ON 19.9.2010 DECLARING TOTAL INCOME OF RS 77,22,550/-. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE ACT AT THE REGISTERED OFFICE OF THE ASSE SSEE COMPANY ON 15.12.2015 AT 1 ST AND 2 ND FLOOR, 13B, DIGAMBAR JAIN TEMPLE ROAD, CHINIPATTY, KOLKATA 7. CONSEQUENT TO THE SEARCH, NOTICE U/S 153A OF THE ACT WAS ISSUED ON 9. 9.2016 AND SERVED UPON THE ASSESSEE ON 14.9.2016 SEEKING RETURN FOR THE ASST YEAR 2010- 11. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING T OTAL INCOME OF RS 77,22,547/- VIDE E- FILING ACKNOWLEDGEMENT NO. 489177871101016 ON 10.10 .2016.. THE ASSESSEE STATED THAT THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143( 2) OF THE ACT FOR THE ASST YEAR 2010-11 IN RESPECT OF THE ORIGINAL RETURN FILED ON 19.9.201 0 HAD EXPIRED ON 30.9.2011 AND HENCE AS ON THE DATE OF SEARCH, THE YEAR UNDER CONSIDERAT ION (I.E ASST YEAR 2010-11) WOULD FALL UNDER THE CATEGORY OF UNABATED ASSESSMENT AND HENCE THE INCOME ASSESSED ORIGINALLY THEREON COULD NOT BE DISTURBED UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH RELATABLE TO SUCH ASSESSMENT YEAR. 3.1. THE ASSESSEE COMPANY RECEIVED THE FOLLOWING PA YMENTS AGAINST SHARE APPLICATION DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO ASST YEAR 2010-11 AS UNDER:- SL. NO. NAME OF THE COMPANY TO WHOM SHARES WERE ALLOTTED NO. OF SHARE FACE VALUE RS. PREMIUM RS. AMOUNT RS. 1. M/S PARAM SAGAR GEM & JEWELLERY PVT. LTD. 50,000 10 40 25,00,000 2 M/S SUBHDRISTI COMPLEX PVT. LTD. 50,000 10 40 25,00,000 3 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 3 3 M/S SWAGATAMA ENCLAVE PVT. LTD. 50,000 10 40 25,00,000 4 M/S RANGOLI DEALER PVT. LTD. 50,000 10 40 25,00,000 5 M/S BLUE PRINT SECURITIES LTD. 50,000 10 40 25,00,000 6 M/S MAA SANTOSHI INTERNATIONAL LTD. 50,000 10 40 25,00,000 7 M/S RATNAKAR DEALCOMM PVT. LTD. 50,000 10 40 25,00,000 8 M/S ALLIED GLOBAL INFRASTRUCTURE LTD. 1,00,000 10 40 50,00,000 9 M/S JAY AAR COMMERCIAL PVT. LTD. 50,000 10 40 25,00,000 10 M/S MRIGIYA ELECTRONIC INDUSTRIES PVT. LTD. 2,50,000 10 40 1,25,00,000 TOTAL 7,50,000 3,75,00,000 3.2. IT WAS ARGUED THAT ADMITTEDLY NO INCRIMINATING MATERIALS WERE FOUND FOR ASST YEAR 2010-11 IN THE COURSE OF SEARCH WITH REGARD TO SHAR E CAPITAL AND SHARE APPLICATION MONEY AND ACCORDINGLY PLEADED NOT TO DISTURB THE ORIGINAL LY ASSESSED INCOME, WHICH IS SAME AS THE RETURNED INCOME. THE LD AO HOWEVER DID NOT HEE D TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO FRAME THE ASSESSMENTS U/S 153A OF THE ACT BY MAKING AN ADDITION TOWARDS SHARE APPLICATION MONEY U/S 68 OF THE ACT I N THE SUM OF RS 3,75,00,000/- ON THE PLEA THAT THE ASSESSMENTS TO BE FRAMED U/S 153A OF THE ACT CLEARS ALL THE DECKS AND 4 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 4 WOULD ENABLE THE LD AO TO ASSESS OR REASSESS THE TO TAL INCOME AS PER THE PROVISIONS OF THE ACT IRRESPECTIVE OF INCRIMINATING MATERIALS FOU ND IN THE SEARCH. THE LD AO COMPLETED THE ASSESSMENT U/S 153A / 143(3) OF THE A CT ON 31.12.2017 DETERMINING THE TOTAL INCOME AT RS 4,52,22,547/- AFTER MAKING AN AD DITION OF RS. 3,75,00,000/- U/S 68 OF THE ACT ON ACCOUNT OF SHARE APPLICATION MONEY. 4. THE ASSESSEE STATED NO INCRIMINATING MATERIALS RELATING TO THE SHARE CAPITAL OR SHARE APPLICATION MONEY OR SHARE PREMIUM WERE FOUND DURIN G THE COURSE OF SEARCH. THE ASSESSEE FILED ALL THE DETAILS WITH REGARD TO THE S HARE CAPITAL AND YET ON THE BASIS OF POST SEARCH DEPOSITION TAKEN BY THE ADIT (INV.) FROM CER TAIN ENTRY OPERATORS, THE LD AO ADDED BACK THE SAID AMOUNT OF RS 3,75,00,000/- AS U NEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE ASSESSEE BEFORE THE LD CITA STATED THT IN SUPPORT OF THE RECEIPT OF SHARE CAPITAL, THE ASSESSEE HAD PROVIDED NAME & ADDRESS OF THE SHA RE APPLICANTS, PAN OF THE SHARE APPLICANTS, CONFORMATION LETTERS FROM THE SHARE APP LICANTS, THEIR ITR ACKNOWLEDGEMENT, COPY OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET, SOURCE OF THE FUNDS PROVIDED, BANK STATEMENT, ROC DOCUMENTS ETC. WITH REGARD TO JUSTI FICATION FOR PREMIUM, THE ASSESSEE COMPANY STATED THAT IT OWNS THE BRAND ANU SAREES , ONE OF THE MAJOR SELLER OF COTTON PRINTED SAREES IN EASTERN INDIA. THIS IS A WELL ES TABLISHED BRANCH AND ASSESSEE HOLDS GOODWILL IN ENTIRE EASTERN INDIA . THE COMPANY IS ALSO REGULARLY INCREASING ITS TURNOVER AND CONSISTENT INCREASED NET PROFITS. DUE TO ITS I NHERENT GOODWILL , THE ASSESSEE WAS ABLE TO RAISE SHARE CAPITAL WITH PREMIUM. THE ASSESSE E ALSO GAVE THE INFORMATION REGARDING THE CHANGED NAME OF THE SHAREHOLDERS TOGETHER WITH THE LATEST ADDRESS BEFORE THE LD AO AND ACCORDINGLY SOUGHT FOR THE DETAILS OF NOTICES S ENT TO THOSE SHAREHOLDERS AT THEIR PRESENT ADDRESS AND ALSO REQUESTED THE LD AO TO INF ORM THE ASSESSEE THE NAME OF THE PARTIES FROM WHOM THE NOTICE HAS BEEN RETURNED UNSE RVED. IT WAS SUBMITTED THAT FROM THE DOCUMENTS FILED PERTAINING TO THE SHARE SUBSCRI BERS, IT COULD BE SEEN THAT THEY HAD SUFFICIENT SOURCES FOR MAKING INVESTMENTS IN THE AS SESSEE COMPANY. THE ASSESSEE MET AND FILED ITS SUBMISSIONS BEFORE THE LD CITA FOR EA CH AND EVERY ALLEGATION LEVELLED 5 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 5 AGAINST IT BY THE LD AO. THE ASSESSEE ALSO FILED TH E DETAILS OF NET WORTH OF VARIOUS SHARE SUBSCRIBING COMPANIES AS UNDER :- NAME OF COMPANY NET WORTH (RS.) APPLICATION MADE (R S.) BLUE PRINT SECURITIES LTD. 24,38,94,621/- 25,00,000 /- RATNAKAR DEALCOM PVT. LTD. 20,01,00,543/- 25,00,000/- M/S RANGOLI DEALER PVT. LTD. 70,01,02,185/- 25,00,000/- ALLIED GLOBAL INFRASTRUCTURE LTD. 19,34,79,863/- 50,00,000/- MAA SANTOSHI INTERNATIONAL LTD .(PRESENTLY KNOWN AS SUNSHINE HOUSECON LTD.) 31,86,35,643/- 25,00,000/- SWAGATAMA ENCLAVE PVT. LTD. 21,02,43,801/- 25,00,000/- SUBHDRISTI COMPLEX PVT. LTD. 20,03,06,791/- 25,00,000/- PARAMSAGAR GEM & JEWELLWERY PVT. LTD. (PRESENTLY KNOWN AS PARAMSAGAR INFRASTRUCTURE PVT. LTD.) 7,56,73,525/- 25,00,000/- JAY AAR COMMERCIAL PVT. LTD. 50,45,32,987/- 25,00,000/- MIRGYA ELECTRONIC INDUSTRIES PVT. LTD. 35,91,31,671/- 1,25,00,000/- HENCE IT WAS PLEADED THAT THE ASSESSEE COMPANY HAD DULY PROVED THE NECESSARY THREE INGREDIENTS I.E IDENTITY OF THE SHARE SUBSCRIBERS, GENUINENESS OF TRANSACTIONS AND 6 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 6 CREDITWORTHINESS OF TRANSACTIONS WITHIN THE MEANING OF SECTION 68 OF THE ACT AND PRAYED FOR DELETION OF THE ADDITION MADE IN THE SUM OF RS 3,75,00,000/-. 5. THE LD CITA HOWEVER CONFIRMED THE ADDITION ON T HE VALIDITY OF ADDITION MADE TOWARDS SHARE CAPITAL IN THE PROCEEDINGS U/S 153A O F THE ACT FOR THE ASST YEAR 2010-11 BY OBSERVING THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF SEARCH PROCEEDINGS AND THE DISCOVERY OF MODUS OPERANDI OF OBTAINING BOGUS SHAR E CAPITAL. APART FROM MAKING THESE OBSERVATIONS, HE ALSO UPHELD THE ACTION OF THE LD A O ON MERITS OF THE ADDITION U/S 68 OF THE ACT AS WELL. AGGRIEVED, THE ASSESSEE IS IN APP EAL BEFORE US. 6. WITH REGARD TO THE PRELIMINARY ARGUMENT OF THE L D AR THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WITH REG ARD TO THE ISSUE OF SHARE CAPITAL, SHARE APPLICATION MONEY AND SHARE PREMIUM, THE LD D R ARGUED THAT THE EXPRESSION INCRIMINATING MATERIAL IS NOT FOUND IN THE PROVIS IONS OF THE ACT AND IT IS ONLY THE HONBLE COURTS WHICH HAD IMPORTED THOSE WORDS WHILE RENDERING THE DECISIONS. HE STATED THAT THE HONBLE COURTS ARE DIVIDED ON THIS ISSUE AND PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT CO VS DCIT REPORTED IN (2014) 49 TAXMAN N.COM 98 (KAR HC) WHEREIN IT WAS HELD THAT SEARCH ASSESSMENTS COULD BE FRAMED EVEN WITHOUT THE EXISTENCE OF INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEAR CH. HE ARGUED THAT THE BASIC FOUNDATION FOR CONDUCTING THE SEARCH IS GOVERNED BY THE PROVISIONS OF SECTION 132 OF THE ACT WHICH HAS TO BE READ HARMONIOUSLY WITH SECTION 153A OF THE ACT. THERE ARE THREE CONDITIONS BASED ON WHICH A SEARCH ACTION COULD BE INITIATED U/S 132 OF THE ACT ON AN ASSESSEE. THEY ARE :- SECTION 132(1) - IF THE CONCERNED AUTHORITY HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEVE THAT - (A) WHERE A PERSON FAILS TO PRODUCE THE BOOKS OF ACCOUN TS AND OTHER DOCUMENTS IN RESPONSE TO NOTICE U/S 142(1) OR SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR 7 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 7 (B) WHERE A PERSON FAILS TO COMPLY WITH THE REQUIREMENT S OF SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (C) WHERE A PERSON IS IN POSSESSION OF ANY MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH ASSETS REPRESENT S EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN , OR WOULD NOT BE, D ISCLOSED FOR THE PURPOSES OF THE ACT (HEREINAFTER REFERRED TO AS THE UNDISCLOSE D INCOME OR PROPERTY) ; THEN THE OFFICER , SO AUTHORIZED COULD CONDUCT A SE ARCH AND PROCEED AS PER THE REQUIREMENTS LAID DOWN IN THE SAID SECTION. HE AR GUED THAT THE AFORESAID THREE PRIMARY CONDITIONS FOR INVOKING SEARCH PROCEEDINGS CANNOT B E GIVEN A GO BY WHILE FRAMING SECTION 153A ASSESSMENTS AND THE INSTANT CASE FALLS UNDER SECTION 132(1)(C ) OF THE ACT. THE PROVISIONS OF SECTION 153A OF THE ACT USE THE E XPRESSION ASSESS OR REASSESS TOTAL INCOME AND HENCE THE SEARCH ASSESSMENT COULD BE FR AMED U/S 153A OF THE ACT IRRESPECTIVE OF ANY INCRIMINATING MATEIALS. 7. IN RESPONSE TO THIS, THE LD AR STATED THAT THE A SSESSMENT FOR THE ASST YEAR 2010-11 WAS ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AS T HE CASE WAS NOT SELECTED FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT ON OR B EFORE 30.9.2011. HE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES WITH REGARD TO FRAMING OF ADDITIONS IN SECTION 153A ASSESSMENTS WITHOUT ANY INCRIMINATING MATERIAL FOUND THEREON. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS:- (A) CIT VS VEERPRABHU MARKETING LTD REPORTED IN (20 16) 73 TAXMANN.COM 149 (CAL HC) (B) DECISION OF THIS TRIBUNAL IN THE CASE OF ACIT V S KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 (C ) CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 ( DELHI HC) (D)CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAV A SHEVA) LTD AND ALL CARGO GLOBAL LOGISTICS LTD REPORTED IN (2015) 374 ITR 645 ( BOM) 8 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 8 (E) DECISION OF HONBLE APEX COURT IN THE CASE OF K ABUL CHAWLA REPORTED IN 380 ITR (ST.) 64 (SC) WHEREIN SLP OF THE REVENUE WAS DISMIS SED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND IT WOULD BE NECESSARY TO ADDRESS THE PRELIMINARY ISSUE OF WHETHER THE ADDITION COULD BE FRAMED U/S 153A OF THE ACT IN RESPECT OF A CONCLUDED PROCEEDING WITHOUT THE EXIST ENCE OF ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH. THE SCHEME OF THE ACT PROVIDES FOR ABATEMENT OF PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IT IS NOT IN DISPUTE THAT THE ASSESSMENT FOR THE ASST YEAR 2010-11 WAS ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AND THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAD EXPIRE D AND HENCE IT FALLS UNDER CONCLUDED PROCEEDING , AS ON THE DATE OF SEARCH. WE HOLD THA T THE LEGISLATURE DOES NOT DIFFERENTIATE WHETHER THE ASSESSMENTS ORIGINALLY WERE FRAMED U/S 143(1) OR 143(3) OR 147 OF THE ACT. HENCE UNLESS THERE IS ANY INCRIMINATING MATERIAL FO UND DURING THE COURSE OF SEARCH RELATABLE TO SUCH CONCLUDED YEAR, THE STATUTE DOES NOT CONFER ANY POWER ON THE LD AO TO DISTURB THE FINDINGS GIVEN THEREON AND INCOME DETER MINED THEREON, AS FINALITY HAD ALREADY BEEN REACHED THEREON, AND SUCH PROCEEDING WAS NOT PENDING ON THE DATE OF SEARCH TO GET ITSELF ABATED. THE PROVISIONS OF SEC TION 153A OF THE ACT ARE REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE :- '[ASSESSMENT IN CASE OF SEARCH OR REQUISITION 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN S ECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN T HE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF A CCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER T HE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITH IN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOM E IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SU CH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; 9 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 9 (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS I MMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS:' 8.1. WE FIND THAT THE CO-ORDINATE BENCH OF DELHI TR IBUNAL IN THE CASE OF DY. CIT V. AGGARWAL ENTERTAINMENT (P.) LTD REPORTED IN [2016] 72 TAXMANN.COM 340 (DELHI - TRIB.) HAD ADDRESSED THIS ASPECT. THE RELEVANT HEADNOTES IS REPRODUCED BELOW: 'SECTION 153A, READ WITH SECTION 143, OF THE INCOME -TAX ACT, 1961-SEARCH AND SEIZURE - ASSESSMENT IN CASE OF (IN CASE OF SECTION 143(1) ASSESSMENT)-ASSESSMENT YEAR 2004-05- WHETHER ASSESSMENT IN RESPECT OF WHIC H RETURN HAS BEEN PROCESSED UNDER SECTION 143(1), CANNOT BE REGARDED AS PENDING FOR PURPOSE OF SECTION 153A AS ASSESSING OFFICER IS NOT REQUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN AND, THUS, SAID ASSESSMENT CANNOT BE REOPENED IN EXERCIS E OF POWER OF SECTION 153A- HELD YES (PARAS 10 AND 12) (IN FAVOUR OF ASSESSEE). ' 8.2. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRI BUNAL IN THE CASE OF ACIT VS KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9. 12.2015 REPORTED IN 2016-TIOL- 167-ITAT-KOL HAD EXPLAINED THE AFORESAID PROVISIONS AS BELOW:- '6.4 IN OUR OPINION, THE SCHEME OF ASSESSMENT PROCE EDINGS SHOULD BE UNDERSTOOD IN THE FOLLOWING MANNER PURSUANT TO THE SEARCH CONDUCT ED U/S. 132 OF THE ACT :- (A) NOTICE U/S. 153A OF THE ACT WOULD BE ISSUED ON THE PERSON ON WHOM THE WARRANT OF AUTHORIZATION U/S. 132 OF THE ACT WAS IS SUED FOR THE SIX ASSESSMENT YEARS PRECEDING THE YEAR OF SEARCH AND ASSES SMENTS THEREON WOULD BE COMPLETED U/S. 153A OF THE ACT FOR THOSE SIX ASSESS MENT YEARS. (B ) IN RESPECT OF THE YEAR OF SEARCH, NOTICE U/S. 143(2 ) OF THE ACT WOULD BE ISSUED AND ASSESSMENT THEREON WOULD BE COMPLETED U/S. 143( 3) OF THE ACT. (C) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YEAR OF SEARCH, NO ADDITION COULD BE MADE IN THE RELEVANT ASSESSMENT YEAR UNLES S ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE RELEVANT ASSESSMENT YEAR. (D) PURSUANT TO THE SEARCH U/S. 132 OF THE ACT, THE PENDING PROCEED INGS WOULD GET 10 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 10 ABATED. IN RESPECT OF ABATED ASSESSMENTS, THE TOTAL INCOME NEEDS TO BE DETERMINED AFRESH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AND OTHER PROVISIONS OF THE ACT. 6.4.1 THE CONCLUDED ASSESSMENTS FOR THE PURPOSE OF SECTION 153A OF THE ACT SHALL BE - (I) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMP LETED U/S. 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF TH E ACT HAS EXPIRED OR; (II) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMPLETED U/S. 143(3) OF TH E ACT ; UNLESS THEY ARE REOPENED U/S. 147 OF THE ACT FOR SO ME OTHER PURPOSE IN BOTH THE SCENARIOS STATED ABOVE. 6.4.2 THE SCHEME OF ASSESSMENT PROCEEDINGS CONTEMPL ATED U/S. 153A OF THE ACT ARE TOTALLY DIFFERENT AND DISTINCT FROM THE PROCEEDINGS CONTEMPLATED U/S. 147 OF THE ACT AND THESE PROCEDURES OF ASSESSMENT OPERATE IN DIFFE RENT FIELDS AND HAVE DIFFERENT PURPOSES TO BE FULFILLED ALTOGETHER. 6.4.3 THE EXPRESSION 'ASSESS OR REASSESS' STATED IN SECTION 153A(1)(B) HAS TO BE UNDERSTOOD AS BELOW:- 'ASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF ABATED ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER THERE ARE ANY INCR IMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO RELEVANT ASSES SMENT YEARS ; 'REASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPEC T OF CONCLUDED ASSESSMENT YEARS WHERE INCRIMINATING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR.' 8.3. WE ALSO FIND THAT RECENTLY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HELD AS UNDER:- '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 AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE P ERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATE LY PRECEDING THE PREVIOUS YEAR 11 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 11 RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE LD AOS AS A FRESH EXERCISE. (III) THE LD AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE LD AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARA TE 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 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE LD AO WH ICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T '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 O N THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COM PLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO C OMPLETE ASSESSMENT PROCEEDINGS. (VI) IN SOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JUR ISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EA CH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE LD AO. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE LD 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 CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 38. THE PRESENT APPEALS CONCERN AYS 2002-03, 2005-0 6 AND 2006-07, ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPL ETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 12 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 12 8.4. WE FIND THAT THE DECISION RELIED UPON BY THE L D DR IN THE CASE OF CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) DOES NOT IN ANY MANNER ADVANCE THE CASE OF THE REVENUE AS ADMITTEDLY THE HONBLE DELHI HIGH COURT IN PARA 24 OF ITS ORDER HAD HELD AS UNDER:- 24. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCR IMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN B E INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN. 8.5. THE LD DR ALSO RELIED ON THE RECENT DECISION O F THE HONBLE KERALA HIGH COURT IN THE CASE OF E.N.GOPAKUMAR VS CIT REPORTED IN (2016) 75 TAXMANN.COM 215 (KERALA) IN SUPPORT OF HIS CONTENTIONS. WE FIND THAT THE DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HAD DULY CONSIDERED THE DECISIONS OF CIT VS ANIL KUMAR BHATI A REPORTED IN (2013) 352 ITR 493 (DEL) ; CIT VS CHETAN DAS LACHMAN DAS REPORTED IN (2012) 211 TAXMAN 61 (DEL HC) ; MADUGULA VENU VS DIT REPORTED IN (2013) 215 TAXMAN 298 (DEL HC) ; CANARA HOUSING DEVELOPMENT CO. VS DCIT REPORTED IN (2014) 49 TAXMANN.COM 98 (KAR HC) ; FILATEX INDIA LTD VS CIT REPORTED IN (2014) 229 TAX MAN 555 (DEL HC) ; JAI STEEL (INDIA) VS ACIT REPORTED IN (2013) 219 TAXMAN 223 (DEL HC) ; CIT VS MURLI AGRO PRODUCTS LTD REPORTED IN (2014) 49 TAXMANN.COM 172 (BOM HC) ; CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD REPORTED IN (2015) 374 ITR 645 (BOM HC) AND ALL CARGO GLOBAL LOGISTICS LTD VS DCIT REPO RTED IN (2012) 137 ITD 287 (MUM ITAT) (SB). WE ALSO FIND THAT AGAINST THE DECISION OF THE HONB LE DELHI HIGH COURT IN 380 ITR 573 (DEL) , THE REVENUE PREFERRED SPECIAL LEAVE PETITIO N BEFORE THE HONBLE SUPREME COURT AND THE SAME WAS DISMISSED BY THE APEX COURT WHICH IS REPORTED IN 380 ITR (ST.) 4 (SC). HENCE IT COULD BE SAFELY CONCLUDED THAT THE DECISIO N OF HONBLE DELHI HC IN THE CASE OF KABUL CHAWLA SUPRA WOULD HAVE TO BE CONSIDERED ON T HE IMPUGNED ISSUE AND IN ANY 13 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 13 CASE, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS VEGETAB LE PRODUCTS LTD REPORTED IN 88 ITR 192 (SC) HAD HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE A SSESSEE MUST BE ADOPTED. 8.6. WE ALSO FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT RECENTLY IN THE C ASE OF PRINCIPAL CIT VS M/S SALASAR STOCK BROKING LTD IN G .A.NO. 1929 OF 2016 ITAT NO. 264 OF 2016 DATED 24.8.2016 HAD ENDORSED THE AFORESAID VIEW OF HONBLE DELHI H IGH COURT IN KABUL CHAWLAS CASE AND ALSO PLACED RELIANCE ON ITS OWN DECISION IN THE CASE OF CIT VS VEERPRABHU MARKETING LTD REPORTED IN (2016) 73 T AXMANN.COM 149 (CAL HC). 8.7. WE FIND THAT THE PROVISIONS OF SECTION 132 OF THE ACT RELIED UPON BY THE LD DR WOULD BE RELEVANT ONLY FOR THE PURPOSE OF CONDUCTIN G THE SEARCH ACTION AND INITIATING PROCEEDINGS U/S 153A OF THE ACT. ONCE THE PROCEEDI NGS U/S 153A OF THE ACT ARE INITIATED, WHICH ARE SPECIAL PROCEEDINGS, THE LEG ISLATURE IN ITS WISDOM BIFURCATES DIFFERENTIAL TREATMENTS FOR ABATED ASSESSMENTS AND UNABATED ASSESSMENTS. AT THE COST OF REPETITION, WE STATE THAT IN RESPECT OF ABATED ASSE SSMENTS (I.E PENDING PROCEEDINGS ON THE DATE OF SEARCH) , FRESH ASSESSMENTS ARE TO BE FRAME D BY THE LD AO U/S 153A OF THE ACT WHICH WOULD HAVE A BEARING ON THE DETERMINATION OF TOTAL INCOME BY CONSIDERING ALL THE ASPECTS, WHEREIN THE EXISTENCE OF INCRIMINATING MAT ERIALS DOES NOT HAVE ANY RELEVANCE. HOWEVER, IN RESPECT OF UNABATED ASSESSMENTS, THE LE GISLATURE HAD CONFERRED POWERS ON THE LD AO TO JUST FOLLOW THE ASSESSMENTS ALREADY CO NCLUDED UNLESS THERE IS AN INCRIMINATING MATERIAL FOUND IN THE SEARCH TO DISTU RB THE SAID CONCLUDED ASSESSMENT. IN OUR CONSIDERED OPINION, THIS WOULD BE THE CORRECT U NDERSTANDING OF THE PROVISIONS OF SECTION 153A OF THE ACT , AS OTHERWISE, THE NECESSI TY OF BIFURCATION OF ABATED AND UNABATED ASSESSMENTS IN SECTION 153A OF THE ACT WOU LD BECOME REDUNDANT AND WOULD LOSE ITS RELEVANCE. HENCE THE ARGUMENTS ADVANCED B Y THE LD DR IN THIS REGARD DESERVES TO BE DISMISSED. 14 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 14 8.8. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTF ULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSMEN T FRAMED U/S 143(1) OF THE ACT FOR THE ASST YEAR 2010-11, WHICH WAS UNABATED / CONCLUD ED ASSESSMENT, ON THE DATE OF SEARCH, DESERVES TO BE UNDISTURBED IN THE ABSENCE O F ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND ACCORDINGLY THE ADDITION M ADE ON ACCOUNT OF SHARE APPLICATION MONEY AND SHARE PREMIUM U/S 68 OF THE ACT IS HEREBY DIRECTED TO BE DELETED. IT IS NOT IN DISPUTE THAT THERE WAS ABSOLUTELY NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE INSTANT CASE WITH REGARD TO THE ISSUE OF SHARE CAPITAL, SHARE PREMIUM EXCEPT UNDERSTANDING THE DISCOVERY OF MODUS OPERANDI OF RA ISING BOGUS SHARE CAPITAL BASED ON THE CERTAIN STATEMENTS RECORDED FROM ENTRY OPERATOR S IN SOME CASES IN WEST BENGAL. SINCE THE ISSUE IS ADDRESSED ON PRELIMINARY GROUND OF ABSENCE OF INCRIMINATING MATERIALS, WE REFRAIN TO GIVE OUR FINDINGS ON THE M ERITS OF THE ADDITION U/S 68 OF THE ACT FOR THE ASST YEAR 2010-11. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 05.09.2018 SD/- SD/- [S.S. GODARA] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 05.09.2018 SB, SR. PS 15 IT(SS)A NO.48/KOL/2018 M/S ANUSHREE TEXTILES PVT. LTD. A.YR. 2010-11 15 COPY OF THE ORDER FORWARDED TO: 1. M/S ANUSHREE TEXTILES PVT. LTD., 1 ST & 2 ND FLOOR, 13B, DIGAMBER JAIN TEMPLE ROAD, KOLKATA-700007. 2. DCIT, CC-3(4), AAYAKAR BHAWAN POORVA, 110, SHANT IPALLY, NEAR RUBY HOSPITAL, E.M. BYE PASS, KOLKATA-700107. 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S