Square Four Residency Pvt. Ltd., Kolkata V. DCIT, CC-2(3), Kolkata, Kolkata

ITSSA 49/KOL/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8926 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-09-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 26-06-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Notional interest; Set aside
• Section: 68; 132; 143(3); 153A; 143(1); 153C

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ ‘बी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: KOLKATA ी राजपाल यादव,उपा य (कोलकाता े ) एवं ी राजेश क ु मार, लेखा सद य के सम [Before Shri Rajpal Yadav, Vice-President (KZ)& Shri Rajesh Kumar, Accountant Member] I.T(SS).A. No. 49/Kol/2022 Assessment Year: 2014-15 Square Four Residency Pvt. Ltd. (PAN:AAACE 8798 C) Vs. DCIT, CC-2(3), Kolkata Appellant / (अपीलाथ!) Respondent / ("#यथ!) I.T(SS).A. No. 45/Kol/2022 Assessment Year: 2012-13 Vastav Dealers Pvt. Ltd. (PAN: AACCV 8058 L) Vs. DCIT, CC-2(3), Kolkata Appellant / (अपीलाथ!) Respondent / ("#यथ!) Date of Hearing / स ु नवाई क& 'त(थ 29.09.2022 Date of Pronouncement / आदेश उ*घोषणा क& 'त(थ 04.11.2022 For the Appellant / 'नधा/0रती क& ओर से Shri Miraj D Shah, A.R For the Respondent / राज व क& ओर से Shri Biswanath Das, CITDR 2 IT(SS)A Nos. 49 & 45/Kol/2022 AY: 2014-15 Square Four Residency Pvt. Ltd. & Vastav Dealers Pvt. Ltd. ORDER/ आदेश Per Shri Rajesh Kumar, AM: These are the appeals preferred by the different assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-20, Kolkata [hereinafter referred to as ‘Ld. CIT(A)’] dated 08.06.2022 & 09.06.2022 for the assessment year 2014-15. 2. First we will take up assessee’s appeal in IT(SS)A No. 49/Kol/2022 for AY 2014-15. 3. The assessee has raised common issue in all the grounds of appeal that the Ld. CIT(A) has erred in upholding the order of AO wherein the various additions were made without any incriminating documents found and seized during the course of search. 4. Facts in brief are that the assessee filed return of income on 10.09.2014 declaring total income of Rs. Nil which were processed u/s 143(1) of the Act on 26.11.2014. A search and seizure action u/s 132 of the Acr was conducted on 03.02.2017 and on subsequent dates in the office as well as residential premises of the assessee and its other group concerns including its directors and key persons of the group. Thereafter a notice u/s 153A of the Act was issued on 10.07.2018 and the said notice was complied with by the assessee by filing return of income on 16.07.2018 which was followed by statutory notices duly issued and served on the assessee. Finally assessment was completed u/s 143(3) read with Section 153A of the Act vide order dated 31.12.2018 wherein two additions were made namely i) bogus share capital and share premium u/s 68 of the Act of Rs. 2,10,00,000/- and ii) commission charges 31,503/-, bogus commodity profit u/s 68 of Rs. 1,98,977/- and brokery charges of Rs. 200/- thereby assessing the income at Rs. 2,12,30,680/-. 3 IT(SS)A Nos. 49 & 45/Kol/2022 AY: 2014-15 Square Four Residency Pvt. Ltd. & Vastav Dealers Pvt. Ltd. 5. The said order of AO was challenged by the assessee before the Ld. CIT(A) on the ground that additions made in the assessment order were not based upon incriminating searched material found and seized during the course of search as all these items were already shown in the audited balance sheet of assesse. The Ld. CIT(A) however dismissed the appeal of the assessee by stating that the additions were based upon the documents seized during the course of search as well as post search enquiries conducted. 5. We have heard the rival parties and perused the material on record including the assessment order and appellate order. We find that the AO has made all the additions on the basis of balance sheet of the assessee which was already available with the department and there was no reference to any seized searched material at all qua these additions. The counsel of the assessee submitted before us since this is an unabated assessment on the date of search and therefore any addition could have only be made on the basis of seized material which is of incriminating in nature. The Ld. Counsel of the assessee in defense of his arguments relied on the series of decisions namely CIT vs. Kabul Chawla reported in [2016] 380 ITR 573 (Del-HC), CIT vs. Commissioner of Income-tax-II, Thanev.Continental Warehousing Corporation (Nhava Sheva) Ltd. reported in [2015] 374 ITR 645 (Bom-HC) and prayed that the order of ld. CIT(A) may be set aside and AO be directed to delete the addition. 6. In order to ascertain the factual position, the Bench put a quarry to the Ld. D.R. to demonstrate or prove the fact that the additions were based upon the incriminating searched material however, the ld. D.R. instead of pointing out any specific incriminating material relied on the orders of authorities below. We note from the records before us as well as from the orders of authorities below that there was no incriminating searched material was referred and since undisputedly the year under consideration is unabated year in which the addition can only be made on the basis of incriminating material. The case of the assessee is squarely covered by the decision of Hon’ble Bombay High Court in the case of CIT vs. Commissioner of Income-tax-II, 4 IT(SS)A Nos. 49 & 45/Kol/2022 AY: 2014-15 Square Four Residency Pvt. Ltd. & Vastav Dealers Pvt. Ltd. Thanev.Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra) and the decision of Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) wherein it has been held that in case of unabated assessment year on the date of search the addition can only be made on the basis of search material and not otherwise. In our opinion, this material gathered by the searched team during the post search investigation does not fall within the ambit of seized incriminating material found during the course of search. And in view of these facts, we are not in concurrence with the conclusion drawn by the Ld. CIT(A) who has recorded a very vague conclusion that additions were based upon incriminating material found during the search as well as post search enquiry. We find from the records before us as well as from the arguments of the rival parties that there was no incriminating search material in respect of these additions and therefore ,the order of Ld. CIT(A) cannot be sustained. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition made on the ground that the AO has no jurisdiction to make these additions. The appeal of the assessee is allowed on legal issue. 7. We are not going into various issues on merits as we have allowed the appeal of the assessee on the issue of jurisdiction and these issues on merit are left open to be taken up at any subsequent stage if need arises for the same. Accordingly, the appeal of the assessee is allowed. 8. Now we shall adjudicate the appeal of the assessee in IT(SS)A No. 45/Kol/2022 for AY 2014-15. 9. The assessee has assailed the order of Ld. CIT(A) on the ground that the Ld. CIT(A) has erred in upholding the order of AO by ignoring the fact that there was no seized incriminating material against the assessee. 10. Facts in brief are that the assessee is a group concern of Square Four Residency Pvt. Ltd. the facts qua which have already been discussed hereinabove. The only difference in the instant case is that the assessment was framed u/s 143(3) read with 5 IT(SS)A Nos. 49 & 45/Kol/2022 AY: 2014-15 Square Four Residency Pvt. Ltd. & Vastav Dealers Pvt. Ltd. Section 153C vide order dated 28.12.2018 . The AO has made addition on account of bogus sale of shares of Rs. 21,90,000/-, commission charges of Rs. 3,285/- and notional interest of Rs. 24,000/-. 11. Before the Ld. CIT(A), the assessee has challenged the order of AO on legal issue as well as on merit. The legal issue is qua the jurisdiction to make addition in absence of incriminating search material as the instant assessment year under consideration is unabated. 12. After hearing the rival parties and perusing the material on record, we find that the facts in this case are quite similar to one as decided by us in IT(SS)A No. 49/Kol/2022 wherein we have allowed the appeal of the assessee on technical issue of lack of jurisdiction of the AO to make addition in absence of any incriminating material to make assessment as the present year is an unabated assessment year and the AO as well as Ld. CIT(A) has failed to demonstrate the additions were based upon the incriminating searched material as there was no reference or indication to the said material at all in the orders of both the authorities below. Therefore, our decision in IT(SS)A No. 49/Kol/2022 would mutatis mutandis apply to this appeal as well. So the appeal of the assessee is allowed. 13. In the result, both the appeals of the assessee are allowed. Order is pronounced in the open court on 4 th November, 2022 Sd/- Sd/- (Rajpal Yadav / राजपाल यादव) (Rajesh Kumar / राजेश क ु मार) Vice-President /उपा य Accountant Member / लेखा सद य Dated: 4 th November, 2022 SB, Sr. PS 6 IT(SS)A Nos. 49 & 45/Kol/2022 AY: 2014-15 Square Four Residency Pvt. Ltd. & Vastav Dealers Pvt. Ltd. Copy of the order forwarded to: 1. Appellant- i) Square Four Residency Pvt. Ltd., 238A, A.J.C. Bose Road, Kolkata-700020 ii) Vastav Dealers Pvt. Ltd., Flat no. 2B, 2 nd Floor, 238A, A.J.C. Bose Road, Kolkata-700020 2. Respondent – DCIT, CC-2(3), Kolkata 3. Ld. CIT(A)-20, Kolkata (sent through e-mail) 4. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata