DCIT, Central Circle - 2(2), Kolkata , Kolkata V. M/s. Kalinga Metalics Limited , Kolkata

ITSSA 81/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2626 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-02-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TULSYAN; SH IKHA AG
• Keywords: Search and seizure; Question of law
• Section: 143(3); 153A; 143(1); 131; 68; 132

Judgement Text

1 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T(SS).A. NO. 81/KOL/2017 ASSESSMENT YEAR: 2009-10 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), KOLKATA. VS. M/S. KALINGA METALICS LIMITED (PAN: AADCK0065H) APPELLANT RESPONDENT DATE OF HEARING 26.02.2019 DATE OF PRONOUNCEMENT 08.03.2019 FOR THE APPELLANT SHRI A. K. SINGH, CIT, DR FOR THE RESPONDENT SHRI A. K. TULSYAN, FCA & MS. S HIKHA AGARWAL, ACA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-20, KOLKATA DATED 21.03.2017 FOR AY 2009-10. 2. THIS APPEAL OF REVENUE IS TIME BARRED BY 26 DAYS AND A CONDONATION APPLICATION DATED 07.07.2017 HAS BEEN FILED BY THE REVENUE EXPLAINING THE REASONS FOR CONDONATION OF DELAY. AFTER PERUSING THE CONDONATION APPLICATION AND HEAR ING BOTH THE SIDES, WE CONDONE THE DELAY IN FILING THE APPEAL OF THE REVENUE. 3. AT THE OUTSET ITSELF, IT HAS BEEN BROUGHT TO OUR NOTICE THAT THIS CASE IS COVERED IN ASSESSEES OWN CASE FOR AY 2008-09 BY THIS TRIBUNAL . ACCORDING TO LD. AR, THERE WAS A SEARCH U/S. 132 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WHICH WAS CONDUCTED ON 18.02.2013 AT THE RESIDENCE, OFFIC ES, FACTORIES AND OTHER BUSINESS CONCERNS OF THE M/S. RASHMI GROUP AND THE ASSESSMENT FOR THI S YEAR WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH. SINCE IT WAS NOT AN UNABATE D ASSESSMENT, THE AO COULD NOT HAVE 2 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 MADE ANY ADDITION WITHOUT THE AID OF ANY INCRIMINAT ING MATERIAL AND THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE TAKING NOTE OF THE DEC ISION OF THE HONBLE DELHI HIGH COURT IN CIT VS . KABUL CHAWLA (2016) 380 ITR 573 (DEL), THE DECIS ION OF HON'BLE CALCUTTA HIGH COURT IN ITA NO. 661 OF 2008 COMMISSIONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD. AND HONBLE DELHI HIGH COURT IN PR. CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DEL) WHICH DECISION HAS BEEN UPHELD BY HONBLE SUPREME COURT REPORTED IN (2016) 380 ITR (ST.) 69-ED. WE NOTE THAT THE LD. CIT, DR ASSAILED THE DECISION OF THE LD. CIT(A) AND CONTENDED THAT IN SEC. 153A PROCEEDINGS THERE I S NO NECESSITY OF ANY INCRIMINATING MATERIALS AND THE VERY CONCEPT OF INCRIMINATING MAT ERIALS IS ALIEN TO THE SCHEME OF THE SEARCH PROCEEDINGS U/S. 153A OF THE ACT. HOWEVER, DURING THE HEARING BEFORE US, WE ASKED TO LD. CIT, DR THE POINTED QUESTION AS TO WHETHER THE AO H AS MADE ANY ADDITION ON THE BASIS OF INCRIMINATING MATERIALS AND THE LD. CIT, DR COULD N OT POINT OUT FROM THE ASSESSMENT ORDER THAT AO TOOK THE AID OF ANY INCRIMINATING MATERIALS UNEARTHED DURING SEARCH QUA THIS ASSESSMENT YEAR TO MAKE THE ADDITION. WE NOTE THAT UNDISPUTEDLY THIS ASSESSMENT YEAR WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH AND SO IT IS AN UNABATED ASSESSMENT. SO AS PER THE SETTLED LAW, IN SEC. 153A ASSESSMENT, FOR A SSESSMENT OF UNABATED ASSESSMENT AS IN THE PRESENT CASE, NO ADDITION/DISALLOWANCE CAN BE M ADE WITHOUT THE AID OF INCRIMINATING MATERIALS UNEARTHED DURING SEARCH QUA THIS ASSESSME NT YEAR. IN SUCH A SCENARIO, TAKING NOTE OF SIMILAR FACTS AND LAW, WE NOTE THAT IN ASSESSEE S OWN CASE IN IT(SS)A NO. 87/KOL/2017 FOR AY 2008-09 ORDER DATED 12.12.2018, THE TRIBUNAL HAS UPHELD THE ACTION OF LD. CIT(A) ON THE SAME REASONING AND DECIDED AS UNDER: 8. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONS IDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON R ECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 8.1. WE FIRST CONSIDER THE LEGAL POSITION AS TO WHETH ER, AN ADDITION CAN BE MADE IN AN ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT, WHICH IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZUR E, WHEN THE ASSESSMENT FOR THE ASSESSMENT YEAR IN QUESTION HAS NOT ABATED. IN THE C ASE ON HAND, THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON 31/08/2008. THE TIME LI MIT FOR ISSUAL OF NOTICE U/S 143(2) OF THE ACT, WAS 30/09/2009. THE SEARCH AND SEIZURE OPERAT ION WAS CONDUCTED IN THIS CASE ON 18/02/2013. THE STATUTORY PERIOD FOR ISSUAL OF NOTIC E U/S 143(2) OF THE ACT, IN THE CASE OF THE ASSESSMENT YEARS HAD EXPIRED PRIOR TO THE DATE OF SEARCH OPERATION. HENCE THE 3 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR HAS NOT ABATED. THE ASSESSING OFFICER MADE THE ADDITION IN QUESTION BY OBSERVING AS UNDER AT PA GE 17 OF THE ASSESSMENT ORDER:- I) NAMES OF THE COMPANIES APPEALING M STATEMENTS OF THE ENTRY PROVIDERS GIVEN TO INVESTIGATION WING FIGURE AS APPLICANTS TO SHARES I N THE ASSESSEE COMPANY. II) PERUSAL OF THE OPERATING BANK A/C SHOWS THAT THE A/C OF MOST OF THE INVESTING COMPANIES IS IN THE SAME BANK AS THAT OF THE ASSESSEE COMPANY. III) THERE IS NO JUSTIFICATION ON RECORD WHATSOEVER A S TO WHETHER THE COMPANY'S CREDENTIALS COMMANDED A HUGE SHARE PREMIUM, PARTICULA RLY WHEN THE SAME IS BEING PAID BY STRANGERS. IV) SUMMONS U/S 131 TO SUCH PERSONS I COMPANY HAVE N OT BEEN ADEQUATELY RESPONDED AND THE ASSESSEE HAS FAILED TO PRODUCE THEM IN RESPONSE TO THE SHOW- CAUSE NOTICE. V) THE FINDINGS THAT THE INVESTING COMPANIES WHICH SUBS CRIBED TO THE SHARES WERE BORNE ON THE FILE OF THE ROC AND THAT THE MONIES HAVE CO ME THROUGH A/C PAYEE CHEQUES IS AT BEST, NEUTRAL. MERE PAYMENT BY CHEQUES IS NOT SACROSANCT AS WOULD NOT, MAKE A NON-GENUINE TRANSACTION AS GENUINE. VI) BONAFIDE AND GENUINENESS OF THE TRANSACTIONS IS THE MAIN ISSUE AND IN THIS REGARD, THE ASSESSEE COMPANY HAS FAILED MISERABLY. VII) SCRUTINY HAS REVEALED THE CAMOUFLAGE ADOPTED BY THE ASSESSEE AND EXPOSED THE TRUE NATURE OF THE TRANSACTIONS. VIII) ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY O F SHARE APPLICANTS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS APPEARING IN ITS BOOKS OF SALE WHICH IS NOT PROVED IN THIS CASE. IN FACT, GENUINENESS OF THE TRANSACTIONS HAS NOT BEEN ESTABLISHED IN SPITE OF REPEATED OPPORTUNITIES. IX) THERE IS ENOUGH MATERIAL ON RECORD TO DOUBT THE VE RACITY OF THE TRANSACTIONS. A PERUSAL OF THE ABOVE DEMONSTRATES THAT THE ADDITIO NS IN QUESTION ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SE ARCH. 8.2. ON THE LEGAL POSITION, WE FIND THAT THE VARIOUS COURTS OF LAW UNDER SIMILAR CIRCUMSTANCES HAVE HELD AS FOLLOWS:- CIT,KOLKATA-III VS. VEERPRABHU MARKETING LIMITED [2 016] 73 TAXMANN.COM 149 (CALCUTTA) : IN THIS CASE THE HONOURABLE CALCUTTA HIGH COURT EXPRES SED THE FOLLOWING VIEWS: 4 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 WE ARE IN AGREEMENT WITH THE VIEWS OF THE KARNATAKA H IGH COURT THAT INCRIMINATING MATERIAL IS A PRE-REQUISITE BEFORE PO WER 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 RE ASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISION S CONTAINED UNDER SECTION 153C READ WITH SECTION 153A. THE DISALLOWANCES MADE B Y THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES. PCIT-2, KOLKATA VS. SALASAR STOCK BROKING LIMITED (ITAT NO. 264 OF 2016) DATED 24.08.2016 : (CALCUTTA) IN THIS CASE, THE HONORABLE HIGH COURT OBSERVED THAT TH E LD. ITAT, KOLKATA WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURISDICTIO N 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. ITA T 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 IDENT ICAL 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 HONORABLE HIGH COU RT DID NOT ADMIT THE APPEAL FILED BY THE DEPARTMENT. THE A BENCH OF THE DELHI ITAT, RECENTLY IN THE CA SE OF ANURAG DALMIA VS. DCIT IN ITA NOS. 5395 & 5396/DEL/2017; ASSESSMENT YEARS: 2006-0 7 & 2007-08, DT. 15/02/2018, UNDER IDENTICAL CIRCUMSTANCES HELD AS F OLLOWS:- 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE R ELEVANT MATERIAL PLACED ON RECORD AND THE FINDING GIVEN IN THE IMPUGNED ORDER WI TH RESPECT TO LEGAL ISSUE RAISED VIDE GROUND NO.5 BY THE ASSESSEE THAT THE ADDITIONS M ADE IN THIS YEAR ARE BEYOND THE SCOPE OF ASSESSMENT U/S.153A, AS NO INCRIMINATING M ATERIAL WAS FOUND DURING THE COURSE OF SEARCH FOR THE IMPUGNED ASSESSMENT YEAR; A ND THE ASSESSMENT HAD ATTAINED FINALITY AND WAS NOT ABATED IN TERMS OF 2ND PROVISO TO SECTION 153A. AS STATED ABOVE, THE ORIGINAL RETURN OF INCOME WAS FILED IN JULY, 200 6 AND SAID RETURN WAS DULY ACCEPTED AND PROCESSED U/S. 143(1) VIDE INTIMATION DATED 25.05.2007. SINCE NO NOTICE U/S. 143(2) WAS ISSUED THEREAFTER OR ANY OTHER PROCEE DINGS HAVE BEEN COMMENCED TO DISTURB SAID RETURN OF INCOME, ACCORDINGLY, IT HAD A TTAINED FINALITY MUCH PRIOR TO THE DATE OF SEARCH WHICH WAS ON 20.01.2012. HENCE IN TERMS OF 2ND PROVISO TO SECTION 153A THE ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07 W AS NOT PENDING AND ACCORDINGLY, HAS TO BE RECKONED AS UNABATED ASSESSME NT. UNDER THE JURISDICTION OF HON'BLE DELHI HIGH COURT, THE LAW IS WELL SETTLED THAT IN CASE OF UNABATED ASSESSMENT, THE ADDITIONS WHICH CAN BE ROPED-IN, IN THE ASSESSMENTS FRAMED U/S.153A, WOULD ONLY BE WITH REGARD TO ANY INCRIMINATING MATERIAL OR EVI DENCE UNEARTHED OR FOUND DURING THE COURSE OF SEARCH. IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH, THEN NO ADDITION CAN BE MADE IN THE ASSESSMEN T YEARS WHERE ASSESSMENTS HAD ATTAINED FINALITY. THE RELEVANT OBSERVATIONS AND THE RATIO LAID DOWN WOULD BE DISCUSSED IN THE LATER PART OF THIS ORDER. 5 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 15. NOW COMING TO THE RATIOS LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT, FIRST OF ALL, IN THE CASE OF KABUL CHAWALA (SUPRA), THE HON 'BLE COURT AFTER DISCUSSING THE ISSUE THREADBARE AND ANALYSING THE VARIOUS JUDGMENTS OF DIFFERENT HIGH COURTS LAID DOWN THE FOLLOWING LEGAL PROPOSITION IN TERMS OF SCO PE OF ADDITION WHICH CAN BE MADE U/S. 153A(1) WHICH ARE 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 AFOREMENT IONED 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 PREVI OUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DAT E 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 I N RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE A O 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 DIS CLOSED 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 MA DE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSME NT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COM PLETED 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 ASSESSM ENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MER GES 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 T HE 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 6 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARC H WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. THIS JUDGMENT OF THE HON'BLE DELHI HIGH COURT HAS BEEN FOLLOWED IN SEVERAL JUDGMENTS NOT ONLY BY THE HON'BLE DELHI HIGH COURT BUT ALSO BY O THER HON'BLE HIGH COURT LIKE, PR. CIT VS. SOMAYA CONSTRUCTION PVT. LTD. 387 ITR 529 ( GUJ), CIT VS. IBC KNOWLEDGE PARK PVT. LTD. 385 ITR 346 (KAR) AND CIT VS.GURINDER SINGH BAWA REPORTED IN 386 ITR 483. IN THE LATEST JUDGMENT THE HON'BLE DELHI HIGH COURT IN PR. CIT VS. MEETA GUTGUTIA, THEIR LORDSHIPS REITERATED THE SAME PRINCIPLE AFTER D ISCUSSING AND ANALYZING CATENA OF DECISIONS INCLUDING THAT OF ANIL KUMAR BHATIA (SUPRA) AND DAYAWANTI GUPTA. THE HON'BLE HIGHCOURT OBSERVED AND HE LD AS UNDER:- 62. SUBSEQUENTLY, IN PRINCIPAL COMMISSIONER OF INC OME TAX-1 V. DEVANGI ALIAS RUPA {SUPRA), ANOTHER BENCH OF THE GUJARAT HIGH COURT REITER ATED THE ABOVE LEGAL POSITION FOLLOWING ITS EARLIER DECISION IN PRINCIPAL COMMISS IONER OF INCOME TAX V. SAUMYA CONSTRUCTION P. LTD. {SUPRA) AND OF THIS COURT IN KA BUL CHAWLA (SUPRA). AS FAR AS KARNATAKA HIGH COURT IS CONCERNED, IT HAS IN CIT V. I BC KNOWLEDGE PARK P. LTD. {SUPRA) FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA) AND HELD THAT THERE HAD TO BE INCRIMINATING MATERIAL QUA EACH OF THE AYS IN WHICH ADDITIONS WERE SOUGHT TO BE MADE PURSUANT TO SEARCH AND SEIZURE OPER ATION. THE CALCUTTA HIGH COURT IN CIT-2 V. SALASAR STOCK BROKING LTD. {SUPRA), TOO , FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA). IN CIT V. GURINDER SINGH BAW A {SUPRA), THE BOMBAY HIGH COURT HELD THAT: 6...ONCE AN ASSESSMENT HAS ATTAINED FINALITY FOR A PARTICULAR YEAR, I.E., IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN PROCEEDINGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF INCRIMINATING MATE RIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING PROCEEDINGS UNDER SECTION 153A O F THE ACT WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DURING THE REGULAR ASSESSMENT P ROCEEDINGS. 63. EVEN THIS COURT HAS IN CIT V MAHESH KUMAR GUPTA {SU PRA) AND THE PR. COMMISSIONER OF INCOME TAX-9 V. RAM AVTAR VERMA {SUP RA) FOLLOWED THE DECISION IN KABUL CHAWLA (SUPRA). THE DECISION OF THIS COURT IN PR . COMMISSIONER OF INCOME TAX V. KURELE PAPER MILLS P. LTD. {SUPRA) WHICH WAS REFERRED TO IN KABUL CHAWLA (SUPRA) HAS BEEN AFFIRMED BY THE SUPREME COURT BY THE DISMISSAL OF THE REVENUE'S SLP ON 7 TH DECEMBER, 2015. THE DEPARTMENT HAD FILED SPECIAL LEAVE PETITION BEF ORE THE HONBLE APEX COURT AGAINST THE ABOVE JUDGMENT OF THE DELHI HIGH COURT . (PR CIT V KURULE PAPER MILLS P. LTD: S.L.P (C) NO-34554 OF 2015[ 2016] 380 ITR (ST) 64-ED).. THE HONBLE APEX COURT DISMISSED THE SPECIAL LEAVE PE TITION FILED BY THE DEPARTMENT. THE RELEVANT PARA AS MENTIONED IN THE ITR IS REPRODUC ED AS UNDER. THEIR LORDSHIPS MADAN B.LOKUR AND S.A.BOBDE JJ DISMI SSED THE DEPARTMENTS SPECIAL LEAVE PETITION AGAINST THE JUDGMENT DATED JULY 06,20 15 OF THE DELHI HIGH COURT IN I.T.A NO 369 OF 2015, WHEREBY THE HIGH COURT HELD THAT NO SUBS TANTIAL QUESTION OF LAW 7 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 AROSE SINCE THERE WAS A FACTUAL FINDING THAT NO INCRIMINA TING EVIDENCE RELATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING SEC TION 68 OF THE ACT FOR THE PURPOSE OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAP ITAL 9. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE CASE-LAW TO THE FACTS OF THE CASE ON HAND, WE FIND THAT THE ONLY ADDITION M ADE IS OF SHARE APPLICATION RECEIVED U/S 68 OF THE ACT AND ADDITION OF COMMISSIO N PAID ALLEGEDLY FOR THE SHARE APPLICATION MONEY AND FINALLY A DISALLOWANCE U/S 14 A OF THE ACT. NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH. T HE ALLEGED STATEMENTS RECORDED FROM ENTRY OPERATORS HAVE ADMITTEDLY BEEN RETRACTED AND THE ASSESSING OFFICER HAS NOT BASED THE ADDITIONS ON THESE STATEMENTS. EVEN OT HERWISE, WHEN COPIES OF THE ALLEGED STATEMENTS RECORDED BY THE REVENUE OFFICIALS HAVE NOT BEEN GIVEN TO THE ASSESSEE, NO ADDITION CAN BE MADE BASED ON SUCH EVID ENCE WHICH IS NOT CONFRONTED TO THE ASSESSEE. THE CONTENTS OF THE STATEMENTS ARE ALSO NOT BROUGHT OUT IN DETAIL IN THE ASSESSMENT ORDER. ONLY A GENERAL REFERENCE IS MADE THAT THERE WERE CERTAIN STATEMENTS RECORDED FROM VARIOUS ENTRY OPERATORS BY THE INVESTIGATION WING. NO ADDITION CAN BE MADE ON SUCH GENERAL OBSERVATIONS. W E ALSO FIND THAT THE ASSESSEE HAS NOT BEEN GIVEN AN OPPORTUNITY TO CROSS-EXAMINE ANY OF THESE PERSONS, BASED ON WHOSE STATEMENTS, THE REVENUE CLAIMS TO HAVE MADE THESE ADDI TIONS. THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM VS. CIT, 125 ITR 713 (SC) HAD HELD THAT OPPORTUNITY OF CROSS-EXAMINATION MUST BE PROVIDED T O THE ASSESSEE. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS EASTERN COMMERCIAL E NTERPRISES (1994) 210 ITR 103 (KOL HC) HELD AS FOLLOWS:- AS A MATTER OF FACT, THE RIGHT TO CROSS-EXAMINATION A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT AND THE OPPORTUN ITY OF SUCH CROSS- EXAMINATION IS ONE OF THE CORNERSTONES OF NATURAL J USTICE . 9.1. EVEN OTHERWISE, IT IS NOT CLEAR AS TO WHICH OF TH ESE STATEMENTS WERE RECORDED DURING THE COURSE OF SEARCH OPERATION OR WHETHER THE S TATEMENTS WERE RECORDED DURING THE COURSE OF SURVEY OPERATIONS. IT IS WELL SETTLED THAT A STATEMENT RECORDED DURING THE COURSE OF SURVEY OPERATION CANNOT BE USED AS AN EVIDENCE UNDER THE ACT. 10. COMING TO THE ALLEGED CASH TRAIL, NONE OF THE MAT ERIAL GATHERED BY THE ASSESSING OFFICER BY WAY OF BANK ACCOUNT COPIES OF VARIOUS COMPANIES SUPPOSED TO BE A CHAIN WAS GIVEN/CONFRONTED TO THE ASSESSEE. THE ALLE GED STATEMENTS WERE SUPPOSEDLY RECORDED FROM DIRECTORS OF THESE COMPANI ES WHICH FORMED THIS ALLEGED CHAIN ARE ALSO NOT BROUGHT ON RECORD. ONLY A GENERAL STATEMENT HAS BEEN MADE THAT THE INVESTIGATION WING HAD RECORDED SOME STATEMENTS. THERE IS NO EVIDENCE WHATSOEVER THAT CASH HAS BEEN ROUTED FROM THE ASSESSE E COMPANY OR THAT ANY CASH WAS DEPOSITED BY THE ASSESSEE COMPANY. THERE IS NO MA TERIAL WHATSOEVER BROUGHT ON RECORD TO DEMONSTRATE THAT THE ALLEGED CASH DEPOSIT M ADE IN THE BANK ACCOUNT OF A THIRD PARTY WAS FROM THE ASSESSEE COMPANY. NO OPPORTU NITY TO CROSS-EXAMINE ANY THESE PARTIES WAS PROVIDED TO THE ASSESSEE. THUS, NONE OF THESE MATERIAL GATHERED BY THE ASSESSING OFFICER CAN BE CATEGORIZED AS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SE ARCH OR FOUND DURING THE COURSE 8 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 OF ANY OTHER OPERATION UNDER THE ACT. THUS, WE HOLD THA T THE ADDITIONS IN QUESTION ARE NOT BASED ON ANY INCRIMINATING MATERIAL. THE LD. CIT (A) ON PAGE 41 & 42 OF HIS ORDER HELD AS FOLLOWS:- I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASSE SSMENT ORDER, DIFFERENT CASE LAWS WAS BROUGHT ON RECORD AND APPEAL ORDERS PASSED BY MY PREDECESSORS ON THIS LEGAL ISSUE. I FIND FROM THE ASSESSMENT ORDER THAT DU RING THE SEARCH & SEIZURE OPERATIONS CONDUCTED U/S 132 OF THE IT ACT, 1961, IN CRIMINATING DOCUMENTS/PAPERS WERE NOT SEIZED. AT LEAST ADDITION MADE BY AO IN THE ASSESSMENT ORDER PASSED U/S 153A/143(3) ARE NOT BASED ON ANY INCRIMINATING DOCU MENTS/ PAPERS SEIZED DURING THE SEARCH OPERATION. IT WOULD ALSO NOT TO BE OUT OF CONTEXT TO MENTION HERE THAT IN THIS CASE, ON THE DATE OF SEARCH, NO ASSESSMENT FOR T HIS YEAR WAS PENDING. THEREFORE, KEEPING IN VIEW THE RATIO DECIDED BY THE JURISDICTION AL BENCH OF KOLKATA TRIBUNAL IN CASE 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 CBDTS DECISION OF NOT FILING SLP IN THIS CASE IN THE SUPREME COURT AND KEEPING IN VIEW THE APEX COURTS DECISION TO DISMISS SLP ON THE SIMILAR ISSUE IN THE CASE OF PR CIT VS KURELE PAPER MILLS PVT LTD: SLP (C) NO. 34554 OF 2015 DT.0 7.12.2015, I AM OF THIS VIEW THAT IN ORDER TO MAINTAIN JUDICIAL CONTINUITY ON THIS ISS UE AND RESPECTFULLY FOLLOWING THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN T HE CASE OF VEER PRABHU MARKETING LTD (SUPRA), ASSESSEES APPEAL ON GROUND NO 1 IS ALLOWED AND AS SUCH I AM NOT INCLINED TO ADJUDICATE APPEAL ON GROUND NO. 2 ON MERIT. 11. WE FIND NOT INFIRMITY IN THE ORDER OF THE LD. CI T(A) AND HENCE UPHOLD THE SAME. 4. SINCE FACTS ARE IDENTICAL AND THERE IS NO CHANGE IN LAW AND/OR IN FACTS, WE RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL DATED 12.12.2018 IN ASSESSEES OWN CASE FOR AY 2008-09 CONFIRM THE ACTION OF LD. CIT(A) AND DISMISS THE RE VENUES APPEAL. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 8 TH MARCH, 2019. SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8TH MARCH, 2019 JD.(SR.P.S.) 9 IT(SS)A NO. 81/KOL/2017 M/S. KALINGA METALICS LIMITED, AY 2009-10 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT DCIT, C. C. 2(2), KOLKATA. 2 RESPONDENT M/S. KALINGA METALICS LIMITED.,1, GARS TIN PLACE, ORBIT HOUSE, 3 RD FLOOR, ROOM NO. 3B, KOLKATA-700 001. 3 4 5 CIT(A) -20, KOLKATA (SENT THROUGH E-MAIL) CIT , KOLKATA. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR