DCIT, Central Circle - 2(2), Kolkata , Kolkata V. M/s. Image Vinimay Limited , Kolkata

ITSSA 84/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5610 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TULSYAN
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Principle of natural justice; Period of limitation; Question of law; Deemed dividend; Accommodation entries; Block assessment; Retraction; Revised return; Documents seized; Reassessment proceedings; TDS; Rule 8D; Set aside
• Section: 143(3); 133A; 153A; 2(22)(e); 14A; 40(a)(ia); 80IB; 133(6); 139(5); 143(1); 131; 263; 132; 154; 15; 139; 68

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER IT (SS) A NO. 84 / KOL / 20 17 ASSESSMENT YEAR :2008-09 DCIT, CENTRAL CIRCLE- 2(2), AAYAKAR BHAWAN, POORVA, 110, SHANTIPALLY, KOLKATA-107 V/S . M/S IMAGE VINIMAY LTD. 39 SHAKESPEARE SARANI , 6 TH FLOOR,KOLKAKTA-17 [ PAN NO.AAACI 6966 L ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.K. SINGH, CIT-DR /BY RESPONDENT SHRI A.K. TULSYAN, FCA /DATE OF HEARING 16-04-2019 /DATE OF PRONOUNCEMENT 15-05-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 A RISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-20, KOLKATAS ORDER DATED 22.03.2017 PASSED IN CASE NO.484/CIT(A)-20/CC-2(2)/15-16, INVO LVING PROCEEDINGS U/S 143(3) R.W.S 153A OF THE INCOME TAX ACT, 1961; IN S HORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. IT TRANSPIRES AT THE OUTSET THAT THE REVENUES I NSTANT APPEAL SUFFERS 26 DAYS IN FILING. IT HAS PLACED ON RECORD ITS CONDONA TON PETITION STATING REASON THEREOF. LEARNED COUNSEL REPRESENTING ASSESSEE IS F AIR ENOUGH IN NOT DISPUTING ALL THESE SOLEMN AVERMENTS. WE THEREFORE CONDONE TH E IMPUGNED DELAY OF 26 DAYS IN FILING INVOLVED IN THE INSTANT APPEAL. 3. WE NOW ADVERT TO THE REVENUES SOLE SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL SEEKING TO CHALLENGE CORRECTNESS OF THE CIT(A)S ORDER QUASHING THE IMPUGNED ASSESSMENT PROCEEDINGS FOR WA NT OF INCRIMINATING IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 2 MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARC H WHICH COULD VALIDLY TRIGGER COURSE SEC. 153A IN PROCEEDINGS IN ISSUE. T HE CIT(A)S DETAILED DISCUSSION UNDER CHALLENGE READS AS FOLLOWS:- 3. I HAVE CONSIDERED THE FINDING OF THE AO IN THE A SSESSMENT ORDER AND THE WRITTEN SUBMISSION AS WELL AS ORAL SUBMISSION MADE BY THE A R DURING THE APPELLATE PROCEEDINGS. 4. APPEAL ON GROUNDS NO 1 AND 2 ARE AGAINST THE ASS ESSMENT ORDER PASSED U/S 153A/143(3) OF THE I T ACT, 1961. THE MAIN CONTENTI ON OF THE ASSESSEE IS THAT ADDITIONS MADE IN THE ASSESSMENT ORDER PASSED ITS 153A/143(3) ARE NOT BASED ON ANY INCRIMINATING DOCUMENTS/MATERIALS SEIZED DURING SEARCH OPERATION CONDUCTED U/S 132 OF THE I T ACT, 1961. DURING THE APPELLATE PROC EEDINGS THE AR HAS FILED A WRITTEN SUBMISSION ON THIS ISSUE WHICH IS AS UNDER: 1.2 THIS GROUND IS AGAINST THE ADDITION OF THE ITEM S OF REGULAR ASSESSMENT IN THE ASSESSMENT MADE UNDER SEC 153A OF THE ACT WITHO UT HAVING ANY INCRIMINATING MATERIAL TO THAT EFFECT FOUND AND SEI ZED IN THE COURSE OF SEARCH & SEIZURE OPERATION. THE LD. AO WHILE EXERCISING TH E POWERS CONFERRED WITHIN HIM O/S 153A OF THE ACT HAS FAILED TO APPRECIATE TH E LEGAL POSITION THAT THE ADDITION IN THE CASE OF SEARCH ASSESSMENTS HAS TO B E MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL. THE LD. AO ALSO CAN NOT START DOING A FRESH ASSESSMENT THAT HAD ALREADY BEEN COMPLETED EITHER U /S 143(3) OR U/S 143(1) UNDER THE ACT WITHOUT HAVING ANY INCRIMINATING MATE RIAL ON RECORD. IN PROCEEDINGS U/S 153A/153C TO REOPEN THE COMPLETED A SSESSMENT IS RESTRICTED ONLY TO THE EXTENT OF INCRIMINATING DOCUMENTS IF AN Y ONLY. THE VARIOUS HIGH COURTS INCLUDING THE JURISDICTION CALCUTTA HIGH CO URT AND JURISDICTIONAL ITA T HAVE ALREADY HELD THAT ISSUES FORMING PART OF THE I TEMS OF THE REGULAR ASSESSMENT IS BEYOND THE SCOPE OF THE SEARCH ASSESS MENT U/S. 153A/153C AND TILE AO HAS NO JURISDICTION TO MAKE ADDITION OT HERWISE THAN ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND IN THE COURSE OF S EARCH. FURTHER IN A CASE WHERE NOTHING INCRIMINATING IS FOUND, THOUGH SEC. 153A WOULD BE TRIGGERED AND ASSESSMENT OR RE-ASSESSMENT TO ASCERTAIN THE TO TAL INCOME IS REQUIRED TO BE DONE, THE SAME WOULD RESULT IN ANY ADDITION AND THE ASSESSM9NTS MADE EARLIER MAY HAVE TO BE REITERATED. 1.3.1 THE AO MADE ADDITION OF RS. 2,69,00,000/- U/S 68 OF THE ACT ON ACCOUNT OF SHARE CAPITAL . A. THE ADDITION HAS BEEN MADE ON THE BASIS OF STATE MENT OF SHRI JIVENDRA MISHRA, SHRI BENI PRASAD LAHOTI, SRI HARI PRASAD RATHI, S HRI RAGHWENDRA KUMAR, SHRI JEEPAK PATARI. SHRI MAHENDRO SETHIA, SHRI PRADEEP K UMAR SULTANIA, SHRI MANOJ KUMAR RAKHEJA, SHRI SUNIL KUMAR DOKAMA, SHRI B.D AG ARWAL, SHRI RAKESH KUMAR JAIN. SHRI SUSHIF KUMAR AGARWAL AND SHN AMIT KUMAR SHYAM SUKH ALLEGED TO BE ENTRY OPERATORS RECORD & DURING POST SEARCH &O1QUIR Y BY THE INVESTIGATION WING WHICH WERE RETRACTED BY THEM LATTER BY AN AFFIDAVIT DULY SWORN BEFORE THE NOTARY PUBLIC STATEMENT OF SOME OF THE ABOVE PARTIES WERE RECORDE D BEFORE THE AO U/S 131 OF THE I. T. ACT IN WHICH THEY DENIED THEIR EARLIER STATEM ENT AND CONFIRMS AFFIDAVIT OF DENIAL. THE SAID PERSONS HAVE NO LOCUS STANDI. THEY ARE IN NO WAY CONNECTED TO THE IMPUGNED TRANSACTION. THEY WERE NEITHER SUBSCRIBER TO THE SHARE CAPITAL (OF THE COMPANIES BELONGING TO THE GROUP) NOR DIRECTOR /EMP LOYEE OF ANY OF THE COMPANIES BELONGING TO TILE GROUP. THEY WERE ONLY RANDOM PERS ONS WHO ARE IN NO WAY CONNECTED TO THE ASSESSEE/SHARE APPLICANT COMPANIES . FURTHER THESE ARE POST SEARCH ENQUIRIES WHICH HAVE NO EVIDENTIARY VALUE IN ABSENC E OF ANY INCRIMINATING SEIZED MATERIAL. NO VALUE CAN BE ATTACHED TO THEIR STATEME NT AS THEY HAVE RETRACTED THEIR STATEMENT SUBMITTED BEFORE THE DEPAL1MENT. THEIR CO NDUCT NEUTRALIZES THEIR VALUE AS WITNESS OF THE DEPARTMENT. THEY ARE DOUBLE SPEAKING PERSON. IN COURSE OF SEARCH & IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 3 SEIZURE OPERATION NO INCRIMINATING MATERIAL OR ASSE TS WERE FOUND TO LINK THE SHARE CAPITAL RAISED BY THE ASSESSEE WITH THE STATEMENT O F SO-CALLED ENTRY OPERATORS. THE ASSESSEE WAS NOT PROVIDED OPPORTUNITY TO CROSS EXAM INE THOSE ENTRY OPERATORS. THEREFORE, STATEMENT OBTAINED FROM THE ENTRY OPERAT ORS LATER ON RETRACTED BY AN AFFIDAVIT AND IN SOME CASES 131 STATEMENT RECORDED BY AO IN WHICH THEY DENIED THEIR EARLIER STATEMENT AND CONFIRM AFFIDAVIT OF DENIAL H AVE NO EVIDENTIARY VALUE, NO SUBSTANCE AND ARE IRRELEVANT AS HELD BY THE JURISDI CTIONAL CALCUTTA HIGH COURT IN THE CASE OF CIT VS EASTERN COMMERCIAL ENTERPRISES.(199 4) 210 ITR 103 . THE HON'BLE HIGH COURT AT PARA NO-4 OF THE ORDER HA S HELD AS UNDER. 'WE HAVE CONSIDERED THE CONTESTING CONTENTIONS OF T HE PARTIES. IT IS TRUE THAT SHRI SUKLA HAS PROVED TO BE A SHIFTY PERSON AS A WI TNESS. AT THE EARLIER STAGES, HE CLAIMED ALL HIS SALES TO BE GENUINE BUT BEFORE THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE, HE DISOWNED TH E SALES SPECIFICALLY MADE TO THE ASSESSEE. THIS STATEMENT CAN AT THE WORST SH OW THAT SHRI SUKLA IS NOT A TRUSTWORTHY WITNESS AND LITTLE VALUE CAN BE ATTACHE D TO WHAT HE STATED EITHER IN HIS AFFIDAVITS OR IN HIS EXAMINATION BY THE ASSESSI NG OFFICER. HIS CONDUCT NEUTRALISES HIS VALUE AS A WITNESS. A MAN INDULGING IN DOUBLE-SPEAKING CANNOT BE SAID BY ANY MEANS A TRUTHFUL MAN AT ANY S TAGE AND NO COURT CAN DECIDE ON WHICH OCCASION HE WAS TRUTHFUL. IF SHRI S UKLA IS NEUTRALISED AS A WITNESS WHAT REMAINS IS ACCOUNTS, VOUCHERS, CHALLAN S, BANK ACCOUNTS, ETC. BUT, WE WOULD OBSERVE HERE THAT WHICH WAY LIES TILE TRUTH IN SHRI SUKLA'S DEPOSITIONS, COULD HAVE BEEN REVEALED ONLY IF HE WA S SUBJECTED TO A CROSS- EXAMINATION BY THE ASSESSEE. AS A MATTER OF FACT, T HE RIGHT TO CROSS- EXAMINATION A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT AND THE OPPORTUNITY OF SUCH CROSS-EXAMINATION IS ONE OF THE CORNERSTONES OF NATURAL JUSTICE. HERO SHRI SUKLA IS THE WITNESS OF (HE DEPARTMENT. THEREFORE, THE DEPARTMENT CANNOT CUT SHORT THE PROCESS OF TAKI NG ORAL EVIDENCE BY MERELY HAVING THE EXAMINATION-IN-CHIEF. IT IS THE NECESSAR Y REQUIREMENT OF THE PROCESS OF TAKING EVIDENCE THAT THE EXAMINATION-IN- CHIEF IS FOLLOWED BY CROSS- EXAMINATION AND RE-EXAMINATION, IF NECESSARY. THE STATEMENTS RECORDED DURING PRE/ POST SEARCH OPE RATION, ENQUIRY OR INVESTIGATION WHICH WERE RETRACTED SUBSEQUENTLY BY AN AFFIDAVIT C AN'T BE TREATED IN ANY CIRCUMSTANCES AS INCRIMINATING MATERIEL. IN THE COU RSE OF SEARCH, NO INCRIMINATING DOCUMENT RELATING TO THE ADDITION MADE U/S 68 IN RE SPECT OF SHARE CAPITAL WAS TONNE AND SEIZED. THIS FACT IS EVIDENT FROM THE ASSESSMEN T ORDER AS THE LD AO IS SILENT ABOUT ANY INCRIMINATING DOCUMENTS (B) THE AO ALSO MADE ADDITION ON TILE ALLEGED GROUN D THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THIRD PARTIES. HE FOUND CASH TRIAL IN THE FOLLOWING CASES. SL.NO. NAME OF THE INVESTOR COMPANY AMOUNT AS PER TRAIL (RS) 1 ARCJ FOMAMCE & MANAGEMENT CONSULTANCY PVT. LTD. 20,00,000/- 2 NILMANI BARTER PVT. LTD. 20,00,000 TOTAL 40,00,000 DURING THE POST .SEARCH ENQUIRY THE DEPARTMENT FOUN D CASH DEPOSITED IN THE BANK ACCOUNT OF SOME. PARTIES DOWN THE LINE WHOM THE ASS ESSEE DOES NOT KNOW OR RES ANY TRANSACTIONS WITH THEM. THE AO PROVIDED NO DOCUMENT /BANK STATEMENT ETC WHICH WAS THE BASIS OF DRAWING OF SUCH ADVERSE INFERENCE. HE HAS NEITHER RECORDED THE STATEMENT OF THE PARTIES IN WHOSE BANK ACCOUNT CASH HAS BEEN DEPOSITED NOR THE INTERMEDIARY PARTIES THROUGH WHOSE BANK ACCOUNT FUN D HAVE ALLEGED TO BE ROUTED AND ULTIMATELY REACHED TO THE ASSESSEE THE LD AO HAS NO T REFERRED TO ANY INCRIMINATING IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 4 MATERIAL FOUND/ SEIZED IN THE COURSE OF SEARCH TO E STABLISH/LINK THAT THE CASH DEPOSITED IN THE BANK ACCOUNT OF THOSE PATTIES ARE ASSESSEE'S MONEY THE APPELLANT RELY ON THE JUDGMENT OF THE HON'BLE D ELHI HIGH COURT IN THE CASE OF PCIT VS. KURELE PAPER MILLS PVT. LTD. (2015) 380 IT R 571(DEL) WHERE IT HAS BEER: HELD THAT IN CASE OF SEARCH ASSESSMENT, ADDITION U/ S 68 IS NOT JUSTIFIED IF NO INCRIMINATING EVIDENCE RELATING TO SHARE CAPITAL FO UND IN THE COURSE OF SEARCH. THE DEPARTMENT HAD FILED SPECIAL LEAVE PETITION BEFORE THE HONORABLE APEX COURT AGAINST THE SAID JUDGMENT WHICH HAS BEEN REJECTED BY THE HO N'BLE APEX COURT. THE SAID DECISION IS SQUARELY APPLICABLE IN TILE CASE OF THE APPELLANT ON THE SIMILAR ISSUE WE ALSO RELY ON THE ORDER OF T HE JURISDICTIONAL ITAT, KOLKATA IN THE CASE OF MRIDUL COMMODITIES (PVT) LTD VS. DCIT, CC.XXI, KOLKATA( 2017) 78 TAXMANN.COM 337(KOLKATA- TLLB) WHEREIN IT HAS BEEN HELD AS UNDER. '10.7 IN VIEW OF THE AFORESAID FINDINGS AND RESPECT FULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HERE IN ABOVE, WE HOLD THAT THE ADDITIONS TOWARDS SHARE APPLICATION MONIES IN THE SUMS OF RS.20,00,00 0/- AND RS. 72.00,000/- FOR THE ASST YEARS 2008-09 AND 2009-10 RESPECTIVELY , WHICH WERE UNABATED/CONCLUDED ASSESSMENTS, 011 THE DATE OF SEA RCH, DESERVES TO BE UNDISTRIBUTED IN THE ABSENCE OF ANY INCRIMINATING M ATERIAL FOUND IN THE COURSE OF SEARCH HENCE, WE HOLD THAT THE LD. AO OUGHT TO H AVE ONLY FOLLOWED THE OLD ASSESSED INCOME EITHER U/S 143(3) OR 143(1) OF THE ACT FOR FILE RELEVANT YEAR. SINCE THE ISSUES ARE ADDRESSED ON PRELIMINARY GROUN D OF ABSENCE OF INCRIMINATING MATERIALS, WE REFRAIN TO GIVE OUR FIN DINGS ON THE MERITS OF THE ADDITIONS MADE TOWARDS IS/ARE APPLICATION MONEY. AC CORDINGLY THE GROUND RAISED BY THE ASSESSEE ARE ALLOWED. ' 1.3.2 THE AO MADE ADDITION OF RS.1,34,500/- HOLDING THE SAME TO BE COMMISSION PAID BY THE ASSESSEE FOR RAISING SHARE CAPITAL. THE ALLEGATION IS BASELESS AS THERE IS NO CORROBORATIVE MATERIAL/EVIDENCE FOUND IN THE COU RSE OF SEARCH AND SEIZURE OPERATION. THE ADDITION IS BASED ON PURE GUESS AND ASSUMPTION OUT OF REGULAR RETURN OF INCOME. 1.3.3 THE AO MADE DISALLOWANCE OF INTEREST ON LATE PAYMENT OF GOVERNMENT DUES U/S 37 RS. 8/-. THE SAME IS A ROUTINE & TECHNICAL A DDITION OF REGULAR NATURE OUT OF REGULAR RETURN OF INCOME. THE EXPANSE IS AS PER THE REGULAR BOOKS OF ACCOUNTS. THERE IS NO INCRIMINATING DOCUMENTS FOR SUCH DISALLOWANCE 1.3.4 THE AO DISALLOWED A SUM OF RS.2,29,8501- U/S 14A READ WITH RULE 8D IN A ROUTINE MANNER ALTHOUGH ASSESSEE HAS NOT MADE ANY D IVIDEND OR ANY OTHER EXEMPTED INCOME. THE SAME IS A TECHNICAL ADDITION O F REGULAR NATURE OUT OF REGULAR RETURN OF INCOME. 1.3.5 THE AO DISALLOWANCE 11 SUM OF RS. 4,07,192/ U/S 40(A)(IA) DUE TO NON- DEDUCTION/SHORT DEDUCTION OF TDS THE SAME IS A ROUTINE & TECHNICAL ADDITION OF REGUL AR NATURE OUT OF REGULAR RETURN OF INCOME. THERE IS NO INCRIMINATING DOCUMENTS FOR SUC H DISALLOWANCE. ALL THE ABOVE ADDITIONS/DISALLOWANCES MADE IN THE A SSESSMENT ORDER ARE PART AND PARTIAL OF THE REGULAR IT RETURN. THE ABOVE ADDITIO NS HAVE NOT BEEN MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND IN THE CO URSE OF SEARCH. THIS FACT IS EVIDENT FROM THE ASSESSMENT ORDER AS T HE AO HAS NOT REFEREED ANY INCRIMINATING MATERIAL FOR MAKING THE ABOVE ADDITIO N/DISALLOWANCES. THE STATEMENTS IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 5 OF ENTRY OPERATORS RECORDED IN PRE/POST SEARCH CANN OT BE HELD AS INCRIMINATING MATERIAL AS THEY HAVE RETRACTED THEIR STATEMENT LAT ER ON BY AN AFFIDAVIT. IT HAS BEEN HELD BY VARIOUS COURTS INCLUDING THE JU RISDICTIONAL HIGH COURT AND JURISDICTIONAL ITAT THAT THE ISSUE FORMING PART OF THE REGULAR ASSESSMENT IS BEYOND THE SCOPE OF SEARCH ASSESSMENT U/S. 153A/153C AND T HE AO HAS NO JURISDICTION TO MAKE ADDITION OTHERWISE THAN ON THE BASIS OF THEE I NCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. WE ALSO RELY ON THE FOLLOWING JUDICIAL DECISIONS. 1.4 WE WOULD LIKE TO PLACE RELIANCE ON THE RECENT D ECISION OF THE HON'BLE HIGH COURT, DELHI IN THE CASE OF PCIT VS. KUREFE PAPER MILLS PV T. LTD. (2016) 380 ITR 571(DEL), SEARCH AND SEIZURE - ASSESSMENT IN SEARCH CASES - S HARE APPLICATION MONEY NO INCRIMINATING EVIDENCE RELATE D TO SHARE CAPITAL ISSUED FOUND DURING COURSE OF SEARCH - DELE TION OF ADDITION UNDER SECTION 68- JUSTIFIED INCOME TAX ACT , 1961, SS. 68, 153A. HELD DISMISSING THE APPEAL. THAT TILE ORDER OF COMM ISSIONER (APPEALS) REVEALED THAT THERE WAS A FACTUAL FINDING THAT NO I NCRIMINATING EVIDENCE RELATED 10 SHARE CAPITAL ISSUE WAS FOUND DURING COU RSE OF SEARCH AS WAS MANIFEST FROM THE ORDER OF AO. CONSEQUENTLY, IT WAS HELD THAT AO WAS NOT JUSTIFIED IN INVOKING SECTION 68 FOR THE PURPOSES O F MAKING ADDITION ON SHARE CAPITAL. THERE WAS NOTHING TO SHOW THAT THE ABOVE F ACTUAL DETERMINATION WAS PERVERSE. THE JUDGMENT OF THE HON'BLE HIGH COURT IS REPRODUCE D AS UNDER: 1. THE REVENUE HAS FILED THE APPEAL AGAINST AN ORD ER DATED NOVEMBER 14, 2014, PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL ( TAT) IN 3761/DEL/2011 PERTAINING TO THE ASSESSMENT YEAR 2002-03. THE QUES TION WAS WHETHER THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) HAS E RRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS.89 LAKHS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME -TAX ACT, 1961 (THE ACT) ON BOGUS SHARE CAPITAL. BUT THE ISSUE WAS WHETHER THERE WAS ANY IN CRIMINATING MATERIAL WHATSOEVER FOUND DURING THE SEARCH TO JUSTIFY INITI ATION OF PROCEEDINGS UNDER SECTION 153A OF THE ACT. 2. THE COURT FINDS THAT THE ORDER OF THE COMMISSION ER OF INCOME-TAX (APLS) REVEALS THAT THERE IS A FACTUAL FINDING THAT NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IS MANIFEST FROM THE ORDER OF THE ASSESSING OFFICER . CONSEQUENTLY, IT WAS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED I N INVOKING SECTION 68 OF THE ACT FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL. 3. AS FAR AS THE ABOVE FACTS ARE CONCERNED, THERE I S NOTHING SHOWN TO THE COURT TO PERSUADE AND HOLD THAT THE ABOVE FACTUAL D ETERMINATION IS PERVERSE. CONSEQUENTLY, AFTER CONSIDERING ALL THE FACTS AND C IRCUMSTANCES OF THE CASE, THE COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUE STION OF LAW ARISES ISNT HE IMPUGNED ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL WHICH REQUIRES EXAMINATION. 4. THE APPEAL IS ACCORDINGLY, DISMISSED. THE DEPARTMENT HAD FILED SPECIAL LEAVE PETITION BEF ORE THE HON'BLE APEX COURT AGAINST THE ABOVE JUDGEMENT OF THE DELHI HIGH COURT (PR. CIT V. KURULE PAPER MILLS P. LTD : SLP (C) NO-34554 OF 2015 [2016] 380 ITR (ST) 64-ED). THE HON'BLE APEX COURT DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT. THE RELEVANT PARA AS MENTIONED IN THE ITR IS REPROD UCED AS UNDER: IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 6 THEIR LORDSHIPS MADAN B LOKUR AND S.A. BODE JJ DI SMISSED THE DEPARTMENTS SPECIAL LEAVE PETITION AGAINST THE JUD GEMENT DATED JULY 06,2015 OF THE DELHI HIGH COURT IN I.T.A. NO. 369 OF 2015, WHEREBY THE HIGH COURT HELD THAT NO SUBSTANTIAL QUESTION OF LAW AROSE SINCE THERE WAS A FACTUAL FINDING THAT NO INCRIMINATING EVIDENCE RELATED TO SHARE CAP ITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE ACT FOR THE PURPOSE OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL . THE ABOVE JUDGMENT IS SQUARELY APPLICABLE IN THE CA SE OF THE ASSESSEE SINCE THE AO MADE ADDITION ON ACCOUNT OF SHARE CAPITAL U/S 68 OF THE I.T. ACT WITHOUT ANY INCRIMINATING DOCUMENTS FOUND IN THE COURSE OF SEAR CH. 1.5 IN THIS REGARD THE HON'BLE JURISDICTIONAL CALCU TTA HIGH COURT HAS TIME AND AGAIN REITERATED ITS VIEW THAT THE ADDITIONS IN THE CASE OF THE SEARCH ASSESSMENTS HAS TO BE MADE ON THE BASIS OF INCRIMINATING MATERIAL. SOME O F THE RECENT DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT ARE DISCUSSED HER EUNDER FOR YOUR HONOURS READY REFERENCE: (A) PCIT-2, KOLKATA VS. SALASAR STOCK BROKING LIMITED ( ITAT NO. 264 OF 2016) DATED 24.08.2016; (CALCUTTA) IN THIS CASE, THE HON'BLE HIGH COURT OBSERVED THAT THE LEARNED. IITAT, KOLKATA WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURIS DICTION U/S. 153A OF THE IT ACT TO REOPEN THE CONCLUDED CASES WHEN THE SEARCH & SEIZUR E DID NOT DISCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIE W, THE LEARNED. ITAT RELIED UPON THE JUDGMENTS OF DELHI HIGH COURT IN THE CASE OF CIT(A) VS. KABUL CHAWLA IN ITA NO.707/2014 DATED 28.08.2014. THE COURT ALSO OBSERV ED THAT MORE OR LESS AN IDENTICAL VIEW HAS BEEN TAKEN BY THIS BENCH IN ITA NO.651/2008 IN THE CASE OF CIT VS. VEERPRABHU MARKETING LIMITED. CONSIDERING THE A BOVE FACTS, THE HON'BLE HIGH COURT DID NOT ADMIT THE APPEAL FILED BY THE DEPARTM ENT. (B) CIT, KOLKATA-III VS. VEERPARABHAU MARKETING LIMITED [2016] 73 TAXMANN.COM 149 (CALCUTTA): IN THIS CASE THE HON'BLE CALCUTTA HIGH COURT EXPRES SED THE FOLLOWING VIEWS: WE ARE IN AGREEMENT WITH THE VIEWS OF THE KARNATAK A HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE-REQUISITE BEFORE PO WER COULD HAVE BEEN EXERCISED UNDER SECTION 153C READ WITH SECTION 153A . 1.6. THE HON'BLE CALCUTTA HIGH COURT IN THE ABOVE C ASES RELIED ON THE FOLLOWING JUDGMENTS. (A) 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 THA T LD. ITAT, KOLKATA WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURISDICT ION U/S 153A OF THE I.T. ACT TO REOPEN THE CONCLUDED CASES WHEN THE SEARCH AND SEIZ URE DID NOT DISCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIE W, THE LD. ITAT RELIED UPON THE JUDGMENTS OF DELHI HIGH COURT IN THE CASE OF CIT (A) VS. KABUL CHAWLA IN ITAT NO.707/2014 DATED 28.08.2014. THE COURT ALSO OBSERVED THAT MORE OR LESS AN IDENTICAL VIEW HAS BEEN TAKEN BY THIS BENCH IN ITA NO. 661/2008 IN THE CASE OF CITVS. VEERPRABHU MARKETING LIMITED. CONSIDERING THE ABOVE FACTS, THE HONORABLE HIGH COURT DID NOT ADMIT THE A PPEAL FILED BY THE DEPARTMENT. (B) CIT, KOLKATA III VS. VEEPRABHU MARKETING LIMITED [2016] 73 TAXMANN.COM 149 (CALCUTTA)|: IN THIS CASE THE HONORABLE CALCUTTA HIGH COURT EXPR ESSED THE FOLLOWING VIEWS: IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 7 WE ARE IN AGREEMENT WITH THE VIEWS OF KARNATAKA HI GH COURT THAT INCRIMINATING MATERIAL IS A PRE- REQUISITE BEFORE P OWER COULD HAVE BEEN EXERCISED UNDER THE SECTION 153C READ WITH SECTION 153A. IN THIS CASE BEFORE US, THE ASSESSING OFFICER HAS M ADE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PRO VISIONS CONTAINED UNDER THE SECTION 153C READ WITH SECTION 153A. THE DISALL OWANCES MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT (A) BUT LE ARNED TRIBUNAL DELETED THOSE DISALLOWANCES. 16. THE HONBLE KOLKATA HIGH COURT IN THE ABOVE CAS E RELIED ON THE FOLLOWING JUDGMENTS. (A) CITVS KABUL CHAWLA (2016) 380 ITR 0573 (DEL) SEARCH AND SEIZURE NEW SCHEME FOR ASSESSMENT IN S EARCH CASES-SEARCH WAS CARRIED OUT U/S 132 ON A LEADING REAL ESTATE DEVELO PER OPERATING ALL OVER INDIA AND SOME OF ITS GROUP COMPANIES SEARCH WAS ALSO CARRI ED OUT IN THE PREMISES OF THE ASSESSEE PURSUANT TO THE SEARCH A NOTICE U/S. 153 A(1) WAS ISSUED TO ASSESS E E AND THEREAFTER HE FILED RETURNS-AS ON THE DATE OF THE S EARCH, NO ASSESSMENT PROCEEDINGS WERE PENDING FOR RELEVANT AYS AND FOR SAID AS, ASSE SSMENTS WAS ALREADY MADE U/S 243(3) ASSESSEE FIELD AN APPLICATION U/S. 154 SEEKI NG RECTIFICATION OF THE ASSESSMENTS ON THE GROUND THAT THE ACCUMULATED PROFITS OF THE C OMPANIES PAYING THE DIVIDEND WERE LESS THAN THE AMOUNT OF LOAN OR ADVANCE GIVEN BY THEM TO THE RECIPIENT COMPANIES-AO DECLINED TO RECTIFY THE ASSESSMENTS- C IT ALSO HELD THAT ADDITION NEED NOT BE RESTRICTED ONLY TO THE SEIZED MATERIAL-ITAT ON APPEAL HOWEVER DELETED ADDITION ON GROUNDS THAT THE ADDITIONS MADE FOR RELEVANT AY S U/S 2(22)(E) WERE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPER ATION AND SAME WAS NOT SUSTAINABLE IN LAW-ISSUE WAS WHETHER THE ADDITIONS MADE TO THE INCOME OF THE ASSESSEE FOR THE SAID AYS U/S2(22) WAS NOT SUSTAI NABLE BECAUSE NO INCRIMINATING MATERIAL CONCERNING SUCH ADDITIONS WERE FOUND DURIN G THE COURSE OF SEARCH AND FURTHER NO ASSESSMENTS FOR SUCH YEARS WERE PENDING ON THE DATE OF SEARCH-HELD, PRESENT APPEALS CONCERNED AYS, 2002-03, 2005-06 AND 2006-07-ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED -SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED-QUESTION FRAMED BY THE COUR T WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE-REVENUES APPE AL DISMISSED. (B) HE RELIED UPON THE FOLLOWING VIEWS EXPRESSED IN PARAGRAPH 50 OF THE JUDGMENT IN THE CASE OF CIT V. IBC KNOWLEDGE PAR (P) LTD (2016) 69 TAXMANN.COM 108(KER.):- SECTION 153C READ WITH SECTION 153A, OF THE INCOME-TAX ACT, 196 1 ASSESSMENT OF INCOME OF ANY OTHER PERSON ((RECORDING OF SATISFACT ION) ASSESSMENT YEARS 2004-05 TO 2006-07 WHETHER WHERE NO MATERIAL BELONGING TO A THIRD PARTY WAS FOUND DURING A SEARCH, BUT ONLY AN INFERENCE OF UNDISCLOSED INCO ME WAS DRAWN, SECTION 153C WOULD HAVE NO APPLICATION HELD, YES WHETHER WHE RE TRIBUNAL HELD THAT ASSESSMENT UNDER SECTION 153C WAS VALID DESPITE THE RE BEING NO SATISFACTION RECODED THAT DOCUMENTS FOUND DURING SEARCH WERE INC RIMINATING IN NATURE AND PRIMA FACIE REPRESENTED UNDISCLOSED INCOME, ORDER OF TRIB UNAL WAS NOT JUSTIFIED HELD, YES [PARAS, 49, 50, 56 & 57] 17. IN THIS REGARD THE HONBLE ITAT KOLKATA HAS TIM E AND AGAIN REITERATED ITS VIEW THAT THE ADDITIONS IN CASE OF THE SEARCH ASSESSMENTS HAS TO BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND ANY DEVIATION FROM THE SAME WOULD REND ER THE ASSESSMENT ORDER INVALID. SOME OF THE RECENT DECISION OF THE HONBLE JURISDICTIONA L TRIBUNAL IS DISCUSSED HEREUNDER FOR YOUR HONORS READY REFERENCE; IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 8 (A) M/S ADHUNIK GASES LTD. & OTHERS VS. DCIT CC-XXX , IT9(SS)A NO. 47/KOL/2016, IT(SS)A NO. 48/KOL/2015, IT(SS)A NO.52/KOL/2015, IT(SS) NO. 54/KOL/2015, IT(SS)A NO.55/KOL/2015, IT(SS)A NO.94-96/KOL/2015 ORDER DATED 06.01.2017 (I TAT KOLKATA ). IN THIS CASE IT IS HELD THAT NO ADDITION U/S. 68 OF THE I. TAX ACT FOR THE SHARE CAPITAL CAN BE MADE IN ABSENCE OF ANY INCRIMINATING MATERIAL. THE CONCLUDING PARA OF THE HONOURABLE ITATS ORDER IS AS UNDER: 9. HAVING HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMISSI ONS OF THE ASSESSEE AS THE PROPOSITIONS CANVASSED BY THE LD AR FOR THE ASSESSE E ARE SUPPORTED BY THE JUDGEMENTS OF JURISDICTIONAL ITAT AND HONBLE HIGH COURTS. LD. AR HAS POINTED OUT THAT NO INCRIMINATING DOCUMENTS WAS FOUND EITHER DU RING SURVEY OR DURING SEARCH PROCEDURE. THE STATEMENT OF SHRI NARESH KUMAR CHHAP ERIA SHOULD NOT BE RELIED ON, BECAUSE HE IS A DOUBLE SPEAKING PERSON. THE ASSESSM ENT PROCEEDINGS WERE COMPLETED BEFORE THE DATE OF SEARCH. BESIDES, THE T IME LIMIT TO ISSUE NOTICE U/S. 143(2) WAS ALSO EXPIRED. IN ORDER TO INITIATE ASSES SMENT PROCEEDINGS U/S. 153A, THREE SHOULD BE A NEW OR INCRIMINATING DOCUMENT. THE ASSE SSMENT WHICH IS ALREADY COMPLETED U/S 143(3)/143(1) SHOULD NOT BE REOPENED. THEREFORE, CONSIDERING THE SCHEME OF SECTION 132 AND SECTION 153A, WE ARE OF T HE VIEW THAT THERE SHOULD BE SOME NEW DOCUMENT/INCRIMINATING DOCUMENT TO INVOKE THE PROVISIONS OF SECTION 153A. LD DR FOR THE REVENUE HAD POINTED OUT THAT TH ERE IS A DIRECT NEXUS AMONG THE COMPANIES, WHICH HAS BEEN ESTABLISHED BY THE STATEM ENT OF MR. NEARESH KUMAR CHHAPPERIA, WHICH CANNOT BE RELIED ON, AS HE WAS A DOUBLE SPEAKING PERSON. THEREFORE, CONSIDERING THE FACTUAL POSITION AND THE JUDGEMENTS CITED BY LD. AR, WE ARE OF THE VIEW THAT THE ADDITIONS MADE BY THE AO U /S 153A AND CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. THEREFORE, WE DELETE TH E ADDITION. B) YOUR HONORS KIND ATTENTION IS INVITED TO THE DE CISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF M/S TANUJ HOLDINGS PVT LTD. VS. DCIT CC -1(2), KOLKATA VIDE ITAT NO. 360 TO 363/KOL/2015 DATED 20.01.2016. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDER: 5.5 WE ALSO FIND THAT NO INCRIMINATING MATERIALS W ERE FOUND DURING THE SEARCH IN THE RESPECT OF THE ISSUE OF DEEMED DIVIDEND. HEN CE IT CANNOT BE THE SUBJECT MATTER OF ADDITION IN 153C PROCEEDINGS IN RESPECT O F COMPLETED ASSESSMENTS. WE HOLD THAT WHEN AN ADDITION COULD NOT BE MADE AS PER LAW IN SECTION 153C PROCEEDINGS, THEN THE SAID ORDER CANNOT BE CONSTRUE D AS ERRONEOUS WARRANTING REVISION JURISDICTION U/S. 263 OF THE AC T.. (C) SHRI, MANISH MUNDHRA VS ACIT-CC-XXX IN ITA-469- 470/KOL/2013 DT. 16.12.2015 (ITAT KOLKATA) 10. WE ALSO ARE OF THE VIEW THAT IN THE LIGHT OF T HE ADMITTED FACT THAT NO INCRIMINATING MATERIAL WAS FOUND IN THE COURSE OF S EARCH OF IMPUGNED ADDITION COULD NOT HAVE BEEN MADE IN THE PROCEEDINGS U/S 153 A OF THE ACT. THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE OF AC IT VS. M/S DELHI HOSPITAL SUPPLY PVT. LTD. (SUPRA) FOLLOWED THE DECISION OF H ONBNLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) SUPPORTED TD HE PL EA OF THE ASSESSEE IN THIS REGARD. (D) ACIT-CC-XXVII VS. KANCHAN OIL INDUSTRIES LTD. I N ITA-725/KOL/2011 DT. 09.12.2015 (ITAT KOLKATA) ; 6.8 IN VIEW OF THE AFORESAID FINDINGS AND JUDICIAL PRECEDENT RELIED UPON, WE HOLD THAT THE DENIAL OF DEDUCTION U/S. 80IB OF T HE ACT IN THE ASSESSMENT S FRAMED U/S. 153A OF THE ACT FOR THE AS ST., YEARS 2003-04 AND 2004-05 WITHOUT ANY INCRIMINATING MATERIALS FOU ND DURING THE COURSE OF SEARCH WITH RESPECT TO THOSE ASSESSMENT Y EARS IS NOT WARRANTED AND HELD AS NOT IN ACCORDANCE WITH LAW. A CCORDINGLY, THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD FOR TH E ASSESSMENT YEAR 2003-04 AND 2004-05 ARE DISMISSED. IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 9 6.9. WE HOLD THAT THE SAME DECISION WOULD BE APPLIC ABLE FOR THE DISALLOWANCE MADE BY THE LEARNED AO U/S. 14A OF THE ACT AND ACCO RDINGLY NO DISALLOWANCE U/S. 14A OF THE ACT COULD BE MADE FOR THE ASST. YEA R 21004-05 BY THE LEARNED AO IN THE ASSESSMENT FRAMED U/S. 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH REGARD TO THE RELEVANT ASSESSMENT YEAR AND WITH REGARD TO THE REL EVANT ISSUE. 6.10 WITH REGARD TO THE CLAIM OF DEDUCTION U/S. 80I B OF THE ACT FOR THE ASST. YEARS 2007-08 AND 2008-09 ARE CONCERNED, WE FIND TH AT THE SAME IS ONLY CONSEQUENTIAL IN NATURE AND ONCE THE ASSESSEE HAS B EEN GRANTED DEDUCTION U/S. 80IB OF THE ACT FOR THE INITIAL ASSESSMENT YEA R I.E. ASST. YEAR 2003-04, THE GRANT OF DEDUCTION UNDER THE SAID SECTION IN RESPEC T OF THE SAME UNIT IS ONLY ACADEMIC AND HENCE THE ASSESSEE IS ENTITLED FOR DED UCTION U/S. 80IB OF THE ACT FOR THE ASST. YEARS 2007-08 AND 2008-09. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IN TH IS REGARD FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 ARE DISMISSED . 6.11 SINCE THE DECISIONS ARE RENDERED BY US ON LEGAL GRO UNDS, WE4 REFRAIN TO GIVE OUR DECISION ON THE MERITS OF THE I SSUES . (E) BUDHIYA MARKETING PVT. LTD. &ORS. VS., ACIT IN ITA NOS. 1545-1546/KOL/2012 [REPORTED IN (2015) 44 CCH 0344] DTD. 10.07.2015 (I TAT KOLKATA) THE ISSUE WHETHER THE ADDITION IN AN ASSESSMENT FR AMED UNDER SECTION 153A CAN BE MADE ON THE BASIS OF THE INCRIMINATING MATERIAL FOU ND DURING THE COURSE OF THE SEARCH WHERE THE ASSESSMENT HAS NOT BEEN ABATED, HAS NOT B EEN CONSIDERED OR DECIDED BY THIS TRIBUNAL. THEREFORE, THIS DECISION, IN OUR OPI NION WILL NOT ASSIST THE REVENUE WHILE DISPOSING OF THE PLEA OF THE ASSESSEE THAT SINCE NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF THE SEARCH RELATING TO THE SHA RE CAPITAL AND THE SHARE PREMIUM, THEREFORE, NO ADDITION CAN BE MADE WHILE MAKING AN ASSESSMENT UNDER SECTION 153A OF THE INCOME TAX ACT. NO CONTRARY DECISION WAS BRO UGHT TO OUR KNOWLEDGE BY THE LD. DR. IN VIEW OF THE AFORESAID DISCUSSION AND THE DEC ISION OF THE HONBLE SPECIAL BENCH, BOMBAY HIGH COURT, AS WELL AS HONBLE DELHI HIGH COURT, WE CONFIRM THE ORDER OF THE CIT(APPEALS) DELETING THE ADDITION MAD E IN EACH OF THE ASSESSMENT YEARS AS WE HOLD THAT THE ASSESSING OFFICE WAS NOT CORRECT IN LAW IN MAKING THE ADDITION IN THE ASSESSMENT MADE UNDER SECTION 153A READ WITH SECTION 143(3) WHEN NO INCRIMINATING MATERIAL WAS FOUND DURING THE COUR SE OF THE SEARCH IN RESPECT OF THE ADDITION MADE BY HIM. WE ACCORDINGLY PARTLY ALLOWED THE CROSS OBJECTIONS TAKEN BY THE ASSESSEE. (F) ACIT VS. SHANTI KUMAR SURANA & ORS. IN IT(SS)A NOS. 12 TO 20 AND CO NOS. 13 TO 20 (REPORTED IN 44 CCH 241) ORDER DTD. 22.06.201 5 (ITAT KOLKATA ) IN VIEW OF THE FACTS IN ENTIRELY AND THE LEGAL PRI NCIPLES ENUNCIATED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHO USING CORPORATION (NHAVA SHEVA) LTD., SUPRA, OF HONBLE ALLAHABAD HIG H COURT IN THE CASE OF SHALLA AGARWAL, SURPA AND MUMBAI SPECIAL BENCH DECI SION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS, SUPRA, WE ARE OF THE VIEW T HAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH IN THE PRESENT CASE FOR THESE ASSESSMENT YEARS EXCEPT THE STATEMENT OF ONE SHRI SAMBVHU KR MORE, AS ADMITTED BY THE AO IN HIS REMAND REPORT DA TED 23.09.2011 AND DESPITE NUMBER OF OPPORTUNITIES REVENUE COULD NOT P RODUCE ANY INCRIMINATING MATERIAL BEFORE THE SEARCH AND THE ASSESSMENTS ARE ALREADY COMPLETED FOR THESE ASSESSMENT YEARS ORIGINALLY, THE ASSESSMENTS FRAMED U/S. 153A OF THE ACT IS IN VALID AND HENCE, QUASHED. (G) TRISHUL HITECH INDUSTRIES LTD. VS. DCIT-CC-XI, IT(SS)A 84-86/KOL2011 DTD. 24.09.2014 (ITAT KOLKATA) ; 9.5 FROM, THE ABOVE VARIOUS DISCUSSIONS AND PRECED ENCE WE ARE OF THE CONSIDERED VIEW THAT ASSESSMENT IN THE IMPUGNED ASS ESSMENT YEARS HAVE BEEN COMPLETED U/S. 143(3) OF THE ACT. HENCE THE AS SESSMENT FOR THE CONCERNED ASSESSMENT YEAR DOES NOT ABATE. HENCE DEH ORSE ANY IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 10 INCRIMINATING MATERIAL, AO CANNOT MADE ANY ADDITION IN THESE CASES. ACCORDINGLY WE HOLD THAT ASSESSMENT U/S. 153C OF TH E ACT IN THESE CASES DEHORSE ANY INCRIMINATING MATERIAL IS NOT SUSTAINAB LE. HENCE WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSU E IN FAVOUR OF ASSESS E E. SINCE WE ARE QUASHING THE APPEALS ON JURISDICTION W E ARE NOT ADJUDICATING THE MERITS OF THE APPEAL AS THE SAME IS NOW ONLY OF ACA DEMIC INTEREST. (H) DCIT VS. MERLINI PROJECT LTD. IT(SS)A NO. 138/K OL/2011 DT. 14.11.2013 (ITAT KOLKATA) ; WE HAVE HEARD THE RIVAL SUB MISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACT ABOUT THIS CASE IS THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) IN WHI CH DEDUCTION WAS ALLOWED IN ENTIRETY UNDER SECTION 80IB OF THE ACT I NTER ALIA ON THE AMOUNT OF INTEREST INCOME. IT IS ALSO UNDISPUTED THAT NO INCR IMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH CASTING DOUBT ABOUT THE ALLOWABILITY OR OTHERWISE OF SUCH DEDUCTION UNDER SECTION 80IB. THIS FACT HAS BEEN FAIRLY ADMITTED BY LD. DR DURING THE COURSE OF PROCEEDINGS BEFORE US AS W ELL. 5. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASES OF ACIT VS. PRATIBHA INDUSTRIES (201`3) 141 ITD 151 (MM) HAS HELD, INTER ALIA, THAT HAVING DONE ORIGINAL ASSESSMENT U/S.143(3), IF NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, THEN IT IS NOT PERMISSIBLE TO MAK E ANY ADDITION IN THE ASSESSMENT UNDER SECTION 153A PURSUANT TO SEARCH A CTION. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOB AL LOGISTIC LIMITED VS. DCFIT (2012) 137 ITR 287 (SB) (MUM) HAS ALSO HELD T O THE SAME EXTENT. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF THE CON SIDERED OPINION THAT NO EXCEPTION CAN BE FOUND TO THE VIEW TAKEN BY CIT (AP PEALS) FOR DECIDING THIS ISSUE IN ASSESSEES FAVOUR. 6. BEFORE PARTING WITH THIS MATE, WE WANT TO MAKE I T CLEAR THAT OUR DECISION IS BASED IN THE BACKDROP OF THE FACTS THAT THE DEDUCTI ON UNDER SECTION 80IB COULD NOT HAVE BEEN TINKERED WITH BECAUSE NOT INCRI MINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ON THIS ISSUE WHE N ORIGINAL ASSESSMENT GRANTING DEDUCTION ON THIS ISSUE WAS COMPLETED UNDE R SECTION 143(3). WE HAVE NOT EXPRESSED ANY OPINION ON THE MERITS OF THE CASE ABOUT THE ALLOLWABILITY OR OTHERWISE OF DEDUCTION UNDER SECTI ON 80IB ON INTEREST INCOME ARISING IN THE PRESENT FACTS AND CIRCUMSTANCES. 7. IN THE RESULT, THE APPEAL FIELD BY THE REVENUE S TANDS DISMISSED. (I) LMJ INTERNATIONAL LTD. VS. SDCIT (2008) 119 TTJ (KOL) 214, (ITAT KOLKATA) ; WHERE NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS CA NNOT BE DISTURBED; ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROCEEDINGS UNDER S. 153C WHEN NO INCRIMINATING DOCUMENTS WERE FOUND IN RESPECT OF THE DISALLOWED AMOUNTS IN THE SEARCH PROCEEDINGS. 1.8 WHEN THE AO COMPLETED THE IMPUGNED ASSESSMENT T HERE WAS THE REPORTED DECISION OF ITAT, SPECIAL BENCH, MUMBAI DATED 06.07 .2012 IN ALL CARGO LOGISTICS LTD. VS. DCIT (2012) 137 ITD 287 (MUMBAI) (SB). IN THIS CASE THE SPECIAL BENCH REFERRED TO THE ALLAHABAD HIGH COURTS ORDER DT. 25 .11.2011 IN CIT VS. SHAILA AGARWAL (2012) 346 ITR 130 (ALL) WHERE IT WAS HELD THAT U/S. 1453A/153C THE AO WILL PROCEED FOR RE-ASSESSMENT IF AS A RESULT OF SEARCH SOME UNDISCLOSED INCOME IS FOUND TO HAVE ESCAPED ASSESSMENT. THE OTHER DECISION REFE RRED TO WAS THE DECISION OF ITAT, JODHPUR BENCH IN SUNCITY ALLOYS (P) LTD. VS A CIT (2009) 124 TTJ 674) (JD) [WHICH DECISION OF THE ITAT JODHPUR BENCH WAS AFFIR MED LATER IN 2013 BY RAJASTHAN HIGH COURT IN IT APPEAL NO.54, 6 TO 63, 66 & 67 OF 2011) REPORTED UNDER THE CITATION JAI STEEL 9INDIA) VS ACIT (2013) 259 CTR 281 (RAJ)] IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 11 1.9 IN CIT V, SHAILA AGARWAL ((2012) 346 ITR 130 ( ALL), THE ALLAHABAD HIGH COURT AT PARA-16 OF THEIR ORDER DT. 25.11.2011 OBSERVED. IF AS A RESULT OF SEARCH, SOME UNDISCLOSED INCOME IS FOUND TO HAVE ESCAPED ASSESS MENT , THE AO MAY HAVE TO INITIATE STEPS FOR RE-ASSESSMENT. (EMPHASIS SUPPL IED). THOUGH PRIMARILY THE ISSUE BEFORE THE COURT WAS THE MEANING AND SCOPE OF ABATEMENT OF THE PROCEEDINGS PENDING ON THE DATE THE SEARCH WAS INITIATED I.E., THE WORDS USED IN THE LANGUAGE OF SEC. 153A, IN READING THE COURTS ORDER ONE CANNOT MISS THE COURTS OBSERVATION THAT INITIATION OF PROCEEDINGS U/S.153A AS CONDITIONAL I .E. INITIATION OF SUCH PROCEEDINGS CAN BE MADE ONLY WHERE THE SEARCH OPERATION HAS UNE ARTHED UNDISCLOSED INCOME. 1.10 IN JAI STEEL (INDIA) VS. ACIT (2013) 259 CTR 2 81 (RAJ), A SEARCH U/S 132(1) WAS CONDUCTED RESULTING IN SEIZURE OF SEVERAL INCRIMINA TING DOCUMENTS. NOTICE U/S. 153A WAS ISSUED. IN THE RETURN FIELD IN RESPONSE TO THE NOTICE U/S.153A, THE ASSESSEE, INTER ALIA, CLAIMED DEDUCTION OF SALES-TAX INCENTIVE A CLAIM THAT WAS NOT MADE IN THE ORIGINAL RETURN FILED U/S. 139(1). THE CONTENTION O F THE ASSESSEE WAS THAT SUCH CLAIM CAN BE MADE AS THE PROCEEDING U/S.153A WAS OVERRIDI NG ALL PROCEEDINGS EARLIER TAKEN OVERALL. THE DECISION OF THE COURT WAS AGAINST THE ASSESSEE, IN COMING TO THE SAID CONCLUSION THE RAJASTHAN HIGH COURT APPLYING THE DE CISION OF ALLAHABAD HIGH COURT IN THE CASE OF SMT. SHAILA AGARWALA AND REFERRING T O THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA (2013) 352 ITR 493 (DELHI), DEALT AT LENGTH WITH THE MEANING, SCOPE AND EFFECT OF SEC. 153A. TH E ORDER OF THE COURT WAS SUMMED UP AT PAGE 281 OF THE REPORT (CTR) AS UNDER: - REQUIREMENT OF ASSESSMENT OR RE-ASSESSMENT U/S. 15 3A HAS TO BE READ IN THE CONTEXT OF SEC. 132 OR SEC. 132A INASMUCH AS IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SEARCH OR REQU ISITION, THE QUESTION OF RE- ASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT AR ISE. THUS, THE UNDERLYING PURPOSE OF TAKING ASSESSMENT OF TOTAL IN COME UNDER SECTION 153A IS TO ASSESS INCOME WHICH WAS NOT DISCLOSED OR WOUL D NOT HAVE BEEN DISCLOSED.XXXXXX. THUS, THE ARGUMENT OF THE ASSES SEES COUNSEL THAT ONCE A NOTICE UNDER SEC. 153A IS ISSUED THE ASSESSMENT F OR SIX YEARS ARE AT LARGE BOTH FOR THE AO AND THE ASSESSEE HAS NOT WARRANT IN LAW. IN A CASE WHERE NOTHING INCRIMINATING IS FOUND, THOUGH SEC. 153A WO ULD BE TRIGGERED AND ASSESSMENT OR RE-ASSESSMENT TO ASCERTAIN THE TOTAL INCOME IS REQUIRED TO BE DONE. THE SAME WOULD NOT RESULT IN ANY ADDITION AND THE ASSESSMENTS MADE EARLIER MAY HAVE TO BE REITERATED ARGUMENT OF THE C OUNSEL ( OF THE ASSESSE ) THAT THE AO IS FREE TO DISTURB THE INCOME, EXPENDIT URE OR DEDUCTION DE HORSE ANY INCRIMINATING MATERIAL WHILE MAKING THE ASSESSM ENT UNDER SEC. 153A IS NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION S..XXXXXXXX. A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISIONS OF SEC. 153A WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BEEN USED IN THE CONTEST OF ABATED PROCEEDING AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS WHICH DO NOT ABATE AS THEY A RE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUI SITION AND CAN BE TINKERED ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOU ND DURING THE COURSE OF THE SEARCH OR REQUISITION OF DOCUMENTS. THEREFORE, IT I S NOT OPEN TO THE ASSESSEE TO SEEK DEDUCTION O CLAIM RELIEF NOT CLAIMED BY IT IN THE ORIGINAL ASSESSMENT WHICH ALREADY STANDS COMPETED, IN AN ASSESSMENT UND ER SEC. 153A MADE IN PURSUANCE OF SEARCH OR REQUISITION. THE CONTENTS OF PARA 26 & 29 OF THE COURTS ORDER A RE SUMMED UP AT PAGE- 263 OF THE REPORT (CTR) AS FOLLOWS:- THE CASE HAS TO BE CONSIDERED AT BEST SIMILAR TO A CASE WHERE IN SPITE OF A SEARCH AND / OR REQUISITION, NOTHING INCRIMINATING IS FOUND. IN SUCH A CASE THOUGH SEC. 153A WOULD BE TRIGGERED AND ASSESSMENT OR REASSESSMENT TO ASCERTAIN THE TOTAL INCOME OF THE PERSON IS REQUIRE D TO BE DONE, HOWEVER, THE IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 12 SAME WOULD IN THAT CASE NOT RESULT IN ANY ADDITION AND THE ASSESSMENT PASSED EARLIER MAY HAVE TO BE REITERATED. THE PROVI SIONS SEC. 153A TO 153C CANNOT BE INTERPRETED TO BE A FURTHER INNINGS FOR T HE AO AND / OR THE ASSESSEE BEFORE THE PROVISIONS OF SEC. 139 ( RETURN OF INCOME ), 139(5) ( REVISED RETURN OF INCOME ), 147 (INCOME ESCAPING ASSESSMENT AND 263 (REVISIO N OF ORDER) (EMPHASIS SUPPLIED) AT PARA 28 OF THE ORDER, THEIR LORDSHIPS ENLARGED U PON THE INTERPRETATION OF SEC. 153A BY THE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA). TO QUOTE THE SAID JUDGMENT ( ANIL KUMAR BHATIA ) ALSO IN NO UNCERTAIN TERMS HOLDS THAT THE REASSESSMENT OF THE TOTAL INCOME OF THE CO MPLETED ASSESSMENT HAS TO BE MADE TAKING NOTE OF THE UNDISCLOSED INCOME, I F ANY, UNEARTHED DURING THE SEARCH AND THE INCOME THAT ESCAPED ASSESSMENT I S REQUIRED TO BE CLUBBED TOGETHER WITH THE TOTAL INCOME DETERMINED I N THE ORIGINAL ASSESSMENT AND ASSESSED AS THE TOTAL INCOME. AS THE RAJASTHAN HIGH COURT OBSERVED IN THEIR ORDER , WHERE THE OUTCOME OF THE SEARCH DOES NOT UNEARTH ANY UNDISCLOSED INCOME, THE OUTCOME OF THE PROCEEDINGS U/S. 153A WILL ONLY BE A RE-ITERATION OF THE INCOME THAT WAS ALREADY ASSESSED BUT RE- OPENED BY THE TRIGGER OF THE SEARCH U/S. 132 OR REQ UISITION U/S 132A. AT PARA 29 OF THE ORDER, THE HIGH COURT RULED: THE ARGUMENT.. THAT THE AO IS ALSO FREE TO DISTURB INCOME EXPENDITURE OR DEDUCTION DE HORS (UNCONNECTED WITH) THE INCRIMINATING MATERIAL, WHILE MAKING ASSESSMENT UND ER S. 153A OF THE ACT IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHI CH..IS ESSENTIALLY IN THE CONTEXT OF SEARCH AND/OR REQUISITION. (MEANING SUPPLIED) 1.11 THUS, THE INFERENCES THAT CLEARLY EMERGE FROM A READING TOGETHER OF THE DECISIONS OF THE TRIBUNALS AND THE HIGH COURT OF AL LAHABAD AND HIGH COURT OF RAJASTHAN ARE: FIRST , ASSESSMENT/REASSESSMENT OF INCOME U/S 153A IS STR ICTLY CONDITIONED BY THEE UNEARTHING OF UNDISCLOSED INCOME AS A RESULT O F ACTION U/S 132 AND/OR 132A. SECOND, WHERE ACTION U/S.132 AND/OR 132A DOES NOT RESULT IN DISCOVERY OF ANY UNDISCLOSED INCOME, THOUGH SUCH ACTION WILL RIG GER REOPENING U/S. 153A, THE PROCEEDING U/S. 153A WILL RESULT IN THE REITERA TION I.E. THE REPETITION OF THE ALREADY ASSESSED INCOME. THIRD, AS WAS RULED AT PARA 29 OF THE ORDER IN THE CASE O F JAI STEEL (INDIA) (SUPRA), THE AO IN THE REASSESSMENT U/S. 153A CANNO T DISTURB EITHER THE INCOME OR EXPENDITURE OR DEDUCTION UNLESS SUCH ACTI ON/S IS WARRANTED BY THE DISCOVERY/DETECTION OF UNDISCLOSED INCOME OF THE AS SESSEE IN COURSE OF THE SEARCH OPERATION U/S. 132 AND/OR 132A. 1.12 THE HONBLE SUPREME COURT IN THE CASE OF PARAS HURAM POTTERY WORKS CO. LTD. VS. ITO (1977) 106 ITR 1(SC) OBSERVED AS UNDER: IT HAS BEEN SAID THAT THE TAXES ARE THE PRICE THAT WE PAY FOR CIVILIZATION, IF SO, IT IS ESSENTIAL THAT THOSE WHO ARE ENTRUSTED WITH T HE TASK OF CALCULATION AND REALIZING THAT PRICE SHOULD FAMILIARIZE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL-VERSED WITH THE LAW ON THE SUBJECT. ANY REMISSNESS ON THEIR PART CAN ONLY BE AT THE COST OF THE NATIONAL EXCHEQ UER AND MUST NECESSARILY RESULT IN LOSS OF REVENUE. AT THE SAME TIME, WE HAV E TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINA LITY IN ALL LEGAL PROCEEDINGS, THAT STATE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 13 1.13 THE HOLNBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS (P) LTD. (1992) 198 ITR 297 (SC) HELD THAT THE SCOPE OF REASSESSMENT IS ONLY WITH REGARD TO THE INCOME ESCAPING ASSESSMENT. THE MATTES WHICH HAVE ATTAINED FINALITY IN ORIGINAL ASSESSMENT CANNOT BE RE-AGITATED IN REASSE SSMENT PROCEEDINGS. THE ASSESSEE AS WELL AS THE AO IS PRECLUDED FROM RE-AGI TATING THE ISSUE IN REASSESSMENT PROCEEDINGS WHICH HAS ATTAINED FINALITY INN ORIGINA L ASSESSMENT PROCEED INGS. THE JURISDICTION OF THE AO IS OUSTED AND IS A FUNCLUS OFFICIO SO FAR AS THE ORIGINAL ASSESSMENT IS CONCERNED. THEREFORE, RE-AGITATING TH E CONCLUDED ISSUES WITHOUT ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H RELATING THERETO CANNOT BE CONSIDERED IN PROCEEDINGS U/S. 153A OF THE ACT. FURTHER, THE ASSESSEE FOR ITS CASE ALSO RELIES ON T HE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SMT. SHAILA AGARWALA AND ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA). 1.14 SIMILAR VIEW HAS BEEN TAKEN BY VARIOUS OTHER H IGH COURTS AND ITAT ON THE SAME ISSUE THAT NO ADDITIONS CAN BE MADE WITHOUT AN Y INCRIMINATING SEIZED MATERIAL IN CASE OF COMPLETED ASSESSMENT U/S. 143(3) OR DEEM ED ASSESSMENT U/S 143(12) OF THE ACT. 1.15 CIT V. LANCY CONSTRUCTIONS (2016) 237 TAXMAN 728 (KARN.) (HC) S. 1153A: ASSESSMENT SEARCH ACCOUNTS WHICH WERE DULY VERI FIED DURING REGULAR ASSESSMENT O F ASSESSEE COULD NOT BE RE-APPRECIATED MERELY BECAUS E FURTHER A SEARCH WAS CONDUCTED IN PREMISES OF ASSESSEE AS SA ME WOULD AMOUNT TO REOPENING OF CONCLUDED ASSESSMENT [S.143(10)]. ASSESSMENTS HA D BEEN COMPLETED UNDER SECTION 143(3) AND UNDER SECTION 143(1). THEREAFTER , A SEARCH WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE. THE AO MADE CERTAIN ADDI TIONS AFTER HOLDING THAT THE ACCOUNTS OF THE ASSESSEE DID NOT TALLY WITH THE COR RESPONDING ACCOUNTS OF THE CREDITORS AND DEBTORS. THE CIT(A) ALLOWED THE ASSES SEES APPEAL, AFTER CONCLUDING THAT NO INCRIMINATING DOCUMENTS WERE FOUND DURING T HE COURSE OF SEARCH, ON THE BASIS OF WHICH ADDITIONS HAD BEEN MADE BY THE AO. THIS FI NDING WAS UPHELD BY THE TRIBUNAL. ON APPEAL, THE HIGH COURT OBSERVED THAT THERE WERE SPECIFIC FINDINGS OF FACT RECORDED BY BOTH THE CIT(A) AND THE TRIBUNAL THAT THERE WERE NO INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH, ON THE BASIS OF WHICH THE ADDITIONS HAD BEEN MADE BY THE AO AND THAT THE ACCOUNTS WERE SUBMITTED BY THE ASSESSEE AT THE TIME OF REGULAR ASSESSMENT WHICH WERE DULY VERIFIED AND ACC EPTED BY THE AO IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS HAVING BEEN FOUND, I F THE ASSESSMENT WAS ALLOWED TO BE REOPENED THE SAME WOULD AMOUNT TO THE REVENUE GE TTING A SECOND OPPORTUNITY TO REOPEN A CONCLUDED ASSESSMENT, WHICH IS NOT PERMISS IBLE. THE HIGH COURT HELD THAT, MERELY BECAUSE A SEARCH WAS CONDUCTED IN THE PREMIS ES OF THE ASSESSEE WOULD NOT ENTITLE THE REVENUE TO INITIATE THE PROCESS OF REAS SESSMENT FOR WHICH THERE WAS A SEPARATE PROCEDURE PRESCRIBED IN THE STATUTE. IT WA S ONLY WHEN THE CONDITIONS PRESCRIBED FOR REASSESSMENT WERE FULFILLED THAT A C ONCLUDED ASSESSMENT COULD BE REOPENED. THE VERY SAME ACCOUNTS WHICH WERE SUBMITT ED Y THE ASSESSEE ON THE BASIS OF WHICH ASSESSMENT HAD BEEN CONCLUDED, COULD NOT BE RE-APPRECIATED BY THE AO MERELY BECAUSE A SEARCH HAD BEEN CONDUCTED IN TH E PREMISES OF THE ASSESSEE (AY 2005-06 TO 2008-09) 1.16 IN SANJAY AGGARWAL VS. DCIT (2014) 40 CCH 0370 (DEL T DRIB), [ORDER DT. 16.06.2014 IN ITA NO.3184/DEL/2013] THE DELHI TRIBU NAL HELD THAT NO ADDITION CAN BE MADE FOR ANY ASSESSMENT YEAR U/S 153A OF INCOME TAX ACT, 1961, ASSESSMENT FOR WHICH IS NOT PENDING ON DATE OF SEARCH, UNLESS ANY INCRIMINATING MATERIAL IS FOUND IN COURSE OF SEARCH. IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 14 1.17 IN MEGHMAN ORGANICS LTD. VS DCIT (2010) 129 TT J (AHD) 255, AHMADABAD BENCH OF THE TRIBUNAL HELD THAT THE AO IS PRECLUDED FROM RE-AGITATING THE ASSESSMENTS WHICH ARE NOT PENDING. 1.18 PCITX V. MITSUIT AND CO. INDIA P.LTD. (2016) 3 84 ITR 360 (DELHI)(HC) S.153A: ASSESSMENT-SEARCH-NO INCRIMINATING MATERIAL FOUND FOR PARTICULAR YEA R- ASSESS MENT IS NOT PERMISSIBLE. DISMISSING THE APPEAL OF REVENUE, THE COURT HELD TH AT; THE TRIBUNAL WAS RIGHT IN HOLDING THAT THERE HAD TO BE INCRIMINATING MATERIAL RECOVERED DURING THE SEARCH QUA THE ASSESSEE IN EACH OF THE YEARS FOR THE PURPOSES OF FRAMING AN ASSESSMENT UNDER SECTION 153A OF THE ACT (AY 1998-99, 1999-2000) 1.19 OM SHAKTHYU AGENCIES (MADRAS) (P) LTD. V. DY. CIT (2016) 157 ITD 1062/177 TTJ 419 (CHENAI) (TRIB.) S. 153A: ASSESSMENT SEAR CH- NOTICE ISSUED FOR THE ASSESSMENT YEAR WHICH HAS BEEN COMPLETED NO INCRI MINATING MATERIAL FOUND DURING THE COURSE OF SEARCH ACTION ASSESSMENT UNDER SECT ION 153A HAD TO BE MADE ONLY AS PER ORIGINAL ASSESSMENT WHICH WAS MADE UNDER SEC TION 1543(1) OR UNDER SECTION 143(3) [S.132, 143(1), 143(3)] WHERE PURSUANT TO SEARCH PROCEEDINGS, NOTICE UNDER SECTION 153A WAS ISSUED, SINCE ASSESSMENT IN RESPECT OF SOME ASSESSMENT YEARS COVE RED BY SAID NOTICE HAD ALREADY BEEN COMPLETED AND, MOREOVER, NO INCRIMINAT ING MATERIAL WAS FOUND DURING SEARCH, ASSESSMENT FOR THOSE ASSESSMENT YEARS COUL D BE MADE ONLY AS PER ORIGINAL ASSESSMENT UNDER SECTION 1143(1) OR 143(3) (AY 2005 -06 TO 2011-12) 1.20 JAIPURIA INFRASTRUCTURE DEVELOPERS V ACIT (DEL HI)(TRIB); (2016) 47 CCH, 0311 (DELHI ITAT) ADDITION-ADDITION ON ACCOUNT OF BOGUS EXPENSES - A SSESSEE FILED RETURN OF INCOME FOR AY 2006-07 DECLARING INCOME OF RS.2,58,59,845 I N RESPONSE TO NOTICE U/S. 153- A IN ORDER TO VERIFY GENUINENESS OF TRANSACTIONS, SUM MONS WERE ISSUED TO AFORESAID PARTIES TO PRODUCE DETAILS OF TRANSACTIONS, VALUE A ND TDS WITH ASSESSEE COMPANY FOR LAST SIX YEARS ALONG WITH THEIR LEDGER ACCOUNT AND COPIES OF AGREEMENT-HOWEVER SUMMONS ISSUED TO VARIOUS PERSONS WERE RECEIVED BAC K UNSERVED-DESPITE DIRECTIONS, ASSESSEE FAILED TO PRODUCE AFORESAID PA RTIES-EVEN NOTICES ISSUED U/S./S 133(6) TO AFORESAID PARTIES WERE RECEIVED BACK UNSE RVED WITH REMARKS INCOMPLETE ADDRESS, WITHOUT HOUSE NUMBER - DURING ASSESSMENT PROCEEDINGS, ONE OF DIRECTORS OF ASSESSEE COMPANY GOT RECORDED STATEMEN T AND FAILED TO PRODUCE PARTIES FOR EXAMINING TO PROVE GENUINENESS OF TRANSACTIONS- CONSEQUENTLY, AMOUNT OF RS.2,34,54,000 WAS TREATED AS BOGUS EXPENSES AND AD DED TO TOTAL INCOME OF ASSESSEE-CIT(A) PARTY ALLOWED APPEAL OF ASSESSEE- H ELD, SO FAR AS ASSESSMENT FOR AY 2006-07 WAS CONCERNED, ASSESSMENT WAS THOUGH COM PLETED U/S. 143(1) BUT UNDISPUTEDLY NO NOTICE WAS ISSUED U/S. 143(2) WITHI N PERIOD OF LIMITATION ON DATE OF SEARCH, MEANING THEREBY NO ASSESSMENT WAS PENDING I N THIS CASE AS ON DATE OF SEARCH I.E. 27.03.2012 AND QUESTION OF ABATEMENT DI D NOT ARISE AND IN THESE CIRCUMSTANCES-ADDITION COULD BE MADE ON BASIS OF IN CRIMINATING MATERIAL UNEARTHED DURING SEARCH ONLY-ADDITION MADE IN BOTH CASES U/S. 153A RED WITH S. 143(3) WAS NOT SUSTAINABLE IN EYES OF LAW, HENCE DELETED- ASSESSEE S APPEAL ALLOWED . 1.21 JADU JEWELLERS & MANUFACTURERS 9(P) LTD. V. ACIT (2016) 130 DTR 17 (JAIPUR)((TRIB.) S. 153A; ASSESSMENT-SEARCH NOT ISSUED NOTICE WITH IN PRESCRIBED LIMIT-ABSENCE OF INCRIMINATING MATERIAL, ORDER WAS HELD TO BE BAD IN LAW.[S.143(2)]. AO HAVING NOT ISSUED NOTICE U/S 143(2) WITHIN THE P RESCRIBED TIME LIMIT PURSUANT TO THE RETURN FILED BY THE ASSESSEE UNDER S. 139(1), N O PROCEEDING WAS PENDING BEFORE THE AO ON THE DATE OF INITIATION OF SEARCH WHICH HA D ABATED, AND THE REVENUE IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 15 AUTHORITIES HAVING FOUND NOT INCRIMINATING DOCUMENT DURING THE COURSE OF SEARCH THE IMPUGNED ORDER PASSED U/S/S 153A R.W.S. 143(3) IS V OID AB INITIO (AY 2008-09) 1.22 TO SUM UP, THE APPELLANT FOR ITS CASE RELIES U PON THE DECISIONS OF VARIOUS JUDICIAL FORUMS AS LISTED OUT ABOVE IN THIS SUBMISSION IN AD DITION TO THE DISCUSSION MADE IN THE PRECEDING PARAGRAPHS TO CONCLUSIVELY SUBMIT THA T THE IMPUGNED ORDER OF RE- ASSESSMENT WAS NULL AND VOID IN LAW FOR WANT OF INH ERENT JURISDICTION U/S. 153A. THE ORDER COMPLETELY FELL OUTSIDE THE PROVISION OF SEC. 153A. THE AOS ORDER WAS IN FLAGRANT VIOLATION OF THE ESTABLISHED JUDICIAL RULI NGS, AS DETAILED IN THIS SUBMISSION. FROM THE DISCUSSION MADE HEREINABOVE, IT IS ESTABLI SHED THAT THE HONBLE JURISDICTIONAL HIGH COURT AND TRIBUNAL HOLD A CONSI STENT VIEW THAT THE ADDITION IN CASE OF SEARCH ASSESSMENTS SHOULD BE MADE ON THE BASIS O F INCRIMINATING MATERIAL IT IS FURTHER SUBMITTED THAT THE ASSESSMENT U/S. 153A MAD E BY THE AO FELL OUTSIDE THE JURISDICTION VESTED IN HIM UNDER THE SAID SECTION. WHEN THE ORDER U/S. 153A/143(3) WAS PASSED, A NUMBER OF AUTHORITATIVE DECISIONS HAD ALREADY BEEN REPORTED TO THE EFFECT THAT THE ASSESSMENT / REASSESSMENT U/S. 153A IS STRICTLY RESTRICTED TO THE UNDISCLOSED INCOME, IF ANY, OF THE ASSESSEE UNEARTH ED DURING THE SEARCH OPERATION; THAT SEC. 153A DOES NOT EMPOWER THE AO TO DO A DE N OVO ASSESSMENT; THAT IS, NO FRESH OR A SECOND TIME VIEWS ON ANY RECEIPT OR EXPE NDITURE CAN BE TAKEN U/S. 153A UNLESS SUCH ACTION ARE WARRANTED BY THE INCRIMINATI NG MATERIAL FOUND/SEIZED DURING THE SEARCH OPERATION. 1.23 IT IS FURTHER SUBMITTED THAT THE AO HAD DONE R EASSESSMENT U/S. 153A AS IF HE WAS EXERCISING POWER U/S. 147 OF THE ACT. THIS WAS BLATANTLY ILLEGAL BECAUSE THE NON-OBSTANTE CLAUSE IN SEC. 153A EXCLUDES FROM ITS SCOPE AND AMBIT SEVERAL PROVISIONS OF THE ACT INCLUDING SEC. 147. 1.24 THE IMPUGNED ORDER U/S 153A WHEN FILTERED THRO UGH THE RATIOS OF THE JUDICIAL RULINGS DISCUSSED AT THE PRECEDING PARAGRAPHS OF TH IS SUBMISSION, COLLAPSES TO THE GROUND LIKE A PACK OF NINE-PINS. IT IS SETTLED THAT REOPENING OF AN ASSESSMENT U/S. 153A CAN BE AUTOMATICALLY TRIGGERED BY AN ACTION U/ S. 132 OR 132A BUT THE SEARCH OR REQUISITION MUST BRING TO SURFACE INCRIMINATING MAT ERIAL OF UNDISCLOSED INCOME TO MAKE ADDITION TO THE ALREADY ASSESSED INCOME. WHEN THE ACTION U/S. 132 OR 132A DOES NOT UNEARTH INCRIMINATING MATERIAL INDICATING A CASE OF UNDISCLOSED INCOME NO ADDITION CAN BE MADE TO THE ALREADY ASSESSED INCOME U/S. 153A. FURTHER, WHERE ADDITION OF UNDISCLOSED INCOME TO THE ALREADY ASSES SED INCOME IS FOUND NOT FEASIBLE ON GROUND OF EVIDENCE AND / OR LAW, THE COMPLETED A SSESSMENT WILL HAVE TO BE REITERATED, THAT IS, THE ALREADY ASSESSED INCOME WI LL BE REPEATED. 1.25 THE AO, IN THE COURSE OF THE REASSESSMENT PROC EEDINGS, REJECTED THE CONTENTION OF THE ASSESSEE THAT THE ITEMS OF REGULAR ASSESSMEN T CANNOT BE ADDED BACK IN THE PROCEEDINGS U/S.153A WHEN NO INCRIMINATING DOCUMENT S WERE FOUND IN THE SEARCH PROCEEDINGS. IT IS FURTHER SUBMITTED THAT THERE IS NO CHANGE IN THE RELEVANT PROVISIONS OF LAW AND THAT NO NEW FACTS OR MATERIAL OR EVIDEN CE IN CONSEQUENCE TO THE SEARCH HAS BEEN BROUGHT ON RECORD AND SO, THE RETURN ALREA DY ACCEPTED BY THE DEPARTMENT CANNOT BE DISTURBED BY THE AO IN THE SEARCH ASSESSM ENT U/S. 153A. 1.26 IN VIEW OF THE AFORESAID DISCUSSION & IN THE F ACTS OF THE INSTANT CASE AND JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, IT IS, THEREF ORE, PRAYED THAT THE IMPUGNED ORDER MAY KINDLY BE VACATED AS THE ADDITION MADE U/ S. 153A CANNOT BE SUSTAINED IN THE EYES OF LAW IN THE RE-ASSESSMENT PROCEEDINGS IN THE ABSENCE OF ANY INCRIMINATING SEIZED MATERIAL DOCUMENT. 5. I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION AS WELL AS DIFFERENT CASE LAWS BROUGHT O N RECORD BY THE AR. THE MAIN ARGUMENT OF THE AR IS THAT ADDITIONS MADE BY THE AO IN THE ASSESSMENT ORDER PASSED U/S 153A/143(3) ARE NOT BASED ON ANY INCRIMI NATING DOCUMENTS/PAPERS SEIZED DURING THE SEARCH OPERATION. THE AR HAS BROU GHT ON RECORD MANY CASE LAWS IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 16 DECIDED BY THE JURISDICTIONAL KOLKATA BENCH OF ITAT AND JURISDICTIONAL CALCUTTA HIGH COURT ON THIS ISSUE. CALCUTTA HIGH COURT HAS TIME A ND AGAIN REITERATED ITS VIEW THAT THE ADDITIONS IN CASE OF THE SEARCH ASSESSMENTS HAS TO BE MADE ON THE BASIS OF INCRIMINATING MATERIAL., SOME OF THE RECENT DECISIO N OF THE HONBLE JURISDICTIONAL HIGH COURT ARE DISCUSSED HEREUNDER. P C IT-2, KOLKATA VS. SALASAR STOCK BROKING LIMITED (IT AT NO. 264 OF 2016) DATED 24.08.2016: (CALCUTTA) IN THIS CASE, THE HONORABLE HIGH COURT OBSERVED THA T THE LD. ITAWT, KOLKATA WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURIS DICTION U/S. 153A OF THE IT ACT TO REOPEN THE CONCLUDED CASES WHEN THE SEARCH & SEIZUR E DID NOT DISCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIE W, THE LD. ITAT RELIED UPON THE JUDGMENTS OF DELHI HIGH COURT IN THE CASE OF CIT(A) VS. KABAUL CHAWALA IN ITA NO. 7007.2014 DATED 28.08.2014. THE COURT ALSO OBSERVED THAT MORE OR LESS AN IDENTICAL VIEW HAS BEEN TAKEN BY THIS BENCH IN ITA NO.661/200 8 IN THE CASE OF CITA VS. VEERPRAABHU MARKETING LIMITED. CONSIDERING THE ABOV E FACTS, THE HONORABLE HIGH COURT DID NOT ADMIT THE APPEAL FILED BY THE DEPARTM ENT. CIT. KOLKATA-III VS. VEERPRABHU MARKETING LTD.[2016] 73 TAXMANN.COM 149 (CALCUTTA); IN THIS CASE THE HNORABLE CALCUTTA HIGH COURT EXPRE SSED THE FOLLOWING VIEWS: WE ARE IN AGREEMENT WITH THE VIEWS OF THE KARNATAK A HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE-REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED UNDER SECTION 153C READ WITH SECTION 153A. IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS MA DE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIO NS CONTAINED UNDER SECTION 153C READ WITH SECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELET ED THOSE DISALLOWANCES. THE HONBLE CALCUTTA HIGH COURT IN THE ABOVE CASES RELI ED ON THE FOLLOWING JUDGMENTS. CIT VS KABUL CHAWLA (2016) 380 ITR 0573 (DEL) SEARCH AND SEIZURE NEWS SCHEME OF ASSESSMENT IN S EARCH CASES- SEARCH WAS CARRIED OUT U/S. 132 ON A LEADING REAL ESTATE DEVEL OPER OPERATING ALL OVER INDIA AND SOME OF ITS GROUP COMPANIES SEARCH WAS ALSO CARRI ED OUT IN THE PREMISES OF THE ASSESSEE-PURSUANT TO THE SEARCH A NOTICE U/S. 153A( 1) WAS ISSUED TO ASSESSEE AND THEREAFTER HE FIELD RETURNS-AS ON THE DATE OF THE S EARCH, NO ASSESSMENT PROCEEDINGS WERE PENDING FOR RELEVANT AYS AND FOR SAID AYS, ASS ESSMENTS WAS ALREADY MADE U/S.143(1), ASSESSEE FILED AN APPLICATION U/S. 154 SEEKING RECTIFICATION OF THE ASSESSMENTS ON THE GROUND THAT THE ACCUMULATED PROF ITS OF THE COMPANIES PAYING THE DIVIDEND WERE LESS THAN THE AMOUNT OF LOAN OR ADVAN CE GIVEN BY THEM TO THE RECIPIENT COMPANIES- AO DECLINED TO RECTIFY THE ASSESSMENTS-C IT ALSO HELD THAT ADDITION NEED NOT BE RESTRICTED ONLY TO THE SEIZED MATERIAL-ITAT ON APPEAL HOWEVER DELETED ADDITION ON GROUNDS THAT THE ADDITIONS MADE FOR RELEVANT AY S U/S. 2(22(E) WERE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPER ATION AND SAME WAS NOT SUSTAINABLE IN LAW- ISSUE WAS WHETHER THE ADDITIONS MADE TO THE INCOME OF THE ASSESSEE FOR THE SAID AYS U/S. 2(22)(E) WAS NOT SUS TAINABLE BECAUSE NO INCRIMINATING MATERIAL CONCERNING SUCH ADDITIONS WERE FOUND DURIN G THE COURSE OF SEARCH AND FURTHER NO ASSESSMENTS FOR SUCH YEARS WERE PENDING ON THE DATE OF SEARCH-HELD, PRESENT APPEALS CONCERNED AYS, 2002-003, 2005-06 AN D 2006-07-ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED -SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED-QUEST ION FRAMED BY THE COU RT WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE-REVENUES APPE AL DISMISSED. IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 17 6. I FURTHER FIND THAT IN THIS REGARD THE HONBLE I TAT KOLKATA HAS TIME AND AGAIN REITERATED ITS VIEW THAT THE ADDITIONS IN CASE OF T HE SEARCH ASSESSMENTS HAS TO BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND ANY DEVIATION FROM THE SAME WOULD RENDER THE ASSESSMENT ORDER INVALID. SOME OF THE RE CENT DECISION OF THE HONBLE JURISDICTIONAL TRIBUNAL IS DISCUSSED HEREUNDER M/S ADHUNIK GASES LTD & OTHERS VS. DCIT C C-XXXX, IT(SS)A NO. 47/KOL/2015, IT(SS)A NO.49/KOL/2015, IT(SS)A NO.50-22/KOL/2015, IT(SS)A NO.54/KOL/2015, IT(SS) NO.55/KOL/2015, IT(SS) NO.94-96/KOL/2015 ORD ER DATED 06.01.2017 ITAT KOLKATA) IN THIS CASE IT IS HELD THAT NO ADDITION U/S. 68 OF THE I. TAX ACT FOR THE SHARE CAPITAL CAN BE MADE IN ABSENCE OF ANY INCRIMINATING MATERIAL. THE CONCLUDING PARA OF THE HONO ITATS ORDER IS AS UNDER. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMI SSIONS OF THE ASSESSEE, AS THE PROPOSITIONS CANVASSED BY THE LD. AR FOR THE AS SESSEE ARE SUPPORTED BY THE JUDGMENTS OF JURISDICTIONAL ITAT AND HON'BLE HI GH COURTS. LD. AR HAS POINTED OUT THAT NO INCRIMINATING DOCUMENTS WAS FOU ND EITHER DURING SURVEY OR DURING SEARCH PROCEDURE. THE STATEMENT OF SHRI NARESH. KUM AR CHHAPERIA SHOULD NOT BE RELIED ON, BECAUSE HE IS A DOUBLE SPEAKING PERSON. THE ASSESSMENT PROCEEDINGS WERE COMPLETED BEFORE THE DATE OF SEARCH. BESIDES, THE TIME LIMIT TO ISSUE NOTICE U/S 143(2} WAS ALSO EXPIRED. IN ORDER TO INITIATE ASSES SMENT PROCEEDINGS U/S 153A, THERE SHOULD BE A NEW OR INCRIMINATING DOCUMENT. THE ASSE SSMENT WHICH IS ALREADY COMPLETED U/ 143(3)/143(1) SHOULD NOT BE' REOPENED . THEREFORE, CONSIDERING THE SCHEME OF SECTION 132 AND SECTION 153AJ WE ARE OF T HE VIEW THAT THERE SHOULD BE SOME NEW DOCUMENT/INCRIMINATING DOCUMENT TO INVOKE THE PROVISIONS OF SECTION. 153A. LD. DR FOR THE REVENUE HAD POINTED OUT THAT T HERE IS A DIRECT NEXUS AMONG THE COMPANIES, WHICH HAS BEEN ESTABLISHED BY THE STATEM ENT OF MR. NARESH KUMAR CHHAPPERIA, WHICH CANNOT BE RELIED ON, AS HE WAS A DOUBLE SPEAKING PERSON. THEREFORE, CONSIDERING THE FACTUAL POSITION AND THE JUDGMENTS CITED BY LD. AR, WE ARE OF THE VIEW THAT THE ADDITIONS MADE BY THE AO U/ S 153A AND CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. THEREFORE, WE DELETE TH E ADDITION,' FURTHERMORE, THE DECISION OF THE JURISDICTIONAL TRI BUNAL IN THE CASE OF M/S TANUJ HOLDINGS PVT LTD VS. DCIT CC-1(2), KOLKATA VIDE ITA T NO. 360 TO 363/KOL/2015 DATED 20.01.2016 IS IMPORTANT. THE RELEVANT PORTION OF TH E ORDER IS REPRODUCED AS UNDER: WE ALSO FIND THAT NO INCRIMINATING MATERIALS WERE F OUND DURING THE SEARCH IN THE RESPECT OF THE ISSUE OF DEEMED DIVIDEND. HENCE IT C ANNOT BE THE SUBJECT MATTER OF ADDITION IN 153C PROCEEDINGS IN RESPECT OF COMPLETE D ASSESSMENTS. WE HOLD THAT WHEN AN ADDITION COULD NOT BE MADE AS PER LAW IN SE CTION 153C PROCEEDINGS, THEN THE SAID ORDER CANNOT BE CONSTRUED AS ERRONEOUS WAR RANTING REVISION JURISDICTION U/S 263 OF THE ACT.' SHRI. MANISH MUNDHRA VS. ACIT-CC-XXX IN ITA-469-470 /KOL/2013 DT. 16.12.2015 IITAT KOLKATA; WE ALSO ARE OF THE VIEW THAT IN THE LIGHT OF THE AD MITTED FACT THAT NO INCRIMINATING MATERIAL WAS FOUND IN THE COURSE OF S EARCH THE IMPUGNED ADDITION EAU LD NOT HAVE BEEN MADE IN THE PROCEEDIN GS U/ S 153A OF THE ACT. THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE O F ACIT VS M/ S. DELHI HOSPITAL SUPPLY PUT. LTD. (SUPRA) FOLLOWED THE DECI SION OF HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAIOLA (SUPRA) SUPPORTS THE PLEA OF THE ASSESSEE IN THIS REGARD ..... IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 18 ACIT-CC-XXVII VS KANCHAN OIL INDUSTRIES LTD. IN ITA -725/KOL/2011 DT. 09.12.2015 [ITAT KOLKATA IN VIEW OF THE AFORESAID FINDINGS AND JUDICIAL PREC EDENT RELIED UPON, WE HOLD THAT THE DENIAL OF DEDUCTION U/S 80IB OF THE ACT IN THE ASSESSMENTS FRAMED U/S 153A OF THE ACT FOR THE ASST YEARS 2003-04 AND 2004 05 WITHOUT ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THOSE ASSESSMENT YEARS IS NOT WARRANTED AND HELD AS NOT IN ACCORDANCE WITH LAW. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD FOR THE ASSESSMENT YEAR'S 200304 AND 2004-05 ARE DISMISSED . WE HOLD THAT THE SAME DECISION WOULD BE APPLICABLE FOR THE DISALLOWANCE MADE BY THE LEARNED AO U/ S 14A OF THE ACT AND ACCO RDINGLY NO DISALLOWANCE U/ S 14A OF THE ACT COULD BE MADE FOR THE ASST YEAR 2004-05 BY THE LEARNED AO IN THE ASSESSMENT FRAMED U/S 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH REGARD TO THE RELEVANT ASSESSMENT YEAR AND WITH REGARD TO THE REL EVANT ISSUE. WITH REGARD TO THE CLAIM OF DEDUCTION U/ S 801B OF THE ACT [OR THE ASST YEARS 2007-08 AND 2008-09 ARE CONCERNED, WE FIND THAT THE SAME IS ONLY CONSEQUENTIAL IN NATURE AND ONCE THE ASSESSEE HAS B EEN GRANTED DEDUCTION U/ S 80IB THE ACT FOR THE INITIAL ASSESSMENT YEAR I .E. ASST YEAR 2003-04, THE GRANT OF DEDUCTION UNDER THE SAID SECTION IN. RESPE CT OF THE SAME UNIT IS ONLY ACADEMIC AND HENCE THE ASSESSEE IS ENTITLED FOR DED UCTION U/S 801B OF THE ACT FOR THE ASST YEARS 2007-08 AND 2008-09. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IN TH IS REGARD FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 ARE DISMISSED. ' SINCE THE DECISIONS ARE RENDERED BY US ON LEGAL GRO UNDS, WE REFRAIN TO GIVE OUR DECISION ON THE MERITS OF THE ISSUES. BUDHIYA MARKETING PVT. LTD. & ORS. VS. ACIT IN ITA NOS- 1545-1546/KOL./2012 [REPORTED IN 1201S] 44 CCH 03441DT. 10.07.2015 ITAT KOLKATA 'THE ISSUE WHETHER THE ADDITION IN AN ASSESSMENT FR AMED UNDER SECTION 153A CAN BE MADE ON THE BASIS OF THE INCRIMINATING MATER IAL FOUND DURING THE COURSE OF THE SEARCH WHERE THE ASSESSMENT HAS NOT B EEN ABATED, HAS NOT BEEN CONSIDERED OR DECIDED BY THIS TRIBUNAL. THEREF ORE, THIS DECISION, IN OUR OPINION WILL NOT ASSIST THE REVENUE WHILE DISPOSING OF THE PLEA OF THE ASSESSEE THAT SINCE NO INCRIMINATING MATERIAL IS FOUND DURIN G THE COURSE OF THE SEARCH RELATING TO THE SHARE CAPITAL AND THE SHARE PREMIUM , THEREFORE, NO ADDITION CAN BE MADE WHILE MAKING AN ASSESSMENT UNDER SECTION 15 3A OF THE INCOME TAX ACT. NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLE DGE BY THE ID. D.R. IN VIEW OF THE AFORESAID DISCUSSION AND THE DECISION O F THE HON'BLE SPECIAL BENCH, BOMBAY HIGH COURT, AS WELL AS HON'BLE DELHI HIGH COURT, WE CONFIRM THE ORDER OF THE CIT(APPEALS) DELETING THE ADDITION MADE IN EACH OF THE ASSESSMENT YEARS AS WE HOLD THAT THE ASSESSING OFFI CER WAS NOT CORRECT IN LAW IN MAKING THE ADDITION IN THE ASSESSMENT MADE U NDER SECTION 153A READ WITH SECTION 143(3) WHEN NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF THE SEARCH IN RESPECT OF THE ADDITION MAD E BY HIM. WE ACCORDINGLY PARTLY ALLOWED THE CROSS OBJECTIONS TAKEN BY THE AS SESSEE. ACIT VS. SHANTI KUMAR SURANA & ORS. IN IT(SS}A NOS. 12 TO 20 AND CO NOS. 13 TO 20 (REPORTED IN 44 CCH 241) ORDER DT. 2Z.06.2015 [I TAT KOLKATA] 'IN. VIEW OF THE FACTS IN ENTIRETY AND THE LEGAL PR INCIPLES ENUNCIATED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF CONTINENTAL WAREHO USING CORPORATION IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 19 (NHAVA SHEVA) LTD., SUPRA, OF HON'BLE ALLAHABAD HIG H COURT IN THE CASE OF SHAILA AGARWAL, SUPRA AND MUMBAI SPECIAL BENCH DECI SION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS, SUPRA, WE ARE OF THE VIEW T HAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE PRESENT CASE FOR THESE ASSESSMENT YEARS, EXCEPT THE STATEMENT OF ONE SHRI SAMBHU KR MORE, AS ADMITTED BY THE AO IN HIS REMAND REPORT DA TED 23.09.2011 AND DESPITE NUMBER OF OPPORTUNITIES REVENUE COULD NOT P RODUCE ANY INCRIMINATING MATERIAL BEFORE THE BENCH AND THE ASSESSMENTS ARE A LREADY COMPLETED FOR THESE ASSESSMENT YEARS ORIGINALLY, THE ASSESSMENTS FRAMED U/ S. 153A OF THE ACT IS IN VALID AND HENCE, QUASHED.' TRISHUL HITECH INDUSTRIES LTD VS. DCITMCC-XI. IT(SS )A84-86/KOL/2011 DT. 24.09.2014 (ITAT KOLKATA); FROM THE ABOVE VARIOUS DISCUSSIONS AND PRECEDENCE W E ARE OF THE CONSIDERED VIEW THAT ASSESSMENT IN THE IMPUGNED ASS ESSMENT YEARS HAVE BEEN COMPLETED U/ S 143(3} OF THE ACT. HENCE THE AS SESSMENT FOR THE CONCERNED ASSESSMENT YEAR DOES NOT ABATE. HENCE DE HORSE ANY INCRIMINATING MATERIAL, AO CANNOT MADE ANY ADDITION IN THESE CASES. ACCORDINGLY WE HOLD THAT ASSESSMENT U/S 153C OF THE ACT IN THESE CASES DE HORSE ANY INCRIMINATING MATERIAL IS NOT SUSTAINABLE . HENCE WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSU E IN FAVOUR OF ASSESSEE. SINCE WE ARE QUASHING THE APPEALS ON JURISDICTION W E ARE NOT ADJUDICATING THE MERITS OF THE APPEAL AS THE SAME IS NOW ONLY OF ACA DEMIC INTEREST. ' DCIT VS. MERLIN PROJECT LTD. IT(SS)A NO-138/KOL/201 1 DT. 14.11.2013 (ITAT KOLKATA) 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACT ABOUT THIS CASE IS THA T THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) IN WHI CH DEDUCT ION WAS ALLOWED IN ENTIRETY UNDER SECT ION 80IB OF THE ACT INTER ALIA ON THE AMOUNT OF INTEREST INCOME. IT IS ALSO UNDISPUTED THAT NO INCR IMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH CASTING DOUBT ABOUT THE ALLOWABILITY OR OTHERWISE OF SUCH DEDUCTION UNDER SECTION 80. THIS FACT HAS B EEN FAIRLY ADMITTED BY ID. D.R. DURING THE COURSE OF PROCEEDINGS BEFORE US AS WELL. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ACI T VS. PRATIBHA INDUSTRIES (2013) 141 ITD 151 (MUM.) HAS HELD, INTER ALIA, THAT HAVIN G DONE ORIGINAL ASSESSMENT U/S 143(3), IF NO INCRIMINATING MATERIAL IS FOUND DURIN G THE COURSE OF SEARCH, THEN IT IS PERMISSIBLE TO MAKE ANY ADDITION IN THE ASSESSMENT UNDER SECTION 153A PURSUANT TO SEARCH ACT ION. THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF ALL CARGO GLOBAL LOGISTICS LIMITED VS. DCIT (2012) 137 ITD 217 (SB)( MUM.) HAS ALSO HELD TO THE SAME EXTENT . IN VIEW OF THE FOREGOING DISCUSSION, WE AR E OF THE CONSIDERED OPINION THAT NO EXCEPTION CAN BE FOUND TO THE VIEW TAKEN BY CIT(APP EALS) FOR DECIDING THIS ISSUE IN ASSESSEE'S FAVOUR. BEFORE PARTING WITH THIS MATTER, WE WANT TO MAKE IT CLEAR THAT OUR DECISION IS BASED IN THE BACKDROP OF THE FACTS THAT THE DEDUCT ION UNDER SECT ION 80IB COULD NOT HAVE BEEN TINKERED WITH BECAUSE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ON THIS ISSUE WHEN ORIGINAL ASSESSMENT GRANT ING DEDUCT ION ON THIS ISSUE WAS COMPLETED UNDER SECT ION 143(3). WE HAVE NOT EXPRES SED ANY OPINION ON THE MERITS OF THE CASE ABOUT THE ALLOW ABILITY OR OTHERWISE OF DEDUCT ION UNDER 80IB ON INTEREST INCOME ARISING IN THE PRESENT FACTS AND CIRCUMSTANC ES. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAN DS DISMISSED.' LMJ INTERNATIONAL LTD VS. DCIT12008) 119 TTJ (KOL) 214. (ITAT KOLKATA); 'WHERE NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS CA NNOT BE DISTURBED; IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 20 ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROCEEDINGS UNDER S. 153A/153C WHEN NO INCRIMINATING DOCUMENTS WERE F OUND IN RESPECT OF THE DISALLOWED AMOUNTS IN THE SEARCH PROCEEDINGS. FURTHERMORE, THE HON'BLE SUPREME COURT HAS DISMISSE D DEPARTMENT'S SPECIAL LEAVE PETITION(SLP) AGAINST THE JUDGMENT DT .06-07-2015 OF THE DELHI HIGH COURT IN ITA NO.369 OF 2015 WHERE THE HIGH COU RT HELD THAT NO SUBSTANTIAL QUESTION OF LAW AROSE SINCE THERE WAS F ACTUAL FINDINGS THAT NO INCRIMINATING EVIDENCE RELATE TO SHARE CAPITAL ISSU ED WAS FOUND DURING THE COURSE OF SEARCH. THE AR HAS FILED A WRITTEN SUBMIS SION ON THIS ISSUE WHICH IS AS UNDER: 'WHETHER SECTION 68 COULD BE INVOKED WHERE NO INCRI MINATING EVIDENCE RELATED TO SHARE CAPITAL FOUND. 7-12-2015 : THEIR LORDSHIPS MADAN B LOKUR AND S A B OBDE JJ DISMISSED THE DEPARTMENT'S SPECIAL LEAVE PETITION AGAINST THE JUD GMENT DATED JULY 6, 2015 OF THE DELHI HIGH COURT IN ITA NO.369 OF 2015, WHEREBY THE HIGH COURT HELD THAT NO SUBSTANTIAL QUESTION OF LAW AROSE SINCE THERE WAS A FACTUAL FINDING THAT NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISS UED WAS FOUND DURING THE COURSE OF SEARCH AND THAT THE ASSESSING OFFICER WAS NOT JUSTI FIED IN INVOKING SECTION 68 OF THE ACT FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL PR. CIT V KURELE PAPER MILLS P LTD, SLP (C) NO.34554 OF 2015'. 7. THE AR HAS ALSO BROUGHT ON RECORD THE CASE LAW O F CIT, KOLKATA-ILL VS VEERPRABHU MARKETING LTD 12016] 73 TAXMANN 149 KOLKATA IN THIS CASE THE HONORABLE CALCUTTA HIGH COURT EXPRESSED THE FOLLOWING VIEWS: 'WE ARE IN AGREEMENT WITH THE VIEWS OF THE KARNATAK A HIGH 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 MA DE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PRO VISIONS CONTAINED UNDER SECTION 153C READ WITH SECTION 153A. THE DISALLOWAN CES MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES.' THE HON'BLE KOLKTA HIGH COURT IN THE ABOVE CASES RE LIED ON THE FOLLOWING JUDGMENTS. CIT VS. KABUL CHAWLA (2016) 380 ITR 0573 (DEL) SEARCH AND SEIZURE-NEW SCHEME OF ASSESSMENT IN SEAR CH CASE- SEARCH WAS CARRIED OUT U/S 132 ON A LEADING REAL ESTATE DEVELOPER OPER ATING ALL OVER INDIA AND SOME OF ITS GROUP COMPANIES-SEARCH WAS ALSO CARRIED OUT IN THE PREMISES OF THE ASSESSEE- PURSUANT TO THE SEARCH A NOTICE U/S 15A(1) WAS ISSU ED TO ASSESSEE AND THEREAFTER HE FILED RETURNS-AS ON THE DATE OF THE SEARCH, NO ASSE SSMENT PROCEEDINGS WERE PENDING FOR RELEVANT AYS AND FOR SAID AYS, ASSESSMENTS WAS ALREADY MADE U/S 143(1), ASSESSEE FILED AN APPLICATION U/S 154 SEEKING RECTI FICATION OF THE ASSESSMENTS ON THE GROUND THAT THE ACCUMULATED PROFITS OF THE COMPANIE S PAYING THE DIVIDEND WERE LESS THAN THE AMOUNT OF LOAN OR ADVANCE GIVEN BY THEM TO THE RECIPIENT COMPANIES- AO DECLINED TO RECTIFY THE ASSESSMENTS-CIT ALSO HELD T HAT ADDITION NEED NOT BE RESTRICTED ONLY TO THE SEIZED MATERIAL-ITAT ON APPEAL HOWEVER DELETED ADDITION ON GROUNDS THAT THE ADDITIONS MADE FOR RELEVANT AY'S U/S 2(22)(E) W ERE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION AND SAME WAS NOT SUSTAINABLE IN LAW- ISSUE WAS WHETHER THE ADDITIONS MADE TO THE INCOME OF THE ASSESSEE FOR THE SAID AYS U/S 2(22)(E) WAS NOT SUSTAINABLE BECAUSE NO INCRIMINATI NG MATERIAL CONCERNING SUCH ADDITIONS WERE FOUND DURING THE COURSE OF SEARCH AN D FURTHER NO ASSESSMENTS FOR SUCH YEARS WERE PENDING ON THE DATE OF SEARCH-HELD, PRESENT APPEALS CONCERNED A IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 21 YS, 2002-03, 2005-06 AND 200607-ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED-SINCE NO INCRIMINATING MATE RIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE IN COME ALREADY ASSESSED- QUESTION FRAMED BY THE COURT WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE----REVENUE'S APPEAL DISMISSED IT WAS ALSO INFORMED/BROUGHT ON RECORD THAT THE ORD ER PASSED BY THE HON'BLE CALCUTTA HIGH COURT HAS ATTAINED FINALITY AS THE CBDT IN IT' S LETTER NO.ADG(L&R)-II/EZ/ PR.CIT(C)-1/KOLKATA/ 1184/20 16/729 DT.07/08-02-201 7 HAS INTIMATED THAT THE PROPOSAL TO FILE SLP IN ABOVE CASE HAS NOT BEEN APP ROVED BY THE BOARD'. APART FROM ABOVE MENTIONED CASE LAWS BROUGHT ON REC ORD, THE AR HAS ALSO FILED COPIES OF APPEAL ORDERS IN DIFFERENT CASES PASSED B Y MY THREE ESTEEMED PREDECESSORS ON THE SAME ISSUE WHEREIN THEY HAVE DI SCUSSED IN LENGTH AND ARRIVED AT CONCLUSION THAT ADDITIONS IN SEARCH ASSESSMENTS UJ S 153A/ 153C CANNOT BE MADE EXCEPT ON THE BASIS OF THE INCRIMINATING MATERIAL F OUND IN THE SEARCH. (REFERENCE A) APPEAL NO.442JCC-3(1)/CIT(A)-21/14-15, DATE OF ORDER 05-12-2014, B) APPEAL NO.440/CC-3(L)/CIT(A)-21/14-15, DATE OF ORDER 15-01-2015 C} APPEAL NO.547/CC-3(1)/CIT(AJ-21/14-5, DATE OF OR DER 10-04-2015 D) APPEAL NO.129/CC-XVII/CIT(A)-I/09-10, DATE OF OR DER 23-09-2010 E] APPEAL NO.292/CC-VI/CIT(A)-C-VI/11-12, DATE OF O RDER 23-10-2013. I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASS ESSMENT ORDER, DIFFERENT CASE LAWS BROUGHT ON RECORD AND APPEAL ORDERS PASSED BY MY PR EDECESSORS ON THIS LEGAL ISSUE. I FIND FROM THE ASSESSMENT ORDER THAT DURING THE SE ARCH AND SEIZURE OPERATIONS CONDUCTED U/S 132 OF THE I T ACT, 1961, INCRIMINATI NG DOCUMENTS/PAPERS WERE NOT SEIZED. AT LEAST, ADDITIONS MADE BY THE AO IN THE ASSESSMENT ORDER PASSED U/S 153A/143(3) ARE NOT BASED ON ANY INCRIMINATING DOCU MENTS/PAPERS SEIZED DURING THE SEARCH OPERATION. IT WOULD ALSO NOT BE OUT OF CONTE XT TO MENTION HERE THAT IN THIS CASE, ON THE DATE OF SEARCH, NO ASSESSMENT FOR THIS YEAR WAS PENDING. THEREFORE, KEEPING IN VIEW THE RATIO DECIDED BY THE JURISDICTIONAL BEN CH OF KOLKATA TRIBUNAL IN CASES REFERRED ABOVE AND THE RATIO DECIDED BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARKETING LTD (SUPRA) IN THE LIGHT O F CB DT'S DECISION OF NOT FILING SLP IN THIS CASE IN THE SUPREME COURT AND KEEPING IN VI EW THE APEX COURT'S DECISION TO DISMISS SLP ON SIMILAR ISSUE IN THE CASE OF PRCIT V S KURELE PAPER MILLS PVT LTD SLP (C) NO.34554 OF 2015 DT.07-12-2015, I AM OF THIS VI EW THAT IN ORDER TO MAINTAIN JUDICIAL CONTINUITY ON THIS ISSUE AND RESPECTFULLY FOLLOWING THE RATIO DECIDED BY THE HORI'BLE CALCUTTA HIGH COURT IN THE CASE OF VEER PR ABHU MARKETING LTD (SUPRA), ASSESSEE'S APPEAL ON GROUNDS NO 1 IS ALLOWED AND AS SUCH I AM NOT INCLINED TO ADJUDICATE APPEAL ON GROUND NO. 2 ON MERIT. 4. LEARNED CIT-DR HAS FILED BEFORE US A DETAILED SE T OF WRITTEN SUBMISSIONS READING AS UNDER:- THE ASSESSEE COMPANY IS THE ONE OF THE GROUP COMPA NIES OF THE RASHMI GROUP. DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO THE A SSESSMENT YEAR 2008-09, THE ASSESSEE RAISED SHARE CAPITAL OF RS.2, 69 ,00, 000/ -(CAPITAL OF RS.53,80,000/- AND PREMIUM OF RS.2,15,20,000/-) FROM 14 COMPANIES BY I SSUING 5,38,000 EQUITY SHARES OF RS. 10 EACH ON PREMIUM OF RS.40/- PER SHARE]. DU RING THE SEARCH OPERATION, THE DETAILED CASH TRAILS WERE PREPARED [COPY ENCLOSED] IT WAS FOUND THAT THE CASH DEPOSITED IN SOME JAMAKHARCHI COMPANIES PASSED THRO UGH SEVERAL LAYERS OF OTHER JAMKHARCHI COMPANIES AND ULTIMATELY RECEIVED BY M/S IMAGE VINIMAY (P) LTD. IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 22 NOTICE U/S 131 ISSUED ON VARIOUS DATES TO THE D IRECTORS OF THE: SUBSCRIBER COMPANIES. IN SOME CASES THE SAME RETURNED UNSERVED WITH THE: REMARKS NO SUCH COMPANY . THE A/R OF THE ASSESSEE IN RESPECT OF UNSERVED SU MMONS U/S 131 SUBMITTED BEFORE THE AO THAT THESE ADDRESSEES OF THE SUMMONS WERE NO LON GER SHAREHOLDERS OF THE: GROUP COMPANIES AND THEREFORE THE: ASSESSEE HAD NO CONTRO L OVER THEM AND HE WAS UNAWARE OF THEIR WHEREABOUTS. DURING THE COURSE OF SEARCH & SEIZURE OPERATION IN THE CASE OF THE ASSESSEE THE STATEMENTS OF THE ENTRY OPERATORS (MITHLESH KUMAR M ISHRA, GOPAL MAITY, MURALI KUMAR MISHRA) AS WELL AS OF THE DUMMY DIRECTORS OF THE CO MPANIES CONTROLLED BY THE ENTRY OPERATORS WERE RECORDED U/S. 131 OF THE INCOME TAX ACT,1961 BY THE DDIT (INV.), KOLKATA. ALL THE DIRECTORS CATEGORICALLY STATED THA T THEY WERE BASICALLY DUMMY DIRECTORS AND THE CONTROL OF THE COMPANIES LIE WITH THE ENTRY OPERATORS. ALL OF THEM STATED UNDER OATH THAT THEY HAD PROVIDED ACCOMMODATION ENTRIES T O THE ASSESSEE. IT IS ALSO SUBMITTED THAT SEARCH & SEIZURE AND SU RVEY OPERATION WERE CONDUCTED IN THE CASES OF VARIOUS ENTRY OPERATORS SUCH AS SHRI JIVEN DRA MISHRA, SHRI BENI PRASAD LAHOTI AND SHRI HARI PRASAD RATHI, SHRI RAGHWENDRA KUMAR A ND SHRI AMIT KUMAR SHYAMSUKHA. DURING THE SAID OPERATIONS, STATEMENTS WERE RECORDE D WHEREIN THEY ADMITTED THAT THEY HAD PROVIDED ACCOMMODATION ENTRY IN THE FORM OF SHA RE CAPITAL AND SHARE PREMIUM TO M/S. RASHMI CEMENT LTD., M/S. RASHMI METALIKS LTD . M/S.,ORISSA METALIKS PVT. LTD., SURSADHANA SPONGE AND ISPAT PVT. LTD., ETC. IN LIEU OF COMMISSION FROM THE COMPANIES CONTROLLED BY THEM. THE STATEMENT OF THE SHRI BENI PRASAD LAHOTI, AN ENTRY OPERATOR, WAS ALSO RECORDED IN THE COURSE OF THE SEARCH & SEIZURE OPERATION WHEREI N HE ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRY TO THE FOLLOWING SHARE HOLDERS OF THE ASSESSEE: ACHI FINANCE & MANAGEMENT CONSULTANCY PVT. L TD NILIMANI BARTER PVT. LTD. HOPE WELL DISTRIBUTER P. LTD. SUGAM COMMODEAL P.LTD. KHUSHI VYPAR P. LTD. FURTHER, SHRI BENI PRASAD LAHOTI PROVIDED THE CAS H TRAII TO THE INVESTIGATION WING AND ALSO NARRATED THE MODUS OPERANDI AS TO HOW THE UNAC COUNTED MONEY OF RASHMI GROUP HAD BEEN ROUTED THROUGH VARIOUS SHELL COMPANIES IN GUISE OF SHARE CAPITAL. SHRI JIVENDRA MISHRA, AN ENTRY OPERATOR, IN HIS R ECORDED STATEMENT ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRY TO THE FOLLOWING SHARE HOLDERS OF THE ASSESSEE COMPANY: BHAVSAGAR VINIMAY PVT. LTD. GILTEDGE VINCOM PVT. LTD. DEVRAAJ MERCANTILE PVT. LTD. ABHARANI VINIMAY PVT. LTD. DURING THE ASSESSMENT PROCEEDINGS U/S 153A, IT AP PEARS THAT THE ENTRY OPERATORS HAD RETRACTED FROM THEIR STATEMENTS RECORDED UNDER OATH DURING THE COURSE OF SEARCH OPERATION. RETRACTION FROM THE STATEMENT UNDER THE OATH OPENS THE ROAD FOR SUCH PERSONS TO BE PROSECUTED FOR GIVING FALSE STATEMENT. IT IS SEEN FROM THE SEIZED DOCUMENTS THAT THE ERS TWHILE SHARE SUBSCRIBING COMPANIES HAD TRANSFERRED THE SHARES TO M/S. SAJJAN KUMAR PAT WARI (HUF) AT A RELATIVELY LOW PRICE; @ RS.10/- PER SHARE. SHRI SAJJAN KUMAR PATWARI IS T HE KEY PERSON OF THE RASHMI GROUP. IT IS NOTEWORTHY THAT THE SHARES WERE SUBSCRIBED BY THE ORIGINAL SHAREHOLDERS @ RS.50/- PER SHARES. IT IS ALSO APPARENT FROM THE BALANCE SH EET OF M/S. SAJJAN KUMAR PATWARI (HUF) THAT IT PURCHASED 4,00,000 SHARES OF M/S. IMA GE VINIMAY (P) LTD. AS SUCH, THE ASSESSEE GROUP ULTIMATELY BROUGHT BACK ITS UNACCOUN TED MONEY IN ITS BOOKS BY ROTATING THE FUNDS. IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 23 IN VIEW OF THE ABOVE, THE AO TREATED THE SHARE CA PITAL AS UNACCOUNTED INCOME OF THE ASSESSEE COMPANY AND ADDED BACK THE SAME U/S. 68 IN THE ABSENCE OF GENUINENESS AND CREDITWORTHINESS OF TRANSACTION. BEING AGGRIEVED WITH THE ORDER OF THE AO, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO INTER-ALIA HIS ORDER DT.22.03.2017 IN AP PEAL NO.484/CIT(A)-20/CC-2(2)115-16 ON THE GROUND THAT THE ADDITION MADE IN THE ORDER U /S. 153A/143(3) WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND/SEIZED IN THE COURSE O F THE SEARCH. THE DEPARTMENT FILED APPEAL BEFORE THE HON'BLE IT AT, KOLKATA AGAINST THE ORDER OF THE CIT(A) DELETING THE ADDITION ON THE GROUND THAT NO INCRIMINATING MATERIALS WERE FOUND/ SEIZED DURING THE SEARCH. IN THIS CONNECTION, IT IS SUBMITTED THAT CERTAIN DOCUMENTS WERE FOUND & SEIZED IN THE COURSE OF THE SEARCH CARRIED OUT AT THE VARIOUS PRE MISES OF THE RASHMI GROUP AND CERTAIN ENTRY OPERATORS. THEY WERE EXAMINED AND THE AUTHORITIES OBSERVED THE THEREFROM THAT THE ASSESSEE HAD ROUTED ITS CASH IN THE GARB O F SHARE CAPITAL. THUS, IT IS INCORRECT, MISREPRESENTATION AND FARFETCHED THAT THE ADDITIONS WERE NOT BASED ON THE INCRIMINATING MATERIALS. FURTHER YOUR KIND ATTENTION IS INVITED T O THE ORDERS IN THE CASES WHERE NO INCRIMINATING MATERIAL IS NOT FOUND: 1. GOPAL LAL BHADRUKA V. DEPUTY COMMISSIONER OF INC OME-TAX [2012] 27 TAXMANN.COM 167 (ANDHRA PRADESH) SECTION 158BD, READ WITH SECTI ON 158BI OF THE INCOME-TAX ACT, 1961 - BLOCK ASSESSMENT IN SEARCH CASES - UNDISCLOS ED INCOME OF ANY OTHER PERSON - FOR PURPOSES OF SECTION 153A/153C ASSESSING OFFICER CAN TAKE INTO CONSIDERATION MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING SEARC H OPERATION FOR MAKING AN ASSESSMENT OF UNDISCLOSED INCOME OF ASSESSEE [IN FA VOUR OF REVENUE] THE QUESTION OF LAW AGITATED BEFORE THE TRIBUNAL WA S WHETHER, FOR THE PURPOSE OF COMPUTING INCOME UNDER SECTION 153A/153C, THE ASSES SING OFFICER WAS REQUIRED TO CONFINE HIMSELF ONLY TO THE MATERIAL FOUND DURING T HE COURSE OF SEARCH OPERATIONS. THE TRIBUNAL HELD AGAINST THE ASSESSEES. HELD THAT BY VIRTUE OF SECTION 158B-I THE VARIOUS P ROVISIONS OF CHAPTER XIV-B ARE MADE INAPPLICABLE TO PROCEEDINGS UNDER SECTION 153A/153C . THE EFFECT OF THIS IS THAT WHILE THE PROVISIONS OF CHAPTER XIV-B LIMIT THE INQUIRY BY TH E ASSESSING OFFICER TO THOSE MATERIALS FOUND DURING THE SEARCH AND SEIZURE OPERATION, NO S UCH LIMITATION IS FOUND INSOFAR AS SECTION 153A/153C IS CONCERNED. THEREFORE, IT FOLLO WS THAT FOR THE PURPOSES OF SECTION 153A/153C THE ASSESSING OFFICER CAN TAKE INTO CONSI DERATION MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND SEIZURE OPERATI ON FOR MAKING AN ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. 2. COMMISSIONER OF INCOME-TAX V. CHETAN DAS LACHMAN DAS [2012] 25 TAXMANN.COM 227 (DELHI) SECTION 153A OF THE INCOME-TAX ACT, 196 1 - SEARCH OR SEIZURE - ASSESSMENT IN CASE OF - ASSESSMENT YEARS 2000-01 TO 2006-07 - WHETHER THERE IS NO CONDITION IN SECTION 153A THAT ADDITIONS SHOULD STRICTLY BE MADE ON BASIS OF EVIDENCE FOUND IN COURSE OF SEARCH OR OTHER POST-SEARCH MATERIAL OR INFORMAT ION AVAILABLE WITH ASSESSING OFFICER WHICH CAN BE RELATED TO EVIDENCE FOUND - HELD, YES - WHETHER SEIZED MATERIAL CAN ALSO BE RELIED UPON TO DREW INFERENCE THAT THERE CAN BE SIMILAR TRANSACTIONS THROUGHOUT PERIOD OF SIX VEERS COVERED BY SECTION 153A- HELD, YES [IN FAVOUR OF REVENUE]. IT IS FURTHER SUBMITTED THAT THE CALCUTTA HIGH COUR T IN THE CASE OF M/S, EASTERN COMMERCIAL ENTERPRISE (1994) :210 ITR 103 (CAL) & M /S, BANGODAYAL COTTON MILLS LTD (2011) 330 ITR 104 HELD THAT THE RIGHT TO CROSS EXA MINATION OF A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT AND OPPORTUNITY OF SUCH CROSS EXAMINATION IS ONE, OF THE CORNER STONE OF NATURAL JUSTICE. AS THE ASSESSE E WAS NOT GIVEN OPPORTUNITY OF CROSS- EXAMINATION BOTH THE CASES WERE REMANDED BACK TO TH E AO TO RECONSIDER THE MATTER AFRESH. HENCE. ON THIS GROUND, THE ADDITION CAN'T B E DELETED. IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 24 IN VIEW OF THE FACTS NARRATED IN THE PRECEDING PARA GRAPHS, IT IS SUBMITTED THAT THE ORDER' OF THE CIT(A) IS PERVERSE, BAD IN LAW AND HENCE LEGAL LY UNSUSTAINABLE. 5. IT IS ACCORDING PRAYED AT THE REVENUES BEHEST T HAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN QUASHING THE IMPUGNED ASSESS MENT / PROCEEDINGS FOR WANT OF ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH IN ISSUE DATED 18.02.2013. LEARNED COUNSEL INVITES OUR ATTENTION TO SEC. 153C ASSESSMENT ORDER DATED 31.03.2015 IN M/S SAJJAN KUM AR PATWARI HUFS CASE NOT MAKING ANY SUCH ADDITION THEN ACCEPTING GE NUINENESS OF SUMS INVOLVED. MR. TULSYAN THEREAFTER PLACES ON RECORD T HIS TRIBUNALS DECISION IN ASSESSEES CASES ITSELF IN IT(SS)A NO.63-65/2017 F OR AYS 2007-08 & 2009-10 TO 2010-11 DECIDED ON 16.01.2019 AS UNDER:- 3. THE ASSESSEE IS A COMPANY. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT, WAS CONDUCTED AT THE BUSINESS AND RESIDENTIAL PREMISES OF RASHMI GROUP AT KOLKATA AND OTHER PLACES, ON 18/02/2013. THEREAFTER THE ASSESSING OFFICER ISSUED NOTICES U/S 153A WERE SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED REVISED RETURN FOR THE ASSESSMENT YE ARS DECLARED THE SAME LOSS. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT ON 31/03/2015. 4.1. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN A PPEAL. THE LD. FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. HE RELIED ON THE DEC ISIONS OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PCIT VS. SALASAR STOCK BROKING LIMITED (ITA NO.264 OF 2016) DT. 24.08.2016 AND THE JUDGMENT IN THE CASE OF CIT VS. VEERPRABHU MARKETING LTD. [2016] 73 TAXMANN.COM 149 (CALCUTTA) AND HELD THAT, INCRIMINATING MATERIAL IS A PREREQUISITE FOR MAKING ADDITIONS IN AN ASSESSMENT FRAMED U/S 153A/143(3) OF THE ACT, WHEREVER ASSESSMENTS FOR THE RESPECTIVE ASSESS MENT YEARS HAVE NOT ABATED. HE POINTED OUT THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS CONCURRED WITH THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. KABUL CHAWLA (2016) 380 ITR 0573 (DEL) . HE FURTHER RELIED UPON A NUMBER OF DECISIONS OF T HE ITAT KOLKATA BENCH AND DELETED ALL THE ADDITIONS MADE IN THE ASS ESSMENT U/S 153A/143(3), ON THE GROUND THAT THEY WERE NOT BASED ON ANY INCRIMINATIN G MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS AND AS THE ASSESSMENTS FOR THESE ASSESSMENT YEARS HAVE NOT ABATED. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- I. THAT THE LD.CIT(A) HAS ERRED IN ADJUDICATING TH E MATTER WITHOUT MAKING ANY INDEPENDENT ENQUIRY TO DETERMINE THE EXI STENCE OF INCRIMINATING EVIDENCE IN THE SEIZED MATERIAL. II. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE TH AT A SPECIAL LEAVE PETITION HAS BEEN ADMITTED BY THE HON'BLE SUPREME C OURT IN [2017] 79 TAXMAN 115(SC) CIT-7 VS RRJ SECURITIES LTD] ON THE ISSUE/JUDICIAL PRONOUNCEMENTS WHICH HAS BEEN OVERLOOKED BY THE CIT (A), WHILE ADJUDICATING THE MATTER. III. LD. CIT(A) HAS ALSO ERRED IN MAKING COMPARISON WITH THE CASE OF VEER PRABHU MARKETING AS IN THE INSTANT CASE THE NOTICE WAS ISSUED U/S 153C IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 25 AND NOT U/S 153A AS DONE IN THE CASE OF THE ASSESSE E. HENCE, THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE WITH THE CASE RELIED UPON BY THE LD. CIT(APPEALS) DIFFER. THE CASE OF CIT VS. KABUL CHAWLA (2016) ITR 0573 (DEL) WHICH WAS ALSO RELIED UPON BY THE LD CIT (A) IS ALSO DIFFERENT AS THE CONTENDED ADDITION WAS U/S 2(22)(E) OF THE I T ACT. IV. FURTHER THE LD CIT(A) ERRED IN OVERLOOKING THE RECENT HIGH COURT JUDGEMENT IN THE CASE OF E.N. GOPAKUMAR VS. CIT(CEN TRAL) (2016) 75 TAXMAN.COM 215(KERALA) WHEREIN IT WAS HELD THAT: SECTION 153A READ WITH SECTION 2(22), OF THE IT ACT , 1961- SEARCH AND SEIZURE- ASSESSMENT IN CASE OF (CONDITION PRECE DENT)- ASSESSMENT YEARS 2002-03, 2005-06 AND 2006-07- WHET HER COMPLETED ASSESSMENT CAN BE INTERFERED WITH ASSESSI NG OFFICER WHILE MAKING ASSESSMENT U/S 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIALS UNEARTHED DURING COURSE OF SEARCH WHICH WAS NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE K NOWN IN COURSE OF ORIGINAL ASSESSMENT- HELD, YES- PURSUANT TO SEARCH CARRIED OUT IN THE CASE OF ASSESSEE, A NOTICE U/S 1 53A(1) WAS ISSUED- IN COURSE OF ASSESSMENT. THE STATUTE NOWHER E MAKES IT CONDITIONAL THAT THE DEPARTMENT HAS TO UNEARTH SOME INCRIMINATING MATERIAL TO CONCLUDE SOME METHOD AGAI NST THE ASSESSEE IN EVENTS WHERE THE ASSESSMENT IS TRIGGERE D BY A NOTICE U/S 153(1)(A) OF THE ACT. V. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD ERRED IN ALLOWING THE ASSESSEE'S APPEAL BY OBSE RVING THAT ADDITIONS MADE BY THE AO IN THE ASSESSMENT ORDER PASSED U/S 1 53A/143(3) ARE NOT BASED ON ANY INCRIMINATING DOCUMENTS/PAPERS SEI ZED DURING THE SEARCH OPERATION.' VI. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAD ERRED IN NOT ADJUDICATING THE APPEAL ON MERIT. VII. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF T HE CASE, THE DEPARTMENT CRAVES TO ADD MORE GROUNDS OR ALTER ANY GROUND AT THE TIME OF APPEAL. 6. THE LD. D/R, SHRI ABANI KANTA NAYAK, SUBMITTED THAT ALL THE ARGUMENTS AND SUBMISSIONS MADE BY HIM IN THE CASE OF M/S. CONSORTIUM ENTERPRISES PRIVATE LTD VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2 (2), KOLKATA IN I.T(SS).A NO.72/KOL/2017 ASSESSMENT YEAR: 2008-09 & I.T(SS).A NO. 73/KOL/2017; ASSESSMENT YEAR: 2010-11; ORDER DT. DECEMBER 5 TH , 2018 , APPLY TO THESE THREE CASES MUTATIS MUTANDIS. HE SUBMITTED THAT HE HAS NOTHING FURTHER TO ADD AND REQUESTED THE BENCH TO ADOPT THOSE ARGUMENTS IN THE SE CASES ALSO. 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, MADE SIMILAR SUBMISSIONS THAT THE SUBMISSIONS MADE BY HIM IN THE CASE OF M/S. CONSORTIUM ENTERPRISES PRIVATE LTD VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) MAY BE ADOPTED IN THESE CASES ALSO AS THE FACTS AND CIRCUMSTANCES ARE IDENTICAL. 8. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONS IDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS :- 9. WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THIS CASE AS SUBMITTED BY BOTH THE PARTIES ARE IDENTICAL TO THE FACTS AND CIRCUMST ANCES IN THE CASE OF M/S. CONSORTIUM ENTERPRISES PRIVATE LTD VS. DEPUTY COMMI SSIONER OF INCOME TAX (SUPRA), IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 26 WHEREIN THIS BENCH OF THE TRIBUNAL IN ITS ORDER DT. DECEMBER 5 TH , 2018, HELD AS FOLLOWS:- 8. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CON SIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, 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 WHE THER, 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 FO UND DURING THE COURSE OF SEARCH AND SEIZURE, WHEN THE ASSESSMENT F OR THE ASSESSMENT YEARS IN QUESTION HAVE NOT ABATED. IN TH E CASE ON HAND, THE ASSESSEE FILED ITS ORIGINAL RETURN OF INC OME ON 29/09/2008 FOR THE ASSESSMENT YEAR 2008-09 AND ON 2 4/09/2010 FOR THE ASSESSMENT YEAR 2010-11. THE TIME LIMIT FOR ISSUAL OF NOTICE U/S 143(2) OF THE ACT, WAS 30/09/2009 AND 30 /09/2011 RESPECTIVELY FOR ASSESSMENT YEAR 2008-09 & 2010-11. THE SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THIS CASE ON 18/02/2013. THE STATUTORY PERIOD FOR ISSUAL OF NOTICE U/S 143(2 ) OF THE ACT, IN THE CASE OF BOTH THE ASSESSMENT YEARS HAD EXPIRED PRIOR TO THE DATE OF SEARCH OPERATION. HENCE THE ASSESSMENT FOR THE I MPUGNED ASSESSMENT YEARS HAVE NOT ABATED. THE ASSESSING OFF ICER MADE THE ADDITION IN QUESTION BY OBSERVING AS UNDER AT P AGE 14 & 15 OF THE ASSESSMENT ORDER:- I) NAMES OF THE COMPANIES APPEALING M STATEMENTS OF THE ENTRY PROVIDERS GIVEN TO INVESTIGATION WING FIGURE AS APP LICANTS TO SHARES IN THE ASSESSEE COMPANY. II) PERUSAL OF THE OPERATING BANK A/C SHOWS THAT TH E 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 AS TO WHETHER THE COMPANY'S CREDENTIALS COMMANDED A HUGE SHARE PREMIU M, PARTICULARLY WHEN THE SAME IS BEING PAID BY STRANGE RS. IV) SUMMONS U/S 131 TO SUCH PERSONS I COMPANY HAVE NOT 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 SUBSCRIBED TO THE SHARES WERE BORNE ON THE FILE OF THE ROC AND TH AT THE MONIES HAVE COME THROUGH A/C PAYEE CHEQUES IS AT BEST, NEU TRAL. 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 B Y THE ASSESSEE AND EXPOSED THE TRUE NATURE OF THE TRANSAC TIONS. IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 27 VIII) ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY OF SHARE APPLICANTS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS APPEARING IN ITS BOOKS OF SALE WHICH I S 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 VERACITY OF THE TRANSACTIONS. A PERUSAL OF THE ABOVE DEMONSTRATES THAT THE ADDITI ONS IN QUESTION ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND D URING THE COURSE OF SEARCH. 8.2. ON THE LEGAL POSITION, WE FIND THAT THE VARIOU S 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 EXPRESSED THE FOLLOWING VIEWS: WE ARE IN AGREEMENT WITH THE VIEWS OF THE KARNATAK A HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE-REQUISIT E BEFORE POWER COULD HAVE BEEN EXERCISED UNDER SECTION 153C READ WITH SECTION 153A. IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS MA DE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREAD Y DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIO NS CONTAINED UNDER SECTION 153C READ WITH SECTION 153A . THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE UP HELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOS E DISALLOWANCES. PCIT-2, KOLKATA VS. SALASAR STOCK BROKING LIMITED (ITAT NO. 264 OF 2016) DATED 24.08.2016 : (CALCUTTA) IN THIS CASE, THE HONORABLE JURISDICTIONAL HIGH COU RT OBSERVED THAT THE LD. ITAT, KOLKATA WAS OF THE OPINION THAT THE A SSESSING OFFICER HAD NO JURISDICTION U/S 153A OF THE I.T. ACT TO REO PEN THE CONCLUDED CASES WHEN THE SEARCH & SEIZURE DID NOT DISCLOSE AN Y INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VI EW, THE LD. ITAT RELIED UPON THE JUDGMENTS OF DELHI HIGH COURT IN TH E CASE OF CIT(A) VS. KABUL CHAWLA IN ITA NO. 707/2014 DATED 2 8.08.2014 . THE COURT ALSO OBSERVED THAT MORE OR LESS AN IDENTI CAL 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 COURT DID NOT ADMIT THE A PPEAL FILED BY THE DEPARTMENT. IT HELD AS FOLLOWS:- SUBJECT MATTER OF CHALLENGE IS A JUDGEMENT AND ORD ER DATED 18TH DECEMBER, 2015 BY WHICH THE LEARNED TRIBUNAL DISMIS SED AN APPEAL PREFERRED BY THE REVENUE REGISTERED AS ITA NO.1775/KOL/2012 AND ALLOWED A CROSS-OBJECTION REGI STERED AS CO-30/KOL/2013 BOTH PERTAINING TO THE ASSESSMENT YE AR 2005-06. THE LEARNED TRIBUNAL WAS OF THE OPINION THAT THE AS SESSING OFFICER HAD NO JURISDICTION UNDER SECTION 153A OF THE INCOME TAX ACT TO IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 28 REOPEN THE CONCLUDED CASES WHEN THE SEARCH AND SEIZ URE DID NOT DISCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIEW, THE LEARNED TRIBUNAL RELIED UPON A JUDGEMENT OF DEL HI HIGH COURT IN THE CASE OF CIT[A] VS. KABUL CHAWLA IN ITA NO.707/2014 DATED 28TH AUGUST, 2014. THE AGGRIEVED REVENUE HAS COME U P IN APPEAL. ....IN THAT VIEW OF THE MATTER, WE ARE UNABLE TO AD MIT THE APPEAL. THE APPEAL IS, THEREFORE, DISMISSED. 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: 2006-07 & 2007-08, DT. 15/02/2018 , HAS EXPLAINED THE LAW ON THIS ISSUE IN THE FOLLOWING MA NNER:- 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE RELEVANT MATERIAL PLACED ON RECORD AND THE FINDING GIVEN IN THE IMPUGNED ORDER WITH RESPECT TO LEGAL ISSUE RAISED VIDE GROUN D NO.5 BY THE ASSESSEE THAT THE ADDITIONS MADE IN THIS YEAR ARE B EYOND THE SCOPE OF ASSESSMENT U/S.153A, AS NO INCRIMINATING M ATERIAL WAS FOUND DURING THE COURSE OF SEARCH FOR THE IMPUGNED ASSESSMENT YEAR; AND 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, 2006 A ND SAID RETURN WAS DULY ACCEPTED AND PROCESSED U/S. 143(1) VIDE IN TIMATION DATED 25.05.2007. SINCE NO NOTICE U/S. 143(2) WAS I SSUED THEREAFTER OR ANY OTHER PROCEEDINGS HAVE BEEN COMME NCED TO DISTURB SAID RETURN OF INCOME, ACCORDINGLY, IT HAD ATTAINED FINALITY MUCH PRIOR TO THE DATE OF SEARCH WHICH WAS ON 20.01 .2012. HENCE IN TERMS OF 2ND PROVISO TO SECTION 153A THE ASSESSM ENT FOR THE ASSESSMENT YEAR 2006-07 WAS NOT PENDING AND ACCORDI NGLY, HAS TO BE RECKONED AS UNABATED ASSESSMENT. UNDER THE JU RISDICTION OF HON'BLE DELHI HIGH COURT, THE LAW IS WELL SETTLED T HAT IN CASE OF UNABATED ASSESSMENT, THE ADDITIONS WHICH CAN BE ROP ED-IN, IN THE ASSESSMENTS FRAMED U/S.153A, WOULD ONLY BE WITH REG ARD TO ANY INCRIMINATING MATERIAL OR EVIDENCE UNEARTHED OR FOU ND DURING THE COURSE OF SEARCH. IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH, THEN NO ADDITION CAN B E MADE IN THE ASSESSMENT YEARS WHERE ASSESSMENTS HAD ATTAINED FIN ALITY. THE RELEVANT OBSERVATIONS AND THE RATIO LAID DOWN WOULD BE DISCUSSED IN THE LATER PART OF THIS ORDER. 15. NOW COMING TO THE RATIOS LAID DOWN BY THE HONB LE 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 FO LLOWING LEGAL PROPOSITION IN TERMS OF SCOPE 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 EXPLA INED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 29 PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS W ILL 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 TH ERE 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 ADDITIO NS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATIO N 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. OBVIOU SLY 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 CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESS MENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT S HALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FIN DINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONL Y ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURI NG THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSE D INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. THIS JUDGMENT OF THE HON'BLE DELHI HIGH COURT HAS B EEN FOLLOWED IN SEVERAL JUDGMENTS NOT ONLY BY THE HON'BLE DELHI HIG H COURT BUT ALSO BY OTHER 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 DISCUSSING AND ANALYZING CATENA OF DECISIONS INCLUDING THAT OF ANIL KUMAR BHATIA IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 30 (SUPRA) AND DAYAWANTI GUPTA. THE HON'BLE HIGHCOURT OBSERVED AND HELD AS UNDER:- 62. SUBSEQUENTLY, IN PRINCIPAL COMMISSIONER OF INC OME TAX-1 V. DEVANGI ALIAS RUPA {SUPRA), ANOTHER BENCH OF THE GU JARAT HIGH COURT REITERATED THE ABOVE LEGAL POSITION FOLLOWING ITS EARLIER DECISION IN PRINCIPAL COMMISSIONER OF INCOME TAX V. SAUMYA CONSTRUCTION P. LTD. {SUPRA) AND OF THIS COURT IN K ABUL CHAWLA (SUPRA). AS FAR AS KARNATAKA HIGH COURT IS CONCERNE D, IT HAS IN CIT V. IBC KNOWLEDGE PARK P. LTD. {SUPRA) FOLLOWED THE DECISION OF THIS COURT IN KABUL CHAWLA (SUPRA) AND HELD THAT THERE H AD TO BE INCRIMINATING MATERIAL QUA EACH OF THE AYS IN WHICH ADDITIONS WERE SOUGHT TO BE MADE PURSUANT TO SEARCH AND SEIZURE OP ERATION. THE CALCUTTA HIGH COURT IN CIT-2 V. SALASAR STOCK BROKI NG LTD. {SUPRA), TOO, FOLLOWED THE DECISION OF THIS COURT IN KABUL C HAWLA (SUPRA). IN CIT V. GURINDER SINGH BAWA {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 SUB JECT TO TAX IN PROCEEDINGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF INCRIMINATING MATERIALS ARE GATHERED I N THE COURSE OF SEARCH OR DURING PROCEEDINGS UNDER SECTION 153A OF THE ACT WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DURING THE REG ULAR ASSESSMENT PROCEEDINGS. 63. EVEN THIS COURT HAS IN CIT V MAHESH KUMAR GUPTA {SUPRA) AND THE PR. COMMISSIONER OF INCOME TAX-9 V. RAM AVT AR VERMA {SUPRA) FOLLOWED THE DECISION IN KABUL CHAWLA (SUPR A). THE DECISION OF THIS COURT IN PR. COMMISSIONER OF INCOM E TAX V. KURELE PAPER MILLS P. LTD. {SUPRA) WHICH WAS REFERRED TO I N KABUL CHAWLA (SUPRA) HAS BEEN AFFIRMED BY THE SUPREME COURT BY T HE DISMISSAL OF THE REVENUE'S SLP ON 7 TH DECEMBER, 2015. 18. POST THE JUDGMENT OF MEETA GUTGUTIA (SUPRA), AL SO THE SAME PRINCIPLE HAVE BEEN REITERATED IN THE CASE OF PCIT VS. BEST INFRASTRUCTURE (INDIA) PVT. LTD. (SUPRA), WHEREIN THE HON'BLE HIGH COURT HELD THAT DURING THE COURSE OF SEARCH, STATEMENT RECORDED U/S. 132(4) BY THEMSELVES DOES NOT CONSTITUTE INCRIMINATING MATERIAL AND ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER U/S.153A SOLELY BASED ON STATEMEN T IS UNSUSTAINABLE WHEN THERE IS NO INCRIMINATING MATERIAL FOUND DURIN G THE COURSE OF SEARCH. AGAIN IN THE CASE OF PCIT VS. DHARAMPAL PREMCHAND LTD., IN ITA NO.512 TO 514/206, THE HON'BLE DELHI HIGH COURT HELD THAT RATIO LAID D OWN IN THE CASE OF KABUL CHAWLA, MEETA GUTGUTIA, STILL HOLDS GROUND AND THE REVENUES CONTENTION THAT THE MATTER SHOULD BE REFE RRED TO A LARGER BENCH WAS TURNED DOWN. APART FROM THESE JUDGMENTS, THERE ARE CATENA OF OTHER JUDGMENT S OF OTHER HIGH COURTS LAYING DOWN SIMILAR RATIO AND PROPOSITION. T HE MAIN UNDERLYING PRINCIPLE PERMEATING IN ALL THE JUDICIAL PRECEDENTS IS THAT, IN THE CASE OF THE UNABATED ASSESSMENT WHICH HAD ATTAINED FINALITY ON THE DATE OF SEARCH, WHICH ARE RECKONED AS UNABATED ASSESSMENTS, NO ADDI TION OVER AND ABOVE THE ORIGINALLY ASSESSED INCOME CAN BE MADE SA NS ANY INCRIMINATING MATERIAL FOUND OR UNEARTHED DURING TH E COURSE OF SEARCH. THE PRINCIPLE REITERATED TIME AND AGAIN IS THAT SOM ETHING SHOULD BE FOUND AS A RESULT OF SEARCH WHICH IS INCRIMINATING IN NAT URE SO AS TO IMPLICATE THE IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 31 ASSESSEE AND ACQUIRE JURISDICTION TO MAKE THE ADDIT ION, BECAUSE FOR THE COMPLETED ASSESSMENT, OR IN OTHER WORDS, ASSESSMENT WHICH ARE NOT ABATED, THE ASSESSING OFFICER IS REQUIRED TO MAKE R EASSESSMENT U/S.153A WHICH IS ONLY POSSIBLE WHEN ANY INCRIMINATING MATER IAL HAS BEEN FOUND DURING THE COURSE OF SEARCH. THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. KURULE PAPER MILLS P. LTD. [2016] 380 ITR 571 (DELHI) HELD AS FO LLOWS:- 1. THE REVENUE HAS FILED THE APPEAL AGAINST AN ORDE R DATED 14.11.2014 PASSED BY THE INCOME TAX APPELLATE TRIBU NAL (ITAT) IN 3761/DEL/2011 PERTAINING TO THE ASSESSMENT YEAR 200 2-03. THE QUESTION WAS WHETHER THE LEARNED CIT (APPEALS) HAD ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 89 LACS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TA X ACT, 1961 ('ACT') ON BOGUS SHARE CAPITAL. BUT, THE ISSUE WAS WHETHER THERE WAS ANY INCRIMINATING MATERIAL WHATSOEVER FOUND DUR ING THE SEARCH TO JUSTIFY INITIATION OF PROCEEDINGS UNDER S ECTION 153A OF THE ACT. 2. THE COURT FINDS THAT THE ORDER OF THE CIT(APPEAL S) REVEALS THAT THERE IS A FACTUAL FINDING THAT 'NO INCRIMINATING E VIDENCE RELATED TO SHARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IS MANIFEST FROM THE ORDER OF THE AO.' CONSEQUENTLY, I T WAS HELD THAT THE AO WAS NOT JUSTIFIED IN INVOKING SECTION 68 OF THE ACT FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CA PITAL. 3. AS FAR AS THE ABOVE FACTS ARE CONCERNED, THERE I S NOTHING SHOWN TO THE COURT TO PERSUADE AND HOLD THAT THE ABOVE FA CTUAL DETERMINATION IS PERVERSE. CONSEQUENTLY, AFTER CONS IDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT IS O F THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE I MPUGNED ORDER OF THE ITAT WHICH REQUIRES EXAMINATION. 4. THE APPEAL IS, ACCORDINGLY, DISMISSED. THE DEPARTMENT HAD FILED SPECIAL LEAVE PETITION BEF ORE THE HONBLE APEX COURT AGAINST THE ABOVE JUDGMENT OF THE DELH I HIGH COURT . (PR CIT V KURULE PAPER MILLS P. LTD: S.L.P (C) NO-34554 OF 2015[ 2016] 380ITR (ST) 64-ED).. THE HONBLE APEX COURT DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT. THE RELEVANT PARA AS MENTIONED IN THE ITR IS REPROD UCED AS UNDER. THEIR LORDSHIPS MADAN B.LOKUR AND S.A.BOBDE JJ DIS MISSED THE DEPARTMENTS SPECIAL LEAVE PETITION AGAINST THE JUD GMENT DATED JULY 06,2015 OF THE DELHI HIGH COURT IN I.T.A NO 36 9 OF 2015, WHEREBY THE HIGH COURT HELD THAT NO SUBSTANTIAL QUE STION OF LAW 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 SECTION 68 OF THE ACT FOR THE PURPOSE OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAPITAL 9. WE APPLY THE PROPOSITIONS OF LAW LAID DOWN IN T HE ABOVE CASE-LAW TO THE FACTS OF THE CASE ON HAND. WE FIND THAT THE ADD ITION MADE FOR THESE IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 32 ASSESSMENT YEARS IS OF SHARE APPLICATION MONEY RECE IVED U/S 68 OF THE ACT AND ADDITION OF COMMISSION ALLEGEDLY PAID ON TH E SHARE APPLICATION MONEY AND FINALLY A DISALLOWANCE U/S 14A OF THE ACT , ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE ALLEGED STATEMENTS RECORDED FROM ENTRY OPERATORS HAVE BEEN ADMITTEDLY RETRACTED BY THEM AND THE ASSESSING OFFICER HAS NOT BASED THE ADDITIONS ON THESE STATEMENTS. EVEN OTHERWISE, WHEN COPIES OF THE ALLE GED STATEMENTS RECORDED BY THE REVENUE OFFICIALS HAVE NOT BEEN GIV EN TO THE ASSESSEE, NO ADDITION CAN BE MADE BASED ON SUCH EVIDENCE WHICH I S NOT CONFRONTED TO THE ASSESSEE. THE CONTENTS OF THE STATEMENTS ARE AL SO NOT BROUGHT OUT IN THE ASSESSMENT ORDER. ONLY A GENERAL REFERENCE IS M ADE THAT THERE WERE CERTAIN STATEMENTS RECORDED FROM VARIOUS ENTRY OPER ATORS BY THE INVESTIGATION WING. NO ADDITION CAN BE MADE ON SUCH GENERAL OBSERVATIONS. WE ALSO FIND THAT THE ASSESSEE HAS NO T BEEN GIVEN AN OPPORTUNITY TO CROSS-EXAMINE ANY OF THESE PERSONS, BASED ON WHOSE STATEMENTS, THE LD. D/R CLAIMS THAT THE ADDITIONS H AVE BEEN MADE. THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CH ELLARAM VS. CIT, 125 ITR 713 (SC) HAD HELD THAT THE OPPORTUNITY OF C ROSS-EXAMINATION MUST BE PROVIDED TO THE ASSESSEE. THE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS EASTERN COMMERCIAL ENTERPRISES (1994) 210 I TR 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 O PPORTUNITY OF SUCH CROSS-EXAMINATION IS ONE OF THE CORNERSTONES O F NATURAL JUSTICE . 9.1. THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR VS. CIT (SUPRA) LAYS DOWN A PROPOSITION, CONTRARY TO THE PROPOSITIONS OF LAW LAID DOWN BY THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. VEERPRABHU MARKETING LTD. (SUPR A) AND PCIT VS. SALASAR STOCK BROKING LIMITED (SUPRA). 9.2. EVEN OTHERWISE, IT IS NOT CLEAR AS TO WHICH OF THESE STATEMENTS WERE RECORDED DURING THE COURSE OF SEARCH OPERATION U/S 132 OF THE ACT OR WHETHER THE STATEMENTS WERE RECORDED DURING THE COU RSE OF ANY SURVEY OPERATIONS U/S 133A OF THE ACT. IT IS WELL SETTLED THAT A STATEMENT RECORDED DURING THE COURSE OF SURVEY OPERATION CANNOT BE USE D AS EVIDENCE UNDER THE ACT. 10. COMING TO THE ALLEGED CASH TRAIL, NONE OF THE M ATERIAL GATHERED BY THE ASSESSING OFFICER BY WAY OF BANK ACCOUNT COPIES OF VARIOUS COMPANIES SUPPOSED TO BE PART OF THE CHAIN OF COMPANIES WAS N OT CONFRONTED TO THE ASSESSEE. THE ALLEGED STATEMENTS THAT WERE RECORDED FROM DIRECTORS OF THESE COMPANIES WHICH FORMED THIS ALLEGED CHAIN WER E ALSO NOT BROUGHT ON RECORD. ONLY A GENERAL STATEMENT HAS BEEN MADE. THERE IS NO EVIDENCE WHATSOEVER THAT CASH HAS BEEN ROUTED FROM THE ASSESSEE COMPANY TO ANY OF THESE CHAIN OF COMPANIES. THERE I S NO EVIDENCE THAT ANY CASH WAS DEPOSITED BY THE ASSESSEE COMPANY. MOR EOVER, THERE IS NO MATERIAL WHATSOEVER BROUGHT ON RECORD TO DEMONSTRAT E THAT THE ALLEGED CASH DEPOSIT MADE IN THE BANK ACCOUNT OF A THIRD PA RTY WAS FROM THE ASSESSEE COMPANY. NO OPPORTUNITY TO CROSS-EXAMINE A NY THESE PARTIES WAS PROVIDED TO THE ASSESSEE. THE BANK STATEMENTS B ASED ON WHICH THE CASH TRAIL WAS PREPARED ARE PART OF THE DISCLOSED D OCUMENTS AND CANNOT BE HELD AS INCRIMINATING MATERIAL. 10.1. THUS, NONE OF THESE MATERIAL GATHERED BY THE ASSESSING OFFICER CAN BE CATEGORIZED AS INCRIMINATING MATERIAL FOUND DURI NG THE COURSE OF SEARCH IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 33 OR FOUND DURING THE COURSE OF ANY OTHER OPERATION UNDER THE ACT. THUS, WE HOLD THAT THE ADDITIONS IN QUESTION ARE NOT BASED O N ANY INCRIMINATING MATERIAL. THE LD. CIT(A) ON PAGE 30 OF HIS ORDER HE LD AS FOLLOWS:- I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE AS SESSMENT ORDER, DIFFERENT CASE LAWS WAS BROUGHT ON RECORD AND APPEA L ORDERS PASSED BY MY PREDECESSORS ON THIS LEGAL ISSUE. I FI ND FROM THE ASSESSMENT ORDER THAT DURING THE SEARCH & SEIZURE O PERATIONS CONDUCTED U/S 132 OF THE IT ACT, 1961, INCRIMINATIN G 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 DOCUMENTS/ PAPERS SEIZED DURING T HE SEARCH OPERATION. IT WOULD ALSO NOT TO BE OUT OF CONTEXT T O MENTION HERE THAT IN THIS CASE, ON THE DATE OF SEARCH, NO ASSESS MENT FOR THIS YEAR WAS PENDING. THEREFORE, KEEPING IN VIEW THE RA TIO DECIDED BY THE JURISDICTIONAL BENCH OF KOLKATA TRIBUNAL IN CAS E REFERRED ABOVE AND THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARKETING LTD (SUPRA) IN THE LI GHT OF CBDTS DECISION OF NOT FILING SLP IN THIS CASE IN THE SUPR EME COURT AND KEEPING IN VIEW THE APEX COURTS DECISION TO DISMIS S SLP ON THE SIMILAR ISSUE IN THE CASE OF PR CIT VS KURELE PAPER MILLS PVT LTD: SLP (C) NO. 34554 OF 2015 DT.07.12.2015, I AM OF TH IS VIEW THAT IN ORDER TO MAINTAIN JUDICIAL CONTINUITY ON THIS ISSUE AND RESPECTFULLY FOLLOWING THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARKETING LTD (SUPRA), ASSE SSEES APPEAL ON GROUND NO 1 IS ALLOWED AND AS SUCH I AM NOT INCL INED TO ADJUDICATE APPEAL ON GROUND NO. 2 ON MERIT. 11. WE FIND NOT INFIRMITY IN THIS ORDER OF THE LD. CIT(A) AND HENCE UPHOLD THE SAME. 12. IN THE RESULT BOTH THESE APPEALS OF THE REVENUE ARE DISMISSED. 10. CONSISTENT WITH THE VIEW TAKEN BY US IN ABOVE M ENTIONED CASE-LAW REFERRED TO BY THE ASSESSEE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DELETE THE ADDITION IN QUESTION. 6. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. WE FIND NO MERIT IN REVENUES ABOVE EXTRACTED ARGUMENTS. TH E CLINCHING FACT THAT HAS GONE UNREBUTTED FROM THE REVENUES SIDE IS THAT ASS ESSEES SHARE CAPITAL IN ISSUE AMOUNTING TO 269,00,000/- ALREADY STOOD RECORDED IN ITS BALANCE SHEET FORMING PART OF REGULAR BOOKS OF ACCOUNT. THE SAME CANNOT BE HELD TO BE INCRIMINATING MATERIAL THEREFROM FORMING CONDITION PRECEDENT FOR SETTING INTO MOTION THE IMPUGNED PROCEEDINGS U/S. 153A OF THE AC T AS HELD IN LEARNED CO- IT(SS)A NO.84/KOL/2017 A. Y.2008-09 DCIT, CC-2(2), KOL. VS. M/S IMAGE VINIMAY LTD. PA GE 34 ORDINATE BENCHS DETAILED DISCUSSION. WE THEREFORE ADOPT THE SAID DETAILED REASONING MUTATIS MUTANDIS TO UPHOLD THE CIT(A)S FINDINGS UNDER CHALLENGE. 7. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 15 /05/2019 SD/- SD/- ( %) (' %) (DR.A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 15 / 05 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CENTRAL CIRCLE-2(2), AAYAKAR BHAWA N, POORVA,110, SHANTIPALLY, KOL KAKTA-107 2. /RESPONDENT-M/S IMAGE VINIMAY LTD., 39 SHAKESPEARE SARANI 6 TH FL, KOLKATA-17 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , 3,