DCIT, Central Circle - 2(2), Kolkata , Kolkata V. M/s. Consortium Enterprises Private Limited , Kolkata

ITSSA 88/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2627 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-02-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TULSYAN; SH IKHA AG
• Keywords: Search and seizure; Question of law
• Section: 143(3); 133A; 153A; 14A; 143(1); 131; 68; 132

Judgement Text

1 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T(SS).A. NO. 88/KOL/2017 ASSESSMENT YEAR: 2009-10 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), KOLKATA. VS. M/S. CONSORTIUM ENTERPRISES PVT. LTD. (PAN: AABCC0065H) APPELLANT RESPONDENT DATE OF HEARING 26.02.2019 DATE OF PRONOUNCEMENT 08.03.2019 FOR THE APPELLANT SHRI A. K. SINGH, CIT, DR FOR THE RESPONDENT SHRI A. K. TULSYAN, FCA & MS. S HIKHA AGARWAL, ACA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-20, KOLKATA DATED 21.03.2017 FOR AY 2009-10. 2. THIS APPEAL OF REVENUE IS TIME BARRED BY 26 DAYS AND A CONDONATION APPLICATION DATED 07.07.2017 HAS BEEN FILED BY THE REVENUE EXPLAINING THE REASONS FOR CONDONATION OF DELAY. AFTER PERUSING THE CONDONATION APPLICATION AND HEAR ING BOTH THE SIDES, WE CONDONE THE DELAY IN FILING THE APPEAL OF THE REVENUE. 3. AT THE OUTSET ITSELF, IT HAS BEEN BROUGHT TO OUR NOTICE THAT THIS CASE IS COVERED IN ASSESSEES OWN CASE FOR AYS 2008-09 AND 2010-11 BY THIS TRIBUNAL. ACCORDING TO LD. AR, THERE WAS A SEARCH U/S. 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHICH WAS CONDUCTED ON 18.02.2013 AT THE RES IDENCE, OFFICES, FACTORIES AND OTHER BUSINESS CONCERNS OF THE M/S. RASHMI GROUP AND THE ASSESSMENT FOR THIS YEAR WAS NOT 2 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 PENDING BEFORE THE AO ON THE DATE OF SEARCH. SINCE IT WAS NOT AN UNABATED ASSESSMENT, THE AO COULD NOT HAVE MADE ANY ADDITION WITHOUT THE AID OF ANY INCRIMINATING MATERIAL AND THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE TAKING NOTE OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN CIT VS . KABUL CHAWLA (2016) 380 ITR 573 (DEL), THE DECIS ION OF HON'BLE CALCUTTA HIGH COURT IN ITA NO. 661 OF 2008 COMMISSI ONER OF INCOME TAX VS.VEERPRABHU MARKETING LTD. AND HONBLE DELHI HIGH COURT IN PR. CIT VS. KURELE PAPER MILLS PVT. LTD. (2016) 380 ITR 571 (DEL) WHICH DECISION HAS BEEN UP HELD BY HONBLE SUPREME COURT REPORTED IN (2016) 380 ITR (ST.) 69-ED. WE NOTE TH AT THE LD. CIT, DR ASSAILED THE DECISION OF THE LD. CIT(A) AND CONTENDED THAT IN SEC. 153A P ROCEEDINGS, THERE IS NO NECESSITY OF ANY INCRIMINATING MATERIALS AND THE VERY CONCEPT OF INC RIMINATING MATERIALS IS ALIEN TO THE SCHEME OF THE SEARCH PROCEEDINGS U/S. 153A OF THE A CT. HOWEVER, DURING THE HEARING BEFORE US, WE ASKED TO LD. CIT, DR THE POINTED QUESTION AS TO WHETHER THE AO HAS MADE ANY ADDITION ON THE BASIS OF INCRIMINATING MATERIALS AN D THE LD. CIT, DR COULD NOT POINT OUT FROM THE ASSESSMENT ORDER THAT AO TOOK THE AID OF A NY INCRIMINATING MATERIALS UNEARTHED DURING SEARCH QUA THIS ASSESSMENT YEAR TO MAKE THE ADDITION. WE NOTE THAT UNDISPUTEDLY THIS ASSESSMENT YEAR WAS NOT PENDING BEFORE THE AO ON TH E DATE OF SEARCH AND SO IT IS AN UNABATED ASSESSMENT. SO AS PER THE SETTLED LAW, IN SEC. 153A ASSESSMENT, FOR ASSESSMENT OF UNABATED ASSESSMENT AS IN THE PRESENT CASE, NO ADDI TION/DISALLOWANCE CAN BE MADE WITHOUT THE AID OF INCRIMINATING MATERIALS UNEARTHED DURING SEARCH QUA THIS ASSESSMENT YEAR. IN SUCH A SCENARIO, TAKING NOTE OF SIMILAR FACTS AND LAW, W E NOTE THAT IN ASSESSEES OWN CASE IN IT(SS)A NOS. 72 AND 73/KOL/2017 FOR AYS 2008-09 AND 2010-11 ORDER DATED 05.12.2018, THE TRIBUNAL HAS UPHELD THE ACTION OF LD. CIT(A) O N THE SAME REASONING AND DECIDED AS UNDER: 8. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONS IDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON 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 WHETH ER, AN ADDITION CAN BE MADE IN AN ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT, WHICH I S NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZUR E, WHEN THE ASSESSMENT FOR THE ASSESSMENT YEARS IN QUESTION HAVE NOT ABATED. IN THE CASE ON HAND, THE ASSESSEE FILED ITS 3 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 ORIGINAL RETURN OF INCOME ON 29/09/2008 FOR THE ASSE SSMENT YEAR 2008-09 AND ON 24/09/2010 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 RESPECTIVE LY FOR ASSESSMENT YEAR 2008-09 & 2010-11. THE SEARCH AND SEIZURE OPERATION WAS CONDUCT ED 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 OPERATIO N. HENCE THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEARS HAVE NOT ABATED. THE ASSESS ING OFFICER MADE THE ADDITION IN QUESTION BY OBSERVING AS UNDER AT PAGE 14 & 15 OF T HE ASSESSMENT ORDER:- I) NAMES OF THE COMPANIES APPEALING M STATEMENTS OF THE ENTRY PROVIDERS GIVEN TO INVESTIGATION WING FIGURE AS APPLICANTS TO SHARES I N THE ASSESSEE COMPANY. II) PERUSAL OF THE OPERATING BANK A/C SHOWS THAT THE A /C OF MOST OF THE INVESTING COMPANIES IS IN THE SAME BANK AS THAT OF THE ASSESSEE COMPANY. III) THERE IS NO JUSTIFICATION ON RECORD WHATSOEVER A S TO WHETHER THE COMPANY'S CREDENTIALS COMMANDED A HUGE SHARE PREMIUM, PARTICULA RLY WHEN THE SAME IS BEING PAID BY STRANGERS. IV) SUMMONS U/S 131 TO SUCH PERSONS I COMPANY HAVE NO T BEEN ADEQUATELY RESPONDED AND THE ASSESSEE HAS FAILED TO PRODUCE THEM IN RESPONSE TO THE SHOW- CAUSE NOTICE. V) THE FINDINGS THAT THE INVESTING COMPANIES WHICH SUBS CRIBED TO THE SHARES WERE BORNE ON THE FILE OF THE ROC AND THAT THE MONIES HAVE CO ME THROUGH A/C PAYEE CHEQUES IS AT BEST, NEUTRAL. MERE PAYMENT BY CHEQUES IS NOT SACROSANCT AS WOULD NOT, MAKE A NON-GENUINE TRANSACTION AS GENUINE. VI) BONAFIDE AND GENUINENESS OF THE TRANSACTIONS IS THE MAIN ISSUE AND IN THIS REGARD, THE ASSESSEE COMPANY HAS FAILED MISERABLY. VII) SCRUTINY HAS REVEALED THE CAMOUFLAGE ADOPTED BY THE ASSESSEE AND EXPOSED THE TRUE NATURE OF THE TRANSACTIONS. VIII) ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY O F SHARE APPLICANTS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS APPEARING IN ITS BOOKS OF SALE WHICH IS NOT PROVED IN THIS CASE. IN FACT, GENUINENESS OF THE TRANSACTIONS HAS NOT BEEN ESTABLISHED IN SPITE OF REPEATED OPPORTUNITIES. IX) THERE IS ENOUGH MATERIAL ON RECORD TO DOUBT THE VE RACITY OF THE TRANSACTIONS. A PERUSAL OF THE ABOVE DEMONSTRATES THAT THE ADDITIO NS IN QUESTION ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SE ARCH. 8.2. ON THE LEGAL POSITION, WE FIND THAT THE VARIOUS COURTS OF LAW UNDER SIMILAR CIRCUMSTANCES HAVE HELD AS FOLLOWS:- 4 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 CIT,KOLKATA-III VS. VEERPRABHU MARKETING LIMITED [2 016] 73 TAXMANN.COM 149 (CALCUTTA) : IN THIS CASE THE HONOURABLE CALCUTTA HIGH COURT EXPRES SED THE FOLLOWING VIEWS: WE ARE IN AGREEMENT WITH THE VIEWS OF THE KARNATAKA H IGH 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 MADE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OT HER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED UN DER SECTION 153C READ WITH SECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSIN G OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLO WANCES. 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 COURT OBSERVED THAT THE LD. ITAT, KOLKATA WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURISDICTION U/S 153A OF THE I.T. ACT TO REOPEN THE CONCLUDED CASES WHEN THE SEARC H & SEIZURE 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 ITA NO. 707/2014 DATED 28.08.2014 . 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 APPEAL FILED BY THE DEPARTME NT. IT HELD AS FOLLOWS:- SUBJECT MATTER OF CHALLENGE IS A JUDGEMENT AND ORDE R DATED 18TH DECEMBER, 2015 BY WHICH THE LEARNED TRIBUNAL DISMISSED AN APPEAL PREFERR ED BY THE REVENUE REGISTERED AS ITA NO.1775/KOL/2012 AND ALLOWED A CROSS-OBJECTION REGISTERED AS CO-30/KOL/2013 BOTH PERTAINING TO THE ASSESSMENT YEAR 2005-06. THE LE ARNED TRIBUNAL WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURISDICTIO N UNDER SECTION 153A OF THE INCOME TAX ACT TO REOPEN THE CONCLUDED CASES WHEN THE SEARCH A ND SEIZURE DID NOT DISCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIEW , THE LEARNED TRIBUNAL RELIED UPON A JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT[A] VS. KABUL CHAWLA IN ITA NO.707/2014 DATED 28TH AUGUST, 2014. THE AGGRIEVED REV ENUE HAS COME UP IN APPEAL. ....IN THAT VIEW OF THE MATTER, WE ARE UNABLE TO ADM IT 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: 2006-0 7 & 2007-08, DT. 15/02/2018, HAS EXPLAINED THE LAW ON THIS ISSUE IN THE FOLLOWIN G MANNER:- 5 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT MATERIAL PLACED ON RECORD AND THE FINDING GIVEN IN THE IMPUGNED ORDER WITH RESPECT TO LEGAL ISSUE RAISED VIDE GROUND NO.5 BY THE ASSESSEE THAT THE ADDITIONS M ADE IN THIS YEAR ARE BEYOND THE SCOPE OF ASSESSMENT U/S.153A, AS NO INCRIMINATING M ATERIAL WAS FOUND DURING THE COURSE OF SEARCH FOR THE IMPUGNED ASSESSMENT YEAR; AN D THE ASSESSMENT HAD ATTAINED FINALITY AND WAS NOT ABATED IN TERMS OF 2ND PROVISO TO SECTION 153A. AS STATED ABOVE, THE ORIGINAL RETURN OF INCOME WAS FILED IN JULY, 200 6 AND SAID RETURN WAS DULY ACCEPTED AND PROCESSED U/S. 143(1) VIDE INTIMATION DATED 25. 05.2007. SINCE NO NOTICE U/S. 143(2) WAS ISSUED THEREAFTER OR ANY OTHER PROCEEDINGS HAVE BEEN COMMENCED 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 ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07 WAS NO T PENDING AND ACCORDINGLY, HAS TO BE RECKONED AS UNABATED ASSESSMENT. UNDER THE JUR ISDICTION OF HON'BLE DELHI HIGH COURT, THE LAW IS WELL SETTLED THAT IN CASE OF UNABAT ED ASSESSMENT, THE ADDITIONS WHICH CAN BE ROPED-IN, IN THE ASSESSMENTS FRAMED U/S.153A, WOULD ONLY BE WITH REGARD TO ANY INCRIMINATING MATERIAL OR EVIDENCE UNEARTHED OR FOU ND DURING THE COURSE OF SEARCH. IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE C OURSE OF SEARCH, THEN NO ADDITION CAN BE MADE IN THE ASSESSMENT YEARS WHERE ASSESSMENT S HAD ATTAINED FINALITY. 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 HONBLE JURISDICTIONAL HIGH COURT, FIRST OF ALL, IN THE CASE OF KABUL CHAWALA (SUPRA), THE HO N'BLE COURT AFTER DISCUSSING THE ISSUE THREADBARE AND ANALYSING THE VARIOUS JUDGMENTS OF DIF FERENT HIGH COURTS LAID DOWN THE FOLLOWING 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 EXPLAINED IN THE AFOREMENTIONE D DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVI OUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DAT E OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS I N RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SI X YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISC LOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. 6 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITION S SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MAD E WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSME NT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COM PLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSM ENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MER GES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON TH E BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. THIS JUDGMENT OF THE HON'BLE DELHI HIGH COURT HAS BEEN FOLLOWED IN SEVERAL JUDGMENTS NOT ONLY BY THE HON'BLE DELHI HIGH COURT BUT ALSO BY O THER HON'BLE HIGH COURT LIKE, PR. CIT VS. SOMAYA CONSTRUCTION PVT. LTD. 387 ITR 529 ( GUJ), CIT VS. IBC KNOWLEDGE PARK PVT. LTD. 385 ITR 346 (KAR) AND CIT VS.GURINDER SINGH BAWA REPORTED IN 386 ITR 483. IN THE LATEST JUDGMENT THE HON'BLE DELHI HIGH COURT IN PR. CIT VS. MEETA GUTGUTIA, THEIR LORDSHIPS REITERATED THE SAME PRINCIPLE AFTER DI SCUSSING AND ANALYZING CATENA OF DECISIONS INCLUDING THAT OF ANIL KUMAR BHAT IA (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 GUJARAT HIGH COURT R EITERATED THE ABOVE LEGAL POSITION FOLLOWING ITS EARLIER DECISION IN PR INCIPAL COMMISSIONER OF INCOME TAX V. SAUMYA CONSTRUCTION P. LTD. {SUPRA) AND OF T HIS COURT IN KABUL CHAWLA (SUPRA). AS FAR AS KARNATAKA HIGH COURT IS CONCERNED , 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 HAD TO BE INCRIMINATI NG MATERIAL QUA EACH OF THE AYS IN WHICH ADDITIONS WERE SOUGHT TO BE MADE PU RSUANT TO SEARCH AND SEIZURE OPERATION. THE CALCUTTA HIGH COURT IN CIT-2 V . SALASAR STOCK BROKING LTD. {SUPRA), TOO, FOLLOWED THE DECISION OF THIS COUR T IN KABUL CHAWLA (SUPRA). IN CIT V. GURINDER SINGH BAWA {SUPRA), THE BOMBAY HIGH CO URT HELD THAT: 6...ONCE AN ASSESSMENT HAS ATTAINED FINALITY FOR A PARTICULAR YEAR, I.E., IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN PR OCEEDINGS UNDER SECTION 7 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF I NCRIMINATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING PROCEEDING S UNDER SECTION 153A OF THE ACT WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DUR ING THE REGULAR ASSESSMENT PROCEEDINGS. 63. EVEN THIS COURT HAS IN CIT V MAHESH KUMAR GUPTA {SU PRA) AND THE PR. COMMISSIONER OF INCOME TAX-9 V. RAM AVTAR VERMA {SUP RA) FOLLOWED THE DECISION IN KABUL CHAWLA (SUPRA). THE DECISION OF THI S COURT IN PR. COMMISSIONER OF INCOME TAX V. KURELE PAPER MILLS P. LTD. {SUPRA) WHICH WAS REFERRED TO IN KABUL CHAWLA (SUPRA) HAS BEEN AFFIRMED BY THE SUPREME COURT BY THE DISMISSAL OF THE REVENUE'S SLP ON 7 TH DECEMBER, 2015. 18. POST THE JUDGMENT OF MEETA GUTGUTIA (SUPRA), ALS O THE SAME PRINCIPLE HAVE BEEN REITERATED IN THE CASE OF PCIT VS. BEST INFRASTRUCTURE (INDIA) PVT. LTD. (SUP RA), WHEREIN THE HON'BLE HIGH COURT HELD THAT DURING THE COURS E OF SEARCH, STATEMENT RECORDED U/S. 132(4) BY THEMSELVES DOES NOT CONSTITU TE INCRIMINATING MATERIAL AND ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER U/S.153A SOLELY BASED ON STATEMENT IS UNSUSTAINABLE WHEN THERE IS NO INCRIMINATING MATER IAL FOUND DURING 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 DOWN I N THE CASE OF KABUL CHAWLA, MEETA GUTGUTIA, STILL HOLDS GROUND AND THE REV ENUES CONTENTION THAT THE MATTER SHOULD BE REFERRED TO A LARGER BENCH WAS TURNE D DOWN. APART FROM THESE JUDGMENTS, THERE ARE CATENA OF OTHER JUDGMENTS O F OTHER HIGH COURTS LAYING DOWN SIMILAR RATIO AND PROPOSITION. THE MAIN UNDERLYING P RINCIPLE PERMEATING IN ALL THE JUDICIAL PRECEDENTS IS THAT, IN THE CASE OF THE UNABA TED ASSESSMENT WHICH HAD ATTAINED FINALITY ON THE DATE OF SEARCH, WHICH ARE RECKONED AS UNABATED ASSESSMENTS, NO ADDITION OVER AND ABOVE THE ORIGINALLY ASSESSED INCOME CAN BE MADE SANS ANY INCRIMINATING MATERIAL FOUND OR UNEARTHED DURING THE COURSE OF SEAR CH. THE PRINCIPLE REITERATED TIME AND AGAIN IS THAT SOMETHING SHOULD BE FOUND AS A RESUL T OF SEARCH WHICH IS INCRIMINATING IN NATURE SO AS TO IMPLICATE THE ASSES SEE AND ACQUIRE JURISDICTION TO MAKE THE ADDITION, BECAUSE FOR THE COMPLETED ASSESSMENT, OR IN OTHER WORDS, ASSESSMENT WHICH ARE NOT ABATED, THE ASSESSING OFFICER IS REQUIRE D TO MAKE REASSESSMENT U/S.153A WHICH IS ONLY POSSIBLE WHEN ANY INCRIMINATING MATERIAL 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 FOLLOWS:- 1. THE REVENUE HAS FILED THE APPEAL AGAINST AN ORDER DA TED 14.11.2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN 3761/DEL/20 11 PERTAINING TO THE ASSESSMENT YEAR 2002-03. THE QUESTION WAS WHETHER THE LEARNED CIT (APPEALS) HAD ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDIT ION OF RS. 89 LACS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ('ACT') ON BOGUS SHARE CAPITAL. BUT, THE ISSUE WAS WHETHER THERE WAS ANY INCRIMINATING MATERIAL 8 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 WHATSOEVER FOUND DURING THE SEARCH TO JUSTIFY INITIATI ON OF PROCEEDINGS UNDER SECTION 153A OF THE ACT. 2. THE COURT FINDS THAT THE ORDER OF THE CIT(APPEALS) REVEALS THAT THERE IS A FACTUAL FINDING THAT 'NO INCRIMINATING EVIDENCE RELATED TO S HARE CAPITAL ISSUED WAS FOUND DURING THE COURSE OF SEARCH AS IS MANIFEST FROM THE OR DER OF THE AO.' CONSEQUENTLY, IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN INVOKING SEC TION 68 OF THE ACT FOR THE PURPOSES OF MAKING ADDITIONS ON ACCOUNT OF SHARE CAP ITAL. 3. AS FAR AS THE ABOVE FACTS ARE CONCERNED, THERE IS NOTHING SHOWN TO THE COURT TO PERSUADE AND HOLD THAT THE ABOVE FACTUAL DETERMINATIO N IS PERVERSE. CONSEQUENTLY, AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES O F THE CASE, THE COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE IMPUGNED 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 DELHI HIGH COURT . (PR CIT V KURULE PAPER MILLS P. LTD: S.L.P (C) NO-34554 OF 2015[ 2016] 380 ITR (ST) 64-ED).. THE HONBLE APEX COURT DISMISSED THE SPECIAL LEAVE PE TITION FILED BY THE DEPARTMENT. THE RELEVANT PARA AS MENTIONED IN THE ITR IS REPRODUC ED AS UNDER. THEIR LORDSHIPS MADAN B.LOKUR AND S.A.BOBDE JJ DISMI SSED THE DEPARTMENTS SPECIAL LEAVE PETITION AGAINST THE JUDGMENT DATED JULY 06,2 015 OF THE DELHI HIGH COURT IN I.T.A NO 369 OF 2015, WHEREBY THE HIGH COURT HELD THAT NO SUB STANTIAL QUESTION 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 SEARC H 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 THE ABOVE CASE-LAW TO THE FACTS OF THE CASE ON HAND. WE FIND THAT THE ADDITION MADE FOR THESE ASSESSMENT YEARS IS OF SHARE APPLICATION MONEY RECEIVED U/S 68 OF THE ACT AND ADD ITION OF COMMISSION ALLEGEDLY PAID ON THE SHARE APPLICATION MONEY AND FINALLY A DISALLOW ANCE U/S 14A OF THE ACT, ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE ALLEGED STATEMENTS RECORDED FROM ENTRY OPERATORS HAVE BEEN ADMITTEDLY RETRACTED BY THEM AND THE ASSESSING OFFICER HAS NOT BASED THE ADDITIONS ON T HESE STATEMENTS. EVEN OTHERWISE, WHEN COPIES OF THE ALLEGED STATEMENTS RECORDED BY THE REVENUE OFFICIALS HAVE NOT BEEN GIVEN TO THE ASSESSEE, NO ADDITION CAN BE MADE BASED ON SUCH EVIDENCE WHICH IS NOT CONFRONTED TO THE ASSESSEE. THE CONTENTS OF THE STATEM ENTS ARE ALSO NOT BROUGHT OUT IN THE ASSESSMENT ORDER. ONLY A GENERAL REFERENCE IS MA DE THAT THERE WERE CERTAIN STATEMENTS RECORDED FROM VARIOUS ENTRY OPERATORS BY THE INVESTIGATION WING. NO ADDITION CAN BE MADE ON SUCH GENERAL OBSERVATIONS. W E ALSO FIND THAT THE ASSESSEE HAS NOT BEEN GIVEN AN OPPORTUNITY TO CROSS-EXAMINE ANY OF THESE PERSONS, BASED ON WHOSE STATEMENTS, THE LD. D/R CLAIMS THAT THE ADDITIONS HAVE BEEN MADE. THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM VS. CIT, 12 5 ITR 713 (SC) HAD HELD THAT THE 9 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 OPPORTUNITY OF CROSS-EXAMINATION MUST BE PROVIDED T O THE ASSESSEE. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS EASTERN COMMERCIAL ENTERPRISES (1994) 210 ITR 103 (KOL HC) HELD AS FOLLOWS:- AS A MATTER OF FACT, THE RIGHT TO CROSS-EXAMINATION A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT AND THE OPPORTUN ITY OF SUCH CROSS- EXAMINATION IS ONE OF THE CORNERSTONES OF NATURAL J USTICE . 9.1. 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 JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VEERPRABHU MARKETING LTD. (SUPRA) AND PCIT VS. SALASAR STOCK B ROKING LIMITED (SUPRA). 9.2. EVEN OTHERWISE, IT IS NOT CLEAR AS TO WHICH OF TH ESE STATEMENTS WERE RECORDED DURING THE COURSE OF SEARCH OPERATION U/S 132 OF THE A CT OR WHETHER THE STATEMENTS WERE RECORDED DURING THE COURSE OF ANY SURVEY OPERA TIONS U/S 133A OF THE ACT. IT IS WELL SETTLED THAT A STATEMENT RECORDED DURING THE COURSE OF SURVEY OPERATION CANNOT BE USED AS EVIDENCE UNDER THE ACT. 10. COMING TO THE ALLEGED CASH TRAIL, NONE OF THE MAT ERIAL GATHERED BY THE ASSESSING OFFICER BY WAY OF BANK ACCOUNT COPIES OF VARIOUS COMPANIES SUPPOSED TO BE PART OF THE CHAIN OF COMPANIES WAS NOT CONFRONTED TO THE ASSESSEE. THE ALLEGED STATEMENTS THAT WERE RECORDED FROM DIRECTORS OF THESE COMPANIES WHICH FORMED THIS ALLEGED CHAIN WERE 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 IS N O EVIDENCE THAT ANY CASH WAS DEPOSITED BY THE ASSESSEE COMPANY. MOREOVER, THERE IS NO MATERIAL WHATSOEVER BROUGHT ON RECORD TO DEMONSTRATE THAT THE ALLEGED CASH DEPOSIT MADE IN THE BANK ACCOUNT OF A THIRD PARTY WAS FROM THE ASSESSEE COMPANY. NO OPPORT UNITY TO CROSS-EXAMINE ANY THESE PARTIES WAS PROVIDED TO THE ASSESSEE. THE BANK STATEM ENTS BASED ON WHICH THE CASH TRAIL WAS PREPARED ARE PART OF THE DISCLOSED DOCUMEN TS AND CANNOT BE HELD AS INCRIMINATING MATERIAL. 10.1. THUS, NONE OF THESE MATERIAL GATHERED BY THE ASS ESSING OFFICER CAN BE CATEGORIZED AS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR FOUND DURING THE COURSE OF ANY OTHER OPERATION UNDER THE A CT. THUS, WE HOLD THAT THE ADDITIONS IN QUESTION ARE NOT BASED ON ANY INCRIMIN ATING MATERIAL. THE LD. CIT(A) ON PAGE 30 OF HIS ORDER HELD AS FOLLOWS:- I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASSES SMENT ORDER, DIFFERENT CASE LAWS WAS BROUGHT ON RECORD AND APPEAL ORDERS PASSED BY MY PREDECESSORS ON THIS LEGAL ISSUE. I FIND FROM THE ASSESSMENT ORDER THAT DU RING THE SEARCH & SEIZURE OPERATIONS CONDUCTED U/S 132 OF THE IT ACT, 1961, IN CRIMINATING DOCUMENTS/PAPERS WERE NOT SEIZED. AT LEAST ADDITION MADE BY AO IN THE ASSESSMENT ORDER PASSED U/S 153A/143(3) ARE NOT BAS ED ON ANY INCRIMINATING DOCUMENTS/ PAPERS SEIZED DURING THE SEARCH OPERATION. IT WOULD ALSO NOT TO BE OUT OF CONTEXT TO MENTION HERE THAT IN THIS CASE, ON THE DATE OF SEARCH, NO ASSESSMENT FOR THIS YEAR WAS PENDING. THEREFORE, KEEP ING IN VIEW THE RATIO 10 IT(SS)A NO. 88/KOL/2017 M/S. CONSORTIUM ENTERPRISES PVT. LIMITED, AY 2009-1 0 DECIDED BY THE JURISDICTIONAL BENCH OF KOLKATA TRIBUN AL IN CASE REFERRED ABOVE AND THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARKETING LTD (SUPRA) IN THE LIGHT OF CBDTS DECISIO N OF NOT FILING SLP IN THIS CASE IN THE SUPREME COURT AND KEEPING IN VIEW THE APEX COU RTS DECISION TO DISMISS SLP ON THE SIMILAR ISSUE IN THE CASE OF PR CIT VS KUREL E PAPER MILLS PVT LTD: SLP (C) NO. 34554 OF 2015 DT.07.12.2015, I AM OF THIS VIEW THAT I N 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 PRAB HU MARKETING LTD (SUPRA), ASSESSEES APPEAL ON GROUND NO 1 IS ALLOWED AND AS SUCH I AM NOT INCLINED TO ADJUDICATE APPEAL ON GROUND NO. 2 ON MERIT. 11. WE FIND NOT INFIRMITY IN THIS ORDER OF THE LD. CI T(A) AND HENCE UPHOLD THE SAME. 4. SINCE FACTS ARE IDENTICAL AND THERE IS NO CHANGE IN LAW AND/OR IN FACTS, WE RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL DATED 05.12.2018 IN ASSESSEES OWN CASE FOR AYS 2008- 09 AND 2010-11 CONFIRM THE ACTION OF LD. CIT(A) AND DISMISS THE REVENUES APPEAL. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 8 TH MARCH, 2019. SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH MARCH, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT DCIT, C. C. 2(2), KOLKATA. 2 RESPONDENT M/S. CONSORTIUM ENTERPRISES PVT. LTD., 1, GARSTIN PLACE, ORBIT HOUSE, 3 RD FLOOR, ROOM NO. 3B, KOLKATA-700 001. 3 4 5 CIT(A) -20, KOLKATA (SENT THROUGH E-MAIL) CIT , KOLKATA. D R, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR