ACIT, Central Circle - 3(3), Kolkata , Kolkata V. M/s. Sethia Agrotech Ltd., Kolkata

ITSSA 91/KOL/2017

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3556 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 10-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOULEAN HANGSHING
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit; Bogus Share capital; Search and seizure; Reason to believe
• Section: 143(3); 142(1); 133A; 153A; 133(6); 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] I.T.(SS)A NO. 91/KOL/ 2017 ASSESSMENT YEAR : 2010-1 1 ACIT, CC-3(3), KOLKATA -VS- M/S SET HIA AGROTECH LTD. [PAN: AACCD 3837 B] (APPELLANT) (RESPONDENT) C.O. NO. 85/KOL/2017 (ARISING OUT OF I.T.A NO. 91/KOL/2017 ) ASSESSMENT YEAR : 2010-1 1 M/S SETHIA AGROTECH LTD. -VS- ACIT, CC-3(3 ), KOLKATA [PAN: AACCD 3837 B] (CROSS OBJECTOR) (RESPONDENT) FOR THE DEPARTMENT : SHRI GOULEAN HANGS HING, CIT DR FOR THE ASSESSEE : SHRI S.M. SURANA, AR DATE OF HEARING : 21.11.2017 DATE OF PRONOUNCEMENT : 01.12.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTI ON BY THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -21, KOLKATA [ IN SHORT THE LD CITA] IN APPEAL NO. 905/CC-3(3)/CIT(A) -21/KOL/15-16 DATED 12.05.2017 AGAINST THE ORDER PASSED BY THE DCIT, CC-3(3), KOL KATA [ IN SHORT THE LD AO] UNDER SECTION 153A/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 17.03.2016 FOR THE ASSESSMENT YEAR 2010-11. 2 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 2 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION OF RS 1,40,00,000/- TOWAR DS SHARE CAPITAL IN THE SEARCH ASSESSMENT FRAMED U/S 153A/143(3) OF THE ACT IN TH E ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH TO THAT EFFECT. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE ACT ON THE SETHIA GROUP AL ONG WITH ITS SISTER CONCERNS AND / OR OTHERS AT VARIOUS PREMISES / OFFICES OF THE GROUP O N 19.3.2014 . THE ASSESSEE IS ONE OF THE COMPANIES IN THE SAID GROUP. IN SOME CASES, SUR VEY OPERATION U/S 133A OF THE ACT WAS ALSO CONDUCTED ON THE SAME DATE AND / OR SUBSEQ UENT DATES AT THE FACTORY PREMISES OF SETHIA OIL INDUSTRIES LTD. CONSEQUENT TO THE SEARCH , NOTICE U/S 153A OF THE ACT WAS ISSUED AND FOR THE YEAR UNDER CONSIDERATION, THE AS SESSEE FILED A LETTER DATED 16.2.2015 TO TREAT THE RETURN OF INCOME FILED ON 8.9.2010 DISCLO SING TOTAL INCOME OF RS 90,993/- AS A RETURN IN RESPONSE TO NOTICE U/S 153A OF THE ACT. THE ORIGINAL RETURN OF INCOME WAS FILED U/S 139(1) OF THE ACT ON 8.9.2010 DECLARING T AXABLE INCOME OF RS. 90,993/-. THE ASSESSEE STATED THAT THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT FOR THE ASST YEAR 2010-11 IN RESPECT OF THE ORIGINAL RETURN FILED ON 8.9.2010 HAD EXPIRED ON 30.9.2011 AND HENCE AS ON THE DATE OF SEARCH, THAT YEAR (I.E ASST YEAR 2010-11) WOULD FALL UNDER THE CATEGORY OF UNABATED ASSESSMENT AND HENCE THE INCOME ASSESSED ORIGINALLY THEREON COULD NOT BE DISTURBED UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH RELATABLE TO SUCH ASSESSMENT YEAR. IT WAS ARGUED THAT ADMITTEDLY NO INCRIMINATING MATERIALS WERE FOUND FOR ASST YEAR 20 10-11 IN THE COURSE OF SEARCH WITH REGARD TO SHARE CAPITAL AND ACCORDINGLY PLEADED NOT TO DISTURB THE ORIGINALLY ASSESSED INCOME, WHICH IS SAME AS THE RETURNED INCOME. THE LD AO HOWEVER DID NOT HEED TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO FRAME THE ASSESSMENTS U/S 153A OF THE ACT BY MAKING AN ADDITION TOWARDS SHARE CAPITAL U/S 68 OF THE ACT IN THE SUM OF RS 1,40,00,000/- ON THE PLEA THAT THE ASSESSMENTS TO B E FRAMED U/S 153A OF THE ACT CLEARS ALL THE DECKS AND WOULD ENABLE THE LD AO TO ASSESS OR REASSESS THE TOTAL INCOME AS PER 3 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 3 THE PROVISIONS OF THE ACT IRRESPECTIVE OF INCRIMINA TING MATERIALS FOUND IN THE SEARCH. THE LD AO COMPLETED THE ASSESSMENT U/S 153A / 143(3 ) OF THE ACT ON 17.3.2016 DETERMINING THE TOTAL INCOME AT RS 1,40,90,993/- AF TER MAKING AN ADDITION OF RS. 1,40,00,000/- U/S 68 OF THE ACT ON ACCOUNT OF SHARE CAPITAL. 4. THE ASSESSEE STATED NO INCRIMINATING MATERIALS RELATING TO THE SHARE CAPITAL OR SHARE PREMIUM WAS FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE FILED ALL THE DETAILS WITH REGARD TO THE SHARE CAPITAL AND YET ON THE BASIS OF POST SEARCH DEPOSITION TAKEN BY THE ADIT (INV.) FROM SRI MURLI LAHOTI , SRI SHIV KUMAR BANKA AND SRI ANAND SINGHANIA, WHO WERE NOT THE DIRECTORS OF THE SHARE APPLICANT C OMPANIES, THE LD AO ADDED BACK THE SAID AMOUNT OF RS 1,40,00,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE ASSESSEE PLEADED BEFORE THE LD CITA THAT EVEN THE O PPORTUNITY OF CROSS-EXAMINATION OF THESE THREE PARTIES WERE DENIED TO THE ASSESSEE BY THE LD AO. THE ASSESSEE BEFORE THE LD CITA STATED THAT IN SUPPORT OF THE RECEIPT OF SHARE CAPITAL, THE ASSESSEE HAD PROVIDED NAME & ADDRESS OF THE SHARE APPLICANTS, PAN OF THE SHARE APPLICANTS, CONFORMATION LETTERS FROM THE SHARE APPLICANTS, THEIR ITR ACKNOW LEDGEMENT, COPY OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET, SOURCE OF THE FUNDS PROV IDED, BANK STATEMENT, ROC DOCUMENTS ETC. THE LD AO DID NOT PROCEED FURTHER , NEITHER ISSUED NOTICE U/S 131 OR 133(6) OF THE ACT TO THE SHAREHOLDERS TO DISPROVE T HAT THE DOCUMENTS FILED BY THE ASSESSEE WERE NOT RELIABLE. THE LD AO SIMPLY RELIED ON THE STATEMENT RECORDED BY THE ADIT (INV.) IN POST SEARCH ENQUIRIES WHICH TOO WAS RECORDED AFTER 118 DAYS OF THE SEARCH WHEN HE HAS TO FORWARD ALL THE DOCUMENTS AND REPORT WITHIN 60 DAYS OF THE SEARCH. THE ASSESSEE FURTHER STATED THAT THERE IS NO DISPUTE THAT THE SHAREHOLDER COMPANIES HAVE DULY DISCLOSED THE INVESTMENT IN SHA RE CAPITAL WITH PREMIUM IN THEIR BOOKS AND BALANCE SHEET AND SUCH INVESTMENTS HAVE A LSO BEEN ACCEPTED BALONG WITH THEIR SOURCE IN THE HANDS OF THE SHAREHOLDERS. THE ASSESSEE FURTHER STATED THAT IT HAD FILED ALL THE EVIDENCES INCLUDING AFFIDAVITS FROM THE SHA REHOLDERS TO PROVE THE CREDIT IN THEIR NAMES. IT WAS POINTED OUT THAT NEITHER THE LD AO HIMSELF EXAMINED THE AFORESAID THREE 4 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 4 PERSONS NOR ALLOWED THE CROSS EXAMINATION SPECIFICA LLY CALLED FOR. THE ADDITION WAS MADE MERELY BASED ON THE STATEMENT RECORDED DURING POST SEARCH ENQUIRIES BY THE INVESTIGATION WING. 4. THE LD CITA DELETED THE ADDITION MADE BY THE LD AO BY OBSERVING AS UNDER:- I HAVE CONSIDERED FINDINGS OF THE AO IN THE ASSESS MENT 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 SEAR CH AND SEIZURE OPERATIONS CONDUCTED U/S 132 OF THE INCOME TAX ACT, 1961, INCRIMINATING DOCUMENTS/PAPERS WERE NOT SEIZED. AT LEAST, ADDITIONS MADE BY THE AO IN THE ASSESSME NT ORDER PASSED U/S 153A/143(3) ARE NOT BASED ON ANY INCRIMINATING DOCUMENTS/PAPERS SEI ZED DURING THE SEARCH OPERATION. IT WOULD ALSO NOT BE OUT OF CONTEXT TO MENTION HERE TH AT 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 BENCH OF KOLKATA TRIBUNAL IN CASES REFERRED ABOVE AND THE RATIO DECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE C ASE OF VEER PRABHU MARKETING LTD. (SUPRA) IN THE LIGHT OF CBDTS DECISION OF NOT FILI NG SLP IN THIS CASE IN THE SUPREME COURT AND KEEPING IN VIEW THE APEX COURTS DECISION TO DISMISS SLP ON SIMILAR ISSUE IN THE CASE OF PR. CIT VS. KURELE PAPER MILLS PVT. LTD : SLP (C) NO. 34554 OF 2015 DATED 07.12.2015, I AM OF THIS VIEW THAT IN ORDER TO MAIN TAIN 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), ASSESSE ES APPEAL ON GROUNDS NO. 2 AND 3 ARE ALLOWED AND AS SUCH I AM NOT INCLINED TO ADJUDI CATE APPEAL ON GROUNDS NO. 4 AND 5 ON MERIT. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS: 1. LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE FIN DING OF INCRIMINATING FACT DURING SEARCH & SEIZURE OPERATION REGARDING BUYBACK OF SHARES @ RS. 10/- BY THE GROUP COMPANIES IMMEDIATELY AFTER ALLOTMENT OF THOSE SHARES @ 50/- PER SHARE THROUGH ENTRY OPERATORS AND REVEALING OF THE RELATED FACTS AND STATEMENTS UNDER OATH OF THE ENTRY OPERATORS IN POST SEARCH IN VESTIGATION CONSTITUTE SUFFICIENT CAUSE TO INITIATE PROCEEDINGS U/S 153A FOR ADDITION OF THE BOGUS SHARE CAPITAL AS ALL INCRIMINATING FACTS/DOCUMENTS ARE RELATED TO IT . 2. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE FINDING OF AN INCRIMINATING FACT DURING SEARCH & SEIZURE OPERATION AMOUNTS TO S EIZURE OF INCRIMINATING DOCUMENT. 3. LD. CIT(A) HAS FAILED TO EXPLAIN AS TO WHY THE J UDICIAL DECISIONS MENTIONED IN THE ASSESSMENT ORDER ARE NOT APPLICABLE IN THIS CAS E. 5 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 5 6. THE LD DR ARGUED THAT THE EXPRESSION INCRIMINAT ING MATERIAL IS NOT FOUND IN THE PROVISIONS OF THE ACT AND IT IS ONLY THE HONBLE CO URTS WHICH HAD IMPORTED THOSE WORDS WHILE RENDERING THE DECISIONS. HE STATED THAT THE H ONBLE COURTS ARE DIVIDED ON THIS ISSUE AND PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT CO VS DCIT REPOR TED IN (2014) 49 TAXMANN.COM 98 (KAR HC) WHEREIN IT WAS HELD THAT SEARCH ASSESSMENTS COULD BE FRAMED EVEN WITHOUT THE EXISTENCE OF INCRIMINATING MATERIALS FOUND IN T HE COURSE OF SEARCH. HE ARGUED THAT THE BASIC FOUNDATION FOR CONDUCTING THE SEARCH IS G OVERNED BY THE PROVISIONS OF SECTION 132 OF THE ACT WHICH HAS TO BE READ HARMONIOUSLY WI TH SECTION 153A OF THE ACT. THERE ARE THREE CONDITIONS BASED ON WHICH A SEARCH ACTION COULD BE INITIATED U/S 132 OF THE ACT ON AN ASSESSEE. THEY ARE :- SECTION 132(1) - IF THE CONCERNED AUTHORITY HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEVE THAT - (A) WHERE A PERSON FAILS TO PRODUCE THE BOOKS OF ACCOUN TS AND OTHER DOCUMENTS IN RESPONSE TO NOTICE U/S 142(1) OR SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (B) WHERE A PERSON FAILS TO COMPLY WITH THE REQUIREMENT S OF SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (C) WHERE A PERSON IS IN POSSESSION OF ANY MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH ASSETS REPRESENT S EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN , OR WOULD NOT BE, D ISCLOSED FOR THE PURPOSES OF THE ACT (HEREINAFTER REFERRED TO AS THE UNDISCLOSE D INCOME OR PROPERTY) ; THEN THE OFFICER , SO AUTHORIZED COULD CONDUCT A SE ARCH AND PROCEED AS PER THE REQUIREMENTS LAID DOWN IN THE SAID SECTION. HE AR GUED THAT THE AFORESAID THREE PRIMARY CONDITIONS FOR INVOKING SEARCH PROCEEDINGS CANNOT B E GIVEN A GO BY WHILE FRAMING SECTION 153A ASSESSMENTS AND THE INSTANT CASE FALLS UNDER SECTION 132(1)(C ) OF THE ACT. 6 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 6 THE PROVISIONS OF SECTION 153A OF THE ACT USE THE E XPRESSION ASSESS OR REASSESS TOTAL INCOME AND HENCE THE SEARCH ASSESSMENT COULD BE FR AMED U/S 153A OF THE ACT IRRESPECTIVE OF ANY INCRIMINATING MATERIALS. 7. IN RESPONSE TO THIS, THE LD AR STATED THAT THE A SSESSMENT FOR THE ASST YEAR 2010-11 WAS ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AS T HE CASE WAS NOT SELECTED FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT ON OR B EFORE 30.9.2011. HE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES WITH REGARD TO FRAMING OF ADDITIONS IN SECTION 153A ASSESSMENTS WITHOUT ANY INCRIMINATING MATERIAL FOUND THEREON. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS:- (A) CIT VS VEERPRABHU MARKETING LTD REPORTED IN (20 16) 73 TAXMANN.COM 149 (CAL HC) (B) DECISION OF THIS TRIBUNAL IN THE CASE OF ACIT V S KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 (C ) CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 ( DELHI HC) (D)CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAV A SHEVA) LTD AND ALL CARGO GLOBAL LOGISTICS LTD REPORTED IN (2015) 374 ITR 645 ( BOM) (E) DECISION OF HONBLE APEX COURT IN THE CASE OF K ABUL CHAWLA REPORTED IN 380 ITR (ST.) 64 (SC) WHEREIN SLP OF THE REVENUE WAS DISMIS SED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND IT WOULD BE NECESSARY TO ADDRESS THE PRELIMINARY ISSUE OF WHETHER THE ADDITION COULD BE FRAMED U/S 153A OF THE ACT IN RESPECT OF A CONCLUDED PROCEEDING WITHOUT THE EXIST ENCE OF ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH. THE SCHEME OF THE ACT PROVIDES FOR ABATEMENT OF PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IT IS NOT IN DISPUTE THAT THE ASSESSMENT FOR THE ASST YEAR 2010-11 WAS ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AND THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAD EXPIRE D AND HENCE IT FALLS UNDER CONCLUDED PROCEEDING , AS ON THE DATE OF SEARCH. WE HOLD THA T THE LEGISLATURE DOES NOT DIFFERENTIATE 7 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 7 WHETHER THE ASSESSMENTS ORIGINALLY WERE FRAMED U/S 143(1) OR 143(3) OR 147 OF THE ACT. HENCE UNLESS THERE IS ANY INCRIMINATING MATERIAL FO UND DURING THE COURSE OF SEARCH RELATABLE TO SUCH CONCLUDED YEAR, THE STATUTE DOES NOT CONFER ANY POWER ON THE LD AO TO DISTURB THE FINDINGS GIVEN THEREON AND INCOME DETER MINED THEREON, AS FINALITY HAD ALREADY BEEN REACHED THEREON, AND SUCH PROCEEDING WAS NOT PENDING ON THE DATE OF SEARCH TO GET ITSELF ABATED. THE PROVISIONS OF SEC TION 153A OF THE ACT ARE REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE :- '[ASSESSMENT IN CASE OF SEARCH OR REQUISITION 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN S ECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN T HE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF A CCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER T HE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNIS H WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIB ED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND TH E PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SU CH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RE LEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS:' 8.1. WE FIND THAT THE CO-ORDINATE BENCH OF DELHI TR IBUNAL IN THE CASE OF DY. CIT V. AGGARWAL ENTERTAINMENT (P.) LTD REPORTED IN [2016] 72 TAXMANN.COM 340 (DELHI - TRIB.) HAD ADDRESSED THIS ASPECT. THE RELEVANT HEADNOTES IS REPRODUCED BELOW: 'SECTION 153A, READ WITH SECTION 143, OF THE INCOME -TAX ACT, 1961-SEARCH AND SEIZURE - ASSESSMENT IN CASE OF (IN CASE OF SECTION 143(1) ASSESSMENT)-ASSESSMENT YEAR 2004-05- WHETHER ASSESSMENT IN RESPECT OF WHIC H RETURN HAS BEEN PROCESSED 8 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 8 UNDER SECTION 143(1), CANNOT BE REGARDED AS PENDING FOR PURPOSE OF SECTION 153A AS ASSESSING OFFICER IS NOT REQUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN AND, THUS, SAID ASSESSMENT CANNOT BE REOPENED IN EXERCIS E OF POWER OF SECTION 153A- HELD YES (PARAS 10 AND 12) (IN FAVOUR OF ASSESSEE). ' 8.2. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRI BUNAL IN THE CASE OF ACIT VS KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9. 12.2015 REPORTED IN 2016-TIOL- 167-ITAT-KOL HAD EXPLAINED THE AFORESAID PROVISIONS AS BELOW:- '6.4 IN OUR OPINION, THE SCHEME OF ASSESSMENT PROCE EDINGS SHOULD BE UNDERSTOOD IN THE FOLLOWING MANNER PURSUANT TO THE SEARCH CONDUCT ED U/S. 132 OF THE ACT :- (A) NOTICE U/S. 153A OF THE ACT WOULD BE ISSUED ON THE PERSON ON WHOM TH E WARRANT OF AUTHORIZATION U/S. 132 OF THE ACT WAS IS SUED FOR THE SIX ASSESSMENT YEARS PRECEDING THE YEAR OF SEARCH AND ASSESSMENTS THEREON WOULD BE COMPLETED U/S. 153A OF THE ACT FOR THOSE SIX ASSESS MENT YEARS. (B ) IN RESPECT OF THE YEAR OF SEARCH, NOTICE U/S. 143(2 ) OF THE ACT WOULD BE ISSUED AND ASSESSMENT THEREON WOULD BE COMPLETED U/S. 143( 3) OF THE ACT. (C) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YE AR OF SEARCH, NO ADDITION COULD BE MA DE IN THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCRI MINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE RELEVANT ASSESSMENT YEAR. (D) PURSUANT TO THE SEARCH U/S. 132 OF THE ACT, THE PEN DING PROCEEDINGS WOULD GET ABATED. IN RESPECT OF ABATED ASSESSMENTS, THE TOTAL INCOME NEEDS TO BE DETERMINED AFRESH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AND OTHER PROVISIONS OF THE ACT. 6.4.1 THE CONCLUDED ASSESSMENTS FOR THE PURPOSE OF SECTION 153A OF THE ACT SHALL BE - (I) ASSESSMEN T YEARS WHERE ASSESSMENTS ARE ALREADY COMPLETED U/S . 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF TH E ACT HAS EXPIRED OR; (II) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMP LETED U/S. 143(3) OF THE ACT ; UNLESS THEY ARE REOPENED U/S. 147 OF THE ACT FOR SO ME OTHER PURPOSE IN BOTH THE SCENARIOS STATED ABOVE. 9 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 9 6.4.2 THE SCHEME OF ASSESSMENT PROCEEDINGS CONTEMPL ATED U/S. 153A OF THE ACT ARE TOTALLY DIFFERENT AND DISTINCT FROM THE PROCEEDINGS CONTEMPLATED U/S. 147 OF THE ACT AND THESE PROCEDURES OF ASSESSMENT OPERATE IN DIFFE RENT FIELDS AND HAVE DIFFERENT PURPOSES TO BE FULFILLED ALTOGETHER. 6.4.3 THE EXPRESSION 'ASSESS OR REASSESS' STATED IN SECTION 153A(1)(B) HAS TO BE UNDERSTOOD AS BELOW:- 'ASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF ABATED ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER THERE ARE ANY INCR IMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO RELEVANT ASSES SMENT YEARS ; 'REASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPEC T OF CONCLUDED ASSESSMENT YEARS WHERE INCRIMINATING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR.' 8.3. WE ALSO FIND THAT RECENTLY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HELD AS UNDER:- '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE P ERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDI NG THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. (II) ASS ESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF T HE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE LD AOS AS A FRESH EXERCISE. (III) THE LD AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE LD AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE AS SESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'I N WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS S HOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SE ARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE LD AO WH ICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN 10 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 10 ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL , THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO C OMPLETE ASSESSM ENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EA CH AY ON THE BASIS OF THE FIND INGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE LD AO. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE LD AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNE ARTHED DURING THE COURSE OF SEARCH OR REQUISITION O F DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 38. THE PRESENT APPEALS CONCERN AYS 2002-03, 2005-0 6 AND 2006-07, ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPL ETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 8.4. WE FIND THAT THE DECISION RELIED UPON BY THE L D DR IN THE CASE OF CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) DOES NOT IN ANY MANNER ADVANCE THE CASE OF THE REVENUE AS ADMITTEDLY THE HONBLE DELHI HIGH COURT IN PARA 24 OF ITS ORDER HAD HELD AS UNDER:- 24. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCR IMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN B E INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN. 8.5. THE LD DR ALSO RELIED ON THE RECENT DECISION O F THE HONBLE KERALA HIGH COURT IN THE CASE OF E.N.GOPAKUMAR VS CIT REPORTED IN (2016) 75 TAXMANN.COM 215 (KERALA) IN 11 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 11 SUPPORT OF HIS CONTENTIONS. WE FIND THAT THE DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HAD DULY CONSIDERED THE DECISIONS OF CIT VS ANIL KUMAR BHATI A REPORTED IN (2013) 352 ITR 493 (DEL) ; CIT VS CHETAN DAS LACHMAN DAS REPORTED IN (2012) 211 TAXMAN 61 (DEL HC) ; MADUGULA VENU VS DIT REPORTED IN (2013) 215 TAXMAN 298 (DEL HC) ; CANARA HOUSING DEVELOPMENT CO. VS DCIT REPORTED IN (2014) 49 TAXMANN.COM 98 (KAR HC) ; FILATEX INDIA LTD VS CIT REPORTED IN (2014) 229 TAX MAN 555 (DEL HC) ; JAI STEEL (INDIA) VS ACIT REPORTED IN (2013) 219 TAXMAN 223 (DEL HC) ; CIT VS MURLI AGRO PRODUCTS LTD REPORTED IN (2014) 49 TAXMANN.COM 172 (BOM HC) ; CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD REPORTED IN (2015) 374 ITR 645 (BOM HC) AND ALL CARGO GLOBAL LOGISTICS LTD VS DCIT REPO RTED IN (2012) 137 ITD 287 (MUM ITAT) (SB). WE ALSO FIND THAT AGAINST THE DECISION OF THE HONB LE DELHI HIGH COURT IN 380 ITR 573 (DEL) , THE REVENUE PREFERRED SPECIAL LEAVE PETITIO N BEFORE THE HONBLE SUPREME COURT AND THE SAME WAS DISMISSED BY THE APEX COURT WHICH IS REPORTED IN 380 ITR (ST.) 4 (SC). HENCE IT COULD BE SAFELY CONCLUDED THAT THE DECISIO N OF HONBLE DELHI HC IN THE CASE OF KABUL CHAWLA SUPRA WOULD HAVE TO BE CONSIDERED ON T HE IMPUGNED ISSUE AND IN ANY CASE, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS VEGETAB LE PRODUCTS LTD REPORTED IN 88 ITR 192 (SC) HAD HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE A SSESSEE MUST BE ADOPTED. 8.6. WE ALSO FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT RECENTLY IN THE C ASE OF PRINCIPAL CIT VS M/S SALASAR STOCK BROKING LTD IN G .A.NO. 1929 OF 2016 ITAT NO. 264 OF 2016 DATED 24.8.2016 HAD ENDORSED THE AFORESAID VIEW OF HONBLE DELHI H IGH COURT IN KABUL CHAWLAS CASE AND ALSO PLACED RELIANCE ON ITS OWN DECISION IN THE CASE OF CIT VS VEERPRABHU MARKETING LTD REPORTED IN (2016) 73 T AXMANN.COM 149 (CAL HC). 12 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 12 8.7. WE FIND THAT THE PROVISIONS OF SECTION 132 OF THE ACT RELIED UPON BY THE LD DR WOULD BE RELEVANT ONLY FOR THE PURPOSE OF CONDUCTIN G THE SEARCH ACTION AND INITIATING PROCEEDINGS U/S 153A OF THE ACT. ONCE THE PROCEEDI NGS U/S 153A OF THE ACT ARE INITIATED, WHICH ARE SPECIAL PROCEEDINGS, THE LEG ISLATURE IN ITS WISDOM BIFURCATES DIFFERENTIAL TREATMENTS FOR ABATED ASSESSMENTS AND UNABATED ASSESSMENTS. AT THE COST OF REPETITION, WE STATE THAT IN RESPECT OF ABATED ASSE SSMENTS (I.E PENDING PROCEEDINGS ON THE DATE OF SEARCH) , FRESH ASSESSMENTS ARE TO BE FRAME D BY THE LD AO U/S 153A OF THE ACT WHICH WOULD HAVE A BEARING ON THE DETERMINATION OF TOTAL INCOME BY CONSIDERING ALL THE ASPECTS, WHEREIN THE EXISTENCE OF INCRIMINATING MAT ERIALS DOES NOT HAVE ANY RELEVANCE. HOWEVER, IN RESPECT OF UNABATED ASSESSMENTS, THE LE GISLATURE HAD CONFERRED POWERS ON THE LD AO TO JUST FOLLOW THE ASSESSMENTS ALREADY CO NCLUDED UNLESS THERE IS AN INCRIMINATING MATERIAL FOUND IN THE SEARCH TO DISTU RB THE SAID CONCLUDED ASSESSMENT. IN OUR CONSIDERED OPINION, THIS WOULD BE THE CORRECT U NDERSTANDING OF THE PROVISIONS OF SECTION 153A OF THE ACT , AS OTHERWISE, THE NECESSI TY OF BIFURCATION OF ABATED AND UNABATED ASSESSMENTS IN SECTION 153A OF THE ACT WOU LD BECOME REDUNDANT AND WOULD LOSE ITS RELEVANCE. HENCE THE ARGUMENTS ADVANCED B Y THE LD DR IN THIS REGARD DESERVES TO BE DISMISSED. 8.8. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTF ULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSMEN T FRAMED U/S 143(1) OF THE ACT FOR THE ASST YEAR 2010-11, WHICH WAS UNABATED / CONCLUD ED ASSESSMENT, ON THE DATE OF SEARCH, DESERVES TO BE UNDISTURBED IN THE ABSENCE O F ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND ACCORDINGLY THE ADDITION M ADE ON ACCOUNT OF SHARE CAPITAL U/S 68 OF THE ACT IS HEREBY DIRECTED TO BE DELETED. S INCE THE ISSUE IS ADDRESSED ON PRELIMINARY GROUND OF ABSENCE OF INCRIMINATING MATE RIALS, WE REFRAIN TO GIVE OUR FINDINGS ON THE MERITS OF THE ADDITION U/S 68 OF TH E ACT FOR THE ASST YEAR 2010-11. ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE IN TH IS REGARD ARE DISMISSED. 13 IT(SS)A NO.91/KOL/2017& C.O. NO.85/KOL/2017 M/S SETHIA AGROTECH LTD. A.YR.2010-11 13 9. THE CROSS OBJECTIONS PREFERRED BY THE ASSESSEE A RE ONLY SUPPORTIVE OF THE ORDER OF THE LD CITA AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICAT ION. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 01.12.2017 SD/- SD/- [N.V. VASUDEVAN] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01.12.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CC-3(3), KOLKATA, AAYAKAR BHAWAN POORVA, E M BY PASS 110, SHANTI PALLY, 4 TH FLOOR, KOLKATA-700107 2. M/S SETHIA AGROTECH LTD., 143/1/1, COTTON STREET , KOL-700007 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S