ACIT, C.C.-3(3), Kolkata, Kolkata V. M/s. Prakash Ply Exim Pvt. Ltd., Kolkata

ITSSA 98/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8123 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 01-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: V K JAIN
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Additional evidence; Question of law; Accommodation entries; Right to appeal; Onus to prove; Documents seized; Set aside
• Section: 271(1)(c); 143(3); 153A; 133(6); 143(1); 250; 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER) IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3), KOLKATA.................APPELLANT VS. M/S. PRAKASH PLY EXIM PVT. LTD.................................................RESPONDENT 67/10, STRAND ROAD KOLKATA 700 006 [PAN : AAECP 0837 D] C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD.....................................................APPELLANT 67/10, STRAND ROAD KOLKATA 700 006 [PAN : AAECP 0837 D] VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3), KOLKATA.............RESPONDENT APPEARANCES BY: SHRI V.K. JAIN, A/R, APPEARED ON BEHALF OF THE ASSESSEE . SHRI A.K. NAYAK, CIT, SR. D/R. APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : FEBRUARY 4 TH , 2019 DATE OF PRONOUNCING THE ORDER : APRIL 10 TH , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- BOTH THESE APPEALS ARE FILED BY THE REVENUE. THE CROSS-OBJECTIONS ARE FILED BY THE ASSESSEE. THESE ARE DIRECTED AGAINST THE SEPARATE BUT IDENTICAL ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 21, KOLKATA, (LD. CIT(A)) PASSED U/S. 250 OF THE INCOME TAX ACT, 1961, (THE ACT), DT. 29/04/2016, FOR THE ASSESSMENT YEARS 2011-12 & 2012-13. 2 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD 2. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF TRADING IN PLYWOOD. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT, ON 21 ST AND 22 ND NOVEMBER, 2013, WAS CONDUCTED ON PRAKASH GROUP OF COMPANIES OF WHICH THE ASSESSEE IS A PART. THEREAFTER NOTICE U/S 153A OF THE ACT, WAS ISSUED TO THE ASSESSEE ON 12/01/2015. FOR THE ASSESSMENT YEAR 2011-12, THE ASSESSEE FILED A RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT, ON 07/08/2015, DISCLOSING TOTAL INCOME OF RS.47,07,515/-. FOR THE ASSESSMENT YEAR 2012-13, IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT, A RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 28/01/2015, DECLARING TOTAL INCOME OF RS.1,00,57,650/-. THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S 153A R.W.S. 143(3) FOR THE ASSESSMENT YEAR 2011-12 DETERMINING THE TOTAL INCOME AT RS.1,89,58,760/- INTERALIA MAKING ADDITION U/S 68 OF THE ACT, OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED OF RS.1.15 CRORES AND RS.27,51,200/- CLAIMED AS UNDISCLOSED AGRICULTURAL INCOME. FOR THE ASSESSMENT YEAR 2012-13, THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AT RS.3,20,06,670/- INTERALIA MAKING ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED U/S 68 OF THE ACT, OF RS.1,98,44,000/- AND OF AGRICULTURAL INCOME TREATED AS UNDISCLOSED INCOME OF RS.21,05,020/-. AGGRIEVED THE ASSESSEE CARRIED THE MATTERS IN APPEAL. BEFORE THE LD. FIRST APPELLATE AUTHORITY, THE ASSESSEE TOOK THE FOLLOWING ADDITIONAL GROUNDS FOR THE ASSESSMENT YEAR 2011-12. 1. FOR THAT THE LD. ASSESSING OFFICER ERRED IN INITIATING THE PROCEEDINGS U/S 153A WHEN NO INCRIMINATING DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND IN THE COURSE OF SEARCH AND AS SUCH THE ASSESSMENT COMPLETED U/S 153A/143(3) IS BAD IN LAW. 2. FOR THAT THE LD AO ERRED IN ADDING BACK RS.1,15,00,000/- U/S 68 WITHOUT WHEN SUFFICIENT EVIDENCE WAS FILED BEFORE THE AO, THE AO DID NOT PROCEED FURTHER, THE INSPECTORS REPORT WAS NOT CONFRONTED TO THE ASSESSEE AND THE ONUS THAT LAY UPON THE ASSESSEE WAS DISCHARGED. 3 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD 2.1. FOR THE ASSESSMENT YEAR 2011-12, THE LD. FIRST APPELLATE AUTHORITY, DELETED THE ADDITIONS BY HOLDING THAT THE ADDITIONS IN QUESTION WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIONS. WHILE DOING SO, HE RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS. M/S. SALASAR STOCK BROKING LTD., ITAT NO. 264 OF 2016, JUDGMENT DT. 24/08/2016 AND CIT VS. VEERPRABHU MARKETING LTD. 73 TAXMANN.COM 149 (CAL) AND CERTAIN OTHER DECISIONS OF THE JURISDICTIONAL ITAT. 3. AGGRIEVED THE REVENUE IS BEFORE US. 4. THE LD. CIT D/R, SUBMITTED THAT AN ADDITION GROUND OF APPEAL WAS ADMITTED BY THE LD. CIT(A) WITHOUT GIVING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER. HE CONTENDED THAT THE ISSUE, AS TO WHETHER THE ADDITIONS WERE BASED ON INCRIMINATING DOCUMENTS/ PAPERS FOUND DURING THE COURSE OF SEARCH, WAS NEVER RAISED BEFORE THE ASSESSING OFFICER OR IN THE ORIGINAL GROUNDS OF APPEAL FILED BY THE ASSESSEE. HE SUBMITTED THAT SINCE THE POWER OF THE LD. CIT(A) IS CO-TERMINUS WITH THAT OF THE ASSESSING OFFICER, HE SHOULD HAVE CONSIDERED THE SEIZED MATERIAL AND EXAMINED THE FINDINGS OF THE ASSESSING OFFICER ON THIS ISSUE AND THAT HE SHOULD NOT HAVE DELETED THE ADDITION. THUS, HE ARGUED THAT THE ORDER IS LIABLE TO BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION, IN ACCORDANCE WITH LAW. 4.1. ON A QUERY FROM THE BENCH, THE LD. D/R SUBMITTED THAT, HE IS NOT DISPUTING THE FACT THAT A NOTICE OF HEARING WAS GIVEN BY THE LD. CIT(A) TO THE ASSESSING OFFICER BUT HE IS SPECIFICALLY DISPUTING THE ADMISSION OF ADDITION GROUND OF APPEAL BY THE LD. CIT(A) WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER OF BEING HEARD. 4.2. ON MERITS, THE LD. D/R SUBMITTED THAT, THE ADDITION WAS BASED ON INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND THAT THE LD. CIT(A) WAS NOT CORRECT IN OBSERVING AND HOLDING OTHERWISE. HE RELIED ON THE SEIZED MATERIAL MARKED AS SBLP-02 (PAGE NO. 19) AND POINTED OUT THAT AN EXAMINATION OF THESE SEIZED PAPER MAKES IT CLEAR THAT THE NAMES OF THE PROMOTERS OMPRAKASH PANDEY, SATYA PRAKASH PANDEY AND RAM 4 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD PRAKASH PANDEY, CLEARLY APPEAR THEREIN IN SHORT FORM AND THAT THEY HAD GIVEN VARIOUS AMOUNTS TO ACCOMMODATION ENTRY OPERATORS AND THAT THE MONEY WAS ROUTED BACK BY WAY OF CHEQUES TO THE ASSESSEE COMPANY. HE FURTHER RELIED ON THE STATEMENTS RECORDED U/S 132(4) OF THE ACT. HE POINTED OUT THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 131 OF THE ACT AS WELL AS U/S 133(6) OF THE ACT TO VARIOUS SHARE APPLICANT COMPANIES AND THAT THE FACT THAT THEY WERE RETURNED UNSERVED AND ARGUED THAT THE ADDITION UNDER THESE CIRCUMSTANCES MADE BY THE ASSESSING OFFICER WAS LEGAL AND THE LD. CIT(A) WAS WRONG IN DELETING THE ADDITION. HE EXTENSIVELY REFERRED TO THE STATEMENT RECORDED FROM OM PRAKASH PANDEY WHICH IS PLACED AT DEPARTMENTAL PAPER BOOK-1 PAGES 15-19 AND SPECIFICALLY DREW THE ATTENTION OF THE BENCH TO THE QUESTION NO. 20, 21, & 23 AS WELL AS THE STATEMENT OF ONE MR. PAWAN KUMAR JAIN, WHO IS AN ENTRY OPERATOR. HE POINTED OUT TO QUESTION NO. 10 OF THE STATEMENT OF MR. PAWAN KUMAR JAIN AND SUBMITTED THAT MR. JAIN HAS STATED THAT CERTAIN AGENTS HAD APPROACHED HIM ON BEHALF OF M/S. PRAKASH PLY EXIM PVT. LTD. AND HE HAS GIVEN CHEQUES AFTER RECEIVING CASH. HE FURTHER RELIED ON THE STATEMENT RECORDED FROM SHRI DEVESH UPADHYAY, ANOTHER ENTRY OPERATOR, WHO IN REPLY TO A QUESTION STATED THAT M/S. PRAKASH PLY EXIM PVT. LTD. HAS TAKEN ACCOMMODATION ENTRIES. ALTERNATIVELY, HE ARGUED THAT, THE HONBLE KERALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR VS. COMMISSIONER OF INCOME-TAX (CENTRAL) REPORTED IN 390 ITR 131 (KER- H.C.) , HAD HELD THAT THERE IS NO NECESSITY OF BASING AN ADDITION IN A SEARCH ASSESSMENT MADE U/S 153A OF THE ACT, ON INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 4.3. THE LD. D/R FURTHER ARGUED THAT THE ASSESSING OFFICER WANTED TO EXAMINE THE ISSUE OF GENUINENESS OF SHARE CAPITAL AND THE ASSESSEE DID NOT SUBMIT ANY REPLY OR FILE ANY DETAILS. HE ALSO POINTED OUT THAT THE ASSESSEE DID NOT FILE PAPER WISE EXPLANATION FOR THE SEIZED MATERIAL BEFORE THE ASSESSING OFFICER. HE SUBMITTED THAT THE LD. CIT(A), DID NOT ADJUDICATE THE ISSUE ON MERITS AND HAD WRONGLY DELETED THE ADDITION ON THE BASIS OF A LEGAL PROPOSITION THAT THE ADDITION WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN 5 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD THE CASE OF KAPURCHAND SHRIMAL VS. COMMISSIONER OF INCOME-TAX [131 ITR 451] , FOR THE PROPOSITION THAT, IT IS THE DUTY OF THE APPELLATE AUTHORITY TO CORRECT THE LACUNAS, IF ANY, IN THE ORDER OF THE ASSESSING OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTROVERTED THE ARGUMENTS OF THE LD. D/R AND SUBMITTED THAT A PLAIN READING OF THE ASSESSMENT ORDER DEMONSTRATES THAT THE ADDITION IN QUESTION WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HE POINTED OUT THAT THE ADDITION WERE MADE BASED ON THE REGULAR BOOKS OF ACCOUNT, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AS HELD BY THE LD. CIT(A). 5.1. ON THE ARGUMENTS OF THE LD. D/R THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSING OFFICER FOR ADMITTING THE ADDITIONAL GROUND, HE SUBMITTED THAT IT IS WELL SETTLED THAT A LEGAL GROUND MAY BE TAKEN BEFORE AN APPELLATE AUTHORITY AT ANY STAGE OF APPELLATE PROCEEDINGS AND WHEN THERE IS NO NECESSITY OF FRESH ENQUIRY INTO THE FACTS, THE LEGAL GROUND CAN BE ADMITTED AND ADJUDICATED BY THE APPELLATE AUTHORITY. HE REFERRED TO RULE 46A OF THE INCOME TAX RULES, 1962 (THE RULES) AND SUBMITTED THAT THIS RULE IS ON THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCE AND DOCUMENTS AND HAS NO RELEVANCE TO ADMISSION AND ADJUDICATION OF ADDITIONAL GROUNDS OF APPEAL. HE REFERRED TO SECTION 250(1) & SECTION 254(1) OF THE ACT AND SUBMITTED THAT THE LANGUAGE IN BOTH THE SECTIONS IS DIFFERENT. HE POINTED OUT THAT SECTION 250(1) OF THE ACT, REQUIRES THE LD. CIT(A) TO GIVE NOTICE OF HEARING TO THE ASSESSING OFFICER AGAINST WHOSE ORDER THE APPEAL IS PREFERRED AND IN CASE OF SECTION 254(1) OF THE ACT, THE SECTION REQUIRES THAT BOTH THE PARTIES SHALL BE GIVEN AN OPPORTUNITY OF BEING HEARD. HE REFERRED TO THE RULES 19, 20 & 21 OF THE ITAT RULES AND SUBMITTED THAT UNDER THE RULES, THE DATE AND PLACE OF HEARING OF THE APPEAL HAS TO BE NOTIFIED. 5.2. HE POINTED OUT THAT IT IS NOT THE CASE OF THE REVENUE THAT NO NOTICE AS REQUIRED U/S 250(1) OF THE ACT, WAS GIVEN TO THE ASSESSING OFFICER. HENCE HE SUBMITTED THAT THIS IS NOT A CASE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE NOR VIOLATION OF RULE 46A OF THE RULES 6 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD AS ALLEGED BY THE LD. D/R. HE POINTED OUT THAT SINCE THE POWERS OF THE LD. CIT(A) ARE CO- TERMINUS AND CO-EXTENSIVE WITH THAT OF THE ASSESSING OFFICER, THE PLEADING OF THE LD. D/R, DOES NOT HAVE ANY MERIT AS THE LD. CIT(A) CONSIDERED THIS LEGAL ISSUE ON MERITS AND ADJUDICATED THE ISSUE. 5.3. ON MERITS, HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT TAKEN SUPPORT FROM ANY PAPER SEIZED FROM THE ASSESSEE NOR HAS THE ASSESSING OFFICER BASED HIS ADDITION ON ANY SEIZED PAPER. ONLY ONE PAPER I.E., SBLP-02 (PAGE NO. 19), HAD BEEN QUOTED AND ADMITTEDLY THIS WAS SEIZED FROM SHRI BALAJI LOGS PRODUCTS PVT. LTD. HE ARGUED THAT THIS PAPER DOES NOT CONTAIN THE NAME OF THE ASSESSEE. 5.4. AS REGARDS PAPER SBLP-02 (PAGE NO. 19), THE ASSESSING OFFICER IN HIS ORDER AT PAGE 3 HAD GIVEN A FINDING THAT THIS PAPER CONTAINED THE NAMES OF THE THREE PROMOTERS OPP, SPP & RPP AND THAT THESE PERSONS HAD GIVEN MONEY TO ACCOMMODATION ENTRY PROVIDERS. HE POINTED OUT THAT NAME OF THE ASSESSEE COMPANY DOES NOT APPEAR IN THE SAID PAPER AND HENCE THE SAID PAPER DOES NOT BELONG TO THE ASSESSEE COMPANY, NOR WAS THIS PAPER FOUND IN THE PREMISES OF THE ASSESSEE. HE RELIED ON THE PANCHNAMA ISSUED IN THE NAME OF THE ASSESSEE AND SUBMITTED THAT THIS PAPER IN QUESTION DOES NOT FIND A MENTION IN THE PANCHNAMA AND WAS NOT FOUNDED DURING THE COURSE OF SEARCH IN THE CASE OF THE ASSESSEE COMPANY. HE SUBMITTED THAT IF THIS PIECE OF PAPER WAS FOUND IN THE COURSE OF SEARCH OF SOME OTHER ASSESSEE, PROCEEDINGS SHOULD HAVE BEEN INITIATED UNDER SECTION 153C OF THE ACT, IN THE CASE OF THE ASSESSEE, AS HELD BY THE ITAT KOLKATA C BENCH OF THE TRIBUNAL IN THE CASE OF SHRI KRISHNA KUMAR SINGHANIA -VS- DCIT IN I.T.(SS).A NOS. 109 & 110/KOL/2017; ASSESSMENT YEARS : 2009-10 & 2012-13. HE CONTENDED THAT A PAPER FOUND DURING THE COURSE OF SEARCH IN SOME OTHER ASSESSEES PLACE AND NOT IN THE CASE OF THE ASSESSEE, THE SAME CANNOT BE RELIED UPON FOR MAKING AN ADDITION IN THE CASE OF THE ASSESSEE. 5.5. HE FURTHER SUBMITTED THAT THE STATEMENT RECORDED U/S 132(4) OF THE ACT, FROM SHRI OM PRAKASH PANDEY, CANNOT CONSTITUTE MATERIAL FOUND DURING THE COURSE OF SEARCH AND IT IS NOT INCRIMINATING MATERIAL. HE FURTHER ARGUED THAT STATEMENTS RECORDED FROM 7 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD STRANGERS DURING THE POST-SEARCH ENQUIRIES CANNOT CONSTITUTE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. FOR THIS PROPOSITION THAT STATEMENTS RECORDED U/S 132(4) OF THE ACT, DOES NOT CONSTITUTE MATERIAL FOUND DURING THE COURSE OF SEARCH HE RELIED UPON A NUMBER OF CASE LAW, WHICH WE WOULD BE REFERRING TO, AS AND WHEN NECESSARY. 5.6. THE LD. COUNSEL FOR THE ASSESSEE FURTHER ARGUED THAT COPIES OF NONE OF THE STATEMENTS SAID TO HAVE BEEN RELIED UPON BY THE ASSESSING OFFICER HAVE BEEN PROVIDED TO THE ASSESSEE NOR WAS HE CONFRONTED WITH THEM NOR WAS THE ASSESSEE GIVEN AN OPPORTUNITY TO CROSS EXAMINE THOSE PERSONS. THUS HE SUBMITTED THAT THESE STATEMENTS AND MATERIAL WHICH WHEN NOT GIVEN OR PROVIDED TO THE ASSESSEE CANNOT BE THE BASIS ON WHICH ADDITIONS CAN BE MADE IN AN ASSESSMENT. HE VEHEMENTLY CONTENDED THAT THE REVENUE HAD FULL OPPORTUNITY BEFORE THE TRIBUNAL TO OPPOSE THE ADMISSION OF ADDITIONAL GROUNDS OF APPEAL BY THE LD. CIT(A) AND THAT THEY HAVE ARGUED AT LENGTH AND HENCE THERE IS NO CASE FOR THE ISSUE TO BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. HE SUBMITTED THAT THE BENCH MAY ADJUDICATE THIS LEGAL ISSUE AS BOTH THE PARTIES HAVE BEEN HEARD ON THIS ISSUE. HE POINTED OUT THAT THE COMPILATION FILED BY THE LD. D/R CONSISTS OF COPIES OF BALANCE SHEETS OF THE ASSESSEE AND ARE NOT INCREMENTING MATERIAL. HE PRAYED THAT THE ORDER OF THE LD. CIT(A) BE UPHELD. 6. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION 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:- 7. THE FIRST ISSUE THAT HAS TO BE ADJUDICATED IN THIS CASE IS, AS TO WHETHER THE LD. CIT(A) WAS RIGHT IN ADMITTING AN ADDITIONAL GROUND OF APPEAL WHEREIN THE ASSESSEE HAD TAKEN A LEGAL ARGUMENT THAT NO ADDITION CAN BE MADE IN AN ASSESSMENT UNDER SECTION 153A R.W.S 143(3) OF THE ACT, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE BEING FOUND DURING THE COURSE OF SEARCH. 8 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD 7.1. THIS IS LEGAL A GROUND AND IT IS NOT THE CASE OF THE LD. D/R THAT THIS GROUND REQUIRES FRESH INVESTIGATION INTO FACTS. ADMITTEDLY ALL THE FACTS ARE ON RECORD. UNDER SUCH CIRCUMSTANCES, THE HONOURABLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS COMMISSIONER OF INCOME TAX 1998 229 ITR 383 SC , HAS HELD AS FOLLOWS:- UNDER SECTION 254, THE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WITH APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM. THERE IS NO REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER (APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS OBJECTIONS BEFORE THE TRIBUNAL. THERE IS NO REASON WHY THE. TRIBUNAL SHOULD BE PREVENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER (APPEALS) TAKES TOO NARROW A VIEW OF THE POWERS OF THE TRIBUNAL. UNDOUBTEDLY, THE TRIBUNAL WILL HAVE THE DISCRETION TO ALLOW OR NOT ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTION OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. IN THE INSTANT CASE, THEREFORE, THE TRIBUNAL HAD JURISDICTION TO EXAMINE A QUESTION OF LAW WHICH AROSE FROM THE FACTS AS FOUND BY THE LOWER AUTHORITIES AND HAVING A BEARING ON THE TAX LIABILITY OF THE ASSESSEE. THIS PROPOSITION OF LAW APPLIES TO APPEALS BEFORE THE LD. CIT(A) WHO IS THE FIRST APPELLATE AUTHORITY. 9 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD THE HONBLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. V. CIT [1991] 187 ITR 688, HELD AS FOLLOWS:- THE ACT DOES NOT CONTAIN ANY EXPRESS PROVISION DEBARRING AN ASSESSEE FROM RAISING AN ADDITIONAL GROUND IN APPEAL AND THERE IS NO PROVISION IN THE ACT PLACING RESTRICTION ON THE POWER OF THE APPELLATE AUTHORITY IN ENTERTAINING AN ADDITIONAL GROUND IN APPEAL. IN THE ABSENSE OF ANY STATUTORY PROVISION, THE GENERAL PRINCIPLE RELATING TO THE AMPLITUDE OF APPELLATE AUTHORITY'S POWER BEING CO-TERMINUS WITH THAT OF THE INITIAL AUTHORITY SHOULD NORMALLY BE APPLICABLE. IF THE TAX LIABILITY OF THE ASSESSEE IS ADMITTED AND IF THE ITO IS AFFORDED OPPORTUNITY OF HEARING BY THE APPELLATE AUTHORITY IN ALLOWING THE ASSESSEE'S CLAIM FOR DEDUCTION ON THE SETTLED VIEW OF LAW, THERE APPEARS TO BE NO GOOD REASON TO CURTAIL THE POWERS OF THE APPELLATE AUTHORITY UNDER SECTION 251(1)( A ). EVEN OTHERWISE AN APPELLATE AUTHORITY WHILE HEARING APPEAL AGAINST THE ORDER OF SUBORDINATE AUTHORITY HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATIONS, IF ANY, PRESCRIBED BY THE STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISION THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE APPEARED TO BE NO GOOD REASON TO JUSTIFY CURTAILMENT OF THE POWER OF THE AAC IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEKING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY THE ITO. THERE MAY BE SEVERAL FACTORS JUSTIFYING RAISING OF SUCH NEW PLEA IN APPEAL, AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS. IF THE AAC IS SATISFIED HE WOULD BE ACTING WITHIN HIS JURISDICTION IN CONSIDERING THE QUESTION SO RAISED IN ALL ITS ASPECTS. OF COURSE, WHILE PERMITTING THE ASSESSEE TO RAISE AN ADDITIONAL GROUND, THE AAC SHOULD EXERCISE HIS DISCRETION IN ACCORDANCE WITH LAW AND REASON. HE MUST BE SATISFIED THAT THE GROUND RAISED WAS BONA FIDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIER FOR GOOD REASONS. THE SATISFACTION OF THE AAC DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE AND NO RIGID PRINCIPLES OR ANY HARD AND FAST RULE CAN BE LAID DOWN FOR THIS PURPOSE. (EMPHASIS OURS) 8. APPLYING THE PROPOSITIONS OF LAW LAID DOWN BY THE HONBLE SUPREME COURT TO THE FACTS OF THE CASE ON HAND, WE FIND NO INFIRMITY IN THE ACTION OF THE LD. CIT(A) IN ADMITTING THE ADDITIONAL GROUND OF APPEAL WHICH RAISES A LEGAL ISSUE AND AS ADMITTEDLY ALL THE FACTS ARE ON RECORD. 10 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD 9. THE GRIEVANCE OF THE REVENUE IS THAT ADEQUATE OPPORTUNITY HAD NOT BEEN GIVEN TO THE ASSESSING OFFICER TO RESPOND ON THIS ADDITIONAL GROUND. SECTION 250(1) OF THE ACT, REQUIRES THE LD. CIT(A) TO FIX THE DATE AND PLACE OF HEARING OF THE APPEAL AND GIVE NOTICE OF THE SAME TO THE ASSESSEE AND ALSO TO THE ASSESSING OFFICER AGAINST WHOSE ORDER THE APPEAL IS PREFERRED. THE FACT THAT THE LD. CIT(A) HAS GIVEN NOTICE OF HEARING TO THE ASSESSING OFFICER AND THIS IS NOT DENIED BY THE REVENUE. WE, IN MOST OF THE CASES BEFORE US, FIND THAT THE ASSESSING OFFICER DOES NOT CHOOSE TO APPEAR BEFORE THE LD. CIT(A), DESPITE ISSUE OF NOTICE. THIS IS PROHIBITED BECAUSE THE POWERS OF THE LD. CIT(A) IS CO- TERMINUS AND CO-EXTENSIVE WITH THAT OF THE ASSESSING OFFICER. 9.1. RELIANCE PLACED BY THE LD. D/R ON RULE 46A OF THE INCOME TAX RULES, 1962 (RULES) IS NOT CORRECT. RULE 46 A DEALS WITH THE ADMISSION OF ADDITIONAL EVIDENCE BY THE LD. CIT(A). RULE 46A(3) OF THE RULES MAKES IT MANDATORY FOR THE LD. CIT(A) TO GIVEN AN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE EVIDENCE AND DOCUMENTS AND CROSS- EXAMINE THE WITNESSES ETC. THIS RULE DOES NOT APPLY TO ADMISSION OF AN ADDITIONAL GROUND OF APPEAL. IN FACT IT IS NOT THE CASE OF THE ASSESSING OFFICER NOR THE LD. D/R THAT ANY ADDITIONAL EVIDENCE HAS BEEN ADMITTED BY THE LD. CIT(A). HENCE, IN OUR OPINION THIS ARGUMENT OF THE LD. D/R IS DEVOID OF MERIT. 9.2. EVEN OTHERWISE, THE LD. D/R HAD FULL OPPORTUNITY OF ARGUING THIS ISSUE BEFORE THIS BENCH OF THE TRIBUNAL. IT WAS NOT SUBMITTED THAT THE ADMISSION OF ADDITIONAL GROUND BY THE LD. CIT(A) WAS ERRONEOUS. WHAT WAS ARGUED IS THAT THE ASSESSING OFFICER WAS NOT GRANTED ADEQUATE OPPORTUNITY. AS THE REVENUE HAD ADEQUATE OPPORTUNITY BEFORE THIS TRIBUNAL, WE ARE OF THE OPINION THAT ADEQUATE OPPORTUNITY WAS GIVEN TO THE REVENUE ON THIS ISSUE. WE DO NOT SEE ANY INFIRMITY IN THE DECISION OF THE LD. FIRST APPELLATE AUTHORITY IN ADMITTING THIS ADDITIONAL GROUND OF APPEAL. HENCE WE DISMISS THIS ARGUMENT OF THE REVENUE. 10. THIS BRINGS US TO THE ISSUE ON MERITS. A PERUSAL OF THE ASSESSMENT ORDER DEMONSTRATES THAT THE ADDITION IN QUESTION WAS NOT BASED ON ANY INCRIMINATING MATERIAL 11 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD FOUND DURING THE COURSE OF SEARCH. AT PARA 4 PAGE 2 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2011-12, THE ASSESSING OFFICER STATED AS FOLLOWS:- 4. ON PERUSAL OF THE BALANCE SHEET , IT IS OBSERVED THAT THE COMPANY ALLOTTED FRESH SHARE CAPITAL OF RS.40,00,000/- ALONG WITH SHARE PREMIUM OF RS.1,60,00,000/- TOTALLING TO RS.2,00,00,000/- DURING THE F.Y. 2010-11 RELATING TO A.Y. 2011-12 OUT OF WHICH AN AMOUNT OF RS.85,00,000/- WAS RECEIVED AS SHARE APPLICATION MONEY FROM TWO COMPANIES DURING THE F.Y. 2009-10. (EMPHASIS OURS) 10.1. SIMILARLY, FOR THE ASSESSMENT YEAR 12-13, AT PARA 4, THE ASSESSING OFFICER STATED AS FOLLOWS:- 4. ON PERUSAL OF THE BALANCE SHEET , IT IS OBSERVED THAT THE COMPANY RECEIVED SHARE APPLICATION MONEY AMOUNTING TO RS.1,98,44,000/- DURING THE F.Y. 2011-12 RELATING TO A.Y. 2012-13. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE SAME HAS BEEN DISCUSSED WITH THE A/R OF THE ASSESSEE AND ASKED TO PRODUCE THE DETAILS OF SHARE APPLICATION MONEY RECEIVED FROM THE PARTIES ALONG WITH THEIR SOURCE TO THE POINT OF THE MONEY TRAIL .( EMPHASIS OURS) 10.2. THUS FOR THE BOTH THE YEARS THE ADDITION IN QUESTION WAS BASED ON INFORMATION CONTAINED IN THE BALANCE SHEET OF THE ASSESSEE COMPANY. THIS IS NOT INCRIMINATING MATERIAL. AT PARA 6 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2011-12 AND PARA 5 FOR THE ASSESSMENT YEAR 2012-13, THE ASSESSING OFFICER REFERRED TO A SEIZED PAPER WHEREIN, THE NAMES OF THE PROMOTERS WERE MENTIONED AS OPP, SPP AND RPP. THE SAID PAPER WAS SBLP-02 (PAGE NO. 19), WHICH IS AN ACCOUNT OF RAJIT KANORIA. A PERUSAL OF THE PAPER DEMONSTRATES THAT CERTAIN CHEQUES WERE ISSUED AND CHEQUES WERE RECEIVED. THERE IS NO MENTION OF ANY CASH DEALING IN THIS SHEET OF PAPER. THE LD. D/R FILED THE PAPER BOOK WHICH CONSISTS OF COPY OF THE NOTES TO THE BALANCE SHEETS OF THE ASSESSEE COMPANY AND ARGUED THAT THE FIGURES THEREIN ARE LINKED WITH THE FIGURES FOUND IN THE SHEET OF PAPER SBLP-02 (PAGE NO. 19). ON AN EXAMINATION OF BOTH THESE PAPERS, WE FIND THAT THIS PAGE NO. 12 OF THE DEPARTMENTAL PAPER BOOK IS PART OF THE REGULAR BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND HAS NOTHING TO DO WITH THE SEIZED DOCUMENTS AND FURTHER, THAT THE DATES HIGHLIGHTED BY THE LD. D/R DO NOT APPEAR IN THE SEIZED DOCUMENT SBLP-02 (PAGE NO. 19). THE ASSESSING OFFICER THOUGH MAKING A OBSERVATION THAT THE 12 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD PROMOTERS OF THE ASSESSEE COMPANY HAVE OBTAINED ACCOMMODATION ENTRIES, HAS NOT BASED ANY OF THE ADDITIONS IN QUESTION ON THIS SHEET OF PAPER OR ON ANY OTHER EVIDENCE. IN FACT, FROM THE LAST PARA OF PAGE 4 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2012-13, ONWARDS, THE FINDINGS OF THE ASSESSING OFFICER IS AS FOLLOWS:- AS MENTIONED PREVIOUSLY, THE ASSESSEE FAILED TO PRODUCE ANY DETAILS REGARDING THE INVESTORS, ALTHOUGH ONUS IS ON IT TO PROVE THE IDENTITY, GENUINENESS ETC. OF THE APPLICANTS. IT MAY BE SEEN THAT THE ONUS DOES NOT GET DISCHARGED EVEN BY CONFIRMATORY LETTER AS FOUND IN CIT VS. UNITED COMMERCIAL AND INDUSTRIAL CO. (PVT.) LTD. (1991) 187 ITR 596 (CAL), NOR IS THE FACT THAT THE AMOUNT IS RECEIVED BY ACCOUNT PAYEE CHEQUES IS SACROSANCT AS WAS POINTED OUT IN CIT VS. PRECISION FINANCE PVT. LTD. (1994) 208 ITR 45 (CAL). 10.2.1. THEREAFTER HE DISCUSSED A NUMBER OF CASE-LAW FOR THE PROPOSITION THAT THE BURDEN OF PROOF HAS TO BE DISCHARGED BY THE ASSESSEE. THEREAFTER AT PARA 6, HE HELD AS FOLLOWS:- 6. THEREFORE, IT IS EVIDENT THAT THE UNDISCLOSED CASH OF RS.1,98,44,000/- HAS BEEN ROUTED BY ASSESSEE COMPANY THROUGH RECEIVING OF SHARE APPLICATION MONEY. HENCE, TREATING THE SHARE APPLICATION RECEIVED OF RS.1,98,44,000/- AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE, THE SAME IS ADDED BACK TO THE TOTAL INCOME AS CASH CREDIT U/S 68 OF THE I.T. ACT. PENALTY PROCEEDING U/S 271(1)(C) IS INITIATED SEPARATELY. 10.2.2. SIMILAR IS THE FINDING OF THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2012-13. 11. BEFORE US, THE LD. D/R COULD NOT POINT OUT ANY PARTICULAR PAPER OR DOCUMENT WHICH IS INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF SEARCH, BASED ON WHICH THE ADDITION IN QUESTION WAS MADE. IN FACT THE ASSESSING OFFICER HAS NOT REFERRED TO ANY STATEMENT RECORDED FROM ANY OTHER PERSON. IT WAS ONLY THE LD. D/R, WHO BROUGHT OUT BEFORE THIS BENCH SOME PART OF THE STATEMENTS FROM CERTAIN PERSONS WHO ARE ALLEGED TO BE ENTRY PROVIDERS. IN THESE COPIES FILED BEFORE US, NO SIGNATURE OF THE PERSON GIVING THE STATEMENTS OR THE PERSONS WHO HAS ADMINISTERED ON OATH APPEARS, COPIES OF THE ORIGINAL 13 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD STATEMENT IN FULL HAS NOT BEEN FILED OR BROUGHT ON RECORD BY THE ASSESSING OFFICER. THESE STATEMENTS FROM OM PRAKASH PANDEY, SURESH KUMAR DARUKA, PAWAN KUMAR JAIN, DEVESH UPADHYAY, WERE NOT RELIED UPON BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER. THE ADDITIONS WERE NOT BASED ON ANY OF THESE STATEMENTS. NONE OF THE COPIES OF THESE STATEMENTS ARE BROUGHT ON RECORD OR FURNISHED TO THE ASSESSEE, LEAVE ALONE GIVING THE ASSESSEE AN OPPORTUNITY OF CROSS-EXAMINATION. HENCE THESE STATEMENTS CANNOT BE THE BASIS OF SUPPORTING THE ADDITION MADE BY THE ASSESSING OFFICER IN BOTH THESE ASSESSMENT YEARS. IN THE CASE OF ADDITION OF AGRICULTURAL INCOME, NO ARGUMENT WAS MADE BY THE LD. D/R THAT THE SAME IS BASED ON ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. 11.1. EVEN OTHERWISE, IN THE DECISION OF THE DELHI BENCH OF THE ITAT IN THE CASE OF MOON BEVERAGES LTD, NEW DELHI VS ACIT; ITA NO.7374/DEL/2017, ASSESSMENT YEAR : 2013-14, ORDER DT. 07-06-2018, IT HAS BEEN HELD THAT STATEMENTS RECORDED U/S 132(4) OF THE ACT, CANNOT TAKE THE PLACE OF INCRIMINATING MATERIAL/PAPERS FOUND DURING THE COURSE OF SEARCH FOR THE PURPOSE OF MAKING AN ADDITION. THE ITAT, IN THIS ORDER RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH IN THE CASE OF CIT VS. HARJEEV AGGARWAL REPORTED IN 290 CTR 263. HENCE WE CONCLUDE THAT NONE OF THESE ADDITIONS FOR BOTH THE ASSESSMENT YEARS ARE BASED ON ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. THE PROPOSITION OF LAW AS TO WHETHER AN ADDITION CAN BE MADE IN AN ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT, WHEN THE ASSESSMENT HAS NOT ABATED, IS WELL SETTLED IN THE FOLLOWING CASE-LAW:- (I) CIT, KOLKATA-III VS. VEERPRABHU MARKETING LIMITED [2016] 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 KARNATAKA 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 MADE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED UNDER SECTION 153C READ WITH SECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSING 14 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD OFFICER WERE UPHELD BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES. (II) PCIT-2, KOLKATA VS. SALASAR STOCK BROKING LIMITED (ITAT NO. 264 OF 2016) DATED 24.08.2016 : (CALCUTTA) IN THIS CASE, THE HONORABLE HIGH COURT OBSERVED THAT 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 SEARCH & SEIZURE DID NOT DISCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIEW, 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 IDENTICAL 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 DEPARTMENT. (III) THE A BENCH OF THE DELHI ITAT, IN THE CASE OF ANURAG DALMIA VS. DCIT IN ITA NOS. 5395 & 5396/DEL/2017; ASSESSMENT YEARS: 2006-07 & 2007-08, DT. 15/02/2018 HELD AS FOLLOWS:- 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 MADE IN THIS YEAR ARE BEYOND THE SCOPE OF ASSESSMENT U/S.153A, AS NO INCRIMINATING MATERIAL 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 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 NOT PENDING AND ACCORDINGLY, HAS TO BE RECKONED AS UNABATED ASSESSMENT. UNDER THE JURISDICTION OF HON'BLE DELHI HIGH COURT, THE LAW IS WELL SETTLED THAT IN CASE OF UNABATED ASSESSMENT, THE ADDITIONS WHICH CAN BE ROPED-IN, IN THE ASSESSMENTS FRAMED U/S.153A, WOULD ONLY BE WITH REGARD TO ANY INCRIMINATING MATERIAL OR EVIDENCE UNEARTHED OR FOUND DURING THE COURSE OF SEARCH. IF NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH, THEN NO ADDITION CAN BE MADE IN THE ASSESSMENT YEARS WHERE ASSESSMENTS HAD ATTAINED FINALITY. THE RELEVANT OBSERVATIONS AND THE RATIO LAID DOWN WOULD BE DISCUSSED IN THE LATER PART OF THIS ORDER. 15 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD 11.2. THE HONBLE CALCUTTA HIGH COURT APPLIED THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL) . THE HONBLE DELHI HIGH COURT AT PARA 37 & 38 HELD AS FOLLOWS: 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 AFOREMENTIONED 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 PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE 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 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 THERE 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 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED 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 ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON 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 16 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD INCOME OR PROPERTY DISCOVERED IN THE COURSE 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, 2005-06 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 ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 11.3. THE LD. CIT(A) FOR ASSESSMENT YEAR 2011-12 AT PAGE 16, OF HIS ORDER HELD AS FOLLOWS:- I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER, DIFFERENT CASE LAWS BROUGHT ON RECORD AND APPEAL ORDERS PASSED BY MY PREDECESSORS ON THIS LEGAL ISSUE. I FIND FROM THE ASSESSMENT ORDER THAT DURING THE SEARCH AND SEIZURE OPERATIONS CONDUCTED U/S 132 OF THE I TACT, 1961, INCRIMINATING DOCUMENTS/PAPERS RELATING TO ASSESSEE WERE NEITHER SEIZED NOR THERE IS ANY MENTION OF ANY INCRIMINATING DOCUMENTS SEIZED FROM THE ASSESSEE. AT LEAST, ADDITIONS MADE BY THE AO IN THE ASSESSMENT ORDER 'PASSED U/S. 153A/143(3) ARE NOT BASED ON ANY INCRIMINATING DOCUMENTS/PAPERS SEIZED DURING THE SEARCH OPERATION IN THE CASE OF ASSESSEE. THE PAPER RELIED ON WAS NOT SEIZED FROM THE ASSESSEE NOR THERE IS ANY MENTION OF ASSESSEE'S NAME IN THE SAID PAPER. IT WOULD ALSO NOT BE OUT OF CONTEXT 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 BENCH 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 OF CBDT'S DECISION OF NOT FILING SLP IN THIS CASE IN THE SUPREME COURT AND KEEPING IN VIEW THE APEX COURT'S 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 DT.07-12-2015, I AM OF THIS VIEW THAT IN ORDER TO MAINTAIN JUDICIAL CONTINUITY ON THIS ISSUE AND RESPECTFULLY FOLLOWING THE RATIO DECIDED BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF VEER PRABHU MARKETING LTD (SUPRA), ASSESSEE'S APPEAL ON ADDITIONAL IS ALLOWED AND AS SUCH I AM NOT INCLINED TO ADJUDICATE APPEAL ON OTHER GROUNDS ON MERIT. 11.4 SIMILAR ARE THE FINDINGS OF THE LD. CIT(A) AT PAGE 16 OF HIS ORDER FOR THE ASSESSMENT YEAR 2012-13. 17 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD 11.5. THESE FINDINGS ARE IN LINE WITH THE PROPOSITIONS OF LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT REFERRED ABOVE. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND UPHOLD THE SAME. 12. EVEN OTHERWISE, THERE IS NO DISPUTE THAT THE DOCUMENT SBLP-02 (PAGE NO. 19), WAS NOT FOUND DURING THE COURSE OF SEARCH IN THE CASE OF THE ASSESSEE. IT WAS FOUND DURING THE COURSE OF SEARCH IN THE CASE OF SHRI BALAJI LOGS PRODUCTS PVT. LTD. THE NAME OF THE ASSESSEE COMPANY IS NOT MENTIONED IN THIS PAPER. UNDER SUCH CIRCUMSTANCES, THE ISSUE IS AS TO WHETHER THE SAME CAN BE USED FOR THE PURPOSE OF MAKING AN ADDITION IN THE CASE OF THE ASSESSEE. THIS BENCH OF THE TRIBUNAL IN THE CASE OF SHRI KRISHNA KUMAR SINGHANIA -VS- DCIT; I.T.(SS).A NOS. 109 & 110/KOL/2017, ASSESSMENT YEARS : 2009-10 & 2012-13, ORDER DT. 06.12.2017, FROM PARA 10 ONWARDS HELD AS FOLLOWS:- 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOT IN DISPUTE THAT THERE WERE NO DOCUMENTS THAT WERE SEIZED FROM THE PREMISES OF THE ASSESSEE EXCEPT LOOSE SHEETS VIDE SEIZED DOCUMENT REFERENCE KKS /1 COMPRISING OF 8 PAGES , FOR WHICH SATISFACTORY EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE AND NO ADDITION WAS MADE BY THE LD AO ON THIS SEIZED DOCUMENT. THE SEIZED DOCUMENT USED BY THE LD AO FOR MAKING THE ADDITION IN SECTION 153A ASSESSMENT IS CG/1 TO 11 AND CG/HD/1 WHICH WERE SEIZED ONLY FROM THE OFFICE PREMISES OF CYGNUS GROUP OF COMPANIES IN WHICH ASSESSEE IS A DIRECTOR. IN THIS REGARD, IT WOULD BE PERTINENT TO NOTE THAT AS PER SECTION 292C OF THE ACT, THERE IS A PRESUMPTION THAT THE DOCUMENTS , ASSETS, BOOKS OF ACCOUNTS ETC FOUND AT THE TIME OF SEARCH IN THE PREMISES OF A PERSON IS ALWAYS PRESUMED TO BE BELONGING TO HIM / THEM UNLESS PROVED OTHERWISE. THIS GOES TO PROVE THAT THE PRESUMPTION DERIVED IS A REBUTTABLE PRESUMPTION. THEN IN SUCH A SCENARIO, THE PERSON ON WHOM PRESUMPTION IS DRAWN , HAS GOT EVERY RIGHT TO STATE THAT THE SAID DOCUMENTS DOES NOT BELONG TO HIM / THEM . THE LD AO IF HE IS SATISFIED WITH SUCH EXPLANATION , HAS GOT RECOURSE TO PROCEED ON SUCH OTHER PERSON (I.E THE PERSON TO WHOM THE SAID DOCUMENTS ACTUALLY BELONG TO) IN TERMS OF SECTION 153C OF THE ACT BY RECORDING SATISFACTION TO THAT EFFECT BY WAY OF TRANSFER OF THOSE MATERIALS TO THE AO ASSESSING THE SUCH OTHER PERSON. THIS IS THE MANDATE PROVIDED IN SECTION 153C OF THE ACT. IN THE INSTANT CASE, IF AT ALL, THE SEIZED DOCUMENTS REFERRED TO IN CG/1 TO 11 AND CG/HD/1 IS STATED TO BE BELONGING TO ASSESSEE HEREIN, THEN THE ONLY LEGAL RECOURSE AVAILABLE TO THE DEPARTMENT IS TO PROCEED ON THE ASSESSEE HEREIN IN TERMS OF SECTION 153C OF THE ACT. IN THIS REGARD, WE WOULD LIKE TO PLACE RELIANCE ON THE RECENT DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. PINAKI MISRA & SANGEETA MISRA [2017] 392 ITR 347 DATED 3.3.2017, WHEREIN IT WAS HELD THAT, NO ADDITION COULD BE MADE ON THE BASIS OF EVIDENCE GATHERED FROM EXTRANEOUS SOURCE AND ON THE BASIS OF STATEMENT OR DOCUMENT RECEIVED SUBSEQUENT TO SEARCH. HENCE WE HOLD THAT THE SAID MATERIALS CANNOT BE USED IN SECTION 153A OF THE ACT AGAINST THE ASSESSEE. THIS OPINION IS GIVEN 18 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD WITHOUT GOING INTO THE MERITS AND VERACITY OF THE SAID SEIZED DOCUMENTS IMPLICATING THE ASSESSEE HEREIN. 13. RESPECTFULLY APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE ABOVE CASE-LAW TO THE FACTS OF THIS CASE WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND HOLD THAT THE ADDITION IN QUESTION ARE BAD IN LAW AS THE ASSESSMENTS HAVE NOT ABATED AND AS THE ADDITION IN THIS ASSESSMENT IS NOT BASED ON ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. 14. IN THE RESULT, APPEALS OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSED. 15. COMING TO THE CROSS-OBJECTIONS FILE BY THE ASSESSEE, WE FIND THAT THEY ARE SIMPLY SUPPORTING THE ORDER OF THE LD. CIT(A), HENCE THEY DO NOT REQUIRE SEPARATE ADJUDICATION AND ARE DISPOSED OFF AS SUCH. 16. IN THE RESULT, APPEALS OF THE REVENUE AND THE CROSS-OBJECTIONS OF THE ASSESSEE FOR THE BOTH THE ASSESSMENT YEARS ARE DISMISSED. KOLKATA, THE 10 TH DAY OF APRIL, 2019. SD/- SD/- [S.S. VISWANETHRA RAVI] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10.04.2019 {SC SPS} 19 IT(SS)A NO. 97/KOL/2017 ASSESSMENT YEAR: 2011-12 IT(SS)A NO. 98/KOL/2017 ASSESSMENT YEAR: 2012-13 C.O. NO.112/KOL/2017 ASSESSMENT YEAR :2011-12 C.O. NO.113/KOL/2017 ASSESSMENT YEAR :2012-13 M/S. PRAKASH PLY EXIM PVT. LTD COPY OF THE ORDER FORWARDED TO: 1. M/S. PRAKASH PLY EXIM PVT. LTD 67/10, STRAND ROAD KOLKATA 700 006 2. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3), KOLKATA 3. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3), KOLKATA 4. CIT(A)- 5. CIT- , 6. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES