JCIT (IN SITU) CC 2(2), KOLKATA, KOLKATA V. SUNRISE TIMPLY CO (P) LTD, KOLKATA

ITSSA 47/KOL/2025

AI Insights

The case involves the revenue's appeal against the order of the CIT(A) which had allowed the assessee's appeal for the assessment year 2010-2011. The revenue challenged the deletion of additions made under sections 68, 69C, and 14A of the Income Tax Act, which were initially added by the Assessing Officer following a search and seizure operation. The tribunal examined whether the additions were based on incriminating material found during the search. The CIT(A)'s decision was supported by the Supreme Court's ruling in Abhisar Buildwell Pvt. Ltd., which emphasized that without incriminating material, the original assessments should remain undisturbed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774260 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 09-04-2025
• Other Referred Cases: Abhisar Buildwell Pvt. Ltd. vs. PCIT, Central-3
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANAT KUMAR RAHA
• Assessee Lawyers: P.K.HIMATSINGKA
• Keywords: Unexplained cash credit; Unexplained expenditure; Document seized; Documents seized; TDS; Search and seizure; Accommodation entries; Block assessment; Earning of tax free income; Bogus Share capital; Rule 8D; Bogus
• Section: 143(3); 142(1); 132; 153A; 68; 69C; 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER IT(SS)A No.47/KOL/2025 (निर्धारण वर्ा / Assessment Year : 2010-2011) JCIT(in situ) CC-2(2), Kolkata H-B, Goenka Niketan, Jatindra Mohan Avenue Kolkata-700006 Vs Sunrise Timply Co (P) Ltd., 67/17,Strand Road, Kolkata-700006 PAN No. :AAGCS 0414 D (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by Shri P.K.Himatsingka, AR रधजस्व की ओर से /Revenue by : Shri Sanat Kumar Raha, CIT-DR सुनवाई की तारीख / Date of Hearing : 25/08/2025 घोषणा की तारीख/Date of Pronouncement : 09/09/2025 आदेश / O R D E R Per Pradip Kumar Choubey, JM : The revenue has filed the instant appeal against the order dated 16.12.2024, passed by the ld. CIT(Appeals) Kolkata-26 for the assessment year 2010-2011. 2. The appeal of the revenue is barred by 40 days. Looking to the facts of the case and considering the submissions of the ld.CIT-DR, we condone the delay of 40 days in the present appeal of the revenue and appeal is admitted for hearing. 3. Brief facts of the case are that the assessee company had carried on during the year business of Trading of timber and plywood. The assessee company filed e-return for the A.Y.2010-11 on 25.09.2010 declaring total income of Rs.2285691 Tax payable on the total income was Rs.722151/- including interest payable Rs 15873. After claiming credit for total prepaid taxes of Rs.814287 (Advance Tax Rs.500000 plus TDS 314287) Rs 92136 Printed from counselvise.com ITA No.47/KOL/2025 2 amount of tax was refundable to the assessee. Consequent upon a search and seizure operation u/s 132 of the Act was conducted on 16.02.2016 at the residential and business premises of Mr. Ramesh Kumar Bagla situated at different places. The assessee company belongs to Mr. Ramesh Kumar Bagla. Pursuant to the search Notice u/s 153A of the Act for the A.Y 2010- 11 was issued on 06.05.2017 requiring the assessee company to file Return. In response to the notice the assessee company filed Return on 31.05.2017 declaring total income of Rs. 2285691 Tax payable on the total income was Rs. 722151 including interest payable Rs 15873. After claiming credit for total prepaid taxes of Rs.814287Advance Tax Rs.500000 plus TDS 314287 Rs 92136 amount of tax was refundable to the assessee. Subsequently in response to the notice u/s 143(2) and notice u/s 142(1) of the Act issued along with questionnaire the assessee company furnished the required particulars and documents during the course of assessment proceedings. After examining the Return and the papers filed the A.O assessed the total income of Rs. 64868191/- vide order u/s 153A/143(3) of the Act dated 29.12.2017, the Assessing Officer has made the following additions/disallowances i) A sum of Rs. 62500000/- being the total amount received by the assessee from 27 (twenty seven) shareholder companies subscribing to the shares of the assessee company during the year and to whom shares were allotted by the assessee company were considered as unexplained cash credit and added to the total income u/s 68 of the Act merely relying on a list and the statement of one Sri. Gopal Banka and Sri. Manohar Lal Nangalia without the considering written explanation of the assessee dt. 15.12.2017 filed before the Printed from counselvise.com ITA No.47/KOL/2025 3 A.O. on 15.12.2017 and also without allowing the assessee company any opportunity of hearing and cross examination of Sri. Gopal Banka and Sri. Manohar Lal Nangalia referred to in the assessment order. Although the name of the assessee company as well as our shareholder companies were not present in the list and the statement of Sri. Gopal Banka and Sri. Manohar Lal Nangalia. ii) another sum of Rs. 62500/- allegedly paid by the assessee to said Sri. Gopal Banka and Sri. Manohar Lal Nangalia as commission in cash@ Rs.0.10 per hundred rupees for providing the accommodation entry was added to the total income as unexplained expenditure u/s 69C of the Act. iii) Expenses of Rs. 20000/- was arbitrarily disallowed u/s 14A of the I.Tax Act read with Rule 8D (iii) of the I.Tax Rules on the ground that the assessee had invested in unquoted equity shares of companies obviously for earning profit inclusive of Dividend which is an exempt income though no such exempt income was earned during the year under assessment. 4. Aggrieved by the assessment order, the assessee preferred appeal before the ld.CIT(A), wherein the appeal of the assessee has been allowed on the basis of decision rendered by the Hon’ble supreme Court in the case of Abhisar Buildwell Pvt. Ltd., reported in [2023] 149 taxmann.com 399 (SC). 5. Being aggrieved and dissatisfied with the impugned order, the assessee preferred appeal before us by taking the following grounds :- 1. Whether on the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting the addition made u/s 68 of the Act on account of bogus share capital and premium amounting to Rs 6,25,00,000/-,addition on account of unexplained expenses u/s 69C of the Act expense amounting to Rs 62,500/- and u/s 14A amounting to Rs 20,000/-? Printed from counselvise.com ITA No.47/KOL/2025 4 2. Whether on the facts and in the circumstances of the case, the Ld CIT(A) erred in ignoring that the addition in the present case was made on the basis of document marked as STPCL/01 & STPCL/HD/01 seized during the course of search and subsequent statement of on Ramesh Kumar Bagla, the key person of the assessee, recorded u/s 132(4) of the Act recorded during the course of search who admitted to have taken accommodation entries for the assessee company, which makes entries recorded in the books of accounts in this regard, which were seized during the course of search and seizure, as incriminating and hence, the Assessing officer rightly assumed jurisdiction u/s 153A of the Act ? 3. Whether on the facts and in the circumstances of the case, the Ld CIT(A) erred in ignoring that the addition in the present case was made on the basis of document marked as STPCL/01 & STPCT/HD/01 seized during the course of search and subsequent statement of entry operators, namely, Sri Gopal Banka and Sri Manohar Lal Nangalia, who admitted to have given accommodation entries to the assessee company, which makes entries recorded in the books of accounts in this regard, which were seized during the course of search and seizure, as incriminating and hence, the Assessing officer rightly assumed jurisdiction u/s 153A of the Act ? 4. That the revenue reserves its rights to substantiate, modify, delete supplement and/or alter any or all grounds of appeal at any the time of appeal proceedings. 6. Ld. AR supported the impugned order thereby submitting that there was no infirmity in the impugned order as the ld.AO erred in law and on facts in framing the assessment order without any incriminating materials found during the course of search and that has been discussed by the ld.CIT(A) in its order. The ld.counsel placed the discretion of the seized documents before us. Ld. counsel further submitted that neither in the assessment order nor in the remand report the Assessing Officer specifically identified any page of document from these bunches that can be considered as incriminating nor the Assessing Officer has brought any Printed from counselvise.com ITA No.47/KOL/2025 5 material on record establishing the presence of incriminating material justifying the addition u/s.153A of the Act. 7. Upon hearing the submission of the counsel for the respective parties, we have perused the impugned order and find that the assessee filed its return of income for the assessment year 2010-2011 declaring total income at Rs.22,85,691/-, his return was processed and there was no notice issued u/s.143(2) of the Act, and, thus, the assessment had attained finality and was an unabated or completed assessment at the time of date of search as the search and seizure operation was conducted on 16.02.2016. We have gone through the paper book filed by the assessee and he placed the description of the seized documents which read as under:- Printed from counselvise.com ITA No.47/KOL/2025 6 8. We have also gone through the remand report and found that the submission of the ld.AR being correct as the remand report dated 25.07.2024 the Assessing Officer did not specifically identified any page or document that can be said to be as incriminating. The Assessing Officer did not bring any material on record establish the present of incriminating material. The CIT(A) has discussed everything in its order and the operative portion of the ld.CIT(A) is reproduced hereinbelow :- Operative Findings of CIT(A): \"In this case, the return of income was filed on 15.10.2010. The case was not selected for scrutiny. Therefore, it would be a case of unabated assessment in terms of section 153A of the Act. The AO in the order of assessment, has mentioned that from the details of various pages/entries of seized documents, that the assessee had raised share capital, details as asked for during assessment proceeding were furnished. The AO has not mentioned as to what documents are being referred to and how these are incriminating in nature. Therefore, the additions have been made not on incriminating materials but on other materials in respect of the completed/unabated assessment. In the recent Judgement of Hon'ble Supreme Court of India in case of PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., [2023] 149 taxmann.com 399 (SC), where in it was specifically narrated that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. \"14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income taking into consideration the incriminating material unearthed during the search Printed from counselvise.com ITA No.47/KOL/2025 7 and the other material available with the AO including the income declared in the returns; and heard by the Bench iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.\" As mentioned above, no incriminating documents have been found during search against the assessee relevant to this particular assessment year. In the current case, additions have been made on the basis statements recorded. Hence, respectfully following the judgement of the Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd., (supra), it is held that the disallowances/additions made are not sustainable. In view of the facts narrated and the discussion above the disallowances/additions made by the AO vide order u/s. 153A read with section 143(3) in this particular assessment year are not sustainable, as these are not linked to any incriminating material found at the time of search. Hence, addition made in this order is deleted. 9. Keeping in view the order passed by the ld. CIT(A) and considering the facts of the assessee, we are not inclined to interfere in the impugned order passed by the ld. CIT(A). Accordingly, the order passed by the ld.CIT(A) is upheld and appeal of the revenue is dismissed. 10. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 09/09/2025. Sd/- (RAJESH KUMAR) Sd/- (PRADIP KUMAR CHOUBEY) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 09/09/2025 Prakash Kumar Mishra, Sr.P.S. Printed from counselvise.com ITA No.47/KOL/2025 8 आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// Printed from counselvise.com "