JCIT(IN SITU) CC22 KOLKATA, KOLKATA V. GLOBAL CASTING PRIVATE LIMITED, KOLKATA

ITSSA 41/KOL/2025

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A) which had deleted the addition made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The addition was initially made treating the share capital/premium received by Global Casting Private Limited as unexplained cash credit following a search operation. The CIT(A) found that the addition was not supported by any incriminating material found during the search, relying on the Supreme Court's judgment in Abhisar Buildwell Pvt. Ltd. The Tribunal dismissed the revenue's appeal, agreeing that the additions made were not sustainable in the absence of incriminating material.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 776875 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-09-2025
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 27-03-2025
• Other Referred Cases: Abhisar Buildwell Pvt. Ltd. vs. PCIT, PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., Bhagya Kalita vs. ACIT, Central Circle-1, Guwahati, CIT vs. Harjeev Aggarwal, CIT vs. Kailashben Manharlal Chokshi, CIT vs. Anil Kumar Bhatia, CIT vs. Chetan Das Lachman Das, Madugula Venu vs. Director of Income Tax, Canara Housing Development Company vs. DCIT, Filatex India Ltd. vs. CIT-IV, Jai Steel India vs. ACIT, Continental Warehousing Corporation (Nhava Sheva) Ltd. vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Court: TRIBUNAL
• Department Lawyers: P.N. BARNWAL
• Assessee Lawyers: S.L. PODDAR
• Keywords: Condonation of delay; Reassessment proceedings; Question of law; Unexplained cash credit; Period of limitation; Retraction; Search and seizure; Accommodation entries; Block assessment; Bogus Share capital; CHAPTER XIVB; Bogus
• Section: 143(3); 263; 132; 153A; 68; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI SONJOY SARMA, JUDICIAL MEMBER IT(SS)A No.41/KOL/2025 (निर्धारण वर्ा /Assessment Year : 2012-2013) JCIT (In Situ), CC-2(2), Kolkata Vs Global Casting Private Limited Swastick Building, 1, Sardar Sankar Road, Kolkata-700026 PAN No.AACCG 9845 L (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri S.L.Poddar, AR रधजस्व की ओर से /Revenue by : Shri P.N.Barnwal, CIT-DR सुनवाई की तारीख / Date of Hearing : 17/09/2025 घोषणा की तारीख/Date of Pronouncement : 19/09/2025 आदेश / O R D E R Per Manjunatha G, AM: This appeal filed by the revenue is directed against the order passed by the ld. CIT(A), Kolkata-26, dated 16.12.2024 pertaining to assessment year 2012-2013. 2. At the outset, we find that the appeal of the revenue is delayed by 27 days. In this regard, the revenue has filed an application for condonation of delay supported with an affidavit stating sufficient reasons for delay. Looking to the facts and circumstances of case and considering the sufficient reasons stated by the revenue in its affidavit, we condone the delay of 27 days in filing the present appeal and the appeal of the revenue is admitted for hearing. 3. The revenue has raised the following grounds of appeal :- 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/premium amounting to Rs.3,14,99,865/- Printed from counselvise.com ITANo.41/Kol/2025 2 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 statements of the entry operators who admitted to have provided 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 ? 3. 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. 4. Brief facts of the case are that the assessee is a company, derives income from business of Manufacturing-activities of casting products and filed its original return of income for the A.Υ. 2012-13 on 29-02-2012, declaring a total income of Rs. 3,73,972/-. A search was conducted in Global Group on 29.12.2020. The assessee M/s. Global Castings Pvt. Ltd. was covered in the said search operation. A warrant u/s. 132 in warrant no. 11525 was executed on 29.12.2020. Subsequently, notice u/s.153A of the Income Tax Act, 1961 was issued on 21.01.2022 and was duly served upon the assessee, asking for true and correct return of its income including the undisclosed income in respect of which it is assessable for the assessment year 2013-2014. Accordingly, notice u/s 153A was issued and the Assessing Officer completed assessment u/s 153A read with section 143(3) of the Act assessing total income at Rs.3,18,73,870/- making the addition u/s.68 of the Act treating the funds received by the assessee as unexplained cash credit. 5. Against the assessment order, the assessee preferred appeal before the ld.CIT(A), wherein the ld.CIT(A) deleted the addition made by the Assessing Officer holding that the addition made on the basis of statements Printed from counselvise.com ITANo.41/Kol/2025 3 recorded during the course of search cannot be sustained as there is no incriminating documents found during the course of search. Accordingly, the ld.CIT(A) relying the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. reported in [2023] 149 taxmann.com 399 (SC) allowed the appeal of the assessee after observing in page 8-10 as under:- In the order, the AO has not brought on record any seized material on the basis of which the additions have been made. The entire additions have been made on the basis of statements of Shri Nath Mal Agarwal, a Kolkata based the entry operator and Shri Rajiv Shah, Key person of the Group & Company without any corroborating seized material. A statement recorded u/s 132(4) of the Act by itself would not be sufficient to assess income since statements on a standalone basis without reference to any seized material discovered during search and seizure would not empower the AO to make the addition. A perusal of the assessment order would reveal that the addition was made on the basis of post search enquiries and the statement of entry operators and does not relate to any incriminating documents found during the course of search operation. In this case, the return of income was filed on 29.02.2012. The case was selected for scrutiny and assessment was completed u/s 143(3) of the Act on 28.03.2015. Therefore, it would be a case of unabated assessment in terms of section 153A of the Act. 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 The operative part of the judgement is as under: \"14. In view of the above and for the reasons stated above, it is concluded as under: 1) 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 ITANo.41/Kol/2025 4 and the other material available with the AO including the income declared in the recturs; and 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. No observations are being made on the merits of the issue involved, as relief is being provided on the ground that the additions made in proceedings u/s.153A are not sustainable, in the absence of incriminating material found during search. The Hon'ble Supreme Court in the case of Abhisar Buildwell (supra) have held that the completed/ unabated assessments can be re- opened by the A.O. in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act. In light of the above decision, the AO may examine the case on applicability of Section 147/148 r.w.s 150 of the Act on the unabated assessment. In this connection, reference is invited to the decision in the case of Bhagya Kalita, vs ACIT, Central Circle-1, Guwahati in I.T.A. Nos.: 120 to 124/GTY/2024dtd. 27/09/2024 wherein it was held: 4.2. At this juncture, it deserves to be mentioned that Section 150 of the Act intends to lift the embargo of period of limitation u/s 149 of the Act to enable the Income Tax Authorities to re-open assessments not only on the basis of orders passed in proceedings under the Act but also on orders of appellate authorities. In considering the action Printed from counselvise.com ITANo.41/Kol/2025 5 u/s 147/148 of the Act the Id. AO would be advised to refer to Instruction No. 1/2003 dated 23.08.2023, which was issued by CBDT to give effect to the case of Abhisar Buildwell (P.) Ltd. (supra). Needless to say, directions u/s 150(1) of the Act would need to be followed strictly and will need to be read in conjunction with the appropriate provisions contained u/s 147/148/149 of the Act. 6. Ld. CIT-DR submitted that the ld.CIT(A) erred in ignoring that the addition in the present case was made on the basis of statements of the entry operators who admitted to have provided 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. Ld. CIT-DR referring to the assessment order at pages 7 & 8, submitted that the share capital/premium raised into Global Group of Companies through m/s Shivam Tradevin Private Limited, M/s Dayanidhi Vanijya Private Limited and M/s Tribhuan Trading Private Limited is in the form of accommodation entry and nothing but own unaccounted fund of global Group companies brought back into their regular books of accounts through this entire exercise. It has also been submitted by the ld. CIT-DR that the assessee was failed to prove the identity, creditworthiness and genuineness of the transactions. Therefore, the funds received by the assessee from paper entries controlled and managed by the entry providers in respect of share capital raised by the assessee, has rightly been added by the Assessing Officer u/s.68 of the Act. Accordingly, the ld.CIT-DR submitted that the order of the ld. CIT(A) deserves to be reversed and that of the order of the Assessing Officer should be restored. Printed from counselvise.com ITANo.41/Kol/2025 6 7. Ld.AR for the assessee, on the other hand, supporting to the order of the ld. CIT(A) submitted that there is no mention by the Assessing Officer in the assessment order with regard to any incriminating material found during the course of search in respect of the assessee, however, the addition has been made by the Assessing Officer only on the basis of statements recorded during the course of search. It was also submitted by the ld. AR that a statement recorded u/s.132(4) of the Act by itself would not be sufficient to assess income since the statements on a standalone basis without reference to any seized material discovered during the search and seizure would not empower the Assessing Officer to make the addition. It was also submitted by the ld. AR that the case of the assessee falls under the unabated assessment in terms of Section 153A of the Act as the assessee filed return of income on 29.02.2012 and the assessment completed u/s.143(3) of the Act on 28.03.2015 and the search was conducted on 29.12.2020 upon which the assessment of the assessee was reopened. Therefore, it was submitted by the ld. AR for the assessee that the ld. CIT(A) has rightly relied on the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra) and allowed the appeal of the assessee. Accordingly, ld. AR submitted that the order of the ld.CIT(A) deserves to be upheld. 8. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. In the present facts of the case, we find that the assessee has filed its return of income on 29.02.2012 and the assessment has been completed u/s.143(3) of the Act on 28.03.2015. Subsequently, upon search and seizure operation conducted Printed from counselvise.com ITANo.41/Kol/2025 7 on 29.12.2020, case of the assessee was reopened and assessment was framed u/s.153A of Act. From these facts it is clear that the reassessment has been framed on an unabated assessment. So far as the addition made by the Assessing Officer and deleted by the ld.CIT(A), it is discernible from the facts available on record that the addition has been made on the consequential statements recorded during the course of search and the statement recorded u/s.132(4) of the Act without any incriminating material cannot constitute incriminating material for the purpose of addition in unabated/concluded assessment. Once the assessment is unabated/concluded on the date of search, no addition can be made without any incriminating material found during the course of search and relied on the decision of the Hon’ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell Pvt. Ltd., reported in [2023] 149 taxmann.com 399 (SC). The ld.CIT(A) after considering the submissions of the assessee and also taking note of the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd.(supra), has held that since the assessment was unabated as on the date of search and further reassessment proceedings were initiated after the date of search, the addition made by the Assessing Officer u/s.68 of the Act, not based on any incriminating material during the search, cannot be sustained. Therefore, we are of the considered view that the findings recorded by the AO on the basis of statement recorded u/s.132(4) of the Act treating the same as incriminating material for the purpose of assessment, is devoid of merit and cannot be accepted. Once there is no nexus between the statement recorded u/s.132(4) of the Act and the evidence then the statement cannot be in the Printed from counselvise.com ITANo.41/Kol/2025 8 nature of incriminating material and on the basis of the said material without any further evidence which is incriminating material, the addition made by the AO towards share capital u/s.68 of the Act as unexplained cash credit cannot be sustained in an assessment passed u/s.153A of the Act consequent to the search action conducted u/s.132 of the Act. This view of ours is supported by the decision of Hon’ble Delhi High Court in the case of CIT Vs. Harjeev Aggarwal, reported in (2016) 290 CTR 263(Delhi-HC), wherein it has been held as under :- \"Nexus between statement recorded under section 132(4) and evidence/material: A plain reading of section 158BB(1) does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words 'evidence found as a result of search' would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the Explanation to section 132(4). However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the Assessing Officer to make a block assessment merely because any admission was made by the assessee during search operation. [Para 20]\" 9. Similar view has been taken by the Hon Delhi High Court in the case of PCIT Vs. Pavitra Realcon Pvt. Ltd. in ITA No.579/2018 dated 29.5.2024 for the proposition that addition cannot be made in search assessment only on the basis of statement recorded u/s 132(4) of the Act. The relevant observation of the Hon’ble Delhi High Court are as under :- \"However, it is an undisputed fact that the statement recorded under Section 132(4) of the Act has better evidentiary value but it is also a settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements.” Printed from counselvise.com ITANo.41/Kol/2025 9 10. Further, Similar view has been taken by the Hon’ble Gujarat High Court in the case of CIT Vs. Kailashben Manharlal Chokshi, passed in ITA No.579/2018, dated 29.05.2024, wherein the Hon’ble High Court has held as under :- \"The glaring fact required to be noted in the instant case was that the statement of the assessee had been recorded under section 132(4) at mid night. In normal circumstances, it is too much to give any credit to the statement recorded at such odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement, if such statement is recorded at such odd hours. Moreover, that statement was retracted after two months. [Para 22] The main grievance of the Assessing Officer was that the statement was not retracted immediately but it was done after two months. It was an afterthought and made under legal advice. However, if such retraction was to be viewed in light of the evidence furnished along with the affidavit, it would immediately be clear that the assessee had given proper explanation for all the items under which disclosure was sought to be obtained from him. So far as amount invested in house property was concerned, the assessee had specifically stated in his explanation that he had incurred the expenses on first floor structure to the tune of Rs. 2,03,185.65 and that amount had been withdrawn from the account of the firm in which he was a partner. As per the statement of the assessee, even the departmental valuation officer had also accepted the cost of construction of first floor to be Rs. 2,06,060. Further, the revenue had not brought any evidence whatsoever which would establish that the assessee had, in fact, incurred an amount of Rs. 4 lakhs on the construction of the first floor; and that said amount was invested out of the undisclosed income. Hence, there was no justification in making addition of Rs. 4 lakhs merely on the basis of statement recorded under section 132(4). [Para 23]\" 11. From the above, it is very clear that the addition made by the AO towards cash credit u/s.68 of the Act is not based on any incriminating material found in the course of search, therefore, in our considered view, once the assessment year is unabated/concluded on the date of search, the addition made by the AO without any incriminating material is bad in law and cannot be sustained. 12. At this stage, it is relevant to refer to the decision in the case of Abhisar Buildwell Pvt. Ltd. (supra). The Hon’ble Supreme Court has Printed from counselvise.com ITANo.41/Kol/2025 10 considered the identical issue of assessment u/s.153A of the Act consequent to search u/s.132 of the Act and after considering the various judicial precedents on this issue including the decision of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, reported in 380 ITR 573 held that no addition can be made in the assessment order framed u/s.153A/153C of the Act consequent to search action conducted u/s.132 of the Act, if such assessment is unabated/concluded as on the date of search, if there is no incriminating material found at the time of search. The relevant observation of the Hon’ble Supreme Court are as under :- 19. The Court then explained that the concept of time-limit for completion of assessment or reassessment under Section 153 had been done away with in a case covered by Section 153A and \"with all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an Assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be.\" The Court then dealt with the second proviso to Section 153A, which states that pending assessment or reassessment proceedings in relation to any AY falling out of the period of six AYs previous to the search shall abate. In such cases all pending assessments, the Court explained that once those proceedings abate, the decks were cleared, for the AO to pass assessment orders for each of those six years determining the total income of the Assessee. Such 'total income' would include \"both the income declared in the returns, if any, furnished by the Assessee as well as the undisclosed income, if any, unearthed during the search or requisition.\" Therefore, merely because the returns of income filed by the Assessee for the AYs previous to the date of the search already stood processed under Section 153A(1)(a) of the Act it could not be held that the provisions of Section 153A could not be invoked. 20. As regards the material unearthed during the search the Court in CIT v. Anil Kumar Bhatia (supra) observed that \"if it is not in dispute that the document was found in the course of the search of the Assessee, then Section 153A is triggered. Once the Section is triggered, it appears mandatory for the Assessing Officer to issue notices under Section 153A calling upon the Assessee to file returns for the six assessment years prior to the year in which the search took place.\" The Court clarified in para 24 as under: \"24. We are not concerned with a case where no incriminating material was found during the search conducted under Section Printed from counselvise.com ITANo.41/Kol/2025 11 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open.\" 21. Therefore it is clear that the decision in CIT v. Anil Kumar Bhatia (supra) does not deal with a situation where, as in the present case, no incriminating material was found during the search conducted under Section 132 of the Act. The decision in Chetan Das Lachman Das 22. On the same date as it rendered the above decision, this Court also pronounced its decision in CIT v. Chetan Das Lachman Das (supra). In the latter case, again, a search was undertaken in the Assessee‟s premises under Section 132 of the Act on 13th December, 2005. The decision itself notes: \"in the course of the search certain documents were found which according to the Assessing Officer suggested gross under invoicing of sales and suppression of production/ yield of Hing.\" Consequently that was again not a case where there was no material unearthed during the search. The judgement also notes that it is on the basis of the material unearthed that the AO made additions of suppressed sale value of Hing and compound Hing. The High Court interfered with the order of the ITAT on the ground that it had failed to examine the seized material itself to find out if the findings of the CIT(A) were justified. Consequently the decision in CIT v. Chetan Das Lachman Das (supra) does not deal with the fact situation that arises in the present case. 23. Nevertheless it is interesting to note that in CIT v. Chetan Das Lachman Das (supra) the Court underscored the need for to Department to have unearthed material during search justifying the assessment sought to be made, in the following words: \"11. ....Section 153A (1) (b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section 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 Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A 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....\" The decision in Madugula Venu 24. Turning to the decision in Madugula Venu v. Director of Income Tax (supra), the question there was not whether in the absence of any incriminating material the assessment could be completed under Section 153A of the Act. No doubt a contention was put forth Printed from counselvise.com ITANo.41/Kol/2025 12 on behalf of the Assessee that \"no material which would implicate him, in the earning of any undisclosed income was unearthed during the search and, therefore, there was no basis to issue the notice under section 153A.\" It must be remembered that the Petitioner in that case had come forth with a writ petition to challenge the search and seizure proceedings under Section 132 of the Act by questioning the very issuance of notice under Section 153A of the Act. It is in that context that the Court found no merit in the writ petition and observed that once a search was conducted under Section 132 of the Act, it was mandatory for the AO to issue notice to the person searched requiring him to furnish returns of income for the six AYs immediately preceding the AY relevant to the previous year in which the search was conducted. The Court was not entering into a discussion on whether any additions could be made in the assessment by the AO in the absence of any incriminating material unearthed during search. On the other hand, it left it open to the Assessee to raise all contentions in the assessment proceedings. The Court observed \"in case he has evidence or material to show that he has not earned any income which is not disclosed to the income tax authorities or to rebut the material gathered during the search, it is perfectly open to him to do so.\" One observation in the said judgement is, however, important. While explaining Section 153A of the Act, the Court observed \"it is not merely the undisclosed income that will be brought to tax in such assessments, but the total income of the assessee, including both the income earlier disclosed and income found consequent to the search, would be brought to tax.\" The Court, however, did not answer the question of whether a finding of undisclosed income would have to be based on some material unearthed during the search. The decision in Canara Housing 25. The Court would also like to refer to a judgement of the Karnataka High Court dated 25th July, 2014 in ITA No.38/2014 (M/s. Canara Housing Development Company v. The DCIT). There the Assessee, which was carrying on real estate business filed its return for AY 2008-2009. His case was taken up under Section 143(3) of the Act and an order came to be passed on 31st December, 2010. Subsequently a search took place in the premises of the Assessee under Section 132 of the Act on 12th April, 2011. The judgement notes \"in the course of search, incriminating material leading to undisclosed income was seized.\" The notice was issued to the Assessee under Section 153A(1) of the Act to file return of income on 13th January, 2012. Even while the return was under consideration, the CIT initiated proceedings under Section 263 of the Act on the ground that the order passed on 31st December, 2010 under Section 143(3) of the Act was prejudicial to the interests of the Revenue. When the CIT negated the objections of the Assessee to the said order, the Assessee appealed to the ITAT. The ITAT negated the plea of the Assessee that by virtue of the proceedings initiated under Section 153A of the Act, the assessment for six years stood reopened and it is for the assessing authority to pass Printed from counselvise.com ITANo.41/Kol/2025 13 appropriate order on the basis of the return filed under Section 153A(1)(a) of the Act. 26. In the High Court the question was whether the CIT could invoke the power under Section 263 of the Act once the proceedings under Section 153A was initiated. The High Court in Canara Housing (supra) answered the question in the negative. It referred to the decision of this Court in CIT v. Anil Kumar Bhatia (supra) and came to the conclusion that once proceedings are initiated under Section 153A of the Act the legal effect was that even where an assessment order is passed, it would stand reopened. In the eye of law there was no order of assessment. It meant that the AO \"shall assess or reassess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the \"total income\" of each year and then pass the assessment order.\" 27. It is important to note that Canara Housing was also a case where some material was unearthed during the search. Further, the High Court was clear that the addition to the income already disclosed would have to be based on some material unearthed during the search. This is clear from the observation in para 9 of the decision to the effect: \"The AO is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search.\" It was further observed that in the facts of that case if the CIT had come across any income that the AO had not taken note of while passing the earlier order, \"the said material can be furnished to the assessing authority\" who will take note of it while determining total income. The decision in Filatex India Ltd. 28. In Filatex India Ltd. v. CIT-IV (supra), one of the questions framed was whether the ITAT erred on facts and in law in not holding that re- computation of book profit, de-hors any material found during the course of search, in the order passed under Section 153A of the Act was without jurisdiction, being outside the scope of proceedings under that Section? The facts of the case were that there was incriminating material found during the course of search conducted in the premises of the Assessee on 18 th January, 2006 and subsequent dates. This included a statement of the General Manager (Marketing). On the basis of the said material and statement additions were made to the disclosed income under Section 115 JB although no material was found specific to such addition. The Court held that under Section 153A \"the additions need not be restricted or limited to the incriminating material, which was found during the course of search.\" Consequently even if no incriminating material was found for the addition under Section 115JB of the Act, since there was some incriminating material found which would sustain Printed from counselvise.com ITANo.41/Kol/2025 14 additions made and since the 'total income' had to be computed, they were sustained by the High Court. 29. In Filatex India Ltd. the Court sought to explain the observations in CIT v. Chetan Das Lachman Das (supra) in the following manner: \"3. Learned counsel for the appellant-assessee has relied on the decision of this Court in CIT v. Chetan Das Lachman Das [20121 211 Taxman 61/25 taxmann.com 227. The said decision notices insertion of Section 153A by Finance Act, 2003, its purpose and object, and the earlier proceedings for block assessment under Chapter XIVB, the difficulties and the legal issues which had arisen on the difference between regular assessment and block assessment. It is in this context that in the case of Chetan Das Lachman Das (supra), the Division Bench, [to which one of us (Sanjiv Khanna, J) was a party], has observed that Section 153A(l)(b) provides for assessment or re- assessment of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. It was emphasized that there is no condition in this Section that the additions should be strictly made on the basis of evidence found during the course of the search or other post search material or information available with the Assessing Officer, related to the evidence found. Subsequent observation to the effect that the assessment under section 153A should not be arbitrary or made without any relevance or nexus with the seized material, is basically clarificatory that the assessment under Section 153A emanates and starts on the foundation of the search, which is the jurisdictional precondition. The additions cannot and should not be arbitrary....\" 30. The above passage in Filatex India Ltd. (supra), paraphrases inter alia, the following line in CIT v. Chetan Das Lachman Das (supra): \"This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material\". However, the immediately next line in CIT v. Chetan Das Lachman Das (supra)reads: \"Obviously an assessment has to be made under this Section only on the basis of seized material....\" 31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das (supra) and Filatex India Ltd. v. CIT-IV (supra) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation Printed from counselvise.com ITANo.41/Kol/2025 15 of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT(A), affirmed by the ITAT, deleting the addition, was not interfered with. The decision in Jai Steel India 33. The decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (supra) involved a case where certain books of accounts and other documents that had not been produced in the course of original assessment were found in the course of search. It was held where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration while computing the total income under Section 153A of the Act. The Court then explained as under: \"22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made.\" 34. The argument of the Revenue that the AO was free to disturb income de hors the incriminating material while making assessment under Section 153A of the Act was specifically rejected by the Court on the ground that it was \"not borne out from the scheme of the said provision\" which was in the context of search and/or requisition. The Court also explained the purport of the words \"assess\" and \"reassess\", which have been found at more than one place in Section 153A of the Act as under: \"26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for Printed from counselvise.com ITANo.41/Kol/2025 16 the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents.\" The decision in Continental Warehousing 35. In Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 Taxmann.Com 78 (Bom) the question addressed by the Bombay High Court was whether the scope of assessment under Section 153A encompasses additions, not based on any incriminating material found during the course of search? It was held that no addition could be made in respect of the assessments that had become final in the event no incriminating material was found during search. The Bombay High Court relied on the earlier decision in CIT v. M/s. Murli Agro Products Ltd. (supra) and discussed the scope and ambit of the proceedings for assessment and reassessment of total income under Section 153A (1) of the Act and the provisos thereto. One of the specific pleas taken by the Assessee was that if no incriminating material was found during the course of search in respect of an issue then no addition in respect of any issue can be made to the assessment under Sections 153A and 153C. It was observed that the assessment or reassessment under Section 153A arises only when a search has been initiated and conducted and, therefore, \"such an assessment has a vital link with the initiation and conduct of the search.\" The Court then reproduced and affirmed the decision of the Special Bench of the ITAT in All Cargo Global Logistics Ltd. v. Deputy Commissioner of Income Tax [2012] 23 taxmann.com 103 (Mum.) (SB) and answered the question as regards the scope of the assessment of total income as under: \"53. ....We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results: (a) Insofar as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search\" Printed from counselvise.com ITANo.41/Kol/2025 17 36. Ultimately in Continental Warehousing (supra), the Bombay High Court answered the question framed by it as under: \"a. In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153Afor which assessments shall be made for each of the six assessment years separately; b. In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search.\" Summary of the legal position 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 Printed from counselvise.com ITANo.41/Kol/2025 18 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 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. Conclusion 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. 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue. 40. The appeals are accordingly dismissed but in the circumstances no orders as to costs. 13. In this view of the matter and considering the facts and circumstances of the case and also by following the ratio laid down by the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. (supra), we hold that the additions made by the Assessing Officer towards share capital u/s.68 of the Act as unexplained cash credit in the assessment order passed u/s.153A of the Act without therebeing any incriminating material found as a result of search, cannot be sustained once the assessment year under consideration is unabated/concluded as on the date of search. Since the assessment year under consideration is unabated/concluded, the addition made by the Assessing Officer without any incriminating material Printed from counselvise.com ITANo.41/Kol/2025 19 is contrary to the decision of the Hon’ble Supreme Court in the above case and, thus, deleted. Ld.CIT(A) after considering the relevant facts has rightly deleted the addition made by the Assessing Officer. Thus, we are inclined to uphold the order of the ld. CIT(A) and dismiss the appeal of the revenue. 14. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 19/09/2025. Sd/- (SONJOY SARMA) Sd/- (MANJUNATHA G) न्यधनयक सदस्य / JUDICIAL MEMBER लेखा सदस्य/ ACCOUNTANT MEMBER कोलकाता Kolkata; ददनाांक Dated 19/09/2025 Prakash Kumar Mishra, Sr.P.S. 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 "