MUKUT INFRASTRUCTRUES PRIVATE LIMITED,LUCKNOW V. DCIT, CENTRAL CIRCLE-1, LUCKNOW

ITSSA 710/LKW/2024

AI Insights

The case involves multiple appeals filed by Mukut Infrastructure Pvt Ltd, Yamuna Infrabuildcon Pvt Ltd, and Nandini Ventures Pvt Ltd against the orders of the Commissioner of Income Tax (Appeals) [CIT(A)]. The appeals were related to the additions made under section 68 of the Income Tax Act, 1961, which were confirmed by the CIT(A) following search and seizure operations under section 132 of the Act. The main legal contention was whether additions could be made in the absence of incriminating material during the search. The Tribunal, referencing recent Supreme Court decisions, found in favor of the assessee, leading to the deletion of the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31910 (ITAT-LUCKNOW)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Other Referred Cases: PCIT Vs. Abhisar Buildwell (P.) Ltd, Smt. Shashi Agarwal vs. DCIT, Ocean Dream Infrastructures Pvt. Ltd. vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANU CHAURASIA
• Assessee Lawyers: AKSHAY AGRAWAL
• Keywords: Set aside; Block assessment
• Section: 251; 132; 153A; 68; 153C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “B”, LUCKNOW BEFORE SHRI SUDHHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER IT(SS) A Nos. 710 to 713/LKW/2024 Assessment Years: 2011-12, 2015-16 to 2017-18 Mukut Infrastructure Pvt Ltd M-18, Gole Market, Mahanagar, Lucknow-226006. v. DCIT, Central Circle-1 5, Ashok Marg, Lucknow- 226001. PAN:AAECM7289C (Appellant) (Respondent) IT(SS) A No. 718/LKW/2024 Assessment Year: 2011-12 Yamuna Infrabuildcon Pvt Ltd M-17, Dobriyal Complex, Gole Market, Mahanagar, Lucknow- 226006. v. DCIT, Central Circle-1 5, Ashok Marg, Lucknow- 226001. PAN:AAACY4621L (Appellant) (Respondent) IT(SS) A No. 719/LKW/2024 Assessment Year: 2014-15 Nandini Ventures Pvt Ltd M-18 Gole Market, Lucknow- 226006. v. DCIT, Central Circle-1 Aaykar Bhawan, 5 Ashok Marg, Lucknow-226001. PAN:AADCN9403C (Appellant) (Respondent) Appellant by: Shri Akshay Agrawal, Adv Respondent by: Shri Manu Chaurasia, CIT(DR) O R D E R PER BENCH.: (1). These six appeals have been filed by the different assessee pertaining to assessment years 2011-12 to 2017-18 against impugned appellate orders dated 14/10/2024 (DIN & Order No.ITBA/APL/S/250/2024-25/1069656039(1), dated 1/10/2024 IT(SS)A Nos. 710 to 713/LKW/2024 IT(SS)A. No.718 & 719/LKW/2024 Page 2 of 9 (DIN & Order No.ITBA/APL/S/250/2024-25/1069624460(1), dated 11/10/2024 (DIN & Order No.ITBA/APL/S/250/2024- 25/1069624481(1), dated 14/10/2024 (DIN & Order No.ITBA/APL/S/250/2024-25/1069656896(1), dated 1/10/2024 (DIN & Order No.ITBA/APL/S/250/2024-25/1069624514(1) and dated 11/10/2024 (DIN & Order No.ITBA/APL/S/250/2024- 25/1069624559(1), respectively of Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. The assessee has raised similar grounds in all the six appeals except the change in figures. For the sake of brevity and convenience, all the appeals are disposed of through this consolidated order. (2). The grounds of appeal are as under: - IT(SS)A. No.710/LKW/2024 1. The appellate authority has erred in law and facts of the case in confirming the addition of Rs.80,00,000/- u/s 68 which was shown as liability in balance sheet of the appellant company. 2. That the approval u/s 153D was given just in a mechanical manner without application of mind. The learned CIT(A) has erred in upholding the same. 3. That no incriminating material was found during search proceedings and the order u/s 153A is bad in law. 4. Any other ground of appeal that may be taken up during the course of appeal proceedings.” IT(SS)A. No.711/LKW/2024 1. The appellate authority has erred in law and facts of the case in confirming the addition of Rs.2,28,00,000/- u/s 68 which was shown as liability in balance sheet of the appellant company. 2. That the approval u/s 153D was given just in a mechanical manner without application of mind. The learned CIT(A) has erred in upholding the same. 3. That no incriminating material was found during search proceedings and the order u/s 153A is bad in law. 4. Any other ground of appeal that may be taken up during the course of appeal proceedings.” IT(SS)A. No.712/LKW/2024 IT(SS)A Nos. 710 to 713/LKW/2024 IT(SS)A. No.718 & 719/LKW/2024 Page 3 of 9 1. The appellate authority has erred in law and facts of the case in confirming the addition of Rs.2,53,334/- u/s 68 which was shown as liability in balance sheet of the appellant company. 2. The appellate authority has erred in law and facts of the case in confirming the addition of Rs.5,01,484/- as rental income of the appellant company. 3. That the approval u/s 153D was given just in a mechanical manner without application of mind. The learned CIT(A) has erred in upholding the same. 4. That no incriminating material was found during search proceedings and the order u/s 153A is bad in law. 5. Any other ground of appeal that may be taken up during the course of appeal proceedings.” IT(SS)A. No.713/LKW/2024 1. The appellate authority has erred in law and facts of the case in confirming the addition of Rs.2,10,00,000/- u/s 68 which was shown as liability in balance sheet of the appellant company. 2. The appellate authority has erred in law and facts of the case in confirming the addition of Rs.6,68,656/- as rental income of the appellant company. 3. That the approval u/s 153D was given just in a mechanical manner without application of mind. The learned CIT(A) has erred in upholding the same. 4. That no incriminating material was found during search proceedings and the order u/s 153A is bad in law. 5. Any other ground of appeal that may be taken up during the course of appeal proceedings.” IT(SS)A. No.718/LKW/2024 1. The appellate authority has erred in law and facts of the case in confirming the addition of Rs.50,00,000/- u/s 68 which was shown as liability in balance sheet of the appellant company. 2. That the approval u/s 153D was given just in a mechanical manner without application of mind. The learned CIT(A) has erred in upholding the same. 3. That no incriminating material was found during search proceedings and the order u/s 153A is bad in law. 4. Any other ground of appeal that may be taken up during the course of appeal proceedings.” IT(SS)A. No.719/LKW/2024 1. The learned CIT(A) has erred in law and facts in upholding the addition of Rs.50,00,000/- under section 68 of the I. T. Act, 1961, which was credited in the bank account of the assessee. 2. The learned CIT(A) has erred in law and facts in upholding the addition of Rs.1,00,000/- under section 68 of the I. T. Act, 1961, which was IT(SS)A Nos. 710 to 713/LKW/2024 IT(SS)A. No.718 & 719/LKW/2024 Page 4 of 9 credited in the bank account of the assessee, without appreciating the facts of the case. That the approval u/s 153D was given just in a mechanical manner without application of mind. The learned CIT(A) has erred in upholding the same. 3. That no incriminating material was found during search proceedings and the order u/s 153A is bad in law. 4. Any other ground of appeal that may be taken up during the course of appeal proceedings (2.1). In these cases, search & seizure operations were conducted in Ramesh Group of cases, under section 132 of the Income Tax Act, 1961 (hereinafter referred as “I.T. Act”); in pursuance whereof assessment orders were separately passed under section 153A read of the I.T. Act. In these assessment orders, additions (corresponding to the amounts mentioned in Grounds of appeal in the present appeals before us) were made under section 68 of the I.T. Act. The assessee filed appeals against the aforesaid assessment orders in the office of the Ld. CIT(A). However, vide impugned appellate orders, the learned CIT(A) dismissed the appeals of the assessees. Aggrieved, the assessees have filed the present appeals before us, in Income Tax Appellate Tribunal (“ITAT” for short). (B) At the time of hearing, the Ld. Counsel for the assessee submitted that the issue as to whether additions can be made in a search assessment in the absence of any incriminating material is now well settled in favour of the assessee by the order of the Hon'ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell (P.) Ltd (2023) 149 taxmann.com 399 (SC)/(2023) 293 Taxman 141 (SC)/(2023) 454 ITR 212 (SC). He further submitted that the Lucknow Bench of ITAT in the case of Smt. Shashi Agarwal (2024) 167 taxmann.com 687 (Lucknow Trib.), considered aforesaid decision of Hon'ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd (supra) and decided the issue in favour of the assessee relying on the same. He also submitted that IT(SS)A Nos. 710 to 713/LKW/2024 IT(SS)A. No.718 & 719/LKW/2024 Page 5 of 9 moreover, in the case of Ocean Dream Infrastructures Pvt. Ltd. vs. DCIT (Order dated 21/01/2025 in I.T.A. No.146 and 147/Lkw/2023) also, identical issue has been decided by Lucknow Bench of Income Tax Appellate Tribunal in favour of the assessee. He further submitted that in the present appeals also, the additions made by the Assessing Officer are not based on any incriminating documents found in the course of search. Relying on the aforesaid cases of Abhisar Buildwell (P.) Ltd (supra), Smt. Shashi Agarwal (supra) and Ocean Dream Infrastructures Pvt. Ltd. (supra), he contended that the additions made in the assessment orders should be deleted. The learned Departmental Representative relied on the impugned orders of the learned CIT(A), and the assessment orders passed by the Assessing Officer. He submitted that the appeals should be set aside to the Assessing Officer. (C) We have heard the rival parties and have gone through the materials placed on record. In the case of Smt. Shashi Agarwal (supra), co-ordinate bench of ITAT Lucknow has decided the matter in favour of the assessee, relying on the case of Abhisar Buildwell (P.) Ltd (supra). The relevant portion of the order of Smt. Shashi Agarwal vs. DCIT (supra) is reproduced as under: - “(C) We have heard both sides. We have perused materials on record. There is no dispute regarding relevant facts. It is not in dispute that no incriminating materials were found in the course of search u/s 132 of the IT Act in respect of the various additions made by the Assessing Officer. Further it is also not in dispute that no assessment proceedings were pending in the cases of the assessee at the time of search conducted on 08/07/2016 in the case of the assessee, u/s 132 of the IT Act. Further, as no assessment proceedings were pending at the time of search & seizure operation u/s 132 of the Act on 08/07/2016, the case of the assessee falls in the category of unabated/completed assessments within the meaning of orders passed by Hon'ble Supreme Court in the cases of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra) and within the meaning of order passed in the case of Kabul Chawla 380 ITR 573 (Delhi), which stands approved by Hon'ble Supreme Court by dint of orders of Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra). Further, in paragraph 14 of the aforesaid order of Hon'ble IT(SS)A Nos. 710 to 713/LKW/2024 IT(SS)A. No.718 & 719/LKW/2024 Page 6 of 9 Supreme Court in the case of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra), the Hon'ble Supreme Court concluded as under: “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 and the other material available with the AO including the income declared in the returns; 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. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.” (C.1) Hon'ble Supreme Court in the case of U. K. Paints (Overseas) Ltd. (supra) widened the application of the order in the case of Abhisar Buildwell (supra) to assessments conducted u/s 153C of the IT Act also. In both orders of Hon'ble Supreme Court i.e. in Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra), the Hon'ble Supreme Court held that in respect of the completed/unabated assessments, no additions can be made in assessment order passed u/s 153A or passed u/s 153C of the IT Act in respect of which incriminating materials were not found in the course of search action u/s 132A of the Act; although Hon'ble Supreme Court held that the completed/unabated assessments can be reopened by the Assessing Officer in exercise of powers u/s 147/148 of the IT Act subject to fulfillment of the conditions as envisaged/mentioned u/s 147/148 of the IT Act. Thus, although the powers of the Assessing Officer u/s 147/148 of the IT Act were saved by Hon'ble Supreme Court in the cases of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra), subject to fulfillment of conditions envisaged u/s 147/148 of the IT Act; it has been categorically held that in respect of completed/unabated assessments, no additions can be made u/s 153A or under section 153C of the Act if incriminating material was not found / unearthed during the course of search u/s 132 of the IT Act in respect of the additions made. (C.2) The issue whether additions can be made in assessment orders passed u/s 153A or u/s 153C of IT Act in cases falling under IT(SS)A Nos. 710 to 713/LKW/2024 IT(SS)A. No.718 & 719/LKW/2024 Page 7 of 9 unabated/completed assessments, when no incriminating material was found at the time of search u/s 132 of the IT Act, was a disputed issue in the past. While a view in favour of assessee was taken, for example, in cases such as CIT vs. Kabul Chawla (supra), Pr. CIT vs. Saumya Construction 387 ITR 523 (Guj), CIT vs. Continental Warehousing 374 ITR 645 (Bom.), Smt. Jami Nirmala vs. Pr.CIT 437 ITR 673 (Orissa), CIT vs. Veerprabhu Marketing Ltd. 388 ITR 574 (Cal.), Pr.CIT vs. Delhi International Airport (P.) Ltd. 443 ITR 574 (Kar.), Pr.CIT vs. Meeta Gutgutia 395 ITR 526 (Delhi), Dr. A. V. Sreekumar vs. CIT 404 ITR 642 (Ker.), Pr. CIT vs. Smt. Daksha Jain 2019 (8) TMI 474 (Rajasthan), etc.; courts took a view in favour of Revenue in cases reported as CIT vs. Rajkumar Arora (supra), CIT vs. Mahndipur Balaji 447 ITR 517 (All.), CIT vs. K. P. Ummer 413 ITR 251 (Ker.), Sunny Jacob Jewellers and Wedding Centre vs. DCIT 362 ITR 664 (Ker.), E. N. Gopakumar 75 taxmann.com 215 (Kerala), etc. The issue has now been finally settled by decisions of Hon'ble Supreme Court in the aforesaid cases of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra) wherein view in favour of assessee has been taken. (C.2.1) In the present appeals before us, the additions have been made by the Assessing Officer in assessment orders passed u/s 153A of the IT Act. Further, we have already noted earlier that the relevant facts are not in dispute. It is not in dispute that no incriminating materials were found in the course of search u/s 132 of the IT Act in respect of the various additions made by the Assessing Officer. Further it is also not in dispute that no assessment proceedings were pending in the cases of the assessee at the time of search conducted on 08/07/2016 in the case of the assessee, u/s 132 of the IT Act. Furthermore, as no assessment proceedings were pending in the case of the assessee at the time when (on 08/07/2016) search u/s 132 of the IT Act was conducted, the case of the assessee in the present appeals before us, falls in the category of completed/unabated assessments within the meaning of orders passed by Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and in the case of CIT vs. Kabul Chawla (supra) which was approved by Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax vs. Abhisar Buildwell (supra). In view of the foregoing, and having regard to the relevant facts and circumstances of the present case before us, and further, as representatives of both sides are in agreement with this, we are of the view that the issue in dispute is squarely covered in favour of the assessee by the orders of Hon'ble Supreme Court in Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra) and by the aforesaid instruction No. 1 of 2023 of CBDT, which is binding on Revenue authorities. Accordingly, we direct the Assessing Officer to delete the additions made amounting to a total of Rs.2,24,81,900/- for assessment year 2015-16 and addition amounting to Rs.44,25,000/- for assessment year 2016-17. (C.2.2) Since we have directed that the aforesaid additions be deleted, the other issues regarding merits of the additions made in the aforesaid two years, become merely academic in nature and do not require any adjudication. Therefore, we decline to make any order with regard to the merits of the various additions made.” (C.1) Identical view, in favour of the assessee, has also been taken by Lucknow Bench of ITAT, in the case of Ocean Dream Infrastructures Pvt. Ltd. (supra). IT(SS)A Nos. 710 to 713/LKW/2024 IT(SS)A. No.718 & 719/LKW/2024 Page 8 of 9 (C.2) No material has been brought to our attention from either side to distinguish the facts and circumstances of the present appeals before us from the facts and circumstances of the precedents mentioned in foregoing paragraph (B) of this order; or to persuade us to take a view different from view taken in precedents mentioned in the foregoing paragraph (B) of this order. Perusal of the assessment orders and impugned orders of Ld. CIT(A) shows that additions are not based on any incriminating materials found in the course of search under section 132 of the Act at the premises of respective assessees. The additions are, instead, connected to regular books of account and bank accounts. (C.2.1) In view of the foregoing, and respectfully following the orders of the Hon'ble Supreme Court in the cases of Abhisar Buildwell (P.) Ltd (supra) and DCIT vs U.K. Paints (Overseas) Ltd (2023) 150 Taxmann.com 108 (SC), and further, on due consideration of aforesaid Instruction of Central Board of Direct Taxes (CBDT) [Instruction No.1 of 2023 (F. No.279/Misc./M- 54/2023-IT)] directing the field authorities to implement the aforesaid orders of Hon'ble Supreme Court in the cases of Abhisar Buildwell (P.) Ltd (supra) and U.K. Paints (Overseas) Ltd (supra), in uniform manner; we direct the Assessing Officer to delete the aforesaid additions made under section 68 of the Act, whereof is mentioned respectively in Ground no. 1 of each of these appeals. Accordingly, ground no. 1 and 3 in each of these appeals are allowed. (D). As we have already deleted the quantum additions; the other grounds of appeal become merely academic in nature due to our decision in foregoing paragraph (C.2 and C.2.1) of this order; and need not be adjudicated. Hence, we decline to decide the ground No. 2 in each of the six appeals before us. All the IT(SS)A Nos. 710 to 713/LKW/2024 IT(SS)A. No.718 & 719/LKW/2024 Page 9 of 9 grounds of appeal are treated as disposed of in accordance with directions and orders as aforesaid. In the result, these appeals of the assessee are partly allowed for statistical purposes. Order pronounced in the open Court on 24/03/2025. Sd/- Sd/- [SUDHHANSHU SRIVASTAVA] [ANADEE NATH MISSHRA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24/03/2025 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File By order // True Copy// Assistant Registrar "