S.S.M. FOREX PRIVATE LIMITED,KAROL BAGH V. DCIT, CENTRAL CIRCLE-29, DELHI

ITA 3639/DEL/2023

AI Insights

The case involves S.S.M. Forex Private Limited, a currency exchange company, which faced additions to its income assessments for the years 2014-15 to 2018-19 following a search and seizure operation on the Sushil Goel group, including the assessee, in January 2020. The additions were made by the AO applying a 4% profit rate on the turnover declared by the assessee, after rejecting the books of account, which were not available at the time of the search. The assessee appealed against these additions, arguing that no incriminating material was found during the search, and thus, the additions were unjustified. The ITAT, referencing a Supreme Court decision, agreed with the assessee, stating that additions could only be made based on incriminating material found during the search in unabated years.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474598 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Other Referred Cases: PCIT vs. Abhisar Buildwell Private Limited, CIT vs. Mukundray K. Shah, CIT vs. Goldstone Cements Limited
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYA CHAUDHARY
• Assessee Lawyers: RAGHAV SHARMA; ISSUE OF NOTICE US A
• Keywords: Reassessment proceedings; Search and seizure
• Section: 153A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.3638/Del/2023 (ASSESSMENT YEAR 2014-15) ITA No.3639/Del/2023 (ASSESSMENT YEAR 2015-16) ITA No.3640/Del/2023 (ASSESSMENT YEAR 2016-17) ITA No.3641/Del/2023 (ASSESSMENT YEAR 2017-18) ITA No.3642/Del/2023 (ASSESSMENT YEAR 2018-19) S.S.M. Forex Private Limited, 30-31, Gaffar Market, Karol Bagh, New Delhi-110005. PAN-AAJCS4554M Vs. DCIT, Central Circle-29, Jhandewalan Delhi. (Appellant) (Respondent) Assessee by Sh. Raghav Sharma, Adv. and Ms. Chandrima Choudhary, Adv. Department by Ms. Jaya Chaudhary, CIT-DR Date of Hearing 11/02/2025 Date of Pronouncement 19/02/2025 2 ITA Nos.3638 to 3642 /Del/2023 S.S.M. Forex Pvt. Ltd. vs. DCIT ORDER PER BENCH: All these five appeals are filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-30, New Delhi, dated 07/11/2023 and 09/11/2023 for Assessment Years 2014-15 to 2018-19 respectively. 2. Since, the issue raised by the assessee in all these appeals are common, therefore, the same are taken together and disposed off by a single order for the sake of convenience. 3. The assessee in these appeals has challenged the action of the lower authorities in making addition without referring to any incriminating material found and seized as a result of search when the assessments were completed u/s 153A of the Act. 4. Brief facts of the case are that the assessee company is RBI registered currency exchanger. A search and seizure operation was conducted upon Sushil Goel group on 30/01/2020, including the assessee company also. During the course of search, no incriminating material was found. The proceedings u/s 153A were initiated in the case of the assessee by issue of notice u/s 153A and subsequently the orders were passed for all the five years wherein trading additions have been made by applying 4% profit rate on the turn over declared by the assessee after rejecting the books of account of the assessee. 3 ITA Nos.3638 to 3642 /Del/2023 S.S.M. Forex Pvt. Ltd. vs. DCIT 5. In first appeal, the Ld. CIT(A) has confirmed the orders of AO, therefore, the appeals were preferred before us. 6. During the course of hearing, Ld. AR submitted that in the instant case, no incriminating paper was found and seized. From the perusal of the assessment orders, it is evident that the assessments were completed without referring to any incriminating material. He further submits that assessee has submitted complete books of accounts before the AO who for the sole reason that they were not available at the time of search, have rejected the same and applied the profit rate of 4%. The Ld. AR further submitted that there is no linkage between incriminating material qua the addition made. He further submitted that it is settled law that in case of search, while framing the assessment u/s 153A, the addition can only be made on the basis of the incriminating material found during the course of search. For this, he placed reliance on the judgment of the Hon’ble Supreme Court in the PCIT vs. Abhisar Buildwell Private Limited reported in [2023] 149 taxman.com 399. Accordingly, the Ld. AR prayed that in all the five years starting from AY 2014-15 to 2018- 19 being the unabated years and no proceedings were pending as on the date of search under any provisions of the Income Tax Act. Therefore, for all these years, no addition could be made without referring to any incriminating material in the order passed u/s 153A of the Act, and, therefore, the additions made in all these years applying a profit rate deserves to be deleted. 4 ITA Nos.3638 to 3642 /Del/2023 S.S.M. Forex Pvt. Ltd. vs. DCIT 7. On the other hand, the Ld. CIT-DR vehemently supported the orders of the lower authorities and submitted that during the course of search no books of accounts were found, therefore, the action of the AO in making the addition by rejecting the books of account and applying profit rate is correct. She also placed on the reliance on the judgments of the Hon’ble Supreme Court in the case of CIT vs. Mukundray K. Shah reported in [2007] 160 taxmann.com 276 (SC) and of Hon’ble Gauhati High Court in the case of CIT vs. Goldstone Cements Limited in ITA No.10 of 2022 dated 29/09/2023. 8. We have heard the rival submissions and perused the material available on record. In the case of the assessee for all these five years, this is an admitted position that there was no proceedings were pending as on the date of search, thus, these are the unabated years when the notices u/s 153A were issued. The Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Private Limited (supra) held that in case of no incriminating material found, the AO cannot assume jurisdiction to assessee/re-assess total income in the case of unabated/completed years. From the perusal of the assessment orders for these five years under consideration clearly shows that AO has not refer any document found in the course of search, incriminating or otherwise. Merely for the reason that the books of accounts maintained in the regular course of business were not found available during the course of search, it is presumed that the books of account produced later is incriminating material. The AO while applying the profit rate in para 4.2 has clearly deserves that 5 ITA Nos.3638 to 3642 /Del/2023 S.S.M. Forex Pvt. Ltd. vs. DCIT books of accounts produced by the assessee are not reliable Such observations of the AO are not based on any material incriminating or otherwise found as a result of search and, therefore, ratio laid down by the Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) is applicable to these assessment years. Therefore, in view of the decision of Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) that there is no incriminating material referred to assessment order by AO nor any such document was produced either before the Ld. CIT(A) or before the Tribunal, therefore, we are of the opinion that no addition could be made in these years. Accordingly, the assessment framed u/s 153A by making additions without any reference to incriminating material are hereby deleted. However, in view of the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) opportunity is granted to the AO to initiate reassessment proceedings u/s 147/148 of the Act in case of completed/unabated assessment where no incriminating material found during the course of search in accordance with the provisions of law. 9. In the result, appeals of the assessee for all these five years are allowed. Order pronounced on 19/02/2025. Sd/- Sd/- (ANUBHAV SHARMA) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 19/02/2025 PK/Ps 6 ITA Nos.3638 to 3642 /Del/2023 S.S.M. Forex Pvt. Ltd. vs. DCIT Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "