SANDEEP MITTAL,LUCKNOW V. DCIT-CC-1, LUCKNOW

ITSSA 431/LKW/2023

AI Insights

The case involves multiple appeals filed by different assessees against the orders of the Commissioner of Income Tax (Appeals), which confirmed the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961, pertaining to Long Term Capital Gains. The assessees argued that the additions were made without any incriminating material found during the search and were based solely on the statements of a third party, Sh. Naresh Jain, which they claimed were not corroborated by any evidence. The Tribunal examined the legal provisions, relevant case laws, and the facts of the case, ultimately deciding in favor of the assessees.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312479 (ITAT-LUCKNOW)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Other Referred Cases: PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., Kabul Chawla vs. CIT, Meeta Gutgutia vs. CIT, Chetan Das Lachman Das vs. CIT, Filatex India Ltd. vs. CIT-IV, Major Metals Ltd. vs. Union of India, Sanjay Bimalchand Jain vs ITO, Ratnakar M. Pujari vs. ITO, Kamalchand Nathmal Lunia vs. ITO, Shri Abhimanyu Soin vs. ACIT, Adaman Timber Industries vs. CIT, Hemantkumar Mansukhlal Soni, HUF vs. CIT, Divyaben Prafulchandra Parmar vs. CIT, Shobit Gupta vs. CIT, Nilesh Jain HUF vs. CIT, CIT vs. P. Mohanakal, CIT vs. Rajkumar Arora, CIT vs. K. P. Ummer, CIT vs. Veerprabhu Marketing Ltd., CIT vs. Delhi International Airport (P.) Ltd., CIT vs. Sumati Dayal, CIT vs. Abhisar Buildwell (P.) Ltd., CIT vs. U. K. Paints (Overseas) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE DID; SANJEEV KRISHNA SHARMA
• Assessee Lawyers: AKSHAY AGRAWAL
• Keywords: Condonation of delay; Set aside; Business income; Difference of opinion; Change of opinion; Reasonable cause; Question of law; Unexplained cash credit; Unexplained expenditure; Unexplained investment; Documents seized; Bogus purchase; Period of limitation; Capital Gains; Principle of natural justice; Sham transactions; Search and seizure; Block assessment; Wrong claim; Bogus Share capital; Tangible material; Penny stocks; Bogus
• Section: 147; 148; 143(3); 271(1)(c); 32; 132; 153A; 68; 69; 69C; 244A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “A”, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER IT(SS) A Nos. 432 to 434/LKW/2023 Assessment Years: 2014-15, 2017-18 & 2015-16 Rupali Mittal 1/16, Vinay khand Gomti Nagar, Lucknow-226010. v. DCIT, Central Circle-1 Income Tax Office, Ashok Marg, Lucknow-226001. PAN:ABIPM5213A (Appellant) (Respondent) IT(SS) A Nos. 431 & 435/LKW/2023 Assessment Years: 2016-17 & 2017-18 Sandeep Mittal 268/641, Saria Mill, Tilak Nagar, Rajendra Nagar, Aishbagh, Lucknow-226004. v. DCIT, Central Circle-1 Income Tax Office, Ashok Marg, Lucknow-226001. PAN:AEVPM1399D (Appellant) (Respondent) Appellant by: Shri Akshay Agrawal, Adv Respondent by: Shri Sanjeev Krishna Sharma, Addl. CIT(DR) O R D E R PER BENCH.: (1). These five appeals have been filed by the different assessees pertaining to assessment years 2014-15 to 2017-18 against impugned appellate orders dated 02/03/2023 (DIN & Order No.ITBA/APL/S/250/2022-23/1050312082(1), dated 2/03/2023 (DIN & Order No.ITBA/APL/S/250/2022-23/1050313338(1), dated 01/03/2023 (DIN & Order No.ITBA/APL/S/250/2022- 23/1050272333(1), dated 02/03/2023 (DIN & Order No.ITBA/APL/S/250/2022-23/1050314666(1), dated 1/03/2023 (DIN & Order No.ITBA/APL/S/250/2022-23/1050273423(1), IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 2 of 42 respectively of Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. (1.1) The assessees have raised similar grounds in all the five appeals except the change in figures. For the sake of brevity and convenience, all the appeals are disposed of through this consolidated order. (1.2) The grounds of appeal are as under: - IT(SS)A. No.431/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that no assessment for the year under consideration was pending, the assessing officer could not have assumed jurisdiction under section 153A of the Income Tax Act, 1961. The law in this regard is now well settled by the Hon’ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any ‘seized’ material whatsoever, much less any ‘incriminating’ material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on what incriminating material was found during the year under assessment, which formed the basis of passing order under Section 153A of the Income Tax Act, 1961. Thus, the addition made under section 153A of the Income Tax Act is invalid when there is no incriminating material to support it. 3. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that no jurisdiction could be assumed by the Assessing Officer under Section 153A of the Income Tax Act, 1961, by merely relying upon the statement of Sh. Naresh Jain and his associates, recorded under Section 132(4) of the Income Tax Act, 1961, since such statements, which were recorded much after the date of search, could not by themselves constitute incriminating material found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate the statement of Sh. Naresh Jain under Section 132(4) of the Income Tax Act, 1961. 4. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was not provided with an opportunity to cross-examine Sh. Naresh Jain or his associates, basis whose statements, the addition under Section 153A was done. It is submitted that despite requesting for such IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 3 of 42 opportunity before the Assessing Officer as well as the Commissioner of Income Tax (Appeals), no cross-examination was afforded to the Assessee, which resulted in flagrant violation of the principles of natural justice and equity. It is submitted that the assessment order as well as the consequential appellate order are liable to be quashed on this ground alone viz. intentional nonobservance of principles of natural justice. 5. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz. intentional nonobservance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 22,60,570/under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of Shant Sheorey 52 Week Entertainments (a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee squarely discharged its onus of proving the identity, genuineness and creditworthiness in relation to the Long-Term Capital Gain derived by it, by filing all documentary evidence viz. contract notes, DEMAT account details, details of Securities Transactions Tax, bank details, details of broker etc. Neither such evidence was rebutted by the Assessing Officer or the Commissioner of Income Tax (Appeals), nor were they rejected / doubted. 8. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the scrip in F.Y. 2008-09 from open market and sold the same in F.Y. 2015-16, after holding the same for about seven (7) years in order to derive Long-Term Capital Gain. Given such extenuating circumstances in the present case, the modus operandi as alleged in the statement of Sh. Naresh Jain (contained in the report of the DIT (Investigation) Mumbai) did not apply to the facts of the case and therefore, the additions made were liable to be quashed. 9) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant was a regular investor, and not only invested in the shares of Shant Sheorey / 52 Weeks Entertainment to derive Long Term Capital Gain but also traded in it. It is submitted that while the trading profit/loss from the sale of shares of Shant Sheorey / 52 Weeks Entertainment has been accepted by the Assessing Officer as business income, the exemption under Section 10(38) of the Income Tax Act, 1961 with respect to the same IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 4 of 42 scrip has been disallowed on a totally misconceived notion. Thus, the Assessing Officer, as also the Commissioner of Income Tax (Appeals) have erred in applying two different yardsticks for the same scrip. It is well- settled that the Revenue cannot be allowed to approbate and reprobate in the same breath. 10) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in making an estimated addition of a sum of Rs. 92,740/- as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 11) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. 13) The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing.” IT(SS)A. No.435/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that no assessment for the year under consideration was pending, the assessing officer could not have assumed jurisdiction under section 153A of the Income Tax Act, 1961. The law in this regard is now well settled by the Hon’ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any ‘seized’ material whatsoever, much less any ‘incriminating’ material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on what incriminating material was found during the year under assessment, which formed the basis of passing order under Section 153A of the Income Tax Act, 1961. Thus, the addition made under section 153A of the Income Tax Act is invalid when there is no incriminating material to support it. 3. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that no jurisdiction could be assumed by the Assessing Officer under Section 153A of the Income Tax Act, 1961, by merely relying upon the statement of Sh. Naresh Jain and his associates, recorded under Section 132(4) of the Income Tax Act, 1961, since such statements, which were recorded much after the date of search, could not by themselves constitute incriminating material found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 5 of 42 the statement of Sh. Naresh Jain under Section 132(4) of the Income Tax Act, 1961. 4. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was not provided with an opportunity to cross-examine Sh. Naresh Jain or his associates, basis whose statements, the addition under Section 153A was done. It is submitted that despite requesting for such opportunity before the Assessing Officer as well as the Commissioner of Income Tax (Appeals), no cross-examination was afforded to the Assessee, which resulted in flagrant violation of the principles of natural justice and equity. It is submitted that the assessment order as well as the consequential appellate order are liable to be quashed on this ground alone viz. intentional nonobservance of principles of natural justice. 5. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz. intentional nonobservance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 22,60,570/under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of Shant Sheorey 52 Week Entertainments (a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee squarely discharged its onus of proving the identity, genuineness and creditworthiness in relation to the Long-Term Capital Gain derived by it, by filing all documentary evidence viz. contract notes, DEMAT account details, details of Securities Transactions Tax, bank details, details of broker etc. Neither such evidence was rebutted by the Assessing Officer or the Commissioner of Income Tax (Appeals), nor were they rejected / doubted. 8. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the scrip in F.Y. 2008-09 from open market and sold the same in F.Y. 2015-16, after holding the same for about seven (7) years in order to derive Long-Term Capital Gain. Given such extenuating circumstances in the present case, the modus operandi as alleged in the statement of Sh. Naresh Jain (contained in the report of the DIT (Investigation) Mumbai) did not apply to the facts of the case and therefore, the additions made were liable to be quashed. IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 6 of 42 9) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant was a regular investor, and not only invested in the shares of Shant Sheorey / 52 Weeks Entertainment to derive Long Term Capital Gain but also traded in it. It is submitted that while the trading profit/loss from the sale of shares of Shant Sheorey / 52 Weeks Entertainment has been accepted by the Assessing Officer as business income, the exemption under Section 10(38) of the Income Tax Act, 1961 with respect to the same scrip has been disallowed on a totally misconceived notion. Thus, the Assessing Officer, as also the Commissioner of Income Tax (Appeals) have erred in applying two different yardsticks for the same scrip. It is well- settled that the Revenue cannot be allowed to approbate and reprobate in the same breath. 10) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in making an estimated addition of a sum of Rs. 1,21,135/- as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 11) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. 13) The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing.” IT(SS)A. No.432/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that the assessment proceedings for the year under consideration had already been completed vide order dated 29.12.2016 under Section 143(3) of the Income Tax Act, 1961, the assessing officer could not have assumed jurisdiction under section 153A of the income tax act, 1961. The law in this regard is now well-settled by the Hon’ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any ‘seized’ material whatsoever, much less any ‘incriminating’ material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on what incriminating material was found during the year under assessment, which formed the basis of passing order under Section 153A of the Income Tax Act, 1961. Thus, the addition made under section 153A of the Income Tax Act is invalid when there is no incriminating material to support it. IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 7 of 42 3. BECAUSE on the facts and circumstances of the case and in law, the issue pertaining to investment in shares was examined threadbare during the course of scrutiny assessment, which culminated into the passing of the assessment order under Section 143(3) of the Income Tax Act, 1961 dated 29.12.2016, whereby a demand of Rs. 1,26,670/- that was raised by the department, was duly paid. Thus, the Commissioner of Income Tax (Appeals) failed in quashing the assessment order passed under Section 153A of the Income Tax Act, 1961, and further erred in not appreciating that the Assessing Officer erroneously and illegally decided to reconsider and re-adjudicate the same issue viz. investment in shares and genuineness of LTCG claimed, de hors any fresh incriminating material seized during search. 4. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that no jurisdiction could be assumed by the Assessing Officer under Section 153A of the Income Tax Act, 1961, by merely relying upon the statement of Sh. Naresh Jain and his associates, recorded under Section 132(4) of the Income Tax Act, 1961, since such statements, which were recorded much after the date of search, could not by themselves constitute incriminating material found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate the statement of Sh. Naresh Jain under Section 132(4) of the Income Tax Act, 1961. 5. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was not provided with an opportunity to cross-examine Sh. Naresh Jain or his associates, basis whose statements, the addition under Section 153A was done. It is submitted that despite requesting for such opportunity before the Assessing Officer as well as the Commissioner of Income Tax (Appeals), no cross-examination was afforded to the Assessee, which resulted in flagrant violation of the principles of natural justice and equity. It is submitted that the assessment order as well as the consequential appellate order are liable to be quashed on this ground alone viz. intentional nonobservance of principles of natural justice. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was nowhere named by Sh. Naresh Jain or his associates, whose statements formed the basis for making additions. It is therefore submitted that the additions having been made on the basis of conjectures and surmises, ought to be quashed. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz. intentional nonobservance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 8. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 8 of 42 passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 62,65,836/under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of M/s Risa International Ltd. (a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 9) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee squarely discharged its onus of proving the identity, genuineness and creditworthiness in relation to the Long-Term Capital Gain derived by it, by filing all documentary evidence viz. contract notes, DEMAT account details, details of Securities Transactions Tax, bank details, details of broker etc. Neither such evidence was rebutted by the Assessing Officer or the Commissioner of Income Tax (Appeals), nor were they rejected / doubted. 10) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the scrip from open market, in order to derive Long-Term Capital Gain. Given such extenuating circumstances in the present case, the modus operandi as alleged in the statement of Sh. Naresh Jain (contained in the report of the DIT (Investigation) Mumbai) did not apply to the facts of the case and therefore, the additions made were liable to be quashed. 11)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant was a regular investor, and not only invested in the shares of M/s Risa International Ltd. to derive Long Term Capital Gain but also traded in it. It is submitted that while the trading profit/loss from the sale of shares of M/s Risa International Ltd has been accepted by the Assessing Officer as business income, the exemption under Section 10(38) of the Income Tax Act, 1961 with respect to the same scrip has been disallowed on a totally misconceived motion. Thus, the Assessing Officer, as also the Commissioner of Income Tax (Appeals) have erred in applying two different yardsticks for the same scrip. It is well-settled that the Revenue cannot be allowed to approbate and to probate in the same breath. 12)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in making an estimated addition of a sum of Rs. 1,87,975/as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 13)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 14) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 9 of 42 15)The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing.” IT(SS)A. No.433/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that no assessment for the year under consideration was pending, the assessing officer could not have assumed jurisdiction under section 153A of the Income Tax Act, 1961. The law in this regard is now well settled by the Hon'ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any ‘seized’ material whatsoever, much less any ‘incriminating’ material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on what incriminating material was found during the year under assessment, which formed the basis of passing order under Section 153A of the Income Tax Act, 1961. Thus, the addition made under section 153A of the Income Tax Act is invalid when there is no incriminating material to support it. 3. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that No jurisdiction could be assumed by the Assessing Officer under Section 153A of the Income Tax Act, 1961, by merely relying upon the statement of Sh. Naresh Jain and his associates, recorded under Section 132(4) of the Income Tax Act, 1961, since such statements, which were recorded much after the date of search, could not by themselves constitute incriminating material found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate the statement of Sh. Naresh Jain under Section 132(4) of the Income Tax Act, 1961. 4. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was not provided with an opportunity to cross-examine Sh. Naresh Jain or his associates, basis whose statements, the addition under Section 153A was done. It is submitted that despite requesting for such opportunity before the Assessing Officer as well as the Commissioner of Income Tax (Appeals), no cross-examination was afforded to the Assessee, which resulted in flagrant violation of the principles of natural justice and equity. It is submitted that the assessment order as well as the consequential appellate order are liable to be quashed on this ground alone viz. intentional nonobservance of principles of natural justice. 5. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was nowhere named by Sh. Naresh Jain or his associates, whose statements formed the basis for making additions. It is therefore submitted that the additions having been made on the basis of conjectures and surmises, ought to be quashed. IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 10 of 42 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz. intentional nonobservance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 29,58,183/- under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of M/s Monotype India Ltd. (a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 8. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee squarely discharged its onus of proving the identity, genuineness and creditworthiness in relation to the Long-Term Capital Gain derived by it, by filing all documentary evidence viz. contract notes, DEMAT account details, details of Securities Transactions Tax, bank details, details of broker etc. Neither such evidence was rebutted by the Assessing Officer or the Commissioner of Income Tax (Appeals), nor were they rejected / doubted. 9) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the scrip from open market in F.Y. 2010-11 and sold it in F.Y. 2016-17 ie, after holding it for about six (6) years, in order to derive Long- Term Capital Gain. Given such extenuating circumstances in the present case, the modus operandi as alleged in the statement of Sh. Naresh Jain (contained in the report of the DIT (Investigation) Mumbai) did not apply to the facts of the case and therefore, the additions made were liable to be quashed. 10) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant was a regular investor, and not only invested in the shares of M/s Monotype India Ltd. to derive Long Term Capital Gain but also traded in it. It is submitted that while the trading profit/loss from the sale of shares of M/s Monotype India Ltd. has been accepted by the Assessing Officer as business income, the exemption under Section 10(38) of the Income Tax Act, 1961 with respect to the same scrip has been disallowed on a totally misconceived notion. Thus, the Assessing Officer, as also the Commissioner of Income Tax (Appeals) have erred in applying two different yardsticks for the same scrip. It is well-settled that the Revenue cannot be allowed to approbate and reprobate in the same breath. 11)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in making an estimated IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 11 of 42 addition of a sum of Rs. 63,737/- as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 13) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1) of the Income Tax Act, 1961. (1)(c) of the Income Tax Act, 1961. 14. The assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing.” IT(SS)A. No.434/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that the assessment proceedings for the year under consideration had already been completed vide order dated 22.05.2017 under Section 143(3) of the Income Tax Act, 1961, the assessing officer could not have assumed jurisdiction under section 153A of the income tax act, 1961. The law in this regard is now well-settled by the Hon'ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any ‘seized’ material whatsoever, much less any ‘incriminating’ material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on what incriminating material was found during the year under assessment, which formed the basis of passing order under Section 153A of the Income Tax Act, 1961. Thus, the addition made under section 153A of the Income Tax Act is invalid when there is no incriminating material to support it. 3. BECAUSE on the facts and circumstances of the case and in law, the issue Pertaining to investment in shares was examined threadbare during the Course of scrutiny assessment, which culminated into the passing of the assessment order under Section 143(3) of the Income Tax Act, 1961 dated 22.05.2017 whereby the income returned by the Assessee was duly accepted. Thus, the Commissioner of Income Tax (Appeals) failed in quashing the assessment order passed under Section 153A of the Income Tax Act, 1961, and further erred in not appreciating that the Assessing Officer erroneously and illegally decided to reconsider and re-adjudicate the same issue viz. investment in shares and genuineness of LTCG claimed, de hors any fresh incriminating material seized during search. 4. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that no jurisdiction could be assumed by the Assessing Officer under Section 153A of the Income Tax Act, 1961, by merely relying upon the IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 12 of 42 statement of Sh.Naresh Jain and his associates, recorded under Section 132(4) of the Income Tax Act, 1961, since such statements, which were recorded much after the date of search, could not by themselves constitute incriminating material found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate the statement of Sh. Naresh Jain under Section 132(4) of the Income Tax Act, 1961. 5. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was not provided with an opportunity to cross-examine Sh. Naresh Jain or his associates, basis whose statements, the addition under Section 153A was done. It is submitted that despite requesting for such opportunity before the Assessing Officer as well as the Commissioner of Income Tax (Appeals), no cross-examination was afforded to the Assessee, which resulted in flagrant violation of the principles of natural justice and equity. It is submitted that the assessment order as well as the consequential appellate order are liable to be quashed on this ground alone viz. intentional no bservance of principles of natural justice. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was nowhere named by Sh. Naresh Jain or his associates, whose Statements formed the basis for making additions. It is therefore submitted that the additions having been made on the basis of conjectures and surmises, Ought to be quashed. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz., intentional nonobservance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 8. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 35,30,429/under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of M/s PFL Infotech Ltd. {a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 9. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee squarely discharged its onus of proving the identity, genuineness and creditworthiness in relation to the Long-Term Capital Gain derived by it, by filing all documentary evidence viz. contract notes, DEMAT account details, details of Securities Transactions Tax, bank details, details of broker etc. Neither such evidence was rebutted by the Assessing Officer or the Commissioner of Income Tax (Appeals), nor were they rejected / doubted. IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 13 of 42 10)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the Scrip from open market, in order to derive Long-Term Capital Gain. Given such extenuating circumstances in the present case, the modus operandi as alleged in the statement of Sh. Naresh Jain (contained in the report of the DIT (investigation) Mumbai) did not apply to the facts of the case and therefore, the additions made were liable to be quashed. 11) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant was a regular investor, and not only invested in the shares of M/s PFL Infotech to derive Long Term Capital Gain but also traded in it. It is Submitted that while the trading profit/loss from the sale of shares of M/s PFL Infotech Ltd.has been accepted by the Assessing Officer as business income, the exemption under Section 10(38) of the Income Tax Act, 1961 with respect to the same scrip has been disallowed on a totally misconceived notion. Thus, the Assessing Officer, as also the Commissioner of Income Tax (Appeals) have erred in applying two different yardsticks for the same scrip. It is well-settled that the Revenue cannot be allowed to approbate and reprobate in the same breath. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in making an estimated addition of a sum of Rs. 80,155/- as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 13) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 14)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. 15)The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing.” (2.1). These appeals have been filed after the time mentioned in section 253(3) of the Income Tax Act, 1961 (“the Act”, for short) The assessees have filed applications explaining the delay, and seeking condonation of delay in filing of aforesaid appeals. The assessees were dissatisfied with the services provided by the previous Counsel, and had to engage a new Counsel. The application for condonation of delay is supported by an affidavits of the assessees. We are satisfied with the reasons advanced by IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 14 of 42 the appellant, within the meaning of Section 253(5) of the Act, that there was reasonable cause for not presenting the appeals within the time mentioned in Section 253(3) of the Act. Therefore, we condone the delay in filing of these appeals and admit the appeals for decision on merits. (2.2) We first take up appeal vide IT(SS)A. No. 433/LKW/2023. The assessee was searched under section 132 of I.T Act because of alleged connection with Mr Naresh Jain who had allegedly facilitated bogus claim of Long Term Capital Gain (LTCG) in certain so called ‘penny stocks’ for a large number of tax payers. An amount of Rs.29,58,183/- shown by the assessee as Long Term Capital Gain on sale of shares was disbelieved by the Assessing Officer and the addition of the aforesaid amount was made under section 68 of the Act. A further addition of Rs.63,740/- was made @ 2% of sale consideration of Rs.31,87,039/- towards alleged commission allegedly paid by the assessee. The relevant portion of the assessment order is reproduced as under: - IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 15 of 42 IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 16 of 42 IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 17 of 42 IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 18 of 42 (2.3) Aggrieved, the assessee filed appeal in the office of the Ld. CIT(A). Vide impugned appellate order, the learned CIT(A) dismissed the appeal of the assessee and confirmed the aforesaid additions of Rs.29,58,183/- and Rs.63,740/-. During the appellate proceedings in the office of the Ld. CIT(A), the assessee made similar submissions. The relevant portion of the impugned order of the Ld. CIT(A), containing the submissions of the assessee are reproduced as under: - “3.3 The appellant has taken following grounds in appeal, which are as under: - (i) The Learned Assessing officer erred in law as well as on facts, in making an assessment u/s 153A of completed assessments in absence of any incriminating material for the year found during the search and not restricting the proceeding only to the seized material/evidence found during the course of search. (ii) That under the facts and circumstances of the case, the AO erred in making addition of a sum of Rs 29,58,183/for the Long Term Capital Gain claimed by the assessee on sale of certain Listed shares and STT paid u/s 68. The addition, being based on the information passed upon by the Investigation Wing Mumbai, surmise and conjecture of the AO, need to be deleted. (iii)That under the facts and circumstances of the case, the AO erred in making an estimated addition of a sum of Rs. 63,740/- for commission to have been paid to obtain the Long Term Capital Gain which has ‘been treated as bogus and need to be deleted. (iv)That under the facts and circumstances of the case, the AO erred in charging interest under sec.234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. (v) That the AO was wrong in initiating penalty proceedings under sec. 271(1)(c) of 61 the Income Tax Act, 1961. (vi) That the assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at the time of hearing. IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 19 of 42 3.4 In the column no.-15 it has been submitted that “The assessment order was received on 07/06/2021 but as the IT portal is not working so we are filing the appeal by email to the Jurisdictional CIT Appeal and will file the same once the online portal is operational. In the circumstance this appeal filed now be treated as within time.” 4.1 During the appellate proceedings the AR has submitted the written submission, which is reproduced here under: “The Appellant was covered as part of search and seizure action u/s. 132 the Income Tax Act, 1961('the Act') in the case of SAM Group on 03.01.2019. In response to notice u/s 153A dated 30.1.2020, the Appellant filed return u/s 153A on 08.04.2021 declaring total income therein of Rs 507,490/-. The assessment was completed u/s 153A r.w.s. 143(3) of Income Tax Act 1961, wherein the AO made addition u/s 68 of the Act on account of Long- Term Capital Gains on sale of shares of Rs 29,58,183/and u/s 69C Rs. 63,740/as estimated commission paid for getting bogus LTCG, in consequence thereof a demand of Rs. 34,87,935/was determined as payable by the Appellant. It is pertinent to note that the Appellant had e-filled her original return pertaining to AY. 2017-18 on 27.10.2017 and declared a total income of Rs. 507490/-. Thereafter, the return of income so filed was duly processed u/s 143(1) and the intimation order was issued on 11.11.2017 accepting the total income at Rs. 507490/-. At the outset, it must be noted that there has been no incriminating material found in the case of the Appellant (as will be elaborated in the later part of this submission), and therefore the assessment made u/s 153A of the Act for A.Y. 2017-18 (which was already processed u/s 143(1) on11-11-2017) is illegal and bad in law. Ground-1: The Learned Assessing officer erred in law as well as on facts in failing to appreciate that return was duly processed for A.Y. 2017-18, no assessment is permissible under Section 153A of the Act, de hors any incriminating material found/impounded during the course of search. Submission for Ground No 1: 1. As stated above, in the absence of any “incriminating material’ found during the course of search, which pertain to the unabated A.Y. 2017-18, no assessment can be made under section 153A of the LT. Act, 1961. Therefore, the order passed by the Assessing Officer u/s 153A is bad in law and deserves to be quashed. 2. Your kind attention is invited towards the decision of the Hon'ble Delhi High court in the case of Principal CIT, Central-2, New Delhi Vs. Meeta Gutgutia [2017] 395 ITR 526. In the said decision, the Hon'ble Court categorically observed that the invocation of Section 153A of the 1.T. Act, 1961, to reopen assessment of earlier years, in the absence of incriminating material found during search qua each assessment year is not correct. The Hon'ble High Court noted that Section 153A of the Act is titled \"Assessment in case of search or requisition\". It is connected to Section 132 which deals with 'search and seizure’. Both these provisions, IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 20 of 42 therefore, have to be read together. It was further observed that Section 153A is an extremely potent power which enables the Revenue to reopen at least six years of assessments earlier to the year of search, and is therefore not to be exercised lightly. The High Court therefore held that it is only if during the course of search under Section 132 incriminating material justifying the re-opening of the assessments for six previous years is found, that the invocation of Section 153A qua each of the AYs would be justified. 3. That, against the order of the Hon'ble Delhi High Court in Meeta Gutgutia (supra) a Special Leave Petition filed before the Hon'ble Supreme Court, which was dismissed by the Hon'ble Supreme Court while observing: - \"We do not find any merit in this petition. The Special leave petition is accordingly dismissed.\" [2018] 257 Taxman 441(SC). 4. The Hon'ble Delhi High Court in Meeta Gutgutia (supra), took cognizance of its decision in CIT v. Chetan Das Lachman Das [2012] 211 Taxman 61 (Delhi), wherein, at Para 11, it was observed that: \"41. 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.\" 5. Reliance is also sought to be placed in the case of Filatex India Ltd. v. CIT, [2014] 229 Taxman 555 (Delhi), wherein it was held that: \"31. What distinguishes the decisions both in CIT Vs. Cheten Das Lachman Dasand Filatex India Ltd Vs. CIT-IV 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\" 6. That, recently by its order dated 6th July 2015 in ITA No. 369 of 2015/Pr. CIT v. Kurele Paper Mills (P.) Ltd.), the Hon'ble Delhi High Court, declined to frame a question flaw 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 of Proesailit 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 CITA), affirmed by the ITAT, deleting the addition, was not interfered with. 7. In fact, the Hon'ble Delhi High Court in CIT (Central)v. Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi) while discussing the decision of the Rajasthan High Court in the case of Jai Steel (India) Jodhpur v. ACT (2013) 36 Taxman 523 (Raj) observed: IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 21 of 42 “33. The decision of the Rajasthan High Court in Jai Steel (India) (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 ll proviso to Section 153A of the Act, the AO Acts under his original jurisdiction, for which, assessments have to be mode; 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.” 8. Keeping in view the above cited decision of the Hon'ble Delhi High Court, in the case of Meeta Gutgutia(supra), against which the Special Leave Petition was dismissed by the Hon'ble Supreme Court of India (meaning thereby that the order of the High Court is final and duly approved by the Supreme Court), as well as a host of other judgements, no addition can be made under section 152(4) of the Act, 1990, in the absence of any incriminating material. 9........... 10............. 11....... 12.... Submission for Ground No 3: The Assessing Officer in its assessment order AO stated that \"From the investigations carried out in connection to arranged capital gains and statement of brokers recorded, it is observed that commission at 2% has been charged for providing arranged capital gains to various parties. As the assessee is one of the beneficiaries and sale consideration of Rs. 31,37,039/- which was arranged, an amount of Rs. 63,740/- i.e. 2% of Rs.31,37,039/is treated as unexplained investment for the financial year source of which remains unexplained and the same is added u/s 69C of the Act\" a) No addition u/s 69C of the Act can be made on the statement of a third party. The Delhi Bench of ITAT in the case of Bhatia Diamonds Pvt Ltd Vs. 1TO [ITAT Delhi] dated 05.04.2019 held that addition under section 69C:on the basis of statement of third party without granting opportunity of cross-examination to assessee was not valid as it amounted to violation of principle of natural justice and against the law: IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 22 of 42 b) The Ld AO interlinked the two different sections while making an addition le. Section 69 –(unexplained investment) and 69C (unexplained expenditure). However, both the Sections cannot be attracted as per the facts of the case of the Assessee. Before invoking section 69 or 69C, the condition precedent as to existence or of investment, expenditure, etc. must be conclusively established by material on record/evidence. c) The Ld AO erred in law as well as in facts of the case by first deeming the amount of expenditure on ad-hoc basis @ 3% of sale value of shares and then invoked section 69C as the source of such expenditure remains unexplained. How can the source of expenditure be explained if it has not been incurred in the first place and is merely deemed so by the AO himself? It is being brought on record that the Appellant has dealing in shares for the last several years and has shown both capital gains as well as business profit/loss from same shares in the stock market while being a registered broker for BSE and NSE. So, there was no reason for payment of any commission. It is being brought on record that the Appellant was subjected to search and no evidence for payment of any commission has been found in the course of the search. In view of the same, it is prayed that addition of estimated commission of Rs. 63,740/- made on some vague and baseless reasons without having any material on record shall be deleted.” (2.4) The assessee also pleaded during the appellate proceedings in the office of the Ld. CIT(A) that no incriminating material was found in the course of search under section 132 of the Act in the case of the assessee. This plea of the assessee was rejected by the Ld. CIT(A). The relevant portion of the impugned order of the Ld. CIT(A) is reproduced below: - “6.1 Ground no.1: The Learned Assessing Officer erred in law as well as on facts, in making an assessment u/s 153Aof completed assessments in absence of any incriminating material for the year found during the search and not restricting the proceedings only to the seized material/evidence found during the course of search. 6.2 I have carefully considered the appellant submission and case laws on which reliance has been placed. In this ground legal issue has been raised that assessment is invalid since no incriminating material was found at the time of search. For the ready reference provisions of section 153A/153C of the Act, is produced here under: “153A. Assessment in case of search or requisition—Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 23 of 42 (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return ‘required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the Previous year in which such search is conducted or requisition is made: - Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. Explanation—F or the removal of doubts, it is hereby declared that, (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 153B. Time-limit for completion of assessment under section 153A.—(1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment, (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of section 153A, within a period of two years from the end of the financial year in which the last of the authorizations for search under section 132 or for requisition under section 132A was executed; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. Explanation.—In computing the period of limitation for the purposes of this section, — (i) the period during which the assessment proceeding is stayed by an order or injunction of any court; or (ii) the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section; or - on (iii) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee of being re-heard under the proviso to section 129; or IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 24 of 42 (iv) in a case where an application made before the Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing from the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in clause (a) or clause (b) of this section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly. (2) The authorisation referred to in clause (a) and clause (b) of sub-section (1) shall be deemed to have been executed, (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer. 153C. Assessment of income of any other person.—Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A.” 6.3 On perusal of provisions of section 153A of the Act, it transpires that in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 318! day of May, 2003, the Assessing Officer shall issue notice to such person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Further assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be shall abate. Therefore, the Assessing Officer has correctly issued the notice u/s 153A of the Act for six previous years and there was no lacuna in issuing the notice. 6.4 In the case of Jitendra Virwanivs. Deputy Commissioner of Income Tax, Central Circle 1(3), Bengaluru, [2021] 129 taxmann.com 38 (Bangalore - Trib.)[30-07-2021], one of the issue was for the AYs 2009-10 to 2012-13 with regard to framing of assessment u/s. 153A of the Income-tax Act, 1961. The Hon’ble ITAT vide para 54, 55 of this order dismissed this IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 25 of 42 ground of appeal of the assessee. The para 54 and 55 is produced here under: “54, In our considered opinion, as per clause (a) of sub section (1) of section 153A, at the stage of issue of notice u/s 153A, the only requirement is to ask the assessee to file return of income for relevant six years covered by section 153A and after filing of return of income, the assessment to be made by the AO will be assessment or reassessment has to be determined afterwards and not at the time of issue of notice u/s 153A. In this view of the matter, we find no merit in this technical objection raised by the assessee and the same is rejected. 55. Accordingly, the action of the AO in issuing notice u/s. 153A in these assessment years 2009-10 to 2012-13 is justified. This ground of the assessee is therefore dismissed.” 6.5.1. In the case of Commissioner of Income Tax v. Orma Marble Palace (P.) Ltd. [2019] 110 taxmann.com 435 (Kerala) in IT APPEALNO. 19 OF 2011, six question of law has been raised: Whether the Tribunal was correct in having affirmed the order of the CIT (i (Appeals) confining the additions made with respect to under-invoicing of sales to the assessment year 2000-01 when there was indicated a consistent practice of such under-invoicing? Whether the Tribunal was correct in having held that there could be no (i) estimation carried out for the other years in the block period when there were no documents seized to evidence such under-invoicing having been carried out in the earlier years? Whether the Tribunal was correct in having affirmed the view of the CIT (Appeals) that the balance-sheet submitted by the assessee before the Bank as (ii) on 31.08.1995 cannot be relied on for reason of that document having not been recovered on search and the figures reflected therein being anomalous when compared with the figures in the balance-sheet filed by the assessee as on the close of the respective assessment years? (iv) AO at the rate of Rs.5 lakhs per year on the unaccounted sales which could have been carried out by the assessee? (v) Ought not the Tribunal have sustained the undisclosed interest income which was based on the assessee's own entries in a Diary recovered on search? (vi Had not the Tribunal acted in a totally perverse manner in deleting the additions made by the A.O? 6.5.2 In order dated 10-01-2019 vide para no-23 it has been held by the Hon'ble High Court of Kerala as under: “23. We have already found that there is lack of material insofar as the prior years of the block period, but the same has been held to be inconsequential, in so far as the A.O being conferred with the power to make assessment in the best of his judgment. The AO was perfectly justified in carrying out an assessment on the best of judgment, making estimations on the basis of the materials recovered. As has been found in Hotel Meriya, it cannot be assumed that a dealer who practises suppression would retain the materials disclosing suppression, for long years; in the instant case a block period of 6 years. There is also no IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 26 of 42 presumption insofar as the suppression having occurred only in the year in which the search was conducted. If at all, the presumption is otherwise insofar as the special procedure prescribed under Chapter XIV-B to assess undisclosed income for a block period, comprising of assessment years prior to the date of search, on the basis of the materials recovered at the search and other evidences available before the AO relatable to such material. At the risk of repetition, it has to be noticed that the block assessment prescribed under Chapter XIV-B also confers power on the AO to make assessment On the best of judgment. Question Nos.(i) and (ii) are answered in favour of the Revenue and against the assessee. We hence set aside the order of the Tribunal and the first appellate authorit an confirm the under-invoicing of sale bills at Rs. 90,50,924/-.” 6.5.3 Against the above order of Hon’ble High Court the Assessee SLP has been dismissed by the Hon’ble Apex Court. 6.6.1. Even in the case of Commissioner of Income-tax (Central)-Ill v. Kabul Chawla 2015] 61 taxmann.com 412 (Delhi), the Hon'ble HIGH COURT OF DELHI vide order dated 28-08-2015, one of the legal position propounded that notice u/s 153A has to be issued for six previous years of search. Once a search takes place under section 132, notice under section 153A(1) will have to be mandatorily issued to the person searched (i) requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. Assessments and reassessments pending on the date of the search shall (ii) abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and (ii) 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 assessment years ‘in which both the disclosed and the undisclosed income would be brought to tax’. Although section 153A does not say that additions should be strictly made on (iv) 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, it does not mean that the assessment ‘can ), arbitrary or made without any relevance or nexus with the seized materia Obviously an assessment has to be made under this section only on the basis of seized material.’ In absence of any incriminating material, the completed assessment Can be reiterated and the abated assessment or reassessment can be made. The wrong (V) ‘assess’ in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word ‘reassess’ to complete assessment proceedings. insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. (vi) Only one assessment shall be made separately for each IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 27 of 42 assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some (vii) 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. 6.6.2 There is no doubt that notice has to be issued u/s 153A or 153C, after complying with the requirements as prescribed under the law. Therefore in this present case jurisdiction has been correctly assumed by the Assessing Officer by issuing notice u/s 153A, as search under section 132 was carried out on 03.01.2019, therefore, there is no lacuna in issuing notice u/s 153A of the Act. 6.7.1 In the case of Canara Housing Development Co v. Deputy Commissioner of Income-tax, Central Circle-i(1), Bangalore [2014] AS taxmann.com 98 (Karnataka) vide order dated 25-07-2014, the Hon'ble HIGH COURT OF KARNATAKA, while deciding the issue related with 263 has held that once proceedings under section 153A is initiated, pursuant to search, order of assessment in respect of Six years stands reopened and, therefore, in absence of any valid assessment order in existence, revision proceedings under section 263 cannot be initiated in such a case. It has been further held that condition precedent for application of section 153A is that there should be a search under section 132; however, initiation of proceedings is not dependent on any undisclosed income being unearthed during such search. 6.7.2..... 6.7.3 6.8.... 6.9... 6.19 The Hon'ble Allahabad Bench has decided the same issue vides order dated 04.05.2022 in the case of ACIT, Central Circle, Allahabad vs Sunshine Infrastate Private Limited, Allahabad (PAN-AANCS9247H)in the ITA. No.103/Alld/2017 in favour of the Revenue.” (2.5) On merits, the Ld. CIT(A) accepted the version of the Assessing Officer and confirmed the aforesaid additions of Rs.29,58,183/- and Rs.63,740/-, dismissing the assessee’s appeal. The relevant portion of the impugned order of the Ld. CIT(A) in this regard is reproduced as under: - “7.1 Ground No, 2 : That under the facts and circumstances of the case, the AO erred in making addition of a sum of Rs. 29,58,183/for the Long Term Capital Gain claimed by the assessee on sale of certain Listed shares and STT paid u/s 68. The addition, being based on the information IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 28 of 42 passed upon by the Investigation Wing Mumbai, surmise and conjecture of the AO, need to be deleted. 7.2 During the assessment proceedings, the Assessing Officer noted that the appellant carried out sale transactions in respect of shares of M/s Monotype India (Monot), in the year. The learned Assessing Officer looked into the various details of the said transaction. The appellant submitted that the resultant LTCG (Long Term Capital Gains) flowing out of the impugned transaction was exempt under section 10(38) of the IT Act. The Assessing Officer further noted that the move to acquire the shares of M/s Monotype India (Monot) a predetermined move which had the sole aim to bring back unaccounted money. Considering the financials and fundamentals of the company M/s Monotype India (Monot), in the context of no significant corporate announcements or any big orders of purchase, the Assessing Officer found the price movements of the scrip M/s Monotype India (Monot), quite abnormal compared to the rise of the index i.e. BSE Sensex during the corresponding period. Add to this, the learned Assessing Officer analyzed the information received from the Investigation Wing of the Department. The Assessing Officer further analyzed the statement of Shri Naresh Jain deposed before the Authorized Officer in which various other persons gave details of the Penny Stocks which were used for facilitating prearranged bogus LTCG/STCL (Long Term Capital Gain /Short Term Capital Loss) along with ‘jama-kharchi’ clients. The Assessing Officer has noted that M/s Monotype India (Monot) was one such Penny Stock which was used for such purposes as admitted by the above referred deponent. Thus, considering all the facts and circumstances, the Assessing Officer reached the conclusion that everything i.e. from purchase of stock to receiving of cheque for its sale was done in a systematic and organized manner to give it a real and legal colour by a group of persons (being the operators). He, therefore, on consideration of the circumstantial evidences, natural human conduct and preponderance of probabilities reached a conclusion that the apparent in this case was not real and that these financial transactions were no real but sham ones and the entire edifice was a colourable device used to evade tax. In view the fact that the appellant failed to prove the source of the credit and genuineness of the credit of the entire sum received in the garb of alleged capital gains, the Assessing Officer proceeded to add the entire sum of Rs 29,58,183/- (Net Long Term Capital Gain) as unexplained cash credit under section 68 of the IT Act. 7.3 During the appellate proceedings, the appellant submitted her written submission vide letter dated 18.02.2023 in support of her claim. The appellant primarily contends that as the purchase of the impugned shares have been effected by payment of cheque through banking transaction and as the sales are corroborated by contract notes, the AQ Was legally not justified in treating the transaction as a sham transaction, It is therefore, contended that the impugned LTCG flowing out from the transaction should be treated as exempt under section 10(38) of the Act. Appellant’s contentions were carefully considered and submissions were meticulously gone through. 7.4.1 During the assessment proceeding, the appellant also submitting copy of bank statement in the name of the appellant, contracts notes; demat accounts, ledger accounts as the evidence towards alleged purchase/sale of the shares of M/s Monotype India (Monot). 7.4.2 The company M/s Monotype India (Monot) was incorporated 30 September 1974. IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 29 of 42 7.5 The appellant's decision to purchase the shares when the financial results of M/s Monotype India (Monot) was not at all splendid with no or meager chance of ‘any lucrative gains at the stage of purchase of its shares was a predetermined action on the part of the appellant leading to the objective to acquire-4TCG by ways of dubious methods. This predetermined action with specific intention was one of the circumstantial evidence leading to the conclusion that LTCG was not a genuine one. 7.6 I further observe the statement made by Shri Naresh Jain as referred to by the Assessing Officer. The weight of the evidence in the face of unequivocal admission by the concerned accommodation provider that the shares of M/s Monotype India (Monot) has been rigged through in-paper- only jama-kharchi companies to provide LTCG/STCL through arranged trading, cannot be brushed aside. Similarly, the astronomical increase in the share price of M/s Monotype India (Monot) without any ostensible reason either by dint of its financials or by dint of the future probability of abnormal profitability through orders of purchase or agreements/contracts as against the Sensex cannot be lost sight of. The fact of abnormal and arranged increase in the share price has actually been corroborated by the statement of persons as named above during the action by the Investigation Wing of Income Tax department clearly evident. The share movement of M/s Monotype India (Monot) as extracted from the website of BSE and trading price pattern of M/s Monotype India (Monot) is identical to penny stock. The price pattern between years 2013 to 2016 is in bell shaped as evident from the graph as seen on the BSE Platform. Further, it is noted from the graph that when organized work of entry providing through Long Term Capital Gain was finished, share prices are continuing at lowest level since then. These facts justify that in share rigging there were involvements of various persons as stated in the Investigation report and Assessing Officer has also discussed in the assessment order. On perusal of graph it is clear that the volume of trade jumps manifold immediately when the market prices of shares reach at optimum level so as to result in LTCG assured to the beneficiaries. This maximum is reached around the time when the initial allottees have held the shares for one year or little more and thus, their gain on sale of such shares would be eligible for exemption from income Tax. On perusal of graph, it is clear that the price of the share falls very sharply after the shares of LTCG beneficiaries have been off loaded through the pre-arranged transactions on the Stock Exchange floor/portal to the Short Term Loss seekers or dummy paper entities. 7.7.1 Thus it is clear that the share of M/s Monotype India (Monot) has been rigged through in-paper-only jama-kharchi companies to provide LTCG/STCL through arranged trading, cannot be brushed aside. Similarly, the astronomical increase in the share price of M/s Monotype India (Monot) without any ostensible reason either by dint of its financials or by dint of the future probability of abnormal profitability through orders of purchase or agreements/contracts as against the sensex cannot be lost sight of. The fact of abnormal and arranged increase in the share price has actually been corroborated by the statement of persons as named above during the action by the Investigation by the Investigation Wing of Mumbai clearly evident. The price pattern between year 2013 to 2016 it is evident that when organized work of entry providing through Long Term Capital Gain was finished, share price is continuing at lowest level since then. Today share of M/s Monotype India (Monot) is at Rs 0.28 These facts justify that in share rigging there were involvements of various companies as stated in the Investigation report of Investigation Wing of Mumbai. IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 30 of 42 7.7.2 On perusal of graph at the BSE platform, it is clear that the volume of trade jumps manifold immediately when the market prices of shares reach at optimum level so as to result in LTCG assured to the beneficiaries. This maximum is reached around the time when the initial allottees have held the shares for one year or little more and thus, their gain on sale of such shares would be eligible for exemption from Income Tax. Further it is clear that the price of the share falls very sharply after the shares of LTCG beneficiaries have been off loaded through the prearranged transactions on the Stock Exchange floor/portal to the Short Term Loss seekers or dummy paper entities. Thus the facts justifies that the appellant was part of this pre-arranged transactions. 7.8 Thus, on the basis of human probabilities and conducts, the picking of shares of a company by the appellant and subsequent sale of such shares leading to astronomical gains is highly coincidental and well-nigh impossible without there being any insider information or prearranged trading. 7.9 In the case of Commissioner of Income Tax Vs. P. Mohanakal2 (SC), it has been held by the Hon’ble Apex Court that — “The doubtful nature of the transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee has been duly taken into consideration by the authorities below. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence.\" 7.10 In identical circumstances, the Nagpur bench of the ITAT in the case of Sanjay Bimalchand Jain Vs ITO in I.T.A. No. 61/Nag/2013 observed as below “All the authorities below, in particular the Tribunal, have observed in unison that the assessee did not produce any evidence to rebut the presumption drawn against him~.under Section 68 of the Act, by producing the parties in whose name the amounts in question had been credited by the assessee in his books of account. In the absence of any cogent evidence, a bald explanation furnished by the assessee about the source of the credits in question viz., realisation from the debtors of the erstwhile firm, in the opinion .of the assessing officer, was not Satisfactory. It is well settled that in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income tax as the income of the assessee of that previous year, if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the assessing officer, not satisfactory.\" (Vijay Kumar TalwarVs. CIT)(SC). “I have heard both the counsel and perused the records. The facts of the case clearly indicate that the assessee has indulged in penny stock transaction. The assessee is a senior citizen. On purported advice of an Income-tax Consultant, she purchased shares of two penny stock Calcutta based companies at Rs.5.50 per share and Rs.4/ - per share respectively in 2003. Both the companies had no standing and the AO their existence of dubious characters. Both purportedly with other company, namely, Khoobsurat Ltd. and the assessee received Shares in Khoobsurat Ltd. in lieu of her shares in earlier companies. The assessee was able to sell the shares at the price of Rs.486.55 and R.485.65 respectively in 2005. The purchase by the assessee of share of two unknown companies whose details were not at all known by the assessee can by no stretch of IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 31 of 42 imagination be said to be an investment transaction. The company whose shares rose from Rs.5/to Rs.485y. within extremely short span has no worthwhile position and balance sheet and is not at all dividend paying company. The broker company through which the shares were sold did not respond to AO’s letter regarding the names and address and bank account of the person who purchased the shares sold by the assessee. In these circumstances it is a clear case where the assessee had indulged in bogus and dubious share transaction meant to account for the bogus and undisclosed income in the garb of long term capital gain. In this regard I may gainfully refer to the decision of Hon’ble jurisdictional High Court in the case of Major Metals Ltd. vs. Union of India and others in Writ Petition No. 397 of 2011 vide order dated 22nd February, 2012. The Hon’ble jurisdictional High Court in this case has held that a company cannot command disproportionate and huge share premium and such receipt of bogus share application money even though through banking channel can be held to be assessee’s undisclosed income received in the garb of unjustified share application money. In the present case | find that there is no justification whatsoever that the shares of an unknown company of Rs.5/- can be sold within two years’ time at Rs.485/without there being any reason on record. This unexplained spurt in the value of unknown company shares is beyond preponderance of probability. It has been held by Hon'ble Apex Court in the case of Durga Prasad More and Sumati Dayal that the tests of human probabilities have also to be applied by the authorities below. In the case of Sumati Dayal 214 ITR 801, it was held that during the year 1970-71 (pertaining to the assessment year 1971-72) between April 6, 1970, and March 20,1971, the appellant claims to have won in horse race a total amount of Rs.3,11,831/- on 13 occasions out of which ten winnings were from jackpots and three were from treble events. Similarly in the year 1971-72, the appellant won races on two occasions and both times the winning were from a jackpot. These receipts were tested on the touch stone of human probability and it was found that apparent was not real. That it was contrary to statistic al theory and experience of the frequencies and probabilities. The exceptional luck enjoyed by the assessee was held to be beyond preponderance of probability. Hence, the Hon’ble Apex Court has affirmed the view that it would not be unreasonable to infer that the appellant had not really participated in any of the races except to the extent of purchasing the winning tickets after the events presumably with unaccounted funds. When the present case is examined on the touch stone of above case law, it is clear that these transactions of the assessee can by no stretch of imagination be considered as investment transactions. They are only make believe transaction. Hence | do not find any infirmity in the revenue taxing the receipt in this regard. The entire amount of the so called receipt of share sales could well also be treated as unexplained credit u/s 68 of the I.T. Act as it has all the ingredients of attracting the rigours of the said section. Section 68 of the I.T. Act provides that where any sum is found credited in the books of the assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the AO satisfactory, the sum so credited may be charged to income tax as income of the assessee of that year. In the present case the assessee’s explanation that the said receipt is on account of investment in shares whereby share of Rs.5/of unknown company has jumped to Rs.485/- in no time has been totally rejected by the authorities below. The assessee has not at all been able to adduce cogent evidences in this regard. There is no economic or financial justification for the sale price of these shares. The IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 32 of 42 so called purchaser of these shares has not been identified despite efforts of the AO. The broker company through which shares were sold did not respond to queries in this regard. Hence the fantastic sale price realisation is not at all humanly probably, as there is no economic or financial basis, that a share of little known company would jump from Rs. 5/- to 485/-, In these circumstances, I do not find any infirmity in the orders of the authorities below. Accordingly I affirm the same and decide the issue against the assessee.” 7.11 It is noteworthy to mention that the above referred decision has since been affirmed by the Hon’ble Nagpur bench of the Bombay High Court in INCOME TAX APPEAL NO. 18/2017 in the case of SANJAY BIMALCHAND JAIN L/H SHANTIDEVI BIMALCHAND JAIN Vs THE PR.COMMISSIONER OF INCOME TAX-I, NAGPUR & ANOTHER. 7.12 On identical circumstances, the Hon’ble Mumbai Tribunal in the case of Ratnakar M. Pujari Vs ITO in t .T.A. No.995/Mum/2012 observes as follows “We have considered the rival contentions and also perused the material available on record including the case laws cited by the parties. We have observed that no scrutiny assessment has been framed for the impugned assessment year by the Revenue u/s 143(3)of the Act originally, while based on information received from Addl.CIT(Inv.), Unit-V, Mumbai that the assessee is indulging in non-genuine and bogus capital gains from transaction of sale and purchase of shares of M/s Shiv Om Investment and Consultancy Limited which was penny stock company and pre-dated contract notes were issued by the Brokers to manipulate and introduce long term capital gains in favour of the assessee which are exempt from tax u/s 10(38) of the Act leading to escapement of income from taxation ; which led to issue of notice dated 07-04-2008 u/s 148 of the Act which is within four years from the end of the relevant assessment year , the receipt of afore-stated information from Addl. CiT(Inv) in our considered view is fresh and tangible material which has live link and nexus with the formation of belief that the income of the assessee has escaped assessment, and keeping in view that the original assessment was not framed u/s 143(3) of the Act and no opinion was ever formed by the AO and hence there is no change of opinion keeping in view the ratio of decision of Hon’ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers Private Limited (2007) 291 ITR 500(SC), we uphold the reopening of the assessment u/s 147/148 of the Act. We have observed that the assessee has made purchases of 4000 shares of M/s Shiv Om Investment and Consultancy Limited for Rs.4,080/on 11th May, 2004 in the previous year relevant to the assessment year 2005-06. The said shares were purchased in off market transactions for which payments were made in cash. The said purchases have been treated as bogus and sham transactions by the Revenue as it is alleged that certain brokers have manipulated and issued pre-dated contract notes which even did not have details such as time of contract, trade number , transaction details etc and payments were also made in cash by the assessee against such sham and bogus purchase with the objective of introducing by manipulating tax free exempt long term capital gains u/s 10(38) of the Act leading to escapement of income from taxation , and the said findings of the AO with respect to bogus and sham purchases have become conclusive and final as the assessee has not challenged the findings of the learned AO made in the assessment order dated 24.12.2009 passed by the AO u/s 143(3) read with Section 147 of the Act in the first appeal filed with learned CIT(A) for the assessment year 200506 and hence the finding of the AO has attained finality. Since the said findings of the AO with respect IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 33 of 42 to purchases of 4000 shares of M/s Shiv Om investment and Consultancy Limited in assessment year 2005-06 have become conclusive having attained finality, the sales in consequence thereof the sham and bogus purchases cannot be accepted as genuine. The assessee has explained that the purchases were backed with contract notes of the brokers and payments were made in cash will not be of any help at this stage as the said finding of the AO treating the purchase of shares as sham and bogus in the assessment year 2005-06 has attained finality. Since, purchases are held to be bogus and sham which has attained finality, the sale Consequence thereof whereby payments are received through cheque of; Shares being sold through stock exchange are not of any help to the assessee for claiming the exemption as long term capital gains as the allegation of the Revenue is that the assessee has in collusion with the Brokers has manipulated and camouflaged the entire transactions of sale and purchase of shares in getting issued pre-dated contract notes for purchases of shares for which payments were also made for these purchase in cash and hence these purchases never existed at that relevant time . It is the allegation of the Revenue that the entire sale and purchase of shares were manipulated by the assessee in collusion with the brokers in order to earn tax free exempt long-term capital gains on sales of shares u/s 10(38) of the Act whereby unaccounted cash of the assessee has been introduced in disguise in lieu of sale proceeds of shares. Keeping in view facts and circumstances of the case and as per our discussions and reasoning as set out above, we find no infirmity in the orders of the learned CIT(A) which we uphold and sustain. The assessee relied upon the decision of the ITAT , Hyderabad in the case of ITO v. Smt Aarti Mittal (2014) 41 taxmann.com 118(Hyd.-Trib) whereby the Tribunal has arrived at the decision that sale and purchase was genuine even though purchase was off-market transaction which was routed not through stock exchange but backed by physical delivery of shares which was later de-mated and under the circumstances the ITAT held the transactions as genuine in nature and the assessee claim was found to be in order, but in the instant case there is a conclusive and final finding of fact that purchases of shares were bogus and sham as was held by the Revenue in the assessment year 2005-06 which has not been dislodged so far as the assessee accepted the said findings which became conclusive, thus the facts in the instant case are distinguishable as against the relied upon case of the assessee in Smt Aarti Mittal (supra) on that ground itself. Similarly, contentions of the assessee that the Revenue has accepted the gains on sale of 1500 shares of M/s Shiv Om Investment and Consultancy Limited in the succeeding assessment year 200708 as long term capital gains while processing of return u/s 143(1) of the Act is not of help to the assessee as every assessment year is separate assessment year and merely because the Revenue has not selected the case under scrutiny by issuing notice u/s 143(2) of the Act and framing detailed scrutiny u/s 143(3) of the Act instead chose to process the return u/s 143(1) of the Act without scrutiny will not entitle the assessee to get the well reasoned assessment orders and appellate orders of the learned CIT(A) dislodged in the absence of the cogent material and evidences to demolish the findings of the authorities below. The Revenue in the case of the assessee’s brother has also declared the purchase and sale of shares as bogus but brought to tax, gains arising from sale of shares as short term capital gains . This in our considered view, is also not of help as the Revenue in the instant case has come to the conclusive finding which attained finality that the transactions of purchase of shares are sham and bogus transactions camouflaged with an intention to evade taxes . We order accordingly.” IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 34 of 42 7.13 In similar circumstances, the Hon'ble Ahmedabad Tribunal in the case of Kamalchand Nathmal Lunia Vs. ITO, Ward-5(2), Surat in ITA number ITA 436/Ahd/2013 observed as follows “After hearing both the sides and considering the totality of the facts and Circumstances of the case, we are also of the opinion that the purchase as well as the sale transactions of the scrips in question was not genuine. The reason for taking this view is that the purchase rate had not tallied with the rate as per BSE website and that the purchases have also been made in cash. Only paper transactions have been made because there was no evidence of physical delivery of the shares. The AO was right in asking the details of the dividend if any received during the holding period. But no such information was provided at any stage of proceeding. Even, the entries in the Demat Account were not sacrosanct because the AO had found on investigation that those were all ‘off market” transactions. It was also noted by the AO that Hon'ble {TAT Mumbai Bench had held that those companies were nothing but entry providers. Rather, it was proved beyond doubt that Mahasagar Group Was engaged in the business of issuance of fraudulent bills. We therefore, affirm the findings of the Revenue Authorities and dismiss the ground of the assessee.” 7.14 The Hon'ble ITAT Chandigarh rendered decision in the case of Shrj Abhimanyu Soin Vs ACIT, Circle-Vil, Ludhiana, vide ITA No.951/Chd/2016 Dated 18.04.2018, wherein the issue before the Hon'ble ITAT was same. There was acquisition of shares of non-descript companies, then their merger with some other companies, followed by the sale of the shares of this new company resulting in huge capital gains, and finally, claim of exemption u/s.10(38) of the Act. In that case, the assessee purchased shares of M/s. Sharp Transports Ltd. (STL), a company based at Kolkata. M/s. STL thereafter merged with M/s. Oasis Cine Communication Ltd. (OCL) along with another company M/s. SakshiVyapar Ltd.(SVL). The assessee was allotted 27200 shares of OCL against the original 800 shares held by him in M/s. STL. These shares were sold at a whopping amount of Rs. 83 lakhs during May 2010. As against the initial investment of Rs.272000/in the shares of M/s STL in December 2008, the assessee received Rs.83 lakhs in May 2010, within a short span of one and a half years. The question before the Hon'ble Tribunal was whether the unnatural LTCG @3072% over a period of one and half years from the purchase of shares of an unlisted company, whose net worth was also not known to the assessee at the time of purchase, is beyond the business logic and whether it is a valid reason to make addition towards undisclosed income. The other question was whether on facts the whole process of trading in shares is depicted just to avoid tax liability and whether the addition towards undisclosed income should be upheld. The Hon'ble ITAT replied both the questions in favour of Revenue. The ITAT observed that the AO had brought out certain glaring facts which cannot be ignored and which are clearly indicative of suspicious nature of transactions. It was observed that the assessee failed to satisfactorily explain the reason for investment in such shares, whose net worth was not known to him. It was observed that 3 huge capital gain of Rs.80.25 lakhs accrued within 17 months of buying the shares of a non-descript company which was incorporated in 2007 and got merged in 2009 with another company. The Hon'ble ITAT remarked that it cannot be a case of any intelligent investment or a simple case of tax planning to gain benefit of long term capital gains. It was further remarked by the ITAT that the earnings @ 3072% within a period of 17 months breaks the ceiling of any record of return on investment, which is beyond the human probability and beyond the business logics of any enterprise. By making such observations, the Hon'ble ITAT, relying on the decisions of Hon'ble Apex IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 35 of 42 Court in the case of Sumati Dayal Vs. CIT and CIT Vs. Presicison Finance Pvt. Ltd. 208 ITR 465 (Cal.), dismissed the appeal of the assessee. The addition made by the AO u/s.68 of the Act was upheld by the Hon'ble ITAT. 7.15 In a decision dt. 12.10.2018, the Hon’ble ITAT Banglore had an occasion of adjudicating a similar issue in the case of Smt. M.K. Rajeshwari Vs. ITO, ITA No.1723/Bang./2018. In the said case the issue involved was disclosure of super profits as LTCG from dealing in penny stocks, and claiming exemption u/s 10(38) of the Act on such profits. In the said case the assessee acquired the share of M/s. Mahavir Advanced Remedies. Though the said script was listed on the stock market, the assessee purchased the shares offline through an intermediary. The AO observed that the financial worth of the company was very poor and there was no prudency in making investment in such shares. There were also reports of SEBI on manipulation of the said script. Within a short span of two years the assessee sold shares at an amount which was 43 times the cost price. It was observed by the AO that such stupendous increase in the share price was not based on any commercial principles nor any market factors. The AO finally concluded that the entire exercise was carried out with a malafide intention to evade taxes. The CIT(A) confirmed the addition made by the AO. He observed as under : ............ 7.16....... 7.17...... 7.18...... 7.19...... 7.20..... 7.21..... 7.22.... 7.23... 7.24.... 7.25... 7.28 Considering the above discussion and submission of the appellant on this ground, I am of view that order of the Assessing Officer on this ground did not call any interference. Hence, this issue has no force. 7.29 Therefore appeal on this ground is dismissed. 8.1 Ground No. 3 : That under the facts and circumstances of the case, the AO erred in making an estimated addition of a sum of Rs. 63,740/for commission to have been paid to obtain the Long Term Capital Gain which has been treated as bogus and need to be deleted. 8.2 In the ground no 2 it has been discussed that how the planning has been made for earning the alleged Long Term Capital Gain for introducing the un-accounting income in garb of same. For arrangement of this type of IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 36 of 42 entries like providing LTCG the operators charged their fees. This varies from 2 to 5 percentages as on the basis of facts of the particular case. In this case 2% commission has been rightly applied by the Assessing Officer; therefore I am in agreement with the decision of the Assessing Officer. Thus the addition of Rs. 63,740/- is hereby confirmed. Therefore appeal on this ground is dismissed.” (2.6) Aggrieved again, the assessee filed appeal in Income Tax Appellate Tribunal (ITAT). The appeal was heard on 23.04.2025. The relevant portion of the order-sheet is reproduced as under: - “In this case, hearing was earlier fixed on 21.04.2025. However, the matter could not be heard because the Ld. CIT DR for Revenue stated that she could not prepare the case due to paucity of time. After ascertaining her convenience, the matter was adjourned to 23.04.2025 as she intimated that she was going to be available for rest of the week. However, today the Ld. CIT(DR)was not present in the court room. Instead, the Ld. Sr.(DR)for Revenue made request for adjournment stating that the Ld. CIT (DR)was not available. Yesterday, also hearings could not take place in respect of cases assigned to LD CIT (DR), as she was not present in Court Room, yesterday also. Further, on 17.04.2025 no Departmental Representative was present in the court room, as a result of which no appeals could be heard including some in which last Opportunity was given by way of hearing on 17.04.2025. It is not known why alternate arrangements for representation on behalf of Revenue are not being made when the Ld CIT (DR) is/was not available today and on the aforesaid dates. The Bench feels that the tendency on the part of the Ld Departmental Representative to abstain from appearing from hearing, without ensuring that alternate arrangements are made for representation on behalf of Revenue, is unhealthy and must not be accepted. The Ld Counsel for assessee stated that issues in dispute were covered in favour of the assessee by order of the Hon’ble Supreme Court, and in view of the foregoing, no useful purpose would be served by delaying the disposal of the appeal by adjourning the case one more time, especially as hearings have been adjourned a number of times in the past. In view of the foregoing the appeal was heard.” (2.7) At the time of hearing, the Ld. Counsel for the assessee submitted that search in the case of the assessee was conducted on the basis of suspicious regarding the assessee’s alleged connection with Mr Naresh Jain and the suspicious that the assessee had allegedly claimed bogus Long Term Capital Gain in collusion with the aforesaid Mr Naresh Jain. The Ld. Counsel for the assessee submitted that no incriminating material was found in respect of these allegations and suspicions; and yet the issue was raised by Revenue in statements recorded during and after search conducted under section 132 of I. T. Act and causing IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 37 of 42 vexation and harassment to the assessee; additions were also made on these issues. He furthe submitted that the issue as to whether addition 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 furthermore 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 still furthermore submitted that in the present appeal, 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), and Smt. Shashi Agarwal (supra), he contended that the additions made in the assessment orders should be deleted. He further submitted that despite no incriminating material being found in the case of the assessee, in search under section 132 of the Act, yet statement was recorded regarding the baseless, unfounded and untrue suspicious and allegation regarding claim of bogus Long Term Capital Gain in collusion with the aforesaid Mr Naresh Jain. Moreover, he submitted that the Long Term Capital Gain earned by the assessee was bonafide and genuine, and was earned after holding the stocks for a number of years. He contended that even if there was any manipulation by the aforesaid Mr Naresh Jain in the price movement of the stocks, even then, the assessee being a genuine investor who earned Long Term Capital Gain as a reward for holding the shares for a long period of many years, without IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 38 of 42 being party to any manipulations in price movement of shares; there was no cause for any adverse view against the assessee. He also contended that the additions made by the Assessing Officer in the assessment order, and the impugned order of the Ld. CIT(A) confirming the aforesaid additions, caused undue harassment and was nothing but abuse of legal process by Revenue. The Ld. Counsel for the assessee relied on the following case laws and instruction of Central Board of Direct Taxes: S. No Name of the case Hon'ble Court Citation 1 Abhisar Buildwell (P) Ltd Supreme Court 150 taxmann 257-2023 2 CBDT Instruction CBDT Instruction 1 of 2023 3 Kishore Kumar Mahapatra Supreme Court 298 taxmann 648 – SC-05/04/2024 4 Kishore Kumar Mahapatra Orrisa High Court (2024) 162 taxmann.com 4 (Orissa) 5 Adaman Timber Industries Supreme Court 62 taxmann.com 3 – 2015 6 Hemantkumar mansukhlal Soni, HUF ITAT Ahemdabad 167 taxmann.com 157-2024 7 Shobit Gupta ITAT Delhi (2024) 168 taxmann.com 599 8 Nilesh Jain HUF Madhya Pradesh HC (2024) 163 taxmann.com 229 9 Divyaben Prafulchandra Parmar Gujarat High Court (2024) 169 taxmann.com 473 (3) The Ld. Sr. Departmental Representative for Revenue did not make any submissions stating that the matter was to be argued by the Ld. CIT-DR. We have already mentioned this in foregoing paragraph no. 3 of this order. We have perused the materials 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 Abhisar Buildwell (P.) Ltd (supra), on the issue whether additions can be made in a search assessment in the absence of any incriminating material found during search. 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 IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 39 of 42 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 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 IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 40 of 42 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 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.” IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 41 of 42 (3.1) 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 relying 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 of Rs.29,58,183/- and of Rs.63,740/-. In view of the foregoing, the aforesaid impugned order dated 02.03.2023 of the Ld. CIT(A) is set aside and the Assessing Officer is directed to delete the aforesaid additions of Rs.29,58,183/- and of Rs.63,740/-. Since we have directed that the aforesaid additions be deleted, the remaining grounds and issues, and the submissions made by the Ld. Counsel for the assessee become merely academic in nature and do not require any adjudication. Therefore, we decline to make any order with regard to them, or with regard to the merits of the various additions made. Grounds of appeal of the assessee are allowed for statistical purposes. (4.2) The facts in respect of aforesaid appeals in IT(SS)A. Nos. 431, 432, 434 & 435/LKW/2023 are similar, mutatis mutandis, to the facts of the aforesaid appeal vide IT(SS)A. No.433/LKW/2023. The facts being similar in pari materia, these four aforesaid appeals vide IT(SS)A. Nos. 431, 432, 434 & 435/LKW/2023 also deserve to be allowed as the same reasoning would apply mutatis mutandis in the remaining appeals vide IT(SS)A. Nos. 431, 432, 434 & 435/LKW/2023. Accordingly, the impugned appellate IT(SS)A Nos. 431 & 435/LKW/2023 IT(SS)A. No.432 to 434/LKW/2023 Page 42 of 42 orders of Ld. CIT(A) in these four appeals are also set aside, and the Assessing Officer is directed to delete all the additions made in the corresponding assessment orders of the respective assessees. In the result, all the appeals of the assessees are allowed for statistical purposes. Order pronounced in the open Court on 28/04/2025. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [ANADEE NATH MISSHRA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28/04/2025 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 "