SHRI ROBIN R. GOENKA, HUF,AHMEDABAD V. THE ASSTT. COMMISSIONER OF INCOMETAX, CENTRAL CIRCLE-1(2), , AHMEDABAD

CO 5/AHD/2023

AI Insights

The case involves multiple appeals and cross objections related to the assessment years 2016-17 and 2017-18, concerning the assessee, Robin R Goenka (HUF). The appeals were filed by the Assistant Commissioner of Income Tax against the orders of the CIT(A), which had partly allowed the assessee's appeals against the additions made by the AO on account of bogus sale of penny scrips. The main legal contention revolved around whether the additions made by the AO were justified in the absence of incriminating material found during the search operations conducted under Section 132 of the Income Tax Act, 1961. The tribunal examined the applicability of Section 153A of the Act, particularly in the context of unabated assessment years where no incriminating material was unearthed during the search.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470537 (ITAT-AHMEDABAD)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Other Referred Cases: PCIT vs. Abhisar Buildwell P. Limited, PCIT vs. Meeta Gutgutia, CIT vs. Kabul Chowla, PCIT vs. Meeta Gutgutia (2018) 96 taxmann.com 468 (SC), CIT vs. Kabul Chowla (2015) 61 taxmann.com 412
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B. P. SRIVASTAV
• Assessee Lawyers: TUSHAR HERMANI; PARIMALSINH B. PARMAR
• Keywords: Set aside; Block assessment; Bogus
• Section: 143(2); 132; 153A

Judgement Text

"IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 1 of 9 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER IT(SS)A Nos.8/Ahd/2023 & 9/Ahd/2023 Assessment Years: 2016-17, 2017-18 Assistant Commissioner of Income Tax, Central Circle – 1(2), Ahmedabad. Vs. Shri Robin R Goenka (HUF), Sur No.207/20, FP. No.271/2 Sankalp House, B/h. Rajpath Club, Bodakdev, Ahmedabad – 380 054. [PAN – AAEHR 8684 P] IT(SS)A Nos.70/Ahd/2023 & 71/Ahd/2023 Assessment Years: 2016-17, 2017-18 Assistant Commissioner of Income Tax, Central Circle – 1(2), Ahmedabad. Vs. Robin Ramavtar Goenka, Plot No.3, Sankalp House, Nr. Rajpath Club, Bodakdev, Ahmedabad – 380 054. [PAN – AFAPG 9631 E] C.O. Nos.5 & 6/Ahd/2023 (In IT(SS)A Nos.08/Ahd/2023 & 09/Ahd/2023) Assessment Years: 2016-17, 2017-18 Shri Robin R Goenka (HUF), Sur No.207/20, FP. No.271/2 Sankalp House, B/h. Rajpath Club, Bodakdev, Ahmedabad – 380 054. [PAN – AAEHR 8684 P] Vs. Assistant Commissioner of Income Tax, Central Circle – 1(2), Ahmedabad. (Appellants) (Respondents) Assessee by Shri Tushar Hermani, Sr. Advocate & Shri Parimalsinh B. Parmar, AR Revenue by Shri B.P. Srivastav, Sr. DR Date of Hearing 18.02.2025 Date of Pronouncement 05.03.2025 IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 2 of 9 O R D E R PER BENCH: IT(SS)A Nos.08 & 09/Ahd/2023 are appeals filed by the Revenue and C.O. Nos.05 & 06/Ahd/2023 are Cross Objections filed by the assessee against the consolidated order dated 28.11.2022 passed by the CIT(A)-11, Ahmedabad for the Assessment Years 2016-17 & 2017-18. IT(SS)A Nos.70 & 71/Ahd/2023 are the appeals filed by the Revenue against the consolidated order dated 29.03.2023 passed by the CIT(A)-11, Ahmedabad for the Assessment Years 2016-17 & 2017-18. As the issue involved in these appeals are common, all the matters were heard together and are being disposed of vide this common order for the sake of convenience. 2. The Revenue has raised the following grounds of appeal :- IT(SS)A No.08/Ahd/2023 for Assessment Year 2016-17 “1. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in giving relief to the assessee by holding that no incriminating materials were found with regard to the issue on which additions were made in the assessment order because an SLP on this issue is pending before the Hon’ble Supreme Court ? 2. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition on account of bogus sale of penny scrip amounting to Rs.27,32,939/- on technical ground, rather than going to the merits of the case. 3. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition, despite the case of the assessee falls under the exceptions laid down in the CBDT’s amendment to para 3 of the Circular No.23 of 2019 vide F.No.279/Misc./M-93/2018-ITJ(Pt.) dated 06.09.2019. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 3 of 9 IT(SS)A No.09/Ahd/2023 for Assessment Year 2017-18 “1. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in giving relief to the assessee by holding that no incriminating materials were found with regard to the issue on which additions were made in the assessment order because an SLP on this issue is pending before the Hon’ble Supreme Court ? 2. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition on account of bogus sale of penny scrip amounting to Rs.21,33,941/- on technical ground, rather than going to the merits of the case. 3. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition, despite the case of the assessee falls under the exceptions laid down in the CBDT’s amendment to para 3 of the Circular No.23 of 2019 vide F.No.279/Misc./M-93/2018-ITJ(Pt.) dated 06.09.2019. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” IT(SS)A No.70/Ahd/2023 for Assessment Year 2016-17 “1. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the additions made in the assessment order, relying on the decision of Hon’ble Gujarat High Court in the case of Saumya Construction without appreciating the facts that there is no restrictive provision s per Section 153A, for the AO to assess or reassess the income of the assessee only on the basis of the incriminating material, 2. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made of Rs.1,22,11,499/- u/s.68 of the I.T. Act, made on account of payout on bogus sale of penny stock. 3. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 4 of 9 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” IT(SS)A No.71/Ahd/2023 for Assessment Year 2017-18 “1. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the additions made in the assessment order, relying on the decision of Hon’ble Gujarat High Court in the case of Saumya Construction without appreciating the facts that there is no restrictive provision as per Section 153A, for the AO to assess or reassess the income of the assessee only on the basis of the incriminating material, 2. In the facts and on the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made of Rs.27,71,702/- u/s.68 of the I.T. Act, made on account of payout on bogus sale of penny stock. 3. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 2.1 The Assessee in his Cross Objections has raised the following grounds:- C.O. No.05/Ahd/2023 for Assessment Year 2016-17 “1. The learned CIT(A) has erred in law and on the facts of the case in confirming the assessment order framed u/s.143(3) r.w.s.153A(1)(b) of the Act in the hands of the appellant based on documents/information found and seized from the premises other than the searched persons’ premises. Under the facts and circumstances of the case, order u/s.153A of the Act is without jurisdiction and therefore bad in law.” C.O. No.06/Ahd/2023 for Assessment Year 2017-18 “1. The learned CIT(A) has erred in law and on the facts of the case in confirming the assessment order framed u/s.143(3) r.w.s.153A(1)(b) of the Act in the hands of the appellant based on documents/information found and seized from the premises other than the searched persons’ premises. Under the facts and circumstances of the case, order u/s.153A of the Act is without jurisdiction and therefore bad in law.” IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 5 of 9 3. Firstly, we are taking up IT(SS)A No.08/Ahd/2023 filed by the Revenue for the Assessment Year (A.Y.) 2016-17. The assessee filed return of income for the Assessment Year 2016-17 on 05.08.2016 declaring loss of (-) Rs.1,53,01,894/- under the head Short Term Capital Loss which was requested to be carried forward. A search under Section 132 of the Income Tax Act, 1961 was conducted on 30.10.2018 in the case of Sankalp Group including the assessee at various premises. During the course of search, residential premises of the assessee were covered under Section 132 of the Act. Therefore, in view of the provisions of Section 153A(1)(b) of the Act, proceedings under section 153A of the Act were initiated. Notice under Section 153A of the Act was issued on 07.02.2019 requiring the assessee to file the return of income for the year under consideration. In response to the aforesaid notices under Section 153A of the Act, the assessee filed return of income for the A.Y. 2016-17 on 11.03.2019 declaring loss of Rs (-) 1,53,01,894/- under the head Short Term Capital loss which was requested to be carried forward. The Assessing Officer issued statutory notices under Section 143(2) of the Act and under Section142(1) of the Act for which the assessee has responded and filed the details. 3.1 The Assessing Officer, on the basis of information received, required the assessee to prove the genuineness of the Short-Term Capital Gain shown on the scrip of Kushal Tradelink. After considering the submissions filed by the assessee, the Assessing Officer observed that as per the investigation report, Kushal Tradelink Limited is involved in the activities of manipulating share market price by synchronising to generate and provide bogus capital gain and loss to the beneficiaries. The Assessing Officer from page no.29 onwards in the Assessment Order has given the details of cash transactions by Kushal Group in the receipt of bogus Long Term Capital Gain benefits to beneficiaries. The assessee has taken Short Term Gain in trading of Penny Scrip to avoid tax on real taxable income relating to Penny Scrip of Kushal Tradelink as the assessee brought 26000 shares through Broker Khajanchi & Gandhi Stock Broking Pvt. Ltd. which has value of Rs.21,03,603.90 and sold value is at Rs.27,32,939/- for the A.Y. 2016-17. Thus, on 03.09.2015 there was gain of Rs.6,29,335/- for the same scrip but as per finding of the Assessing Officer the Short Term Capital Gain of Rs.6,29,335/- was pre-determined and, therefore, the Assessing IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 6 of 9 Officer made addition of Rs.27,32,939/- on account of bogus sale of Penny Scrip of Kushal Tradelink Private Limited. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. Sr. DR submitted that the ld. CIT(A) was not right in holding that there is no incriminating material found with regard to the issue on which the additions were made in the Assessment Order and relied upon the decision of PCIT vs. Abhisar Buildwell P. Limited – (2003) 454 ITR 212 (SC). The Ld. DR further submitted that the CIT(A) was not right in deleting the addition on account of bogus sale of penny scrip on technical ground rather than going to the merits of the case. 6. The Ld. Sr. Counsel relied upon the order of the CIT(A) and submitted that there was no incriminating material and it is an unabated year. 7. We have heard both the parties and perused all the relevant material available on record. It is undisputed fact that both the assessment years A.Y.2016-17 & A.Y. 2017-18 are unabated years. It is pertinent to note that no documents were seized in the course of search at the premises of the assessee and that the additions made by the AO in these years are not based on any incriminating material found in the course of search. The contention of the Ld. DR is that there was incriminating material found in case of Kushal Tradelink & Sankalp Group, which pertained to the assessee. However, it is seen from the assessment order that the AO had merely referred to certain information received in the case of assessee. We do not find reference of any incriminating material pertaining to the assessee found from the premises of Kushal Tradelink or Sankalp Group or any other third party. In the absence of reference of any incriminating material found in the course of search in the assessment order, we cannot accept the proposition that the addition was made on the basis of incriminating material found in the course of the search of a third person. 7.1 The ld. CIT(A) has rightly held that for unabated assessment years the additions cannot be made while passing order under Section 153A of the Act, if such additions are not based on the material found during the search. The ratio laid down by the Hon’ble Supreme Court in the case of PCIT vs. Meeta Gutgutia (2018) 96 IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 7 of 9 taxmann.com 468 (SC) and CIT vs. Kabul Chowla decided by the Hon’ble High Court of Delhi (2015) 61 taxmann.com 412 is squarely applicable. In fact, the Hon’ble Supreme Court in the case of Abhisar Buildwell P. Limited (supra) as well, has asserted this principle. The Hon’ble Supreme Court held in that case, in no uncertain terms, that no addition can be made in respect of completed assessments in the absence of any incriminating material. The conclusion as recorded by the Apex Court in Para 14 of the order in the case of Abhisar Buildwell (supra) is found to be 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 fulfilment of the conditions IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 8 of 9 as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. 7.2 The essence of the judgement is that the incriminating material found during the search gives the AO the jurisdiction to assess or reassess the ‘total income’ u/s 153A of the Act of the unabated/completed assessment. In the absence of any incriminating material unearthed during the search the AO would not have the jurisdiction to proceed in the unabated/completed year(s) only on the basis of other material. Since in the current year there was no reference in the assessment order, to any incriminating material found in the course of search, we are of the considered opinion that the AO had no jurisdiction to make addition in the unabated year, only on the basis of ‘other material’. Therefore, the ld. CIT(A) has rightly held that the Assessment Order itself is bad in law. The Ground No.-3 taken by the Revenue pertains to filing of appeal in respect of the cases covered in the exception to the CBDT Circular and this ground is not at all connected with the legality or the merit of the addition. Therefore, the appeal of the Revenue in IT(SS)A No.8/Ahd/2023, is dismissed. 8. As regards IT(SS)A No.9/Ahd/2023, the facts are identical to that of IT(SS)A No. 8/Ahd/2023 and hence dismissed. 9. IT(SS)A No.70/Ahd/2023 and IT(SS)A No.71/Ahd/2023 are also identical to that of IT(SS)A No. 8/Ahd/2023. Hence, both these appeals filed by the Revenue are also dismissed. 10. As regards Cross Objections No.5 & 6/Ahd/2023 filed by the assessee, we don’t find any merit therein. The ld. CIT(A) did not confirm any addition as made by the AO in the assessment order. Therefore, the ground taken by the assessee in the CO is found to be incorrect and, therefore, dismissed. IT(SS)A Nos.8, 9, 70 & 71/Ahd/2023 & C.O. Nos.5 & 6/Ahd/2023 (Assessment Years: 2016-17 & 2017-18) ACIT vs. Robin R Goenka (HUF) Page 9 of 9 11. In the result, all the four appeals filed by the Revenue as well as the Cross Objections filed by the assessee, are all dismissed. Order pronounced in the open Court on this 5th March, 2025. Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 5th March, 2025 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "