TMI Blog2018 (4) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted on 29.05.2012. It is not the case of the Principal CIT that Assessing Officer failed to take into consideration any incriminating material unearthed during first search on 29.05.2012 and has failed to make any investigation on it or make any additions / disallowances thereon. The case of the Principal CIT is simply that during second search on 02.03.2016, the investigation wing has found fault with the share capital raised by the assessee company for Assessment Year 2009-10. It should be noted that the Assessing Officer has framed assessment u/s 153A on 30.03.2015 as per the law laid down by the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) and other High courts/Apex Court as stated above which according to us is the correct view or at the most can be definitely termed as a plausible view. Therefore, the view taken by the Assessing Officer cannot be held to be erroneous order and prejudicial to the interest of the revenue as held by the Hon ble Supreme Court in the case of Malabar Industries vs. CIT (2000 (2) TMI 10 - SUPREME Court). - Decided in favour of assessee - ITA No. 2519/Kol/2017, ITA No. 2520/Kol/2017 An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was under a bona fide belief that the impugned order of Pr. CIT was not appealable before this Tribunal, since they were not advised by their Tax Consultants about this legal right. Later on, when a Senior Lawyer advised them to file an appeal, the assessee s immediately took steps to file the appeals. Therefore, the delay caused, we note, was because of the wrong advice of the Tax Professional, for which assessee s cannot be penalized. For the ends of justice, we condone the delay and admit the appeal for hearing. 4. These three appeals filed by the different assessee s emanate from a common search conducted at their premises, involves common and identical issues, therefore, appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, since facts remain similar and the grounds are identical, we take ITA No.2520/Kol/2017 i.e. M/s Cliff Trexim Pvt Ltd,as lead case for deciding the above appeals en masse. 5. The grounds of appeal raised by the assessee in the lead case (ITA No.2520/Kol/2017) are as follows: 1. That on the facts and in the circumstances of the case, the Ld. Pr. CIT having derived satisfaction on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer u/s 153A r.w. section 143(3) of the Act. The brief facts apropos the aforesaid issue are that a search and seizure operation under the provisions of section 132(1) of the Act was conducted on Banktesh Group on 29.05.2012 and subsequent dates. The assessee s are part of the Banktesh Group. In the instant lead case, the assessee filed its return of income for A.Y 2009-10 u/s 139 of the Act on 25.09.2009 showing total income of ₹ 4,28,560/-. A notice u/s 153A of the Act was issued on the assessee on 25.06.2014 calling for filing return of income. In response to such notice, the assessee filed its return of income u/s 153A of the Act on 15.12.2014 declaring total income of ₹ 4,28,560/-. The assessment was completed on 30.03.2015 at total income of ₹ 7,73,840/-. 7. Thereafter, the ld. Principal CIT found fault with the assessment order passed by the AO, by takingnote that accommodation entries in the form of bogus share capital have been taken by different assessee s of the said group with the help of different accommodation entry operators. According to him during search conducted on 02.03.2016, entry operators have confirmed that the allotme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the corporate veil be lifted. Therefore, the ld. Principal CIT rejected the contention of the assessee and held that order passed by the AO dated 30.03.2015 for A.Y 2009-10 is erroneous and prejudicial to the interest of Revenue and, therefore, he directed the AO to make necessary examination on the issue and pass a fresh assessment order. 10. Not being satisfied with the order of the ld. CIT(A), the assessee is in appeal before us. 11. The ld. Senior Counsel assailing the decision of ld. Principal CIT drew our attention to show-cause notice (SCN) issued by the ld. Principal CIT dated 04/09.11.2016 and stated as under: Assessment for the A.Y 2009-10 u/s 153A of the Income Tax Act, 1961 in the case of M/s. Cliff TreximPvt. Ltd. which is a part of Banktesh Group was completed on 30.03.2015 by the DCIT, Central Circle 3(2), Kolkata. On analysis of assessment records, it is observed that in the year under consideration, the assessee raised share capital and premium to the tune of ₹ 10.40 crore. During the assessment proceeding, the assessee furnished the list of investors who subscribed in shares of the assessee company. The assessee furnished the supportin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCN u/s 263 of the Act (placed at Pages 17 18 of the P/B) as to why assessment order for A.Y 2009-10 (unabated year) should not be set aside for de novo assessment. 13. The ld. Counsel pointed out that the sole satisfaction behind SCN was that during search conducted on 02.03.2016 on Banktesh group and investigation it was found that accommodation entries in the form of bogus share capital have been taken by the group companies with the help of different known accommodation entry operators and one of such accommodation entries were allotment of shares of ₹ 10.40 crores by the appellant-company. It was further alleged in the SCN that statements recorded from the entry operators during search operation also confirmed the said position. 14. In this connection, it is submitted by the AR that a show-cause notice must be accompanied with the material on which the opinion of the authority (Ld. Pr. C.I.T.) is based. Further, such SCN should have documents on the basis of which the Ld. Pr. C.I.T. has arrived at the conclusion that the assessment order u/s.153A/143 of the Act for unabated A.Y. 2009-10 was erroneous and prejudicial to the interests of revenue. Absence of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment on the ground of illness depicted a complete disregard of the principles of natural justice. The period of limitation prescribed by section 269UD had expired. This was not a fit case for remand. The proceedings were liable to be quashed. 17. It was brought to our notice that on further reference to the Hon'ble Apex Court by the Appropriate Authority, the Hon ble Apex Court in their judgment reported in (2001) 249 ITR 554 (SC) affirming the judgment of Hon'ble Allahabad High Court held that a SCN must be accompanied with the material on which the opinion of the said authority is based. Further the same should have documented on the basis of which the said authority has arrived at any conclusion. Absence of these is a gross violation of natural justice. The order pronounced, to quote, is as under: There has been so gross a breach of principles of natural justice in this case that the High Court (see [1996 (220 ITR 509 (All)], was right in setting aside the order on that count and not giving consideration to remitting the matter. [Emphasis given] 18. Attention of ours was drawn to the decision of ITAT, Delhi in the case of Cargill India Pvt. Ltd. vs. DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted the default by failing to furnish the requisite information in time. This would enable him to file a proper reply in defence. Without detail of default, no adequate reply could be furnished. The contention of the learned Departmental representative that specific clauses of rule 10D(1) under which information was not furnished within time and default was committed were mentioned in the penalty order is of no avail. The mention of the above detail in the order is of no use. The details were required to be mentioned in the show cause notice so as to afford reasonable and adequate opportunity to the assessee to meet out the case and serve the purpose of the notice. For the above defect also, the penalty proceedings are held to be vitiated and liable to be cancelled. [Emphasis ours] 19. According to AR, a perusal of the above decisions including that of the Hon'ble Apex Court, which is law of the land, brings out the necessary requirements of a valid SCN and the same are in equal force applicable to the facts and circumstances of the instant case of the appellant. To sum up, these are - a. The SCN must be accompanied with the material on which the opinion of the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d below: The legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee or without giving an opportunity of cross-examination, if the addition is made, the same is required to be deleted on the ground of violation of the principles of natural justice. This is clearly stated by the Hon'ble Supreme Court in the case of Kishinch and Chellaram (supra) wherein it is stated that before the Income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine. 10. Without any prejudice to the above submissions, undersigned would further state that the Ld. Pr. C.I.T. on analysis of assessment records derived satisfaction for issuing the impugned show-cause notice u/s. 263 of the Act that no detailed investigation was carried out at the time of assessment regarding genuineness of introduction of share capital. The expression record as used in s.263 of the Act is comprehensive enough to include the whole record of evidence on which the original assessment order is based. At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above position clear, reliance was placed on the decision of jurisdictional High Court in the case of CIT v. S.M. Oil Extraction Pvt. Ltd. (1991) 190 ITR 404 (Cal). For better appreciation of the ratio of the decision, facts in nutshell in the said case were that the ITO while making the assessment u/s.143(3) accepted the value of plant machinery as reflected in the balance sheet in toto. During the course of assessment proceeding, the A.O. himself referred the matter for valuation to the Valuation Officer, New Delhi. The valuer made the valuation at ₹ 16,12,000/- as against ₹ 9,39,449/- shown in the balance sheet. However, before such report of the Valuation Officer was received by the A.O., the assessment order u/s.143(3) was passed accepting the assessee's valuation. On the above facts, the Ld. C.I.T. invoked jurisdiction u/s.263 of the Act and set aside the said assessment order for passing fresh order. On appeal, the Hon'ble Tribunal held that the material (valuation report) which was not in existence at the time the assessment was made and came into existence afterwards could not form part of the records at the assessment stage and cannot be taken into c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the Hon'ble High Court allowed the departmental appeal, but the ratio of the decision is squarely applicable to the case of the present appellant. In view of the above decision of Hon'ble jurisdictional High Court, according to ld AR the Ld. Pr. C.l.T. acted beyond his jurisdiction in having directed revision of assessment and the same is liable to be quashed. 23. According to ld AR, despite the aforesaid facts and settled position in law, the appellant filed a reply against the said show cause notice u/s 263 of the Act vide letter dated 16.01.2017 objecting to the impugned proceeding on the premise that the show cause notice alleges that the A.O completed the assessment u/s 153A of the Act without making enquiry and investigation in respect of share capital of ₹ 10.40 crores received by the appellant- company during the relevant assessment year. The appellant submitted in its reply that during the course of search seizure operation, no incriminating document in respect of share capital raised by the appellant-company or assessee group as a whole was found or seized. The case of the appellant was centralized and selected for assessment under the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation that the share capital raised by the assessee company is accommodation in nature. In this regard our attention was drawn to the decision of the Hon'ble Apex Court in the case of Vinod Solanki vs. Union of India Another in Civil Appeal No.740 of 2008 dated 18/12/2008 and in particular paras 14, 22 34 of the said judgment where it has been held that the entire burden to prove that the confession was voluntary in nature is on the department. Further, the Hon'ble Apex Court was followed by the Hon'ble Bombay High Court in the case of CIT vs. Uttam Chand Jain in Income Tax Appeal No. 634 of 2009 confirmed the order of the Tribunal, wherein the Tribunal had given the finding that the statement of one Mr. Trivedi to the effect that he was not doing actual business of trading and manufacturing of diamonds and that the transactions reflected in his books of account were merely accommodation entries given to various VDIS declarants was only a general statement and not based on any independent evidence gathered prior to or during the course of reassessment proceedings and, on the other hand, the entries found recorded in the books were considered as genuine and the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company. So there was no need to make any enquiry. 29. According to the ld. Counsel, in the aforesaid notice u/s 263 of the Income Tax Act, 1961, it has also been stated that the proper enquiry was not made. The method and process of proper enquiry has not been mentioned in the Income Tax Act, 1961. It is left at the discretion of the assessing officer. In respect of enquiry being made by the learned assessing officer, we are citing the following judgments from which it is crystal clear that it is not judicious to revise the order u/s 263 of the Income Tax Act, 1961 on the plea of proper enquiry. In the case of Commissioner of Income Tax, Kolkata V/s M/sLotus Capital Financial Services Ltd., ITAT 125 of 2012 in which the company had raised share capital and the assessment was passed u/s 143(3) of the Income Tax Act, 1961, the Hon'ble CIT revised the order u/s 263 of the Income Tax Act, 1961 on the plea that proper enquiry was not made in spite of the fact that the learned A.O. had made proper enquiry. The Hon'ble ITAT Kolkata Bench held that proceedings u/s 263 of the Income Tax Act, 196l was bad in law. The Hon'ble High Court of Kolkata has also confirmed the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the Assessing Officer is unsustainable in law. In the case of Hycron India vs. Asstt. CIT (2004) 82 TTJ (JD) 450 it has been held that assessment having been made by AO after application of mind to the facts of the case, exercise of revisional jurisdiction by CIT was invalid. 30. From the above decisions, according to ldAR, that it shall not be proper on the part of the Learned Commissioner of Income Tax to revise the order u/s 263 of the Income Tax Act, 1961 on the ground of proper enquiry. The term proper enquiry has not been mentioned in the Income Tax Act, 1961 and since the Learned Assessing Officer is a quasi-judicial authority, the mode of enquiry and nature of enquiry should not have been questioned by the higher authority. 31. According to ld AR, section 263 of the Income Tax Act, 1961 does not visualize a case of substitution of the judgment of the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority wrong or erroneous as commonly understood. Such situations, however, would not be facets of an erroneous decision in so far the meaning of the said expression as appearing in section 36 of the Act is concerned. Judicial opinion is unanimous that the expression as appearing in section 36 must be confined to jurisdiction errors otherwise there would be no distinction between the different aspects of the corrective power conferred by the provisions of the Act for application in different situation. No distinction between the power to reopen an assessment and the appellant or revisional power or the power to rectify would exist. There would be an intermingling of the powers resulting in confusion and uncertainty, a situation definitely not contemplated by any statute. 33. In Bongaigaon Refinery and Petrochemicals Ltd. v. Union of India (2006) 287 ITR 120 (Gau), the Guwahati High Court held as under (page 130): The above judicial pronouncements therefore adumbrate the essence and extent of the revisional jurisdiction of an authority akin to the Commissioner of Income-tax under the Act. Not only is the exercise of the suomotu power conceptualised therein hedged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the Commissioner purported to exercise the power at the suggestion of the audit department. This position would be clear if one refers to the averment made in paragraph 4(d) of the affidavit-in-opposition, by one Madan Mohan Lal, filed on behalf of the respondents. From the facts it is apparent that the Additional Commissioner did not exercise his discretion and judgment. In the aforesaid view of the matter, on the basis of the principles enunciated by the Supreme Court in the case of Sirpur Paper Mills Ltd. v. Commissioner of Wealth-tax [1970] 77 ITR 6 (SC), this notice cannot also be sustained. The notice, therefore, issued on the 24th of March, 1972, is hereby quashed and set aside. 36. Hence, according to ld AR, proceeding u/s 263 of the Income Tax Act, 1961 is not in accordance with law in light of above mentioned decisions of Sirpur Paper Mills (supra). 37. Further, the ld AR submitted that merely because of the fact that assessing officer's order is erroneous, a Commissioner of Income Tax cannot interfere. Similarly, because an order of the assessing officer is prejudicial to the interests of the revenue, it will not attract revisional jurisdiction under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer'. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an A.O. adopts one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the A.O. has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the A.O. is unsustainable in law. 40. Further, in respect of the verification of identity and genuineness of share capital money raised by the assessee company, the ld. AR submitted that the assessee company has furnished all the necessary details and documents in respect of share capital raised by it such as name, address, PAN of the share applicants etc. and the necessary details and documents were filed of the share applicants company before AO. 41. The ld AR submitted that it is evident from the above discussions that no incriminating material was found during the sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant-company: i) Principal CIT Vs. Kurele Paper Mills P. LTD. [2016] 380 ITR 571 (Del]- Held, dismissing the appeal, that the order of the Commissioner (Appeals) revealed that there was factual finding that no incriminating evidence related to share capital issued was found during the course of search as was manifest from the order of the Assessing Officer. Consequently, it was held that the Assessing Officer was not justified in invoking section 68 of the Income-tax Act, 1961, for the purposes of making additions on account of share capital. There was nothing to show that the factual determination was perverse. [Emphasis given] 44. The Supreme Court has dismissed the SLP filed by the Department in [2016] 380 ITR (St.) 64] ii) ACIT Vs. Budhiya Marketing Pvt.Ltd. (2015) 44 ITR(Trib) 617 (Kol) - held as under:- Where an assessment order has already been passed for a year or years within the relevant six assessment years, then the Assessing Officer is duty bound to reopen those proceedings and reassess the total income taking note of the undisclosed income if any, unearthed during the search . The expression unearthed during the search denotes that in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A : Held, dismissing the appeal, that incriminating material in the seized material was a pre-requisite before power was exercised under section 153C read with section 153A of the Act. The Department had not shown any incriminating material unearthed either during the search or during the requisition or even during the survey which was or might be relatable to the assessee. The Assessing Officer had made disallowances of the expenditure, which were already disclosed, for one reason or the other, but such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances were upheld by the Commissioner (Appeals) and that there was no infirmity in the order of the Appellate Tribunal deleting the disallowances. 46. CIT vs. Kabul Chawla (2015) 380ITR 573 (Del), wherein it has been held as under: ( v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word assess in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word reassess to completed assessment proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o revise such assessment. In substance, what the A.O. could not do directly, the Ld. C.I.T. cannot do indirectly. In support of the said settled position, following further reliance is placed before the Hon'ble Bench: a) Jai Steel (India) vs. ACIT (2013) 259 CTR 281 (Raj) The provisions of sections 153A to 153C cannot be interpreted to be a further innings for the Assessing Officer and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of an abated proceedings and reassess has been used for completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that since no addition could have been made on the issue of share application money, the assessment order could not be regarded as erroneous. Affirming the decision of the ITAT, the Hon'ble Delhi High Court in the said case held as under by stating that since AO could not have made addition on account of share application money, the assessment order was not erroneous and CIT could not have exercised jurisdiction u/s 263 of the Act: Held, dismissing the appeal, that the Tribunal had held that the order of the Assessing Officer could not be regarded as erroneous even if the Assessing Officer had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition had been made on account of the reasons for reopening which were recorded before issue of notice under section 118 of the Act. It had held that the Assessing Officer could not have made an addition on account of the share application money as no addition had been made on account of fixed deposits of ₹ 20 lakhs. The tribunal had noticed and recorded that in the reasons for reopening it was mentioned that the assessee had made investment in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Tata Metaliks Ltd. vs. CIT in ITA No.301 of 2005 dated 22.09.2014. Therefore, according to him, judgment rendered by the Delhi High Court in the case of CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del) cannot come to the rescue of the assessee. The ld. CIT(DR) vehemently opposed the appeals and does not want us to interfere in the order of the ld. Principal CIT. 50. We have heard both the parties and perused the materials available on record, we note that there was a search u/s 132(1) of the Act which was conducted against the assessee company on 29.05.2012 (hereinafter referred to the first search ) triggering section 153A proceedings against the assessee which proceedings culminated in the AO framing order u/s 153A/143(3) passed on 30.03.2015, which order of the AO has been interfered by the ld. Pr. CIT exercising his jurisdiction u/s 263 of the Act, which action of the ld. CIT is under challenge before us. Before this first search, we note certain important facts which are germane to decide the lis before us. We note that the assessment year under consideration is Assessment Year 2009-10. It is an undisputed fact that the original return of income was filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to exercise his power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer s order was passed on incorrect assessment of fact; or (ii) incorrect application of law; or (iii)Assessing Officer s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and re-assessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the total income of the aforementioned six years in separate will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. : i) BiswanathGarodiaVs.DCIT (2016) 76 taxmann.com81 ii) CIT Vs.ContinentalWarehousinhg (NhavaSheva) Ltd (2015 374 ITR 645). iii) Jai Steel (India) Jodhpur Vs. ACIT (2013) 259 CTR 281 iv) CIT Vs.Deepak Kumar Aggarwal (2017) 398 ITR 586 v) Principal CIT Vs.DipakJashvantalaPanchal (2017) 397 ITR 253. vi) Principal VIT vs.Lalit Jain (2017) 384 ITR 543 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigation carried out by the investigation wing after the second search on 02.03.2016. In this context, it would be appropriate to reproduce the again the show-cause notice issued by the Principal CIT which is as under: OFFICE OF THE PR. COMMISSIONER OF INCOME TAX, CENTRAL, KOLKATA 2 Aayakar Bhawa Poorva, 110, Shantipally, E M Bye Pass, Kolkata 700 107. F.No. Pr.CIT/Central II/KOL/263/2016-17/6186 Dated: 04/11/2016 To The Principal Officer, M/s. Cliff Trexim (P) Ltd. 57, Burtolla Street, Kolkata 700 007. Sir, Sub: Show Cause Notice u/s 263 of the I.T. Act, 1961 in the case of M/s. Cliff Trexim (P) Ltd..., (PAN-AABCC0961E) for the A.Y 2009-10. Please refer to the above. Assessment for the A.Y 2009-10 u/s 153A of the Income Tax Act, 1961 in the case of M/s. Cliff Trexim Pvt. Ltd. which is a part of Banktesh Group was completed on 30.03.2015 by the DCIT, Central Circle 3(2), Kolkata. On analysis of assessment records, it is observed that in the year under consideration, the assessee raised share capital and premium to the tune of ₹ 10.40 crore. During the assessment proceeding, the assessee furnished the list of investors wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in the year under consideration, i.e A.Y 2009-10, the assessee has raised share capital and premium to the tune of ₹ 10.40 crores. (iii) During the assessment proceedings, the assessee furnished the list of investors who subscribed in shares of the assessee company. (iv) The assessee furnished the supporting documents regarding share transactions of investors companies (v) But no detailed investigation was carried out at the time assessment regarding genuineness of introduction of share capital (vi) On 02.03.2016 another search was conducted against the Banktesh Group by DDIT(Investigation), Unit-2, Kolkata (vii) During the search (second search) post search investigation, it was found that accommodation entries in the form of bogus share capital have been taken by different group of companies by the said group with the help of accommodation entry operators and that the allottee companies are bogus and non-existing. (viii) The statement of entry operators were also recorded during search and seizure operation which confirmed the finding of the investigation wing that in lieu of commission they provided accommodation entry in the form of share capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bscribed in shares of the assessee company. (iv) The assessee furnished the supporting documents regarding share transactions of investors companies (v) But no detailed investigation was carried out at the time assessment regarding genuineness of introduction of share capital 60. From a perusal of the above facts reveal that ld. Principal CIT is finding fault with the AO in not conducting detailed enquiry about the share capital introduced into the assessee company. Though in the same breath, the Principal CIT admits that assessee has produced all relevant documents before the AO in respect to the share capital. However, the ld. Principal CIT missed the most important fact that A.Y 2009-10 was not pending before the Assessing Officer on the date of first search on 29.05.2012, so it is an unabated assessment and the AO could have only reiterated the assessment crystallized as per intimation forwarded by the Department u/s 143(1) dated 25.11.2011 wherein the Department accepted the returned income filed by the assessee on 25.09.2009, because there was no incriminating material unearthed/seized during search (first) on 29.05.2012. It is very important to take note of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Banktesh Group of Companies (ix).In view of the aforesaid facts, the Pr. CIT is of the view that assessment completed on 30.03.2015 may be erroneous in so far as it is prejudicial to the interest of the Revenue. 63. From the reading of the aforesaid facts taken note by the Principal CIT, it is evident that the sheet anchor on which the Principal CIT based his foundation to find fault with the Assessing Officer is emanating from the second search which happened on 02.03.2016 based on which investigation report has been made wherein the share capital raised by the assessee company for Assessment Year 2009-10 is under suspicion/cloud. So, the Principal CIT refers to the second search which happened on 02.03.2016 and the investigation report thereafter made by the investigation wing which is subsequent and obviously a development after framing the assessment order by the Assessing Officer dated 30.03.2015. The Assessing Officer cannot be said to be a clairvoyant, who could have forecasted or foreseen that a second search would take place on 02.03.2016 and thereby some material/oral/evidence would be collected by the investigation wing a year before i.e. on 30.03.2015 when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that the very same issue was before the Hon ble Delhi High court in Kabul Chawla (supra) wherein also the issue of 143(1) intimation and the expiry of time to issue 143(2) notice by Assessing Officer before the date of search was also adjudicated and thereafter only the law was laid down by the Hon ble High Court of Delhi, so the issue raised by the ld. CIT(DR) is no longer res integra and therefore, has no merit. The Hon ble Calcutta High court s order in Tata Metaliks Ltd. is distinguishable on facts and pertained to filing of revised return of income in cases where assessee received intimation u/s 143(1) of the Act and is not in conflict with the view of Hon ble Delhi High Court in Kabul Chawla (supra) which is on 153A proceedings after search is conducted by the Department. 67. Moreover, it has to be remembered that Principal CIT cannot do indirectly what he could have done directly. The said proposition of law has been laid in a similar case by this Tribunal in the case of M/s Ujjal Transport Agency vs. CIT, Central-II in IT(SS) No.58/Kol/2013 Assessment Year 2007- 08 wherein it has held as under: 16. Having held that the scope of the proceedings u/s.153A in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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