TMI Blog2017 (12) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... We hold that the assessment framed u/s 143(1) of the Act for the Asst Year 2010-11, which was unabated / concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly the addition made on account of share capital u/s 68 of the Act is hereby directed to be deleted. - Decided in favour of assessee. - I.T.(SS)A No. 91/Kol/2017 And C.O. No. 85/Kol/2017 - - - Dated:- 1-12-2017 - Shri N.V.Vasudevan, JM And Shri M.Balaganesh, AM For The Department : Shri Goulean Hangshing, CIT DR For The Assessee : Shri S.M. Surana, AR ORDER Per M.Balaganesh, AM 1. This appeal by the Revenue and the Cross Objection by the assessee arise out of the order of the Learned Commissioner of Income Tax (Appeals) -21, Kolkata [ in short the ld CITA] in Appeal No. 905/CC-3(3)/CIT(A)-21/Kol/15-16 dated 12.05.2017 against the order passed by the DCIT, CC-3(3), Kolkata [ in short the ld AO] under section 153A/143(3) of the Income Tax Act, 1961 (in short the Act ) dated 17.03.2016 for the Assessment Year 2010-11. 2. The only issue to be decided in this appeal is as to whether the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 17.3.2016 determining the total income at ₹ 1,40,90,993/- after making an addition of ₹ 1,40,00,000/- u/s 68 of the Act on account of share capital. 4. The assessee stated no incriminating materials relating to the share capital or share premium was found during the course of search. The assessee filed all the details with regard to the share capital and yet on the basis of post search deposition taken by the ADIT (Inv.) from Sri Murli Lahoti, Sri Shiv Kumar Banka and Sri Anand Singhania, who were not the directors of the share applicant companies, the ld AO added back the said amount of ₹ 1,40,00,000/- as unexplained cash credit u/s 68 of the Act. The assessee pleaded before the ld CITA that even the opportunity of cross-examination of these three parties were denied to the assessee by the ld AO. The assessee before the ld CITA stated that in support of the receipt of share capital, the assessee had provided name address of the share applicants, PAN of the share applicants, conformation letters from the share applicants, their ITR acknowledgement, copy of profit and loss account and balance sheet, source of the funds provided, bank statement, ROC document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and respectfully following the ratio decided by the Hon ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd. (Supra), assessee s appeal on grounds no. 2 and 3 are allowed and as such I am not inclined to adjudicate appeal on grounds no. 4 and 5 on merit . 5. Aggrieved, the revenue is in appeal before us on the following grounds: 1. Ld. CIT(A) has failed to appreciate that the finding of incriminating fact during search seizure operation regarding buyback of Shares @ ₹ 10/- by the group companies immediately after allotment of those shares @ 50/- per share through entry operators and revealing of the related facts and statements under oath of the entry operators in post search investigation constitute sufficient cause to initiate proceedings u/s 153A for addition of the bogus share capital as all incriminating facts/documents are related to it. 2. The Ld. CIT(A) has failed to appreciate that the finding of an incriminating fact during search seizure operation amounts to seizure of incriminating document. 3. Ld. CIT(A) has failed to explain as to why the judicial decisions mentioned in the assessment order are not applicable in this case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or before 30.9.2011. He reiterated the submissions made before the lower authorities with regard to framing of additions in section 153A assessments without any incriminating material found thereon. Reliance was placed on the following decisions in support of his contentions:- ( a) CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC) ( b) Decision of this tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 ( c ) CIT vs Kabul Chawla reported in (2016) 380 ITR 573 ( Delhi HC) ( d)CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd and All Cargo Global Logistics Ltd reported in (2015) 374 ITR 645 ( Bom) ( e) Decision of Hon ble Apex Court in the case of Kabul Chawla reported in 380 ITR (St.) 64 (SC) wherein SLP of the revenue was dismissed. 8. We have heard the rival submissions. We find it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the act provides for abatement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect. The relevant headnotes is reproduced below:- Section 153A, read with section 143, of the Income-tax Act, 1961-Search and seizure - Assessment in case of (in case of section 143(1) assessment)-Assessment year 2004-05- Whether assessment in respect of which return has been processed under section 143(1), cannot be regarded as pending for purpose of section 153A as Assessing Officer is not required to do anything further about such a return and, thus, said assessment cannot be reopened in exercise of power of section 153AHeld yes (Paras 10 and 12) (In favour of assessee). 8.2. We find that the Co-ordinate Bench of this tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016-TIOL- 167-ITAT-KOL had explained the aforesaid provisions as below:- 6.4 In our opinion, the scheme of assessment proceedings should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act :- ( a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal position that emerges is as under: ( i) Once a search takes place under section 132 of the Act, notice under section 153A(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 reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the LD AOs as a fresh exercise. ( iii) The LD AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The LD AO has the power to assess and 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 AYs in which both the disclosed and the undisclosed income would be brought to tax . ( iv) Although Section 153A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the decision of Hon ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) had duly considered the decisions of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) ; CIT vs Chetan Das Lachman Das reported in (2012) 211 Taxman 61 (Del HC) ; Madugula Venu vs DIT reported in (2013) 215 Taxman 298 (Del HC) ; Canara Housing Development Co. vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) ; Filatex India Ltd vs CIT reported in (2014) 229 Taxman 555 (Del HC) ; Jai Steel (India) vs ACIT reported in (2013) 219 Taxman 223 (Del HC) ; CIT vs Murli Agro Products Ltd reported in (2014) 49 taxmann.com 172 (Bom HC) ; CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in (2015) 374 ITR 645 (Bom HC) and All Cargo Global Logistics Ltd vs DCIT reported in (2012) 137 ITD 287 (Mum ITAT) (SB). We also find that against the decision of the Hon ble Delhi High Court in 380 ITR 573 (Del), the revenue preferred Special Leave Petition before the Hon ble Supreme Court and the same was dismissed by the apex court which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon ble Delhi HC in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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