TMI Blog2018 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 application money and share premium u/s 68 is hereby directed to be deleted. It is not in dispute that there was absolutely no incriminating material found during the course of search in the instant case with regard to the issue of share capital, share premium and the AO had only tried to explain the various layers through which the monies ultimately reached the assessee company. The other addition of commission of ₹ 35,000/- is only consequential to the first addition. - Decided against revenue - I.T.(SS).A No. 14/Kol/2017 - - - Dated:- 26-9-2018 - Shri M.Balaganesh, AM And Shri S.S.Viswanethra Ravi, JM For The Appellant : Shri G. Hangshing, CIT DR For The Respondent : Shri A.K. Tulsiyan, FCA ORDER Per M.Balaganesh, AM 1. This appeal by the revenue arises out of the order of the Learned Commissioner of Income Tax(Appeals)-21, Kolkata [in short the ld CIT(A)] in appeal no. 202/DCIT,CC-3(2)/CIT(A)-21/Kol/2016-17 dated 23.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO observed that the notices issued u/s 133(6) of the Act to the share subscribing investors duly filed their reply in response to the said notice u/s 133(6) of the Act confirming and substantiating the investment made by them in the assessee company. The requisite documents and details such as bank statements, income tax return acknowledgement, audited accounts, source for making investments were duly submitted before the ld AO. 3.2. The ld AO held that :- Cash deposits were made by small firms into their own account. Cheques were issued to paper companies. The said paper companies passed the amount through other paper companies to the assessee company. The receipt of money was formally given the stamp of share capital / share application money received. It may be mentioned here that financial crimes are not committed as spur of the moment but they are executed as a result of well planned and thought out strategy after considering various aspects and legal obligations of all stake holders. Thereafter, there is no surprise that the paper formalities of filing statutory returns with different Departments, getting accounts audited, routing the fund ultimately through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pleaded that the assessee company had duly proved the necessary three ingredients i.e identity of the share subscribers, genuineness of transactions and creditworthiness of transactions within the meaning of section 68 of the Act and prayed for deletion of the addition made in the sum of ₹ 70,00,000/-. The other addition of ₹ 35,000/- towards alleged commission payment is only consequential to the first addition of share application money. 5. The ld CITA deleted the additions made in the search assessment u/s 153A of the Act on the ground that there was absolutely no incriminating material found during the course of search with regard to the impugned issues added in the said assessment. He observed as under:- I have considered the findings of the AO in the assessment order, different case laws brought on record and appeal orders passed by my predecessors on this legal issue. I find from the assessment order that during the search and seizure operations conducted u/s 132 of the I T Act, 1961, incriminating documents / papers were not seized during the search operation. It would also not be out of context to mention here that in this case, on the date of search, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; or (c) where a person is in possession of any money, bullion, jewellery or other valuable article or thing and such assets represents either wholly or partly income or property which has not been , or would not be, disclosed for the purposes of the Act (hereinafter referred to as the undisclosed income or property) ; then the officer , so authorized could conduct a search and proceed as per the requirements laid down in the said section. He argued that the aforesaid three primary conditions for invoking search proceedings cannot be given a go by while framing section 153A assessments and the instant case falls under section 132(1)(c ) of the Act. The provisions of section 153A of the Act use the expression assess or reassess total income and hence the search assessment could be framed u/s 153A of the Act irrespective of any incriminating mateials. 7. In response to this, the ld AR stated that the assessment for the Asst Year 2012-13 was originally completed u/s 143(1) of the Act as the case was not selected for scrutiny by issuance of notice u/s 143(2) of the Act on or before 30.9.2013. He reiterated the submissions made before the lower authorities with regard to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing 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 (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: 8.1. We find that the Co-ordinate Bench of Delhi Tribunal in the case of Dy. CIT v. Aggarwal Entertainment (P.) Ltd reported in [2016] 72 taxmann.com 340 (Delhi - Trib.) had addressed this aspect. The relevant headnotes is reproduced below:- Section 153A, read with section 143, of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly different and distinct from the proceedings contemplated u/s. 147 of the Act and these procedures of assessment operate in different fields and have different purposes to be fulfilled altogether. 6.4.3 The expression 'assess or reassess' stated in section 153A(1)(b) has to be understood as below:- 'assess' means assessments to be framed in respect of abated assessment years irrespective of the fact whether there are any incriminating materials found during the course of search with respect to relevant assessment years ; 'reassess' means assessments to be framed in respect of concluded assessment years where incriminating materials were found during the course of search in respect of the relevant assessment year. 8.3. We also find that recently the Hon ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) held as under:- '37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: ( i) Once a search takes place under section 132 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made known in the course of original assessment. 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07, on the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 8.4. We find that the decision relied upon by the ld DR in the case of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) does not in any manner advance the case of the revenue as admittedly the Hon ble Delhi High Court in para 24 of its order had held as under:- 24. We are not concerned with a case where no incriminating material was found during the search conducted under section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open. 8.5. The ld DR also relied on the recent decision of the Hon ble Kerala High Court in the case of E.N.Gopakumar vs CIT reported in (2016) 75 taxmann.com 215 (Kerala) in support of his contentions. We find that the decision of Hon ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act , as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. Hence the arguments advanced by the ld DR in this regard deserves to be dismissed. 8.8. In view of the aforesaid findings and respectfully following the judicial precedents relied upon hereinabove, we hold that the assessment framed u/s 143(1) of the Act for the Asst Year 2012-13, which was unabated / concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the cours ..... 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