TMI Blog2018 (12) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.177/CC- 4(1)/CIT(A)-21/KOL/15-16 dated 23.03.2017 against the order passed by DCIT, CC- 4(1), Kolkata [ in short the ld AO] under section 143(3) / 153D / 153A of the Income Tax Act, 1961 (in short the Act ) dated 30.03.2015 for the Assessment Year 2009-10. 2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the addition of ₹ 1,63,00,000/- towards share capital / share application money and share premium in the search assessment framed u/s 153A of the Act in the absence of any incriminating material found during the course of search to that effect. 3. The brief facts of this issue is that there was a search and seizure operation conducted u/s 132 of the Act on 13.12.2012 in the residential and business premises of various persons belonging to Maanheruka Group including the assessee. In some cases belonging to the group, survey operation u/s 133A of the Act was also conducted on the same date and / or subsequent dates. The assessee company is one of the group companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income as per the provisions of the Act irrespective of incriminating materials found in the search. The ld AO completed the assessment u/s 153A / 143(3) of the Act on 30.3.2015 determining the total income at ₹ 1,92,11,460/- after making an addition of ₹ 1,63,00,000/- u/s 68 of the Act on account of share capital / share application money / share premium and disallowance u/s 14A of the Act to the tune of ₹ 9,89,324/-. The addition made towards share capital / share application money / share premium was based on statement recorded from two directors u/s 132(4) of the Act which was later retracted by them. It was alleged that share application money was raised by the group by paying cash and had eventually converted the undisclosed income into legal money. 5. The ld CITA deleted the addition by observing 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 that search and seizure operations conducted u/s 132 of the I.T.Act, 1961, incriminating documents / papers were not seized. At lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Act and it is only the Hon ble Courts which had imported those words while rendering the decisions. He stated that the Hon ble Courts are divided on this issue and placed reliance on the decision of the Hon ble Karnataka High Court in the case of Canara Housing Development Co vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) wherein it was held that search assessments could be framed even without the existence of incriminating materials found in the course of search. He argued that the basic foundation for conducting the search is governed by the provisions of section 132 of the Act which has to be read harmoniously with section 153A of the Act. There are three conditions based on which a search action could be initiated u/s 132 of the Act on an assessee. They are :- Section 132(1) - If the concerned authority has in consequence of information in his possession, has reason to believe that - (a) where a person fails to produce the books of accounts and other documents in response to notice u/s 142(1) or summons issued u/s 131(1) of the Act ; or (b) where a person fails to comply with the requirements of summons issued u/s 131(1) of the Act ; or (c ) where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 (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: 9.1. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act are totally 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. 7.3. 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, notice un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. 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. 9.4. 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. 9.5. 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 (2016) 380 ITR 573 (Del) had duly considered the decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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. 9.8. 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 2009-10, 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 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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