TMI Blog2019 (10) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... te Shri Nirav Sheth, FCA For the Revenue : Shri Radhey Shyam, CIT, DR ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) These two appeals are preferred by the Revenue against two separate orders both dated 02.08.2017 passed by the Ld. CIT (A) 20, Kolkata and since the issued involved therein are common, the same have been heard together and are being disposed of by a consolidated order along with corresponding cross-objections filed by the assessee being C.O. No. 14 15/Kol/2019. 2. The relevant facts of the case giving rise to these appeals and cross-objections are as follows. The assessee is a company which is engaged in the business of real estate. The returns of income for both the years under consideration were originally filed by it on 25.09.2009 and 21.09.2010 for A.Y. 2009-10 and 2010-11 respectively declaring total income at Nil claiming that there was no business carried on by it during the said years. A search and seizure action u/s 132 was conducted in the case of the assessee as well as in the cases belonging to the same group on 05.08.2014 as well as on the subsequent dates. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssments completed under section 153A/143(3) of the Act vide assessment orders dated 31.12.2016 for the assessment years 2009-10 and 2010-11 by treating the share capital and share premium amounts received during the years under consideration as unexplained cash credits were challenged by the assessee in the appeal filed before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), detailed written submissions were filed by the assessee stating, inter alia, that the scope of unabated assessments completed by the Assessing Officer under section 153A/143(3) was limited to assess the undisclosed income only on the basis of incriminating material found during the course of search and in the absence of any such incriminating material found during the course of search, the addition made by the Assessing Officer under section 68 by treating the share capital and share premium amounts as unexplained cash credits was unjustified. The ld. CIT(Appeals) found merit in this contention raised on behalf of the assessee and after extracting the entire written submission filed by the assessee in his impugned order, he deleted the addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. The Hon'ble Kolkata High Court in the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573( Del) Search and seizure-New scheme of assessment in search cases-Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies-Search was also carried out in the premises of the assessee-Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns-As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1),assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies- AO declined to rectify the assessments-CIT also held that addition need not be restricted only to the seized m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted before the date of search. Besides, the time limit to issue notice U/S 143(2) was also expired. In order to initiate assessment proceedings u/s 153A, there should be a new or incriminating document. The assessment which is already completed u/s. 143(3)/143(1) should not be reopened. Therefore, considering the scheme of section 132 and section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of section 153A. Ld. DR for the revenue had pointed out that there is a direct nexus among the companies, which has been established by the statement of Mr. Naresh Kumar Chhapperia, which cannot be relied on, as he was a double speaking person. Therefore, considering the factual position and the judgments cited by Id. AR, we are of the view that the additions made by the Aa u/ s 153A and confirmed by the ld. CIT(A) needs to be deleted. Therefore, we delete the addition. Furthermore, the decision of the jurisdictional tribunal in the case of M/s Tanuj Holdings Pvt. Ltd Vs. DCIT CC-l(2), Kolkata vide ITAT No. 360 to 363jKol/2015 dated 20.01.2016 is important. The relevant portion of the order is reproduced as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03- 04 the grant of deduction under the said section in respect of the same unit is only academic and hence the assessee is entitled for deduction u/ s 80lB of the Act for the Asst Years 2007-08 and 2008-09. Accordingly the ground raised by the revenue in this regard for the assessment years 2007-08 and 2008-09 are dismissed. Since the decisions are rendered by us on legal grounds, we refrain to give our decision on the merits of the issues. Budhiya Marketing Pvt. Ltd. Ors. Vs. ACIT in ITA Nos1545-1546/ Kol./2012 [reported in (2015) 44 CCH 03441dt. 10.07.2015 (ITAT Kolkata) The issue whether the addition in an assessment framed under section 153A can be made on the basis of the incriminating material found during the course of the search where the assessment has not been abated, has not been considered or decided by this Tribunal. Therefore, this decision, in our opinion will not assist the revenue while disposing of the plea of the assessee that since no incriminating material is found during the course of the search relating to the share capital and the share premium, therefore, no addition can be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and decide the issue in favour of assessee. Since we are quashing the appeals on jurisdiction we are not adjudicating the merits of the appeal as the same is now only of academic interest. DCIT Vs. Merlin Project Ltd. IT(SS)A No-138/Kol/2011 Dt. 14.11.2013 (ITAT Kolkata); We have heard the rival submissions and perused the material available on record. The undisputed fact about this case is that the original assessment in this case was completed under section 143(3) in which deduct ion was allowed in entirety under sect ion 801B of the Act inter alia on the amount of interest income. It is also undisputed that no incriminating material was found during the course of search casting doubt about the allowability or otherwise of such deduction under section 80IB. This fact has been fairly admitted by ld. D.R. during the course of proceedings before us as well. The Mumbai Bench of the Tribunal in the case of ACIT vs. Pratibha Industries (2013) 141 ITD 151 (Mum.) has held, inter alia, that having done original assessment u/s 143(3), if no incriminating material is found during the course of search, then it is permissible to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that no incriminating evidence related to share capital issued was found during the course of search and that the Assessing Officer was not justified in invoking section 68 of the Act for the purposes of making additions on account of share capital Pr. CIT v Kurele Paper Mills P Ltd, SLP (C) No.34554 of 2015 . 7. The AR has also brought on record the case law of CIT, Kolkata-III vs Veerprabhu Marketing Ltd [2016] 73 taxmann 149 Kolkata In this case The Honorable Calcutta High Court expressed the following views: We are in agreement with the views of the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has 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 made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. The Hon'ble Kolkata High Court in the above cases re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have discussed in length and arrived at conclusion that additions in search assessments u/s 153A/153C cannot be made except on the basis of the incriminating material found in the search. Reference a) appeal no.442/CC-3(1)/CIT(A)-21j 14-15, date of order 05-12-2014, b) appeal no.440/CC-3(1)/CIT(A)-21/ 14-15, date of order 15-01-2015 c) appeal no.547 /CC-3(1)/CIT(A)-21/ 14-15, date of order 10-04-2015 d) appeal no.129 /CC-XVI I/CIT(A)- I j09-10, date of order 23-09-2010 e) appeal no.292/CC-Vl/CIT(A) -C-VI/ 11-12, date of order 23-10-2013. 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. At least, additions made by the AO in the assessment order passed u/s 153A/ 143(3) are not based on any incriminating documents/papers seized during the search operation It would also not be out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as not based on incriminating materials found in course of search and wrongly held that the said assessment is bad in law overruling sections 153A, 153A(1) and explanations thereunder. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) 20, Kolkata was wrong in holding that in respect of unabated assessments (no pending proceedings) as on date of search, the Assessing Officer cannot frame the search assessment under section 153A of the Act by making certain additions without any incriminating materials found during the course of search. 5. That on the facts and circumstances of the case and under law, the Ld. CIT(A) erred in stating that no addition u/s 68 of the I.T. Act for share capital can be made in absence of any incriminating material without examining this issue on merit. 5. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that a similar issue was involved in the case of M/s. Shantinath Financial Services Ltd. (IT(SS)A No. 102/Kol/2017 A.Y. 2010-11), which was heard simultaneously, wherein a detailed submission was made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the course of search. This legal position clearly emanates from the various judicial pronouncements cited and relied upon by the assessee in the written submission filed before us. No doubt, there are certain judicial pronouncements cited by the ld. D.R. in his written submission, wherein a contrary view has been taken, which is in favour of the Revenue. However, a consistent view has been taken by the Hon ble Calcutta High Court on this issue in several cases, which is in favour of the assessee. For instance, in the case of DCIT vs.- Salasar Stock Broking Limited (supra), the decision of the Tribunal holding that the addition made by the Assessing Officer in the assessment completed under section 153A was beyond the scope in the absence of any incriminating material found during the course of search was upheld by the Hon ble Calcutta High Court. It is noted by Their Lordships that the Tribunal while arriving at its decision had relied upon the judgment of the Hon ble Delhi High Court in the case of Kabul Chowla (supra) and more or less an identical view had been taken by the Court even in the case of Veerprabhu Marketing Limited (supra). In the case of Kabul Chowla, sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue on the issue under consideration, we find that the consistent view taken by the Hon ble Jurisdictional High Court is in favour of the assessee and respectfully following this binding precedent, we hold that since the assessment for the year under consideration was not pending as on the date of search, there was no abatement and the addition made by the Assessing Officer in the unabated assessment completed under section 153A on account of share capital and share premium amount by treating the same as unexplained cash credit was not sustainable as the same was not made on the basis of any incriminating material found during the course of search. We accordingly uphold the impugned order of the ld. CIT(Appeals) deleting the said addition made by the Assessing Officer and dismiss this appeal of the Revenue. 6. As the issue involved in the present case as well as all the material facts relevant thereto and the arguments by both the sides are similar to the case of M/s. Shantinath Financial Services Ltd. (supra), we respectfully follow the decision to this Tribunal rendered in the case of M/s. Shantinath Financial Services Ltd. (supra) and uphold the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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