TMI Blog2019 (6) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 850 - ITAT KOLKATA] and the Ld. DR for the revenue has failed to controvert the findings of the order of the Co-ordinate Bench of IT AT, Kolkata (supra), therefore respectfully following the judgment of the Co-ordinate Bench, we note that without any incriminating material addition should not be made in case of concluded (unabated) assessments. - Decided in favour of assessee. - IT(SS) A. Nos. 95 and 96/Kol/2018 - - - Dated:- 28-6-2019 - A.T. Varkey, Member and Dr. A.L. Saini, JJ. For Appellant: Somnath Ghosh, Advocate For Respondents: P.K. Srihari, CIT, DR ORDER Dr. A.L. Saini, J. 1. The captioned two appeals filed by the assessee, pertaining to assessment years 2011-12 and 2012-13, are directed against the separate orders passed by the Ld. Commissioner of Income Tax (appeals)-21, Kolkata, which in turn arise out of assessment orders passed by the Assessing Officer U/s. 153A/143(3) of the Income Tax Act, 1961, (in short the 'Act'). 2. Since, the issues involved in these two appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) asking the assessee to prove the genuineness of the transaction, identity of the share applicant and their creditworthiness. The Assessing Officer stated that primary onus to prove the identity, genuineness and creditworthiness is upon the assessee. Since the assessee has not proved the identity, genuineness and creditworthiness of the share subscribing companies, therefore the Assessing Officer issued summons U/s. 131 to the share subscribing companies for cross-examination and cross-verification. The Assessing Officer noticed that the some of the notices returned unserved and no compliance was made by the share subscribing companies. However, some of the share subscribing companies made the compliance of the notice U/s. 131 of the Act and replied to the Assessing Officer. The Assessing Officer also asked the assessee to disclose the allotment of shares and replied the quarry raised in the notice issued U/s. 131 of the Act to the share subscribing companies. In response to that, the assessee had failed a reply before the AO on 22.12.2017. The Assessing Officer gone through the reply of the assessee and held that the assessee had failed to prove the three ingredients viz. identit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition u/s. 132A of the Act stand abated and not the assessments/reassessments proceedings already finalized for those assessment years. It is clarified that on initiation of proceedings U/s. 153A of the Income Tax Act. 1961, the proceedings pending in appeal revision or rectification proceedings against finalized assessment/reassessment shall not abate [C.B.D.T. CIRCULAR No. 7 DATED 05-09-2003 (2003) 262 ITR (ST) 107]. In other words, since the finalized assessment proceedings do not abate; the appeal revision or rectification pending against such finalized assessment proceedings also would not abate. Once an assessment proceeding has attained finality, then the Assessing Authority while passing the independent assessment order U/s. 153A read with section 143(3) of the Act could not have disturbed such assessment order. If there is nothing on record to suggest that any incriminating material was unearthed during the search U/s. 132 of the Act, the Assessing Authority while passing the order U/s. 153A read with Section 143(3) of the Act cannot disturb the assessment order originally framed. In the present instance, the Ld. Assessing Officer also did not record any finding that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. We note that the assessee company has filed its return of income U/s. 139(4) of the Act, on 19.03.2012 declaring total income at Rs. NIL. In the assessee's case a search and seizure operation U/s. 132 of the Act was conducted on 01.12.2015 at the business premises of Bhalotia and Kayal Group. In the assessee's case under consideration, the time limit to issue notice U/s. 143(2) of the Act was elapsed on 30.09.2012 for assessment year 2011-12. The time limit to issue notice U/s. 143(2) of the Act was also elapsed on 30.09.2013 for assessment year 2012-13. Therefore, both the assessment years, that is, A.Y. 2011-12 and A.Y. 2012-13 are unabated assessments. Assessment year 2012-13 was completed by assessing officer under section 143(3) of the Act on 27.08.2014, that is, before the search action under section 132 of the Act on 01.12.2015, therefore it is an unabated assessment proceedings where addition can be made by AO under section 153A provided there is an incriminating material (PB-381). In the assessee's case under consideration, the only add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention to page 89 of paper book where balance sheet as on 31.03.2011 is placed, wherein the Bank account maintained by the assessee in Axis Bank had shown ₹ 50 lakhs as cash at bank which is not based on SFA 01 and SFA 02 of the seized documents. However, Ld. D.R. for the Revenue wanted the counsel to reconcile the figures of ₹ 50 lakh shown as cash at bank in the said bank account with ₹ 30 lakhs(share application money), which the assessee has received. Before us, the Ld. Counsel submitted the balance sheet as on 31.03.2011, wherein we noticed in the head of the current liabilities, that there is mentioned about share application money received from Vedant Tradecom Pvt. Ltd. at ₹ 30 lakh (pb-89). Based on this, factual position now we shall examine whether in the assessee's case under consideration is there any incriminating material. 10. This is an undisputed fact, as explained above, that in the assessee's case, it is an unabated assessment proceedings in both the years i.e. assessment year 2011-12 and 2012-13. We note that for assessment year 2012-13, the assessee has submitted before us the assessment order U/s. 143(3) dated 27.08.2014 (PB-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll settled that when the assessment originally completed for the relevant year has become final before the date of search, there is no abatement of the said assessment and the scope of assessment under section 153A which is made in pursuant to the search is limited to assessing the undisclosed income of the assessee as found/detected on the basis of incriminating material found during the course of search. In the case of Kurele Paper Mills Pvt. Limited (supra) cited by the Ld. Counsel for the assessee, no incriminating evidence related to share capital issue was found during the course of search and keeping in view the same, the addition made by the Assessing Officer by treating the share capital as unexplained cash credit under section 68 was held to be unsustainable by the Hon'ble Delhi High Court. In the case of Salasar Stock Broking Limited (supra), it was held by the Hon'ble Calcutta High Court that incriminating material is pre-requisite before power could have been exercised under section 153A and the Assessing Officer had no jurisdiction under section 153A to reopen the concluded cases when the search and seizure did not disclose any incriminating material. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricted to the income assessed U/s. 143(1) of the Act. In the instant case, the Ld. Assessing Officer has assumed jurisdiction U/s. 153A of the Act dehors any incriminating materials found in the course of search and seizure operation belonging to the assessee for the assessment year under dispute. Also, in the assessment proceedings, the Ld. Assessing Officer did not justify his stand even in the notice dated 27.07.2017 issued U/s. 142(1) of the Act to prove the basis for assuming jurisdiction U/s. 153A of the Act and thereby passed the assessment order U/s. 153A/143(3) of the Act on the issue which is already disclosed in the original return filed U/s. 139(1) of the Act. Therefore, it is apparent that the Ld. Assessing Officer had, in fact, no material in his possession, far from any incriminating evidence, to claim that books of accounts and/or documents belonging to the assessee were seized during the search and seizure proceedings U/s. 132 of the Act and therefore lacked any jurisdiction to resort to the additions made in the assessment order framed U/s. 153A/143(3) of the Act. It is settled law that in assessments that are abated, the Assessing Officer retains the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt found during the course of search and seizure operation to be the incriminating evidence for his justification in resorting to the impugned addition on account of share application money. It is an admitted fact that the deposits and withdrawals of the said bank account statement were duly considered in the original return filed U/s. 139(1) of the Act which stood accepted U/s. 143(3) of the Act by the Ld. Assessing Officer and as such, the bank account statement cannot form incriminating evidence so as to justify his illegal addition on that account. It is settled position of law that the Assessing Officer had no jurisdiction under section 153A of the Act to reopen the concluded cases when the search and seizure did not disclose any incriminating material [PCIT vs. Salasar Stock Broking Ltd. (ITAT No. 264 of 2016 dated 25.08.2016 (Cal)]. Further, where no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the A.O. and consequently, he was not justified in invoking section 68 of the Act for the purposes of making additions on account of share capital [PCIT vs. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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 under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six A.Ys. 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 A.Ys. 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 A.Ys. in which both the disclosed and the undisclosed income would be brought to tax . (iv) Although Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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