TMI Blog2021 (7) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... 19, I.T.(SS)A. Nos.413 & 414 /Lkw/2019, I.T.(SS)A. Nos.415 /Lkw/2019 - - - Dated:- 15-7-2021 - Shri A. D. Jain, Vice President And Shri T. S. Kapoor, Accountant Member For the Appellant : Shri P. K. Kapoor, C. A. For the Respondent : Smt. Sheela Chopra, CIT, D.R. ORDER PER T. S. KAPOOR:A.M. This is a group of 4 appeals filed by the different assessees against the separate orders of learned CIT(A) dated 29/11/2018 in ITA No. 89 and dated 29.03.2019 in ITA Nos. 413 to 415. The assessees has taken similar grounds of appeals and these were heard together, therefore, for the sake of convenience a common and consolidated order is being passed. The ld. counsel at the time of hearing argued only grounds No. 1 and 2 which are common in all the appeals and for the sake of completeness the same is reproduced below: 1. Because the learned CIT(A) was wrong in law on facts in confirming the assessment order passed by Assessing Officer u/s 153A of the Act as the same was not in consonance with the settled position of law vis- -vis search cases. 2. Because the learned CIT(A) has erred in law and on facts in upholding the assessment ignoring the settled posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions u/s 153C of the Act. It was submitted that with these findings Hon'ble Supreme Court has further affirmed that for making additions u/s 153A/153C, the existence of incriminating material is sine qua non. Learned counsel for the assessee in this respect filed a chart containing therein the names of assessees, I.T.A. Nos., assessment years involved, date of assessment orders and the respective paper book pages where the respective orders u/s 143(3) were placed. It was argued that since in all these cases additions has not been made on the basis of incriminating material therefore additions sustained by learned CIT(A) are not in accordance with law and need to be deleted. It was submitted that when this ground was taken before ld. CIT(A) he adjudicated the same in ITA No. 89 and 415 and decided against the assessee by holding that for making additions u/s. 153A there is no requirement that the addition can only be made on the basis of incriminating material only. It was submitted that in ITA No. 413 and 414 the ld. CIT(A) has dismissed such ground by wrongly holding that such ground was not pressed whereas the fact remains that assessee had requested the ld. CIT(A) to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f notice u/s 143(2) expired on 30.09.2015 which is also before the date of search i.e. 27.11.2015 and assessment in this year also stood completed before the date of search. Now coming to ITA No. 415 in the case of Divya Agarwal for AY 2011-12 the original return of income was filed on 28.07.2011, a copy of the acknowledgment of return is placed at Page 7 of the paper book. The return was processed u/s 143(1) on 23.12.2011, a copy of the processing u/s. 143(1) is placed at Page 8 of the paper book and assessment in this case was completed vide assessment order dated 25.03.2013, a copy of which is placed at Pages 9 and 10 of the paper book. Therefore, the assessment in this case also stood completed before the date of search on 27.11.2015. 5. The above facts clearly demonstrate that the assessment years involved in these appeals stood completed before the date of search and additions, if any, were to be made on the basis of incriminating material only which has not been done as the order of Assessing Officer do not indicate or refer to any incriminating material. Before ld. CIT(A) the assessee took a specific ground that in the absence of incriminating material the additions cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. This provision does not restrict the Assessing Officer to take action in those cases where assessment has already been completed. Since, the AO has rightly exercised his powers to assess/reassess the case u/s 153A of the Act, The undersigned find no force in the submission of the appellant and therefore, this ground is dismissed. 5.3 The contention of the Id. A.R. is also not acceptable after placing reliance on following judicial pronouncement. In the .cose of E.N. Gopalkumar Vs.CIT (2016) 75 taxmann.com 215 (Kerala)-Hon'ble Kerala High Court held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(1)(a). The above order has been passed after considering cases of; (i) CIT v. Kabul Chawla [2016] 380 ITR 5737(20151 234 Taxman 300/61 Taxmann.com 412 (Delhi) (ii) CIT v. Continental Warehousing Corpn. (Nhava Sheva) Ltd. [2015] 374 ITR 645/232 Taxman 270/58 taxmann.com 78 (Bom.) (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53/4, additions need not be restricted or limited to incriminating material, found during course of search. 5.4 In view of the detailed discussion mentioned here-inabove and considering the jurisdictional pronouncements cited here-in-above, legal grounds of appeal of the appellant are hereby dismissed for A.V. 2010-11 to A.Y. 2015-16. 6. The above findings of learned CIT(A) clearly demonstrate that there was no incriminating material on the basis of which the Assessing Officer had made the additions. The ld. CIT(A) in his findings has held that law does not require that additions u/s 153A can only be made on the basis of incriminating material. While holding so, the ld. CIT(A) has also relied on certain case laws which has been decided against the assessee. First case law of E. N. Gopalkumar vs. CIT was pronounced in 2016. Second case law of CIT vs. Raj Kumar Arora was pronounced in 2014. Third case law of CIT vs. Kesarwani Zarda Bhandar Sahson Allahabad was pronounced in 2014. Similarly case law of CIT vs. St. Francis Clay D cor tiles was pronounced in the year 2016 whereas the Hon'ble Delhi High Court has pronounced the case law in the case of Pr. CIT vs. Meeta Gulg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issue of notice u/s 143(2) expired on 30/09/2015 and intimation u/s 143(1) was issued vide order dated 04/08/2015, a copy of which is placed in paper book at pages 41 to 61. Similarly, in respect of appeals in I.T.A. No.637 638, the return for assessment year 2012-13 was filed on 30/09/2012 which is apparent from page No. 18 of the paper book and therefore, the time for issue of notice u/s 143(2) expired on 30/09/2013 which is before the date of search. Similarly, for assessment year 2014-15, the return was filed on 30/11/2014 which is apparent from page No. 39 of the paper book and the time for issue of notice u/s 143(2) expired on 30/09/2015 and intimation u/s 143(1) was issued vide order dated 19/12/2014, a copy of which is placed in paper book at pages 42 to 47. Similarly, in respect of appeals in I.T.A. No.630 631, the return for assessment year 2012-13 was filed on 30/09/2012 which is apparent from page No. 18 of the paper book and time for issue of notice u/s 143(2) expired on 30/09/2013 which is before the date of search i.e. 23/08/2016. Similarly, for assessment year 2014-15 the return was filed on 30/11/2014 which is apparent from page No. 37 of the paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Investigation Wing, Kanpur. The incriminating documents which were found and seized are the premises also include a diary identified as BK-2, containing ledgers of different parties. On going through pages of these ledgers, it was found that the companies of Sri Shashwat Agarwal are paper companies and are engaged in providing the accommodation entries of bogus LTCG, unsecured loan etc, to various parties by accepting undisclosed cash from beneficiaries. Name of such beneficiaries, datewise receipt of cash and issuance of cheques from and to them, is recorded in this diary very vividly. The name of Sri Navin Jain and his family members such as his father Sri Naresh Kiunar Jain, Naresh Kumar Jain HUF, his mother Smt. Shrimati Jain and his wife Neetu Jain also figure in this diary. Shri Navin Jain and his aforementioned family members have taken accommodation entries of tax exempt Long Term Capital Gain by the way of pre-arranged and manipulative trading in the shares Cityon Systems (India) Limited. This sale was stage managed by Sh. Shashwat Agarwal and his brothers as all the shares were purchased by the companies controlled by Sh. Shashwat Agarwal. 5.1 The above observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was dismissed by Hon'ble Supreme Court. Learned counsel for the assessee had also relied on case law of Pr. CIT vs. Meeta Gutgutia (supra), the SLP of which has also been dismissed by Hon'ble Supreme Court. Though the SLP in the case of Kabul Chawla was dismissed due to low tax effect but the SLP in the case of Meeta Gutgutia was not dismissed due to low tax effect but was dismissed on merits. For the sake of completeness, the judgment of Hon'ble Delhi High Court in the case of Meeta Gutgutia is reproduced below: A search and seizure under section 132 urns conducted in the premises of the FNP group which comprised of various companies, partnerships and proprietorship concerns. The statement of an employee PG was recorded on oath under section 133A. The assessee was a director/partner/shareholder in the group of companies/concerns. She was the proprietor of the concern FNP. On the basis of documents recovered during the search operation, a notice under section 153A was issued to the assessee. Thereafter, a notice and questionnaire under sections 143(2) and 142(1) were also issued. The Assessing Officer passed separate orders in respect of the assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2004-05, the Appellate Tribunal held that the additions made were based on seized documents and, therefore, the assessment under section 153A was valid. It dismissed the appeals filed by the Department in respect of the deletions made by the Commissioner (Appeals) and dismissed the assessee's appeal for non-prosecution. On appeals: Held, dismissing the appeals, (i) that it was only if during the course of search under section 132 incriminating material justifying the reopening of the assessments for six previous years was found that the invocation of section 153 A qua each of the assessment year would be justified. 5.2 The above judgment of Hon'ble Delhi High Court has been upheld by Hon'ble Supreme Court as the SLP filed by Revenue has been dismissed which is reported at 96 Taxmann.com 468. Hon'ble Delhi High Court in above case has distinguished the case law of Dayawanti Gupta vs. CIT 390 ITR 496 (Del) which Learned D. R. had heavily relied. The case law of Hon'ble Allahabad High Court in the case of Raj Kumar Arora 367 ITR 517, though supports the contentions of the Revenue but since Hon'ble Supreme Court has decided the issue in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, the appeals filed by the assessee in I.T.A. No.630, 631, 633, 634, 637 and 638 are partly allowed. 8. Now coming to appeals in I.T.A. No.643 and 678 for assessment year 2017-18, we find that assessments in these years were pending as on the date of search and additions could have been made in these years even without having found any incriminating material therefore, ground No. 1 2 in these appeals are dismissed. 7. The existence of incriminating material for making additions u/s 153A is further strengthened from the decision of Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society [2017] 397 ITR 344 (SC) where Hon'ble Supreme Court in a case u/s 153C has again highlighted the importance of existence of incriminating material for making the additions. The Hon'ble Supreme Court went on to hold that the Assessing Officer, while relying on the incriminating material, has to make reference in the satisfaction note regarding year-wise existence of incriminating material. Since there is an interplay between section 153A and section 153C, the findings of Hon'ble Supreme Court in a case u/s 153C are applicable for making ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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