TMI Blog2022 (10) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(2) of the Act has expired long back. Hence, it is an unabated assessment year and this assessment can be tinkered with only if incriminating material pertaining to this year has been found during the course of search - we allow the preliminary ground of the appeal and delete the additions made in the assessment passed u/s 153A r.w.s. 143(3) - Decided in favour of assessee. - I.T(SS)A. No. 27/Kol/2022 - - - Dated:- 9-9-2022 - Shri Rajpal Yadav, Hon ble Vice President And Dr. Manish Borad, Hon ble Accountant Member For the Assessee : Shri Miraj D. Shah, FCA and Shri A.K. Gupta, FCA For the Revenue : Md. Ghayas Uddin, CIT D/R ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER: The present appeal is directed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeals), Kolkata 21 (hereinafter the Ld. CIT(A) ) dated 08/04/2022, passed u/s 250 of the Income Tax Act, 1961 ( the Act ), for Assessment Year 2006-07. 2. The assessee has raised the following grounds of appeal before this Tribunal:- 1. FOR THAT the order passed by the Commissioner of Income Tax (Appeal) dated 8 April 2022 confirming the order of Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant was the beneficial owner of the said two bank accounts and could not have made addition in respect of the same in the hands of the Appellant. c) The Appellant cannot prove the negative that he is not an account holder or beneficial owner of the said two bank accounts and that the Appellant neither a shareholder nor a Director and having proved or ever had any interest of any nature whatsoever in the two bank accounts, the addition made by the Assessing Officer was erroneous and illegal. d) No adverse inference could be drawn by the Assessing Officer that the Appellant could not furnish the details of some trust mentioned by HSBC Bank, Geneva in their letters when the Appellant could not have any knowledge thereof in as much as he had no interest or knowledge therein. e) The Assessing Officer erred in adding the sum of Rs.4,52,40,074/- and the sum of Rs. 20,80,685/- lying in the said Bank accounts with HSBC Bank, Geneva without discharging the burden of showing by adducing legal evidence of a definite character that the transactions in the said bank accounts apparently in the name of Gingest Marketing Ltd., and Masonic Ltd. respectively, both non-resident corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had operated Bank Accounts with client ID BUP_SIFIC_PER_ID 5090159437 and Code BUP_SIFIC_PER_ID:5090159438 in Switzerland with HSBC Bank. The Assessing Officer furnished a copy of the information sheet of HSBC Bank, Switzerland allegedly in respect of the appellant and asked the explanation of the appellant as to why the name of the appellant is appearing in the said sheet and what are the nature of transaction in the said account. The said Information Sheet was unsigned and unauthenticated document and was written in a foreign language. No translation of the same in English language or vernacular language was obtained by the Assessing Officer nor was it given to the appellant for his explanation thereon. The appellant furnished an affidavit sworn by him on 24th December 2014 affirming that during the course of search, the officials of Investigation Wing had shown some typed papers in regard to some account with HSBC, Geneva which was not found from his premises during search. That in course of investigations by the DDIT (Inv.), the appellant had furnished evidences being communications received from HSBC, Geneva that the said bank accounts belonged to Gingest Marketing Ltd. and M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Masonic Ltd. respectively, in the impugned assessment. The Assessing Officer had no positive evidence and wanted the Appellant to prove that he was not the accountholder of the said bank accounts. The Assessing Officer arbitrarily drew an adverse inference against the appellant on the ground that the appellant could not furnish the details of some trust mentioned by HSBC, Geneva in their letter when the appellant could not have any knowledge thereof in as much as he had no interest or knowledge therein. The appellant never admitted that any of the transactions in the said bank accounts with HSBC belonged to the appellant. There is no evidence on record that the appellant, at any point of time whatsoever, made any deposits in the said bank accounts in the relevant previous year or at any time whatsoever since the inception of the said bank accounts. 6. Aggrieved the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee filed detailed submissions and also filed all the papers as were filed with the A.O. The written submissions filed by the Appellant are set out at pages 9 to 35 of the order of CIT(A). It was also submitted before him that as no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther submitted that it is an admitted fact that no incriminating material or documents whatsoever was found in course of such search and consequent to search u/s 132 of the Act. 8. Per contra the Ld. D/R, vehemently argued by supporting the orders of the lower authorities and stated that the assessee failed to prove that the said two bank accounts did not belonging to the Appellant and that he was not the beneficial owner. It was submitted that the findings given by A.O. and confirmed by the CIT (A) are correct and legally valid and should be confirmed. 9. We have heard rival contentions and perused the records placed before us as well as the case laws cited by Ld. Counsel for the assessee. First we take up Ground Nos. 1 to 3 challenging the legality of the assessment proceedings carried out subsequent to search u/s 132 of the Act. (i) It is an admitted fact that no incriminating documents or material were found in course of the search and no addition has been made in the assessment made pursuant thereto on such account. Only two additions have been made in the assessment under section 153A of the Act in respect of the said alleged bank account at the HSBC and the disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the appellant. Assessment u/s 153A can be conducted only where any proceedings were pending at the time of search and got abated and/or any incriminating material or documents were found in the course of search. From the facts of the case it is clear that the assessment u/s 153A/143(3) was framed with reference to unverified and unsubstantiated information allegedly gathered by the Income Tax Department from some unnamed and unspecified authorities whose identity has never been disclosed to the appellant till date. No documents, details or papers even remotely connected with the alleged bank account were found from the appellant s premises or were in the possession of the appellant. In absence of any incriminating details found in the course of search and the fact that the assessment for A.Y. 2006-07 had not abated, no addition or disallowance was permissible in the assessments framed u/s 153A of the Act. 10. This is now well settled by the judgments of various High Courts and Coordinate Benches of the Tribunal. It can also be seen from pages 16 to 26 of the order of the CIT(A) set out from the written submissions filed by the Appellant before him. In addition to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment u/s. 143(3) or u/s. 147 of the I. T,. Act could not be made u/s. 153A of the I. T. Act? While disposing appeal the Hon'ble High Court held: We are in agreement with the views expressed by 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. We find no infirmity in the aforesaid act of the learned Tribunal. The appeal is, therefore, dismissed. No Special Leave Petition was filed in the Supreme Court by the Revenue against the aforesaid decision of the Hon'ble Calcutta High Court. c) In the case of Pr. CIT vs. Salasar Stock Broking Ltd ITAT No. 264 of 2016, the Hon ble Calcutta High Court took the same view and held: Subject matter of challenge is a jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious companies supposed to be part of the chain of companies was not confronted to the assessee. The alleged statements that were recorded from directors of these companies which formed this alleged chain were also not brought on record. Only a general statement has been made. There is no evidence whatsoever that cash has been routed from the assessee company to any of these chain of companies. There is no evidence that any cash was deposited by the assessee company. Moreover, there is no material whatsoever brought on record to demonstrate that the alleged cash deposit made in the bank account of a third party was from the assessee company. No opportunity to cross examine any these parties was provided to the assessee. The bank statements based on which the cash trail was prepared are part of the disclosed documents and cannot be held as incriminating material. 10.2. Thus, none of these materials gathered by the Assessing Officer can be categorized as incriminating material found during the course of search or found during the course of any other operation under the Act. Thus, we hold that the additions in question are not based on any incriminating material. The Id. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. For Assessment Year 2008-09 assessee has raised two grounds of appeal. Ground No.1 challenges the addition on the ground that no incriminating material was found during the course of search and addition has been made merely on the basis of information called during the course of assessment proceedings. Through Ground No.2 the impugned addition of Rs.2,24,326/- is challenged with regard to disallowance of interest paid on loan holding that the loan funds were not utilized for the business purposes. 9. We find that the Co-ordinate Bench while adjudicating similar issue in the case of Sainath Coloniers V ACIT (2019) 35 ITJ 77 (Trib. Indore) following the judgment of Hon ble High Court of Delhi in the case of CIT V/s Kabul Chawla (2016) 380 ITR 573 (Del) observed as follows: We therefore in the given facts and circumstances of the case and respectfully following the judgments referred and relied by the Ld. Counsel for the assessee are of the considered view that no addition/disallowance was called for Assessment Year 2008-09 to 2010-11 as no incriminating material was found during the course of search at the premises of the assessee as the time limit of issuance of notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 153 A(l) will have to be mandatorily issued to the person searched requiring him to fde returns for six AYs 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 AYs will have to be computed by the AOs as a fresh exercise. (iii) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to I.T(SS).A. No. 15/Kol/2022 Assessment Year: 2007-08 Sreedeb Commodities Pvt. Ltd. 5 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 AYs in which both the disclosed and the undisclosed income would be brought to tax . (iv) Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi Bench's order. It reads as under: 15. Thus, when during the course of search of an assessee any books, document or money, bullion, jewellery etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person. Hon'ble Delhi High Court in the case of Subhag Khattar in Tax Appeal No.60 of 2017 has considered the following question of law: Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition made in assessment made u/s 153A of the Act? [B] Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? [C] Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search? 35. Hon'ble Court concurred with the decision of Hon'ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: 16. Section 153A bears the heading Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome on 18.11.2010. In terms of section 153B, the assessment was required to be completed within a period of two years from the end of the financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition as well as the copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed. 11. It is also per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs.- Shri Ram Realcon Pvt. Ltd. [IT(SS)A No. 14 15/KOL/2017 13. Vikram Financial Services Ltd. vs.- DCIT [IT(SS)A No. 81/KOL/2010 14. DCIT vs.- M/s. Bohra G. NN Brothers Pvt. Ltd. [IT(SS)A No. 89/KOL/2017 14. A perusal of the above finding would indicate that the Assessing Officer has nowhere made reference to any seized material in the assessment order. The Assessing Officer has been examining the matter as if he is passing a regular assessment order u/s 143(3) or 147 of the Act. Under the scheme of assessment as propounded in the various judgments of the Hon ble High Courts referred above, an addition can only be made if some incriminating material regarding receipt of bogus share application money was found during the course of search. The Assessing Officer did not make reference to this effect. The ld. CIT(A) is on the same line. The ld. CIT(A) has discussed the issue on merits but did not address whether the issue can be examined in an assessment framed u/s 153A of the Act or not. The judgment of the Hon ble Delhi High Court in the case of Kabul Chawla (supra) is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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