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TMI Blog2023 (4) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... filed through online on 11.10.2018. That the ld. CIT(Appeals) ought to have decided the issue raised by the appellant instead of rejecting the same without entertaining. (2) That the ld. CIT(Appeals) has erred in law and in fact while not adjudicating the addition of Rs.4,70,00,000/- (for A.Y. 2012-13), Rs.2,05,00,000/- (for A.Y. 2013-14), Rs.1,75,00,000/- (for A.Y. 2015-16) made by the Assessing Officer u/s 68 of I.T. Act, 1961 without appreciating the fact of the case mentioned in Form No. 35 itself. 3. In ITA No. 224/GAU/2019, the assessee has raised the following ground :- "That the ld. CIT(Appeals) was not justified while confirming addition of Rs.2,07,20,125/- without properly appreciating the fact of the case". 4. The assessee has raised the following revised grounds of appeal in ITA No. 219/GAU/2019:- (1) For that in the facts and circumstances of the case the appellate order passed was in violation of principals of natural justice hence is bad in law and be quashed. (2) For that in the facts and circumstances of the case the assessment made u/s 153A of the IT Act 1961 was bad in law and hence the appellate order passed by the Ld CIT(A) based on the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the interest u/s 234 A/B/C the same was unjustified and hence the same be recalculated as per the applicable law. (11) The appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. (12) The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal. 5. The assessee has raised the following revised grounds of appeal in ITA No. 222/GAU/2019:- (1) For that in the facts and circumstances of the case the addition of Rs. 1,75,00,000 merely on the basis of disclosure made by the assessee and without any corroborative evidence is bad in law, uncalled for, unjustified and the same should be deleted. (2) For that in the facts and circumstances of the case the addition of Rs. 1,75,00,000 is bad in law, bad in facts and in violation of circulars and order of central board of direct taxes and hence the same be deleted. (3) For that in the facts and circumstances of the case the appellate order passed was in violation of principals of natural justice hence is bad in law and be quashed. (4) For that in the facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. (13) The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal. 6. The assessee has raised the following revised grounds of appeal in ITA No. 224/GAU/2019:- (1) For that in the facts and circumstances of the case the Ld Assessing Officer erred in disallowing the provision of expenses of Rs.2,07,20,125 which was part of the cost of the projects of the assessee. Thus the addition made was unjustified, illegal and deleted. (2) For that in the facts and circumstances of the case the lower authorities failed to consider that the expenses of Rs.2,07,20,125 had to be considered to determine the real income of the project and therefore the said expenditure has to be allowed in computing the income of the assessee. (3) For that in the facts and circumstances of the case the lower authorities failed to appreciate that the books of accounts of the assessee were audited and the same were not rejected by the Ld Assessing Officer. Thus under the circumstances the disallowance of Rs.2,07,20,125 was not justified and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emerged against an assessment proceeding carried out under section 153A read with section 143(3) of the Income Tax Act. The assessment order was passed on 31.12.2017. ITA No. 224/GAU/2019 has emerged vide assessment order dated 30.03.2015 passed under section 143(3) of the Income Tax Act. 8. Before taking the grounds of appeal in a seriatim, we drew our attention to the brief facts namely, the assessee is engaged in the business of Real Estate. It has filed its original return electronically on 30.09.2012 declaring total income of Rs.53,69,210/-. A notice under section 143(2) was issued vide which case of the assessee was selected for scrutiny assessment under CASS. The ld. Assessing Officer has passed the assessment order on 30.03.2015. He determined the taxable income of the assessee at Rs.2,66,31,152/- as against Rs.53,69,210/- declared by the assessee. After this assessment order, a search was carried out at the premises of the assessee on 17.09.2015. The ld. Assessing Officer thereafter issued a notice under section 153A of the Income Tax Act. The assessee has filed return of income in response to this notice on 28.11.2017 declaring total income at Rs.58,43,030/-. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has already attained finality. He made reference to the assessment order dated 30.03,.2015 passed under section 143(3) before the search was carried out upon the assessee. 14. The ld. D.R., on the other hand, drew our attention towards paragraph no. 3.1 of the assessment order and submitted that during the course of search, one Inspector was deputed to carry out spot verifications at Chokhani Group, who indulged providing accommodation and his finding demonstrated that this share application money was bogus. 15. We have duly considered the rival contentions. There is no doubt that the assessee has filed the original return of income under section 139 of the Income Tax Act and assessment was framed under section 143(3) and no addition was made qua bogus share application. After the search, such an assessment can be disturbed or could be construed as abated only if incriminating material was found and seized during the course of search. The scope of section 153A has been explained in a large number of decisions and for the sake of completeness of the finding, we note our finding from IT(SS)A Nos. 26 & 27/KOL/2021 in the case of GPT Sons (P) Limited, wherein we have made reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 153A read with Section 143(3) of the Income Tax Act, 1961 in the circumstances of the case, were not justified and supportable in law?" After putting reliance upon its decision in the case of CIT Vs. Kabul Chawla (supra) has replied this question as under: "6. The Assessee went in appeal before the Commissioner of Income Tax (Appeals) who dismissed it by an order dated 27th November, 2014. A further appeal was filed by the Assessee before the ITAT. The ITAT, inter alia, found substance in the contention of the Assessee that the assessment under Section 153(A) of the Act, in the absence of any incriminating material found during the search on the premises of the Assessee was not sustainable in law. Reliance was placed on the decision of this Court in Commissioner of Income Tax v. Kabul Chawla, [2016] 380 ITR 573. 7. A question was posed to the learned counsel for the Revenue whether in the present case anything incriminating has been found when the premises of the Assessee was searched. The answer was in the negative. The entire case against the Assessee was based on what was found during the search of the premises of the AEZ Group. It is thus apparent on the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of the search, the assessments for assessment years 2002-03, 2005-06 and 2006-07 already stood completed and the returns in these years were accepted under Section 143(1) of the Act and these acceptance of returns processed under Section 143(1) of the Act was construed by the Hon'ble Delhi Court as completion of assessments and this acceptance of return, according to the Hon'ble Delhi High Court, could be tinkered with if some incriminating material was found at the premises of the assessee. 12. The position of law in other decisions referred by the ld. Counsel for the assessee is identical; particularly we have considered the judgment of Hon'ble Calcutta High Court in the case of PCIT vs. Salasar Stock Broking Pvt. Ltd. (supra)". 16. On the strength of above, if we examine the facts of the present case, then it would reveal that nothing was discovered during the course of search about this share application money. Taking the advantage of search, ld. Assessing Officer is reassessing the income of the assessee, which has already assessed in an assessment order under section 143(3). The factum of share application money is already available in the books. It has to be assume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture, then its inclusion from the WIP has also to be excluded. If this exercise is not being carried out by the ld. Assessing Officer, then the profit ratio would increase at 19.12%, which is a very abnormal profit in the line of construction. 23. We have duly considered the rival contentions and gone through the record carefully. A provision is being made in the accounts for contingent liability. Sometime a liability is discernible but its complete crystallization cannot be ensured on the basis of material available and therefore, a provision of certain expenses are being made and if a provision is found genuine reasonable qua need of the business based on earlier years feed back, then it can be allowed as a deduction namely in the case of assessee under Head No. 5 provision of Bank interest at Rs.46,40,000/- has been made. There cannot be any doubt about this liability. The assessee has claimed this provision as a deduction. It was under the impression that this provision is allowed. Therefore, it took this amount to the work-in-progress, which is to be sold in subsequent years. The ld. Assessing Officer has disallowed the deduction of this provision and correspondingly did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities, ld. Counsel for the assessee submitted that the ld. Assessing Officer has not discussed any detail except a reference to the statement of assessee, whereby under section 132(4), he has made disclosure. The copy of such statement has been placed on the paper book from pages no. 1 to 4. On the other hand, ld. D.R. relied upon the order of ld. Assessing Officer. 30. We have duly considered the rival contentions and gone through the record carefully. We have taken note of the finding recorded by the ld. Assessing Officer. In the finding, no corroborative evidence is discernible except the reliance upon the disclosure made in the statement recorded under section 132(4) of the Income Tax Act. The relevant part of the statement of Shri Vishnu Kant Chokhani, S/o Late Jiwanrum Chokhani recorded under section 132(4) of the Income Tax Act on 13.11.2015 reads as under:- Q.1: Please identify youself. Ans. I am Shri Vishnu Kant Chokhani S/o. Late Jiwanram Chokhani aged about 48 years, a resident of Aakashdeep Building Opp. S P. Textile, Police Bazar, Shillong- 793001 Meghalaya. 1 can read, write and speak Hindi and English. Q. 2 Are you aware of the consequence of statements you a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 133A of the I.T. Act, 1961 on 23.12.2014 by DDIT(Inv) Kolkata wherein they have also admitted the above-stated modus operandi in respect of the scrip M/s CCL International Ltd. What do you have to say about the LTCG that you have booked in the same scrip M/s Kailash Auto Finance (P) Ltd. in the light of the above revelations? Further please see the statement of Shri Pradeep jain and its enclosure of the type of company in which LTCG entry has been done. What do you have to say on the above revelations? In the light of the above discussion you and your concerns have made bogus investment in tented penny stocks to receive LTCG. The details of these transaction are given below:- Sl. No. Beneficiaries Penny Stock Amount of LTCG (Rs.) 1. BRAHMADUTT CHOKHANI KAILASH AUTO FINANCE LTD. 1,68,30,300 2. VISHNU KANT CHOKHANI KAILASH AUTO FINANCE LTD. 1,41,27,050 3. KAVITA CHOKHANI KAILASH AUTO FINANCE LTD. 1,67,82,500 4. KAMLA DEVI CHOKHANI KAILASH AUTO FINANCE LTD. 1,67,12,210 5. BRAHMADUTT CHOKHANI AND SONS (HUF) KAILASH AUTO FINANCE LTD. 1,66,75,000 6. VISHNU CHOKHANI AND SONS (HUF) KAILASH AUTO FINANCE LTD. 1,34,72,155 Total 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 286/2/2013, which prohibits the department i.e. search party to take any confession in the search. The CBDT is of the view that oftenly officials used to obtain confession from the assessee and stop further recovery of material. Such confessions have been retracted and then the addition could not withstand the scrutiny of higher authorities because no material was found supporting such addition. Keeping in view the above principle, the Board has restrained the authorities from taking confession under section 132(4) of the Income Tax Act. There are a large number of decisions which suggest that without corroborating evidence, addition ought not to be made on the basis of a declaration made under section 132(4) of the Income Tax Act. 32. A perusal of the above questionnaire reveals that name of the assessee i.e. M/s. Agrim Infraproject Pvt. Limited is not discernable in the table of investor from Serial No. 1 to 6, neither it is reflected in the answer. In the answer, a declaration of the Director is confined to Rs.9,45,99,215/-, which is relatable to six individuals alongwith HUF, so even there is no disclosure on behalf of the Company i.e. M/s. Agrim Infraproject Pvt. Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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