TMI Blog2014 (1) TMI 1942X X X X Extracts X X X X X X X X Extracts X X X X ..... arch, as in the instant case, the AO has to reassess the total income of the assessee and the assessment already completed can be tinkered with or distrusted where some incriminating material is found and seized during the course of search indicating undisclosed income of the assessee. AO would assume the jurisdiction to reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the return. In case no incriminating material is unearthed during the search, the AO cannot reassess taking into consideration the other material in respect of completed assessments/unabated assessments. In the instant case, there is nothing on record and/or brought to our notice during the course of hearing that the Competent authority was seized of the aforesaid statement of Shri S. K Khemka at the time of recording of the satisfaction whereby the authorization has been issued and the search warrant was issued whereby the search has been initiated in case of the assessee. Therefore, the statement of Shri S.K Khemka is availability of other material/documentation which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious grounds of appeal: 1. That the Ld. CIT(A) has erred in confirming the order of Assessing Officer in making the addition of Rs. 87,04,733/- on account of long term capital gain on sale of shares, which was claimed to be exempt u/s 10(38), amounting to Rs. 87,04,733/- 2. That the Ld.CIT(A) has failed to appreciate that during the course of search of the assessee, no incriminating evidence in respect of dealing on such shares have been found and the recent judgment of Hon'ble Apex Court in the case of 'PCIT-III Vs. Abhisar Buildwell Pvt. Ltd.' in Civil Appeal No. 6580/2022 delivered on 24.04.2023 have not been considered properly by the Ld. CIT(A) and, as such, since no incriminating evidence was found during the course of search of the assessee and hence the addition of Rs. 87,04,733/-was not called for. 3. That the Ld. CIT(A) has confirmed the order of Assessing Officer by relying upon the statement of one Sh. Sunil Kumar Kayan and Sh. S.K. Khemka, which was recorded by the Investigation Wing, Kolkata on 13.03.2015 and not during the course of search of the assessee and, thus, the same could not be said to be the 'incriminating evidence' as found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the grounds of appeal before the appeal is finally heard or disposed off. 4. Briefly the facts of the case are that the assessee filed his original return of income declaring total income of Rs. 6,77,053/- on 29/09/2012 and in the return of income so filed, the assessee has claimed exemption towards Long Term Capital Gain (LTCG) under section 10(38) amounting to Rs. 87,04,733/-. The return of income was thereafter processed under section 143(1) and thereafter, no notice under section 143(2) was issued within the statutory time period. 4.1 Subsequently, search and seizure operation under section 132(1) were carried out at the residential and business premises of M/s Jain Amar Clothing Pvt. Ltd. Group of cases on 26/02/2016 and the assessee premises were also searched on the said date. Thereafter, the case of the assessee was centralized and notice under section 153(A) dt. 28/09/2016 was issued to the assessee. In response to the notice, the assessee filed his return of income on 28/01/2017 declaring total income of Rs. 6,77,053/- as originally declared under section 139(1) of the Act. 4.2 During the course of assessment proceedings, the AO stated that the assessee has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee found mentioned in the list of the client to whom said contract notes have been issued. 4.6 The AO thereafter referred to the financial data of M/s Maple Goods (P) Ltd. and stated that the credentials of M/s Mapple Goods Pvt. Ltd. were not satisfactory as it has no fixed assets, no turnover, no profitability and accordingly, a show cause was issued to the assessee stating that from the aforesaid discussion, it is clear that M/s Mapple Goods Pvt. Ltd. and M/s Access Global Ltd. are penny stocks and identity and credentials of both are suspicious in nature and why the LTCG claimed of Rs. 87,04,733/- should not be treated as bogus and added under Section 68 of the Act. 4.7 In response to show cause notice, the assessee submitted as under: That he has purchased 1700 equity shares of M/s Maple Goods (P) Ltd. in F.Y. 2010-11 through share broker S.K. Khemka. That M/s Maple Goods (P) Ltd. was later on amalgamated with M/s Access Global Ltd. in November 2011 and as per the amalgamation scheme approved by the Hon ble Calcutta High Court, against 1 share of M/s Maple Goods (P) Ltd., 47 equity shares of M/s Access Global Ltd. were allotted. That the shares of M/s Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sented introduction of assessee s unaccounted money, that the assessee s alleged transaction of purchase and sale of shares were not real, that the assessee has only attempted to present as fact that the amount received from the stock broker represented sale proceeds of shares, however, in reality, there was no genuine or bonafide purchase and sale of shares and the assessee s claim of LTCG with respect of trading of shares in M/s Maple Goods (P) Ltd. and M/s Access Global Ltd. amounting to Rs. 87,04,733/- was treated as bogus and added to the total income of the assessee treating the same as unexplained cash credit under Section 68 of the Act. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). 5.1 During the course of appellate proceedings, it was submitted that the assessee has made investment in shares of M/s Maple Goods (P) Ltd. in A.Y. 2011-12 and the shares were purchased through Shri S.K. Khemka and the copy of the account with Shri S.K. Khemka was placed on record. It was submitted that payment against the purchase of shares was made to Shri S.K Khemka through saving bank account maintained with HDFC Bank and copy of the bank statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of certificate as found in the locker is itself incriminating material as it has been issued by the unauthorized broker indulging into an illegal trading, it was submitted that it is only an allegation and that the AO has not brought any material on record to prove this contention. 5.7 It was further submitted that the AO has not uttered a single word that all the relevant documents from page No. 1 to 34 and page 180 to 182 of Annexure A represent the transactions which were duly recorded in the records / books of the assessee. All these transactions are routed through banking channels. All these transactions are reflected in the computation chart and the return of income which has been duly filed in accordance with law. It was submitted that the said broker was an authorized broker of Calcutta Stock Exchange and duly registered with SEBI and all these facts are on record. The AO has not denied these facts. It was submitted that all the transactions have been transacted through Calcutta Stock Exchange for the sale of shares. Hence the contention of the AO is purely an allegation on assumption basis which is not permitted in the eyes of law. It was further submitted that the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing allegations, which are simply allegations and no documentary evidences have been placed on records. 5.10 It was further submitted that the following facts are to be considered while calculating the long term capital gains: a) The shares of Maple Goods Private Limited Company were purchased in the assessment year 2011-12 through banking channels and the same has not been doubted by the AO. This clearly shows that the purchase of shares is genuine. b) There was complete amalgamation of the Maple Goods Pvt. Ltd. made through Calcutta High Court and the AO has not uttered a single word on this issue. c) The shares of Access Global Limited were allotted to the assessee as per the Calcutta High Court orders. The shares were received by the assessee in Demat Account. This fact has been admitted by the AO. d) The shares were sold through the broker by the assessee through Calcutta Stock Exchange. This fact has been admitted by the AO. e) The payments against the sale of shares were received from the broker and this fact has not been contradicted by the AO. f) The complete details of saving bank account number xxxxxxx along bank statement with HDFC Bank for purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under section 153A r.w.s 143(3) was illegal, the AO in his remand report submitted that the same cannot be accepted and pointed out that at pages No. 01 to 34 and 180 to 182 of Annexure-A seized from locker No. 194, HDFC Bank, Ludhiana, contains details of share for which bogus LTCG has been claimed by the assessee and which were confronted to the assessee in detailed show cause dt. 14/09/2017. It was stated by the AO that the above documents reflect that the assessee was in possession of the shares which has later on been utilized for bogus LTCG claim on sale of share under section 10(38) of the Act. It was stated that the share of M/s Maple Goods (P) Ltd. were purchased through broker Shri S.K. Khemka is clear from the seized record. It was stated that given the nature of the whole scheme being managed, these documents are of incriminating nature as these were issued by broker to make the scheme appearing to be falling within the four corners of law and these documents are incriminating in nature as they have direct bearing on the assessment of correct income of the assessee. Moreover as per the case of Sumati Dayal Vs. CIT 214 ITR 801(SC) even the circumstantial evidence bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid capital gain has been duly reflected in the computation of income and the purchase of the shares were made through banking transactions as per copy of the HDFC Bank duly submitted and placed on record. It was further submitted that even the copy of account duly confirmed from the books of Shri S.K. Khemka was furnished to the AO for the A.Y. 2011-12 where the said payment of cheque for the purchase of shares have duly been recorded. It was accordingly submitted that the assumption that there is an incriminating material deducted as a result of search on the applicant is entirely misconceived, misplaced and wholly untenable. 7.2 It was submitted that the assessment for A.Y 2011-12 stood completed wherein no adverse inference has been drawn in this respect and therefore no material much less any incriminating material has been found to allege that any consideration has been passed on or received outside books of accounts. It was accordingly submitted that being a case of unabated assessment in absence of any incriminating material found as a result of search in the case of the assessee the whole of the proceedings under section 153A r.w.s 143(3) is bad in law. 7.3 It was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted providing bogus LTCG entries to the assessee. The said statement was corroborated by the evidence in nature of shares seized during the course of search. Thereafter the Ld. CIT(A) referred to an article published in Taxman and stated that the documents seized from the assessee i.e, share certificates and contract bills have been used to understate the income and were only a device based on misrepresented facts, hence they fall in the definition of incriminating material. Thereafter referring to the decision of Hon ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell Pvt. Ltd. in Civil Appeal No. 6580 of 2021 dt. 24/04/2023, it was stated by the Ld. CIT(A) that in case any incriminating material is found during the course of search, the AO can assess the total income of the assessee on the basis of incriminating material as well as any other material in knowledge or possession of the AO including the total income declared in the returns. Hence the contention of the assessee that no incriminating material was found on the basis of which the said assessment has been framed was held without basis and rejected. Further, on merits as well, various contentions raised by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be anyway an incriminating material. Rather the said documents support the case of the assessee that the purchase of shares is genuine and is backed by proper documents. Further regarding the various statements of Shri S.K. Khemka and Shri Sunil Kumar Kayan, and other persons referred to by AO as well as by the Ld. CIT(A), it was submitted that the said statements have nothing to do with the search proceedings of the assessee as these were recorded during their respective investigation proceedings way back in the year 2015 and the statements were any way recorded at the back of the assessee and no opportunity to cross examine was ever given to the assessee. 10.4 It was further submitted that the statement recorded during the course of search has no evidentiary value and cannot be said to be incriminating evidence by itself as found during the course of search as held in various decisions and in this regard, reliance was placed on the decisions of Hon ble Delhi High Court in case of Pr. CIT Vs. Best Infrastructure India Pvt. Ltd. 397 ITR 82 (Del), CIT Vs. Harjeev Aggarwal 290 CTR 263 (Del), Jaipur Benches of the Tribunal in case of DCIT Vs. A M Exports 69 ITR (Trib)16 (Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a clear case where incriminating material has been found during the course of search in terms of share certificates and the contract notes. It was submitted that both the AO as well as the Ld. CIT(A) have recorded a categorical finding that the incriminating material has been found and seized during the course of search. In this regard our reference was drawn to the show cause issued by the AO wherein he has specifically referred to pages No. 1 to 34 and 180 to 182 of Annexure-A sized from Locker No. 194, HDFC Bank, Ludhiana. It was submitted that the contents of the documents so found and seized from the Locker clearly shows that the assessee has purchased the shares of M/s Maple Goods (P) Ltd. through the broker Shri S.K. Khemka. It was further submitted that Shri Suresh Kumar Khemka in his statement recorded on oath by the investigation wing, Kolkata has admitted that he has issued Katccha Panna (Purchase Contract Note) of M/s Maple Goods (P) Ltd. which later on got amalgamated with M/s Access Global and for which many persons claimed LTCG and list of such persons includes the name of the assessee. It was accordingly submitted that these documents so found and seized are of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search under section 132 or requisition under section 132A or not. The relevant discussions and the legal preposition so laid down by the Hon ble Supreme Court are contained in para 5 to 14 of its judgment which read as under: 5. We have heard learned counsel for the respective parties at length. The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i.e., whether any addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132 A of the Act, 1961 or not. 6. It is the case on behalf of the Revenue that once upon the search under section 132 or requisition under section 132A, the assessment has to be done under section 153A of the Act, 1961 and the AO thereafter has the jurisdiction to pass assessment orders and to assess the 'total income' taking into consideration other material, though no in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 does not mean that the assessment 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 is 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says, that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the, six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A, of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of, the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading Assessment in case of search or requisition . It is well settled as held by the Supreme Court in a catena of deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under section 158BA of the Act, 1961. The erstwhile scheme of block assessment under section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the 'undisclosed income' was chargeable to tax at a special rate of 60% under section 113 whereas income other than 'undisclosed income' was required to be assessed under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation. For the removal of doubts, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfillment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. 13. The Hon ble Supreme Court in the aforesaid decision has held that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act and thus, the object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Bombay High Court further affirmed the decision of the Special Bench of the Tribunal in All Cargo Global Logistics Ltd. Vs. DCIT [2012] 18 ITR (Trib) 106 (Mumbai) wherein it was held that the incriminating material in the context of the relevant provision means books of account, other documents found in the course of search but not produced in the course of original proceedings and secondly, the undisclosed income or property discovered in the course of search. 15. We deem it appropriate to reproduce the findings of the Hon ble Bombay High Court in case of Continental Warehousing Corporation (supra) and the same read as under: 30. Even otherwise, we agree with the Division Bench when it observes as above with regard to the ambit and scope of the powers conferred under section 153A of the Act. Since we are not required to trace out the history and we can do nothing better than to reproduce the observations and conclusions as above that we are not repeating the same. Even if the exercise of power under section 153A is permissible still the provision cannot be read in the manner suggested by Mr. Pinto. Not only the finalised assessment cannot be touched by resorting to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llary to this provision is that completed assessment shall not abate. These assessments become final except in so far and to the extent as undisclosed income is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six years. It may cause hardship to some assesses where one or more of such assessments has or have been completed before the date of initiation of search. This is hardly of any relevance in view of clear and unambiguous words used by the legislature. This interpretation does not cause any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word incriminating document . Clauses (a) and (b) of section 132(1) employ the words books of account or other documents . For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. 51. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). 52. The provision comes into operation if a search or requisition is initiated after 31.5.2003. On sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. 54. It may be mentioned here that Ld. Counsel for All Cargo Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention that all six assessments are to be made, if necessary, on the basis of undisclosed income discovered in the course of search. He was specifically questioned about the jurisdiction of the AO to make original assessment along with assessment u/s 153A, merging into one. However he took an evasive view submitting that this question need not be decided in his case although the question of jurisdiction u/s 153A was vehemently pressed on account of which ground No. 1 in the appeal for assessment year 2004-05 was admitted as additional ground. He also wanted the additional ground to be retained in case of any future contingency. 16. The matter relating to incriminating material coupled with various other issues ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons recorded at the time of issuing a notice under Section 148 of the Act seeking to reopen an assessment. These reasons cannot be improved upon and/or supplemented much less substituted by affidavit and/or oral submission; (e) In the instant case, the satisfaction note dated 13th July 2021 (common for all Assessment Years) insofar it relates to Assessment Year 2017-2018 only records that: (i) an account of petitioner in the books of Hubtown Limited was found. It is important to note that the said account agreed exactly to the account of Hubtown Limited in the books of petitioner, a fact verified during the course of the survey on the day after the search, i.e., 31st July 2019. (ii) petitioner had entered into transactions of purchase and sale of shares of Hubtown Limited which have been recorded in petitioner s books of accounts and tax paid on the resulting gain. (iii) reference is made to an alleged re-cast of loan from petitioner to Hubtown Limited into an advance against property during year ended 31st March 2019 and the same is not relevant to Assessment Year 2017-2018. (f) Accordingly, it is irrefutable that no incriminating material relating to petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case of completed/unabated assessment wherein the original return of income filed on 29/09/2012 stood processed under section 143(1) and accepted in absence of any notice under section 143(2) and statutory period of issuance of such notice stood expired well before the date of search which was conducted on 26/02/2016. 19. As per section 153A of the Act, once a search and seizure action is carried out, the AO has to assess or reassess the total income of the assessee in respect of six years immediately preceding the assessment year relevant to the previous year in which a search is conducted or requisition is made. In case the assessment is pending on the date of search the same shall be abated as per proviso to section 153A(1) of the Act and the AO is free to assess the income of the assessee as regular assessment. However, in case of completed assessment and not abated as on the date of search, as in the instant case, the AO has to reassess the total income of the assessee and the assessment already completed can be tinkered with or distrusted where some incriminating material is found and seized during the course of search indicating undisclosed income of the assessee. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so searched assumes significance as the same alone will indicate the incriminating nature of such material so found belonging to the assessee during the course of search as held by the Bombay High Court in case of Ashok Commercial (supra) wherein it was held that the contents of the said satisfaction note are the only statement/material to be looked at and the Revenue cannot seek to augment, supplement or add to the material recorded to support the claim that the incriminating material has been found and the Revenue cannot refer to any other document or material to establish such a claim. In the instant case, we find that there is nothing on record and/or brought to our notice during the course of hearing which demonstrates that any satisfaction note has been prepared and recorded by the Assessing officer of family members whose locker has been searched and from where the documents belonging to the assessee has been found and seized. The fact that the assessee s premises were also searched and he was covered as part of the same search operations and action is initiated u/s 153A in his case, the same doesn t take away the statutory requirement of recording of satisfaction note by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific show-cause notice dated 14/09/2017 regarding bogus LTCG has been issued by the AO and considering the submissions of the assessee, the transaction of purchase of the shares of M/s Maple Good (P) Ltd through the broker Shri S.K Khemka has been duly accepted by the AO. Therefore, where for assessment year 2011-12, the documents so found and seized from the locker have not been found as incriminating in nature by the Assessing officer and in that scenario, it is difficult to understand and appreciate how the same documents can be treated as incriminating in nature for the impugned assessment year 2012-13 vide the order passed u/s 153A r/w 143(3) of the even date i.e, 29/12/2017 by the same Assessing officer. 25. Moving further, it is noted that pursuant to scheme of amalgamation approved by the Hon ble Calcutta High Court, the assessee had received shares of Access Global in lieu of shares held in Maple Goods (P) Ltd. and the shares of Access Global were received and credited in the demat account of the assessee. Therefore, once the scheme of amalgamation has been implemented, Maple Goods (P) Ltd loses its legal existence and identity and merges into Access Global and the fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemka is highly relevant to assessee s case as the assessee has purchased shares through the said broker. There is a difference between relevancy of material and incriminating nature of material found during the course of search. The material which could be relevant doesn t necessarily be held as incriminating in nature. In case of unabated assessment, what is required to be seen is whether there is any incriminating material unearthed during the course of search. Only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income in case of completed/unabated assessment taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the return. 27. As we have noted above, the share certificates corroborate and confirm the disclosed transaction of purchase of shares of Maple Good (P) Ltd by the assessee and cannot be termed as incriminating in nature. Therefore, where there is no incriminating material found during the course of search, the statement of Shri S.K Khemka (and what has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntents advanced by the ld CIT/DR therefore cannot be accepted. 29. In view of the aforesaid discussion and in the entirety of facts and circumstances of the case and respectfully following the dicta laid down by the Hon ble Supreme Court, Hon ble Delhi and Bombay High Court as well as Special Bench of the Tribunal, we are of the considered view that the addition of Rs 87,04,733/- made by the AO during the reassessment proceedings completed u/s 153A is not based on any incriminating material found or seized during the course of search and seizure action u/s 132 of the Act in case of the assessee. Being a case of completed/unabated assessment, in absence of any incriminating material found during the course of search, the addition so made cannot be sustained and is hereby directed to be deleted. In the result, the ground No. 2, 3 4 of the assessee s appeal is allowed. 30. In view of the aforesaid discussions where we have deleted the addition in absence of any incriminating material, other grounds of appeal on merits of the case, lack of opportunity for cross-examination, etc have become academic in nature and we don t deem it necessary to adjudicate the same. These grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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