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TMI Blog2018 (10) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... uded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly the addition made on account of share application money and share premium u/s 68 is hereby directed to be deleted. It is not in dispute that there was absolutely no incriminating material found during the course of search in the instant case with regard to the issue of share capital, share premium and the AO had only tried to explain the various layers through which the monies ultimately reached the assessee company. The other addition of commission is only consequential to the first addition. Since the issue is addressed on preliminary ground of absence of incriminating materials, we refrain to give our findings on the merits of the addition u/s 68 for the Asst Year 2012-13 and the commission of ₹ 72,500/-. Accordingly the grounds raised by the revenue in this regard are dismissed. - I.T.(SS).A No. 11/Kol/2017 - - - Dated:- 26-9-2018 - Shri M.Balaganesh, AM And Shri S.S.Viswanethra Ravi, JM For The Appellant : Shri G. Hangshing, CIT DR For The Respondent : Shri A.K. Tulsiyan, FCA ORDER Per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to Asst Year 2012-13 as under:- Amtek Financial Consultants Pvt Ltd - ₹ 25,00,000/- Jagmangal Vanijya Pvt Ltd - Rs 25,00,000/- Zircon Infracon Pvt Ltd - ₹ 70,00,000/- ARS Financial Consultant Pvt Ltd - ₹ 25,00,000/- ₹ 1,45,00,000/- In the course of assessment proceedings , name and address of share applicants, number of shares allotted and amount along with Form No. 2 filed with Registrar of Companies were submitted before the ld AO. The ld AO observed that the notices issued u/s 133(6) of the Act to the share subscribing investors duly filed their reply in response to the said notice u/s 133(6) of the Act confirming and substantiating the investment made by them in the assessee company. The requisite documents and details such as bank statements, income tax return acknowledgement, audited accounts, source for making investments were duly submitted before the ld AO. 3.2. The ld AO held that :- Cash deposits were made by small firms int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld AO completed the assessment u/s 153A / 143(3) of the Act on 29.3.2016 determining the total income at ₹ 1,45,82,471/- as against the returned loss of ₹ 29/-. 4. The assessee stated no incriminating materials relating to the share capital or share application money or share premium were found during the course of search. Similar arguments were advanced for addition made towards commission paid on account of alleged bogus share capital and preliminary expenses written off. It was submitted that from the documents filed pertaining to the share subscribers, it could be seen that they had sufficient sources for making investments in the assessee company. Hence it was pleaded that the assessee company had duly proved the necessary three ingredients i.e identity of the share subscribers, genuineness of transactions and creditworthiness of transactions within the meaning of section 68 of the Act and prayed for deletion of the addition made in the sum of ₹ 1,45,00,000/-. The other addition of ₹ 72,500/- towards alleged commission payment is only consequential to the first addition of share application money. 5. The ld CITA deleted the additions made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He argued that the basic foundation for conducting the search is governed by the provisions of section 132 of the Act which has to be read harmoniously with section 153A of the Act. There are three conditions based on which a search action could be initiated u/s 132 of the Act on an assessee. They are :- Section 132(1) - If the concerned authority has in consequence of information in his possession, has reason to believe that - (a) where a person fails to produce the books of accounts and other documents in response to notice u/s 142(1) or summons issued u/s 131(1) of the Act ; or (b) where a person fails to comply with the requirements of summons issued u/s 131(1) of the Act ; or (c) where a person is in possession of any money, bullion, jewellery or other valuable article or thing and such assets represents either wholly or partly income or property which has not been , or would not be, disclosed for the purposes of the Act (hereinafter referred to as the undisclosed income or property) ; then the officer , so authorized could conduct a search and proceed as per the requirements laid down in the said section. He argued that the aforesaid three primary conditions fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. The provisions of section 153A of the Act are reproduced hereunder for the sake of convenience :- [ Assessment in case of search or requisition 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- ( a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of abated assessments, the total income needs to be determined afresh in accordance with the provisions of section 153A and other provisions of the Act. 6.4.1 The concluded assessments for the purpose of section 153A of the Act shall be - ( i) assessment years where assessments are already completed u/s. 143(1) and time limit for issuance of notice u/s. 143(2) of the Act has expired or; ( ii) assessment years where assessments are already completed u/s. 143(3) of the Act ; unless they are reopened u/s. 147 of the Act for some other purpose in both the scenarios stated above. 6.4.2 The scheme of assessment proceedings contemplated u/s. 153A of the Act are totally different and distinct from the proceedings contemplated u/s. 147 of the Act and these procedures of assessment operate in different fields and have different purposes to be fulfilled altogether. 6.4.3 The expression 'assess or reassess' stated in section 153A(1)(b) has to be understood as below:- 'assess' means assessments to be framed in respect of abated assessment years irrespective of the fact whether there are any incriminating materials found during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ld. AO. ( vii) Completed assessments can be interfered with by the Ld. AO while making the assessment under section 153A 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 the course of original assessment. 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07, on the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 8.4. We find that the decision relied upon by the ld DR in the case of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) does not in any man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court in Kabul Chawla s case and also placed reliance on its own decision in the case of CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC). 8.7. We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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