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TMI Blog2019 (2) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, was conducted at the business and residential premises of Rashmi Group at Kolkata and other places, on 18/02/2013. Thereafter the Assessing Officer issued notice u/s 153A dt. 08/05/2014 and was served upon the assessee on 15/05/2014. In response to the notice, the assessee filed revised return declaring the same income as in the original return of income. The Assessing Officer completed the assessment u/s 153A r.w.s. 143(3) of the Act on 31/03/2015 determining total income of the assessee at Rs. 1,65,87,090/-. 4.1. Aggrieved the assessee carried the matter in appeal. The ld. First Appellate Authority granted part relief. He relied on the decisions of the Hon'ble Calcutta High Court in the case of PCIT vs. Salasar Stock Broking Limited (ITA No.264 of 2016) dt. 24.08.2016 and the judgment in the case of CIT vs. Veerprabhu Marketing Ltd. [2016] 73 taxmann.com 149 (Calcutta) and held that, incriminating material is a prerequisite for making additions in assessment u/s 153A/143(3) of the Act, wherever assessments have not abated. He pointed out that the Hon'ble Jurisdictional High Court has concurred with the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Kabul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case, the Ld. CIT(A) had erred in allowing the assessee's appeal by observing that additions made by the AO in the assessment order passed u/s 153A/143(3) are not based on any incriminating documents/papers seized during the search operation." vi. That on the fact and in the circumstances of the case, the Ld. CIT(A) had erred in not adjudicating the appeal on merit. vii. That on the fact and in the circumstances of the case, the department craves to add more grounds or alter any ground at the time of appeal." 6. The ld. D/R, submitted that the incriminating material need not necessarily be found during the course of search and that the material which is gathered during the course of any proceedings under the Act, undertaken in connection with any other persons and the material gathered during post search operations can also be the basis on which additions can be made in an assessment made u/s 153A r.w.s. 143(3) of the Act. He submitted that in the case on hand the addition in question was made based on statements recorded from various entry operators during the course of search and seizure operations at their premises and also was based on a cash trail prepare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. He submitted that the assessee was kept in dark and no material whatsoever collected by the Assessing Officer was confronted to the assessee. 7.1.1. He further argued that no evidence was brought on record by the Assessing Officer to prove that the alleged cash deposits in the bank account of third parties was in fact the assessee's money. Thus, he submits that the addition cannot be based on such material which is never confronted to the assessee. 7.2. On the issue of alleged statements from several entry operators being the basis of the addition in question, he submitted that the addition was not based on any of these statements by the Assessing Officer. He argued that the fact that all these alleged entry operators had retracted from the statements allegedly made by them, is not denied by the Assessing Officer. He further argued that the copies of the alleged statements were not confronted with the assessee nor any opportunity given for cross-examining these statements. He further relied on the judgment of the Hon'ble Madras High Court in the case of CIT vs S. Kader Khan Son [2008] 300 ITR 157 for the proposition that the statements recorded during the course of survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would not, make a non-genuine transaction as genuine. VI) Bonafide and genuineness of the transactions is the main issue and in this regard, the assessee company has failed miserably. VII) Scrutiny has revealed the camouflage adopted by the assessee and exposed the true nature of the transactions. VIII) Onus is on the assessee to prove the identity of share applicants, their creditworthiness and genuineness of the transactions appearing in its books of sale which is not proved in this case. In fact, genuineness of the transactions has not been established in spite of repeated opportunities. IX) There is enough material on record to doubt the veracity of the transactions." A perusal of the above demonstrates that the additions in question are not based on any incriminating material found during the course of search. 8.2. On the legal position, we find that the various Courts of law under similar circumstances have held as follows:- CIT,Kolkata-III Vs. Veerprabhu Marketing Limited [2016] 73 taxmann.com 149 (Calcutta) : In this case The Honourable Calcutta High Court expressed the following views: "We are in agreement with the views of the Karnataka High Court that incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.01.2012. Hence in terms of 2nd Proviso to Section 153A the assessment for the Assessment Year 2006-07 was not pending and accordingly, has to be reckoned as unabated assessment. Under the jurisdiction of Hon'ble Delhi High Court, the law is well settled that in case of unabated assessment, the additions which can be roped-in, in the assessments framed u/s.153A, would only be with regard to any incriminating material or evidence unearthed or found during the course of search. If no incriminating material has been found during the course of search, then no addition can be made in the assessment years where assessments had attained finality. The relevant observations and the ratio laid down would be discussed in the later part of this order. 15. Now coming to the ratios laid down by the Hon'ble Jurisdictional High Court, first of all, in the case of Kabul Chawala (supra), the Hon'ble Court after discussing the issue threadbare and analysing the various judgments of different High Courts laid down the following legal proposition in terms of scope of addition which can be made u/s. 153A(1) which are as under:- "37. On a conspectus of Section 153A (1) of the Act, read wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition 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." This judgment of the Hon'ble Delhi High Court has been followed in several judgments not only by the Hon'ble Delhi High Court but also by other Hon'ble High Court like, Pr. CIT vs. Somaya Construction Pvt. Ltd. 387 ITR 529 (Guj), CIT vs. IBC Knowledge Park Pvt. Ltd. 385 ITR 346 (Kar) and CIT vs. Gurinder Singh Bawa reported in 386 ITR 483. In the latest judgment the Hon'ble Delhi High Court in Pr. CIT vs. Meeta Gutgutia, their Lordships reiterated the same principle after discussing and analyzing catena of decisions including that of Anil Kumar Bhatia (supra) and Dayawanti Gupta. The Hon'ble HighCourt observed and held as under:- "62. Subsequently, in Principal Commissioner of Income Tax-1 v. Devangi alias Rupa {supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Principal Commissioner of Income Tax v. Saumya Construction P. Ltd. {supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share application received u/s 68 of the Act and addition of commission paid allegedly for the share application money and finally a disallowance u/s 14A of the Act. No incriminating material has been found during the course of search. The alleged statements recorded from entry operators have admittedly been retracted and the Assessing Officer has not based the additions on these statements. Even otherwise, when copies of the alleged statements recorded by the revenue officials have not been given to the assessee, no addition can be made based on such evidence which is not confronted to the assessee. The contents of the statements are also not brought out in detail in the assessment order. Only a general reference is made that there were certain statements recorded from various entry operators by the investigation wing. No addition can be made on such general observations. We also find that the assessee has not been given an opportunity to cross-examine any of these persons, based on whose statements, the revenue claims to have made these additions. The Hon'ble Supreme Court in the case of Kishinchand Chellaram vs. CIT, 125 ITR 713 (SC) had held that opportunity of cross-examin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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