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TMI Blog2019 (10) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwala, Sr. Advocate & Shri Nirav Sheth, FCA For the Revenue : Shri Radhey Shyam, CIT, DR ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) These two appeals are preferred by the Revenue against two separate orders both dated 02.08.2017 passed by the Ld. CIT (A) - 20, Kolkata and since the issued involved therein are common, the same have been heard together and are being disposed of by a consolidated order along with corresponding cross-objections filed by the assessee being C.O. No. 14 & 15/Kol/2019. 2. The relevant facts of the case giving rise to these appeals and cross-objections are as follows. The assessee is a company which is engaged in the business of real estate. The returns of income for both the years under consideration were originally filed by it on 25.09.2009 and 21.09.2010 for A.Y. 2009-10 and 2010-11 respectively declaring total income at Nil claiming that there was no business carried on by it during the said years. A search and seizure action u/s 132 was conducted in the case of the assessee as well as in the cases belonging to the same group on 05.08.2014 as well as on the subsequent dates. The lockers belonging to the various persons of the group were also cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 2009-10 and 2010-11 by treating the share capital and share premium amounts received during the years under consideration as unexplained cash credits were challenged by the assessee in the appeal filed before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), detailed written submissions were filed by the assessee stating, inter alia, that the scope of unabated assessments completed by the Assessing Officer under section 153A/143(3) was limited to assess the undisclosed income only on the basis of incriminating material found during the course of search and in the absence of any such incriminating material found during the course of search, the addition made by the Assessing Officer under section 68 by treating the share capital and share premium amounts as unexplained cash credits was unjustified. The ld. CIT(Appeals) found merit in this contention raised on behalf of the assessee and after extracting the entire written submission filed by the assessee in his impugned order, he deleted the addition made by the Assessing Officer under section 68 after recording his observations/findings as under which are identical for both the years u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573( Del) Search and seizure-New scheme of assessment in search cases-Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies-Search was also carried out in the premises of the assessee-Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns-As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1),assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies- AO declined to rectify the assessments-CIT also held that addition need not be restricted only to the seized material-ITAT on appeal however deleted addition on grounds that the additions made for relevant AY's u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law-Issue was whether the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of section 153A. Ld. DR for the revenue had pointed out that there is a direct nexus among the companies, which has been established by the statement of Mr. Naresh Kumar Chhapperia, which cannot be relied on, as he was a double speaking person. Therefore, considering the factual position and the judgments cited by Id. AR, we are of the view that the additions made by the Aa u/ s 153A and confirmed by the ld. CIT(A) needs to be deleted. Therefore, we delete the addition." Furthermore, the decision of the jurisdictional tribunal in the case of M/s Tanuj Holdings Pvt. Ltd Vs. DCIT CC-l(2), Kolkata vide ITAT No. 360 to 363jKol/2015 dated 20.01.2016 is important. The relevant portion of the order is reproduced as under: We also find that no incriminating materials were found during the search in the respect of the issue of deemed dividend. Hence it cannot be the subject matter of addition in 153C proceedings in respect of completed assessments. We hold that when an addition could not be made as per law in section 153C proceedings, then the said order cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rits of the issues." Budhiya Marketing Pvt. Ltd. & Ors. Vs. ACIT in ITA Nos1545-1546/ Kol./2012 [reported in (2015) 44 CCH 03441dt. 10.07.2015 (ITAT Kolkata) The issue whether the addition in an assessment framed under section 153A can be made on the basis of the incriminating material found during the course of the search where the assessment has not been abated, has not been considered or decided by this Tribunal. Therefore, this decision, in our opinion will not assist the revenue while disposing of the plea of the assessee that since no incriminating material is found during the course of the search relating to the share capital and the share premium, therefore, no addition can be made while making an assessment under section 153A of the Income Tax Act. No contrary decision was brought to our knowledge by the ld. D.R. In view of the aforesaid discussion and the decision of the Hon'ble Special Bench, Bombay High Court, as well as Hon'ble Delhi High Court, we confirm the order of the CIT(Appeals) deleting the addition made in each of the assessment years as we hold that the Assessing Officer was not correct in law in making the addition in the assessment made under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act inter alia on the amount of interest income. It is also undisputed that no incriminating material was found during the course of search casting doubt about the allowability or otherwise of such deduction under section 80IB. This fact has been fairly admitted by ld. D.R. during the course of proceedings before us as well. The Mumbai Bench of the Tribunal in the case of ACIT vs. Pratibha Industries (2013) 141 ITD 151 (Mum.) has held, inter alia, that having done original assessment u/s 143(3), if no incriminating material is found during the course of search, then it is permissible to make any addition in the assessment under section 153A pursuant to search action. The Special Bench of the Tribunal in the case of All Cargo Global Logistics Limited vs. DCIT (2012) 137 ITD 217 (SD)(Mum.) has also held to the same extent. In view of the foregoing discussion, we are of the considered opinion that no exception can be found to the view taken by CIT(Appeals) for deciding this issue in assessee's favour. Before parting with this matter, we want to make it clear that our decision is based in the backdrop of the facts that the deduct ion under sect ion 80IB could not have been tink ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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." The Hon'ble Kolkata High Court in the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573( Del) Search and seizure-New scheme of assessment in search cases-Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies-Search was also carried out in the premises of the assessee-Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns-As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1), assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al issue. I find from the assessment order that during the search and seizure operations conducted u/s 132 of the I .T. Act , 1961, incriminating documents/papers were not seized. At least, 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 It would also not be out of context tomention- here that in this case, on the date of search, no assessment for this year was pending. Therefore, keeping in view the ratio decided by the Jurisdictional bench of Kolkata Tribunal in cases referred above and the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra) in the light of CBDT's decision of not filing SLP in this case in the Supreme Court and keeping in view the Apex Court 's decision to dismiss SLP on similar issue in the case of Pr. CIT -vs . - Kurele Paper Mills Pvt. Limited: SLP(C) No. 34554 of 2015 dated 07.12.2015, I am of this view that in order to maintain judicial continuity on this issue and respectfully following the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra), as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant material available on record. It is observed that a similar issue was involved in the case of M/s. Shantinath Financial Services Ltd. (IT(SS)A No. 102/Kol/2017 A.Y. 2010-11), which was heard simultaneously, wherein a detailed submission was made by both the sides in writing in support of their respective stand and after considering the said written submission, the Tribunal decided the issue after analysing the legal position in the light of the various judicial pronouncements cited by both the sides vide paragraph No. 7 to 9 of its order dated 30th September, 2019 as under: 7. We have considered the rival submissions and also perused the relevant material available on record. In this case, a search and seizure action under section 132(1) of the Act was conducted on 17t h & 18t h December, 2014 and the addition made by the Assessing Officer in the unabated assessment completed in pursuance of the search under section 153A of the Act on account of share capital and share premium received during the year under consideration by treating the same as unexplained cash credit was deleted by the ld. CIT(Appeals) on the ground that the same was not based on any incriminating m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon the judgment of the Hon'ble Delhi High Court in the case of Kabul Chowla (supra) and more or less an identical view had been taken by the Court even in the case of Veerprabhu Marketing Limited (supra). In the case of Kabul Chowla, search was conducted under section 132 of the Act. As on the date of search, no assessment proceeding was pending for the relevant assessment year and the addition made by the Assessing Officer in the assessment completed under section 153A pursuant to the search on account of deemed dividend under section 2(22)(e) was deleted by the Tribunal on the ground that the same were not based on any incriminating material found during the course of search. The decision of the Tribunal was upheld by the Hon'ble Delhi High Court by holding that the additions made to the income of the assessee for the relevant assessment years under section 2(22)(e) were not sustainable because no incriminating material concerning such additions was found during the course of search and further no assessments for the said years were pending on the date of search. 8. In the case of S. Ajit Kumar (supra), relied upon by the ld. D.R., Hon'ble Supreme Court has held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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