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TMI Blog2020 (3) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) relying upon the decisions of the Hon ble High Court of Kerala in the case of E.N.Gopakumar Vs. CIT [ 2016 (11) TMI 72 - KERALA HIGH COURT] and case of CIT Vs. Raj Kumar Arora [ 2014 (10) TMI 255 - ALLAHABAD HIGH COURT] has held that even if there is no incriminating material, the AO is empowered to make additions in an assessment framed u/s.153A of the Act. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision favouring the assessee should be followed. For this, we derive support from the decision in the case of CIT vs. Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] - Assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated and even no incriminating material found during the course of search, is unsustainable in the eyes of law. As per the decision of Hon ble Delhi High Court in the case of Kabul Chawla, [ 2015 (9) TMI 80 - DELHI HIGH COURT] completed assessments can be interfered with by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the ld.CIT(A) has deleted the additions as per Section 292C of the Act, therefore, first we shall take up the cross objections of the assessee and the grounds raised therein are as under :- Grounds raised in CO No.20/CTK/2019 (A.Y.: 2009-2010) : 1. That, the Ld. C.l.T.(A) erred in dismissing the legal ground of the assessee that there being no incriminating material found in course of the search operation, no addition can be made in respect of unabated year in relation to the share capital of ₹ 14,73,00,000/-. 2. That, the order of the Ld. C.I.T.(A) rejecting the above legal ground on the alleged stand that as per sec. 153A there is no need of incriminating material for making additions U/S.153A of the Act is directly in contradiction with several judgments of Hon'ble High Courts and Tribunal, including the decisions of Hon'ble ITAT, Cuttack in the cases of E-City Projects Lucknow P. Ltd., order dated 28.02.2018 and Midas Capital Pvt. Ltd., order dated 23.03.2018 relied upon before him. 3. That, the Ld. C.I.T.(A) being Officer subordinate to Hon'ble ITAT, Cuttack Bench was duty bound to accept the authorities relied upon by the assessee and thus h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently the jurisdiction was changed u/s.127 of the Act and necessary compliance was made by both the sides. It was also noted by the AO that the assessee company had filed return of income for the impugned assessment year on 29.09.2009 u/s.139(1) of the Act assessing total income of ₹ 98,44,850/-. During the course of assessment, the AO referred those documents which were found during the course of search and seizure and it was also noted by the AO that the disputed amount was recorded in the books of accounts of the assessee. In this regard, the assessee submitted his written submissions and relied on various documents in support of his claim. Accordingly, the completed the assessment by making various additions and determined total income at ₹ 15,84,80,145/-. 5. Aggrieved from the above order, the assessee appealed before the CIT(A). The assessee also submitted his written submissions and relied on various case laws. Ld. CIT(A) after considering the submissions of the assessee as well as findings of AO, rejected the legal grounds raised by the assessee regarding no incriminating material was found during the course of search but the CIT(A) allowed the appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings were invalid and illegal. 2. However at this juncture, before going on to the particular detailed facts of the addition, it is first relevant to discuss the history of the legislations in relation to search proceedings and assessments, the specific provisions of the section 153A of the Act, its scope, its implications and also the various judicial decisions on the subject. 3. Going briefly into the history of the legislations in relation to search proceedings and assessments, it is stated that since the commencement of the Income Tax Act, 1961 there was no separate procedure for assessment of search cases. Prior to 31st May 1995 there were no special provisions for assessment of search cases. Assessments were governed by the regular provision of the I.T. Act as applicable to relevant assessment year as prevailing then. Assessments were used to be reopened having recourse to the provision of section 147 of the Act. However a provisional order U/S 132(5) used to be passed for release of seized assets. Thereafter, with effect from 1st June 1995, scheme of block assessment in section 158BC and 158BD as per chapter XIVB of the Act was introduced. The main purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 132A. 5. Now explaining the specific provisions of the section 153A of the Act, it would be relevant to first make a reference to the provisions of the section 153A of the Act and the observation of the Apex Court in a case, as under: 5.1. The Section 153A of the Income Tax Act, 1961, reads as under: * 153A.Assessment in case of search or requisition *(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 be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inality in all legal proceedings, that state issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasijudicial controversies as it must in other spheres of human activity. )) It would not be out of place to mention here that as per the provisions of Article 141 of the Constitution of India, 1949, the Law declared by Supreme Court shall be binding on all courts within the territory of India and accordingly, it is the law of land. 5.2. A plain reading of the relevant section as laid out above lays down that Section 153A would be applicable where a search is initiated under section 132 or books of account or other documents or any assets are requisitioned under section 132A of the Act after 31st May, 2003. Therefore, before invoking the provisions of section 153A of the Act it would be necessary to comply with the provisions contained under section 132(1) of the Act. Once the warrant of authorization or requisition is issued and search is conducted, Panchanama is drawn, the completed assessments for all the relevant years would get reopened irrespective of whether any incriminating material is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement refers to suspension or termination of the proceedings either of the main action, or the proceedings ancillary or collateral to it. The proceedings, which have already terminated are not liable for abatement unless statute expressly provides for such consequence thereof 5.5. The word 'pending' occurring in the second proviso to section 153A of the Act, is also significant. It is qualified by the words 'on the date of initiation of the search', and makes it abundantly clear that only such assessment or reassessment proceedings are liable to abate. In other words, Assessments which are not pending i.e. completed assessments as on the date of search would hold their base and would not abate. 5.6. Thus what emerges is that only pending Assessments as on the date of search shall abate. The legislature is clear that any appeal, revision or rectification proceedings, if pending as on the date of search shall not abate. Accordingly, as far as completed assessments are concerned, they do not abate and pending appeals etc. in respect thereof continue to exist notwithstanding the fact that the search has been made. Thus a completed assessment becomes final un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be evidence based. Section 153A of the Act is a separate and special provision that has been specially enacted to undertake search related assessments. A search U/S 132 of the Act, is authorized to unearth undisclosed assets or transactions resulting in income which are not recorded in the books of account of a person. Therefore, a search puts in motion the process of assessment of the undisclosed income of a tax payer which is not disclosed to the department before the date of search. Thus section 153A is limited to the assessments of income which are discovery of search. 5.9. Therefore, proper construction would be that in respect of completed assessments, the assessment shall be made only if incriminating documents etc. are found. Therefore, the term assess and reassess appearing in section 153(1)(b) means that assessment shall be made in case of pending assessments and reassessments shall be made in respect of completed assessments where incriminating material is found. 6. Having understood the legal position as laid out by the law itself, we now move on to analyse the position as laid out by the following decisions: (copies all enclosed in separate paperbook con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abul Chawla on 28.08.2015 380 ITR 573 (Del) The legal position that emerges on a perusal of section 15JA and section 132 of the Income-tax Act, 1961, is as under: (i) Once a search takes place under section 132 of the Act, notice under section 153A(l) will have to be mandatorily issued to the person in respect of whom search was conducted requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the total income of the six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years in which both the disclosed and the undisclosed income would be br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purposes of making additions on account of share capital. There was nothing to show that the factual determination was perverse. [The Supreme Court has dismissed the special leave petition filed by the Department against this judgment : [2016J 380 ITR (St.) 64-Ed.J Pr. CIT-2 v. Salasar Stock Broking Ltd. (G.A. No. 1929 of2016IITAT No. 264 of2016) dated 2410812016 Calcutta High Court (copy enclosed) In the said case, the learned Tribunal was of the opinion that the Assessing Officer had no jurisdiction under Section 153A of the Income Tax Act to reopen the concluded cases when the search and seizure did not disclose any incriminating material. In taking the aforesaid view, the learned Tribunal relied upon a judgement of Delhi High Court in the case of CIT(A) vs. Kabul Chawla reported in 380 ITR 573. The aggrieved Revenue appealed before the Hon'ble High Court. The Hon'ble High Court dismissed the appeal by observing as under: We are in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre- requisite before power could have been exercised under section153C read with section 153A. In the case before us, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us income emanating from the incriminating material found during the course of search. In respect of assessment pending on the date of search which got abated in terms of second proviso to section I53A(1), the total income shall be computed afresh un influenced by the fact whether or not there is any incriminating material. Suncity Alloys (P) Ltd. vs. ACIT [2009J 124 TTJ 674, Jodhpur Bench of the ITAT Upon the perusal of second proviso below Section I53A, it is found clearly laid that assessment or reassessment referred to in Section I53A that are pending on the date of initiation of search or making requisition u/s I32A shall abate. The statute does not say that the assessment or reassessments that have already been made before the date as aforesaid shall also abate. It is also not correct that all the proceedings or returns filed shall also abate. In fact the assessing authority is the custodian of all such returns including the returns relatable to pending assessments that stand abated Sub-section (2) of Section I53A mandates that if any proceeding initiated or any order of assessment made u/ss (1) relating to any assessment year which has been abated under the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparently conflicting verdicts in CIT vs. Kabul Chawla 380 ITR 573 (Del) (supra) and Dayawanti Gupta v. CIT 390 ITR 496 (Del). Here, derouting it would be of relevance to briefly quote the decision of the Delhi High Court in Dayawanti Gupta vs. CIT [390 ITR 496 (Del)](copy enclosed) wherein the High Court dealt with the issue whether an assessment u/s 153A can be made even if no incriminating material has been found during s. 132 search proceedings. In the said case it was held as under: (i) that the assessment under section 153A was not arbitrary or made without any relevance or nexus with the various seized materials in the form of documents, agreements, invoices and statements in the form of accounts and calculations, since the assessment under the section could be made only on the basis of the seized material. The statements made under oath by the assessee and her family members were part of the record and continued to be so. They were never reasonably explained and their probative value was undeniable. The occasion for making them arose because of the search and seizure that occurred and the seizure of various documents pointed to the undeclared income. (h) That t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed not only by this Court in its subsequent decisions but also by several other High Courts. (xvi) For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those A Ys. It would be further relevant to note at this juncture that the Hon'ble Supreme Court vide its recently pronounced decision on 3rd October, 2017 has stayed the operation of the judgement of the Delhi High Court in Dayawanti Gupta vs. CIT [390 ITR 496 (Del) wherein the High Court dealt with the issue whether an assessment u/s 153A can be made even if no incriminating material has been found during s. 132 search proceedings. Copy of the decision of the Apex Court pronounced on 3rd October, 2017 is enclosed herewith. Thus, it stands as an undisputed fact that the decision in the case of Kabul Chawla [380 ITR 573 (Del)] holds good and the decision in the case of Dayawanti Gupta v. CIT [390 ITR 496 (Del)] has no operation in public domain. In a very recent judgement of the Hon'ble Apex Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 331RANI2019 (copy enclosed). It was held by your Honours as under: 14. On perusal of the above observations of the AO, we find total absence of reference to any incriminating material which may have any bearing to impugned additions/disallowances. As a corollary, it is manifest that additions/disallowances have been made without reference to any specific incriminating material/document found as a result of search and seizure action under s.132 of the Act and is based on re-appreciation of facts unconnected to search. Accordingly, we are of the view that various additions/disallowances made by the AO on the basis of TEP or financial statements are clearly beyond the scope of authority vested under s.153A o(the Act owing to absence of any incriminating material or evidence deduced as a result of search. No reference of such incriminating material, if any, is found in any o(the assessment orders for the purposes of making various additions/disallowances. In this regard, We would like to placed reliance on the decision of ITAT Delhi Bench of the Tribunal in the case of M/s Aerens Buildwell Ltd. Vs. ACIT, ITA No.5073IDelI2016, order dated 21.12.2018, wherein the Tribunal after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the same has been added to the income of the assessee. Therefore, in our considered opinion, the action of the AO is based upon conjectures and surmises and hence, the additions made is not sustainable in the eyes of law, because this issue in dispute is now no more res-integra, in view of the decision dated 28.8.2015 of the Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Kabul Chawla (2016)380 ITR 573(Del.) and appeal filed before the Hon'ble Supreme Court Of India by the Department in the case of CIT vs. Kabul Chawla has been dismissed in Civil Appeal No. 6415 of 2016 vide order dated 17. 9. 2018. The relevant finding of the Hon 'ble Delhi High Court in the case of CIT vs. Kabul Chawla are reproduced under:- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned ITA Nos. 707, 709 and 713 of 2014 of decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (l) will have to be mandatorily issued to the person searched requiring him to file returns for six Ays immedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 6. Respectfully following the precedent of the Hon'ble Jurisdictional High Court in the case of CIT vs. Kabul Chawla, as aforesaid, we allow the appeal of the Assessee, because AO has completed the assessment and made the addition in dispute without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record. Hence, the addition in the case is deleted and the grounds raised by the assessee in the appeal are allowed. 15. The coordinate bench of the Tribunal in the case of Dr. Sukanta Chandra Mallick, in IT(SS)A Nos.86-91/CTK/2018, order dated 08.07.21019, wherein the Tribunal has observed as under :-' 12. In the present case, we find that there is nothing on record to suggest that any material was found in the course of search which would show any connection on addition made by AD with the seized material which is the subject matter of dispute in assessment order. Nothing is found contrary to the stated position of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or made known in the course of original assessment. However, in the case in hand, the AO has not referred to any incriminating material found during the course of search while framing the assessment. Section 153 A of the Act, 1961 provides for the scheme of assessment of income in case of a searched person. For the sake of completeness of our order, we would like to reproduce the provisions of Section 153A of the Act, which read as under- [Assessment in case of search or requisition 153A. [(1)J 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 . From the above provisions of Section 153A of the Act, it is clear that the Assessing Officer, while framing. assessment under section 153A of the. Act cannot make the addition/disallowance dehors any 'incriminating/ material: In this regard, reliance can also be placed on the decision of Mumbai Bench of the Tribunal in the case of K.Sera Sera Produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final, in the event where no incriminating material is found during the course of search. The Hon'ble High Court also noticed its earlier judgment in the case of CIT v. Murali Agro Products Ltd. [IT Appeal No. 36 of 2009, dated 29-10-2010J and elaborately culled out the scope and ambit of the assessment and reassessment of to tal income under section 153A(1) of the Act read with the proviso thereof The Hon'ble Bombay High Court has ruled out that an assessment under section 153A(1) in an unabated year would not encompass any addition for which no incriminating material is found during the course of search, because in such a case, the original assessment had become final. 8.1 The aforesaid proposition is also supported by judgment of Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla [2015J 61 taxmann.com 412/234 Taxman 300/[2016J 380 ITR 573, wherein the legal proposition has been summarized in the following words:- Summary of the legal position 37. On a conspectus of Section 153A(1) of the Act, read with the proviso thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed or made known in the course of original assessment. 8.2 In this legal background, we may now turn to the addition made by the Assessing Officer in the impugned assessment and the manner in which such additions have been made. The first addition is out of claim of preliminary expenses under section 35D of the Act of ₹ 10,12,826/-, and the relevant discussion in this regard is contained in para 5 of the assessment order which shows that it -is based on the disallowance made in the assessment originally finalized under section 143(3) of the Act dated 22/11/2006. The second addition is the disallowance of Stock Exchange listing fee of ₹ 2,00,000/- and the relevant discussion is contained in para-6 of the assessment order. The addition has been made primarily in the absence of evidence to substantiate the expenditure. Thirdly, depreciation on furniture and fixtures of ₹ 5,94,013/- has been denied in terms of the discussion in para-7 of the assessment order. The relevant discussion shows that in case of some of the invoices of the cost of furniture and fixtures, the assessee could not substantiate the values and thus, depreciation was denied on such value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of DCIT Vs. Rajiv Kumar [2018J 99 taxmann.com 371, has held as under :- 20. Hon 'ble Bombay High Court in the case of Pr. CIT Vs. Jignesh P. Shah [2018J 99 taxmann.com 111 has held as under :- 21. The Chandigarh Bench of the Tribunal in the case of Mala Builders (P.) Ltd. Vs. ACIT [2017J 88 taxmann.com 801, has observed as under :- 22. It is not the case of the Revenue that the assessment was pending on the date of search. If there is no any assessment is pending before the AO, that assessment order is unabated. In this case before us, the assessment is not pending before the AO as submitted by the AR of the assessee which has not been controverted by the Revenue. The AO has not referred any incriminating materials if any found during the course of search while framing the assessment. It appears that there was no incriminating material was found in the case of the assessee which can be used for completing assessment. The assessee had filed return of income as per Section 139 of the Act, which was available before the AD. The AO has made addition only on the basis of TEP (Tax Evasion Petition) filed by somebody else, financial statements and return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 120 or any other provision of this Act, and the [Additional Commissioner or] [Additional Director or] [Joint Commissioner or Joint Director] who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act ;] On careful conjoining reading of provisions of Section 2(7 A) of the Act and Section 153A of the Act, it is clear that the CIT(A) has been precluded. The AO must have referred to the incriminating material while framing the assessment for unabated assessment year in his order. Respectfully following the judicial pronouncements cited above, we hold that additions/disallowances made without any nexus to incriminating material found, if any, as a result of search operations, are not sustainable in the eyes of law in section 153A of the proceedings. Hence, the additions/disallowances made by the AO in all the captioned appeals require to be quashed. Thus, we find merit in the legal ground raised by the assessee in ground No.3 and the same is allowed. In this view of the matter, we do not intend to adjudicate various additions/disallowances on me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of the assessee is allowed. Midas Capital Pvt Ltd. ACIT, Central Circle, Cuttack, ITAT-Cuttack Bench, AY 2011-12 2012-2013, (IT (SS) A No. 04 OS/CTKJ2018) pronounced on 23/0312018 (Order copy enclosed). 28. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision in favour of the assessee should be followed. For this, we derive support from the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC). Therefore, we are of the considered view that in an assessment made uls.153A of the Act for an assessment year for which assessment has not been abated, then the jurisdiction of the Assessing Officer to make addition in such an assessment, is confined to such incriminating search material and no addition dehors the search material can be made. 29. ln the instant case, we find that during the course of the relevant search only tally data of the assessee company was found which shows that the assessee has receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification proceedings in connection to the completed assessments, if pending as on the date of search shall not make assessments incompletes abate. 7.2. However in cases where the return of income is filed and is processed U/S 143(1) of the Act but Notice u/s 143(2) of the Act is not served on the assessee within the stipulated time period, then also the assessment would be termed as 'concluded assessment' i.e. no proceedings are pending. In support of the above argument, reliance is placed on the following decisions: Decision of the Punjab Haryana High Court in the case of Vipin Khanna vs CIT [255 ITR 220(PH)];- There/ore, in a case where a return is filed and is processed u/s 143(1)(a) of the Act and no notice under sub section (2) of section (143) thereafter is served on the assessee within the stipulated period of 12 months, the assessment proceeding u/s 143 come to an end and the matter becomes final. Thus, although technically no assessment is framed in such a case, yet the proceedings for assessment stand terminated. Recent judgment of the Hon'ble ITAT Kolkata in the case of Smt Yamini Agarwal vs DCIT (ITA Nos.97 98/Kol/20 15)- pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught not to have been examined by the AD in the assessment proceedings uls.153A of the Act as the said issue stood concluded with the assessee's return of income being accepted prior to the date of search and no notice having been issued uls.143(2) of the Act within the time limit laid down in that section. Such assessment did not abate on the date of search which took place on 28.3.2008. In respect of assessments completed prior to the date of search that have not abated, the scope of proceedings uls.153A of the Act has to be confined only to material found in the course of search. Since no material whatsoever was found in the course of search, the additions made by the AO in the order of assessment for both the Assessment years could not have been subject matter of proceedings uls.153A of the Act. Consequently, the said various additions made in the orders of Assessment ought not to have or could not be made by the AO. Gr.No.1 raised by the Assessee in both the appeals are accordingly allowed 27. In view of the above conclusions, the other grounds of appeal raised by the Assessee on merits, do not require any consideration. 7.3. Now discussing what constitutes the sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32,095 49,91,258 28,69,748 81,93,101 III Transportation expenses 1,47,45,775 98,41,416 2,45,87,191 IV Bad Debt written off 18,18,674 18,18,674 V Peripheral Development Exps Total Additions 14,76,32,095 5,90,91,258 1,47,45,775 1,45,29,838 23,59,98,966 From the above, it is seen that the additions made on account of addition of share capital, transportation expenses, Bad debts write off and disallowance of the peripheral expenses, were all borne out of the Regular Accounts. In connection to the share capital, the Id. A.O. has relied upon seized document BNRO-4, pages 15 to 21 wherein as per the A.O. himself the receipt of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to interpret the same in its literal sense and not giving a meaning which would cause violence to the provisions of the statute, as held in Britania Industries Ltd. vs. ClT (2005) 278- ITR-546 at 547 (SC). It is a well settled principle of law that the court cannot read anything into a statutory provision or stipulate a condition, which is plain and unambiguous. A Statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intention. While interpreting the provision the court only interprets the law and cannot legislate it. If a provision of law is incorrect, it is for the legislature to amend, modify or repeal it, if deemed necessary. Legislative cases omissus cannot be supplied by judicial interpretative process. 5.6 Considering the decision of Hon'ble Supreme Court in the case of Britania industries Ltd. (supra) and of Hon'ble High Court of Kerala and of Hon'ble High Court of Allahabad (supra), even if there was no incriminating material, Assessing Officer is empowered to make additions is an assessment framed u/s.15 3A of the Income Tax act, 1961. From the above it is seen that the Id. CITCA) has reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) has failed to notice the fact that copy of incorporation certificate furnished by the assessee before A.O in respect of the subscribed companies did not bear the signature of the registrar nor bear his office seal. Similarly the copies of memorandum of association and articles of association filed before A.O in respect of the subscribed company did not bear the signature of the subscribers and the witnesses and it was not certified by any director. (vi) That, the Ld. CIT (Appeals) has failed to appreciate the fact that verification letters uls.133(6) of the I T Act were issued by A.O to all share applicant companies and most of the letters were returned back as unserved and no reply was received from the balance cases where the letters were not returned back. (vii) That, the Ld. ClT (Appeals) has failed to appreciate the fact that the A.O gave opportunity to the assessee to prove genuineness of its claim by establishing physical existence of the share applicant companies with documentary evidence and the assessee failed to do so by stating that the assessee company had no information for the shift of old address or closure of old share applicants though all the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare application amount mostly by self cheques or self paid cheques. (xv) That, the Ld. CIT (Appeals) has jailed to appreciate the totality of the fact that share applicant companies did not have such fund to support their credit worthiness and the share applicant companies are nothing but accommodation entry operators and financial statements were prepared and sham bank transactions were made to show the investments as genuine. (xvi) That, in the similar cases of (a) Yagya Techno Solutions Pvt. Ltd. vs ACIT (ITA No.4955/Del/2016 dtd. 31-05-2017) and (b) ITO, Ward 5(3) , Kolkata vs Blessing Commercial (P) Ltd., Hon 'ble ITAT sustained the additions made u/s.68 of the IT Act on a/c of share capital holding the view that the genuineness of transactions and or credit worthiness of parties were not proved. (xvii) That, the additions made by the A.O are lawful and justified and those need to be sustained / full. (xviii) That, the appellant craves to add, amend, modify or alter any ground of appeal at the time or before hearing of appeal. For A.Y. 2010-11 vide IT (SS) A No. 142/CTKl2018 (iii) That, the Ld. CIT (Appeals) erred in law as well as fact in deleting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes book regarding decision of Board meeting, copy of Form no. 5 submitted before Roe for increasing shares and other necessary documents which are required to be maintained by the companies for increasing share capital. (xi) That, the Ld. CIT (Appeals) has failed to notice the fact that the assessee company has bought back the shares at a consideration of ₹ 5/- though it was sold by the assessee company @ Rs.IO/- as cost per share and premium oI₹ 40/- per share two years back. The same is totally illogical in respect of a prudent investor who had bought the shares just two years back. (xii) That, the Ld. CIT (Appeals) has failed to notice the fact that the A. 0 had verified the bank statements of the share applicant companies as submitted by assessee company and the A.O found that their accounts had been credited with substantial amount either on the date of issue of cheques or one day or two days before the date of issue of cheque for shares. (xiii) That, the Ld. CIT (Appeals) has failed to notice the fact that the assessee does not maintain regular books of Ales with related bills and vouchers and had not produced the same before A.O during the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imself in making the said addition in respect to the impugned addition with relation to the share capital itself in fact supports the case of the Appellant that the disclosure of the share capital received and recorded in the regular books of Accounts is true and correct. Thus the seized documents in fact evidence such share capital transaction. 3.2. In connection to the above, your Honours kind attention is invited to the section 292 C of the Income Tax Act, 1961, which is quoted as under: 292C. Presumption as to assets, books of account, etc.-Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132, it may, in any proceeding under this Act, be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents/are true, and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14 and the same could not be applied retrospectively in the case of the Appellant for the A. Y s 2009-10 and 2010-11, being the years under appeal before your Goodself. Also it is submitted that the Id. A.O. had also issued verification letters u/s .133(6) of the Act to all the share applicants. However few of them were returned back and they were, not found at the addresses furnished by the appellant in as much as they were the old shareholders back in the year 2008 and 2009. The shares having been purchased by new share applicants, the Appellant was not in the possession of the current addresses of the Applicants. The Id. A.O. has through his entire assessment order discussed in great details the various issues concerning the share application which are all totally irrelevant to the case of the Appellant for the two said years both being the concluded assessment years. 5. In view of the above facts, as were submitted in full details before the Id. CIT(A) , the Id. CIT(A) after full analysis of the facts of the case and the seized material came to his conclusion which is as below: (vide para 6.4 of his order) 6.4 I have carefully examined the assessment order an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r allegations made by the Assessing officer, at best, can give rise to suspicion. But, suspicion cannot take the place of evidence. The share applicant companies have transacted through banking channels, while receiving investment and at the time of making investment. Moreover, the details maintained in the document in BNR-04 which is the seized material, are reflected in the audited books of account of the appellant company and therefore the presumption u/s.292C of the Income Tax Act, 1961, that the contents in the seized material are true, is in favour of the appellant company. The-Assessing Officer has not brought any material on record to rebut this presumption. Thus, there is no evidence in the seized material to come to the conclusion that the share capital is not genuine. No evidence has been brought on record by the Assessing Officer to suggest that the share capital is not genuine. Considering these aspects, the addition made' of ₹ 14,7 3,00,000/- by the Assessing Officer is ordered to be deleted. 6. Lastly before concluding on this ground it would be relevant to state here that the two case laws being (a) Yagya Techno Solutions Pvt. Ltd. vs ACIT (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT (Appeals) erred in law as well as fact in deleting the addition of ₹ 49,91,258 - made by A.O under the head negative cash balance on the basis of seized document. The Ld. CIT (Appeals) treated that the same was disclosed by the director in his own hand though the A. 0 had adjusted the disclosed amount with negative cash balance amount and the unadjusted negative cash balance of ₹ 49,91,258/- had been added by the A.O. The plea taken by the assessee before Ld. CIT(Appeals) of negative peak theory of the group is not applicable in this case, (ii) That, the Ld. CIT (Appeals) erred in law as well as fact in deleting the addition of ₹ 49,91,258/- made by A.O under the head negative cash balance on the basis of seized document ignoring the fact of the case. A total negative cash balance of ₹ 3,88,93,088/- was found in the case of M/s. Maa Tarini Co., Prop. Bajrang Kumar Agarwal, M/s. Basukinath Co. M/s. Basukinath Roadways Pvt. Ltd. on different dates from the year 2007-08 to 2013-14 during course of search operation of this group. Out of the said negative cash balance, a sum of ₹ 2,26, 50, 500/- had been disclosed in the hands of Bajran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AMOUNT 2008-09 2007-08 15-07-2007 11,47,434 11,47,434 2009-10 2008-09 25-08-2008 50,54,548 31-08-2008 8,80,977 06-06-2008 3,32,095 62,67,620 2010-11 2009-10 21-02-2010 29,16,696 29-03-2010 34,05,302 05-05-2009 49,91,258 1,13,13,256 2011- 12 2010- 11 15-09-2010 19,37,463 20-04-2010 42,37,433 61,74,896 2012-13 2011- 12 22-11-2011 43,61,786 18-04-2011 28,69,748 72,31,534 2013-14 2012-13 05-05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10 ₹ 45,00,000/- Add: ₹ 26,85,000/- ₹ 71,85,000/- 2010-11 Nil Add: ₹ 29,81,000/- ₹ 29,81,000/- 2014-15 ₹ 1,70,00,000/- Less: ₹ 56,66,000/- ₹ 1,13,34,000/- ₹ 2,26,50,000/- 4.2. Thus the disclosure of ₹ 2,26,50,000/- was made in the hands of Bajrang Kumar Agarwal as under: AY 2008-09 2009-10 2010-11 2014-15 TOTAL BAJRANG KUMAR AGARWAL (153 A) Income from land sauda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11 29,16,696 34,05,302 49,91,258 1,13,13,256 29,80,901 29,81,000 2011-12 19,37,463 42,37.433 61,74,896 2012-13 43,61,786 29,04,303 28,69,748 1,01,35,837 2013-14 24,87,480 15,59,305 5,25,675 45,72,460 2014-15 21,85,888 21,85,888 1,13,34,000 TOTAL 1,78,95,407 1,72,47,943 87,18,776 4,38,62,126 2,26,50,000 Thus covering and explaining the entire negative cash peak, the Appellant group made a disclosure of ₹ 2,26,50,000/-. In fact the chart above will show that the highest group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ATH ROADWAY S P LTD. 2008-09 Negative peak Cumulative negative peak Negative peak Cumulative negative peak Negative peak 11,50,000 11,50,000 11,47,434 11,47,434 2009-10 71,85,000 83,35,000 50,54,548 62,01,982 8,80,977 1,87,86,384 3,32,095 (Disallowed) 2010-11 29,81,000 1,13,16,000 29,16,696 91,18,678 34,05,302 2,21,91,686 49,91,258 (Disallowed) 2011-12 19,37,463 1,10,56,141 4,58,314 2,26,50,000 Disallowed 7. Now based on the above disclosure ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entire material available on record along with the orders of authorities below, we find that the ld. AR of the assessee has challenged legal issue regarding no incriminating material found during the course of search by the searched team and the addition is not on the basis of any incriminating material, which has been challenged by the assessee by way of cross objections. It was also averred by the ld. AR of the assessee that the CIT(A) has wrongly dismissed the legal ground challenged before him. As, at the outset, ld. AR of the assessee has argued only on the legal ground, therefore, we proceed to dispose off the cross objections filed by the assessee along with the appeals of Revenue for the assessment years 2009-2010 2010-2011. 10. On careful perusal of the orders of both the authorities below, we observe that there is no reference of any incriminating material on record. It has been observed by the CIT(A) that the additions made by the AO, has been recorded in the books of accounts, therefore, he deleted the addition as per Section 292C of the Act. Therefore, it cannot be said that whatever the addition made by the AO was already recorded in the books of accounts. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at emerges is as under: (i) Once a search takes place under section 132, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (III) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six assessment years 'in which both the disclosed and the undisclosed income would be brought to tax'. (iv) Although section 153A does not say that additions should be .strictly made on the basis of evidence found in the course of the sea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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