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TMI Blog2023 (4) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee pursuant to allotment of search cannot be construed as incriminating material found during the course of search and hence additions cannot be made in the hands of the assessee u/s. 153A of the Act in case of unabated assessment year in absence of any incriminating material unearthed during the course of search. In the case of M/s. Garg Brothers Pvt. Ltd. [ 2018 (4) TMI 986 - ITAT KOLKATA ] the ITAT held that no addition in Section 153A assessment for unexplained share capital in absence of incriminating material. Accordingly, in the case of Saumya Construction Pvt. Ltd. [ 2016 (7) TMI 911 - GUJARAT HIGH COUR ] and various other judicial precedents reproduced above, we are of the considered view that CIT(A) has not erred in facts and in law in deleting the additions made by the AO u/s. 68 of the Act, in the instant set of facts. In the result, the appeal of the Department is dismissed. - IT (SS) A No. 13/Ahd/2020 - - - Dated:- 21-4-2023 - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member The DCIT, Central Circle-1, Vadodara Versus M/s. Guruprasad Infrastructure Pvt. Ltd. For the Assessee : Shri Parin Shah , A. R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd as a result of search or requisition of books of accounts, there is no such stipulation in sec. l53A and sec. 158BI specifically states that the provisions of Chapter-XIV-B, under which sec. 158BB falls, would not be applied where a search was initiated u/s.132 after 31/5/2003. 6. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s.132 is conducted in the case of the assessee, and that if the interpretation of the ld.CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 7. It is, therefore, prayed that the order the Ld. CIT(A)-12, Ahmedabad may be set aside and that of the AO may be restored to the above extent. 8. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the assessee itself to introduce its own undisclosed money in the form of share capital invested by companies having no creditworthiness, most of the whom had filed return of loss or nil income during the relevant period. While making the additions, the Assessing Officer observed as under:- 6.7 Moreover it is worthwhile to mention that the majority of investors of shares in the Assessee Company are same as those investing in the other Companies of the Dhajiama Group. The peculiar nature of investment/sale by the investors in shares of the Assessee Company was devoid of the human probability. The Assessee Company could not satisfactorily explain the source/purpose of the investors and how they were contacted and convinced to invest in the newly incorporated Companies of the Dhanjimama group which does not have any profit/surplus or proven record of profit. There is a predictable similar trend of investment made by these investors which are being summarized as follows: i. All of these investors have invested in the month of March 2010. ii. All of these investors have invested at a premium of nine value of share. iii. All these investors are not identifiable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of search (30-07-2012) and following the decision of CIT vs. Kabul Chabla (Delhi High Court) and PCIT vs. Saumya Construction Pvt. Ltd. (Gujarat High Court), the Assessing Officer could not have made any addition to the total income without there being any incriminating material found during the course of search. Further, the CIT(A) held that the aforesaid additions were not based on any incriminating materials found during the course of search but was made with respect to share application money received on issue of share capital as duly corroborated in the balance sheet for the year under consideration. Therefore, clearly additions regarding the share application money received by the assessee company during the year under consideration was not based on any incriminating material found during the course of search conducted. The CIT(A) held that the list of shares share holding cannot be incriminating material by itself which otherwise was also very much part of the books of accounts and audited annual report of the assessee company. Even otherwise, ld. CIT(A) held that the assessee has shifted its onus u/s. 68 by establishing the identity and creditworthiness of the share h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year relevant to the previous year in which search was conducted). For the purpose the AO has relied upon the judgments in the cases of CIT Vs Kolkata Knitwears 362 ITR 673 (Supreme Court), and CIT Vs Tara Agencies 292 ITR 444 (Supreme Court) in general and the judgments in the cases of CIT Vs St. Francis Clay Decor Tiles 240 taxman 168, E N Gopakumar Vs CIT(Central) 75 taxman.corn 215 (Kerala) and CIT Vs Anilkumar Bhatia (Delhi High Court) dated 10/08/2012 in particular in die context of proceedings u/s 153A. The AO has also mentioned that as per the website of Hon'ble Supreme Court of India and SLP filed by the Department against the decision of Gujarat High Court in CIT Vs Saumya Construction Pvt. Ltd. has been disposed and dismissed vide order dated 24/04/2018 and that there is no speaking order as searched as to why it has been dismissed and therefore the legel question regarding interpretation of scope of section 153A of the Act is still open. 28.12 The AO's Report vide BRD/DCIT/CC-1/APPEAL/GIPL/2019-20 dated 01/10/2019 was provided to the appellant for comments if any in response to which the appellant filed the written rejoinder on 22/10/2019 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated by the issuance of a notice under section 153A(l)(a) can be concluded against the interest of the assesses including making additions even without any incriminating material being available against the assessee in the search under section 132 on the basis of which the notice was issued under section 153A(l)(a) of the Act. [Para 8} 28.14 In this regard I am of the considered view that the Supreme Court having rejected the Department's SLP in various cases including the cases of Sinhgad (Technical Education Society (Order dtd. 29/08/2017) and Saumya Construction Pvt. Ltd. (Order dated 24/08/2018), the decisions of the respective High Courts have become final and that the decisions have not been found to suffer any infirmity that should have called for any speaking order from the Hon'ble Supreme Court. Further in this regard, Taxman's Law Relating to Assessment in Search Cases (September 2019) by Shri G C Das and K Chandrahas has been referred to wherein the authors are of the view that a perusal of various decisions of High Courts and the Tribunals shows that the pre dominant view is that no addition can be made without incriminating evidence being found duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted incriminating material found during the course of search and the assessment year was unabated on the date of search. As the addition become void ab initio the submissions made by the appellant on the merits of the issue and the related Remand Reports of the AO become mere academic and are not required to be dealt with. 28.17 It is noted that the appellant, in spite of its first year of operation and no incriminating material/undisclosed assets found during the course of search filed the return of income (in response to notice u/s.!53A) at total income of Rs.2.00 crores on account of additional income disclosed during the course of search. A question arises whether in such a case also the appellant shall be eligible for protection by dint of the case laws like Kabul Chawla and Saumya Construction Pvt. Ltd. It is my considered view that the disclosure of additional income whether related to any incriminating material/any unaccounted assets or not is an issue of adequacy of such income vis-avis the related incriminating evidences found during the search. It has no bearing on the legal proposition that the AO, in the case of unabated assessment years, can make additions only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. However in view of the appellant being protected by the case laws related to legality of assessment proceedings u/s- 153A and addition in such assessments, no addition can be sustained. 29. The appeal is allowed. 5. The Department is in appeal before us against the order passed by ld. CIT(A) giving relief to the assessee. Before us, the ld. Departmental Representative placed reliance on the observations made by the Assessing Officer in the 153A order. In response, the counsel for the assessee submitted that the case of the assessee is covered in its favour in view of the decision of the Gujarat High Court in the case of Saumya Construction 387 ITR 529 (Gujarat High Court) and various other decisions of the Ahmedabad ITAT which have held that in case of unabated assessment year, no addition can be made to the income of the assessee in absence of any incriminating material found during the course of search. In the present case, the search on the assessee was carried out on 03-07-2012, whereas the time limit for issuance of notice u/s. 142 of the Act had already elapsed on 30-09-20211. Accordingly, this is a case of unabated assessment year. Further, the counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und during search, Assessing Officer, in assessment under section 153A, would not be entitled to interfere with assessee's claim for deduction under section 80-IA, which was part of original assessment proceedings and such assessment had abated. In the case of PCIT v. Devangi [2017] 88 taxmann.com 610 (Gujarat), after the search conducted at the assessee's premises, the Assessing Officer initiated proceedings under section 153A of the Act on the basis of the incriminating material seized for the period of the assessment year 2004-05 onwards, and made the addition for the assessment years 2000-01 to 2004-05. The Tribunal deleted the addition holding that only undisclosed income and undisclosed assets deducted during the search could be brought to tax and in assessee's case no incriminating material was found with respect to the assessment years 2000-01 to 2004-05, at the time of search. The Gujarat High Court held that the Tribunal was correct in law in holding that the scope of section 153A was limited to assessing only search related income. 7. Further, we are also of the view that ld. CIT(A) has not erred in holding that the share application money received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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