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TMI Blog2024 (9) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 were unabated. On this aspect, neither anything to the contrary is discernible from the record nor any contention disputing the said factual position had been raised before us by the Ld. CIT-DR or stated in the report filed by the A.O. Whether any incriminating material pertaining to the subject year, i.e. A.Y.2010-11 was found in the course of search seizure proceedings? - We are of a firm conviction that now when the share application money received by the assessee company from the mentioned share applicants is found recorded in its audited books of accounts, and had formed part of its financial statements that were enclosed along with its original return of income for the said year, it is difficult to fathom that as to how the same could be brought within the meaning of Incriminating material found in the course of search proceedings conducted. Rather, the fact that shares were issued by the assessee company to the aforementioned respective share applicants in lieu of the share application money that was received from them much prior to the search and seizure proceedings, therein fortifies the assessee's claim that the share application money that was received from the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating in nature. Also, we find no substance in the claim of the department that as Shri Sanjay Agrawal in his reply to Question No.7 of his statement recorded u/s.131(1A) of the Act dated 29.01.2018, had stated that the share capital/premium was received by the assessee company from Kolkata based investor companies through banking channels, therefore, the same rendered the said statement as incriminating in nature. At the threshold, we may observe that as the aforesaid statement dated 29.01.2018 (supra) was in itself recorded much after conclusion of the search proceedings, therefore, the same cannot be brought within the meaning of incriminating material found in the course of search seizure proceedings conducted on the assessee company on 24.10.2017. Insignificant financials of the investor companies - It is only where any incriminating material is found or unearthed in the course of search proceedings that the requisite jurisdiction to make addition regarding unabated assessment of the assessee company for the subject year would be vested with the A.O. We are of a strong conviction that drawing of adverse inferences regarding the financial credibility of the investor co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order incorporating the aforementioned material facts was forwarded to the Jt. CIT, Range-Central, Raipur for his fresh approval u/s. 153D of the ActOnce the draft assessment order is approved by the Jt. CIT u/s. 153D of the Act, then the A.O thereafter is rendered as functus officio and can only pass the final assessment order as approved by the Jt. CIT. An analogy in support of our aforesaid view can safely be drawn from the judgment of the Hon'ble Apex Court in the case of Panchmahal Steel Ltd. Vs. U.A.Joshi, ITO and another [ 1996 (9) TMI 8 - SUPREME COURT ] In the present case before us not only the A.O had tinkered with the draft assessment order that was approved by the Jt. CIT, Range-Central, Raipur vide his letter dated 30.12.2019 but had also come up with a final assessment order, which as observed by us hereinabove is found to be materially different from the draft assessment order that was approved by the Jt. CIT on 30.12.2019. Thus we are of a firm conviction that as the Jt. CIT, Range-Central, Raipur had no occasion to consider the changes/modifications/alteration carried out by the Dy.CIT(Central Circle)-2, Raipur to the draft assessment order that was approved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g grounds of appeal: 1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 5,75,00,000/- made by the Assessing Officer on account of bogus share application money and share capital received from Kolkata based paper companies. 4. Also, the assessee company is before us as a cross-objector for the aforementioned year by raising the following grounds: 1. On the facts and circumstances of the case and in law, the ld. CIT(A) ought to have considered the legal issue raised for AY10-11 that the ld. AO was not having jurisdiction to reopen the assessment u/s. 153A for AY10-11 (i.e. extended period of 7th year to 10th year) in absence of any undisclosed asset of Rs. 50 lakhs or more in his possession, as per 4th proviso to sec. 153A, Expl.2, where search u/s. 132 has been initiated on 24-10-17 which is after the amendment made by the Finance Act, 2017 wef.1-4-17; assessment made u/s. 153A rws.143(3) would be invalid, bad in law non-est and is liable to be quashed. 2. On the facts and circumstances of the case an in law the ld. CIT(A) ought to have considered the legal issue for AY 10-11 that if there is no incriminating material/documents fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated time period but because of delayed delivery of the same by the courier, therefore, the same in all fairness be condoned. The Ld. AR in support of his aforesaid contention had submitted an application a/w. an affidavit of Shri Sanjay Agrawal, director of the assessee company. Also, the Ld. AR had drawn our attention to the tracking sheet of the courier, viz. Sky King courier which fortified his aforesaid claim. 6. The Ld. CIT-DR objected to the assessee's request for seeking of condonation of the delay involved in filing the cross objections. It was submitted by him that there was no justifiable reason regarding the delay of 9 days involved in filing of the cross-objection by the assessee company. 7. We have given a thoughtful consideration and are of the view that as the delay involved in filing of the captioned cross-objection, which is not inordinate, had occasioned because of reasons beyond the control of the assessee, i.e. delay on the part of courier agency in delivering the orders/documents to the assessee's counsel, therefore, the same merits to be condoned. 8. The assessee company has filed before us a preliminary objection under Rule 27 of the Income Tax Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars, i.e. upto A.Y. 2018-19. The A.O qua the subject year, i.e. A.Y. 2010-11, held the share application money of Rs. 5.75 crore received by the assessee company from 2 Kolkata based companies as unexplained cash credit u/s. 68 of the Act, as under: Sl No. Sl. No. Name of the Investor company F.Y. A.Y. Amount of share capital/premium received 2. 1. Prithvi Dealcom Pvt. Ltd. 2009-10 2010-11 34500000 2. Shri Shyam Ply Traders Pvt. Ltd. 2009-10 2010-11 23000000 Total 57500000 Thereafter, the A.O vide his order passed u/s. 143(3) r.w.s. 153A of the Act, dated 30.12.2019 determined the income of the assessee company at Rs. 6,08,26,561/-. 12. Aggrieved, the assessee company carried the matter in appeal before the CIT(Appeals). The assessee company assailed the assessment order before the CIT(Appeals) on four major grounds, viz. (i) that the Ld. AO in absence of any undisclosed asset had erred in reopening the assessment proceedings for A.Y. 2010-11, i.e. beyond a period of six years; (ii) that the Ld. A.O without having any incriminating/positive document on record had erred in making additions for the subject year, wherein the assessment proceedings were unabated on the date on which se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to time and filled written submissions with supporting documents which were placed on record by the A.O. Regular books of accounts were also produced and checked with seized material by the A.O. Inspection and copies of all seized documents was provided by the A.O. 4.1.1 Once the assessee has participated in assessment proceedings before the A.O the appellant assessee cannot claim that issue of notice u/s. 153A for A.Ys 2010-11 to 2015-16 is not in order. Once the assessee has been put to notice and has filed returns in response to the notices and has attended the assessment proceedings, it cannot be said that issue of notice u/s 153A is not in order. It is seen that the issue of notice u/s 153A by the A.O for A.Ys. 2010-11 to 2015-16 is in order. A perusal of the assessment order shows that during search and seizure operations books of account, document, loose papers etc. were seized. Photocopies of the seized material was also provided to the assessee by the A.O. The seized documents and papers are the incriminating material on the basis of which the additions have been made. In view of the above, the ground taken by the appellant that no incriminating material is found and the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2010-11, and had rejected the same. The CIT(Appeals) had observed that as the assessee company had participated in the assessment proceedings before the A.O, therefore, it could not thereafter claim that issuance of notice u/s. 153A of the Act for the subject year, i.e. A.Y. 2010-11 was not in order. Also, the CIT(Appeals) observed that the A.O in the assessment order had referred to books of account, documents, loose papers etc. that were seized in the course of the search proceedings. It was observed by him that the documents/loose papers which were seized in the course of the search proceedings were incriminating material, based on which, the addition was made in the hands of the assessee company. Accordingly, the CIT(Appeals) had observed that there was no merit in the contention of the assessee company that as no incriminating material was found in the course of the search proceedings, therefore, there was no justification for the A.O to have framed the assessment u/s. 153A of the Act. The CIT(Appeals) did not find favour with the assessee's claim that the A.O had erred in framing assessment u/s. 153A of the Act in absence of a valid approval of the Jt. CIT, Range-Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the search proceedings in the unabated assessment for the subject year: 19. Apropos the ground of cross-objection No.2, the assessee company has assailed the order of the CIT(Appeals), who had rejected it's claim that in absence of any incriminating material found in the course of the search proceedings for the subject year, i.e. A.Y. 2010-11, no addition as regards the unabated assessment proceedings of the assessee company for the subject year could have been made. 20. S/shri Vijay Mehta and Sunil Kumar Agrawal, the Ld. Authorized Representatives (for short 'AR') for the assessee company, submitted that as the assessment in the case of the assessee company for the subject year, i.e. A.Y. 2010-11 was unabated on the date of search, i.e. 24.10.2017, therefore, the A.O in absence of any incriminating material found in the course of search proceedings could not have made the addition of Rs. 5.75 crore u/s. 68 of the Act. The Ld. AR in support of his contention had drawn our attention to the submissions that were filed by the assessee company in the course of proceedings before the CIT(Appeals). 21. Apropos the amount of share application money of Rs. 5.75 crore (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,53,40,000/- during the subject year, i.e. A.Y. 2010-11. 23. The Ld. AR submitted that now when the amounts mentioned in the aforesaid seized document, viz. Page No.44 of LPS-1 were the details of the fresh infusion of share capital and share premium that were received by the assessee company during the subject year, which were duly disclosed in its audited balance sheet for the said year, it was incomprehensible that as to how the same could be dubbed as incriminating by the department's counsel. 24. Apropos, Page 20 of LPS-1 that was seized from the office of M/s. NR Ispat and power Pvt. Ltd, the Ld. AR submitted that the transactions therein mentioned were the investments made by the five investor companies towards share application money with the assessee company during F.Y.2009-10 to F.Y.2013-14. The Ld. AR referring to the subject year, i.e. F.Y.2009-10 submitted that the seized document, viz. Page No.20 of LPS-1, referred to the share application money (gross amount) that was received by the assessee company during the subject year from two investor companies, viz. (i) M/s. Prithvi Dealcom Pvt. Ltd.: Rs. 4,05,00,000/-; and (ii) M/s. Shri Shyam Ply Traders Pvt. Ltd. : Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 crore; and (ii) M/s. Shri Shyam Ply Traders Pvt. Ltd. : Rs. 2.30 crore were mentioned. The Ld. AR submitted that the A.O while framing the assessment for the year under consideration, i.e. A.Y. 2010-11 had not rebutted the aforesaid factual position but had rather accepted the same, at Page 5, Para 4.1. of his order. 25. As the investments made during the subject year by one of the investor company, viz. M/s. Prithvi Dealcom Pvt. Ltd. : Rs. 3.45 crore as was mentioned by the assessee company in its reply dated 24.12.2019 (supra), addition of which had thereafter been made by the A.O, Page-6 of assessment order ( i.e. as per the Chart') was found to be at variance with the amount of Rs. 4.05 crore mentioned in the seized document, viz. Page 20 of LPS-1 against the name of the said investor company for the year under consideration, i.e. A.Y. 2010-11, therefore, the Ld. AR was called upon to put forth an explanation as regards the same. In reply, the Ld. AR submitted that though the assessee company had received an amount of Rs. 4.05 crore from M/s. Prithvi Dealcom Pvt. Ltd. (supra) during the subject year but out of the same an amount of Rs. 60 lacs was refunded, which, thus, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcle-2, Raipur, dated 26.12.2019 to the Jt. CIT (Central), Raipur for approval u/s. 153D of the Act, (Page 1 of APB). Also, our attention was drawn towards the approval u/s. 153D of the Act, dated 30.12.2019 that was granted by the Jt. CIT, Range-Central, Raipur, Page 2 of APB. The Ld. AR submitted that the approval by the Jt. CIT, Range-Central, Raipur dated 30.12.2019 in itself revealed that the same was granted in a mechanical and routine manner without any application of mind, i.e. as an idle formality/empty ritual on the part of the approving authority. Elaborating on his contention, the Ld. AR averred that a common approval in 33 cases was granted by the Jt. CIT, Range-Central, Raipur vide his letter dated 30.12.2019 for four different assessees. Apart from that, the Ld. AR submitted that a perusal of the approval dated 30.12.2019 in itself revealed that the Jt. CIT had not looked into the draft assessment order in the backdrop of the seized records and had merely presumed that the needful would have been done by the A.O. The Ld. AR to fortify his aforesaid contention had drawn our attention to Para 3 of the approval u/s. 153D of the Act, dated 30.12.2019. The Ld. AR submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mann.com 3 (SC). 31. Elaborating further on his contention, the Ld. AR submitted that as in the present case the approval u/s. 153D of the Act was mechanically granted by the Jt. CIT, Range-Central, Raipur vide his letter dated 30.12.2019 without any independent application of mind, and on a presumption of proper performance of duty by the A.O, thus, such perfunctory approval so granted by him could not be termed as legitimate. The Ld. AR once again had drawn our attention to the contents of the approval letter dated 30.12.2019 (supra), wherein the Jt. CIT, Range- Central, Raipur by referring to an office letter No. F No. Jt.CIT(Central)/RPR/Draft Assessment order/2016-17, dated 09.09.2016, had stated that it is presumed that the A.O had, viz. (i) given proper opportunity of hearing to the assessee; (ii) thoroughly verified the seized material; and (iii) satisfied himself on all the issues emanating from the record and additions wherever required had been proposed; therein granted the impugned approval and directed the A.O to act accordingly. The Ld. AR submitted that the aforesaid letter dated 30.12.2019 (supra) revealed beyond doubt that the Jt.CIT without carrying out any verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the A.O to the assessee company therein calling upon it to file its reply on the same date, i.e. 27.12.2019 ( upto 5.00 pm); (iii) Show cause Notice (SCN), dated 27.12.2019 issued by the A.O to the assessee company directing it to submit its reply as to why an addition of Rs. 1,61,42,749/- towards difference in value of stock may not be made in its case u/s. 69 of the Act by 28.12.2019 (upto 2.00 pm); and (iv) the reply filed by the assessee company on 27.12.2019, was once again forwarded by the A.O to the Jt. CIT, Raipur, Range-Central, Raipur for his approval u/s. 153D of the Act. The Ld. AR to fortify the aforesaid factual position had drawn our attention to the relevant papers of the assessee's Paper Book filed for A.Y. 2018-19, viz. receipt of report of the government valuer on 27.12.2019 (Page 160 of APB for A.Y. 2018-19), letter dated 27.12.2019 issued by the A.O calling upon the assessee company to file its reply regarding the comments/letter of the registered/department valuer, viz. M/s. Frontline Consultants Pvt. Ltd. by 27.12.2019 (upto 5.00 pm), Page 159 of APB for A.Y. 2018-19, Show Cause Notice dated 27.12.2019 issued by the A.O to the assessee company direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the A.O could not be sustained and was liable to be struck down for want of valid assumption of jurisdiction. The Ld. AR in support of his aforesaid contention had relied on the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Akil Gulamali Somji, ITA No. 1416 to 1419 dated 15.01.2013, wherein the Hon'ble High Court had observed that in a case where the Jt.CIT had no occasion to consider changes that were incorporated by the A.O in the final assessment order, then it was to be held that the impugned assessment order had been passed without approval of the concerned authority as required per the mandate of law. Also, the Ld. AR had drawn support from the order of the ITAT, Pune in the case of BBG India Ltd. Vs. DCIT, ITA No.11 to 16/PUN/2023, dated 19.10.2023. The Ld. AR submitted that the Tribunal in its aforesaid order taking cognizance of the fact that the A.O after obtaining approval of the Jt. CIT u/s. 153D of the Act, had carried out certain rectification /improvements and passed the final assessment order, observed that the same was to be held as having been passed without obtaining the approval as per the mandate of law. 35. Per contra, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for the CIT(Appeals) to have vacated the said addition. The Ld. DR submitted that Shri Amit Chanda, director of M/s. Prithvi Dealcom Pvt. Ltd. in his statement recorded by the DDIT (Inv.), Unit-IV (2), Kolkata on 05.06.2014, had admitted in reply to Question No.3 that he was engaged in the job of a dummy director as per the dictates of Shri Amit Dalmiya, an infamous accommodation entry provider. Also, the Ld. DR submitted that Shri Amit Dalmiya (supra) had in his statement recorded by the DDIT (Inv.), Unit-IV (2), Kolkata on 05.06.2014 and 31.03.2015, inter alia, admitted that he was involved in the business of providing accommodation entries in lieu of commission income. Also, Shri Amit Dalmiya (supra) had in his statement admitted that Shri Amit Chanda (supra) as per his dictates was providing services as a dummy director in various companies that were managed by him for providing accommodation entries. The Ld. DR had further drawn our attention to the financial statements of the aforementioned investor companies which revealed that the same over the years, i.e. F.Y.2011-12 to F.Y. 2017-18 were not engaged in any business activities. Also, the Ld. DR submitted that the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne share application money/share capital/share premium from the said companies. The Ld. DR had relied on the observations of the A.O that the investor companies were paper/shell companies which had facilitated the routing of the unaccounted income of the assessee company in the garb of share application money/share capital/share premium back to the latter's coffers. 37. The Ld. AR rebutted the contentions advanced by the department's counsel. It was submitted by the Ld. AR that the CIT(Appeals) had based on a well-reasoned order dislodged the adverse inferences that were drawn by the A.O as regards the authenticity of the assessee s claim of having received genuine amount of share application money/share capital/share premium from the subject investor companies during the year in question. 38. We have heard the Ld. authorized representative of both the parties at length, perused the orders of the lower authorities and the material available on record as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 39. As the Ld. AR has assailed the validity of the jurisdiction assumed by the A.O for fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has to be done under Section 153A of the Act, 1961 and the AO thereafter has the jurisdiction to pass assessment orders and to assess the total income taking into consideration other material, though no incriminating material is found during the search even in respect of completed/unabated assessments. 7. At the outset, it is required to be noted that as such various High Courts, namely, Delhi High Court, Gujarat High Court, Bombay High Court, Karnataka High Court, Orissa High Court, Calcutta High Court, Rajasthan High Court and the Kerala High Court have taken the view that no addition can be made in respect of completed/unabated assessments in absence of any incriminating material. The lead judgment is by the Delhi High Court in the case of Kabul Chawla (supra), which has been subsequently followed and approved by the other High Courts, referred to hereinabove. One another lead judgment on the issue is the decision of the Gujarat High Court in the case of Saumya Construction (supra), which has been followed by the Gujarat High Court in the subsequent decisions, referred to hereinabove. Only the Allahabad High Court in the case of Pr. Commissioner Of Income Tax v. Mehndipur Bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A 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. 7.2 Thereafter in the case of Saumya Construction (supra), the Gujarat High Court, while referring the decision of the Delhi High Court in the case of Kabul Chawla (supra) and after considering the entire scheme of block assessment under Section 153A of the Act, 1961, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no additional can be made by the AO and the AO has no jurisdiction to re-open the completed assessment. In paragraphs 15 16, it is held as under: 15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other proceeding. 16. Section 153A bears the heading Assessment in case of search or requisition . It is well settled as held by the Supreme Court in a catena of decisions that the heading of the, section can be regarded as a key to the interpretation of the operative portion of, the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning From the heading of section 153, the intention of the Legislature is clear, viz, to provide for assessment in case of search and requisition. When, the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the undisclosed income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, if such order of annulment is set aside Explanation. For the removal of doubts, it is hereby declared that, (i) save as otherwise provided in this section, Section 153- B and Section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the total income in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub- section (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2017 passed in the review applications. It is required to be noted that the issue before the Allahabad High Court was, whether in case of completed/unabated assessments, the AO would have jurisdiction to re-open the assessments made under Section 143(1)(a) or 143(3) of the Act, 1961 and to re- assess the total income taking notice of undisclosed income even found during the search and seizure operation. 15.1 In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. Under the circumstances, the aforesaid appeals preferred by the assessee M/s Kesarwani Zarda Bhandar, Sahson, Allahabad deserve to be dismissed and are according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y incriminating material for the year under consideration was found in the course of the search seizure proceedings conducted on the assessee company u/s. 132 of the Act on 24.10.2017? 45. We have thoughtfully considered the observations of the first appellate authority in the backdrop of those recorded by the A.O. Before proceeding any further, we may herein observe that the assessee company in the course of the assessment proceedings vide its reply dated 24.12.2019, had assailed before the A.O the validity of the jurisdiction that was assumed by him for making additions while framing the assessment u/s. 153A of the Act. Although, it was the claim of the assessee company that as no incriminating material was found in the course of the search proceedings, therefore, the A.O was divested of his jurisdiction to make any addition regarding its unabated assessment for the year under consideration but the same was summarily rejected by the A.O. The A.O, was of the view that an assessment u/s. 153A of the Act was not dependent upon finding of any incriminating material in the course of search proceedings. Ostensibly, the A.O while framing the assessment had concluded that any addition/di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings and filed written submissions along with supporting documents with the A.O. The CIT(Appeals) observed that as the assessee company had filed its return of income in response to the notice u/s. 153A of the Act, and also participated in the assessment proceedings, therefore, it could not thereafter claim that the issue of notice u/s. 153A of the Act for the year under consideration was not in order. Accordingly, the CIT(Appeals) was of a firm conviction that the issuance of notice u/s. 153A of the Act by the A.O for the year under consideration, i.e. A.Y. 2010-11 was in order. Also, the CIT(Appeals) had observed that a perusal of the assessment order revealed that during the course of search and seizure operations, books of account, documents and loose papers were seized. The CIT(Appeals) was of the view that as books of accounts, documents and loose papers seized during the course of search seizure proceedings were incriminating material, therefore, no infirmity did emerge from the additions that were made by the A.O based on the same. As such, the CIT(Appeals) found no merit in the claim of the assessee company that in absence of any incriminating material found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incriminating material on the basis of which the additions have been made. In view of the above, the ground taken by the appellant that no incriminating material is found and the issue of notices u/s 153A for A.Y 2010-11 to 2015-16 is not justified, has no merit and is, therefore, rejected. Therefore, appeal on these grounds is Dismissed. 48. Although, we find that the CIT(Appeals) had hereinabove observed that books of account, documents and loose papers etc. seized in the course of search seizure proceedings conducted on the assessee company on 24.10.2017 were incriminating material which, thus, justified the additions made by the A.O while framing the assessment vide his order passed u/s. 143(3) r.w.s. 153A of the Act, dated 30.12.2019, but the said observation is found to be contradictory in the backdrop of the subsequent observations recorded in his order. The CIT(Appeals) at Page 383 of his order, had, inter alia, observed that no incriminating material relevant to the additions pertaining to the alleged bogus share application money that was received by the assessee company from its five group companies had been referred to by the A.O in the assessment order. Also, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issing in the present case of appellant. Thus, the A.O had no locus standi to assume that the share application money received by the appellant is not genuine. (emphasis supplied by us) 49. Be that as it may, we shall independent of the aforesaid observations of the CIT(Appeals) deliberate upon the issue as to whether or not any incriminating material pertaining to the subject year was found or unearthed in the course of the search proceedings conducted on the assessee company. We find that the Hon'ble Apex Court in the case of Principal Commissioner of Income Tax, Central-3 Vs. Abhisar Buildwell (P) Ltd. (supra), while approving the view taken by the Hon'ble High Court of Delhi in the case of CIT Vs. Kabul Chowla (supra), had observed that the completed/unabated assessment can be interfered with by the AO while making the assessment under Section 153A of the Act only on the basis of some incriminating material found during the course of search; or requisition of documents; or undisclosed income or property discovered in the course of search which was not produced or not already disclosed or made known in the course of original assessment. The Hon'ble Apex Court had fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LPS-1; and (ii) Page No.20 of LPS-1; (b) statements of directors of the investor companies recorded much prior to the search proceedings; (c) statements of Shri Sanjay Agrawal, director of the assessee company recorded u/s. 132(4) of the Act and u/s. 131(1A) of the Act; and (d) insignificant creditworthiness of the investor companies to make substantial investments towards share application money/share capital/share premium with the assessee company. The multi-facet contentions of the Ld. DR on the aforesaid aspects are being dealt with as under: (A) Re: Seized documents referred by the A.O in the assessment order: 51. Admittedly, it is a matter of fact discernible from the assessment order that the A.O had referred to two documents which were seized from the office premises of the assessee company during the course of search seizure proceedings conducted on 24.10.2017, viz. (i) Page 44 of LPS 1; and (ii) Page 20 of LPS-1. For the sake of clarity, the scanned copies of the aforesaid seized documents are culled out as under: Page 44-LPS-1 M/s. N.R ISPAT POWER PVT. LTD DETAILS OF INFUSION OF CAPITAL Year Paid-up capital Share premium Total 2007-08 300000 0 300000 2008-09 9610000 2269 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the same is the amount that was received by the assessee company as Share premium during the subject year and was disclosed in Schedule B of its balance sheet for the said year as Security premium account under the parent head Reserves and surplus , Page 19 of APB, as under: SCHEDULE B RESERVES SURPLUS AS AT AS AT 31-03-2010 31-03-2009 Securities Premium Account Opening Balance 22,690,000 Received during the year 105,340,000 128,030,000 22,690,000 Profit Loss Account 4,664,660 326,680 132,694,660 23016680 It transpires in the backdrop of the aforesaid facts that the figure of Rs. 10,53,40,000/- (supra) as mentioned in the aforesaid seized document, i.e. Page No. 44 of LPS-1 for the subject year was the amount that was received by the assessee company during the subject year as Share premium , which was disclosed in its audited balance sheet that was filed along with its original return of income for the said year. 54. Based on our aforesaid observations, we are of the view that as the contents of the seized document, viz. Page No.44 of LPS-1 makes a mention of the share capital and share premium that was received by the assessee company during the subject year, which as observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by no means the same could be brought within the meaning of incriminating material found during the course of the search seizure proceedings conducted on the assessee company on 24.10.2017. 57. Apropos the seized document, viz. Page No.20 of LPS 1, it is the Ld. AR's contention that the contents of the same reveals the share application money that was received by the assessee company during the subject year from the investor companies, viz. (i) M/s. Prithvi Dealcom Pvt. Ltd. : Rs. 3.45 crore; and (ii) M/s. Shri Shayam Ply Traders Pvt. Ltd. : Rs. 2.30 crore, and the same was duly recorded in its books of accounts. 58. Before proceeding any further, it would be pertinent to point out that the A.O while framing the assessment had, inter alia, observed that the share application money received by the assessee company for the subject year, i.e. A.Y. 2010-11 was recorded in its books of account. In fact, the A.O had observed that the assessee company in the garb of share application money stated to have been received from various Kolkata based paper/shell companies had introduced its unaccounted income in its books of account. For the sake of clarity, the observations of the A.O are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Shri Shyam Ply Traders Pvt. Ltd. :1,84,000 shares (allotted for Rs. 2.30 crore on 30.12.2009), i.e. much prior to the search and seizure proceedings, therein fortifies the assessee's claim that the share application money that was received from the aforementioned parties could not be held as incriminating material found in the course of search and seizure proceedings conducted on the assessee company on 24.10.2017. 60. Although it is the claim of the department that the assessee company during the year under consideration was in receipt of share application money of Rs. 5.75 crore from 2 paper/shell companies but there can be no gainsaying that no incriminating material was found or unearthed during the course of search proceedings which would support the same. In fact, it is not even the case of the department that any incriminating material evidencing receipt of accommodation entries by the assessee company in the garb of share application money/share capital/share premium from the aforementioned investor/subscriber companies was found in the course of the search seizure proceedings conducted on 24.10.2017. (B) Re : Statements of the directors of the investor companies: 61 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words evidence found as a result of search would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 64. Also, a similar view had been taken by the Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Best Infrastructure (India) Pvt. Ltd. (2017) 397 ITR 82 (Del.). The Hon'ble High Court relying upon its earlier order in the case of CIT Vs. Harjeev Aggrawal (supra), had once again held that the statement recorded u/s. 132(4) of the Act cannot by itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her observed that a statement recorded in the course of search proceedings could not be imported in the case of the assessee for the purpose of satisfying the salutary condition of existence of incriminating material found/unearthed in the course of the search proceedings conducted on the assessee. Also, we find that ITAT, Mumbai, B Bench in the case of Micro Ankur Developers Vs. DCIT-CC 3(4), ITA Nos. 1046 to 1050/Mum/2019 dated 02.09.2022 had adopted a similar view. The Tribunal had concluded that the statement of the entry operator recorded u/s. 132(4) of the Act cannot be construed as an incriminating evidence justifying the addition made in case of an unabated assessment of the assessee company particularly when the statement was not recorded on the basis of any incriminating material found or unearthed in the course of search seizure proceedings conducted on the assessee. 66. We, thus, based on our aforesaid deliberations are unable to concur with the A.O (as stated in his report dated 08.09.2023)/CIT-DR that the adverse statements of the directors of the investor companies, which were recorded much prior to the search conducted on the assessee company can be brought within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch proceedings. As the Hon'ble Apex Court in the case of Principal Commissioner of Income Tax, Central-3 Vs. Abhisar Buildwell (P) Ltd. (supra), had held that in absence of any incriminating material found in the course of search proceedings, no addition in case of an unabated assessment of the assessee can be validly made, therefore, we are of the a firm conviction that the A.O in absence of any incriminating material pertaining to the subject year found in the course of search proceedings conducted on the assessee company on 24.10.2017 was divested of his jurisdiction from making any addition while framing the assessment in its case for the subject year u/s. 153A of the Act. 69. Apart from that, we are of a firm conviction that the mere fact that Shri Sanjay Agrawal, director of the assessee company, had in his statement recorded u/s. 132(4) of the Act, dated 24.10.2017 failed to furnish details as regards the investments made by the investor/subscriber companies can by no stretch of imagination render the said statement as incriminating in nature. Also, we find no substance in the claim of the department that as Shri Sanjay Agrawal (supra) in his reply to Question No.7 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. Once again, we may herein reiterate that the Hon'ble Apex Court in the case of Principal Commissioner of Income Tax, Central-3 Vs. Abhisar Buildwell (P) Ltd. (supra), had held that in absence of any incriminating material found in the course of search proceedings, no addition regarding unabated assessment of the assessee can be made. Accordingly, it is only where any incriminating material is found or unearthed in the course of search proceedings that the requisite jurisdiction to make addition regarding unabated assessment of the assessee company for the subject year would be vested with the A.O. We are of a strong conviction that drawing of adverse inferences regarding the financial credibility of the investor companies by the A.O de-hors finding of any incriminating material in the course of search seizure proceedings would not vest jurisdiction with the A.O to make addition in its unabated assessment for the subject year, i.e. A.Y. 2010-11. 72. Alternatively, we are of the view that as the investors/subscriber companies in compliance to the notices issued by the A.O u/s. 133(6) of the Act had filed copies of share certificates, bank statements evidencing subscription, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h seizure proceedings conducted on the assessee company on 24.10.2017, therefore, the A.O on the said count itself was divested of his jurisdiction to make any addition while framing assessment in the unabated assessment of the assessee company for A.Y. 2010-11. 74. We, thus, in terms of our aforesaid observations are of the considered view that as held by the Hon'ble Apex Court in the case of Principal Commissioner of Income Tax, Central-3 Vs. Abhisar Buildwell (P) Ltd. (supra), in absence of any incriminating material found in the course of search proceedings, no addition regarding the unabated assessment of the assessee company for the subject year, i.e. A.Y. 2010-11 could have been made. 75. Accordingly, in the backdrop of our aforesaid deliberations, we concur with the Ld. AR that the A.O had wrongly assumed jurisdiction and made an addition of Rs. 5.75 crore (supra) u/s. 68 of the Act while framing the assessment u/s. 143(3) r.w.s. 153A of the Act, dated 30.12.2019 for A.Y. 2010-11. Thus, the Ground of cross objection No.2 raised by the assessee company is allowed in terms of our aforesaid observations. 76. Before parting, we may herein observe that though the additions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislature in all its wisdom, no order of assessment or reassessment, inter alia, pursuant to search seizure proceedings conducted on the assessee shall be passed by an A.O. below the rank of Joint Commissioner without obtaining the prior approval of the Joint Commissioner. We find that the primary objective of Section 153D is to introduce a higher degree of scrutiny of an assessment order framed pursuant to search proceedings. It is not merely a procedural step but a substantive legal requirement as underscored by the Central Board of Direct Taxes (CBDT) in Circular No.3 of 2008, dated 12.3.2008. The purpose of incorporating the aforesaid statutory provision is to prevent arbitrary or biased decisions by introducing a layer of accountability in the assessment process. 79. We find that the Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Anuj Bansal (2024) 165 taxmann.com 2 (Del.) and the Hon'ble High Court of Allahabad in the cases of Pr. CIT Vs. Sapna Gupta (2023) 147 taxmann.com 288 and Pr. CIT Vs. Siddharth Gupta (2023) 450 ITR 534 (All. HC), while approving the view taken by the Tribunal had held that the approving authority is required to apply independent mind t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019) had thereafter continued with the assessment proceedings. The A.O had vide his letter dated 27.12.2019 (Page 159 of APB for A.Y. 2018-19) forwarded to the assessee company a copy of the comments of the department/registered valuer, viz. M/s.Frontline Constants Pvt. Ltd., dated 27.12.2019, Page 160 of APB for A.Y. 2018-19, wherein the latter had dealt with the objections that were raised by the assessee company regarding the valuation of its stock. Accordingly, the A.O had called upon the assessee company to submit its comments on the aforesaid report of the valuer before 27.12.2019 (up to 5.00 pm). For the sake of clarity, the letter dated 27.12.2019 of the Dy.CIT (Central Circle)-2, Raipur is culled out as under: 82. Also, the A.O vide his Show Cause Notice ( SCN ) dated 27.12.2019, Page 159A of the APB for A.Y. 2018-19, had called upon the assessee company to put forth an explanation as to why the difference of stock pertaining to raw material, finished goods and scrap amounting to Rs. 1,61,42,749/- may not be added in its case u/s. 69 of the Act. The A.O as per the SCN dated 27.12.2019 had directed the assessee company to furnish its reply by 28.12.2019 (upto 02.00 pm). For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice (SCN), dated 27.12.2019 issued by the Dy.CIT, Range-Central, Raipur to the assessee company, wherein he had called upon the assessee company to put forth an explanation as to why the difference of stock amounting to Rs. 1,61,42,749/- may not be added in its case u/s. 69 of the Act and had directed it to furnish its reply by 28.12.2019. (upto 02.00 pm), Page 159A of APB for A.Y. 2018-19. Reply of the assessee company dated 27.12.2019 to the letter dated 27.12.2019 received from the Dy. CIT, Central Circle-2, Raipur, wherein it had rebutted the comments of the registered/department's valuer, viz. M/s. Frontline Consultants Pvt. Ltd. 84. We find substance in the Ld. AR's contention that it is not a case that the A.O after forwarding the draft assessment order to the Jt. CIT, Range-Central, Raipur vide his letter dated 26.12.2019 (received by the Jt. CIT on the same date) for approval u/s. 153D of the Act, had thereafter, communicated to the said approving authority about the assessment proceedings that were continued by him after forwarding the draft assessment order on 26.12.2019. Also it is not a case that the A.O had forwarded any fresh draft assessment order incorporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order, at page 53 in table in para 4.12 at sr. no. for F.Y. 13-14 (A.Y. 14-15) undisclosed income is 64,99,958. (ii) At page no. 54 of the draft assessment order in para 5.1 table of Excess Items following differences are noticed as compared to the final assessment order dt. 30-12-2019;- (a) at Sl.No.1 of Billets there is difference in the value as compared to final assessment order: In the 'draft assessment order', there is mentioned figures of value of physical verification at Rs. 99,94,740; thereafter difference mentioned at Rs. 3,91,061; While, in the 'final assessment order', there is mentioned figures of value of physical verification at Rs. 99,94,660; thereafter, difference mentioned at Rs. 3,90,980; (b) at Sl.No.4 of Coal there is difference in rate per MT (PMT) and corresponding value as compared to final assessment order: In the 'draft assessment order', rate per MT of physical verification taken at Rs. 2,180 and as per books of account taken at Rs. 2,180; value of difference taken at Rs. 31,45,773; While, in the 'final assessment order', rate per MT of physical verification taken at Rs. 3,000 and as per books of account taken at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 'excess stock' is Rs. 3,54,60,103 as per 'final assessment order at 1 table in Para 5.2 5.3 (Page 55); (vi) at Page 55 of the draft assessment order, Para 5.3 is completely different from the final assessment order like for 'shortage of stock', GP rate of 12.70% taken for AY18-19 in draft assessment order at Para 5.3; while, for 'shortage of stock', GP rate of 11.36% is taken based on last 3 years average in final assessment order at Para 5.3; similarly, 'unaccounted sale' is taken at Rs. 1,30,10,170 and profit on such sales taken at Rs. 16,52,292 in the draft assessment order at Para 5.3 while, profit on 'shortage of stock taken at Rs. 14,89,762 in the final assessment order at Para 5.3. (vii) at Page 56 of the draft assessment order at Para 8, in the table, addition of Rs. 3,59,42,686 and assessed income for AY18-19 is mentioned at Rs. 6,05,53,626; while, in the final assessment order dt.30-12-2019, at Page 57, addition of Rs. 3,69,49,865 and assessed income at Rs 6,15,60,805 has been mentioned. The above differences are mentioned in tabular format: Table 1. 4. It is submitted that when the final assessment order is different (and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated by the A.O in the final assessment order, then it was to be held that the impugned assessment order was passed without approval of the concerned authority as required per the mandate of law. Also, we find that the ITAT, Pune in the case of BBG India Ltd. Vs. DCIT, ITA No.11 to 16/PUN/2023, dated 19.10.2023, taking cognizance of the fact that the A.O after obtaining approval of the Jt. CIT u/s. 153D of the Act had thereafter carried out certain rectification/improvements and passed the final assessment order, observed that the said order was to be held as having been passed without obtaining the approval as per the mandate of law. 88. We are of a firm conviction that once the draft assessment order is approved by the Jt. CIT u/s. 153D of the Act, then the A.O thereafter is rendered as functus officio and can only pass the final assessment order as approved by the Jt. CIT. An analogy in support of our aforesaid view can safely be drawn from the judgment of the Hon'ble Apex Court in the case of Panchmahal Steel Ltd. Vs. U.A.Joshi, ITO and another (1997) 225 ITR 458 (SC). In the present case before us not only the A.O had tinkered with the draft assessment order that was appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be a detailed assessment order. Also, it was observed that as per Section 114 of the Evidence Act, where an official Act had been done in accordance with the official procedure, it will lead to a presumption that due diligence was followed. Apart from that, the Hon'ble High Court had observed that as the matter was remanded back to the file of the A.O for fresh adjudication with a liberty to the assessee to raise the issue before the revenue authority, and furnish necessary information/evidence in support of his contention, therefore, no prejudice was caused to him. 91. At this stage, we may herein observe that in the case of Hitesh Golchha Vs. ACIT, Central Circle-1, Raipur (supra), the assessee except for referring to the contents of the approval letter had failed to lead any evidence/material which could irrefutably prove to the hilt that the approval was mechanically granted in absence of any application of mind by the Jt. CIT. However, the facts involved in the present case before us are materially distinguishable. The A.O in the present case after forwarding the draft assessment order vide his letter dated 26.12.2019, had thereafter continued with the assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company on 24.10.2017, no addition could have been made as regards its unabated assessment for the said year, therein, remains the same as are there before us in its case for the captioned year, i.e.A.Y. 2011-12, in CO No.13/RPR/2022, but we deem it fit to briefly cull out the facts in so far the same emanates from the contents of the seized documents referred to by the A.O in the assessment order for the year under consideration, i.e. A.Y. 2011-12, viz. (i) Page 44 of LPS-1; and (ii) Page 20 of LPS-1. 95. Admittedly, it is a matter of fact discernible from the assessment order that the A.O had referred to two documents which were seized from the office premises of the assessee company during the course of search seizure proceedings conducted on 24.10.2017, viz. (i) Page 44 of LPS 1; and (ii) Page 20 of LPS-1. For the sake of clarity, the scanned copies of the aforesaid seized documents are culled out as under: Page 44-LPS-1 M/s. N.R ISPAT POWER PVT. LTD DETAILS OF INFUSION OF CAPITAL Year Paid-up capital Share premium Total 2007-08 300000 0 300000 2008-09 9610000 22690000 32300000 2009-10 9160000 105340000 114500000 2010-11 0 0 0 2011-12 12648000 145152000 157800000 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed in Schedule B of its balance sheet for the said year as Securities premium account under the parent head Reserves and surplus , Page 19 of APB, as under: SCHEDULE- B RESERVES SURPLUS AS AT AS AT 31-03-2011 31-03-2010 Securities Premium Account Opening Balance 128,030,000 22,690,000 Received during the year - 128,030,000 105,340,000 Profit Loss Account 20,572,838 46,64,660 148,602,838 132,694,660 In the backdrop of the aforesaid facts, we find that as mentioned in the aforesaid seized document, i.e. Page No. 44 of LPS-1, the assessee company during the subject year had not received any amount of Share premium , a fact that was disclosed in its audited balance sheet that was filed along with its original return of income for the said year. 98. Based on our aforesaid observations, we are of the view that as the contents of the seized document, viz. Page No.44 of LPS-1 makes a mention of the fact that no amount of Share capital and Share premium was received by the assessee company during the subject year, a fact which as observed by us hereinabove was disclosed in its audited balance sheet for the said year, therefore, the same cannot be brought within the meaning of incriminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2017. 101. Apropos the seized document, viz. Page No.20 of LPS 1, it is the Ld. AR's contention that the contents of the same reveals the Share application money that was received by the assessee company during the subject year from the investor companies, viz. (i) M/s. Prithvi Dealcom Pvt. Ltd. : Rs. 3.85 crore; (ii) M/s. Shri Shayam Ply Traders Pvt. Ltd. : Rs. 1.37 crore; and (iii) M/s. Unnati Commodeal Pvt. Ltd. : Rs. 1.20 crore, and the same were recorded in its books of accounts. 102. Before proceeding any further, it would be pertinent to point out that the A.O while framing the assessment had, inter alia, observed that the share application money received by the assessee company for the subject year, i.e. A.Y. 2011-12 was recorded in its books of account. In fact, the A.O had observed that the assessee company had in the garb of share application money stated to have been received from various Kolkata based paper/shell companies introduced its unaccounted income in its books of account. For the sake of clarity, the observations of the A.O are culled out as under: 4.1 During the course of search assessment, it is found that during the block period from A.Y 2009-10 to 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cult for us to fathom that as to how the same can be brought within the meaning of Incriminating material found in the course of search proceedings conducted on it on 24.10.2017. Rather, the fact that shares have been allotted by the assessee company to the said respective share applicants in lieu of the share application money received from them, viz. (i) M/s. Prithvi Dealcom Pvt. Ltd. : 3,08,000 shares allotted (for Rs. 3.85 crore on 03.03.2012); (ii) M/s. Shri Shyam Ply Traders Pvt. Ltd.: 1,09,600 shares allotted (for Rs. 1.37 crore on 03.03.2012); and (iii) M/s. Unnati Commodeal Pvt. Ltd. : 96,000 shares allotted (for Rs. 1.20 crore on 03.03.2012) i.e. much prior to the search and seizure proceedings conducted on 24.10.2017, therein further supports the assessee's claim that the contents of the seized documents, viz. Page 20-LPS-1 cannot be brought with the meaning of incriminating material found during the course of search and seizure proceedings conducted on the assessee company on 24.10.2017. 104. Although it is the claim of the department that the assessee company during the year under consideration had received its unaccounted money of Rs. 6.42 crores in the garb of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CO No.12/RPR/2022, based on which we have, inter alia, vacated the additions made by the A.O vide his consolidated order passed u/s. 143(3) r.w.s. 153A of the Act, dated 30.12.2019 for A.Y. 2010-11, for the reason that in absence of any incriminating material found in the course of search and seizure proceedings conducted on the assessee company on 24.10.2017 no addition could have been made as regards its unabated assessment for the said year, therein, remains the same as are there before us in its case for the captioned year, i.e.A.Y. 2012-13, CO No.14/RPR/2022, but we deem it fit to briefly cull out the facts in so far the same emanates from the contents of the seized documents referred to by the A.O in the assessment order for the year under consideration, i.e. A.Y. 2012-13, viz. (i) Page 44 of LPS-1; and (ii) Page 20 of LPS-1. 109. Admittedly, it is a matter of fact discernible from the assessment order that the A.O had referred to two documents which were seized from the office premises of the assessee company during the course of search seizure proceedings conducted on 24.10.2017, viz. (i) Page 44 of LPS 1; and (ii) Page 20 of LPS-1. For the sake of clarity, the scanned cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- (as on 31.03.2011). We, thus, find substance in the Ld. AR's contention that as mentioned in the seized document, viz. Page No.44 of LPS-1 fresh share capital of Rs. 1,26,48,000/- was received by the assessee company during the year under consideration as was disclosed in its audited balance sheet for the said year. 111. Apropos the amount of Rs. 14,51,52,000/- mentioned in the aforesaid seized document, viz. Page No.44 of LPS-1, under the head share premium for the subject year, i.e. A.Y. 2012-13 we find that the same was the amount received by the assessee company as Share premium during the subject year, which was disclosed in its balance sheet for the said year as Securities premium account under the parent head Reserves and surplus , as under: RESERVES SURPLUS AS AT AS AT 31-03-2012 31-03-2011 Securities Premium Account Amount at the beginning of the year 128,030,000 128,030,000 Add: Amount received during the year 145152000 - Amount at the end of the year 273182000 128030000 In the backdrop of the aforesaid facts, we find that as mentioned in the aforesaid seized document, i.e. Page No. 44 of LPS-1, the assessee company during the subject year had received an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter alia, observed that the regular books of account of the assessee company by no stretch of imagination could be treated as incriminating material to form a basis for framing of the assessment u/s. 153A r.w.s. 143(3) of the Act. 114. We, thus, are of a strong conviction that as the contents of the seized document, viz. Page No.44 of LPS-1 makes a reference of the fact that the assessee company during the subject year had received amounts towards share capital and share premium , which were recorded in its audited financial statements filed along with its original return of income, therefore, by no means the same can be brought within the meaning of incriminating material found during the course of the search seizure proceedings conducted on the assessee company on 24.10.2017. 115. Apropos the seized document, viz. Page No.20 of LPS 1, the Ld. AR submitted that the same refers to the share application money that was received by the assessee company during the subject year from the investor companies, viz. (i) M/s. Prithvi Dealcom Pvt. Ltd. : Rs. 2.23 crore; (ii) M/s. Shri Shayam Ply Traders Pvt. Ltd. : Rs. 5.42 crore; and (iii) M/s. Unnati Commodeal Pvt. Ltd. : Rs. 90 lacs, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Pvt. Ltd has introduced its unaccounted money into the books in the form of share application money from various Kolkata Based shell companies. The rotation of money through various bank accounts and companies was carried by entry operator. An entry operation is the person who is in the business of giving accommodation entries in lieu of cash/cheque of equal amount after charging certain percentage of commission in cash. The details of shell/paper companies and year wise investment are as under: As observed by us hereinabove, it is the Ld. ARs' claim that now when the share application money received by the assessee company from the aforementioned investor companies was recorded in its books of account, it was, thus, incomprehensible as to how the same could be brought within the meaning of incriminating material as had been canvassed by the department's counsel. The Ld. AR submitted that as observed by the A.O, the assessee company as per its books of account had received an aggregate amount of share application money of Rs. 8.91 crore (supra) during the year under consideration, i.e. A.Y. 2012-13, against which shares were allotted to the aforesaid share applicants duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under consideration had received its unaccounted money of Rs. 8.91 crores in the garb of share application money/share capital/share premium from 3 paper/shell companies but there can be no gainsaying that no incriminating material was found or unearthed during the course of search proceedings which would support the same. In fact, it is not even the case of the department that any incriminating material evidencing receipt of accommodation entries by the assessee company in the garb of share application money/share capital/share premium from the aforementioned investor/subscriber companies was found in the course of the search seizure proceedings conducted on 24.10.2017. 119. As the aforesaid issue had been deliberated at length by us in the preceding year, i.e. A.Y. 2010-11, in CO No.12/RPR/2022, wherein we had after dealing with the multi-facet observations of the lower authorities on the issue as to whether or not any incriminating material was found in the course of the search seizure proceedings conducted on the assessee company on 24.10.2017, had answered the same in negative and decided the issue in favour of the assessee company, therefore, our adjudication, on the said i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company during the course of search seizure proceedings conducted on 24.10.2017, viz. (i) Page 44 of LPS 1; and (ii) Page 20 of LPS-1. For the sake of clarity, the scanned copies of the aforesaid seized documents are culled out as under: Page 44-LPS-1 M/s. N.R ISPAT POWER PVT. LTD DETAILS OF INFUSION OF CAPITAL Year Paid-up capital Share premium Total 2007-08 300000 0 300000 2008-09 9610000 22690000 32300000 2009-10 9160000 105340000 114500000 2010-11 0 0 0 2011-12 12648000 145152000 157800000 2012-13 6578940 62770958 69349898 2013-14 3192470 32882441 36074911 2014-15 2384800 26232800 28617600 2015-16 154150 1695650 1849800 Total 44028360 396763849 440792209 Page 20-LPS-1 Prithvi Deal Com Pvt. Ltd. Shri Shyam Ply Traders Pvt. Ltd. Unnati Commodeal Pvt. Ltd. Chitrakoot Infonet Pvt. Ltd. Eternity Commercial Pvt. Ltd. Total Sl. No. F.Y Amount Amount Amount Amount Amount 1 2009-10 40500000 23000000 - - - 63500000 2 2010-11 38500000 13700000 12000000 - - 64200000 3 2011-12 22300000 54200000 9000000 - - 85500000 4 2012-13 1275000 - 69350000 15300000 13000000 98925000 5 2013-14 - - - - 6500000 6500000 Grand Total 102575000 909000000 90350000 15300000 19500000 318625000 124. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he backdrop of the aforesaid facts, we find that as mentioned in the aforesaid seized document, i.e. Page No. 44 of LPS-1, the assessee company during the subject year had received an amount of Rs. 6,27,70,958/- as Share premium , a fact which was disclosed in its audited balance sheet that was filed along with its original return of income for the said year, and was scrutinized by the A.O while framing the assessment vide his order passed u/s. 143(3) of the Act, dated 16.02.2016. 126. Based on our aforesaid observations, we are of the view that as the contents of the seized document, viz. Page No.44 of LPS-1 makes a mention that an amount of share capital (Rs. 65,78,940/-) and share premium (Rs. 6,27,70,958/-) was received by the assessee company during the subject year, a fact which was duly disclosed in its audited balance sheet for the said year, therefore, the same cannot be brought within the meaning of incriminating material found during the course of search proceedings. Our aforesaid view that a transaction recorded in the books of account of an assessee, which had been subjected to audit and was disclosed in its financial statements enclosed along with the original return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 9,89,25,000/-, viz. (i) M/s. Prithvi Dealcom Pvt. Ltd. : Rs. 12,75,000/-; (ii) M/s. Eternity Commercial Pvt. Ltd. : Rs. 1,30,00,000/-; (iii) M/s. Chirakoot Infonet Pvt. Ltd. : Rs. 1,53,00,000/- and (iv) M/s. Unnati Commodeal Pvt. Ltd. : Rs. 6,93,50,000/-, which were recorded in its books of accounts. The Ld. AR submitted that the receipt of share application money during the year under consideration, had been looked into by the A.O while framing assessment in its case vide his order passed u/s. 143(3) of the Act, dated 16.02.2016, Page 19-22 of APB. 130. Before proceeding any further, it would be pertinent to point out that the A.O while framing the assessment had, inter alia, observed that the share application money received by the assessee company for the subject year, i.e. A.Y. 2013-14 was recorded in its books of account. In fact, the A.O had observed that the assessee company in the garb of share application money stated to have been received from various Kolkata based paper/shell companies introduced its unaccounted income in its books of account. For the sake of clarity, the observations of the A.O are culled out as under: 4.1 During the course of search assessment, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. : Rs. 6,93,50,000/- is found recorded in its audited books of accounts, which formed part of its financial statements that were enclosed along with its original return of income, and had been scrutinized in the original assessment framed u/s. 143(3) of the Act, dated 16.02.2016, therefore, it is difficult to fathom that as to how the same can be brought within the meaning of Incriminating material found in the course of search proceedings conducted on 24.10.2017. Rather, the fact that shares have been allotted by the assessee company to the aforesaid respective share applicants in lieu of the share application money received from them, viz. (i) M/s. Prithvi Dealcom Pvt. Ltd. : 11,283 shares allotted (for Rs. 12,74,979/-); (ii) M/s. Eternity Commercial Pvt. Ltd.: 115044 shares allotted (for Rs. 1,29,99,972/-); (iii) M/s. Chirakoot Infonet Pvt. Ltd. : 135398 shares allotted (Rs.1,52,99,974/-); and (iv) M/s. Unnati Commodeal Pvt. Ltd. : 657894 shares allotted for Rs. 6,93,49,900/- i.e. much prior to the search and seizure proceedings conducted on 24.10.2017, therein further supports the assessee's claim that the contents of the seized document, viz. Page 20-LPS-1 cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany in CO No.15/RPR/2022 for A.Y. 2013-14 is allowed, the appeal of the revenue in IT(SS)A No.9/RPR/2021 for A.Y. 2013-14 is dismissed as having been rendered as infructuous in terms of our aforesaid observations. ITA No.04/RPR/2021 ITA No.10/RPR/2021 A.Y. 2018-19 136. As the facts and issue qua the validity of the jurisdiction assumed by the A.O for framing the assessment vide his order passed u/s. 143(3) of the Act, dated 30.12.2019 for the subject year, i.e. A.Y. 2018-19, in absence of valid approval of the Jt. CIT, Range-Central, Raipur u/s. 153D of the Act remains the same as was there before us in the preceding year, i.e. A.Y. 2010-11, in CO No.12/RPR/2022, therefore, the order therein passed shall mutatis mutandis apply for disposing the captioned appeal filed by the assessee company viz. ITA No. 04/RPR/2021 for A.Y. 2018-19. 137. As we have in terms of our aforesaid observations quashed the assessment framed by A.O u/s. 143(3) of the Act, dated 30.12.2019 for want of valid assumption of jurisdiction, thus, while for the appeal filed by the assessee company in ITA No.04/RPR/2021 for A.Y. 2018-19 is allowed, the appeal filed by the revenue in ITA No.10/RPR/2021 for A.Y. 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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