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TMI Blog2022 (10) TMI 1277X X X X Extracts X X X X X X X X Extracts X X X X ..... d with section 153A of the Act. Subsequently, the AO reopened the assessment of AY 2012-13 by issuing notice u/s 148 of the Act and completed the assessment u/s 143(3) r.w.s 147 of the Act. In the reopened assessment of AY 2012-13 and in the search assessments of AY 2015-16 and 2017-18, the AO made certain additions. The Ld CIT(A) also confirmed the said additions and hence the assessee has filed these appeals before the Tribunal. 3. We shall first take up the appeal filed for AY 2015-16. In this year, the assessee has raised a legal issue questioning the validity of additions made in this year, in the absence of any incriminating materials found during the course of search. The legal ground urged in these years read as under:- "The Ld CIT(A) has erred in law and in facts in confirming the additions made by the Assessing Officer without any incriminating evidence found at the time of search." We noticed earlier that the search has taken place in the hands of the assessee on 16.11.2017. The assessee had earlier filed return of income u/s 139(1) of the Act for AY 2015-16 on 29-08-2015. It is submitted that the time limit for issuing notice u/s 143(2) of the Act has expired for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the unabated/completed/finalized assessments only if the incriminating materials found during the course of search warrant such interference, meaning thereby, if the search action did not bring out any incriminating material, then the AO cannot disturb the completed assessments and he has to simply reiterate the earlier total income in the present assessment order. 6. The above said view expressed by the Special bench has since been upheld by Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd (supra). The relevant observations made by Hon'ble Bombay High Court in the above said case are extracted below:- "31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under: "48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. 49. Before proceeding further, we may now examine the provision contained in sub-section (2) of section 153, which has been dealt with by Ld. Counsel. It provides that if any assessment made under sub- section (1) is annulled in appeal etc., then the abated assessment revives. However, if such annulment is further nullified, the assessment again abates. The case of the Ld. Counsel is that this provision further shows that completed assessments stand on a different footing from the pending assessments because appeals etc. proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the Ld. Counsel, though not specifical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1)(b) and the first proviso ? We are of the view that for answering this question, guidance will have to be sought fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his on account of the fact that no assessment in respect of the six assessment years were pending so as to have abated. The impugned order accepted the aforesaid submission of the respondent-assessee by interalia placing reliance upon the decision of the Special Bench of the Tribunal in Al-Cargo Global Logistics Ltd. rendered on 6 July 2012. The Tribunal in the impugned order further held that no incriminating material was found during the course of the search. Thus the entire proceedings under Section 153A of the Act were without jurisdiction and therefore the addition made had to be deleted on the aforesaid ground. The impugned order also thereafter considered the issues on merits and on it also held in favour of the respondent-assessee. 6. Mr. Kotangale, the learned Counsel for the revenue very fairly states that the decision of the Special Bench of the Tribunal in Al-Cargo Global Logistics Ltd. was a subject matter of challenge before this Court as a part of the group of appeals disposed of as CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 374 ITR 645/58 taxmann.com 78/232 Taxman 270 (Bom.) upholding the view of the Special Bench of the Tribunal in Al- C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating materials found during the search and therefore the enhancement is also without jurisdiction u/s 153A. Accordingly, the additional grounds No. 1A and 1B raised by the assessee stand allowed in favour of the assessee and AO is directed accordingly." 9. We may also gainfully refer to the decision rendered by Hon'ble Delhi High Court in the case of Kabul Chawla, wherein identical view was expressed. The Hon'ble Delhi High Court has summarized the legal position with regard to the provisions of sec. 153A as under:- "Summary of the legal position 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 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 (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d concluded in unabated assessment. Hence the decisions rendered by the Hon'ble Jurisdictional Bombay High Court in the case of Continental warehousing Corporation (Nhava Sheva) Ltd (supra) and Gurinder Singh Bawa (supra), in our view, shall squarely apply to the facts of the present case. Accordingly we hold that the AO, in the absence of any incriminating material found during the course of search relating to the impugned additions, was not justified in assessing them in this year. 11. In view of the foregoing discussions, we set aside the orders passed by Ld CIT(A) in the hands of these assessees for AY 2015-16 and direct the AO to delete the additions made in this year in the impugned assessment order. 12. Since we have decided the above said legal issue in favour of the assessee, which results in deletion of all additions made by the AO in AY 2015-16, we do not find it necessary to deal with the issues urged on merits of addition, as the same would be rendered academic in nature. 13. We shall now take up the appeal filed by the assessee for AY 2012-13. The assessee had filed return of income u/s 139(1) earlier declaring a total income of Rs. 2,28,320/-. Consequent to the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard rival contentions and perused the record. We notice that an identical case of allegations that the assessee has availed accommodation entries by way of capital gains in order to convert unaccounted money into accounted one, was examined by the Hon'ble jurisdictional Bombay High Court in the case of Shyam Power (supra). The decision rendered by Hon'ble Bombay High Court in the above said case are extracted below:- "3. Mr. Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr. Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e termed as substantial question of law." 18. In the instant case also, we noticed that the AO has simply relied upon the report of the investigation department and held that the long term capital gains declared by the assessee are not genuine. No other material was brought on record by the AO to prove that the assessee has indeed availed only accommodation entries. We noticed that the assessee has furnished all documents relating to purchase and sale of securities. The shares have entered into and exited from his demat account. The purchase and sale transactions have been routed through the bank accounts of the assessee. All these documentary evidences produced by the assessee have not been disproved. Accordingly, we are of the view that the decision rendered by the jurisdictional Hon'ble Bombay High Court in the above said case of Shyam R Pawar (supra) is squarely applicable to the facts of the present case. The Ld A.R also relied upon following decisions, which support the case of the assessee:- (a) CIT vs. Smt Jamnadevi Agrawal (2012)(20 taxmann.com 529)(Bom) (b) PCIT vs. Ziauddin A Siddique (ITA No. 2012 of 2017)(Bom) (c) PCIT vs. Smt Renu Agarwal (ITA No. 44 of 2022)(B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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