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TMI Blog2025 (3) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... MR. VIJAY BISHNOI AND HON'BLE MR. JUSTICE KAUSHIK GOSWAMI For the Appellant(s) : Mr. S.C. Keyal, Advocate. For the Respondent(s) : Ms. P. Jain, Advocate (through videoconferencing), Mr. H. Betala and Ms. P.K. Khakolia, Advocates. JUDGMENT & ORDER (CAV ) (VIJAY BISHNOI, CJ) This appeal is preferred on behalf of the appellants being aggrieved with the order dated 07.04.2022 passed by the Income Tax Appellate Tribunal, Guwahati Bench, Guwahati (hereinafter referred to as "ITAT") in I.T.A. No.324/GAU/2019 for the Assessment Year 2014-2015 in respect of the sole respondent. 2. This Court, vide order dated 09.10.2023, has admitted this appeal on the following substantial questions of law: "1. Whether on facts and circumstances of the case, the Hon'ble Tribunal was justified in confirming findings of the Ld. CIT (appeal) that the assessment for A.Y. 2014-2015 is not abated ? 2. Whether on facts and circumstances of the case, the Hon'ble Tribunal was correct in law holding that the assessment for a Assessment Year is not abated when no assessment order was passed prior to passing order u/s 153A of the Income Tax Act?" 3. The brief facts of the case are that the sole respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disclosed amount of Rs.4,23,30,000/- for the financial year 2013-14 relevant to the assessment year 2014-15 was neither incorporated in the Return nor offered for tax during period under consideration. As such, vide show cause notice dtd. 05/11/2018, Shri Rohit Jain, Chairman of the CMJ Group was show caused as to why the Rs.4,23,30,000/- should not be added to the total income of the assessee as disclosed by him vide disclosure petition dtd. 29/08/2016. In reply, Shri Rohit Jain, Chairman of the CMJ Group submitted a retraction petition dtd. 07/12/2018 along with an affidavit stating that the disclosure was made under coercion and threat. However, the assessee has not been able to produce any evidence, documentary or circumstantial, in support of the averment of coercion, threat etc. In this regard reliance is made on the decision of various hon'ble judicial authorities as under: In the case of the KTMS Mohammed, 197 ITR 196 (1992), the SC while throwing further light on the evidentiary value of the retracted statement said that retracted statement has to be seen with great circumspection. The statement, if obtained by any inducement, threat, coercion or by any impro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 07/12/2018. Further my family members Shri Karan Jain, Smt. Reshmi Jain and Miss Karishma Jain have also submitted their affidavit dtd. 15/11/2016 in this regard as on today which denies the forced statements taken from them by the department. However the deponent has not been able to produce any evidence, documentary or circumstantial, in support of the averment of coercion, threat etc. It has been discussed in earlier paras why a scrip is considered to be penny stock. The value as well as the trend of trading that determines a scrip whether it is penny stock or not. In the instant case, the details in regard to scrip, trend of trading, prices of shares over a certain period, background of the company etc. all these features are well discussed to show that the shares are nothing but penny stock. Summing up the above facts, it appears that the assessee is basically a salaried person and does not bear even minimum interest and information in regard to the share trading. In his statement recorded on oath u/s 132 (4) on 02.06.2016, he has admitted the fact of routing the unaccounted income of the family by way of pre-arranged long term capital gain in the regular books of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the scheme and has admittedly converted his unaccounted cash equal to the sale proceeds of share in to while in the guise of exemption under section 10 (38) of the Income Tax Act, 1961. xiii) With so much of evidence against the assessee, the onus was on assessee to prove that his transactions were genuine and that he had not availed benefit of the aforementioned scheme to convert black money into white. xiv) In Sumati Dayal vs. Commissioner of Income Tax .... the Supreme Court observed and I quote, "It is no doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee. [See: Parimisetti Seetharamamma (supra) at P.5361. But, in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year the same may be charged to Income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure petition dated 29/08/2016 which was subsequently confirmed by the assessee in his sworn statement. In view of the above the amount of Rs.4,23,30,000/- as disclosed by Shri Rohit Jain on account of so called Long term capital gain is added to Total income of the assessee within the meaning of section 68 of the Income tax Act, 1961. As the assessee has deliberately and wilfully concealed her unaccounted income, a conclusion which is obvious from the discussion made in the order, penalty under section 271 (1) (c) is also initiated. 16. The total income of the assessee is computed as under in light of the discussions made in the foregoing paras:- Returned income: Rs. 2,00,080/- Add: As discussed in para 15.2 Rs. 4,23,30,000/- Assessed Income : Rs. 4,25,30,080/-" 5. Being aggrieved with the Assessment Order dated 31.12.2018, the respondent preferred an appeal before the Commissioner of Income Tax (Appeals), Guwahati under Section 250 of the Income Tax Act, raising as many as 16 grounds. 6. The Commissioner of Income Tax (Appeals), vide order dated 08.04.2019, allowed the said appeal while recording a finding of fact that the Assessing Officer had invoked the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no addition could be made merely by placing reliance on the statement recorded during search and also without reference to any incriminating document or material. xxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx For the above assessment year, I note that the Appellant had filed a return of income under Section 31/07/2014 wherein the Appellant had duly disclosed the impugned capital gain and claimed the exemption accordingly. Admittedly there was no regular assessment made on the Appellant for the above assessment year. Also the time limit for issuance as well as service of notice under Section 143/2) of the Act in the case of the Appellant for the above assessment year had already expired on 30/09/2015. Thus as on the date of Search in the case of the Appellant, i.e. on 02/06/2016, the assessment for the above assessment year 2014-15 was a completed assessment and therefore following the ratio of the above judgments as discussed earlier, in the absence of any incriminating documents or material, the already completed assessment cannot be disturbed unless any incriminating material is found during the course of search. In this case, it is vivid that the AO has not referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ratio of the judgment in the case of Kabul Chawla, discussed per supra, the proceedings for the impugned assessment year were completed and could not have been disturbed." 8. Being aggrieved with the order dated 08.04.2019 passed by the Commissioner of Income Tax (Appeals), the appellant preferred an appeal, being ITA No.324/GAU/2019 before the ITAT. The ITAT noted the grounds of appeal in para No.3 of the impugned order dated 07.04.2022, which are reproduced hereunder : "3. The grounds of appeal raised by the revenue are as under : "1. That in the fact and circumstances of the case and the law in this matter, the Ld. CIT(A) is not justified in deleting the addition stating that the assessment for the Ay 2014-15 is non-abated and stood already completed despite the fact that the original assessment in this case for Ay 2014-15 against the return filed on 31.07.2014 was abated and the assessment u/s 153A r.w.s. 143 (3) on 31.12.2018 is an abated assessment.. 2. The Ld. CIT(A) was not justified in deleting the addition stating that in absence of any incriminating material the addition made by the AO in the impugned order is deleted while the original assessment in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged coercion/duresse obtaining it (refer page 19 of paper book)]. It is noted that other than the statement of his father which has been obtained under threat/coercion/duress [which has been retracted within few days] the AO has made the addition as undisclosed income the assesser's LTCG to the tune of Rs. 4,40,50,000/-. However we find that other than the retracted statement there was no iota of evidence/material to substantiate the impugned additions. The Id. CIT(A) has given a finding of fact that other than the assessee's father's statement regarding the LTCG of assessee, there was no incriminating material found during search qua the assessee qua the AY 2014-15. In such a scenario, no addition was legally sustainable as held by the Hon'ble Delhi High court in Kabul Chawla (supra) and in this context it is noted that similar ratio was agreed upon in the case of Meeta Gutgutia (supra) Delhi High Court. And it is noted that several other High Courts have also come to similar conclusion either by following Kabul Chawla (supra) or otherwise. This includes the decisions of the Hon'ble Gujarat High Court in Pr CIT v. Soumya Constructions (P.) Ltd. [2016] 387 ITR 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the sole respondent has placed reliance on the decision of the Hon'ble Supreme Court rendered in- (i) Principal Commissioner of Income tax, Central 3 Vs. Abhisar Buildwell (P) Ltd., reported in [2023] 149 taxmann.com 399 (SC); (ii) Principal Commissioner of Income -tax Vs. Saroj Sudhir Kothari, reported in [2023] 154 taxmann.com 360 (SC); (iii) Principal Commissioner of Income-tax (Central) 2 Vs. Jay Ambey Aromatics, reported in [2023] 156 taxmann.com 691 (SC) and (iv) Principal Commissioner of Income-tax Central 2 Vs. S.S. Con Build (P) Ltd., reported in [2023] 151 taxmann.com 317 (SC). 13. The Hon'ble Supreme Court, in Abhisar Buildwell (P) Ltd. (supra), while affirming the view taken by the Delhi High Court in the case of Commissioner of Income Tax, Central III CIT Vs. Kabul Chawla, [2015] 61 taxmann.com 412/234 Taxman 300/ [2016] 380 ITR 573 (Delhi) as well as by Gujarat High Court in the case of Pr.CIT Vs. Saumya Construction (P.) Ltd. [2017] 81 taxmann.com 292/[2016] 387 ITR 529 (Guj.) has held as under: "8. For the reasons stated hereinbelow, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: '153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: (I) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/ unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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