TaxTMI 
TaxTMI 
2018 (9) TMI 417
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.... and trading of cotton printed sarees. The assessee maintains proper books of accounts and the same were subjected to audit by chartered accountants. The assessee filed its return of income for the Asst Year 2010-11 on 19.9.2010 declaring total income of Rs. 77,22,550/-. There was a search and seizure operation conducted u/s 132 of the Act at the registered office of the assessee company on 15.12.2015 at 1st and 2nd floor, 13B, Digambar Jain Temple Road, Chinipatty, Kolkata - 7. Consequent to the search, notice u/s 153A of the Act was issued on 9.9.2016 and served upon the assessee on 14.9.2016 seeking return for the Asst Year 2010-11. In response to the said notice, the assessee filed its return of income declaring total income of Rs. 77,22,547/- vide e- filing acknowledgement No. 489177871101016 on 10.10.2016.. The assessee stated that the time limit for issuance of notice u/s 143(2) of the Act for the Asst Year 2010-11 in respect of the original return filed on 19.9.2010 had expired on 30.9.2011 and hence as on the date of search, the year under consideration (i.e Asst Year 2010-11) would fall under the category o....
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....3A / 143(3) of the Act on 31.12.2017 determining the total income at Rs. 4,52,22,547/- after making an addition of Rs. 3,75,00,000/- u/s 68 of the Act on account of share application money. 4. The assessee stated no incriminating materials relating to the share capital or share application money or share premium were found during the course of search. The assessee filed all the details with regard to the share capital and yet on the basis of post search deposition taken by the ADIT (Inv.) from certain entry operators, the ld AO added back the said amount of Rs. 3,75,00,000/- as unexplained cash credit u/s 68 of the Act. The assessee before the ld CITA stated tht in support of the receipt of share capital, the assessee had provided name & address of the share applicants, PAN of the share applicants, conformation letters from the share applicants, their ITR acknowledgement, copy of profit and loss account and balance sheet, source of the funds provided, bank statement, ROC documents etc. With regard to justification for premium, the assessee company stated that it owns the brand 'Anu Sarees' , one of the major seller of cotton printed sarees in Eastern India. This is a well ....
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....nfirmed the addition on the validity of addition made towards share capital in the proceedings u/s 153A of the Act for the Asst Year 2010-11 by observing that the addition has been made on the basis of search proceedings and the discovery of modus operandi of obtaining bogus share capital. Apart from making these observations, he also upheld the action of the ld AO on merits of the addition u/s 68 of the Act as well. Aggrieved, the assessee is in appeal before us. 6. With regard to the preliminary argument of the ld AR that there was no incriminating material found during the course of search with regard to the issue of share capital, share application money and share premium, the ld DR argued that the expression 'incriminating material' is not found in the provisions of the Act and it is only the Hon'ble Courts which had imported those words while rendering the decisions. He stated that the Hon'ble Courts are divided on this issue and placed reliance on the decision of the Hon'ble Karnataka High Court in the case of Canara Housing Development Co vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) wherein it was held that search assessments could be framed ev....
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....725/Kol/2011 dated 9.12.2015 (c) CIT vs Kabul Chawla reported in (2016) 380 ITR 573 ( Delhi HC) (d) CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd and All Cargo Global Logistics Ltd reported in (2015) 374 ITR 645 ( Bom) (e) Decision of Hon'ble Apex Court in the case of Kabul Chawla reported in 380 ITR (St.) 64 (SC) wherein SLP of the revenue was dismissed. 8. We have heard the rival submissions. We find it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2010-11 was originally completed u/s 143(1) of the Act and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceeding , as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Henc....
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....fficer is not required to do anything further about such a return and, thus, said assessment cannot be reopened in exercise of power of section 153A- Held yes (Paras 10 and 12) (In favour of assessee)." 8.2. We find that the Co-ordinate Bench of this tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016-TIOL- 167-ITAT-KOL had explained the aforesaid provisions as below:- "6.4 In our opinion, the scheme of assessment proceedings should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act :- (a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s. 153A of the Act for those six assessment years. (b) In respect of the year of search, notice u/s. 143(2) of the Act would be issued and assessment thereon would be completed u/s. 143(3) of the Act. (c) In respect of concluded assessments prior to the year of search, no addition could be made in the relevant assessmen....
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.... (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 LD AOs as a fresh exercise. (iii) The LD AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The LD AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the LD AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." (v) In absence of any inc....
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.... in (2012) 211 Taxman 61 (Del HC) ; Madugula Venu vs DIT reported in (2013) 215 Taxman 298 (Del HC) ; Canara Housing Development Co. vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) ; Filatex India Ltd vs CIT reported in (2014) 229 Taxman 555 (Del HC) ; Jai Steel (India) vs ACIT reported in (2013) 219 Taxman 223 (Del HC) ; CIT vs Murli Agro Products Ltd reported in (2014) 49 taxmann.com 172 (Bom HC) ; CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in (2015) 374 ITR 645 (Bom HC) and All Cargo Global Logistics Ltd vs DCIT reported in (2012) 137 ITD 287 (Mum ITAT) (SB). We also find that against the decision of the Hon'ble Delhi High Court in 380 ITR 573 (Del) , the revenue preferred Special Leave Petition before the Hon'ble Supreme Court and the same was dismissed by the apex court which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon'ble Delhi HC in the case of Kabul Chawla supra would have to be considered on the impugned issue and in any case, the Hon'ble Supreme Court in the case of CIT vs Vegetable Products Ltd reported in 88 ITR 192 (SC) had held that ....