TaxTMI 
TaxTMI 
2018 (10) TMI 181
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....cided in this appeal is as to whether in the facts and circumstances of the case, the ld CITA was justified in deleting the addition made in the sum of Rs. 72,500/- on account of commission for getting accommodation entries , for want of incriminating materials found during the course of search relatable to such issue. 3. The brief facts of this issue is that the assessee is a company incorporated on 15.9.2011. It had filed its return of income for the Asst Year 2012-13 u/s 139 of the Act on 31.1.2013 declaring total loss of Rs. 29/-. There was a search and seizure operation conducted u/s 132 of the Act on 7.11.2013 at the business as well as residential premises of the 'Dollar Group' at Kolkata and other places. Consequent to the search, notice u/s 153A of the Act was issued on 13.4.2015 seeking return for the Asst Year 2012-13. In response to the said notice, the assessee filed its return of income declaring total loss of Rs. 29/- on 6.5.2015. The assessee stated that the time limit for issuance of notice u/s 143(2) of the Act for the Asst Year 2012-13 in respect of the original return filed on 31.1.2013 had expired on 30.9.2013 and hence as on the date of search, the year und....
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....ity is taken into accoiunt, it becomes quite apparent that the investment is part of a strategy to introduce unaccounted funds in the form of share capital. In this circumstances, the above facts lead to the conclusion that this was an arrangement of induction of unaccounted money through misleading layers to the beneficiaries of assessees." 3.3. It was argued that admittedly no incriminating materials were found for Asst year 2012-13 in the course of search with regard to share capital and share application money and accordingly pleaded not to disturb the originally assessed income, which is same as the returned income. The ld AO however did not heed to the contentions of the assessee and proceeded to frame the assessments u/s 153A of the Act by making an addition towards share application money u/s 68 of the Act in the sum of Rs. 1,45,00,000/- on the plea that the assessments to be framed u/s 153A of the Act clears all the decks and would enable the ld AO to assess or reassess the total income as per the provisions of the Act irrespective of incriminating materials found in the search. In the said assessment, he also made addition of Rs. 72,500/- towards commission pa....
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....ing SLP in this case in the Supreme Court and keeping in view the Apex Court's decision to dismiss SLP on similar issue in the case of Pr CIT vs Kurele Paper Mills Pvt Ltd : SLP(c) No. 34554 of 2015 dt. 07-12-2015, I am of this view that in order to maintain judicial continuity on this issue and respectfully following the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra), assessee's appeal on grounds no. 1 is allowed and as such I am not inclined to adjudicate appeal on ground no. 2 and 3 on merit. Aggrieved, the revenue 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 v....
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....cision of this tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 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 2012-13 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 assess....
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....s Assessing Officer 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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....assessments 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 incriminating material, the completed assessment c....
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....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 if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. 8.....