TaxTMI 
TaxTMI 
2019 (10) TMI 878
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....ct was issued by the Assessing Officer on 05.10.2015, in response to which the return of income for the year under consideration was filed by the assessee on 19.11.2015 declaring total income of Rs. 9,83,698/-. During the year under consideration, the assessee-company had raised a share capital of Rs. 11,80,000/- alongwith a share premium of Rs. 2,83,20,000/- aggregating to Rs. 2,95,00,000/-. As found during the course of search and seizure action, the assesee-company had raised the said share capital and share premium from seven companies. As per the information available with the Assessing Officer, some of the said companies were paper/jamakharchi companies maintained by certain entry operators having dummy Directors. The Assessing Officer also noted that as per the statements of the said entry operators and dummy directors recorded by the Investigation Wing, Kolkata, the amount of share capital and share premium was brought into the books of account of the assessee through the jamakharchi companies, routing assessee's unaccounted cash. In order to verify the share capital and share premium amount claimed to be received by the assessee during the year under consideration, notices....
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....fter extracting the entire written submission filed by the assessee in his impugned order, he deleted the addition made by the Assessing Officer under section 68 after recording his observations/findings as under:- "5. I have considered the findings of the AO in the assessment order and the written submission as well as different case laws brought on record by the AR. The main argument of the AR is that additions made by the AO in the assessment order passed u] s 153A/143(3) are not based on any incriminating documents/papers seized during the search operation. The AR has brought on record many case laws decided by the Jurisdictional Kolkata bench of ITAT and Jurisdictional Calcutta High Court on this issue. Calcutta High Court has time and again reiterated its view that the addition in case of the search assessments has to be made on the basis of incriminating material. Some of the recent decisions of the Hon'ble Jurisdictional High Court are discussed hereunder. PCIT-2. Kolkata Vs. Salasar Stock Broking Limited (ITAT No. 264 of 2016) dated 24.08.2016: (Calcutta), In this case, the Honorable High Court observed that the Ld. ITAT, Kolkata was of the o....
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....rial-ITAT on appeal however deleted addition on grounds that the additions made for relevant AY's u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law-Issue was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search-Held, present appeals concerned AYs,2002-03, 2005-06 and 2006-07-0n the date of the search the said assessments already stood completed-Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed-Question framed by the Court was answered in favour of the assessee and against the Revenue- Revenue's appeal dismissed. 6. I further find that In this regard the Hon'ble ITAT Kolkata has time and again reiterated its view that the additions in case of the search assessments has to be made on the basis of incriminating material and any deviation from the same would render the assessment order in....
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....ing the search in the respect of the issue of deemed dividend. Hence it cannot be the subject matter of addition in 153C proceedings in respect of completed assessments. We hold that when an addition could not be made as per law in section 153C proceedings, then the said order cannot be construed as erroneous warranting revision jurisdiction u/s 263 of the Act." Shri. Manish Mundhra Vs. ACIT-CC-XXX in ITA-469-470/Kol/2013 Dt. 16.12.2015 (ITAT Kolkata); We also are of the view that in the light of the admitted fact that no incriminating material was found in the course of search the impugned addition could not have been made in the proceedings u/s 153A of the Act. The decision of the fTAT, Delhi Bench in the case of ACIT vs M/s. Delhi Hospital Supply Pvt. Ltd. (supra) followed the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (supra) supports the plea of the assesee in this regard ..... " ACIT-CC-XXVII Vs Kanchan Oil Industries Ltd. in ITA-725/Kol/2011 Dt. 09.12.2015 (ITAT Kolkata); In view of the aforesaid findings and judicial precedent relied upon, we hold that the denial of deduction ix] s 801B of the Act in the assessme....
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....f the aforesaid discussion and the decision of the Hon'ble Special Bench, Bombay High Court, as well as Hon'ble Delhi High Court, we confirm the order of the CIT(Appeals) deleting the addition made in each of the assessment years as we hold that the Assessing Officer was not correct in law in making the addition in the assessment made under section 153A read with section 143(3) when no incriminating material was found during the course of the search in respect of the addition made by him. We accordingly partly allowed the Cross Objections taken by the assessee." ACIT Vs. Shanti Kumar Surana& Ors. in IT(SS)A Nos. 12 to 20 and CO Nos. 13 to 20 (reported in 44 CCH 241) order dt. 22.06.2015(ITAT Kolkata) "In view of the facts in entirety and the legal principles enunciated by Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (NhavaSheva) Ltd., supra, of Hon'ble Allahabad High Court in the case of Shaila Agarwal, supra and Mumbai Special Bench decision in the case of All Cargo Global Logistics, supra, we are of the view that there is no incriminating material found during the course of search in the present case for these asse....
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....o the same extent. In view of the foregoing discussion, we are of the considered opinion that no exception can be found to the view taken by CIT(Appeals) for deciding this issue in assessee's favour. Before parting with this matter, we want to make it clear that our decision is based in the backdrop of the facts that the deduct ion under sect ion 80IB could not have been tinkered with because no incriminating material was found during the course of search on this issue when original assessment granting deduct ion on this issue was completed under sect ion 143(3). We have not expressed any opinion on the merits of the case about the allow ability or otherwise of deduct ion under section 80IB on interest income arising in the present facts and circumstances. In the result, the appeal filed by the Revenue stands dismissed." LMJ International Ltd Vs. DCIT(2008) 119 TTJ (Kol) 214. (ITAT Kolkata); "Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed; items of regular assessment cannot be added back in the proceedings under s. 153A/153C when no incriminatin....
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....ng all over India and some of its group companies-Search was also carried out in the premises of the assessee-Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns-As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1), assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies-AO declined to rectify the assessments-CIT also held that addition need not be restricted only to the seized material-ITAT on appeal however deleted addition on grounds that the additions made for relevant AY's u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law-Issue was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were....
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....rketing Ltd (supra) in the light of CBDT's decision of not filing 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. Limited: SLP(C) No. 34554 of 2015 dated 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 on technical ground and as such I am not inclined to adjudicate appeal on ground no 2 on merit". 4. Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal on the following grounds (as revised): "(1) The ld. CIT(A)-21/Kolkata was not justified in allowing the appeal of the assessee on technical ground, without considering the relevant provision of section 153A which provides for assessing or reassessing the total income. (2) The ld. CIT(A)-21/Kolkata was not justified in allowing the appeal of the assessee only on technical ground without considering the facts and ....
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....t for purposes of 153A also and it is for this reason there is no further requirement of recording any belief or satisfaction by AO for issue of notice u/s 153A. As may be noted from the conditions of recording the satisfaction of PDIT(lnv), one of the conditions is regarding books or other documents which were not produced or would not have been produced on issue of summons. Thereby implying that post search, while the AO is making assessment, it has to examine the correctness of income disclosed not only based on what material has been gathered during search but also based on these books or documents which in the opinion of PDIT(lnv) would not have been produced upon issue of summons, whether or not such books of accounts or documents have been actually found during search. In fact, there are numerous instances when even the books of accounts as per already filed audit reports are not found at any of the premises during search, more so when the searched entities represent only the shell companies. Similarly, there is a requirement of satisfaction by PDIT(lnv) in respect of income being fully or partly not disclosed for the purposes of the Act. Hence, even if some income/....
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....at power of AO is restricted only to make assessment the evidence found during search. The provisions of 153A not only require assessment of undisclosed income but total income also. The expression 'total income' would include the income emanating from disclosed items, income emanating from partly or wrongly disclosed items as well as income emanating from undisclosed items. U/s 153A, no distinction is made for assessment of total income in the cases which were earlier completed u/s 143(1), the cases which were earlier completed u/s 143(3)/147 or the cases were no return was filed prior to search. Thus, in all the three categories, it is as per the scheme of the Act that the total income of the assessee as defined u/s 2(45) needs to be assessed for all the 6 AYs for which the Aa is mandated to issue notice u/s 153A. 1.3 Further u/s 153A, there is a provision for abatement of pending assessments whether or not any evidences were found for that year. There can also be a situation where neither any regular assessments were made earlier nor any proceedings were pending, which could be abated. The section also envisages the issue of notice u/s 153A whether or not any ev....
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....ceedings under this section, notwithstanding that the reasons for such issue has not been included in the reasons recorded under sub-section(2) of section 148". Hence, even in absence of any explanation u/s 153A also similar to the explanation 3 u/s 147, the intention of the legislature and the scheme of the Act for making assessment u/s 153A where search u/s 132 is initiated, is same i.e. in order to make assessment of total income, after having assumed the jurisdiction to assess total income, the powers of AO shall not remain restricted to mere those material which were seized during search but shall also include the assessment of income based on any entry already recorded prior to search or any claim/relief allowed prior to search, which has been found to be erroneous during the proceedings u/s 153A. 1.5 There is divergence of judicial opinion on the question of whether assessment u s 153A can be restricted to only the incriminating material seized during the search or whether the AO can also take view based on something which might be noticed otherwise during the course of assessment proceedings u/s 153A? Some of the judicial verdicts are as under: &n....
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.... initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings under section 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search - Held, yes (g) CIT-II Vs continental warehousing corporation 235 Taxman 568 (SC) The High Court by impugned order held that no addition can be made in respect of assessments which have become final if no incriminating material is found during search or during 153A proceeding - Whether Special Leave Petition filed against impugned order was to be granted - Held, yes (i) The dismissal of SLP by supreme court in case of PCIT vs Meeta Gutgutia wherein also the same views were expressed as in Kabul Chawla, would also not lead to conclusion that the question decided by Delhi High court against the revenue in Meeta Gutgutia is settled because the SLP has already been admitted by SC for hearing on the same question in several other cases such as Continental warehousing, Best Infrastructure (supra). Further, Supreme Court in Sinhgad Tech Edu Society 397 ITR 344(SC) held that no notice u/s 153C could be invoked unle....
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....oceedings u/s 153C if any document, an entry or an asset is found in relation or pertaining to a person other than the searched person, which has a bearing on the assessment of total income as per the provisions of the I T Act. Hence the word "incriminating", as used by the courts in context of section 153C, needs to be applied in the context of section 153A also which has to be seen as something which can have a bearing on the assessment of correct total income u/s 2(45) as per provisions of the Act. 2.3 The expression 'have a bearing on determination' as used u/s 153C also has a wide connotation which implies that the nexus of the seized documents/ assets to income should only be a logical nexus to the ultimate process of determination of total income and that such evidence need not be in the nature of direct hard evidence. Applying the same principles, the incriminating material for the purposes of section 153A also has to be necessarily construed to be in the nature of a prima facie evidence only (including a circumstantial evidence) and not as hard evidence. The use of the expression 'books of accounts' u/s 153C again suggests that even the entries rec....
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....ry already appearing in books or accepted in earlier assessments based on documents submitted at that point of time, are camouflaged or manipulated or reflected to be in the nature or from a source which is different from the real nature or source as appearing from the evidences found during a subsequent search, then such material/ facts coming to fore now will definitely constitute an incriminating material. In consequence of the same the earlier recorded entries/earlier admitted documents and evidence shall have no force as genuine evidence. If it were held not to be so, then the purpose of 153A would be defeated as it would fail to prevent the mischief, which it sought to prevent just because the entries were already recoded in the books or some documents had already been accepted. Hence applying the Hayden's rule of mischief, the mere fact that such entries are recorded in the books of accounts or some fabricated or colourful documents have already been accepted as correct, will not prevent such material or entry from being incriminating, if the circumstances suggest otherwise. The Hayden's rule of mischief has been judicially accepted and applied by Calcutta High Court....
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....cticed on the court is always a ground for vacating the judgment, as where the court is deceived or misled as to material circumstances, or its process is abused, resulting in the rendition of a judgment, which would not have been given if the whole conduct of the case had been fair". The Madras High Court in case of L. Mohanam vs Mohamed Idris on 24 June, 2011 in O.S.A.No.310 of 2010 has observed as under: 19. In support of his contention, the learned senior counsel for the appellant/plaintiff relied on the decision of the Hon'ble Supreme Court in Hamza Haji V. State of Kerala and another reported in (2006) 7 SCC 416, wherein it has been observed that a decision obtained by playing a fraud on Court is liable to be set aside on the basic principle that the party who secured such a decision by fraud cannot be allowed to enjoy its fruits. The learned senior counsel also relied on the observation of the Hon'ble Supreme Court in State of Andhra Pradesh and another Vs. T.Suryachandra Rao reported in (2005) 6 SCC 149 to the effect that the fraud vitiates every solemn Act and fraud and justice never dwell together. In A. V.Papayya Sastry and Others Vs. Govt. Of A....
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....apement of income that was taxable; if assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to Assessing Officer any opinion on questions that are raised in proposed re-assessment proceedings - Held, yes - Whether every attempt to bring to tax income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where order of assessment does not address itself to a given aspect sought to be examined in re-assessment proceedings - Held, yes In view of the above, applying the same principle in the present context also, it can be safely concluded that in the absence of any categorical finding on the genuineness of a claim in an earlier assessment having being accepted on make belief documents/evidences only, it cannot be said that the A.O. has expressed any opinion on the correctness or otherwise of the items/entries disclosed in the return of income already filed prior to the search. The judicial view is very clear wherein it has been held that the mere submission of some documents proving identity or bank account, affidavits in contrast to the other evidences su....
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.... be given a go by while framing section 153A assessments and the instant case falls under section 132(1 )(c) of the Act. Once the search is conducted and notice u/s. 153A is issued the appellant has to file the return of "total income" whether there was any seized material or not. It shows that seized material or undisclosed income is not the criteria for filing of return declaring total income. What is required to file return of income for appellant is that (1) there should be search and (ii) 153A notice should be issued. Once the notice is issued u/s. 153A and appellants file its return of income for six years then the earlier returns became non est and the returns filed in response to notice u/s. 153A becomes the final return and the AO has power to assess or reassess the case for entire six years. The earlier assessment also becomes non est as the earlier return filed by the appellant became non est. 6. The aforesaid view get strength from Delhi High Court decision of Pr. Commissioner of Income Tax vs. Niraj Jindal dated February 9, 2017 wherein it is held that once the assessing officer accepts the returns filed u/s. 153A the original return filed u/s. 153A becomes no....
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.... passed by the ld. CIT(Appeals) giving relief to the assessee on the issue under consideration by making the following submissions in writing:- "1.1 A search & seizure operation was conducted u/s 132 of the Act on 17.12.2014 by the Investigation Wing, Kolkata at the business as well as residential premises of the "SAFECHEM Group" at Kolkata and other places. Assessment u/s 153A/143(3) was completed on 30.12.2016 determining total Income of Rs. 3,04,83,700/- inter-alia making the following addition: (i) Unexplained Cash credit u/s 68 of the I.T. Act -Rs. 2,95,OO,OOO/- The above additions made in this impugned order are part & parcel of the regular income tax return filed u/s 139(1) and the audited Balance sheet & profit & loss account. In the instant case the above additions are not based on any incriminating seized material. 1.2 As per Section 153A, the assessments are classified in two categories, i.e. (i) Completed Assessment and (ii) Pending or Abated Assessment. Completed Assessment refers to the assessment which are not pending as on the date of search and the time limit for issuance of notice u/s 143(2) has expired. Thus, the assessme....
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....ssessments has to be made only on the basis of incriminating material. The Ld. AO also can not start doing a fresh assessment that had already been completed either u/s 143(3) or u/s 143(1) under the Act without having any incriminating material on record. In proceedings u/s 153Aj153C to reopen the completed assessment is restricted only to the extent of incriminating documents if any. The various High Courts including the jurisdiction Calcutta High Court and jurisdictional ITAT have already held that issues forming part of the items of the regular assessment, is beyond the scope of the search assessment u/s.153A/153C and the AO has no jurisdiction to make additions otherwise than on the basis of the incriminating material found in the course of search. 1.4.2 In the instant case, the AO has made the addition of Rs. 2,95,00,000/- u/s 68 of the I.T. Act on account of share capital on the ground that the share applicants did not company to summons u/s 131 of the Act and the assessee did not produce the Directors of the investor companies. The AO also alleged that some applicant companies are jamakharchi companies. He also alleged that as per the data base of the Inve....
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.... person. In course of search & seizure operation no incriminating material or assets were found to link the share capital raised by the assessee with the statement of so called entry operator. The assessee was not provided opportunity to cross examine the entry operators. Therefore, statement obtained from the entry operator later on retracted by an affidavit has no evidentiary value & no substance and are irrelevant and cannot be treated as incriminating material for the purpose of making the addition in the hands of the assessee. In the course of search, no incriminating document relating to the addition made u/s 68 in respect of share ital was found and seized. This fact is evident from the assessment order as the Ld AO is silent about any incriminating documents found in the course of search. 1.5 During the course of hearing before the Hon'ble Bench, the Ld. OR has made a written submission before the Hon'ble Bench with regard to the instant matter. The Ld. DR in the submission have made generalised allegations which are completely irrelevant given the facts of the instant case. The Ld. DR in his submission has alleged that the term 'incriminating ....
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....file of the AO for considering the same after giving an opportunity to the assessee. But in our case, no such incriminating material has been found by the department as a result of search nor the addition has been made based on the incriminating documents. As such the reliance placed by the Ld. OR in the instant case is completely irrelevant. (iv) The Ld. DR also relied on the decision of Hon'ble Delhi High Court in case of Smt. Dayawanti (390 ITR 496); In this regard, we would like to submit that the facts of the above case are not relevant for the assessee case. In the above case, statements of family members were recorded on the basis of which addition was made. Further, none of the statements made were retracted by them. Thus, the Hon'ble High Court held that the statements so recorded consequent to search can be treated as incriminating material. However, in the current case, no such statement has been recorded with regard to the search of the assessee group and the statements as relied by the revenue were from the data base of the department and were recorded in case of some other group not relevant to the assessee. Further, the alleged stat....
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....e Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, such confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders". 1.7.1. In this regard, we rely on the following decisions of the....
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....h. Besides, the time limit to issue notice u/s.143(2) was also expired. In order to initiate assessment proceedings u/s.153A there should be a new or incriminating document. The assessment which is already completed u/s.143(3)/143(l) should not be reopened. Therefore, considering the scheme of Section 132 and Section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of Section 153A. Ld. DR for the revenue had pointed out that there is a direct nexus among the cornpemes. which has been established by the statement of Mr.Naresh Kumar Chhaparia, which cannot be relied on, as he was a double speaking person. Therefore, considering the factual position and the judgments cited by Id AR, we are of the view that the additions made by the AO u/s.153A and confirmed by the Id CIT(A) needs to be deleted. Therefore, we delete the addition. 10.In the result, appeal filed by the assessee on ground No.IT(SS)A No.47, 49, 50, 51, 52, 54, 55, 94, 95, 96/Ko1/2015 is allowed. " (iii) DCIT vs M/s. Warren Tea Ltd. in IT(SS)A No. 72-78/Ko1/2015 dated 23.08.2017; "6. Aggrieved by the assessment order passed by th....
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....etracted later on. The Apex court has observed in Pullengode Rubber Produce Co. Ltd. vs. State of Kerala, 91 ITR 18 (SC) that an admission is an extremely important piece of evidence but it cannot be said to be conclusive. It is open to the person who made the admission to show that it was incorrect. The CJT(A) further cited the following judgments: . Based on the above reasoning the CJT(A) observed that though Initially all the parties who supplied goods/ materials or provided services or executed works in the nature of contract stated that they had provided accommodation entries to the assessee company without doing actual transactions but later on they all retracted their statements on the ground that they were pressurized to give such statements and that their all business transactions with the assessee company were actual business transactions. In support of their claim in the affidavit they all appeared before the AD and produced their books of account bills/vouchers and bank statements. After verification of such books of account and primary documents nothing adverse was noted by the AO end. Therefore, he did not mention anything about the books of account,....
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....collection of evidence of income which leads to information on what as not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders . 8. Undisputedly, since the search happened on 27.01.2011, the assessments in respect to assessment years 2005-06 to 2009-10 were undisputedly not pending before the AO, we note that the statements recorded simultaneously of the persons while search was going on at the Warren Tea Group premises i.e. Shri Pankaj 8agaria, Shri Ramgopal Drolia, Shri Pawan Kumar goenka, Shri Deepak lhunihunwala and Shri Ram Avtar Mittal and statements recorded on behalf of M/s Asian Udyog and on behalf of M/s. P. M Traders u/s 132(4) as well as survey u/s.133A has been retracted within....
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....in the ITA No. 707, 709 & 7013 of 2014 CIT Central-Ill vs. Kabul Chawla, wherein their lordships have held as under: . 11. In the light of the aforesaid ratio laid by the Hon'ble High Courts, wherein, the Hon1Jle High Court held that in the absence of any incriminating materials, the concluded assessment need to be reiterated and in the essessees cases before us from a perusal of the above chart, it is clear that on the date of search i.e. on 27.01.2011, assessments pertaining to A. Y. 2005-06, 2006-07, 2008-09 and 200910 were not pending before the AO and the last date for issuance of Section 143(2) notice for scrutiny had elapsed. Therefore/ it can be safely assumed that these assessments were not pending before the AO and as per the ratio laid by the Hon'ble High Courts these assessments are concluded assessments/ which cannot be tinkered with and fresh additions cannot be made without direct nexus to the incriminating materials seized during search. Therefore/ no addition without incriminating materials ought to have been saddled on the assessee for A. Y. 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 and so we allow the appeal of the assessee on the legal issue ra....
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....vs S. Khader Khan &. Sons, Hon'ble Madras High Court, in 300 ITR 157; "What is more relevant, in the instant case/ is that the attention of the Commissioner and the Tribunal was rightly invited to the circular of the Central Board of Direct Taxes dated March 10/ 2003/ with regard to the confession of additional income during the course of search and seizure and survey operations. The said circular dated March 10, 2003 reads as follows: 'Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned asses sees while filing returns of income. In these circumstances/ on confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording s....
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.... franchise fees for relevant year - On basis of said statement Assessing Officer opined that number of outlets for which franchise fee was received had more or less remained same in all assessment years from 2001-02 to 2006-07 and estimated undisclosed income at a certain percentage of amount of disclosure made by assessee in her statement under section 132(4) - High Court in impugned order held that since no incriminating material was unearthed to show that there was failure by assessee to disclose franchise income/ addition made by Assessing Officer was unjustified - whether SLP against said decision was to be dismissed - Held, yes [Para 2] [In favour of assessee]." 1.8.2 The appellant further rely on the judgment of the Hon'ble Delhi High court in the case of PCIT Vs. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571(DEL) where it has been held that in case of search assessment, addition u/s 68 is not justified if no incriminating evidence relating to share capital found in the course of search. The relevant extracts of the same is as under: "SEARCH AND SEIZURE - ASSESSMENT IN SEARCH CASES - SHARE APPLICATION MONEY- NO INCRIMINATING EVIDENCE RELATED ....
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.....P (C) No-34554 of 2015[2016] 380 ITR (st) 64-Ed). The Hon'ble Apex court dismissed the special leave petition filed by the department; The relevant Para as mentioned in the ITR is reproduced as under. "Their Lordships Madan B.Lokur and SA. Bobde JJ dismissed the Departments special leave petition against the judgment dated July 06,2015 of the Delhi High Court in I.T.A No 369 of 2015, whereby the High Court held that no substantial question of law arose since there was a factual finding that no incriminating evidence related to share capital issued was found during the course of search and that the assessing officer was not justified in invoking section 68 of the Act for the purpose of making additions on account of share capital". 1.8.3 In this regard, further we would like to place reliance on the decision of Hon'ble Jurisdictional ITAT, Bench 'A' in case of DCIT vs M/s MBL Infrastructure Ltd., in IT(SS)A No. 65,66,67 &. 76/Kol/2016 dated 01.05.2019 wherein it has been held that in the proceedings u/s 153A, neither any fresh claim can be made by the assessee which was not claimed at the time of original assessment proceedings nor any addition can be ....
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....s issued by him till the expiry of the statutory time limit which ended on 30. 09.2008 the original assessment for the year under consideration i.e. A. Y. 2008-09 had become final before the search and seizure operation conducted on 28.10.2010. As rightly contended by the Id Counsel for the assessee, there was thus no reason or occasion to raise this issue in the proceedings under section 153A read with section 143(3) and the disallowance made by the Assessing Officer to the extent of Rs. 4,49,85,993/- on account of assessee's claim for deduction under section 801A, which was allowed in the original assessment and that assessment had become final, was not sustainable, especially when there was no incriminating material found during the course of search, which could form the basis of the said disallowance. Even the Id D.R. has not disputed this position which is clearly evident from the record including the assessment order passed by the Assessing Officer under section 153A read with section 143(3). We, therefore, find no infirmity in the impugned order of the dl. CJT(Appeals) deleting the disallowance made by the Assessing Officer on this issue and upholding the same, we dismis....
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.... notice u/s 153A(1) was issued to assessee and thereafter he filed returns. As on the date of the search, no assessment proceedings were pending for relevant A Ys and for said AYs, assessments was already made u/s 143(1), assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies AO declined to rectify the assessments-CIT also held that addition need not be restricted only to the seized material-ITAT on appeal however deleted addition on grounds that the additions made for relevant A Ys u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law-Issue was whether the additions made to the income of the assessee for the said A Ys u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search-Held, present appeals concerned A Ys,2002-03, 2005-06 and 2006-07-On the date of the search the said ass....
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....n 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 ground no 1 is allowed and as such I am not inclined to adjudicate appeal on ground no. 2 on merit." 1.10 Thus, we rely fully on the order of the Ld. CIT(A) and further in view of the above discussions made and case laws relied on it is, therefore, prayed that all the above additions made u/s 153A cannot be sustained in the eyes of law in the re-assessment proceedings in the absence of any incriminating seized material/document. The submissions made by the Ld. DR have no relevance in the instant case. Therefore, it is prayed that the additions so made may kindly be deleted". 7. We have considered the rival submissions and also perused the relevant material available on record. In this case, a search and seizure action under section 132(1) of the Act was conducted on 17th & 18th December, 2014 and the addition made by the Assessing Officer in the unabated assessment completed in pursuance of the search under section 153A of the Act on account of share capital and share premium received during the year unde....
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....d during the course of search was upheld by the Hon'ble Calcutta High Court. It is noted by Their Lordships that the Tribunal while arriving at its decision had relied upon the judgment of the Hon'ble Delhi High Court in the case of Kabul Chowla (supra) and more or less an identical view had been taken by the Court even in the case of Veerprabhu Marketing Limited (supra). In the case of Kabul Chowla, search was conducted under section 132 of the Act. As on the date of search, no assessment proceeding was pending for the relevant assessment year and the addition made by the Assessing Officer in the assessment completed under section 153A pursuant to the search on account of deemed dividend under section 2(22)(e) was deleted by the Tribunal on the ground that the same were not based on any incriminating material found during the course of search. The decision of the Tribunal was upheld by the Hon'ble Delhi High Court by holding that the additions made to the income of the assessee for the relevant assessment years under section 2(22)(e) were not sustainable because no incriminating material concerning such additions was found during the course of search and further no assessments for....