TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 913
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....t on 25.09.2009 and 21.09.2010 for A.Y. 2009-10 and 2010-11 respectively declaring total income at Nil claiming that there was no business carried on by it during the said years. A search and seizure action u/s 132 was conducted in the case of the assessee as well as in the cases belonging to the same group on 05.08.2014 as well as on the subsequent dates. The lockers belonging to the various persons of the group were also covered in the said action. During the course of search and seizure action, valuables such as cash, jewellery, silver utensils were found and seized. Pursuant to the said action, notices u/s 153A were issued by the AO on 20.03.2015 in response to which the returns of income were filed by the assessee for both the years under consideration on 08.052015 declaring total income at Nil. On perusal of the relevant balance sheets of the assessee company, the AO noticed that the assessee had received share capital and share premium amounting to Rs. 2.78 crores and 5.33 crores during the previous year relevant to A.Y. 2009-10 and 2010-11 respectively from the various companies. The post search verification carried out by him by making the spot enquiries revealed that the ....
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....al and share premium amounts as unexplained cash credits was unjustified. The ld. CIT(Appeals) found merit in this contention raised on behalf of the assessee and after 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 which are identical for both the years under consideration: "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 her....
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....ven 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 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 o....
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.... relevant portion of the order is reproduced as under: We also find that no incriminating materials were found during 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 ITAT, 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 ITA725/Kol/2011 Dt. 09.12.2015 (ITAT Kolkata); In view of the aforesaid findings and judicial precedent reli....
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.... our knowledge by the ld. D.R. In view of 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 p....
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....e 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 incriminating documents were found in respect of the ....
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....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 pending on the date of search- Held, present appeals concerned AYs,2002-03, 2005-06 and 2006-07-0n the date o....
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.... 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 orders of the Ld. CIT(A), the Revenue has preferred these appeals before the Tribunal on the following identical grounds: "1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) - 20 erred in allowing Ground No. 1(a) & 1(b) of the assessee's appeal on technical grounds in which the assessee challenged the assumption of jurisdiction by the AO to make an assessment under section 153A/143(3) of the Income Tax Act claiming that no incriminating document was found and / or seized during search and he did not adjudicate other grounds of appeal on merit. 2. That on the facts and circumstances of the case and in law, the decision of Ld. CIT(A) allowing Ground No. ....
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....g 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 under consideration by treating the same as unexplained cash credit was deleted by the ld. CIT(Appeals) on the ground that the same was not based on any incriminating material found during the course of search. It is true that when a search under section 132(1) is conducted, the Assessing Officer gets jurisdiction to issue notice under section 153A for the relevant years and complete the assessments for the said years. It is also true that there is no explicit mention in the language used in section 153A that the addition made under section 153A should be based on the incriminating material found during the course of search. The scope of assessment to be made under section 153A, however, is considered and defined in the various judicial pronouncements. In this regard, the assessments are classified in two categories, i.e. completed assessment and pending or abated assessment. It is held that if the assessment for the relevant year is pending as on the date of search and it is not completed, the same gets abate....
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.... 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 the said years were pending on the date of search. 8. In the case of S. Ajit Kumar (supra), relied upon by the ld. D.R., Hon'ble Supreme Court has held that the material found or statement recorded in the survey conducted simultaneously at the premises of a connected person can be treated as incriminating material for the purpose of making the addition under section 153A of the Act. In the present case, it is observed that no such survey had been conducted under section 133A simultaneously either at the premises of the assessee or of a connected person. The statements of the so-called entry operators and dummy Directors relied upon by the Assessing Officer for making the addition were thus not recorded in any proceedings such as survey conducted simultaneously or in connection with the search conducted in the case of the assessee and since the said statements were also retracted subsequently by the deponents, we find merit in the contention raised on behalf of the assessee that the same could not be tre....