TaxTMI 
TaxTMI 
2019 (6) TMI 1458
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....sessee(in I.T.A. No. 95/Kol/2018 for assessment year 2011-12), are as follows: 1) On the facts and circumstances of the case CIT(A) erred in upholding assessment order passed by the Assessing Officer under section 153A in case of unabated assessments, where no incriminating evidences were found during the search. 2) On the facts and circumstances of the case CIT(A) erred in not following binding precedents of Supreme Court, Jurisdictional High Courts and Kolkata Tribunal on the issue of illegality of additions made in case of unabated assessment which are dehors the incriminating material found during the search. 3) On the facts and circumstances of the case both CIT(A) & Assessing Officer erred in not appreciating the fact that for a period prior to 01/04/2013, (wherein an amendment was made in section 68 by insertion of explanation) assessee was not required to explain source of source of funds. In short explanation to section 68 is prospective and not retrospective. 4) On the facts and circumstances of the case CIT(A) erred in confirming additions made by the Assessing Officer under section 68 which are based on conjectures and surmises. ....
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....ue of Rs. 10 each during the subsequent financial year 2011-12 at a premium of Rs. 490 per share to M/s. Vedant Tradecom Pvt. Ltd. Hence, the share application money to the extent of Rs. 30 lacs received during the financial year 2010-11 was treated unexplained cash credit U/s. 68 of the Act and therefore AO made addition at Rs. 30 lacs. 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has just reiterated the findings of the Assessing Officer and confirmed the addition made by Assessing Officer. Aggrieved by the order of the Ld. CIT(A) the assessee is in appeal before us. 6. Shri Somnath Ghosh, the ld. Counsel for the assessee, begins by pointing out that Ld. Assessing Officer initiated the proceedings u/s 153A of the Income Tax Act, 1961, consequent to the search operation U/s. 132 of the Act carried on 01/12/2015 at the business premises of the assessee. However, the Ld. Assessing Officer did not aver in the impugned assessment order u/s. 153A/143(3) of the Income Tax Act, 1961 framed by him that there was any money, bullion, jewellery or other valuable article or thing, and/or books of accounts or docum....
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....tion made by assessing officer should be deleted. 7. Per contra, the Ld. DR for the Revenue, submitted before us that during the search and seizure operation the documents marked as SFA01 and SFA02 have been seized (PB-89). According to Ld. DR these SFA01 and SFA02 are incriminating documents, hence assessing officer has rightly made addition. The Ld. DR for the Revenue also submitted that the merely filing of bank statement, income tax return, copies of bank statement, would not suffice to prove the genuineness and creditworthiness and identity of the share subscribing companies. These share subscribing companies do not have income generation activity in the assessment year under consideration. Apart from this, the assessee company has issued shares at premium of Rs. 490 to 990 per share which is not acceptable for such a low profit making company which does not have enough credit in the market. The share subscribing companies have also failed to reply in response to notice U/s. 131 of the Act therefore the addition made by the Assessing Officer should be sustained. 8. We have heard both the parties and perused the material available on record. We find it would be necessary ....
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....r section 153A assessment, was on account of share application money of Rs. 30 lakh, which emanated from the disclosed bank statement which was duly disclosed in the original return of income filed by the assessee. The Ld. Counsel for the assessee claimed that in both the assessment years, that is, A.Y. 2011-12 and A.Y. 2012-13, original assessments were completed under section 143(1)/143(3) and the time limit to issue notice under section 143(2) was elapsed, therefore addition should not be made unless there is incriminating material. There is no whisper of incriminating material in both the assessment years. We note that the Paper Book page-64 contains Panchanama, wherein, in addition to assessee, another Group company namely, "A ONE Infra Project Pvt. Ltd." was also searched. During the search and seizure operation, the search party found the documents/books of accounts which is marked as SFA/Kol/1 and SFA/Kol/2 (PB-65). This search party also took the inventory of the cash found during the course of search and seizure U/s. 132 of the Act vide Annexure-1 (PB-66). During the search and seizure operation inventory of books of accounts were taken by the search team which is mention....
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....27.08.2014, and the relevant para of the assessment order, which is useful for our discussion is furnished below: "During the F.Y. 2011-12 the assessee company engaged in the business of Commodity transaction and investment. During the course of hearing, the A.R. produced and furnished some documents as called for, which are placed on records. During the F.Y. 2011-12 related to the A.Y. 2012-13 the assessee company raised fresh share capital along with security premium amounting to Rs. 5,34,00,000/-. Notice U/s. 133(6) was issued to all new share investors. In response, the investors furnished replied along with sources of investment reflecting in the bank statement which are placed on records: Assesses u/s 143(3) at a total income : Rs. 2,01,793/- R/o : Rs. 2,01,800"/- From the facts narrated above, it is abundantly clear that during the original assessment U/s. 143(3), the information was there with the Assessing Officer regarding issue of share capital and share premium wherein the Assessing Officer issued notices U/s. 133(6) of the Act and all the investors have responded and therefore he did not make an addition. The search party did not ....
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....53A of the Act on the basis of Bank account found during the course of search and since the said Bank account as well as the transactions reflected therein were duly disclosed by the assessee in its return of income originally filed for the year under consideration, we find ourselves in agreement with the contention of the Ld. Counsel for the assessee that the same cannot be treated as incriminating material found during the course of search. The addition of Rs. 15,00,000/- made by the Assessing Officer under section 68 and confirmed by the Ld. CIT(Appeals) thus was not based on any incriminating material found during the course of search and the same, in our opinion, is not sustainable being outside the scope of section 153A of the Act. We, therefore, delete the said addition and allow this appeal of the assessee." Since the assessee's case under consideration is squarely covered by "M/s. A ONE Infra Projects Pvt. Ltd., in IT(SS)A No. 91/Kol/2018 (supra), and the Ld. DR for the revenue has failed to controvert the findings of the order of the Co-ordinate Bench of IT AT, Kolkata (supra), therefore respectfully following the judgment of the Co-ordinate Bench, we note that wit....
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.... been assessed, the assessment under section 153A will be made only on the basis of incriminating material, which in the context of relevant provisions means (i) books of account, other documents found in the course of search but not produced in the course of original assessment and (ii) undisclosed income or property discovered in the course of search [All Cargo Global Logistics Ltd. vs. DCIT: (2012) 137 ITD 287 (Mum) (SB)]. While conferring such jurisdiction upon the assessing authority, the Legislature, to remove all the difficulties with regard to the multiplicity of proceedings pending on the date of initiation of search, through second proviso to section 153A of the Act, which required abatement of all those proceedings which are pending on that date, so that the assessee and the assessing authority shall deal with only one type of proceedings, wherein the Assessing authority shall access or reassess the total income of the person searched. This barrier has been set up by the legislature only with regard to proceedings that were found pending before the Assessing authority on the date of search. Therefore, only a proceeding which is pending shall get abated. The time limit to....
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....ound during the course of search and since the said bank account as well as the transactions reflected therein were duly disclosed by the assessee in its return of income originally filed for the year under consideration, therefore, the same cannot be treated as incriminating material found during the course of search and as such, such addition was not based on any incriminating material found during the course of search and the same is not sustainable being outside the scope of section 153A of the Act. 14. We also note that the Hon'ble Jurisdictional Calcutta High Court in ITA No. 661 of 2008 Commissioner of Income Tax vs. Veerprabhu Marketing Ltd. has also held as under: "We agree with the view expressed by the Karnataka High Court that incriminating material is pre-requisite before power could have been exercised U/s. 153(C) r.w. Section 153(A). In the case before us, the AO has made a disallowance of the expenditure, which was held disclosed, for one reason or the other, but such disallowances made by the AO were upheld by the LD. CIT(A) but the Ld. Tribunal deleted these disallowance. We find no infirmity in the aforesaid Act of the Ld. Tribunal. The appeal is,....