TaxTMI 
TaxTMI 
2021 (3) TMI 315
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.... assessee on 08/12/2016. The assessee in response filed a return on 13/02/2017 declaring the same income as was declared in the original return of income filed u/s 139 of the Act. Thereafter notice u/s 143(2) and 142(1) of the Act, was served on the assessee and ultimately the assessment was completed u/s 153A/153D/143(3) of the Act on 31/12/2017, determining the total income of the assessee at Rs. 59,94,797/- interalia making addition of Rs. 60,00,000/- u/s 68 of the Act, on the ground that the share application money received by the assessee along with share premium from four (4) share applicant companies was unexplained cash credit. The Assessing Officer held that the share applicant companies were paper companies and that the creditworthiness and genuineness of the share capital received in the books of the assessee to the tune of Rs. 60,00,000/- was not proved. Aggrieved the assessee carried the matter in appeal before the ld. First Appellate Authority, without success. 3. Further aggrieved, the assessee is before us on the following grounds:- "1. For that the order of the Ld. CIT (A) is arbitrary, illegal and bad in law. 2. For that the Ld. C.I.T(A) erred....
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.....09.2012 and assessment was completed u/s. 143(1), there was a search under seizure action u/s. 132 on 12.08.2015 and no incriminating material was found with reference to the addition made by the A.O. on account of share application money with share premium by wrongly treating the same as unexplained cash credit u/s 68 amounting to Rs. 60,00,000/ - , therefore, no addition can be made in an assessment made u/s. 153A of the I.T. Act covered by various Court's judgements. 4. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal." 5. The ld. Counsel for the assessee submitted that the additional grounds are legal grounds which do not require any verification of facts and that all the facts related to these grounds are on record and in terms of the judgment of the Hon'ble Supreme Court in the case of NTPC Ltd. vs. CIT reported in [1998] 229 ITR 383 (SC), these legal grounds should be admitted. 5.1. The ld. D/R opposed the contentions and submitted that these grounds were not raised before the lower authorities and hence could not be admitted. 6. After hearing rival contentions, we f....
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....ies are completed u/s 143(3) of the Act, no addition can be made in the hands of the assessee company. 9. On a query from the Bench, the ld. D/R could not point out any incriminating material found during the course of search, based on which, the additions in question were made. Nevertheless he relied on the order of the ld. CIT(A) and argued that there is no requirement of incriminating material be found the course of search based on which an addition can be made in an assessment u/s 153A/143(3) of the Act. He relied on certain judgments of the Hon'ble Kerala High Court for this proposition and argued that the order of the ld. CIT(A) be upheld. We will deal with this judgment later in our order, as and when required. 10. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 11. This Bench of the Tribunal in the case of DCIT, CC-2, Kolkata vs. M/s. Rashmi Float Glass Ltd. (supra), under identical circumstances, has held as follows:- "8. We have heard rival contentions. On careful consideration of the facts....
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....ansactions appearing in its books of sale which is not proved in this case. In fact, genuineness of the transactions has not been established in spite of repeated opportunities. IX) There is enough material on record to doubt the veracity of the transactions." A perusal of the above demonstrates that the additions in question are not based on any incriminating material found during the course of search. 8.2. On the legal position, we find that the various Courts of law under similar circumstances have held as follows:- CIT, Kolkata-III Vs. Veerprabhu Marketing Limited [2016] 73 taxmann.com 149 (Calcutta) : In this case The Honourable Calcutta High Court expressed the following views: "We are in agreement with the views of the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with se....
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....ssessments framed u/s.153A, would only be with regard to any incriminating material or evidence unearthed or found during the course of search. If no incriminating material has been found during the course of search, then no addition can be made in the assessment years where assessments had attained finality. The relevant observations and the ratio laid down would be discussed in the later part of this order. 15. Now coming to the ratios laid down by the Hon'ble Jurisdictional High Court, first of all, in the case of Kabul Chawala (supra), the Hon'ble Court after discussing the issue threadbare and analysing the various judgments of different High Courts laid down the following legal proposition in terms of scope of addition which can be made u/s. 153A(1) which are as under:- "37. On a conspectus of Section 153A (1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for....
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....dgments not only by the Hon'ble Delhi High Court but also by other Hon'ble High Court like, Pr. CIT vs. Somaya Construction Pvt. Ltd. 387 ITR 529 (Guj), CIT vs. IBC Knowledge Park Pvt. Ltd. 385 ITR 346 (Kar) and CIT vs. Gurinder Singh Bawa reported in 386 ITR 483. In the latest judgment the Hon'ble Delhi High Court in Pr. CIT vs. Meeta Gutgutia, their Lordships reiterated the same principle after discussing and analyzing catena of decisions including that of Anil Kumar Bhatia (supra) and Dayawanti Gupta. The Hon'ble HighCourt observed and held as under:- "62. Subsequently, in Principal Commissioner of Income Tax-1 v. Devangi alias Rupa {supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Principal Commissioner of Income Tax v. Saumya Construction P. Ltd. {supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High Court is concerned, it has in CIT v. IBC Knowledge Park P. Ltd. {supra) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search an....
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....rse of search. 12. The Hon'ble Jurisdictional High Court in the case of Pr. CIT vs. Rashmi Infrastructure Pvt. Ltd. in ITAT 99 of 2019, G.A. No. 1211 of 2019 (Calcutta HC), judgment dt. 24/02/2020 has held as under:- "The question is whether the assessee had unexplained cash credit in their books which could be charged to income tax in the previous year in question ? We find on scrutiny of paragraphs 10 and 10.2 of the order of the tribunal that questions of fact and evidence were discussed and adjudicated upon by it. We set out paragraphs 10 and 10.2 of the impugned order of the tribunal is as follows : "10. Coming to the alleged cash trail, none of the material gathered by the Assessing Officer by way of bank account copies of various companies supposed to be part of the chain of companies was not confronted to the assessee. The alleged statements that were recorded from directors of these companies which formed this alleged chain were also not brought on record. Only a general statement has been made. There is no evidence whatsoever that cash has been routed from the assessee company to any of these chain of companies. There is no evidence that any ....
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.... cannot reopen the facts any more in this jurisdiction. No questions of law far less any substantial question of law is involved. 13. The Hon'ble Calcutta High Court in the case of CIT vs. Veerprabhu Marketing Ltd. reported in [2016] 73 taxmann.com 149 (Calcutta), held as follows:- "5. He relied upon the following views expressed in paragraph 50 of the judgment in the case of CIT v. IBC Knowledge Park (P.) Ltd. [2016] 69 taxmann.com 108 (Kar.):- "Materials such as books of account, documents or valuable assets found during a search should belong to a third party which would lead to an inference of undisclosed income of such third party. Such an inference should be recorded by the Assessing Officer having jurisdiction over the searched persons and communicated to the Assessing Officer having jurisdiction over such third party along with the seized documents and other incriminating materials on the basis of which the Assessing Officer having jurisdiction over such third party would issue notice under Section 153C. On receipt of the aforesaid material, the Assessing Officer having jurisdiction over such third party would proceed against the said third party. Thus,....
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....ing Ltd. in G.A. No. 1929 of 2016, ITAT No. 264 of 2016, judgment dt. 24th August, 2016, under identical circumstances, followed the judgment in the case of CIT vs. Veerprabhu Marketing Ltd. (supra) and dismissed the appeal of the revenue. 15. This Bench of the Tribunal in the case of ACIT vs. Majestic Commercial (P) Ltd. [2020] 116 taxmann.com 412 (Kolkata-Trib.), has held as follows:- "12. We find that the Hon'ble Delhi High Court while adudicating the appeal in the case of Kabul Chawla (supra) had judicial note of host of the earlier decisions in the cases of CIT v. Anil Kumar Bhatia [2012] 24 taxmann.com 98/211 Taxman 453/[2013] 352 ITR 493 (Delhi) ; CIT v. Chetan Das Lachman Das [2012] 25 taxmann.com 227/211 Taxman 61 (Delhi); Madugula Venu v. DIT [2013] 29 taxmann.com 200/215 Taxman 298 (Delhi); Canara Housing Development Co. v. Dy. CIT [2014] 49 taxmann.com 98 (Kar.) ; Filatex India Ltd. v. CIT [2014] 49 taxmann.com 465/[2015] 229 Taxman 555 (Delhi); Jai Steel (India) v. Asstt. CIT [2013] 36 taxmann.com 523/219 Taxman 223 (Delhi); CIT v. Murli Agro Products Ltd. [2014] 49 taxmann.com 172 (Bom.); CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2....
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....ances.' In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed.' 14. In his written and oral submissions, the ld. CIT, DR relied on several judgments of the Hon'ble High Courts justifying addition made in the order u/s 153A for the AY 2011-12 which on the date of search did not abate. After careful perusal of each judgment relied upon by the Ld. CIT, DR in his submissions but having regard to the specific facts involved in the assessee's case, we find that none of the judgments advance the revenue's case since the factual and legal matrix of the present case is distinguishable. For the following reasons therefore, we find that the Revenue's case is not furthered by the judgments relied upon by the Ld. CIT, DR. (A) In the case of Sunny Jacob Jewellers and Wedding Centre v. Dy. CIT [2014] 48 taxmann.com 347/362 ITR 664 (Ker.), the facts were that the assessee firm conducted business of manufacture and sale of gold jewellery from six business concerns. In the course of search evidence was found that the assessee would make actual sales by issue of estimate slips and in support of such fact c....
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....given by her. She had categorically mentioned that she did not have her own source of income and that she was a proprietor of a concern only on paper. On these facts the Hon'ble High Court held that it was not in dispute that in course of search, incriminating material in relation to out of books turnover was found and with reference thereto the statement of the assessee's son was recorded in which he had admitted of earning undisclosed income. In the circumstances when the assessee was the owner of the proprietary concern which was carrying on the business, the Court upheld the Revenue's action of making addition on account of profits from such undisclosed business transactions. We however find that in the present case neither the assessee nor any of its directors have admitted of earning any undisclosed income nor in the impugned order the AO has brought on record any tangible incriminating material which was found in the course of search with reference to which the addition made can be justified. For these reasons therefore the judgment of the Hon'ble Delhi High Court is not applicable. (C) In the case of B Kishore Kumar v. Dy. CIT [2014] 52 taxmann.com ....
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....e simultaneously conducted against the so-called entry operator Shri Anand Sharma nor any documentary evidence supporting assessee's transactions with any of the entry operators was found from the assessee's premises during the course of search. We therefore find that the facts of the present case were materially different from the facts before the Hon'ble Apex Court in the case of S. Ajit Kumar (supra) and in that view of the matter the said judgment does not have any application. (E) As regards the ld. CIT, DR's reliance on the judgment of the Hon'ble Allahabad High Court in the case of Raj Kumar Arora v. CIT [2014] 52 taxmann.com 172/367 ITR 517, we find that in the said judgment, the Hon'ble High Court simply followed the judgment of the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra). The decision of the Hon'ble Delhi High Court in that case was however subsequently distinguished by the same Court in its later judgment in the case of Kabul Chawla (supra). The judicial principles to be applied in the matter of framing of assessments u/s 153A for unabated years have been elaborately laid down in the said later judgment, ....
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....o-called entry operators they had admitted of providing accommodation entries to the assessee during the relevant year. In fact we find that prior to the completion of assessment u/s 153A on 31-12-2017, the AO himself never personally examined any of the so-called entry operators nor was opportunity of cross examination afforded to the assessee though the addition was justified solely with reference to their so-called statements. On the contrary we fid that although the statements of the so-called entry operators recorded in 2013 and 2014 were available with the AO's predecessor who completed the assessments u/s 153C on 30-03-2015, he did not find that the said statements constituted any incriminating evidence found in the course of search and therefore no adverse inference was drawn with reference to the said statement. Having regard to these facts, we therefore find that the judgment of the Hon'ble Delhi High Court in the case of Best Infrastructure (India) (P.) Ltd. (supra) is more appropriate in deciding the present appeal. 16. Considering the decisions of the judicial authorities on the subject, particularly the decision of Hon'ble Calcutta High Court in t....