TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 1402
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.... identical, these are heard analogously and are being disposed of by a common order. IT(SS)A No. 448/Ahd/2019 is taken as the lead case. 2. The grounds raised by the Revenue in IT(SS)A No. 448/Ahd/19 is as under: "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that no addition which is not based on any incriminating material found during the course of search on the assessee's premises could be made u/s. 153A in this case? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made of Rs.94,33,504/- on bogus exempt long term capitals on sale of shares of Shree Ganesh Spinners Ltd. (SGSL) when the entries found in the seized material of Shrish Chandrakant Shah showed that the prices of scrip were raised exponentially, the counter-parties were controlled by Shri Shah and hence transactions of purchase itself were non-genuine? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made of Rs.94,33,504/- on bogus exempt long term capital gains on sale of shares of Shree Ganesh Spinners Ltd. (SGSL) when the sales....
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....g of assessment under Section 153A of the Act is this that during the Financial Year 2012-2013 to 201415, investigation directorates at Mumbai and Ahmedabad searched a group of persons who were engaged in providing accommodation entries through various routes of share capital, preferential allotment and long-term capital gain etc. Accordingly, one Shri Sirish Chandra Shah, (in short 'SCS') situated Mumbai was also searched. As per the search team, some documents were found which was connected with the appellant. One Shri Pradeep Birewar of Ahmedabad was also searched who has stated to have admitted in indulging the activity of providing accommodation entries. In view of the search operation carried out at the premises of the abovementioned two persons, a warrant under Section 132 was issued and the premises of the appellant was searched on 04.12.2014. It is the case of the appellant that the investigating team could not find any incriminating material from the premises of the appellant with regard to the alleged bogus accommodation entries and the AO has made addition merely on the basis of material found at the premises of other searched parties. 6. In the return of income the as....
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.... 81 taxmann.com 292 (Guj). He further relied upon the judgement passed by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla, reported in 380 ITR 573(Del). Relying upon the ratio laid down by the Hon'ble Courts in the judgements relied above, the Ld. Counsel contended that the additions and the disallowance made by the Ld. AO in an unabated assessment in the absence of incriminating material is bad in law and therefore rightly quashed by the Ld. CIT(A). The Ld. DR relied upon the order passed by the Ld. AO in support of the disallowance. 8. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record including the orders passed by the authorities below. 9. The gist of the matter as it appears from the entire document placed before us and the argument advanced by the parties is this that the appellant sold shares of M/s. Shri Ganesh Spinners Ltd. now known as Yantra Natural Resources Ltd. which were purchased by the appellant off market directly from the company "SGSL" by way of preferential issue for Rs.35,87,501/- and partly sold for Rs.94,33,504/- by making cross A/c payee cheques totaling t....
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....g way back why assessee would retain any incriminating material with her". Suffice to say that the Ld. AO admitted this fact of not having any incriminating material being found during search in the assessee's premises. 11. It is the contention of the assessee that no addition could be made in case of concluded assessment and/or unabated assessments in the absence of any incriminating material discovered during the course of search. In order to adjudicate this issue, we are conscious of the fact that the position of law propounded in various authoritative judgments regarding the scope of section 153A of the Act. First, we refer to the decision of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla, 380 ITR 573 (Del). Hon'ble Delhi High Court after detailed analysis has summarized the following legal position: 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 f....
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....can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Hon'ble jurisdictional high Court has also considered the decision of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra). Hon'ble Gujarat High Court framed the following question of law in the case of Pr.CIT vs. Saumya Construction (supra): "[A] Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? [B] Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? [C] Whether th....
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....eclared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 17. In the facts of the present case, a search came to be conducted on 07.10.2009 and the notice was issued to the assessee under section 153A of the Act for assessment year 2006-07 on 04.08.2010. In response to the notice, the assessee filed return of income on 18.11.2010. In terms of section 153B, the assessment was required to be completed within a period of two years from the end of the financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements rec....
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....t in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has bee....
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....tute an assessment, is concerned, we find that the factual matrix in decision rendered by Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398 05/10/2015) was similar wherein the original return was processed u/s 143(1) and the time limit for issuing notice u/s 143(2) had already expired. The Hon'ble Court chose to follow its own decision rendered in CIT Vs. Continental Warehousing Corporation [2015 374 ITR 645]. Therefore this argument would not hold much water which is also fortified by subsequent decision of Hon'ble Bombay High Court in CIT V/s Deepak Kumar Agarwal (398 ITR 586 11/09/2017) which held as under: - 20. At the outset, and since heavy reliance is placed by the Revenue on the Supreme Court judgment in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra), it would be proper to note the facts in the same. 21. There, the Assistant Commissioner of Income Tax challenged the correctness of the decision rendered by a Division Bench of the Gujarat High Court. That Division Bench judgment allowed the Writ Petition/Special Civil Application of the assessee. 22. The respondent-assessee, a private limited company, filed its return of income ....
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....eated to be an order of assessment. That is how it referred to the Division Bench Judgment of the High Court at Delhi and explained the legal position. There was thus no assessment under Section 143(1)(a) and therefore, the question of change of opinion did not arise. A reference to Section 147 therefore, was made in the context of the Assessing Officer being authorized and permitted to assess or re- assess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. Before us, such is not the position, and even if this judgment of the High Court had been brought to the notice of the Division Bench deciding the Continental Warehousing Corpn. and All Cargo Global Logistics (supra), there would not have been any difference. Similar view has been expressed by Hon'ble Delhi High Court in CIT Vs. Kabul Chawla (380 ITR 573). 8. The Ld. CIT-DR has placed on record material seized from the assessee during search proceedings. The copies of the Panchnamas (page 1 to 6 of assessee's paper-book) have also been placed on record. Upon combined reading of all these documents, it could be gathered that none of the documents show tha....
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....nt. Further, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income and the addition should be made only on the basis of material gathered during search operations. Any action on the contrary has to be viewed adversely. The subsequent Circular F.No.286/98/2013-IT (INV.II)] dated 18/12/2014 emphasizes upon need to focus on gathering evidences during search / survey and to strictly avoid obtaining admission of undisclosed income under coercion / undue influence. Therefore, the action of Ld. AO could not be said to be in line with these circulars issued by CBDT. 10. Proceeding further, it is settled legal proposition that the confession need corroboration with evidences. Though admission is an important piece of evidence but it is not conclusive and it is open to the assessee to show that it is incorrect. Therefore, retracted admission, in the absence of any incriminating material, would not be sustainable. In order to make a genuine and legally sustainable addition on the basis of surrender during search, it is sine-quanon that some incriminating material must have been found to corre....
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....suant to search carried out in case of the assessee, a notice under section 153A(1) was issued. In course of assessment, Assessing Officer made addition to assessee's income in respect of deemed dividend. It was undisputed that assessment for assessment years in question had already been completed on date of search. Since no incriminating material was unearthed during the search, no additions could have been made to income already assessed. Consequently, the impugned addition was to be deleted". **** ***** **** 16. In all the above decisions of various Hon'ble High Court's, the legal position is that no addition can be made in case of an unabated assessment if no incriminating material is found in the course of search. On a perusal of the Assessment Order I noticed that there was no reference to any of the incriminating material found and seized in the premises of the assessee in the course of the search proceedings. The Assessing Officer in the Assessment Order refers to the seized incriminating material in the case of one Shri Shirish C. shah and the post search enquiries made in his case to make an addition in the hands of the assessee denying the long te....
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....ion as above shall mutatis mutandis apply to all these appeals. Accordingly, the legal grounds raised in all these appeals stand allowed and the impugned additions as made therein stand deleted. All these appeals stand allowed. 15. After careful reading of the order passed by the Ld. CIT(A) we find that the assessee's main contention of not having any incriminating material in the possession of the Ld. AO found during the course of search of the premises of the assessee which ought to have been the main basis of reopening of an unabated assessment and on the contrary addition has been made without due process of law has been taken into consideration in its proper perspective. The ratio laid down in the judgement passed by the Hon'ble jurisdictional High Court in the case of Saumya construction (supra) and the judgement passed by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) has been applied rightly by the CIT(A) in the case in hand keeping in view of the particular fact that even the Ld. AO admitted the fact of not having any incriminating material found during the search of the assessee's premises. In our considered opinion quashing of the proceeding b....
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....hall apply mutatis mutandis. 24. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 463/Ahd/2019(A.Y. 2011-12) : 25. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 26. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. IT(SS)A No. 453/Ahd/2019(A.Y. 2011-12):_ 27. Ground Nos. 1 to 7:- These grounds have already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 1 to 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 28. Ground No. 8:- This ground has already been decided by us in IT(SS)A No. 448/Ahd/2019 for A.Y. 2011-12 in Ground No. 5 therein. In the absence of any changed circumstances the same shall ap....