TaxTMI 
TaxTMI 
2023 (6) TMI 1490
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.... filed by the revenue against the order of the Learned Commissioner of Income Tax (Appeals)-21, Kolkata, (hereinafter referred to as the 'ld. CIT(A)') passed u/s 250 of the Income-tax Act, 1961 (hereinafter the 'Act'), dt. 03/11/2022. ITA No. 31/Kol/2023; Assessment Year 2008-09 and ITA No. 32/Kol/2023; Assessment Year 2010-11, are appeals filed by the revenue against the order of the Learned Commissioner of Income Tax (Appeals)-21, Kolkata, (hereinafter referred to as the 'ld. CIT(A)') passed u/s 250 of the Income-tax Act, 1961 (hereinafter the 'Act'), even dt. 31/10/2022. 2. The Registry has pointed out that there is a delay of eight (8) days in filing of ITA No. 25/Kol/2023; Assessment Year 2008-09, ITA No. 26/Kol/2023; Assessment Year 2009-10 and ITA No. 27/Kol/2023; Assessment Year 2010-11 and a delay of thirty eight (38) days in filing of ITA No. 28/Kol/2023; Assessment Year 2010-11, ITA No. 31/Kol/2023; Assessment Year 2008-09 and ITA No. 32/Kol/2023; Assessment Year 2010-11, in time before the Tribunal. The revenue has filed a petition for condonation of delay stating the reasons of delay. After perusing the same, we find that t....
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.... on account of unexplained share application money u/s 68 of the Income Tax Act, 1961. 2. That on the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 22,50,00,000/- made by the AO on account of bogus unsecured loan u/s. 68 of the Income Tax Act, 1961. 3. The department craves leaves to add, modify or alter or withdraw any of the grounds of appeal before or at the time of hearing of the case." "ITA No. 31/Kol/2023; Assessment Year 2008-09 1. On the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,62,00,000/- made by the AO on account of unexplained share application money u/s 68 of the Income Tax Act, 1961. 2. That on the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,00,71,821/- made by the AO on account of bogus unsecured loan u/s. 68 of the Income Tax Act, 1961. 3. The department craves leaves to add, modify or alter or withdraw any of the grounds of appeal before or at the time of hearing of the case." "ITA No. 31/Kol/2023; Assessment Yea....
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....lowell Engineering Ltd. 2008-09 2,88,81,320/- On account of being bogus unsecured loan u/s 68 of the Act. Followell Engineering Ltd. 2009-10 i) 7,07,70,000/- ii) 12,48,20,377/- i) On account of unexplained share application money u/s 68 of the Act. ii) On account of being bogus unsecured loan u/s 68 of the Act. Followell Engineering Ltd. 2010-11 i) 4,70,00,000/- ii) 7,61,95,000/- i) On account of unexplained share application money u/s 68 of the Act. ii) On account of being bogus unsecured loan u/s 68 of the Act. Arunoday Holding Pvt. Ltd. 2010-11 i) 7,35,00,000/- ii) 22,50,000/- i) On account of unexplained share application money u/s 68 of the Act. ii) On account of being bogus unsecured loan u/s 68 of the Act. Supersonic Carrier Pvt. Ltd. 2008-09 i) 1,62,00,000/- ii) 1,00,71,821/- i) On account of unexplained share application money u/s 68 of the Act. ii) On account of being bogus unsecured loan u/s 68 of the Act. Supersonic Carrier Pvt. Ltd. 2010-11 3,50,00,000/- On account of unexplained share application money u/s 68 of the Act. 6. Now, since the issues raised in all the instant ap....
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....orts have been made to examine the entities from whom the amounts were received and ld. Assessing Officer has seemed to merely rely upon the satisfaction borrowed from the reasons recorded for reopening of assessment for Assessment Year 2011-12, u/s 147/148 of the Act. The assessee also contended before the ld. CIT (A) that additions cannot be made in the completed assessments in absence of any incriminating material and since for Assessment Years 2008-09 to Assessment Year 2010-11, no assessment were pending and no incriminating material was found, therefore, no addition was called for. 7. So far as the statement of alleged entry operators are concerned, the same cannot constitute incriminating material because the copy of the third party statements were not provided to the assessee for cross-examination and even otherwise, these statements were available with the Assessing Officer at the time of initiation of 153A proceedings for Assessment Year 2012-13 to 2017-18, notices were issued only for Assessment Year 2012-13 to 2017-18 which clearly indicates that the Assessing Officer was convinced that there was no material requiring issuance of notice beyond six years. The ld. CIT ....
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....sposal of objections for AY 200809 vide letter dated 01.10.2019 42 to 57 Yes Yes 8. Notices issued u/s 143(2) & 142(1) dt. 07.11.2019 for AYs 2008-09, 2009-10 and 2010-11 58 to 69 Yes Yes 9. Show cause notice issued dated 20.12.2019 for AYs 2008-09, 200910 and 2010-11 70 to 75 Yes Yes 10. Response to show cause dated 20-122019 filed on 26-12-2019 76 to 77 Yes Yes 11. Submissions dated 25-06-2019 filed before AO 78-88 Yes Yes 12. Submission filed before AO on 15-102019 89-91 Yes Yes 13. Reasons recorded for issuance of notice u/s 148 for AY 2011-12 92 to 98 Yes Yes 14. Evidence of serving of the assessment orders by postal authorities 99 to 101 Yes 15. Audited Accounts for FY 2007-08, 2008-09 and 2009-10 102-149 Yes Yes 11. Further submissions were made on account of the legal grounds as well as the grounds raised before the ld. CIT (A) and same reads as follows:- "(a) 4th proviso to section 153A not applicable - No mention of "income represented in the form of assets" in the satisfaction note The power given by the 1st Proviso ....
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....nsecured loans" as bogus. No effort has been made to even examine the entities from whom the amount was received, the dates of receipt in bank account or whether the said sum was received was bogus or not. The Ld. A.O. has seemed to merely rely upon the satisfaction borrowed from the Reasons Recorded for reopening of assessment for AY 2001-2012 u/s 147/148, and made an addition of the entire share capital and share premium and unsecured loans in the said period without conducting any such independent enquiry or investigation of his own for the purposes of passing search assessments and making the addition u/s 68 for the "relevant assessment years". Addition has been made of "unsecured loans" on the basis of difference in opening and closing balances without pointing out the unsecured loans which are alleged to be bogus. The Ld AO had no names or amounts which could be alleged as bogus. (d) No additions can be made for completed assessments sans incriminating documents. In the case of the relevant assessment years i.e., 2008-09, 2009-10 & 2010-11 no assessments or reassessments were pending. Hence the assessments already made for the said years attained fi....
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....) W.r.t the alleged statement of Mr. Ramnath Jhunjhunwala, the key person of the Assessee group who had (on behalf of the group) allegedly accepted the above modus operandi in his statements recorded u/s 132(4)/131 - it is submitted that the reliance on the same to invoke the 4th Proviso to Sec. 153A is also erroneous since the Assessing Officer has neither in the Satisfaction Note or the Impugned Assessment Order(s) specified as to which specific portion of the statement of Mr Juhjhunwala has he found to be incriminating vis-a-vis the existence of undisclosed income of the Assessee (represented in the form of an asset) that has escaped assessment for the relevant assessment year or years. The reliance on the said statement in a generalized and overarching manner does not aid in the fulfilment of the criteria that have to be mandatorily met for invoking the 4th Proviso 12. Further reliance was placed on the following decisions:- ● Pr. CIT vs. Meeta Gutgutia ; [2018] 96 taxmann.com 468 (SC) ● CIT vs. Kabul Chawal ; 61 taxmann.com 412 (Delhi) ● Andaman Timber Industries vs. Commissioner of Central Excise; [2015] 62 taxmann.com 3 (SC) ....
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....orting to the 4th proviso to Section 153A of the Act. Since Section 153A of the Act has a direct bearing on the issue, the provisions of Section 153A of the Act are extracted below:- "153A. ^51[(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person^52 where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 ^53[but on or before the 31st day of March, 2021], the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years ^54[and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, ^52so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reasses....
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....lls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.] ^60[(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the ^61[Principal Commissioner or] Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provi....
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....upersonic Carrier Pvt. Ltd. 2008-09 iii) 1,62,00,000/- iv) 1,00,71,821/- i) On account of unexplained share application money u/s 68 of the Act. ii) On account of being bogus unsecured loan u/s 68 of the Act. Supersonic Carrier Pvt. Ltd. 2010-11 3,50,00,000/- On account of unexplained share application money u/s 68 of the Act. 15.2. We find that the ld. CIT(A), in the impugned order dealt with this issue observing as follows:- "The facts in the present appeal are identical to those discussed above. In the present case, not only has the AO not been able to bring on record the existence of the jurisdictional fact mandated by the 4th proviso to section 153A, read with the two explanations therein, in his satisfaction note, but in fact has not been able to establish its existence through his order of assessment or even during remand. In the context of the above discussions, one more objection of the appellant is worth discussing. The AR has pointed out that since the original satisfaction was supposed to be based upon the invocation of the 4th proviso, therefore actions, if any, would necessarily have to be made up....
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....ala, let us for the sake of argument, assume that the AO had validly invoked the jurisdiction u/s 153A for AY 2011-12. then in such an event, it has to be borne in mind that, first the AO had to make addition in respect of the purported undisclosed asset valued at Rs. 50 lakhs or more; and only thereafter the AO can venture to make any other additions/disallowance which are not in the nature & character of 'Asset' but represents undisclosed/unexplained income/expenditure/credit etc. Perusal of the assessment order impugned before us, shows that that AO did not make any addition/s in respect of escaped/undisclosed asset in the relevant AY 2011-12. We therefore find ourselves in agreement with Shri Dudhwewala that, unless the AO made addition/s of Rs. 50 Lakhs or more in relation to escaped/undisclosed asset, he could not assume jurisdiction to make addition/s on other items (viz. liabilities like credit entry etc.) The reason is simple, because in such a scenario, it bellies the claim of the AO in issuing notice u/s 153A of the Act, that he is in possession of the jurisdictional fact i.e. undisclosed asset valued Rs. 50 lakhs or more has escaped assessment, wh....
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....d/or make any other of additions/disallowances, because the jurisdictional fact on the strength of which he assumed section 153A jurisdiction is absent or not in existence. In the light of the aforesaid discussion, and in our considered opinion, this alternate plea of Shri Dudhwewala is well founded and deserves to be accepted." I find that the argument of the AR in the instant case, has force. It has to be admitted that the assessment or reassessment for the relevant assessment year(s), through the invocation of the 4th proviso is an extraordinary power that can be invoked only when the specific requirement of their being material in the possession of the AO, revealing undisclosed income represented in the form of assets valued at over 50 lakh with respect to the relevant assessment years exists. It is an admitted fact that even though there must exist material in the possession of the Assessing Officer to the above effect, it is only through process of assessment/reassessment that an actual addition can be made, after it has been shown through this assessment/reassessment that this fact indeed was true and the jurisdictional fact indeed did exist. Therefore the addition ....
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...., 2009-10 and 2010-11 had been unabated and all assessments had already been completed, no additions could in any case have been made other than those based upon incriminating material found during search. Therefore, the additions in any case would not be sustainable. Coming to an issue that has a bearing on the assessing officer's satisfaction that this was a fit case for assessment u/s 153A, within the meaning of the 4th proviso to that section for the assessment years 2008-09, 2009-10 and 2010- 11, the AO, it may be recalled had responded to the objections raised by the appellant arising the issue of notice u/s 153A for the said periods on 06.05.2019. In this letter, as already discussed, the AO had provided the appellant with a copy of the satisfaction note as well as what he construed to be incriminating material and the jurisdictional fact upon which he had based his satisfaction for issue of the impugned notices. Thereafter in response to another objection by the appellant, the AO once again issued a response dated 01.10.2019. In this letter inter alia, the AO, besides reiterating what he had already stated earlier in connection with the incriminating material a....
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....te in order to justify post facto the issue of the said notices. The satisfaction note has to be read, sans this additional evidence and therefore, as per the earlier discussions, cannot be used for the issue of notices 153A in this case. b. Without prejudice to the above purely legal issue, upon examination of the data so- provided, it is found that it is in the form of excel sheets recovered from the hard disc of the entry operator showing some loan entries pertaining to the appellant. The same contains names along-with amounts of unsecured loans of Shri RNJ, one of the key persons of the group. These entries, it is seen refer to a later period than the presently impugned assessment years 2008-09, 2009-10 and 2010-11. Page 51, 52 and 56 of the paper book depict these transactions. On these pages the name mentioned is "RNJ" and "1.4.2010 to 31.3.2011" respectively. It has not been shown how these transactions relate to the present appellant and/or the presently impugned periods. I cannot also disagree with the contention of the AR of the appellant that the said notings mention transactions that are all in cheque and nowhere show that the same are bogus or accommo....
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....ssing officer made through his various communications with the appellant, or his presently impugned assessment order even through the medium of the remand report that the conditions stipulated in the 4th proviso of section 153A, read with both the explanations present therein, were met and fulfilled by the AO at the time of penning his satisfaction for issue of notice u/s 153A of the Act for the assumption of jurisdiction by him for the assessment of the income of the appellant for the assessment years 2008-09, 2009-10 and 2010-11. These conditions, it is apparent from the foregoing discussions, were not even met or fulfilled during assessment or even at the time of the remand. Not only was there nothing that was shown, during appeal proceedings, to have come into the possession of the assessing officer, on account of the search u/s 132 of the Act, that could be said to be material in the form of books of account, documents or evidence that could be said to reveal that income represented in the form assets amounting to Rs 50 lakh or more had escaped assessment in the case of the present appellant for the assessment years 2008-09, 2009-19 or 2010-11, thereby prohibiting the assessin....
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....for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.- For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.- For the pu....
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.... in the assessment order. The assets referred in the 4th proviso are the assets which are appearing on the right side of the balance sheet whereas the Assessing Officer is referring to unsecured loan and shares capital and share premium which is on the liability side of the balance sheet. In other words, the 4th proviso to Section 153A of the Act talks about the assets whereas the Assessing Officer has invoked the 4th proviso by referring to liabilities which is completely inverse of what is provided under the Act. 18.2. Now once the basic condition i.e., availability of "asset" as defined under explanation 2 to 4th proviso to Section 153A of the Act, if any, found during the course of search with the assessee/group concern is absent, nor there is any reference to any incriminating material referring to ownership of such undisclosed assets by assessee and only there is a reference of the credits received by the assessee/s which are duly disclosed in the regular books of accounts are part of the audited financial statements, issuing of notice u/s 153A of the Act then invoking the 4th proviso to Section 153A of the Act, is invalid and bad in law and beyond jurisdiction and thus on....
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....n examination of this matter in remand, the AO has not been able to shed any light upon this issue or bring on record any incriminating material, much less the existence of the jurisdictional fact in relation to the 'relevant assessment years that might have found mention in the settlement application. Even though, neither the AO during assessment, nor during remand, nor the indeed the appellant has addressed the following issue, in my opinion, for a complete discussion of whether there indeed was any mention within the settlement application present on record in the form of the SOF (statement of facts before the Commission) - it was felt necessary to examine the said SOF thoroughly. Upon such examination, it was found that even though the SOF does not mention any issues, either in relation to the relevant assessment years in this case, viz. 2008-09, 2009-10 and 2010-11 or indeed in relation to the existence of the jurisdictional fact discussed earlier in relation to these assessment years; an examination of the order u/s 245D(4) reveals that there are some important references to issues that have a bearing upon the instant set of appeals. In the order u/s 245D(4) of t....
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.... the office of the concerned PCIT, did not make any reference to any escapement of income in respect of the assessment years preceding the assessment years before the Commission in connection of the present appellant. The Commission did not hold any adverse view in relation to the opening balance as on 1.4.2010, in respect of the present appellant. Without prejudice to the discussions in relation to the objections raised by the Rule -9 report, two things need to be pointed out. The first is that there was no mention by the Rule -9 report or the Department during the proceedings before the Commission, of the existence of any income that had escaped assessment amounting to Rs 50 lakh or more, represented in the form of assets in relation to the AYS 2008-09, 2009-10 or 2010-11 in the case of the present appellant. The second observation emanates from the order u/s 245D(4) itself in the case of the entire group - of which the present is also a part- where it has been recorded that a joint verification of the issues involved had been undertaken under the aegis of the Commission, in which, both, the appellant's group and the officers of the Department had participated. A joi....
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.... about the application filed before the ITSC before us which as contended by the ld. Counsel for the assessee, is a confidential document and unless and until such application is withdrawn or the commitment made by the assessee in such application is not honored, then in such circumstances, information contained in such application with ITSC cannot be used against the assessee. In the instant case, the application was filed by the assessee and its group concern before ITSC for Assessment Year 2012-13 to 2017-18 and the same has been accepted by the ITSC and the tax liabilities as arising therein has been paid. Thus, the assessee's application with ITSC has been accepted. Now, once the application has been accepted the information contained therein cannot be used against the assessee for other Assessment Years unless and until other conditions provided under the Act are fulfilled which brings us again to the same point i.e., validity of initiating proceedings under the 4th Proviso to Section 153A of the Act and as discussed above, since the conditions for invoking the provisions of 4th proviso u/s 153A of the Act are not be fulfilled by the Assessing Officer in any of the cases befo....
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....made and contested in appeal 2008-09 Difference in the unsecured loan [through deposits in bank account] from the last year and the current year of Rs. 2,22,81,320/- added under section 68 of the Income Tax Act, 1961 2009-10 Money brought in the books in the form of share capital/share premium in the form of deposits in bank accounts being Rs. 7,07,00,000/- added under section 68 of the Income Tax Act, 1961 Difference in the unsecured loan [through deposits in bank account] from the last year and the current year of Rs. 12,48,20,377/- added u/s 68 of the Act, 1961 2010-11 Money brought in the books in the form of share capital/share premium in the form of deposits in bank accounts being Rs. 4,70,00,000/- added under section 68 of the Income Tax Act, 1961 Difference in the unsecured loan [through deposits in bank account] from the last year and the current year of Rs. 7,61,95,000/- added under section 68 of the Income Tax Act, 1961. The AR of the appellant has contested that it was manifestly unlawful that these additions were made on the basis of the difference of balance sheet figures from last and current year i.e., the ye....
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.... CIT(A). 26. The next issue on merits relates to whether additions can be made for completed assessments in absence of any incriminating documents. 27. The ld. CIT (A) has given the following finding on this issue in the impugned order:- "The above discussions and citation have clearly brought forth the meaning of the word incriminating material that should be employed in cases such as the present appeal. This meaning has to be read in harmony with the proposition that in the case of a search and thereafter, in the case of any unabated assessments, the only additions that can be made u/s 153A can be with respect to incriminating material found during the search. This last proposition has been affirmed through a plethora of decisions from judicial authorities across the country. Some of these have already been discussed above, in the context of the meaning of "incriminating material", while some more, being relevant in this appeal, are discussed below: The Hon'ble Delhi High Court in the case of Pr. CIT vs. Meeta Gutgutia, reported in 395 ITR 526 held as under: "56. Section 153A of the Act is titled "Assessment in case of search or requisition". ....
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....f any incriminating material, the AO does not have any jurisdiction to interfere in concluded assessments. A similar view was taken by the judiciary in the case of Pr. CIT vs. Kurele Paper Mills P. Ltd. (2016) 380 ITR 571, where the Hon'ble Delhi High Court held that proceedings u/s 153A of the IT Act, 1961 were without jurisdiction where no assessments were pending at the time of initiation of proceedings u/s 153A and no incriminating evidence was found during the course of search: "Held, dismissing the appeal, that the order of the Commissioner (Appeals) revealed that there was a factual finding that no incriminating evidence related to share capital issued was found during the course of search as was manifest from the order of the Assessing Officer. Consequently, it was held that the Assessing Officer was not justified in invoking section 68 for the purposes of making additions on account of share capital. There was nothing to show that the factual determination was perverse.(AY. 2002-2003)." The Supreme Court has dismissed the special leave petition may filed by the Department against this judgment [2016] 380 ITR 64(St.) In the case of Ka....
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....e assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments 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. Conclusion 38. The present appeals concern AYS 2002-03, 2005-06 and 2006-07. On 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." I find that there are several decisions of the jurisdictional Kolkata Tribunal itself, as well as of other authorities, that have followed or underlined the above propositions and principles of law that in the absence of any incriminating material found during search, no addition can be made u/s 153A/153C in the case of complete....
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....criminating material found during the search, the 4th Proviso also stipulates conditions which should be precedent to the issue of notice in the case of the "relevant assessment years" - conditions which mandatorily have to be satisfied before a valid notice can lawfully be issued under this section. This last issue shall also be discussed later in this order. 28. We observe that the original return of income u/s 139 of the Act, was filed by the assessees in the instant appeals before us on the following dates:- Year wise details in the case of Followel Engineering Ltd. is tabulated below:- AY Return Filing Date Return Processed 2008-09 30-09-2008 10-08-2009 2009-10 12-09-2009 04-03-2011 2010-11 16-09-2010 18-03-2011 Year wise detail in the case of Super Sonic Carrier P. Ltd. is tabulated below:- AY Return Filing Date Return Processed 2008-09 26-09-2008 18-12-2009 2010-11 26-09-2010 29-03-2012 Year wise detail in the case of Super Sonic Carrier P. Ltd. is tabulated below:- AY Return Filing Date Return Processed 2010-11 06-10-2010 15-04-2011 29. From the above details, we notice that the ....
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....t. Ltd. [IT(SS)A No. 14 & 15/KOL/2017 13. Vikram Financial Services Ltd. -vs.- DCIT [IT(SS)A No. 81/KOL/2010 14. DCIT -vs.- M/s. Bohra G. & NN Brothers Pvt. Ltd. [IT(SS)A No. 89/KOL/2017 16. After going through the settled judicial precedence, we notice that the year under appeal before us are AY 2009-10, AY 2010-11, AY 2011-12 & AY 2012-13 and the time limit for issuance of notice u/s 143(2) of the Act was 30th September, 2010, 2011, 2012 & 2013 and the date of search is 17th to 18th December, 2014. As on the date of search the time limit for issuance of notice u/s 143(2) of the Act stood expired and no assessments were pending which could be abated. Therefore, all the impugned assessment years before us are completed and non-abated assessment years and addition during these years can be made only based on the incriminating material evidencing that the income mentioned in such seized material has not been disclosed by the assessee. Since in the instant case there is no mention of the name of the assessee company in the seized material bearing no. AIPL/4 pages 4, 5, 6 & 7, therefore, this presumption of ld. AO that the share capital received by t....
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....eferred to hereinabove. One another lead judgment on the issue is the decision of the Gujarat High Court in the case of Saumya Construction (supra), which has been followed by the Gujarat High Court in the subsequent decisions, referred to hereinabove. Only the Allahabad High Court in the case of Pr. Commissioner Of Income Tax v. Mehndipur Balaji, 2022 SCC OnLine All 444 : (2022) 447 ITR 517 has taken a contrary view. 7.1 In the case of Kabul Chawla (supra), the Delhi High Court, while considering the very issue and on interpretation of Section 153A of the Act, 1961, has summarised the legal position as under: Summary of the legal position 38. 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 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassess....
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....ction 153A of the Act, 1961, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no additional can be made by the AO and the AO has no jurisdiction to re-open the completed assessment. In paragraphs 15 & 16, it is held as under: "15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the' assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or ....
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.... to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the sear....
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....ry power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: "153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st da....
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....gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub- section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess....
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....e the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub- section (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisi....
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.... be conceived that the ITRS or balance sheets present upon the MCA website can be construed as material found during search, much less it being incriminating. In any case, even the AO himself has admitted that these were downloaded from the MCA site and has not tried to make a case for their discovery having been made during the search. Without prejudice to the fact that it is undisputed that this material was not found during search, making it ineligible for serving as an essential component of the jurisdictional fact; mandatory, as per the provisions of the 4th proviso to section 153A, for the issue of notice within the meaning of the 4th proviso to section 153A of the Act, read with the two explanations therein, nowhere has it, in any case, been established that there was anything incriminating found in these documents. Considering the position of law as discussed at length earlier in this order, therefore, it cannot be accepted that either ITRS or balance sheets from the MCA website could be lawfully accepted as material that was incriminating material found during search, or that it revealed the essential jurisdictional fact discussed earlier." 34. The ld. CIT (A) has right....
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....d the satisfaction that this was a fit case for invoking the 4th proviso to section 153A of the Act and to issue notice u/s 153A for the purpose of assuming jurisdiction for assessing the income of the appellant for the assessment years 2008-09 to 2010- 11 by bringing on record that it (this statement) revealed the existence of the jurisdictional fact of there being income represented in the form of assets, of 50 lakh or more, that had indeed escaped assessment. In the absence of any indication-however remote of this jurisdictional fact from these formation of satisfaction for the assumption of jurisdiction." 36.1. The findings of the ld. CIT (A) on the issue with respect to the alleged statement of Mr. Ramnath Jhunjhunwala, is as under:- This brings us to the next issue that Shri Ramnath Jhunjhunwala, the key persons of the group, had on behalf of the group, accepted the above modus operandi in their statements recorded u/s 132(4)/131 of the IT Act during the course of search and post search enquiry. But once again this is a reliance placed by the AO upon very non-specific statements. They are specific only in so far as they neither mention any transaction related to t....
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....on Mr. Ramnath Jhunjhunwala made by the ld. Assessing Officer while making the addition. We observe that the ld. CIT (A) has taken note of the fact including the statement recorded u/s 132(4)/131 of the Act that they were specific only to the transactions mentioned therein but no specific surrender was made pertaining to the transactions relating to the Assessment Year 2008-09 to 2010-11. We observe that the Assessing Officer has extrapolated the statement of the key person Mr. Ramnath Jhunjhunwala for the Assessment Year 2008-09 to 2010-11 which was beyond his jurisdiction since the addition for Assessment Year 2008-09 to 2010-11 could have been only on validly invoking the 4th proviso to Section 153A of the Act which the ld. Assessing Officer failed to do so as discussed by us in the preceding para wherein we have confirmed the finding of the ld. CIT (A) quashing the subject matter of the instant appeal i.e., the order u/s 153A of the Act. Therefore, on this issue also, ld. Assessing Officer has erred in making the addition merely on the basis of the statement of the key person without fulfilling the relevant provisions of the Act which was sine-qua-non for initiating the proceed....