M/s. Bhansali Fincom Pvt. Ltd. Vs DCIT (ITAT Kolkata)
Conclusion: Unabated/concluded assessment, on the date of search, deserved to be undisturbed in the absence of any incriminating material found during search and accordingly impugned addition was deleted.
Facts –
Search was conducted and based on the search and notice was issued u/s 153A for AY 2010-11. Assessee stated that the time limit for issuance of notice u/s 143(2) for AY 2010-11 in respect of the original return filed on 23.9.2010 had expired on 30.9.2011 and hence as on the date of search, the year under consideration (i.e AY 2010-11) would fall under the category of unabated assessment and hence the income assessed originally thereon could not be disturbed unless there is any incriminating material found in the course of search relatable to such assessment year.
The assessee stated no incriminating materials relating to the share capital or share premium were found during the course of search and hence addition is not possible.
Held –
The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the AY 2010-11 was originally completed u/s 143(1) and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceeding, as on the date of search.
Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments.
In respect of unabated assessments, the legislature had conferred powers on the AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment.
We hold that the assessment framed u/s 143(1) of the Act for the AY 2010-11, which was unabated / concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly the addition made on account of share capital and share premium u/s 68 of the Act is hereby directed to be deleted.
FULL TEXT OF THE ITAT JUDGEMENT
1. These two appeals of the assessee arise out of the separate orders passed the ld. Commissioner of Income Tax(Appeal)-21, Kolkata (in short the Ld. CIT(A)] in appeal nos. 10762 &10784/DCIT, CC-3(3)/CIT(A)-21/KOL/2017-18 dated 03.07.2018 and 02.07.2018 respectively against the separate orders passed by the ACIT, CC-3(3), Kolkata [ in short the ld AO] under section 153A / 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 29.12.2017 and 31.12.2017 respectively for the Assessment Years 2010-11 and 2013-14 respectively. Both these appeals are taken together and disposed off by this common order for the sake of convenience.
IT(SS) A No. 59/Kol/2018 – Asst Year 2010-11
2. The preliminary issue involved in this appeal is as to whether in the facts and circumstances of the case, the ld CITA was justified in confirming the addition made towards share capital in the sum of Rs 3,50,00,000/- for the Asst Year 2010-11 in the assessment framed u/s 153A of the Act without having any incriminating material in that regard.
3. The brief facts of this issue is that the assessee is a company carrying on business of dealing in shares and loan transactions. The assessee filed its return of income for the Asst Year 2010-11 on 23.9.2010 declaring total income of Rs 81,676/-. There was a search and seizure operation conducted u/s 132 of the Act at the residential, office premises,bank lockers etc of the Patni Group of cases on 8.3.2016. A search warrant was executed in the name of the assessee. Consequent to the search, notice u/s 153A of the Act was issued on the assessee for the Asst Year 2010-11. In response to the said notice, the assessee filed its return of income on 24.10.2016 declaring total income of Rs 81,676/-. The assessee stated that the time limit for issuance of notice u/s 143(2) of the Act for the Asst Year 2010-11 in respect of the original return filed on 23.9.2010 had expired on 30.9.2011 and hence as on the date of search, the year under consideration (i.e Asst Year 2010-11) would fall under the category of unabated assessment and hence the income assessed originally thereon could not be disturbed unless there is any incriminating material found in the course of search relatable to such assessment year. Infact the assessee had specifically objected before the ld AO that there is absolutely no incriminating materials found during the course of search for the Asst Year 2010-11 and hence the concluded assessment could not be disturbed in the assessment proposed to be completed u/s 153A of the Act. After making this preliminary objection, the assessee however co-operated with filing of requisite details before the ld AO.
3.1. The assessee company received the following payments against share application during the financial year 2009-10 relevant to Asst Year 2010-11 as under:-
