Assessment completed after proper inquiry cannot be reframed without fresh evidence

DCIT Vs N. M. Agrofood Products Pvt. Ltd (ITAT Jaipur)

ITAT Jaipur held that assessment which are already completed after making proper inquiries cannot be allowed to again reframed merely based on the search without any fresh evidence. Addition unsustainable

Facts-

The case of the assessee was selected for scrutiny and the assessment u/s 143(3) was completed on 25.03.2015. Thereafter, search was conducted in 2018 and AO observed that assessee company has received total quantum of share capital and premium on account of the aforesaid share allotment of 6,49,50,000/-from companies and individuals who not only lack credit worthiness but their identity itself cannot be proved. Hence, the assessee company was issued show cause notice that why the amount of share allotment money shouldn’t be considered as bogus and added back to the total income of the assessee.

After considering reply of the assessee, AO observed that transactions are bogus and are to be treated as unexplained income u/s 68.

Conclusion-

Held that CIT(A) has after considering the details arguments of both the parties clearly taken a view that there is no incrementing material, no addition can be made for the assessment which are already completed after making the proper enquiries by the AO, and those assessment cannot be allowed to again reframed merely based on the search and that too without any fresh evidence. Merely the surveys conducted parties are not available after 8 years it is not the fault of the assessee and without any fresh material unearthed during search no fresh addition can be made on the issue which are already settled.

FULL TEXT OF THE ORDER OF ITAT JAIPUR

This appeal is filed by the revenue aggrieved from the order of the Commissioner of Income Tax (Appeal)- 4, Jaipur [ Here in after referred as Ld. CIT(A) ] for the assessment year 2012-13 passed on 25.11.2021, which in turn arise from the assessment order passed by the Assistant Commissioner of Income Tax, Central Circle-3, Jaipur dated 31.12.2019 pursuant to the search and seizure action under section 132 of the Income Tax Act, passed under section 143(3) r.w.s. 153A of the Act.

2. In this appeal the revenue has marched following grounds of appeal:

Ground-1. The Ld. CIT (Appeal) has erred in law in holding that additions can be made in the proceedings under section 153A of the Income Tax Act 1961 in respect of the assessments which were completed prior to the date of search, except based on some incriminating material unearthed during the search which was not already available to the Assessing Officer. While granting relief to the assessee, the Ld. CIT (Appeal) has failed to take note of the position that Hon’ble Supreme Court of India has admitted SLP against this proposition in the following matters –

i. Principal Commissioner of Income Tax v. Gahoi Foods Ltd. 117 taxmann.com 118(SC)/272 Taxman 521(SC) dated 24.01.2020

ii. ii. Principal Commissioner of Income-tax, Central-4 v. Dhananjay International Ltd.,114 taxmann.com 351(SC)/270 Taxman 15(SC) dated 16.09.2019.

2. The Ld. CIT (Appeal) has erred in law and on facts in not carrying out her duty of adjudicating the grounds on merit, and dismissing them only on a technical.

3. Whether on the facts and circumstances of the case, and in law the Ld. CIT(A) erred in deleting the addition to Rs. 5,20,00,000/ made by the AO on account of unexplained share premium u/s 68 of the Income-tax Act, 1961.

4. Whether on the facts and circumstances of the case, and in law the Ld. CIT(A) erred in deleting the addition to Rs. 5,95,00,000/ made by the AO on account of unexplained unsecured loans u/s 68 of the Income-tax Act, 1961

5.The Appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.

3. The brief facts of the case are that in this case, original return of income was filed by assessee 30.09.2012, declaring total income at Rs.1,33,69,670/- for the Assessment Year 2012-13. Thereafter, the case of assessee was selected for scrutiny, accordingly, the assessment u/s 143(3) of the Income tax Act, 1961 was completed on 25.03.2015 and thus, the assessment was completed in this case as on the date of search and income was assessed at Rs. 1,34,11,740/-. After giving effect of Ld. CIT(A) in the first quantum proceeding, the income was reduced to Rs.1,33,83,700/.

4. A search was conducted on 08.02.2018 in the case of “NM Group, Sriganganagar” to which the assessee belongs. Various assets/books of account and documents were found and seized as per annexure prepared during the course of search.

4.1 Accordingly, notice u/s 153A of the IT Act, 1961 for this year was issued on 30.07.2018 and duly served upon the assessee. In compliance to the notice u/s 153A of the IT Act, 1961, return of income was e-filed on 22.08.2018, declaring total income of Rs. 1,33,83,690/- ( which was finally decided after appeal effect of first round ) for the year under consideration. The assessee company is carrying out business of Grain Merchants. Apart from this, the assessee has shown income from house property.

4.2 Accordingly, notice u/s 143(2) & 142(1) of the Income tax, 1961 were issued along with questionnaire requiring certain details/ information, which was duly served upon the assessee.

5. During the course of analysis of the financials of assessee company it was observed that assessee company has shown to have issued shares of face value of 10 at exorbitantly high premium of 190 per share on 26.03.2012 to certain persons, most of which were companies shown to have been registered at Kolkata and other companies which were shown to have been registered at Delhi. The total quantum of share capital and premium shown to have been received by M/s N M Agrofood Products Pvt. Ltd on account of the aforesaid share allotment is 6,49,50,000. The details of the list of allotees filed by the assessee. These allotees are companies shown to be registered in Kolkata. The details their total income as per their ITR for the assessment year under consideration wherein these companies have shown to have subscribed for shares at exorbitantly high premiums was obtained and placed on record in the assessment order at page 3 para 5.1. The ld. AO observed that most of the companies that have shown to have invested in shares of the assessee company at exorbitant premium have shown insignificant incomes in the year of such investment. From the financial data ld. AO observed that the companies based in Kolkata do not seem to have the financial capacity for the investment in shares of the assessee company at huge premium that they have shown to have made. Moreover, most of the Kolkata companies have the same address, and on verification, it is observed that the directors of these companies are also directors in many other companies also based in Kolkata and simply provided accommodation entries of share application / premium thereon.

6. In order to ascertain the existence of the above-mentioned companies, during the course of search proceedings; surveys were authorized at the given addresses of M/s Ritesh Properties Pvt. Ltd, Rites Real Estate Pvt. Ltd, Rupali Trade & Holding Pvt. Ltd, Surbhika Vyapaar Pvt. Ltd at 4, Synanogue Street, Kolkata as well as at the given addresses of Waltair Investment Pvt. Ltd, Axiom Commodities Pvt. Ltd and Extent VinimayPvt. Ltd at 63, Radha Bazaar Street, Kolkata. The survey teams did not find existence of any of these companies at the given addresses. The reports of the survey teams were reproduced in the assessment order. The ld. AO after going through the report and financial details of these companies based in Kolkata, stated that these companies have no real existence or identity, and that the investment being shown by them by means of share premium in M/s N M Agrofood Products Pvt. Ltd simply appears to be an arrangement to route the unaccounted money generated by the group concerns via layering them in bank accounts and finally introducing them by means of share premium in the group concerns through the Kolkata based shell companies.

7. During the course of post-search proceedings, Shri Manoj Kumar Gupta, main person of the group was asked to submit his explanation with regards to the genuineness of the share premium shown to have been received by assessee company from the above mentioned Kolkata based companies. In response, Shri Manoj Kumar submitted that this issue was previously considered during the course of assessment proceedings u/s 143(3) and that confirmations from all the share allotees were submitted by him during the course of assessment proceedings. The ld. AO stated that the statement of Shri Manoj Kumar was considered, but is not acceptable as mere submission of confirmation letters does not discharge the onus cast upon the assessee to satisfactorily explain the nature and source of the share premium received. It is clear that Kolkata based investing companies do not have any creditworthiness to make such huge investments that they have shown. On physical verification, these companies were found to be non-existent.

8. Same way the ld. AO observed that companies shown to have been registered in Delhi and have invested in the assessee company details of their total income as per their I.T. Returns for the A.Y. 2012-13 relevant to the F.Y. 2011-12, being the year in which they have shown to have subscribed for shares at exorbitantly high premium were tabulated in the assessment order at page 7, para 5.4.

9. The ld. AO observed that most of the companies that have shown to have invested in shares of assessee company at exorbitant premium have shown insignificant Incomes in the year of such Investment. From the above financial data, the companies based in Delhi do not have the financial capacity for the investment in shares of assessee company that they have shown to have made. Moreover, most of the companies have the same / similar address, which is another Indicator of the fact that they are suitcase/paper companies without any actual existence. The fact that these companies have shown to have made share premium investment in the same tranche as other Kolkata based shell companies, it is apparent that the investment being shown by the Delhi based companies in assessee company is prima facie an arrangement to route the unaccounted money generated by the group concerns. via layering them in bank accounts and finally Introducing them as share premium in the group concerns through accommodation entry providing shell companies.

10. The three individuals shown to be residents of Delhi made investment in the assessee company. The ld. AO observed that it is highly improbable that certain individuals would simply invest in a Ganganagar based company at an exorbitant premium. The ld. AO thus, observed that assessee company has received total quantum of share capital and premium on account of the aforesaid share allotment of 6,49,50,000/-from companies and individuals who not only lack credit worthiness but their identity itself cannot be proved. Hence, the assessee company was issued show cause notice that why the amount of share allotment money shouldn’t be considered as bogus and added back to the total income of the assessee.

11. The assessee filed its reply vide letter dated 13.12.2019, where in the assessee contended that;

“That your good self has suspected transaction of allotment of share capital on account of the reason that share having face value of Rs. 10 has been issued at high premium of Rs. 190/- per share and also issued these shares mainly to Kolkatta & Delhi based companies and accordingly show cause as to why this amount should not be added back to income in AY 2012-13 u/s 68 of the Act, in this connection we are to submit as under:

i) In AY 2012-13, assessee company has allotted share capital of Rs. 32,47,500/ and also received share premium of Rs. 6,17,02,500/-totalling to Rs. 6,49,50,000/-.

ii) Assessee company has allotted 3,24,750 shares during the year having face value of Rs. 10 at share premium of Rs. 190/- per share. Assessee company has allotted shares as on 26-03-12. Fair market value as on 26-03-12 as per book value method works out to as under:

No. of Shares prior to allotment of new shares	10,000
Equity Share Capital	1,00,000
Reserve & Surplus as on 31-03-11	7,81,436
Profit for the year 2011-12	93,54,131
Total value of existing equity capital	1,02,35,567
Value per share [102,35,567/10,000]	1023.56 per share

Thus, on book value basis, value per share works out to Rs. 1023/- per share whereas assessee company has issued share at Rs. 200/- only. Thus it cannot be said that shares are issued at exorbitant higher price. It is further submitted that provision of section 56(2)(viib) was introduced by Finance Act, 2012 effective from AY 2013-14. Thus the provision relating to allotment of share at share premium is not applicable in the year under consideration.

iii) Date wise list of share application money received by company for allotment of shares is enclosed. From the above statement, it is apparent that out of total share application money of Rs. 649.50 lacs, a sum of Rs. 129.50 lacs was received in FY 2009-10. Receipt of opening share application money of Rs. 129.50 lacs is verifiable from the previous year figure appearing in audited financial of year under consideration. Copy of bank statement of FY 2009-10 marking receipt of share application money is enclosed.

iv) It is that share capital was allotted in AY 2012-13, copy of return of allotment is enclosed.

v) During AY 2012-13, assessee company has received share capital of Rs. 520 lacs from 14 companies. is submitted that assessment proceeding AY 2012-13 has been completed u/s 143(3) wherein assessee has submitted copy of share application money, confirmation of shareholder, bank statement of shareholder, etc. of all these shareholders. After detailed examination, your predecessor has accepted the genuineness and creditworthiness of shareholders. All these documents are verifiable from the file of original assessment proceeding lying with your good self. Copy of assessment order is enclosed. We are also enclosing following supporting documents for further verification of receipt of share capital from these 14 companies:

i) Active profile status of all these companies extracted from MCA website showing that all these companies are active company has made all statutory compliances and also uploaded their google location on MCA website. Active profile status also contains their e-mail address for correspondence and their current address. Their office google location can also be access from MCA website. Latest address along with e-mail address of all these companies are enclosed.

ii) Audited financial statement of all these companies for AY 2012-13 & subsequent year. From the audited financial statement, it is apparent that these companies is having substantial turnover and they are engaged in full-fledged business activities.

iv) Assessee company has approached present director of both these companies and they are sending the confirmation showing outstanding balance due to them. Confirmation will be submitted within 2-3 days’ time.”

12. The ld. AO contended that the reply of the assessee has been duly and carefully analysed and is not acceptable due to the following reasons:

i. The assessee has stated that all these companies are existent and has also submitted that their active profile status but same is not acceptable in light of findings of survey proceedings wherein the companies are found to be non-existent.

ii. With regards to assessee submission that the share allotment was done at most reasonable price is considered and rejected as the assessee has issued shares of Rs. 10 face value at a premium of Rs. 190 which by no stretch of imagination appears to be reasonable.

iii. The assessee cannot at any time answer the fact that with such financial credentials how can a company or individual Invest such high share application money without any business correspondence.

iv. The assessee also submitted few confirmations of certain companies but that doesn’t in any way prove that the transactions were genuine. By barely furnishing the confirmation the assessee cannot get away from discharging his onus of establishing the genuineness, identity and credit worthiness of the source company.

v. Even otherwise enquiries were conducted in the case of Delhi based companies during the assessment proceedings and the same were found to be non-existent. The relevant part of the enquiry report is placed on record.

13. The ld. AO further stated that although the assessee has submitted some confirmations but still the fact of the matter is that these companies and individuals are non-existent and do not have the credit worthiness to invest the same amount as share application money. For a transaction to be considered as bogus the assessee needs to prove all the three limbs of section 68 satisfactorily i.e. identity, genuineness and credit worthiness. Therefore, the said transactions are bogus and are to be treated as the assessee’s unexplained income under the provisions of section 68 of the Income tax Act, 1961. The ld. AO further noted that here in this case none of the above limbs is established and hence the case is amply clear that the share premium received is actually an accommodation entry through routing of funds. However, the assessee’s contention that the share application money of Rs. 129.50 lacs were pending allotment which is apparent from the balance sheet of the assessee company. Therefore, the sum was not credited in the year under consideration. Considering the facts as discussed above amount of Rs.5,20,00,000/- (6,49,50,000 1,29,50,000) considered as unexplained cash credits from undisclosed sources and added back to the total income of the assessee under section 68 of the Income tax Act, 1961.

14. It was also observed that assessee company had accepted unsecured loans from certain Kolkata based companies. The assessee company had shown to have huge amounts of outstanding unsecured loans from, inter-alia, M/s Axisline Commodities Pvt. Ltd, M/s Dishika Marketing Pvt. Ltd, M/s Pearl Tracom Pvt. Ltd, M/s Sarvayoni Vanijya Pvt. Ltd, M/s Vishveshwara Agencies Pvt. Ltd and M/s Snowblue Mercantile Pvt. Ltd. On search of the official MCA website database, it is learnt that no company exists with the name Axisline Commodities Pvt. Ltd. However, there exists a company named Axisline Commodities Trade Pvt. Ltd. The incorporation details of the aforesaid companies were retrieved from the MCA website and the financial details from the official System of the Income Tax Department.

15. On perusal of the details as extracted and tabulated in the assessment order the AO found that all the companies listed therein are Kolkata based companies. On perusal of the income of the companies, it is seen that none of the companies has creditworthiness to advance huge amounts of unsecured loans. In order to verify bonafides of the above-mentioned companies who have purportedly advanced loans to assessee company. During the search proceedings, surveys were authorised on test check basis at the given address of M/s. Pearl Tracom Pvt. Ltd., M/s. Snowblue Merchantile Pvt. Ltd., M/s. Vishveshwara Agencies Pvt. Ltd., The survey teams did not find the existence of these companies at the given address.

16. During the course of post-search proceedings, Shri Manoj Kumar on 07.05.2018 was asked to file his explanation with regards to the bonafides of the companies who have shown to have extended unsecured loans to assessee company. In response, he has stated that the above-mentioned companies have advanced certain sums of money to assessee company, some amounts ostensibly for the purpose of making purchases in their name and other amounts as unsecured loans. Shri Manoj Kumar further submitted that the outstanding amounts in the names of the above-mentioned companies have, as on date, either been repaid back (as is in the case of M/s Dishika Marketing Pvt. Ltd) or have been squared up by means of credit sales by M/s NM Agrofood Products Pvt. Ltd to these companies (as in the case of the other 5 companies mentioned above). In this regard the statement of Shri Manoj Kumar relied upon.

17. On the basis of evidences gathered during the search it is apparent that the companies are Kolkata based accommodation entry providing shell companies, and the unsecured loans shown to have been accepted by assessee is simply the case of routing its own unaccounted money after being laundered through the bank accounts of such accommodation entry providing shell companies.

18. Hence, the assessee company was issued show cause notice that why the amount of shown as unsecured loan shouldn’t be considered as bogus and added back to the total income of the assessee. The assessee filed its reply vide letter dated 13.12.2019, the relevant part of which is reproduced hereunder:

“That your another observation is that assessee company has accepted unsecured loan amounting Rs. 5,95,00,000/- from Kolkata based companies and accordingly your good self has show caused why this amount should not be added back to your total income of AY 2012-13 u/s 68 of the Act, in this connection we are to submit as under:

i) Detail of these loan creditors are as under:

Axisline Commodities Trade Private Limited	1,00,00,000
Dishika Marketing Pvt. Ltd.,	90,00,000
Pearl Tradecom Pvt. Ltd.	1,40,00,000
Sarvayoni Vanijya Pvt. Ltd.	35,00,000
Snowblue Mercantile Pvt. Ltd.	90,00,000
Vishveshwara Agenciles Pvt. Ltd.	1,40,00,000
Total	5,95,00,000

ii) Assessment proceeding of assessee company for AY 2012-13 has been completed u/s 143(3) wherein all these unsecured loan creditors has been examined in depth and after detailed examination your predecessor has accepted the unsecured loan creditors as genuine. During the course of original assessment proceeding, assessee has submitted confirmation, bank statement and other documents of all these loan creditors, thus all these documents may be examined from file of original assessment proceeding. It is further submitted that your predecessor has also made independent enquiry by issuing notices u/s 133(6) to these loan creditors.

iii) Copy of ledger account of all these companies from the date of receipt of loan to final repayment of loan or adjustment of loan account is enclosed. Actually assessee has received the advances towards commodity transaction from these parties, however due to inferior market condition these are outstanding in AY 2012 13. Later on in AY 2017-18 or AY 2018-19 (prior to search) either all these transactions has squared up or repayment has been made. In most of the parties cases, their balances has been adjusted against the differences of commodities transactions and credited to income account of assessee company.

iv) Active profile status of all these companies extracted from MCA website is enclosed. From active profile status, it is apparent that all these companies are active company has and made all statutory compliances and also uploaded their google location on MCA website. Active profile status also contains their e-mail address for correspondence and their current address. Their office google location can also be access from MCA website. Latest address along with e­mail address of all these companies are enclosed.

v) Audited financial statement of all these companies for AY 2012-13 & subsequent year. From the audited financial statement, it is apparent that these companies is having substantial turnover and they are engaged in full-fledged business activities.

vi) Assessee company has approached present director of both these companies and they are sending the confirmation showing outstanding balance due to them. Confirmation will be submitted within 2-3 days’ time.”

19. The ld. AO stated that the reply of the assessee has been duly and carefully analysed and is not acceptable due to the following reasons:

1. The assessee has stated that all these companies are existent and has also submitted that their active profile status but same is not acceptable in light of findings of survey proceedings wherein the companies are found to be non-existent.

2. With regards to assessee’s submission that the these amounts have been paid in subsequent years is not acceptable as there is no denial of the fact that the very source of these funds was bogus lacking identity and credit worthiness.

3. The assessee cannot at any time answer the fact that with such meagre income how a company or individual can lend such huge amounts of loan to the assessee company. By no stretch of imagination can such amount of loan be justified by such non-existent companies.

4. The assessee also submitted few confirmations of certain companies but that doesn’t in any way prove that the transactions were genuine. By barely furnishing the confirmation the assessee cannot get away from discharging his onus of establishing the genuineness, identity and credit worthiness of the source company.

20. Although the assessee has submitted some confirmations but still the fact of the matter is that these companies and individuals are non­existent and do not have the credit worthiness to lend such huge amounts of loan to the assessee company. For a transaction to be considered as bogus the assessee needs to prove all the three limbs of section 68 satisfactorily i.e. identity, genuineness and credit worthiness. Therefore, the said transactions are bogus and are to be treated as the assessee’s unexplained income under the provisions of section 68 of the Income tax Act, 1961 as in this case none of the above limbs is established. Hence the case is amply clear that the unsecured loan shown to have been received by the assessee company is actually an accommodation entry through routing of funds. Considering the facts as discussed above amount of Rs.5,95,00,000/- considered as unexplained cash credits from undisclosed sources and added back to the total income u/s 68 of the Income tax Act, 1961.

21. Aggrieved from the order of the ld. AO the assessee marched the appeal before the ld. CIT(A). The ld. CIT(A) after discussing the matter in detailed, allowed the appeal of the assessee. The revenue aggrieved by the order of ld. CIT(A) assailed this appeal before us.

22. The ld. DR has filed the Paper book containing 65 pages of the evidences relied upon on 25.04.2022 wherein ld. DR has submitted various statement of the persons in these group cases and also filed the report of the inspector who conducted verification / inquiry in these case. He has also filed his written submission at length which is extracted here in below :

A search was conducted on 08.02.2018 in the case of N.M. Group, Sriganganagar and the assessee company was also covered under search operation. Order u/s 143(3)/153A was passed in this case on 31.12.2019. In the said assessment order, the assessing officer made two additions

i. Addition on account of share premium u/s 68 of the Act: Rs. 5,20,00,000/-

ii. Addition for unsecured loans from Kolkata based companies u/s 68 of the Act: Rs. 5,95,00,000/

Addition on account of share premium

The assessee company had allotted 324750 shares during the year having face value of Rs.10/- at a premium of Rs.190/- per share. Thus, the assessee received Rs.32,47,500/- on account of share capital and Rs.6,17,02,500/- on account of share premium totalling to Rs.6,49,50,000/-. During the course of search proceedings, consequential survey operations were conducted in Kolkata and Delhi and many of the companies to whom shares were claimed to be allotted, were found non-existent. Further, the AO has discussed at length in the assessment order that these companies disclosed very meagre income in their return of income. The status of many of these companies were found to be inactive in the ROC database. Based on these findings, the AO concluded that the investing companies did not have creditworthiness to invest in these companies and they were also found to be non-existent at the time of survey and enquiries which were simultaneously done with the search proceedings. As the share application of money of Rs.129.50 Lacs was pending allotment, therefore, the AO added Rs.5,20,00,000/- (6,49,50,000­1,29,50,000) u/s 68 of the Act.

Addition on account of unsecured loans

During the course of assessment proceedings, it was noticed that the assessee has received unsecured loans from the following Kolkata based companies

Axisline Commodities Trade Pvt. Ltd.	Rs.1,00,00,000
Dishika Marketing Pvt. Ltd.	Rs.90,00,000
Pearl Tradecom Pvt. Ltd.	Rs.1,40,00,000
Sarvayoru Vanijya Pvt. Ltd.	Rs.35,00,000
Snowblue Mercantile Pvt. Ltd.	Rs.90,00,000
Vishveshwara Agencies Pvt. Ltd	Rs.1,40,00,000
Total	Rs.5,95,00,000

The AO has given the details of total income of the above 6 companies in the assessment order at page no-13. It is clear from these details that either these company did not file any return of income or they disclosed very marginal income which was not commensurate to the unsecured loans provided by these companies to the assessee company. It has been further held by the AO that survey proceedings were conducted at the time of search proceedings in case of Pearl Tradecom Pvt. Ltd, Snowblue Mercantile Pvt. Ltd. and Vishveshwara Agencies Pvt. Ltd. These companies were found to be non-existent during the course of survey proceedings. Therefore, the AO added Rs.5,95,00,000/- u/s 68 of the Act.

The matter travelled to CIT(A). The Ld. CIT(A) vide order dated 25.11.20121 allowed the appeal of the assessee on technical ground that no incriminating documents were seized during the course of search in this case following the judgment of Hon’ble Rajasthan High Court in Jai Steel (India) Ltd. and judgement of Hon’ble Delhi High Court in the case of Kabul Chawla and other case laws. The Ld. CIT(A) has observed in her order that the AO had accepted the share premium and unsecured loans received by the appellant as genuine transactions in original order u/s 143(3) of the Act. Once, when the AO has accepted the transactions as genuine then in the proceedings u/s 153A of the Act, the same cannot be treated as bogus until there is any material or evidence to prove the contrary. She has further observed that the AO in his remand report has solely relied upon the unexecuted survey u/s 133A of the Act and therefore even if the information/report of the Investigation Wing is considered as a relevant evidence, however in view of the above discussion that the surveys were not executed in respect of all the 14 companies for share premium and in the case of 6 companies for unsecured loans and also the fact being that they were conducted on wrong addresses as discussed above, the same cannot be regarded as incriminating material unearthed during the course of search & seizure u/s 132(1) of the Act in the case of the appellant.

The decision of the Ld. CIT(A) is not acceptable on account of the following reasons

1. It is submitted that as per provisions of section 153A, the AO has to issue notices u/s 153A(1) of the Act for six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. Further as per provisions of section 153A(1)(b), the AO has to assess or reassess the total income of such years. Therefore. in pursuance to these notices issued u/s 153A(1), the AO has to assess or reassess the total income for the relevant assessment years. Further, there is no mention in the section that these assessments should be based on incriminating material found during the course of search.

2. Judicial Pronouncements relied upon;

(i) It would be appropriate to reproduce the head note in the case of CIT Vs ST. Francis Clay Decor Tiles [2016] 70 taxmann.com 234 (Kerala) a under:

“Section 153A, read with section 132 and 132A of the Income-tax Act, 1961 Search and seizure – Assessment in case of (Scope of) – Assessment years 2002 03 to 2006-07 – Whether where there was a disclosure made by giving a statement during course of search, Assessing Officer, by virtue of power conferred on him under section 1534 was competent to issue notice under said provision and require assessee firm to furnish returns as provided thereunder – Held, yes Whether neither under section 132 nor under section 1534, phraseology incriminating’ is used by Parliament, therefore, any material which was unearthed during search operations or any statement made during course of search by assessee is a valuable piece of evidence in order to invoke section 1534-Held, yes [Para 21] [Matter remanded/In favour of revenue]

(ii) The head note in the case of E.N. Gopakumar Vs CIT [2016] 75 taxmann.com 215 (Kerala) is as under:

“Section 153A, read with section 132, of the Income-tax Act, 1961 – Search & seizure-Assessment in case of (Scope of) Whether for issuance of a notice under section 153A(1)(a), it is not necessary that search on which it was founded should have necessarily yielded any incriminating material against assessee or person to whom such notice is issued Held, yes Whether, therefore, assessment proceedings generated by issuance of a notice under section 153A(1)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(1)(a)- Held, yes [Paras 7 and 8] [In favour of revenue]”

(iii) In the case of CIT Vs MGF Automobiles Ltd. [2016] 72 taxmann.com 240 (SC), the SLP filed by the department has been admitted. The head note is as under.

Section 153A, of the Income-tax Act, 1961-Search and seizure-Assessment in case of (Conditions precedent) Assessment years 2004­05 and 2005-06 Pursuant to High Court’s order company CML was amalgamated with assessee company from 1-4-2003- In returns of income, assessee set off losses of company CML against its income – Thereafter a search took place in assessee’s premises and certain incriminating material was seized, which was stated to be destroyed in a fire that took place at premises of revenue-Consequent to search, Assessing Officer framed assessments disallowing set off of losses of company CML and made additions – High Court by impugned order held that since Assessing Officer proceeded to frame assessments under section 153A relying on some information not unearthed during search, assessment orders so passed were not sustainable in law – Whether Special Leave Petition filed against impugned order was to be granted-Held, yes [Para 2] [In favour of revenue]

(iv) The head note in the case of CIT Vs Dr. P. Sasikumar [2016] 73 taxmann.com 173 (Kerala) is as under:

“I. Section 153A, read with sections 132 and 132A, of the Income-tax Act, 1961 -Search and seizure-Assessment in case of (Submission of returns for six years) -Assessment years 2002-03 to 2008-09- Whether any material unearthed during search operations or any statement made during course of search by assessee is a valuable piece of evidence in order to invoke section 153A Held, yes – Whether once search is initiated under section 132 or a requisition is made under section 132A, Assessing Officer is empowered to issue notice to person searched requiring him to furnish return of income in respect of each of following six assessment years as referred to in clause (b) of section 153A(1) Held, yes – Whether once aforesaid notice is issued, assessee has to furnish all details with respect to each assessment year since same is treated as a return filed under section 139 – Held, yes – Whether even if no documents are unearthed, nor any statement was made by assessee during course of search under section 132 or any material is received for afore specified period of six years, assessee is bound to file a return – Held, yes – Whether abatement of assessment or reassessment pending on date of initiation of search within period of six assessment years specified under section 1534 will also not absolve assessee from his liability to submit returns as provided under section 1534(1)(a)- Held, yes [Paras 5 & 6] [In favour of revenue]

(v) The head note in the case of Canara Housing Development Co. Vs DCIT [2014] 49 taxmann.com 98 (Karnataka) is as under:

“Section 153A, read with section 263, of the Income-tax Act, 1961 – Search and seizure – Assessment in case of search or requisition (Conditions precedent) – Assessment year 2008-09 Whether once proceedings under section 153A is initiated, pursuant to search, order of assessment in respect of six years stands reopened and, therefore, in absence of any valid assessment order in existence, revisional proceedings under section 263 cannot be initiated in such a case Held, yes [Paras 10 and 11] [In favour of assessee]

Section 153A, read with section 132, of the Income-tax Act, 1961 – Search and seizure – Assessment in case of search or requisition (Conditions precedent) – Assessment year 2008-09 – Whether condition precedent for application of section 153A is that there should be a search under section 132, however, initiation of proceedings is not dependent on any undisclosed income being unearthed during such search – Held, yes [Para 10]”

(vi) The head note in the case of CIT Vs Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad) is as under:

“Section 153A, read with section 143 of the Income-tax Act, 1961 – Search and seizure – Assessment in case of (Scope of assessment) – Assessment year 2000 01 – Whether Assessing Officer has power to reassess returns of assessee not only for undisclosed income, which was found during search operation but also with regard to material that was available at time of original assessment – Held, yes [Para 11] [In favour of revenue/Matter remanded]

(vii) The head note in the case of DR. A. V. Sreekumar Vs CIT [2018] 90 taxmann.com 355 (Kerala) is as under:

“Section 153A, read with sections 132 and 143 of the Income-tax Act, 1961 Search and seizure-Assessment in case of (Scope of) – Assessment years 1999 2000 and 2000-2001-Search was conducted at premises of assessee on basis of two documents received before search by Department through a Tax Evasion Petition allegedly filed by one of brokers involved in transaction pursuant to which notices under sections 153A and 143 were issued and assessment orders were passed for respective years making additions – Assessee contended that documents relied on to make additions, being not one seized in search conducted, proceedings under section 153A read with section 143 were non-est-However it was pursuant to search and enquiry conducted thereafter that it was revealed that assessee had rental income from a flat purchased at Bangalore which had been sold – Further, suppressed account maintained by assessee in which there was unaccounted consideration from purchaser also was unearthed and exact amount of income escaped from assessment was supported by ample evidence Whether therefore, no ground could be taken that other material which were already available with Department could not be relied on in proceedings – Held, yes [Paras 13, 21 and 22] [In favour of revenue]”

(viii) In the case of Sunny Jacob Jewellers And Wedding Centre v. DCIT [2014] 48 taxmann.com 347 (Kerala), it was held that:

In the case of CIT v. Hotel Meriya [2010] 195 Taxman 459 (Ker.) it was held that none of the provisions under Chapter XIV-B mandates, for making block assessment there shall be evidence regarding the concealment of income for every year for the block period. Though technically one is not concerned with the block assessment, based on the information as stated above for six previous assessment years, under section 153A the Department can assess or reassess in accordance with the procedure contemplated.

Therefore, there is no prohibition or embargo on the Department to consider this information for assessment or reassessments contemplated under section 153A. There is also no requirement under section 153A and other provisions requiring the Department to collect information and evidence for each and every year for six previous years under section 153A. Therefore, the argument of assessee that the information gathered either during pre-search enquiry or during the course of search cannot be made use so far as the six previous assessment years, is unsustainable.

(ix) In the case of CIT v. Orma Marble Palace (P.) Ltd. [2019] 110 taxmann.com 435 (Kerala), it has been held that:

“23. We have already found that there is lack of material insofar as the prior years of the block period, but the same has been held to be inconsequential, in so far as the A.O being conferred with the power to make assessment in the best of his judgment. The AO was perfectly justified in carrying out an assessment on the best of judgment, making estimations on the basis of the materials recovered. As has been found in Hotel Meriya, it cannot be assumed that a dealer who practises suppression would retain the materials disclosing suppression, for long years; in the instant case a block period of 6 years. There is also no presumption insofar as the suppression having occurred only in the year in which the search was conducted. If at all, the presumption is otherwise insofar as the special procedure prescribed under Chapter XIV-B to assess undisclosed income for a block period, comprising of assessment years prior to the date of search, on the basis of the materials recovered at the search and other evidences available before the AO relatable to such material. At the risk of repetition, it has to be noticed that the block assessment prescribed under Chapter XIV-B also confers power on the AO to make assessment on the best of judgment.”

3. In view of the above judicial pronouncements, it is humbly submitted that appeals of the department may please be allowed and these cases may be set aside to the file of the ld. CIT(A) for deciding appeals on merits.

Without prejudice to the above, it is submitted that there was simultaneous survey operation in this case of many companies. The Ld. CIT(A) has observed that there is no credibility of unexecuted survey. In this regard, it is submitted that the survey operations were conducted on the basis of the addresses provided by the investment companies in the departmental database and the department cannot be held liable for any in action on the part of any assessee to the advantage of some third party. Further, it is not in the hands of the department to execute a survey authorisation if the assessee concerned is not found to be existent at the address provided to the department. Hence, unexecuted survey authorisation should go against the investing companies and the appellant rather then treating it as in favour of the appellant. If the Ld. CIT(A) thought that survey was not conducted in 100% cases and proceedings were conducted in 50% cases, then proceedings in 50% cases were sufficient enough to be treated as incriminating material. Incriminating material does not mean that the material should be in the form of seized paper or seized soft copies. The phrase must be interpreted wide enough to treat the non-existing companies at the addresses provided to the Department as incriminating material, if survey is conducted simultaneously with the search operation. This will be as per the letter and spirit of the judgement of the Hon’ble Delhi High Court in the case of Kabul Chawla. There will be no scope of finding the ‘material’ used in common parlance to be found when the survey could not be executed due to the default of the assesses. Hence, the order of the ld. CIT is liable to be set-aside on this count also.

23. In addition to the above written submission, before us, the ld. DR also heavily argued and relied upon the findings of the assessing officer and prayed that the order of the ld. CIT(A) be set-a-side and that of the AO be restored. The ld. DR further argued that the addition made in the total income of the assessee were well related to the undisclosed income unearthed during the search and seizure action initiated by the department. The addition is fully based on the evidences in the possession of the AO which was collected at the time of search and seizure action. During the course search simultaneously, survey was conducted at the premises of all those companies from where the share investment is flowing. The search team has taken sufficient efforts to place on record the fact that these companies are mere paper companies has no sufficient income. He also read the report of the officer conducted spot verification on the address available with the department as per PAN data base. The statement of the Manoj Kumar Gupta, a key person of the group was also recorded which is made part of the order by the ld. AO. Shri Manoj Kumar Gupta. He merely reiterated that transactions are already verified in the proceeding u/s. 143(3) of the Act. In that proceeding under taken the physical verification were not conducted of these entities. The correct address was not placed on record by the party. Thus, based on the material collected in search and simultaneously survey operation of these companies were conducted but offices could not be located. Thus, based on this observation the ld. DR submitted that the addition made by the ld. AO should sustain. As per provision of section 132 read with section 153A of the Income Tax Act, the AO has to assessee or reassess the income of last six years and total income refers to the sum total of income in respect of which a person is assessable. The total income will therefore, cover not only the income emanating from the declared source or any material omission before AO but from all sources including undisclosed one or based on unplaced material before the assessing officer. The ld. DR further submitted that ld. CIT(A) has allowed the appeal of the assessee only on technical grounds and no incrementing material either discussed or looked into. He has not decided the appeal on merits of the case. Out of total 33 companies 21 are Kolkatta based and 12 located at Delhi and all these companies has no worth to invest in the assessee company.

24. As regards the addition of unsecured loans appearing in the books of the assessee company for all six parties all are based at Kolkatta. Their name, address, last three-year details of income were reproduced in the assessment order. The income of these companies are not sufficient to advance the money at substantial amount as claimed by the assessee. The survey of these companies was conducted on test check basis. Based on the financial information placed on record these companies’ capacity to advance loan is not established. At the address given as per PAN database these companies were not found at the address. All these facts on record very well establish that these companies’ identity and capacity is not proved.

25. The ld. DR further argued that when 50 % of the companies where surveyed how can the ld. CIT(A) not decide the merits of the case and allowed the appeal of the assessee on technical ground. Considering on these evidences the ld. DR submitted that this evidence be considered as incrementing material and the addition made by the AO should sustained. He further stated that the ld. AR cannot argue that the surveys were not conducted at the correct address as per ROC data when the survey were conducted based on the address available with the department as per PAN data. The ld. DR relied upon the recent judgement of the Calcutta HC in the case of Swati Bajaj and prayed that the appeal be decided based on the facts placed on record. The ld. DR also argued that ld.CIT(A) has heavily relied upon the decision of the Hon’ble Rajasthan HC where in the facts are different as in this case survey were conducted in 50 % companies and therefore, the same is distinguishable and enquiry conducted be considered as incrementing in this case.

26. Per Contra, the ld. AR of the assessee submitted that in compliance to notice under section 153A of the Income Tax Act, 1961, the assessee submitted its return of income on e-filling portal on 22.08.2018. The AO completed the assessment under section 153A r.w.s. 143(3) of the Act vide order dated 31.12.2019 by making addition of Rs. 5,20,00,000/-under section 68 for share subscription by various shareholders and Rs. 5,95,00,000/- taken by the assessee as unsecured loans and the same was also added u/s. 68 of Act. The ld. AR of the assessee also filed a detailed paper book containing 273 pages wherein he has submitted all the relied upon evidence such as submission made before lower authorities, statement recorded and relied upon, inspectors report, Extract from the ROC website about the active status of the companies with whom the transactions are recorded extract of the bank transactions, confirmations, allotments of shares. He also submitted his averments n the written submission which reads as under:

Facts:

1. The assessee company is engaged in the trading of agricultural commodities in Sriganganagar. It filed the return u/s 139(1) on 30.09.2012 declaring an income of Rs.1,33,69,670/- (PB 1). The assessment u/s 143(3) was made on 25.03.2015 at total income of Rs.1,34,11,740/- (PB 24-27).

2. A search was conducted on 08.02.2018 in the case of “NM Group, Sriganganagar” to which the assessee belongs. In response to notice u/s 153A assessee filed the return on 22.08.2018 declaring total income of Rs.1,33,83,690/-.

3. In search no incriminating document was found for the year under consideration. The AO, however, completed the assessment by making addition of Rs.5,20,00,000/- on account of unexplained share capital and Rs.5,95,00,000/- on account of unexplained unsecured loan u/s 68 of the IT Act, 1961.

4. Before Ld. CIT(A) assessee challenged the validity of the order passed u/s 153A of the Act and the addition made by AO u/s 68 of the Act. The Ld. CIT(A) vide letter dt. 16.09.2021 called for remand report. The remand report dt. 12.11.2021 submitted by AO to Ld. CIT(A) is at PB 16A-36A. The assessee’s reply in response to remand report is at PB 37A-38A. Thereafter a supplementary remand report dt. 23.11.2021 (PB 39A-45A) was submitted by AO to Ld. CIT(A). The assessee’s reply in response to this remand report is at PB 46A.

5. The Ld. CIT(A) after considering the fact that issue of share capital as well as unsecured loans was considered by the AO during the course of original assessment proceedings u/s 143(3) of the Act which was accepted as genuine and no incriminating material was found while framing the assessment u/s 153A of the Act held that the addition made by AO u/s 143(3) r.w.s. 153A is legally not tenable and hence is not liable to be sustained.

Submission:

1. It is submitted that the original assessment u/s 143(3) for the relevant assessment year had already been completed on 25.03.2015 (PB 24-27). As on the date of search the assessment for AY 2012-13 was not pending. From the order sheet placed at PB 36-39 it can be noted that during the original assessment proceedings AO required the assessee to provide evidence regarding genuineness of the companies/ individuals from whom share capital is received and confirmation of unsecured loans. The same was provided by the assessee from time to time. The AO after examining the same found no discrepancy and accepted the genuineness of share capital and unsecured loans. In search no incriminating document was found to warrant a relook into the matter already decided in the carlier proceedings. It is a settled law that completed assessment can be interfered by the AO only on the basis on incriminating evidence found during the search. The assessments u/s 153A are not fresh assessments since the purpose of making the reassessment u/s 153A is subject to tax, hitherto undisclosed income unearthed during the course of search. The second proviso to section 153A(1) provides only for the abatement of pending assessments. Therefore, already completed assessments do not abate and they shall hold the field. It can be interfered by the AO while making the assessment u/s 153A only if some incriminating material is unearthed during the course of search or requisition of documents or undisclosed income or property is declared in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Thus, when no incriminating documents for the year under consideration were found, addition made by the AO in assessment proceedings u/s 153A is illegal and bad in law. For this purpose reliance is placed on the following case laws:

PCIT vs. Meeta Gutgutia (2018) 257 Taxman 441 (SC)

Invocation of sec. 153A to reopen concluded assessments of AYS carlier to year of search was not justified in absence of incriminating material found during search qua cach carlier assessment year. SLP filed against said decision dismissed.

Jai Steel (India) v. ACIT [Raj HIC] (2013) 219 Taxman 223 (Raj)

“The requirement of assessment or reassessment under the said section has to be read in the context of s. 132 or s. 1324, in as much as in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. The underlying purpose of making assessment of total income under s. 153A is, therefore, to assess income which was not disclosed or would not have been disclosed. The purpose of second proviso is also very clear, in as much as once an assessment or reassessment is ‘pending’ on the date of initiation of search or requisition and in terms of s. 1534, a return is filed and the AO is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under s. 1534 would be the assessment for the said year. The necessary corollary of the second proviso is that the assessment or reassessment proceedings, which have already been ‘completed’ and assessment orders have been passed determining the assessee’s total income and, such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. The argument raised by the counsel for the assessee to the effect that once notice under s. 153A is issued, the assessments for six years are at large both for the AO and assessee has no warrant in law. From a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under ss. 132 and 1324, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of second proviso to s. 1534, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made.”

CIT VS. Kabul Chawla (2016) 380 ITR 573 (Del) (HC)

“Completed assessments can be interfered with by the AO while making the assessment under s. 1534 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. The present appeals concern asst. yrs. 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.”

Principal CIT Vs. Dipak Jashvantlal Panchal [2017] 397 ITR 153 (Guj.) (HC)

It was held this case that from the heading of section 153A, the intention of the Legislature is clear, viz, provide for assessment in case of search and requisition, When the very purpose of the provision is make assessment case of search or requisition, goes without saying that the assessment has have relation 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 view of the mandate of sub-section (1) of section 153A of the Act, every case where there was search or requisition, the AO is obliged to issue notice to such person furnish returns of income for the six years preceding the assessment year relevant to the previous year which the search conducted or requisition is made, any addition or disallowance can made only on the basis of material collected during the search or requisition.

CIT Deepak Kumar Agarwal Ors. (2017) 158 DTR 100/ 251 Taxman 22 (Bom.) (HC)

No addition could have been made while completing assessment u/s 153A in the case of completed assessment if incriminating material recovered and no undisclosed income was determinable from material found as result search. Once there no incriminating material in support of the addition brought record by revenue, then no addition u/s 68 could be made.

CIT Gurinder Singh Bawa [2016] 386 ITR 483 (Bom.) (HC)

In this case assessee’s return for AY 2005-06 was processed u/s 143(1) of the Income-tax Act, 1961. notice 143(2) was issued. search was conducted u/s 132 and in proceedings u/s 153A, AO additions for assessment year question of the sums declared as gifts by the assessee treating them as credits covered u/s and part of the loan received from company in which assessee was shareholder deemed dividend. The CIT(A) deleted the sum added deemed dividend but upheld addition respect of sum declared as gifts by the assessee. The assessee challenged validity of assessment made u/s 153A on the ground that no assessment respect of the assessment years was pending so as have abated. The Tribunal accepted the assessee’s submission and held that incriminating material having been found during the course of search, entire proceedings u/s 153A were without jurisdiction and therefore, the addition made had to deleted. appeal before the Bombay Iligh Court, dismissing the appeal of the Income-tax Department, it was held once assessment was not pending but had attained finality for particular year, could not subject to proceedings u/s153A of the Act if no incriminating materials found in course of search during the proceedings u/s153A which were contrary to and were disclosed during regular assessment proceedings.

CIT VS. SKS Ispat Power Ltd. [2017] ITR 584 (Bom.) (HC)

The scope assessment 153A of Act limited the incriminating evidence found during the search and no further.

DCIT Vs. Frost Falcon Distilleries Ltd. (2021) 207 DTR (Del.) (Trib.)

In view of the fact that incriminating material was found during the search action relating share received by from three parties, impugned addition of said share capital sustainable.

Jammu Metallic Oxides Private Limited Vs. DCIT 55 CCH 618(Jaipur)(Trib)

Even if report of the investigation wing Kolkatta was considered as relevant evidence, the same could not be regarded as incriminating material unearth during the course of search and seizure as no such material is found from the assessee and therefore addition made by the AO u/s 153A was not sustainable and liable to be deleted when the assessment was completed u/s 143(3) and was not pending as on the date of search.

2. The sole basis of AO for making the addition u/s 153A is the survey carried out on 10.02.2018 at the addresses of companies from whom share capital and unsecured loan is received where these companies are stated to be found not existing. It is submitted that in respect of 14 companies from whom share capital was received, survey was conducted only on 7 companies. Even out of these 7 companies, the survey was conducted at the wrong address/ in the wrong name of 6 companies. In respect of 6 companies from whom unsecured loan was received, survey was conducted only on 3 companies and even in case of these 3 companies it was conducted at the wrong address. Therefore such erroneous survey results cannot be made basis of holding that these companies are non­existent more particularly when assessee has filed all the evidences justifying the receipt of share capital and unsecured loan. Thus this observation of AO would not constitute any incriminating material/ document found in search so as to confirm any jurisdiction to the AO to make addition u/s 153A.

3. The department has relied on the decision of Hon’ble Supreme Court in case of PCIT Vs. Gahoi Foods (P) Ltd. 117 taxmann.com 118/ 272 Taxman 521 dt. 24.01.2020 and PCTT Vs. Dhananjay International Ltd. 114 taxmann.com 351/ 270 Taxman 15 dt. 16.09.2019 wherein the Ilon’ble Supreme Court has admitted the SLP filed by the department against the order of High Court where it is held that completed assessment can be interfered by the AO only on the basis of incriminating evidence found during the search. However, granting of SLP would not mean that the law laid down by the High Court is reversed. In fact in case of Meeta Gutgutia (supra), Hon’ble Supreme Court has rejected the SLP of the department. This confirms that if no incriminating material was found in search, then in view of the decisions of Hon’ble High Court/ Tribunals referred above including the decision of Rajasthan High Court, the contention of the assessee should be accepted. Further Hon’ble Supreme Court in case of CIT Vs. Vegetable Products Ltd. 88 ITR 192 has held that where two reasonable constructions of a taxing provision are possible, then the construction which favours the assessee must be adopted.

4. The Ld. D/R has filed a written synopsis where he has relied on certain decisions of Kerala High Court and admission of SLP filed by the department on this issue by the Hon’ble Supreme Court. However, as stated in Point No.3 above, almost all the High Courts including Rajasthan High Court has taken a view that in the absence of any incriminating material found in search, the concluded assessment cannot be tinkered with. Therefore, the decisions of Kerala High Court cannot be applied on the assessee in preference to the decision of Rajasthan High Court.

5. So far as Ground No.2 of the department is concerned, the Ld. CIT(A) has not decided the merit of the case. This is for the reason that once this issue has been examined in the original assessment proceedings, in the absence of any incriminating material found in search, no addition can be made.

Therefore, there is no error in the order of CIT(A). In any case, no addition on merit can be made as per the submission given before Ld. CIT(A) which is placed at PB 4A-14A.

In view of above, order of Ld. CIT(A) be upheld by dismissing the ground of department.

27. In addition to the above written arguments the ld. AR of the assessee argued that this being the search period assessment, the addition can only be made based on the incrementing material placed on record which is missing in this case. Merely the survey conducted at some other party’s places and they were not found on that address the whole transaction under taken in the normal course of business cannot be void on that reasons that the parties are not available at the address and that the transaction done in 2011-12 and survey of that party not found in 2018. The original assessment already completed and the copy of the assessment order placed on record. In that original quantum assessment, proceedings the ld. AO raised various queries which were replied based on the evidence called for and the same were accepted. The additions were made in that original quantum proceedings. Now in the search related assessment in the absence of any incrementing material no addition can be made on those completed assessments. The issue of share capital and unsecured loans have already been examined in the original assessment proceedings for this the ld. AR of the assessee drawn our attention to the order sheet entries enclosed at page 36 to 38 of various dates showing that the AO has made exhaustive inquiry on this issue and the assessee has given satisfactory reply on it. The fresh addition can only be made if the incrementing material unearthed during the search proceedings. Here in this case nothing found which shows that for this transaction the on-money transaction entered related to those transaction entered in books. As the assessment for the year under consideration is already not abated and in the absence of any evidence no addition can survive in the proceedings u/s. 153A of the Act. He relied upon the various case laws cited and produced in the paper book/written synopsis filed. He has emphasised that the legal issue is covered by the Hon’ble Supreme court decision, Hon’ble Rajasthan High Court and even this bench also in many cases held that in the absence of the incrementing material no addition can be made where the assessment is not abated. As regards the survey conducted the ld. AR of the assessee submitted that the address at which the same were carried out are not the address available on the ministry of corporate affairs (MCA) portal and that is why at the time of survey the said companies were not found at that old address. The ld. AR of the assessee drawn our attention to paper book page no. 248 to 250G, being the extract of company master data of all these companies as appearing. All these shows the questioned company are active and compliant company. As regards the decision cited by the ld. DR and relied upon in the appeal memo where the SLP is either dismissed or not decided and in the absence of the clear finding the jurisdiction High Court decision should prevail and requested to decide the issue based on the ratio of judgment in favour of the assessee. The judgement cited by the ld. DR are all of Hon’ble Kerala High Court whereas on this issue not only the Hon’ble Rajasthan High, Delhi, Bombay and Gujarat can be seen and that all the High Courts are in favour of the view taken by the ld. CIT(A). Thus, the decision of the Hon’ble Kerala High Court thus, cannot bind the assessee case.

28. Against the arguments of the ld. DR, ld. AR of the assessee further submitted that the assessee has not refrained the AO in the earlier proceedings to do the physical enquiry and in that enquiry conducted now no adverse material placed on record by the revenue. As the selection of the parties are made as per the will and wishes of the team and not in all cases. The same is also not at the correct address as per the MCA’s website. It is not duty of the assessee company to enforce the loan and share applicant company to change the address as per provision of section 139A(5)(d) to change the address on PAN data base. The law already takes care of such failure and on that the assessee should not be given any type of punishment. Not only that the transaction were done in 2011-2012 and physical enquiries were conducted in 2018 then over a period of time the company might have shifted their office and address. As regards the Swati Bajaj case is not related to the unsecured loan and share investment it is related to Bogus Long Term Capital gain scam. The fact of that case and this case are totally different. There is no admission either by the company nor the directors of the company about the transaction being not genuine not only that no material is found in the search action so as to create doubt on these transactions. Considering these set of facts not only the case is covered on technical ground but even on merits the department has no case against the assessee company. In summary the ld. AR submitted that in the absence of final finding on the SLP filed by the department before the Hon’ble Supreme Court so as to decide whether the statement of recorded is to be considered as incrementing material or not. In the absence of the any prevalent present finding the judicial decision prevalent as on today shall decide the issue. Presently the binding decision of jurisdictional and surrounding High Court decision should prevail and based on these set of arguments he submitted that the appeal of the revenue is not sustainable.

29. In the rejoinder the ld. DR submitted that the facts of the Rajasthan High Court judgment with that of this case is also differentiable. In this case the enquiry conducted shows that the companies are not in existence at the address. It is duty of the tax payer to update the address on PAN data base. There is sufficient investigation done at the time of the search and that can be considered as an incrementing material and thus, the addition made by the ld. AO be restored and thus, the jurisdiction high court decision differentiated.

30. We have considered the rival contentions, submissions and decisions relied upon by both the parties. Undisputedly, the assessment for assessment year 2012-13 was not pending on the date of search on 08.02.2018. The assessment was completed under section143(3) of the Income Tax Act, 1961. Thus, the assessment for the assessment year 2012-13 cannot be considered as abated by virtue of search conducted under section 132 on 08.02.2018. The assessing officer would reassess the total income of the assessee as per the provisions of section 153A in respect of assessment year 2012-13. As the assessee objected to the proposed addition on the ground that during the search no incriminating material indicating any undisclosed income for the year under consideration was found, which is also apparently clear from the assessment order itself. Further it was contended since there is no incriminating material found during the course of search and seizure action, therefore, the AO is not empowered to make any addition in the total income of the assessee. It is a settled position of law that there cannot be a review under the garb of reassessment proceeding under section 153A of the Act. Therefore, the proposed reassessment proceedings are absolutely in abuse of process of law, illegal and bad in law. The provisions of section 153A cannot be applied in respect of assessment which has already been completed unless some incriminating material/information comes into the possession/knowledge of the AO during the course of search proceedings. Since the assessment for the assessment year 2012-13 was not pending as on the date of search and there is no incriminating material found or seized during the course of search, then the AO is bound to reassess the total income as it was assessed on the original return of income. Though the AO is legally bound to assess or reassess the total income of six years immediately preceding to the year of search, however, the assessments which are pending on the date of search gets abated and the assessments which were not pending on the date of search had attained the finality. Therefore, the addition over and above the assessed income cannot be made de hors the incriminating material found at the time of search while completing the assessment under section 153A of the Act. If there is no incriminating material then the original assessment made can be reiterated and no further addition is called for and an addition can only be made on the basis of undisclosed income derived from material/documents seized as a result of search. The completed assessment can be interfered or disturbed by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search and requisition of income disclosing undisclosed income not already disclosed or made known in the course of original assessment. Therefore, in the absence of any incriminating material found or seized during the course of search and seizure proceedings, the additions made by the AO during the course of reassessment under section 153A of the Act are without jurisdiction and liable to be deleted. In support of his contention the Id. A/R has relied upon the decision of Hon’ble Delhi High Court in case of Kabul Chawla, 380 ITR 573 (Delhi) and submitted that Hon’ble High Court has held that in case of completed assessment not abated by virtue of search under section 132 of the Act in the absence of any incriminating material, the same can be reiterated and, therefore, no addition could have been made to the income already assessed. The Id. A/R has also relied upon the following decisions:

1. Principal CIT vs. Meeta Gutgutia (2017) 395 ITR 526 (Delhi) SLP filed before the Hon’ble Supreme Court was dismissed vide order dated 2nd July, 2018.

2. Jai Steel (India) vs. ACIT (2013) 219 Taxman 223 (Raj.)

3. Principal CIT Vs. Dipak Jashvantlal Panchal [2017] 397 ITR 153 (Guj.)

4. CIT Deepak Kumar Agarwal Ors. (2017) 158 DTR 100/ 251 Taxman 22 (Bom.)

5. CIT Gurinder Singh Bawa [2016] 386 ITR 483 (Bom.) (HC)

6. CIT VS. SKS Ispat Power Ltd. [2017] ITR 584 (Bom.) (HC)

7. DCIT Vs. Frost Falcon Distilleries Ltd. (2021) 207 DTR (Del.) (Trib.)

8. Jammu Metallic Oxides Private Limited Vs. DCIT 55 CCH 618(Jaipur)(Trib)

31. Thus, the ld. AR has submitted that the Hon’ble Jurisdictional High Court has held that the requirement of assessment or reassessment under section 153A has to be read in the context of section 132 or 132A of the IT Act, in as much as in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of concluded assessment does not arise, which would require mere reiteration and it is only in the context of abated assessment under second proviso which is required to be assessed. The underlined purpose of making assessment of total income under section 153A of the Act is, therefore, to assess income which was not disclosed or would not have been disclosed. The assessment or reassessment proceedings which have already been completed and assessment orders have been passed determining the assessee’s total income and, such orders are subsisting at the time when search or requisition is made, there is no question of any abated assessment since no proceedings were pending. Therefore, the addition to the income that has already been assessed will be made on the basis of incriminating material only. In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Thus the Id. AR submitted that the AO has made the addition in the assessment under section 153A whereby the completed assessment has been disturbed without even referring to any incriminating material found or seized during the course of search and seizure under section 132 of the Act. The only basis of addition is the inquiry made during course of the search of the parties with the whom the assessee has undertaken transaction were not found at the address and it has no connection with the search proceedings of the assessee. Therefore, in the absence of any incriminating material found or seized during the search of the assessee, no addition can be made in the assessment framed under section 153A of the Act.

32. Based on the arguments and the rival submissions as well as the relevant material on record it is not disputed that the assessment for the assessment year 2012-13 was not pending on the date of search on 08.02.2018. The assessment was completed under section 143(3) of the I.T. Act. Thus, the assessment for the assessment year 2012-13 was not got abated by virtue of search under section 132 on 08.02.2018. Thus, the AO would reassess the total income of the assessee as per the provisions of section 153A in respect of the assessment year 2012-13. The proceedings under section 153A in respect of the assessment year would be in the nature of reassessment and not in the nature of assessment. It is a settled proposition of law that the assessment or reassessment under section 153A in respect of the assessment years which have already been completed and assessment orders have been passed determining the assessee’s total income, the addition to the income that has already been assessed can be made only on the basis of incriminating material. In the absence of any incriminating material the completed assessment can only be reiterated. The provisions of section 132 read with section 153A of the Act stipulate two types of situations – one where the assessment of any assessment year falling within six assessment years is pending on the date of initiation of search under section 132 or making of requisition under section 132A of the Act. Therefore, the assessment under section 153A in respect of those assessment years which stand abated due to the reason of pending on the date of initiation of search or requisition shall be the original/first assessment. In the second category where the assessment or reassessment has already been completed on the date of initiation of search or making of requisition as the case may be, the assessment under section 153A would be in the nature of reassessment. The Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla while analyzing the provisions of section 153A read with section 132 of the Act has observed in para 37 and 38 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 six AYS immediately preceding the previous year relevant to the AY in which the search takes place.

 . Assessments and reassessments pending on the date of the search shall abate. The total income for such AYS will have to be computed by the AOS as a fresh exercise.

i. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the ‘total income’ of the aforementioned six years in separate assessment orders for each of the six years. I other words there will be only one assessment order in respect of each of the six AYS “in which both the disclosed and the undisclosed income would be brought to tax”.

ii. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.”

v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings.

vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one 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 153 A 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.”

33. Thus, the Hon’ble High Court has held that in the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The Hon’ble High Court has also referred the term used in section 153A as “assess” which is relatable to abated proceedings and the word “reassess” related to completed assessment proceedings. Therefore, the 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 document 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. The Hon’ble Delhi High Court has reiterated its view in case of Principal CIT vs. Kurele Paper Mills (supra) in para 1 to 3 as under :

“1. The Revenue has filed the appeal against an order dated 14.11.2014 passed by the Income Tax Appellate Tribunal (ITAT) in 3761/Del/2011 pertaining to the Assessment Year 2002-03. The question was whether the learned CIT (Appeals) had erred in law and on the facts in deleting the addition of Rs. 89 lacs made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 (‘ACT) on bogus share capital. But, the issae was whether there was any Incriminating material whatsoever found during the search to justify initiation of proceedings under Section 153A of the Act.

2. The Court finds that the order of the CIT(Appeals) reveals that there is a factual finding that “no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the AO.” Consequently, it was held that the AO was not justified in invoking Section 68 of the Act for the purposes of making additions on account of share capital.

3. As far as the above facts are concerned, there is nothing shown to the court to persuade and hold that the above factual determination is perverse. Consequently, after considering all the facts and circumstances of the case, the Court is of the opinion that no substantial question of law arises in the impugned order of the ITAT which requires examination.”

The SLP filed by the revenue against the said decision of Hon’ble Delhi High Court was dismissed by the Hon’ble Supreme Court vide order dated 7th December, 2015. In a subsequent decision, the Hon’ble Delhi High Court in the case of Principal CIT vs. Meeta Gutgutia has again analyzed this issue in para 55 to 71 as under :

“55. On the legal aspect of invocation of Section 153A in relation to AYS 2000 01 to 2003-04, the central plank of the Revenue’s submission is the decision of this Court in Smt. Dayawanti Gupta (supra). Before beginning to examine the said decision, it is necessary to revisit the legal landscape in light of the elaborate arguments advanced by the Revenue.

56. Section 153A of the Act is titled “Assessment in case of search or requisition”. It is connected to Section 132 which deals with ‘search and seizure’. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power which enables the Revenue to re open at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under Section 132 incriminating material justifying the re-opening of the assessments for six previous years is found that the invocation of Section 153A qua each of the AYS would be justified.

57. The question whether unearthing of incriminating material relating to any one of the AYS could justify the re-opening of the assessment for all the earlier AYS was considered both in Anil Kumar Bhatia (supra) and Chetan Das Lachman Das (supra). Incidentally, both these decisions were discussed threadbare in the decision of this Court in Kabul Chawla supra). As far as Anil Kumar Bhatia (supra) was concerned, the Court in paragraph 24 of that decision noted that “we are not concerned with a case where no incriminating material was found during the search conducted under Section 132 of the Act. We therefore express no opinion as to whether Section 153A can be invoked even under such situation”. That question was, therefore, left open. As far as Chetan Das Lachman Das (supra) is concerned, in para 11 of the decision it was observed:

“11. Section 153A (1) (b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or Information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.”

58. In Kabul Chawla (supra), the Court discussed the decision in Filatex India Ltd. (supra) as well as the above two decisions and observed as under:

“31. What distinguishes the decisions both in CITV. Chetan Das Lachman Das (supra), and Filatex India Ltd. v. CIT-IV (supra) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two. decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search.

32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating materia being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT (A), affirmed by the ITAT, deleting the addition, was not interfered with.”

59. In Kabul Chawla (supra), the Court referred to the decision of the Rajasthan High Court in Jai Steel (India) v. Asstt. CIT[2013] 36 taxmann.com 523/219 Taxman 223. The said part of the decision in Kabul Chawla (supra) in paras 33 and 34 reads as under:

’33. The decision of the Rajasthan High Court in Jai Steel (India), Jodhpurv. ACIT (supra) involved a case where certain books of accounts and other documents that had not been produced in the course of original assessment were found in the course of search. It was held where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration while computing the total income under Section 153A of the Act. The Court then explained as under:

“22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that:

(a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made;

(b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material; and

(c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made.”

34. The argument of the Revenue that the AO was free to disturb income de hors the incriminating material while making assessment under Section 153A of the Act was specifically rejected by the Court on the ground that it was “not borne out from the scheme of the said provision” which was in the context of search and/or requisition. The Court also explained the purport of the words “assess” and “reassess”, which have been found at more than one place in Section 153A of the Act as under:

“26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words ‘assess’ or ‘reassess’-have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents,”’

60. In Kabul Chawla (supra), the Court also took note of the decision of the Bombay High Court in CITV. Continental Warehousing Corpn (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78/232 Taxman 270/374 ITR 645 (Bom.) which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position was thereafter summarized in Kabul Chawla (supra) 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 six AYS immediately preceding the previous year relevant to the AY in which the search takes place.

ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYS will have to be computed by the AOS as a fresh exercise.

iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the ‘total income’ of the. aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYS “in which both the disclosed and the undisclosed income would be brought to tax”.

iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.”

v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings. ¥

vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one 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 153 A 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.”

61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla (supra) beginning with the Gujarat High Court in Saumya Construction (P.) Ltd. (supra). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of the Assessee of Rs. 14.5 crores against declared income of Rs. 3.44 crores. The ITAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYS under consideration i.e., AY 2006-07. The Gujarat High Court referred to the decision in Kabul Chawla (supra), of the Rajasthan High Court in Jai Steel (India) (supra) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 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 requisition. However, instead of the earlier regime of block assessment whereby, it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding.

16. Section 153A bears the heading “Assessment in case of search or requisition”. It is “well settled as held by the Supreme Court in a catena of decisions that the heading or the Section Can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round 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 czea 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 Jal 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 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.

** **

19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of an 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, 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) v. Asst. CIT (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 CITV. Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.’

62. Subsequently, in Devangi alias Rupa (supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Saumya Construction (P.) Ltd. (supra) and of this Court in Kabul Chawla supra). As far as Karnataka High Court is concerned, it has in 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 and seizure operation. The Calcutta High Court in Salasar Stock Broking Ltd. (supra), too, followed the decision of this Court in Kabul Chawla (supra). In Gurinder Singh Bawa(supra), the Bombay High Court held that:

“6. . . . . . once an assessment has attained finality for a particular year, i.e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under section 153A of the Act which are contrary to and/or not disclosed during the regular assessment proceedings.”

63. Even this Court has in Mahesh Kumar Gupta (supra) and Ram Avtar Verma (supra) followed the decision in Kabul Chawla (supra). The decision of this Court in Kurele Paper Mills (P.) Ltd. (supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue’s SLP on 7th December, 2015.

The decision in Dayawanti Gupta

64. That brings us to the decision in Smt. Dayawanti Gupta (supra). As rightly pointed out by Mr. Kaushik, learned counsel appearing for the Respondent, that there are several distinguishing features in that case which makes its ratio inapplicable to the facts of the present case. the first place, the Assessees there were engaged in the business of Pan Masala and Gutkha etc. The answers given to questions posed to the Assessee in the course of search and survey proceedings in that case bring out the points of distinction. In the first place, it was stated that the statement recorded was under Section 132(4) and not under Section 133A. It was a statement by the Assessee himself. In response to question no. 7 whether all the purchases made by the family firms, were entered in the regular books of account, the answer was:

“We and our family firms namely M/s. Assam Supari Traders and M/s. Balaji Perfumes generally try to record the transactions made in respect of purchase, manufacturing and sales in our regular books of accounts but it is also fact that some time due to some factors like inability of accountant, our busy schedule and some family problems, various purchases and sales of Supari, Gutka and other items dealt by our firms is not entered and shown in the regular books of accounts maintained by our firms.”

65. Therefore, there was a clear admission by the Assessees in Smt. Dayawanti Gupta (supra) there that they were not maintaining regular books of accounts and the transactions were not recorded therein.

66. Further, in answer to Question No. 11, the Assessee in Smt. Dayawanti Gupta (supra) was confronted with certain documents seized during the search. The answer was categorical and reads thus:

“Ans:- I hereby admit that these papers also contend details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside Books of accounts and these are actually unaccounted transactions made by our two firms namely M/s. Asom Trading and M/s. Balaji Perfumes.”

67. By contrast, there is no such statement in the present case which can be said to constitute an admission by the Assessee of a failure to record any transaction in the accounts of the Assessee for the AYS in question. On the contrary, the Assessee herein stated that, he is regularly maintaining the books of accounts. The disclosure made in the sum of Rs. 1.10 crores was only for the year of search and not for the earlier years. As already noticed, the books of accounts maintained by the Assessee in the present case have been accepted by the AO. In response to question No. 16 posed to Mr. Pawan Gadia, he stated that there was no possibility of manipulation of the accounts. In Smt. Dayawanti Gupta(supra), by contrast, there was a chart prepared confirming that there had been a year-wise non-recording of transactions.

In Smt. Dayawanti Gupta (supra), on the basis of material recovered during search, the additions which were made for all the years whereas additions in the present case were made by the AO only for AY 2004-05 and not any of the other years. Even the additions made for AYS 2004-05 were subsequently deleted by the CIT (A), which order was affirmed by the ITAT. Even the Revenue has challenged only two of such deletions in ITA No. 306/2017.

68. In para 23 of the decision in Smt. Dayawanti Gupta (supra), it was observed as under:

“23. This court is of opinion that the ITAT’s findings do not reveal any fundamental error, calling for correction. The inferences drawn in respect of undeclared income were premised on the materials found as well as the statements recorded by the assessees. These additions therefore were not baseless. Given that the assessing authorities in such cases have to draw inferences, because of the nature of the materials since they could be scanty (as one habitually concealing income or indulging in clandestine operations can hardly be expected to maintain meticulous books or records for long and in all probability be anxious to do away with such evidence at the shortest possibility) the element of guess work is to have some reasonable nexus with the statements recorded and documents seized. In tills case, the differences of opinion between the CIT (A) on the one hand and the AO and ITAT on the other cannot be the sole basis for disagreeing with what is essentially a factual surmise that is logical and plausible. These findings do not call for interference. The second question of law is answered again in favour of the revenue and against the assessee.”

69. What weighed with the Court in the above decision was the “habitual concealing of income and indulging in clandestine operations” and that a person indulging in such activities “can hardly be accepted to maintain meticulous books or records for long.” These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions of franchisee commission.

70. The above distinguishing factors in Smt. Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts.

71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYS 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYS.”

34. The Hon’ble Delhi High Court has concurred with the view as taken in case of Kabul Chawla (supra) as well as the decision of Hon’ble Jurisdictional High Court in the case of M/s. Jai Steel India Ltd. vs. ACIT (supra). Even on the issue of addition made by the AO in the proceedings under section 153A in respect of the assessment year which was already completed on the date of search, the Hon’ble High Court has held that in the absence of any material which was subsequently unearthed during the search and was not already available to the AO, the additions made by the AO on account of security deposits were rightly deleted by the Id. CIT (A). The relevant observations of the Hon’ble High Court in case of Principal CIT vs. Meeta Gutgutia (supra) are in para 53 as under :

“53. At this stage, it is also to be noticed that an elaborate argument was made by Mr. Manchanda on the aspect of the security deposits accepted by the Assessee. These were of two kinds one was of refundable security deposits and the other for non-refundable security deposits. As far as the refundable security deposits were concerned, the AO himself in his remand report accepted them as having been disclosed. This has been noticed by the CIT (A) in para 7.2.1 of his order for AY 2004-05. As regards non-refundable security deposit, the CIT (A) accepted the AO’s findings that treating the sum as ‘goodwill written off on deferred basis’ was not correct, hence the addition of Rs. 5,09,343 was held to be justified and correct. It was duly accounted for under ‘liabilities’ and transferred to income in a phased manner. This was not done by manipulating the account books of the Assessee as alleged by the Revenue. This would have been evident had the return been picked up for scrutiny under Section 143(3) of the Act. This, therefore, was not material which was subsequently unearthed during the search which was not already available to the AO. Consequently, the additions sought to be made by the AO on account of security deposits were rightly deleted by the CIT (A).”

35. Thus, the essential corollary of these decisions is that no addition can be made in the proceedings under section 153A in respect of the assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO. It is pertinent to note that the SLP filed by the revenue against the decision of Hon’ble Delhi High Court in case of Principal CIT vs. Meeta Gutgutia was dismissed vide order dated 2nd July, 2018. There are series of decisions on this issue including the decision of Hon’ble Jurisdictional High Court in case of M/s. Jal Steel India vs. ACIT (supra) wherein the Hon’ble High Court has held in para 23 to 30 as under :

“23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee.

The relevant extract of the said judgment reads as under:

“19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature this Section is that the Assessing Officer is empowered to assess or reassess the “total income” of the aforesaid years. This is significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the ‘total income’ of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax.

20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note to the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub-section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be.

21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub-section (1) of Section 153A says that such proceedings “shall abate”. The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the ‘total income’ of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition “shall abate”. Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of hose six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in case where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee’s total Income and such orders subsistig at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the tal income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made.” (Emphasis supplied)

24. The said judgment also in no uncertain terms holds that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken.

25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating. material, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act.

26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words ‘assess’ or ‘reassess’ have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word ‘assess’ has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents.

27. The Allahabad High Court in Smt. Shaila Agarwal’s (supra) has held as under:

“19. The second proviso to Section 153A of the Act, refers to abatement of the pending assessment or re-assessment proceedings. The word ‘pending’ does not operate any such interpretation, that wherever the appeal against such assessment or reassessment is pending, the same along with assessment or reassessment proceedings is liable to be abated. The principles of interpretation of taxing statutes do not permit the Court to interpret the Second Proviso to Section 153A in a manner that where the assessment or reassessment proceedings are complete, and the matter is pending in appeal in the Tribunal, the entire proceedings will abate.

20. There is another aspect to the matter, namely that the abatement of any proceedings has serious causes and effect in as much as the abatement of the proceedings, takes away all the consequences that arise thereafter. In the present case after deducting bogus gifts in the regular assessment proceedings, the proceedings for penalty were drawn under Section 271(1)(c) of the Act. The material found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty.” (Emphasis supplied)

The said judgment which essentially deals with second proviso to Section 153A of the Act also supports the conclusion, which we have reached hereinbefore.

28.It has been observed by the Hon’ble Supreme Court in K.P. Varghese v. ITO [1981] 131 ITR 597/7 Taxman 13 that “it is well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided.”

29.The argument of the counsel for the appellant if taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon’ble Supreme Court in the case of K.P. Varghese (supra).

30.Consequently, it is held that it is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under Section 153A of the Act in pursuance of search or requisition is required to be made.”

36. The addition made by the AO is neither based on any single loose paper found/seized nor any statement recorded during the course of search conducted in the case of the appellant which could be treated incriminating as is evident from the assessment order and the remand report of the AO. The Id. CIT (A) thus following the legal proposition on this issue, accepted the Contention of the assessee and allowed the appeal of the assessee. The relevant part of the finding of the Ld. CIT (A) are as under:

4.5 I have perused the written submissions filed by the ld. AR and the order of AO. I have also gone through the remand report dated 12.11.2021 of the AO & the rejoinder comments filed by the ld. AR dated 16.11.2021 on each of the issues raised by the appellant vide its grounds of appeal. I have also perused the supplementary remand report dated 25.11.2021 of the AO and the rejoinder comments dated 26.11.2021 of the ld. AR. I have also perused the case laws cited by the ld. AR. In view of the above, considering the remand report of the AO and the rejoinder comments of the appellant, the grounds of appeal raised by the appellant are adjudicated upon as under;

5. Ground No. 1 relates to an addition made by the AO on account of
alleged unexplained expenses without any incriminating material found in search for which assessment proceedings were not pending as on the date of search.

5.1 The submissions of the appellant as per the statement of facts enclosed with Form No. 35 and reiterated during the appellate proceedings are summarized as under:

Submission:

The original return of income for the relevant assessment year was filed on 30.09.2012. The original assessment u/s 143(3) for the relevant assessment year had already been completed on 25.03.2015 (PB 24­27). As on the date of search the assessment for AY 2012 13 was not pending. In search no incriminating material indicating any undisclosed income for the year under consideration was found. Both the additions made by the AO are based upon the financial statements of the assessee and other details already provided to him in the original assessment proceedings as is evident from the discussion made in ground no 2 & 3 below where AO raised specific queries to verify the share application money/unsecured loan raised during the year and after considering the details furnished and necessary verification made, the same was accepted. A perusal of the assessment order framed u/s153A clearly indicates that the AO has not referred to a single piece of evidence found during the search in making the additions.

It is a settled law that a completed assessment can be interfered by the AO only on the basis on incriminating evidence found during the search. The assessments u/s 153A are not fresh assessments since the purpose of making the reassessments under section 153A is subject to tax, hitherto undisclosed income unearthed during the course of the search. The second proviso to section 153A(1) provides only for the abatement of the pending assessments. Therefore, already completed assessments do not abate and they shall hold the field. It can be interfered by the AO while making the assessment u/s 153A only if some incriminating material is unearthed during the course of search or requisition of documents or undisclosed income or property is declared in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The issuance of notices under section 153A(1) for all the six assessment years does not entail altogether a fresh exercise of making a fresh assessment. Only in case of pending assessments, the jurisdiction to make original assessment and assessment u/s 153A merges into one. In case of completed assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. The heading of Section 153A is “Assessment in case of Search or Requisition”. The intention of legislature is clear that the assessment u/s 153A has to be in relation to the material found during the search. Thus, when no incriminating documents for the year under consideration were found, the addition made by the AO in assessment proceedings u/s 153A is illegal and bad in law. Reliance in this regard is placed on the following case laws:

PCIT vs. Meeta Gutgutia (2018) 257 Taxman 441 (SC)

Invocation of sec. 153A to reopen concluded assessments of AYS earlier to year of search was not justified in absence of incriminating material found during search qua each earlier assessment year. SLP filed against said decision dismissed.

Jai Steel (India) v. ACIT [Raj HC] (2013) 219 Taxman 223 (Raj)

“The requirement of assessment or reassessment under the said section has to be read in the context of s. 132 or s. 132A, in as much as in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. The underlying purpose of making assessment of total income under s. 153A is, therefore, to assess income which was not disclosed or would not have been disclosed. The purpose of second proviso is also very clear, in as much as once an assessment or reassessment is ‘pending’ on the date of initiation of search or requisition and in terms of s. 153A, a return is filed and the AO is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under s. 153A would be the assessment for the said year. The necessary corollary of the second proviso is that the assessment or reassessment proceedings, which have already been ‘completed’ and assessment orders have been passed determining the assessee’s total income and, such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. The argument raised by the counsel for the assessee to the effect that once notice under s. 153A is issued, the assessments for six years are at large both for the AO and assessee has no warrant in law. From a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under ss. 132 and 132A, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of second proviso to s. 153A, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment reassessment can be made.”

Principal CIT Vs. Dipak Jashvantial Panchal [2017] 397 ITR 153(Guj.) (HC)

It was held this case that from the heading section the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose the provision is make assessment in case goes without saying that the assessment has have relation the search or requisition. In other the assessment should connected something found during search or requisition, material which reveals undisclosed income. Thus, while mandate sub-section section 153A Act, every where there was a search requisition, AO 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.

CIT VS. Deepak Kumar Agarwal & Ors. (2017) 158 DTR 100/251 Taxman 22 (Bom.) (HC)

No addition could have been made while completing assessment u/s 153A in the case of completed assessment if no incriminating material is recovered and no undisclosed income was determinable from the material found as a result of search. Once there is no incriminating material in support of the addition is brought on record by the revenue, then no addition u/s 68 could be made. CIT Vs. Gurinder Singh Bawa [2016] 386 ITR 483 (Bom.) (HC) In this case the assessee’s return for the AY 2005-06 was processed u/s 143(1) of the Income-tax Act, 1961. A notice u/s 143(2) was not issued. A search was conducted u/s 132 and in proceedings u/s 153A,AO made additions for the assessment year in question of the sums declared as gifts by the assessee treating them as cash credits covered u/s 68 and a part of the loan received from a company in which the assessee was a shareholder as deemed dividend. The CIT(A) deleted the sum added as deemed dividend but upheld the addition in respect of the sum declared as gifts by the assessee. The assessee challenged the validity of the assessment made u/s 153A on the ground that no assessment in respect of the six assessment years was pending so as to have abated. The Tribunal accepted the assessee’s submission and held that no incriminating material having been found during the course of the search, the entire proceedings u/s 153A were without jurisdiction and therefore, the addition made had to be deleted. On appeal before the Bombay High Court, dismissing the appeal of the Income-tax Department, it was held that once an assessment was not pending but had attained finality for a particular year, it could not be subject to the proceedings u/s153A of the Act if no incriminating materials were found in the course of the search or during the proceedings u/s153A which were contrary to and were not disclosed during the regular assessment proceedings.

CIT VS. SKS Ispat and Power Ltd. [2017] 398 ITR 584 (Bom.) (HC)

The scope of assessment u/s 153A of the Act is limited to the incriminating evidence found during the search and no further M/s Rajasthan Fort & Palace Pvt. Ltd. vs. DCIT ITA No. 597 to 599/JP/2017 order dated 24.01.2018 (Jaipur) (Trib.)

In case of an unabated assessment u/s 153A, no addition in absence of any incriminating material emerging during course of search and seizure proceedings conducted u/s 132 can be made in the hands of assessee.

Jammu Metallic Oxides Pvt. Limited V. DCT 55 CCH 618 (JP-Trib) (PB 251-252)

Even if report of the investigation wing Kolkatta was considered as a relevant evidence, the same could not be regarded as incriminating material unearth during the course of search and seizure as no such material is found from the assessee and therefore addition made by the AO u/s 153A was not sustainable and liable to be deleted when the assessment was completed u/s 143(3) and was not pending as on the date of search.

CIT v. Kabul Chawla [Delhi HC] (2016) 380 ITR 573 (Del)

“Completed assessments can be interfered with by the AO while making the assessment under s. 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. The present appeals concern asst. yrs. 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.” The sole basis of the AO for making the addition u/s 153A is the survey carried out at the addresses of these companies on 10.02.2018 in consequence to the search of the assessee where these companies are stated to be not found existing. The detailed discussion on this issue is made in the subsequent ground. However, this observation of the AO would not constitute any incriminating material/ document found in search so as to confirm any jurisdiction to the AO to make addition u/s 153A. Therefore the additions made without reference to any incriminating material found in search is illegal and bad in law and the some be directed to be deleted.

5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:

(i) A search and seizure operation u/s 132 of the IT Act, 1961 was conducted at the business premises of the appellant on 08.02.2018. Various assets/books of accounts and documents were found and seized as per the annexures prepared during the course of Search. Subsequently notice u/s 153A was issued to the appellant for A.Y. 2012-13 to 2017-18 wherein the appellant was required to file returns for relevant assessment assessments were framed thereon. years. The appellant filed returns and assessment were framed thereon.

(ii) On appeal, the appellant contended that the case of the appellant for the year under consideration was completed u/s 143(3) of the Act on 25.03.2015. Thus, the assessment proceedings for AY 2012-13 were not pending on the date of search. In search no incriminating material indicating any undisclosed income for the year under consideration was found and as there was no seized material based on which assessment had been completed by the AO in its case, assessment SO framed by the AO u/s 153A of the Act is illegal and bad in law. In support of his contention, the appellant placed reliance on the decisions of various High Courts and also of the Hon’ble Supreme Court as mentioned in his submissions mentioned supra.

(iii) After careful consideration of the submissions of the appellant, it is observed that the sole basis of the addition made in the assessment framed u/s 153A of the Act is the survey conducted u/s 133A in case of certain Kolkata based companies from whom the appellant company has received the share application money as well as unsecured loans.

(iv) It is observed that during the year, the appellant has received share application money from 14 Kolkata based companies amounting to Rs. 6,49,50,000/-. However, as the share application money of Rs. 129.50 lacs was pending allotment and as the sum was not credited in the year under consideration, the A.O. added the amount of Rs. 5,20,00,000/­(6,49,50,000-1,29,50,000) unexplained as undisclosed sources u/s 68 of the Income tax Act, 1961.

(v) The fact remains that during the course of search proceedings in the case of the appellant, surveys were authorized at the given addresses of M/s Ritesh Properties Pvt. Ltd, Rites Real Estate Pvt. Ltd, Rupali Trade & Holding Pvt. Ltd, Surbhika Vyapaar Pvt. Ltd at 4, Synanogue Street, Kolkata as well as at the given addresses of Waltair Investment Pvt. Ltd, Axiom Commodities Pvt. Ltd and Extent Vinimay Pvt. Ltd at 63, Radha Bazaar Street, Kolkata from whom the appellant company had obtained share premiums. The survey teams did not find existence of any of these companies at the given addresses. In view of the above, the AO has held that these companies have provided accommodation entries of share application/premium thereon.

(vi) However, it is observed that out of the 14 companies as mentioned in the assessment order, surveys were conducted only on 7 companies to whom the shares have been allotted. It was alleged by the appellant that the survey was conducted at the wrong addresses of 6 companies out of the aforesaid 7 companies, though the correct name & addresses were available as per ROC Master Data and therefore the reliance placed by the AO on these erroneous surveys conducted to conclude that the 14 companies are non-existent is contrary to the record and therefore no reliance can be placed on these surveys and accordingly these aforesaid companies cannot be considered to be non-existent.

(vii) Further, the A.O. has made another addition of Rs. 5,95,00,000/-on account of unsecured loans u/s 68 of the Act. The assessee company had shown to have huge amounts of outstanding unsecured loans from, inter alia, M/s Axisline Commodities Pvt. Ltd, M/s Dishika Marketing Pvt. Ltd, M/s Pearl Tracom Pvt. Ltd, M/s Sarvayoni Vanijya Pvt. Ltd, M/s Vishveshwara Agencies Pvt. Ltd and M/s Snowblue Mercantile Pvt. Ltd. It is observed that during the search proceedings in the case of the appellant company, surveys were authorized on test check basis at the given addresses of M/s Pearl Tracom Pvt. Ltd, M/s Snowblue Merchantile Pvt. Ltd. and M/s Vishveshwara Agencies Pvt. Ltd. The survey teams did not find the existence of these companies at the given addresses. The AO has alleged that the companies are non-existent based on the surveys conducted on 10.02.2018. However the appellant has alleged that the surveys were conducted only on 3 companies out of 6 and even in case of the 3 companies it was conducted at the wrong address. Therefore such erroneous survey results cannot be made basis of holding that these companies are non-existent.

(viii) On the contrary, it is observed that the issue of share premium as well as unsecured loans received from the aforesaid companies were considered by the AO during the course of original assessment proceedings u/s 143(3) of the Act. It is observed that during the course of original assessment proceedings, the complete details of share capital such as copy of share application money account, confirmation from all the share allotties & unsecured loan creditors, bank statement of share holders etc. was produced before the AO which was examined and no adverse inference was drawn by the A.O. During the course of the assessment proceedings u/s 153A of the Act, the appellant had filed all the evidences justifying the receipt of share capital and unsecured loans. The share capital and loans have been received through banking channel and all the share holders and loan creditors are assessed to tax, confirmations been filed and the shares have been allotted to the share holders.

(ix) It is observed that while passing the assessment order u/s 143(3) of the Act, the AO has accepted the share premium and unsecured loans received by the appellant as genuine transactions. Thus once when the AO has accepted the transactions as genuine then in the proceedings u/s 153A of the Act, the same cannot be treated as bogus until there is any material or evidence to prove the contrary. It is observed that the appellant has produced all the relevant documentary evidences in support of the aforesaid transactions which remained uncontroverted by the AO during the assessment proceedings u/s 153A of the Act.

(x) There is no dispute that these transactions of share premium contribution and unsecured loans are duly recorded in the books of accounts and disclosed in the return of income, the original assessment u/s 143(3) of the Act being already completed and the assessment for the assessment year under consideration was not pending on the date of search, therefore, it is manifest from the record that during the course of search and seizure u/s 132 of the Act in the case of the assessee no material much less the incriminating material was unearthed or any undisclosed income which was not disclosed in the books of accounts was detected or found.

(xi) Therefore a remand report was called from the AO to produce the incriminating material/document to justify the addition. The AO in his remand report has submitted that the transactions of unsecured loan have been recorded in the seized document as per page nos. 1, 4, 7, 11, 13, 15, 18, 20, 21 of Annexure AS-27(Lal Bahi in name of NMAF Pannawali 2012-13). It is observed that these documents refer to the transaction of unsecured loans and they do not pertain to share premium received from alleged companies though the AO was specifically required to produce the incriminating document with reference to the unsecured loans and share premiums. Thus it is obvious that except the fact that the survey was carried out in the case of alleged companies which could not be executed, the AO has no other incriminating material to justify the addition so made by him. Infact no incriminating material was found or referred or is the basis of the addition made by the AO on account of share premium while framing the assessment u/s 153A of the Act for the year under consideration. The AO has solely relied upon the unexecuted survey u/s 133A of the Act and therefore even if the information/report of the Investigation Wing is considered as a relevant evidence, however in view of the above discussion that the surveys were not executed in respect of all the 14 companies for share premium and in the case of companies for unsecured loans and also the fact being that they were conducted on wrong addresses as discussed above, the same cannot be regarded as incriminating material unearthed during the course of search & seizure u/s 132(1) of the Act in the case of the appellant. The requirement for making the addition u/s 153A of the Act the AYrs where the assessment was not pending on the date of search and the proceedings are in the nature of re-assessment is essentially the incriminating material disclosing undisclosed income which was not disclosed by the assessee. In the case hand, the AO himself has not claimed any incriminating material found during the search & seizure operation in the case of the appellant in respect of the aforesaid share premium received by the appellant company Further in respect of the unsecured loan, the AO vide his remand report has only referred to Annexure AS-27 as mentioned supra which is nothing but the index of the ledger account maintained by the appellant. Further the A.O. in his supplementary remand report has referred to Ann.AS-24. On perusal of the above, it is observed that it a ledger account of various Pvt. Ltd. Companies from which the appellant has obtained unsecured loans.

Moreover, these ledger accounts pertain to FY 2012-13 i.e. for the AY 2013-14 and not to the year under consideration. Furthermore, these cannot be considered incriminating as they are part of books of accounts.

(xii) In view of the above discussion, I find that the AO was not in possession of any documentary evidence or even statement of the person who have allegedly provided the accommodation entries to the appellant. On the contrary, the fact remains that the issue of share premium and unsecured loans was elaborately examined by the AO in the original assessment proceedings, in the case of the appellant for the year under consideration for which no adverse inference was drawn by the AO.

( ) In search assessment, any undisclosed income, which can ultimately be added, is only to the extent of any unrecorded assets/material found or any incriminating document found as representing undisclosed income earned. Further, the facts of the present case remains that there is no incriminating evidence related to addition made by the AO found during the course of search as is manifest from the order of the AO as well as both the remand reports furnished by the A.O. during the course of appellate proceedings. The issue of assessment or reassessment u/s 153A in respect of the assessment year which has already been completed and the issue of addition to the income that has already been assessed can be made only on the basis of incriminating material, has been examined in detail by the various High Courts including the jurisdictional High Court in case of Jai Steel (India) Ltd. Vs. ACIT (88 DTR 1). The relevant part of the decision of the Rajasthan High Court in Jai Steel (India) Ltd. Jodhpur vs. ACIT (Supra) is reproduced herein as under:

“22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that:

(a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made;

(b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material; and

(c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made.”

(xiv) Similar view is expressed by Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla 380 (Delhi HC). The Hon’ble High Court, while analyzing the provisions of section 153A read with section 132 of the Act has observed in para 37 and 38 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 six AYS immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYS will have to be computed by the AOs as a fresh exercise.

iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the ‘total income’ of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYS “in which both the disclosed and the undisclosed income would be brought to tax”.

iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this Section only on the basis of seized material.”

 . In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings.

i. Insofar pending assessments are concerned, the jurisdiction to make original assessment and assessment under section 153A merges into one. Only one 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 the AO while making the assessment under section 153A only on the basis of the of some incriminating material unearthed during course search or requisition of documents or undisclosed income property discovered in the course of search which not produced or already disclosed made known the course of original assessment.”

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.”

Thus, the Hon’ble High Court has held that in the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The Hon’ble High Court has also referred the term used in section 153A as “assess” which is relatable to abated proceedings and the word “reassess” related to completed assessment proceedings. Therefore, the 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 document 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. Infact the SLP filed against the said order has also been dismissed by the Hon’ble Supreme Court vide order dated 07.12.2015.

(XV) In Kabul Chawla (supra), the Court also took note of the decision of the Bombay High Court in CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78/232 Taxman 270/374 ITR 645 (Bom.) which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment u/s 153A and 153C of the Act.

It was held that once an assessment has attained finality for a particular year, i.e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under section 153A of the Act which are contrary to and/or not disclosed during the regular assessment proceedings.”

(xvi) Recently Hon’ble Supreme Court vide order dated 02-07-2018 in Meeta Gutgutia Vs. Pr CIT (96 Taxmann.com 468) have held that Invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year. The head note of the judgment is as under:

Section 153A of the Income-tax Act, 1961 Search and seizure (General principles) . Assessment years 2001-02 to 2003-04 and 2004-05 – High Court in Impugned order held that invocation of section 153A to re­open concluded assessments of assessment years earlier to year of search was not justified in absence of Incriminating material found during search qua each such earlier assessment year – Whether SLP against said decision was to be dismissed – Held, yes [Para 2] [In favour of assessee]

(xvi) Further, similar view is also taken in the following judgments, including by Hon’ble ITAT Jaipur, in many cases:

• • • Prateek Kothari Vs. ACIT (312/Jaipur/2015.
    • PCIT vs. Meeta Gutgutia 152 DTR 153 Vijay Kumar D Agarwal V/s DCIT in IT(SSJA Nos 153, 154, 155 & 156/Ahd/2012
    • Ratan Kumar Sharma vs. DCIT ITA 797 & 798 /Jaipur/2014
    • Vikram Goyal vs. DCIT ITA 174/Jaipur/2017 etc.
    • Jadau Jewellers & Manufacturer PL Vs. ACIT (686/ Jaipur/2014)

(xviii) Thus, the essential corollary of these decisions and also the decision relied upon by the appellant is that no addition can be made in the proceedings under section 153A in respect of the assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO.

(i) The present appeal concerns AY 2012-13. On the date of the search, the said assessment already stood completed as discussed supra and the additions made by the AO u/s 143(3) r.w.s. 153A on account of share premiums and unsecured loans are without any reference to the seized material. Since no proceedings under the Income Tax Act were pending for AY 2012-13 as on the date of search, and accordingly scope of examination of issues in the assessment u/s 153A was required to be restricted to the incriminating material, if any, found as a result of search. It is observed that the addition is neither based on any single loose paper found/seized nor on any statement recorded during the course of search conducted in the case of the appellant as is evident from the order of the AO. Therefore, in view of the aforesaid discussion and respectfully following the binding decision of the Hon’ble Jurisdictional High Court, decision of various other High Courts and the decision of Hon’ble Supreme Court as discussed supra, it is observed that the aforesaid addition made by the AO u/s 143(3) r.w.s. 153A for the year under consideration is legally not tenable and hence is not liable to be sustained. Accordingly, the Ground of Appeal No. 1 is treated as allowed.

37. Therefore, in the assessment order there is no mention, reference or finding that the additions have been made by the AO on the basis of any incriminating material found during the course of search and seizure in the case of the assessee. The ld. DR has also relied upon the decision in the case of CIT vs. St Francis Clay Décor Tiles [ 2016] 70 taxmann.com 234 (Kerala) wherein it was held that AO has power to reassess the return of the assessee only from the undisclosed income declared in the statement during the course of search and where no undisclosed income is found then the AO cannot made any reassessment and in this case of hand the fact is that the assessee or its representatives have not disclosed any income in the statement. Thus, this judgment cited by ld. DR is also of no help. The DR has also relied upon the decision of Hon’ble Kerala High Court in the case of E.N. Gopalkumar vs. CIT (Central) (2016) 75 taxmann.com 215 (Ker.). In this regard we are of the view that when the Hon’ble Jurisdictional High Court decision is available in favour of the assessee, then in that eventuality the decision of Hon’ble Kerala High Court is not applicable in the case of the assessee. However, as per the facts of the present case, the assessment for A.Y. 2012 13 was not an abated assessment and in absence of any incriminating material, no addition can be made. The ld. DR also cited that in the case of CIT Vs. MGF Automobiles the SLP filed by the department has been admitted. Therefore, considering these facts the appeal should be heard on merits. The judgement cited and relied by the ld. DR are all of Hon’ble Kerala High Court whereas on this issue not only the Hon’ble Rajasthan High, Delhi, Bombay and Gujarat can be seen and that all the High Courts are in favour of the view taken by the ld. CIT(A). Thus, the decision of the Hon’ble Kerala High Court thus cannot bind the assessee. The ld. DR has also relied upon the judgments which cited in these written submissions are also considered by us but at the same time are not applicable to the facts and circumstances of the present case. The ld. DR has specifically argued that even if no incriminating material unearthed during the search, yet while granting the relief to the assessee, the ld. CIT (A) has failed to take note of the fact that the SLP filed by the Department in the case of PCIT vs. Gahoi Foods Pvt. Ltd. 117 Taxmann.com 118 (SC) and in case of PCIT vs. Dhananjay * international Ltd. (2020) 114 Taxmann.com 351 (SC) are pending before the Hon’ble Supreme Court and has already been admitted.

38. On this issue we also have persuaded the judgment of the Hon’ble Supreme Cout in the case of Commissioner of Income-tax-III, Pune v. Sinhgad Technical Education Society 84 taxmann.com 290 (SC) and the relied upon comments of the apex court is reiterated here in below to which clearly holds and confirm the view of the Jurisdictional High Court and the view of this tribunal

18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred.

19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy.

39. In this regard, we are of the view that no final orders have been passed so far by the Hon’ble Supreme Court in the judgments cited by the Id. DR. Therefore, the principle of ” ratio descendi ” are not applicable with regard to the aforementioned cases. Therefore, we are of the view that in the absence of any order by Hon’ble Supreme Court, the decision of Hon’ble Jurisdictional High Court in the case of Jai Steel Ltd. vs. ACIT, 88 DTR 1 (Raj.), PCIT vs. Smt. Daksha Jain, DB IT No. 125/2017 are binding on us. Further, we are also fortified with the decision in the case of CIT vs. Continental Warehousing Corporation (2015) 64 taxmann.com 34 (SC), PCIT vs. Devi Dass Garg (2020) 114 taxmann.com. 552 (SC). Accordingly, in the facts and circumstances of the case and in view of the binding precedents on this issue and SLP filed by the revenue is not decided by Hon’ble Supreme Court. We based on the binding nature of judgment hold that the additions made by the AO while passing the assessment order under section 153A for the assessment year 2012-13 are not sustainable. We found force in the arguments of the ld. AR of the assessee and also convince with the findings of the ld. CIT(A) who has after considering the facts on record taken a considered view that the looking to the facts of the case on technical ground, he has considered the appeal of the assessee and before giving his findings he has called for the remand report also and the equal chance were given to revenue place their case. The ld. DR appearing on the behalf of the revenue has merely relied on the investigation done at the time of search simultaneous survey conducted in the investor company. In all these processes we have not seen any reasons as to why and how the order of the ld. CIT(A) is not correct. There is no admission of either party of any undisclosed income. As the ld. CIT(A) has after considering the details arguments of both the parties clearly taken a view that there is no incrementing material, no addition can be made for the assessment which are already completed after making the proper enquiries by the AO, and those assessment cannot be allowed to again reframed merely based on the search and that too without any fresh evidence. Merely the surveys conducted parties are not available after 8 years it is not the fault of the assessee and without any fresh material unearthed during search no fresh addition can be made on the issue which are already settled. Even, the ld. CIT(A) has based on the arguments of the assessee followed the jurisdictional High Court decision and Tribunals orders and even this co-ordinate bench decision is also binding on us in the absence of any contrary judgement.

40. In terms of these observations appeal of the revenue is dismissed on technical ground and the same is not required to be adjudicated on merits.

41. In the result the appeal of the revenue is dismissed.

Order pronounced in the open Court on 24/08/2022.