M/S. BAJRANGBALI STEEL INDUSTRIES PVT. LTD,ROURKLA vs. ACIT, CENTRAL CIRCLE, SAMBALPUR

As the facts in all these appeals are identical, they are being disposed off by this consolidated order.

Shri S.K.Tulsyan, Advocate with Shri B.K.Tibrewal, and Ms. Nisha Rachh, CAs represented on behalf of the assessee. Shri M.K.Gautam, Pr.CIT appeared on behalf of the revenue.

It was fairly agreed by both the sides that the issues in all these appeals relate to only three following issues :- i) Estimation of the profit in respect of ‘unproved purchases’ @10% by the ld. CIT(A); ii) Estimation of the profit in respect of ‘unproved sales’ @5% by the ld. CIT(A); and iii) Addition representing cash credits being loans received by the respective assessees from various entities.

It was submitted by the ld. AR that there was a search on the premises of the assessees on 20.02.2020. it was the submission that as a consequence of search, notices u/s.153A of the Act came to be issued on the assessees. Returns were filed in response to the notice issued u/s.153A of the assessee, however, nor return has been filed in response to the notice issued u/s.153A of the Act for the assessment year 2014- 3 IT(SS)A No.31-44/CTK/2022 & 2015 in the case of Bajrangbali Re-rollers Pvt. Ltd. It was the submission that the assessment came to be completed u/s.153A r.w.s.143 of the Act on 30.09.2021. In the course of assessment the AO treated the purchases from various persons as unexplained expenditure. It was the submission that the AO in his assessment order mentions that in the course of survey conducted u/s.133A of the Act as also while conducting the post search enquiry, it was confirmed that the concerns from which the purchases have been made were paper concerns and that the concerns were providing bogus purchases, invoices on commission basis. It was the submission that consequently the AO had treated the alleged bogus purchases as unexplained expenditure u/s.69C of the Act and had made an addition thereafter. It was the further submission that on similar lines sales to certain concerns were also treated as unexplained cash credits and additions had been made on such sales. It was the further submission that on the basis of information received from DDIT(Inv.), Unit- 2(2), Kolkata, the transaction of loans received by the assessee from various financial companies were treated as the unexplained cash credits in the hands of the assessee by invoking the provisions of Section 69 of the Act and additions were made thereafter. It was the submission that all the purchases and the sales were by cheques, supported by invoices and entered in the stock register. The ld. AR specifically submitted that for none of the years was any defect in the stock register found or pointed out. It was also submitted that in the course of search, the tally software data was also found and no variation from the actual invoices and sales 4 IT(SS)A No.31-44/CTK/2022 & bills with the information in the tally data was found. It was the submission that as per the provisions of Section 292C of the Act, the books of accounts as found in the course of search is to be deemed to be true. The ld. AR placed reliance on the decision of the Hon‟ble Supreme Court in Review petition rendered in Civil Appeal No.9604 to 9605 of 2008 in the case of Odeon Builders Pvt. Ltd. dated 21.08.2019, wherein it has been held as follows :- IN THE SUPREME COURT OF INDIA INHERENT JURISDICTION REVIEW PETITION (C) DIARY NO. 22394 OF 2019 IN CIVIL APPEAL NOS. 9604-9605 OF 2018 Commissioner of Income Tax-7, … Petitioner New Delhi Versus M/s Odeon Builders Pvt. Ltd. … Respondent O R D E R Delay condoned. We have perused the review petition and find that the tax effect in this case is above Rs.1 crore, that is, Rs.6,59,27,298/-. Ordinarily, therefore, we would have recalled our order dated 17th September, 2018, since the order was passed only on the basis that the tax effect in this case is less than Rs.1 crore. However, on going through the judgments of the CIT, ITAT and the High Court, we find that on merits a disallowance of Rs.19,39,60,866/- was based solely on third party information, which was not subjected to any further scrutiny. Thus, the CIT (Appeals) allowed the appeal of the assessee stating: “Thus, the entire disallowance in this case is based on third party information gathered by the Investigation Wing of the Department, which have not been independently subjected to further verification by the AO who has not provided the copy of such statements to the appellant, thus denying opportunity of cross examination to the appellant, who has prima facie discharged the initial burden of substantiating the purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and the fact of payment through cheques, & VAT Registration of the sellers & their Income Tax Return. In view of the above discussion in totality, the purchases made by the appellant from M/s Padmesh Realtors Pvt. Ltd. is found to be acceptable and the consequent disallowance resulting 5 IT(SS)A No.31-44/CTK/2022 & Rs.19,39,60,866/-, is directed to be deleted.” The ITAT by its judgment dated 16th May, 2014 relied on the selfsame reasoning and dismissed the appeal of the revenue. Likewise, the High Court by the impugned judgment dated 5th July, 2017, affirmed the judgments of the CIT and ITAT as concurrent factual findings, which have not been shown to be perverse and, therefore, dismissed the appeal stating that no substantial question of law arises from the impugned order of the ITAT. In these circumstances, the Review Petitions are dismissed. ……………………J. (R.F. Nariman) ……………………J. (Indu Malhotra) New Delhi; August 21, 2019

Ld. AR also relied upon the decision of the Hon‟ble Delhi High Court in the case of Agson Global (P.) Ltd. Vs. ACIT, reported in [2022] 134 taxmann.com 256 (Delhi), wherein it has been held that when the entire purchases and sales transactions were duly recorded in the regular books of accounts of all the parties concerns and were routed through regular banking channels and the absence of any incriminating evidence found, no addition was called for. The ld. AR also drew our attention to the order of the ld. CIT(A) to submit that remand report had been called for from the AO and the same has been extracted by the ld. CIT(A) in his order. It was the submission that in the remand proceedings, the AO submits that there is credible information from the DGCE, Rourkela available wherein it is mentioned that most of the companies with whom the assessee had made transaction, had issued fake invoices. It was submitted that there is no proceedings of DGCE against the assessee and if such information was as mentioned by the AO was available, nothing stopped the DGCE 6 IT(SS)A No.31-44/CTK/2022 & from initiating proceedings against the assessee which has not been done. Ld. AR further drew our attention to Section 142(2) of the Act, which is extracted hereinbelow :- 142. (2) For the purpose of obtaining full information in respect of the income or loss of any person, the [Assessing] Officer may make such inquiry as he considers necessary.

It was the submission that Shri Amit Kumar Agrawal is a director in M/s Bajrangbali Steels Industries Pvt. Ltd. and in response to all the questions asked regarding the loose sheets found, he has submitted that he does not remember. It was the submission that these incriminating materials had been found in the course of search and consequently the initiation of the proceedings u/s.153A of the Act was valid. It was the submission that the supporting documents such as the invoices etc. in respect of the seized materials had not been found in the course of search. It was the submission that on the basis of the information 16 IT(SS)A No.31-44/CTK/2022 & DGCE the company from whom the assessee has made purchases were bogus companies and many of the companies to whom the assessee had made sales were also bogus companies. It is the transaction in respect of the such bogus companies only which the AO has treated as unexplained expenditure in respect of the purchases and unexplained cash credit in respect of the sales. The ld. Pr.CIT(OSD) further drew our attention to the decision of the Hon‟ble Gujarat High Court in the case of Smt. P. Sheth, reported in 356 ITR 451 (Gujarat). It was the submission that the ld. CIT(A) has extracted the relevant portion of the said citations in his order to estimate the profit @10% of the unproved purchases and @5% of the unproved sales. It was the submission that if at all the assessee desired to cross examine such evidence, the assessee ought to have asked for the evidences and opportunities. It was the submission that this has not been done. It was the submission that non granting of the evidence to the assessee should not annul the assessment but in the worst case the issues could be restored to the file of the AO with granting the assessee adequate opportunities. He relied on the decision of the Hon‟ble Supreme Court in the case of Pirai Choodi, reported in [2012] 20 taxmann.com 733 (SC), wherein the Hon‟ble Supreme Court has held that assessment order passed without granting an opportunity to the assessee to cross-examine, should not have been set aside by the High Court but the High Court should have directed the AO to grant the assessee an opportunity to cross-examine the concerned witnesses. To similar effect, ld.

Ld. Pr.CIT(OSD) has also filed his written submissions as follows :- Bee Pee Rollers (P.) Ltd. in IT(SS)A No.31 to 33/CTK/2022 for AY 2016-17 to AY 2018-19 Bajrangbali Steel Industries Pvt. Ltd. in IT(SS) A No.34 to 39/CTK/2022 for AY 2014-15 to AY 2018-19 & AY 2019-20 and in for AY 2020-21 Bajrangbali Re-Rollers Pvt. Ltd. in IT (SS) A NoAO to 44/CTK/2022 for AY 2014-15 to 2018-19 and ITA No.110/CTK/2022 for AY 2020 - 21 At the outset, the Id. AR of the assessee company never sought an opportunity to cross-examine the suppliers/creditors. Hence it was a failure on the part of the assessee company that it did not seek an opportunity to cross-examine the suppliers/creditors. Moreover the assessment can't be cancelled merely on this ground. Even in the Decision of Hon'ble Supreme Court in the case of CCE vs. Andaman Timbers Industries (127 DTR 241), the Hon'ble Apex Court held in para-G as under: "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority, though the statements of those witnesses were made the basis of the impugned order, is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea was not even 18 IT(SS)A No.31-44/CTK/2022 & Adjudicating Authority. As far as the Tribunal was concerned, rejection of this plea was totally untenable. The Tribunal had simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellants themselves to explain as to why their ex- factory prices remained static. It was not for the Tribunal to have guesswork for what purposes the appellant wanted to cross- examine those dealers and what extraction the appellant wanted from them.

As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price-list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price- list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to pre-suppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions." ii.) Adverse evidence and material, relied upon in the order, to reach the finality, should be disclosed to the assessee. But this rule is not applicable where the material or evidence used is of Collusive Nature. The Hon'ble Allahabad High Court held in the case of Digvijay Chemicals Ltd. vs. ACIT (248 ITR 381) that it is not necessary that there must be always a cross- examination of a witness before discarding its evidence. iii.) Reliance is also placed on the decision of Hon'ble Kolkata High Court in the case of Hindustan Tobacco Company (27 taxmann.com 155) and Hon'ble Patna High Court in the case of Dr. Gauri Shankar Prasad (88 taxmann.com 700). iv.) The Hon'ble Kolkata High Court in the case of Swati Bajaj & others in lA No.GA/2/2022 & In ITAT/6/2022 dated 14.06.2022 has held as under: "59. We are conscious of the fact that there may be exceptions however nothing has been brought before us to show that there was an exception in any of these appeals heard by us. In a few cases the assessee has been made known of the statement of the Director of the penny stock company or the stock broker, entry operator despite which those assessees could not make any headway. While on this issue, we need to consider as to whether 19 IT(SS)A No.31-44/CTK/2022 & and under what circumstances the right of cross examination can be demanded as a vested right. In Kishanlal Agarwalla, the Hon'ble Division Bench of this Court pointed out that no natural justice requires that there should be a kind of formal cross examination as it is a procedural justice, governed by the rules and regulations. Further it was held that so long as the party charged has a fair and reasonable opportunity would receive, comment and criticize the evidence, statements or records on which the charges is being against him, the demand and tests of natural justice are satisfied.

In Bakshi Ghulam Mohammad AIR (1967) SC 122, the Hon'ble Supreme Court held that the right of hearing cannot include the right of cross examination and the right must depend upon the circumstances of each case and must also depend on the statute under which the allegations are being enquired into." v.) Without prejudice to the above, reliance is placed on the decision of the Hon'ble Supreme Court in the case of ITO vs. M. Pirai Choodi (63 DTR 187) wherein in the absence of an opportunity to cross-examine the witness, the matter was restored to the A.O. The Hon'ble Delhi High Court in the case of CIT vs. P C Chemicals (27 taxmann.com 9) held that where assessment was reopened and additions under section 69A were made without providing statements and materials, on basis of which such additions were made, to assessee, matter should be remitted back without quashing said order. The Hon'ble Madras High Court in the case of Vetrivel Minerals vs. ACIT (129 taxmann.com 126) held where assessment orders passed in case of assessee under section 153A were passed in gross violation of principles of natural justice as copies of all materials seized which were used for framing assessment had not been supplied to assessee, no opportunity for cross- examination had been provided and even section 65B of Evidence At had not been complied with before admitting electronic evidence, matter was to remanded back to Assessing Officer for adjudication afresh.

It was the submission that admittedly, the revenue has not filed any appeal against the order of the ld. CIT(A) deleting the addition per se. It was the submission that the ld. CIT(A) having estimated the income of the assessee by estimating the profits on the unproved purchases and unproved sales, the same is liable to be upheld.

We have considered the rival submissions. The fact in the present case, was that there was a search on the group of the assesses. The 20 IT(SS)A No.31-44/CTK/2022 & search resulted in certain documents being found. No evidence whatsoever has been found in the course of search to show that the assessee has done any act of concealment of his income. All that has been done is the AO has completed the assessment by placing the reliance on the appraisal report prepared by the Investigation Wing and by relying upon the information alleged to have been received from the Investigation Wing of the department from Kolkata and information received from the DGCE, Rourkela. Unfortunately, the appraisal report has not been placed before us but a perusal of the remand report as extracted by the ld. CIT(A) shows that the ld. AO in the remand proceedings has extracted from the appraisal report, and a reading of that remand report shows that no categorical evidence has been relied upon by the Investigation Wing in preparing the appraisal report. A perusal of the statements of Shri Santosh Kumar Pattnaik shows that he is the accountant of M/s Bajarangbali Re-rollers Pvt. Ltd. Conveniently he has been questioned on documents relating to M/s Bajrangbali Steel Industries Pvt. Ltd. On what basis he should be able to answer these questions is not coming out of the statements nor from the appraisal report, nor from the assessment order, much less the statement before us. Coming to the statement of Mr. Amit Agrawal, who is claimed to be the Director of M/s Bajrangbali Steel Industries Pvt. Ltd. What is his responsibilities is not coming out of the statement. The statement also does not refer to him as a director of M/s Bajrangbali Steel Industries Pvt. Ltd. Nothing comes out of the appraisal report or from the order of the AO 21 IT(SS)A No.31-44/CTK/2022 & nor has any evidence been produced wherein he has been asked to examine and verify what is being placed before him to elicit the facts. Another peculiarity is that even in the remand report, which is shown at page 282 of the paper book the AO agrees that the assessee had filed datewise purchase details, stock register, purchase register, sales register, copy of invoices, copy of accompanying weigh bills, to substantiate his claim. The Assessing Officer has also mentioned in his remand report that test check has been done and the documents clearly showed the Truck Nos. and other details and also showed that goods were transported from the site of the parties. The search nor the post search enquiry showed that any of the purchase bills or the sales bill contained any over invoicing or any under invoicing. The search did not yield any evidence to show that there was variation in the stock register.

Though the AO relies upon the information received from the Investigation Wing, Kolkata and the information from the DGIE, Rourkela, the details of such information is not forthcoming much less is the letter date or No. have been provided either in the assessment order or the remand report much less the appraisal report. If one is to see the standard procedure of information transmitted from one officer to another officer or from superior officers to subordinate staff or from one department to another department, there is always a requirement at the end that the concerned officer do necessary investigation and verification and draw the appropriate conclusion. This is why the provisions of section 142(2) are important and assessment is not to be done on the 22 IT(SS)A No.31-44/CTK/2022 & basis of information. Information is only a starting point of investigation. It is incumbent upon the Assessing officer as the assessing authority has to do independent examination of the information. Unfortunately, this independent examination is conspicuous by its absence in the present case. It is only if there is any independent investigation or examination done by the AO u/s.142(2), which could be put to the assessee for cross examination as required u/s.142(3) of the Act. Information received by the AO cannot be put to the assessee for cross examination, as it is not any evidence found in the course of action u/s.142(2) of the Act. In the present case, as it is noticed that there is no evidence to prove the alleged unproved purchases or unproved sales and as there is no evidence in any manner found in the course of search or post search enquiry or in the course of assessment proceedings to show that the sellers and buyers were bogus, no addition on account of said unproved purchases or unproved sales can be made in the hands of the assessee. This view also supports from the fact that in the statement recorded, which has been extracted above, various registers and facts have been brought to question such entries in the registers and such invoices have not been shown to be not recorded in the regular books of account of the assessee and there is neither any allegation that the books of account were produced subsequent to search whereas it is an admitted fact that the regular books of account were found on tally in the course of search.

Coming to the action of the ld CIT(A) in estimating 10% of the alleged unproved purchase and 5% of the alleged unproved sales, as we 23 IT(SS)A No.31-44/CTK/2022 & have categorically held that the addition per se of alleged unproved purchases and unproved sales cannot be made in the hands of the assessee, the question of estimation of the profit on the same no more survive. Even otherwise, the ld CIT(A) in his wisdom having rejected the books of account, could have at best estimated the income of the assessee for the whole year, he could not estimate the profit merely on the alleged undisclosed sales or unproved purchases. In these circumstances, this issue is decided in favour of the assessee and the addition as confirmed by the ld CIT(A) in respect of 10% profit estimated on the „unproved purchases‟ and 5% profit on the „unproved sales‟ stands deleted.

In respect of cash creditors, which have been added, it was the submission by ld AR that the assessee neither in the course of search nor in the post search enquiry has any evidence been found to show that the financial companies with whom the assessee had dealt with were bogus. It was the submission that in respect of loan creditors also, no examination has been done by the Assessing Officer or the investigation wing. It was the submission that nothing has been put to the assessee either to question the loan creditors. It was the submission that the evidence in respect of loan creditors as available with the assessee had been produced before the AO. It was the submission that in the absence of any incriminating evidence in respect of loan creditors, just on the basis of presumption, the same cannot be disbelieved. It was the submission that though the AO refers to information having been received from the 24 IT(SS)A No.31-44/CTK/2022 & Investigation Wing of the Department of Kolkata, no statement recorded from any of the said loan creditors, claiming that the transaction with the assessee is bogus has also been found nor recorded. It was the submission that interest was being paid on the loans, TDS was being deducted, returns were filed by the loan creditors and even today, the same continues. It was the submission that the loan creditors also have PAN No., which are still existing and it no more lies in the mouth of the revenue to turn around and say that the transaction is bogus especially when nothing has been done by the revenue to even question those loan creditors. It was the submission that the addition as made by the AO and confirmed by the ld CIT(A) is liable to be deleted.

In reply, ld Pr. CIT (OSD) submitted that in the case of Bajarangbali Steel Industries Pvt Ltd., for the assessment year 2019-20 in IT)SS) No.40/CTK/2022, Shri Dilip Das, Director of Arnav Financial Services Private Limited has categorically admitted that Arnav Financial Services Private Limited is a Shell company and that the transaction is not genuine. To this, ld AR submitted that Shri Dilip Das is not the Director of Arnav Financial Services Private Limited. It was also the submission that the statement of Shri Dilip Das has not been given to the assessee for cross examination and he has no objection if the issue is restored to the file of the Assessing Officer so that the Assessing Officer can provide the assessee an opportunity to cross examine Shri Dilip Das. In respect of assessment year 2020-2021, it was submitted by ld Pr. CIT (OSD) that in the case of Bajrangbali Steel Industries Pvt Ltd., in IT(ss) A 25 IT(SS)A No.31-44/CTK/2022 & No.109/CTK/2022 in respect of Arnav Financial Services Private Limited and Avighna Vyapar Pvt Ltd., though Shri Satyendra Kumar Thakur has confirmed the transaction, the field enquiry showed that both the companies are Shell companies.

In reply, ld AR submitted that the transaction having been accepted by Shri Satyendra Kumar Thakur, who is the Director in both the companies, the responsibility on the part of the assessee stands discharged.

Ld Pr. CIT(OSD) has filed written submission as follows: Bee Pee Rollers (P.) Ltd. in IT(SS)A No.31 to 33/CTK/2022 for AY 2016-17 to AY 2018-19 Bajrangbali Steel Industries Pvt. Ltd. in IT(SS) A No.34 to 39/CTK/2022 for AY 2014-15 to AY 2018-19 & AY 2019-20 and in for AY 2020-21 Bajrangbali Re-Rollers Pvt. Ltd. in IT (SS) A No.40 to 44/CTK/2022 for AY 2014-15 to 2018-19 and ITA NO.110/CTK/2022 for AY 2020- 21 It has been argued in the first ground of appeal that no incriminating documents were found and seized in course of search in the present case and therefore the A.O. could not have disturbed the completed assessments. It must be appreciated here that that word "incriminating" has not been used in the in Section 153A of the Act. Hence same can't be imported into it. Section 153A (which is similarly worded to section 158BC of the Act), provides that where the A.O. is satisfied that any money, bullion, jewellery or other valuable article or thing or any books of account or documents seized or requisitioned, he shall proceed against such person and issue such person a notice and assess or reassess undisclosed income of such other person. However, there is a distinction between the two provisions inasmuch as under section 158BC notice can be issued only where the money, bullion, jewellery or other valuable article or thing or any books of account or documents seized or requisitioned belong to such person, whereas under Section 158BC if the Assessing Officer is satisfied that any undisclosed income belongs to any person, in respect of whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he shall proceed to 'determine undisclosed income of such other person. Hence the Legislature has purposely used the words 'total income' instead of the term 'undisclosed income'.

Section 153A is a provision which deals with assessment in case of search or requisition. The activation of a search is not something which is regulated by any limit as to period of time. Even if returns are filed and regular assessments are concluded, search on 27 IT(SS)A No.31-44/CTK/2022 & premises could always be made, if the authority concerned is satisfied that action ought to proceed in that line. Once that is done, Section 153A(l)(a) authorises the issuance of notice calling for filing of returns. This has been noted even under the point decided above. Once a return is filed in answer to such a notice, the Explanation to Section 153A provides, among other things, that all provisions of the Income Tax Act will apply to the assessment made under Section 153A of the Act. This is the manner in which the provisions in Sections 153A, 153B and 153C of the Act would regulate. Once that is done, it is well within the jurisdiction of the assessing authority to proceed with any lawful modes of assessment as prescribed in the Act. The Statute nowhere makes it conditional that the department has to unearth some incriminating material to conclude some method against the assessee in events where the assessment is triggered by a notice under Section 153A(l)(a) of the Act. This means that even when such notice is triggered following a search, the assessment proceedings can be concluded in any manner known to law, including under Section 143(3) or even Section 144 of the Act, if need be. Therefore, the assessment proceedings generated by the issuance of a notice under Section 153A (l)(a) of the Act can be concluded against the interest of the assessee including making additions even without any incriminating material being available against the assessee in the search under Section 132 of the Act on the basis of which the notice was issued under Section 153A(l)(a) of the Act. We answer this issue accordingly.

In the case in hand, the assessing authority had, upon receipt of the returns in answer to the notice under Section 153A(l)(a) of the Act, given an opportunity to the assessee to interact with the officer and thereafter he was required to place a cash flow statement. All that followed thereafter is the assessing authority carrying out an exercise of acting on the cash flow statement and concluding the assessment by determining the amounts on a meaningful and appropriate application of the cash flow statement by rearranging the entries thereof. That activity carried out by the assessing authority, though to a larger extent, was found against by the CIT (Appeals), has found disapproval at the hands of the Tribunal which is the last fact finding authority. We see that the decision of the Appellate Tribunal cannot be critisised as unreasonable, perverse or unavailable on the face of record. Resultantly, these appeals fail". It may please be noted that the Hon'ble Kerala High Court has duly noted the contrary decision of Hon'ble Delhi High Court in the case of Kabul Chawla (380 ITR 573), and Kurele Paper Mills (P.) Ltd. (38Q ITR 571) and Hon'ble Mumbai High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (374 ITR 645) while holding the decision in favour of Revenue. ii.) The Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora (52 taxmann.com 172) held that the Assessing Officer has power to reassess returns of assessee not only for undisclosed 28 IT(SS)A No.31-44/CTK/2022 & income found during search operation but also with regard to material available at time of original assessment. The observations of Hon'ble High Court in para-ll are reproduced as under: "10. Under the block assessment proceeding under Chapter XIV-B only the undisclosed income found during the search and seizure operation were required to be assessed and the regular assessment proceedings were preserved. The introduction of Section 153A of the Act provides a departure from this proceeding. Under Section 153A of the Act, the Assessing Officer has been given the power to assess or reassess the total income of the assessment years in question in separate assessment orders. Consequently, there would be only one assessment order in respect of six assessment years in which total disclosed or undisclosed income would be brought to tax. Consequently, even though an assessment order has been passed under Section 143(1) (a) or under Section 143(3) of the Act, the Assessing Officer would be required to reopen these proceedings and reassess the total income taking notice of undisclosed income even found during the search and seizure operation. The fetter imposed upon the Assessing Officer under Sections 147 and 148 of the Act have been removed by the non obstante clause under Section 15 3A of the Act. Consequently, we are of the opinion that in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed, which were subsisting when the search was made, the Assessing Officer would be competent to reopen the assessment proceeding already made and determine the total income of the assessee. The Assessing Officer, while exercising the power under Section 153A of the Act, would make assessment and compute the total income of the assessee including the undisclosed income, notwithstanding the assessee had filed the return before the date of search which stood processed under Section 143(l)(a) of the Act.

However, we find that the Tribunal without appreciating the facts and circumstances has proceeded purely on the basis that the cases at hand were covered under the Special Bench decision in All Cargo Logistics Ltd. (supra). In our view the course adopted by the Tribunal was not the proper one to decide the question with regard to the sustainability of the order passed by the First Appellate Authority. Therefore, we are of the considered opinion that the Tribunal has not adopted the right method to decide the issue with regard to the question framed in these appeals and therefore, it is only necessary to remand the matter to the Tribunal for fresh consideration." iv.) The Hon'ble Delhi High Court in the case of Filatex India Ltd. vs. CIT (49 taxmann.com 465) held that during assessment under section 153A, additions need not be restricted or limited to incriminating material, found during course of search. The observations of the Hon'ble High Court in para-2 are reproduced as under:

If there is power to do something under the Act, the action taken in the fiscal matters cannot be set aside in exercise of the writ jurisdiction on the ground that such power is to be exercised needlessly, without any purpose. The exercise of power in such case can only be challenged, if the power is being exercised with ulterior motive and mala fide intentions. It is not open for the petitioner to contend before the writ court that the exercise of power, which admittedly exists in the authority, will expose the petitioner to assessment for the same period on which assessing authority has already recorded satisfaction". vi.) Reliance is also placed on the decision of Hon'ble Delhi High Court in the case of CIT vs. Chetan Das Lachmandas (25 taxmann.com 227) wherein it was held that there is no condition in section 153A that additions should strictly be made on basis of evidence found in course of search or other post-search material or information available with Assessing Officer which can be related to evidence found. It was further held that seized material could also be relied upon to draw inference that there were similar transactions throughout period of six years covered by section 153A of the Act. vii.) It was held by the Hon'ble Delhi High Court in the case of Smt. Dayawanti vs. CIT (75 taxmann.com 308) that where inferences drawn in respect of undeclared income of assessee were premised on materials found as well as statements recorded by assessee's son in course of search operations and assessee had not been able to show as to how estimation made by Assessing Officer was arbitrary or unreasonable, additions so made by Assessing Officer by rejecting books of account was justified. The observations of the Hon'ble Delhi High Court in para-20 are reproduced as under: "

The lynchpin of the assessee's submissions on this aspect is also that the statements were not recorded during the search but later and that they cannot be considered of any value. This court is un-persuaded with the submission. The search was conducted on 22.03.2006. Various materials: documents, agreements, invoices and statements in the form of accounts and calculations were seized. On 18th April, 2006 and 3rd May 2006, the assessee's sons (including one of the appellant's, Abhay Gupta) recorded statements under oath; the assessee too made her statement under oath, admitting that though returns were filed ostensibly on her behalf, she was not in control of the business. She and all other family members made short statements and endorsed the statements under oath, of those who elaborated the trading and business operations relating to clandestine income. These statements under oath were part of the record and continued to be so. They were never explained in any reasonable manner. Their probative value is undeniable; the occasion for making them arose because of the search and seizure that occurred and the seizure of 32 IT(SS)A No.31-44/CTK/2022 & various documents, etc. that pointed to undeclared income. In these circumstances, the assessee's argument that they could not be acted upon or given any weight is insubstantial and meritless. This court also notices that the decision in Anil Kumar Bhatia case (supra) which held that such statements are relevant, though noticed, has not been doubted in any later decision, including Kabul Chawla, which is the mainstay of the assessee's case. Consequently the first question of law is answered against the assessee and in the revenue's favour". The observations of Hon'ble Delhi High Court in para-L? are reproduced as under: "From a perusal of the aforesaid statement on 18.04.2006, it is manifest that it was not a case of mere surrender as claimed by the Id. counsel. On the contrary we find in Pg 60 & 61, Annexure 'A'3 and Pg 1 to 29 of AnnexureA-2 were found and seized from the assessee. Once confronted with the aforesaid seized documents, it was admitted by Shri Abhay Gupta that the proprietorship concern of the assessee was engaged in unaccounted cash sales and purchases and therefore there was undisclosed income. Thus the necessary logical fall out of the aforesaid is that there was material found as a result of search on the assessee, showing unaccounted transactions. In our opinion. even the statement obtained whereby. the additional income of Rs.3.5 crores was offered also constitutes material unearthed during search. The Id. counsel however has submitted that the said statement was not of the assessee, and was that of the son of the assessee. This argument too does not come to the rescue of the assessee, because the assessee also has signed the said statement as no. 2 above; and it has been stated very clearly in the statement of Shri Abhay Gupta to question No. 2 (supra) that he has made the statement on behalf of others u/s, 132(4) of the Act including the assessee. Moreover the aforesaid statement dated 18.04.2006 was followed by another statement on 03.05.2006, where too Shri Abhay Gupta represented himself as the authorized representative of the proprietorship concern of the assessee and sister concern Balajee Perfumes. In the said statement too the surrender was reiterated. The aforesaid surrender no doubt was not acted upon by the assessee, but the said fact cannot lead us from the irresistible conclusion that incriminating material was unearthed during search. No material has been placed before us to negate the aforesaid factual aspect as well as to support the claims of AR that the admission before the Revenue was not valid and hit by duress and coercion. Before we conclude this issue, we consider it appropriate to note that the Id. AR, had also stated that no material Per-se was found pertaining to the year under consideration. However, this argument also does not hold any water because once Section 153A is triggered on account of unearthing of incriminating material during search, the AO is empowered to compute the total income for six assessment year prior to the year of search. There are no fetters or limitation under the statute, so as to curtail the jurisdiction of the AO. We derive 33 IT(SS)A No.31-44/CTK/2022 & High court in the case of CIT vs. Anil Bhatia (352 ITR 493) (Delhi HC)". viii.) Even the Hon'ble Delhi High Court in the case of Kabul Chawla (380 ITR 573) has explained the legal position in para-3 7 as under: "On a conspectus of Section 153A(I) 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(l) will have to be mandatorily issued to the person searched requiring him to file returns for six AY s 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 AY s "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 AD 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.

Coming to the loan creditors in respect of other appeals for assessment years from 2014-15 to 2018-19, admittedly, there is no evidence available with the Revenue in the form of any statement recorded from any of the Directors to controvert the evidence in the form of income tax returns filed, confirmation letters filed, deduction of TDS on the interest paid and the interest income offered by such loan creditors for the relevant assessment years, consequently the additions are unsustainable and the same stand deleted.

In the result, appeals of the assessee in IT(SS)A No.31 to 33/CTK/2022 for the assessment years 2016-17 to 2018-19 in the case of M/s. Bee Pee Rollers Pvt Ltd., in IT(SS)A No.34 to 38/CTK/2022 for the assessment years 2014-15 to 2018-19 in the case of Bajarangabali Steel Industries Pvt Ltd., and IT(SS)A No.40 to 44 for the assessment years 2014-15 to 2018-19 in the case of M/s. Bajrangbali Re-Rollers Pvt Ltd., stands allowed. And in the case of Bajarangbali Steel Industries Pvt Ltd., for the assessment year 2020-2021 stands allowed and IT(SS)A No.39/CTK/2022 for the assessment year 2019-20 in the case of Bajarangbali Steel Industries Pvt Ltd., stands partly allowed. Order dictated and pronounced in the open court on 28/03/2023. Sd/- Sd/- (अरुण खोड़पऩया) (जाजज माथन) (ARUN KHODPIA) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 28/03/2023 Prakash Kumar Mishra, Sr.P.S.