SHORYA TRADING COMPANY PVT LTD,KARNAL vs. ACIT,CENTRAL CIRCLE, KARNAL

PER AVDHESH KUMAR MISHRA, AM Common facts and similar grounds arise in the above captioned appeals of the assessee; therefore, these appeals were heard together and are being disposed off by this common order. 2. The substantive core issue raised in these appeals are that whether the assessments completed under section 143(3) rws 153A(1)(b) of the Income Tax Act, 1961 (‘Act’) without initiating search under section 132(1) of the Act and in absence of any seized material are legally valid. Besides the ITA No.814 & 815/Del/2025 Shorya Trading Company P. ltd.

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merit of addition, the assessee has also raised issues of non-quoting of DIN on the body of the orders and validity of approval under section 153D of the Act in both appeals.
3. The relevant facts giving rise to these appeals are that the appellant assessee, engaged in consultancy, investments in shares, etc., filed its original Income Tax Returns (‘ITR’) of the respective years within the time specified under section 139 of the Act. Oswal Group of cases of Karnal, was searched, on 22.01.2018, under section 132(1) of the Act. The assessee belongs to the Oswal Group of cases of Karnal. As per the assessment orders, the assessee was not found in existence during the course of search operations carried out under section 132(1) of the Act at any premises;
House No. 871, Sector-13, Karnal, House No. 836, Sector-13, Karnal and House No. C-5/2A, Rana Pratap Bagh, Opposite CC Colony, New Delhi though the assessee used to file its ITRs showing its address as House No.
C-5/2A, Rana Pratap Bagh, Opposite CC Colony, New Delhi. Therefore, the statement of the owner of the said property was recorded, which specifically admitted that the assessee was neither in possession of the said property ever nor it had done any business from the said premises. Further, the owner of the said property admitted that he had never heard the name of the assessee. Later, the Assessing Officer (‘AO’) initiated assessment proceedings under section 153A of the Act and completed consequential assessments by making additions of Rs.50,00,000/- and Rs.81,00,000/- in the returned

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income of AYs 2014-15 and 2015-16 respectively. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who dismissed both appeals. Hence, these appeals preferred by the assessee are before us.
4. At the outset, the Ld. Counsel submitted that the search was never initiated on the assessee as evident from the report of the Assessing Officer
(‘AO’) and Panchnama in the said case. Hence, proceedings initiated under section 153A of the Act, in these cases, were not justified. Accordingly, he prayed for quashing the impugned orders. In support of his contention, the Ld. Counsel placed reliance on the decision of the Tribunal in the assessee’s own case in ITA No. 1365/Del/2022 in AY 2017-18, wherein it had been held that the search under section 132(1) of the Act was not imitated on the assessee as there was no panchnama drawn in this regard. Hence, notice issued under section 153A of the Act was quashed. The Ld. Counsel drew our attention to the relevant part of the order as under:
“6. We have heard the rival submissions and perused the material available on record. In the instant case it was claimed by the assessee that no search was taken place u/s 132 in its case and its name was not appearing in any of the Panchnama drawn as a result of search carried out by the department in entire group on 22.1.2018. In order to verify the claim of the assessee this bench vide order sheet entry dt.
27.9.2023 has directed the ld. DR to call for report from the AO as to whether search was conducted on assessee and if search was conducted a copy of search warrant in the name of the assessee be produced before the bench. During the course of hearing the ld. CIT DR has filed a report from the AO i.e. DCIT, Central Circle, Karnal Shorya
Trading Company Pvt. Ltd. vs. ACIT wherein it is categorically admitted by the AO that no panchnama is available in folder containing the name of the assessee. It is also stated by the AO that no paper was found and ITA No.814 & 815/Del/2025
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seized wherein name of assessee / relation to the assessee has been found. The relevant report dt. 12.6.24 submitted by AO is as under:

To Dated 12.06.2024
The Commissioner of Income Tax (DR)
G-Bench, ITAT, New Delhi
Sub: Appeal filed by the assessee in the case of M/s Shorya Trading
Company Pvt. Ltd. vide ITA No. 1365/Del/2022 for AY 2017-18 (PAN:
AAKCS0778A)-Regarding-
Kindly refer to your e-mail dated 24.05.2024 vide which certain documents in respect of subject mentioned assessee has been required by your goodself.
2. In this regard, requisite information/documents as per following details are enclosed herewith for your kind consideration.
i Copy of panchnama drawan on 22.01.2018 in the H.No. 871, Sector-
13, Karnal ii As per panchnama folder handed over to this office by the DDIT(Inv.), there is no such panchnama wherein name of assessee M/s
Shorya Trading Company Pvt. Ltd. is mentioned. iii During the course of search at House No. 871, Sector-13, Karnal various loose papers were found and seized by the Department. On examination of these documents, no such document wherein name of assessee/relation to the assessee has been found.
Encl. As above.
Yours faithfully,
(DR.
AMAN
BISHLA)
Deputy Commissioner of Income Tax Central Circle,
Karnal.
7. First we must refer the provisions as contained in section 153A(1) of the Act which is as follows:

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………
As per above, notice u/s 153A of the Act can be issued only in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A of the Act. Admittedly in the case of the assessee neither of any such action was carried out thus the notice issued u/s 153A dt.
23.01.2019 is without juri iction and is bad in law. In view of these facts and after considering the report of the AO, we find that no search warrant was issued in the name of the assessee thus no proceedings u/s 153A of the Act could be initiate in the case of the assessee accordingly the notice issued us 153A is hereby quashed.”
5. The Ld. CIT-DR argued the case vehemently and defended the impugned order.
6. We have heard both parties at length and have perused material available on the record. Generally, panchanama was drawn at the end of search proceedings under section 132(1) of the Act. However, it can be drawn in between also in case of any specified action; for e.g. under section 132(3) of the Act. But we are of the considered view that Panchnama is not the sole conclusive proof for initiation of search proceedings under section 132 of the Act as it cannot be ruled out that (i) there is no error in panchnama and (ii) panchanama has not been drawn due to any unforeseen reason even after initiation of search proceedings under section 132 of the Act. However, the Ld. CIT-DR, even after the finding of the coordinate bench in the assessee’s own case in ITA No. 1365/Del/2022 in AY 2017-18 (order dated 21.02.2025) that no search under section 132 of the Act taken place on the assessee, has failed to bring any material on the record to controvert the finding of the ITA No.814 & 815/Del/2025
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Tribunal in ITA No. 1365/Del/2022 by demonstrating that the search has been initiated on the assessee under section 132 of the Act.
7. The only requirement for initiation of proceedings under section 153A of the Act is either initiation of search under section 132 of the Act or requisition under section 132A of the Act and definitely it is not the conclusion of the search with panchnama drawn. Here, the Revenue has failed to conclusively prove that the search has been initiated on the assessee under section 132 of the Act. It is a case of absence of evidence and not evidence of absence. It means that just because something hasn't been proven to exist, it doesn't automatically mean it doesn't exist. However, when the Ld. CIT-DR has not only failed to contradict submission of the Ld.
Counsel that the assessee has not been subjected to the search under section 132 of the Act but also failed to conclusively prove/establish/
demonstrate that the search under section 132 of the Act has been initiated on the assessee, we respectfully following the finding of the Tribunal in the assessee’s own case in ITA No. 1365/Del/2022 in AY 2017-18 (order dated
21.02.2025), hold that assessments completed under section 153A of the Act are not justified; hence both assessments are hereby quashed accordingly.
8. Other grounds raised in these appeals of the assessee, in view of the above finding, become academic. Hence, such grounds are not being adjudicated here.

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9. In the result, both appeals of the assessee are allowed as above.
Order pronounced in open Court on 31st July, 2025 (SATBEER SINGH GODARA) (AVDHESH KUMAR MISHRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated:22/10/2025
Binita, Sr. PS