DCIT, CENTRAL CIRCLE 3.2, KOLKATA vs. SHIVAM IRON AND STEEL COMPANY LIMITED, KOLKATA

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ITSSA 48/KOL/2026Status: HeardITAT Kolkata01 September 2026AY 2015-20165 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(A) and dismissed the appeals of the Revenue. The Tribunal noted that the search was conducted on 17.07.2019, and for AY 2015-16, the assessment was unabated as the time to issue a notice under Section 143(2) had expired. It is settled law that in an unabated assessment, the AO's jurisdiction to make additions is limited to incriminating materials seized during the search. As no incriminating seized materials were found in this case, the AO lacked jurisdiction to make the addition of share capital money. The Tribunal followed the decision of the Hon'ble Supreme Court in PCIT, Central – 3 vs. Abhisar Buildwell Pvt. Ltd. (2023) 149 taxmann.com 399 (SC), which held that in the absence of any incriminating seized material, the AO has no jurisdiction to make an addition in an unabated assessment year. The issue in AY 2017-18 was substantially similar, and the same reasoning applied. Therefore, both appeals were dismissed.

What were the facts?

The Revenue has filed two appeals against the orders of the CIT(A) for Assessment Years (AY) 2015-16 and 2017-18, which were filed with a delay of 87 and 97 days respectively. The Tribunal condoned the delay. For AY 2015-16, the Revenue's sole issue is the deletion of an addition of Rs. 2,50,00,000/- made by the Assessing Officer (AO) under Section 68 of the Income-tax Act, 1961, on account of bogus share application funds. A search and seizure operation was conducted on the BABA Group on 17.07.2019. The assessee filed its return for AY 2015-16 on 15.09.2015. A notice under Section 153A was issued on 28.06.2021, and the assessee filed a return on 13.06.2021. The AO noted that the assessee received share application money from shell companies lacking creditworthiness and whose directors were linked to entry operators. Physical verification of addresses also failed. The AO added the amount, which the CIT(A) deleted, holding that no incriminating documents were seized during the search and the assessment was unabated, thus the AO lacked jurisdiction.

What were the issues?

1. Whether, in an unabated assessment year, the Assessing Officer has jurisdiction to make an addition on account of share application money when no incriminating documents or materials were seized during a search operation, as per Section 153A of the Income-tax Act, 1961? Assessee's Contention: The learned Authorized Representative relied on the CIT(A)'s order, arguing that since no incriminating materials were found during the search, the AO lacked jurisdiction to make the addition for share application/premium. The CIT(A) rightly allowed the appeal. Revenue's Contention: The learned Departmental Representative relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 68,Section 153A,Section 143(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA

Before: SHRI RAJESH KUMAR & SHRI PRADIP KUMAR CHOUBEY

For Appellant: Shri Sanat Kumar Raha, CIT-DR
For Respondent: Shri Robin Maheshwari, FCA
Hearing: 15.07.2026Pronounced: 01.09.2026

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.(SS)A. Nos.48 & 49/KOL/2026 Assessment Years: (2015-16& 2017-18) DCIT, Shivam Iron and Steel Company Central Circle – 3(2), Vs. Limited, 9th Floor, East India House, 20B, Kolkata Abdul Hamid Street, Kolkata – 700069, West Bengal [PAN: AAECS1926J] (Appellant) .. (Respondent) Appellant by : Shri Sanat Kumar Raha, CIT-DR Respondent by: Shri Robin Maheshwari, FCA Date of Hearing 15.07.2026 Date of Pronouncement 01.09.2026

O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

These two appeals preferred by the revenue are against the orders of the learned Commissioner of Income Tax (Appeals), Kolkata-21 (hereinafter referred to as the “ld. CIT(A)”],dated17.09.2025 for the Assessment Years(AY) 2015-16 and 2017-18 respectively.

2.

Both the appeals in IT(SS)A Nos.48 & 49/Kol/2026 are barred by 87 and 97 days respectively. The revenue has filed condonation of delay letters, explaining the delay in filing appeals. We find that the reasons explained by the revenue in both appeals are reasonable and bonafide. Therefore, we find

ITA Nos.48 &49/Kol/2026/AY 2015-16& 2017-18 DCIT vs. Shivam Iron & Steel Company Ltd. the reasons to be bonafide and genuine. Accordingly, the delay in filing both the appeals are hereby condoned and appeals are admitted for adjudication.

IT(SS)A No.48/Kol/2026 (A.Y. 2015-16): 3. The only issue raised by the revenue is against the deletion of addition of Rs.2,50,00,000/- as made by the Assessing Officer (In short, ‘the AO’) u/s 68 of the Income-tax Act, 1961 (In short, ‘the Act’) on account of bogus share application funds from various companies. 4. The facts of the case in brief are that a search and seizure operation was conducted at the residential and office premises of BABA Group of cases on 17.07.2019. The assessee filed its original return of income on 15.09.2015, declaring total income at Rs. Nil. Consequent to search and seizure operation, notice u/s 153A of the Act was issued on 28.06.2021, which was complied with by filing return of income on 13.06.2021, declaring total income of Rs.9,23,53,319/-. Thereafter, notices u/s 143(2) and 142(1) of the Act along with questionnaire were issued, which were duly complied by assessee by filing details/evidences before the AO qua the subscribers. During the assessment proceedings, the AO noted that assessee received share application money from multiple shell companies and laundered its undisclosed/unaccounted income. Accordingly, the AO observed that these allotee companies didn’t have creditworthiness to purchase share subscription. These allottee companies have no/miniscule or meagre turnover and their tax liability is negligible. The AO also noted that Directors/past directors of these allottees companies were appearing in the Department Database of shell companies which were managed and controlled by Kolkata based entry operators. The AO also noted that inspector was deputed to

ITA Nos.48 &49/Kol/2026/AY 2015-16& 2017-18 DCIT vs. Shivam Iron & Steel Company Ltd. conduct physical verification the existence of the registered addresses of the subscribers, however, all were not found on the said given addresses. The AO, finally issued show cause considering the said facts as to why the money received by assessee by way of share application should not be added which was duly replied by assessee. Thereafter, AO added the said amount of ₹ 2,50,00,000/- to the income of the assessee in the assessment framed u/s 153A/143(3), dated 30.09.2021.

5.

Aggrieved, the assessee preferred appeal before the ld. CIT(A) and ld. CIT(A) allowed the appeal of the assessee by holding that no incriminating documents/materials were seized during the search relating to said addition made by AO and therefore the addition made is bad in law and not sustainable. The ld. CIT(A) referred to the assessment order while passing the appellate order and observed that in the assessment order, the AO has not referred to any incriminating seized documents or materials during the search. The ld. CIT(A) mentioned the relevant part on punchnama of the said search from pages 38 to 43 and recorded a finding that on a careful perusal of the above panchnamas it has been gathered that documents with identification marks SISCL/1 to SISCL/6, SISCL/HD/1, AHS/1, AHS/HD/1 & AHS/HD/2 were seized during search and seizure operation and there was no mention of the said share application money received by assessee in the said documents. The ld. CIT(A) noted that since the assessment is unabated on the date of search and no incriminating materials/documents were seized during the search and therefore the AO has no jurisdiction to make addition of the said capital share money. The ld. CIT(A), after following the decision of Hon'ble Supreme Court in case of PCIT, Central – 3 vs. Abhisar Buildwell Pvt. Ltd., (2023) 149 taxmann.com 399 (SC) deleted the addition.

ITA Nos.48 &49/Kol/2026/AY 2015-16& 2017-18 DCIT vs. Shivam Iron & Steel Company Ltd. 6. The learned Authorized Representative (ld. AR) relied heavily on the order of ld. CIT(A) by submitting that ld. CIT(A) has passed very reasoned and speaking order discussing the facts that no incriminating materials was seized or found during the search and therefore, the AO has no jurisdiction to make addition except only on the basis of seized material but in the present case there was no incriminating documents or materials, therefore, the AO have no authority to make the addition in respect of share application/share premium and ld. CIT(A) rightly allowed the appeal. The ld. DR on the other hand relied on the orders of authorities below.

7.

After hearing the rival submissions and perusing the materials available on record, we find that a search was conducted u/s 132 of the Act on 17.07.2019 at the various business premises and residential premises of Baba Group. The impugned assessment year is A.Y. 2015-16. We note that on date of search, there was no pending assessment proceedings and the time available to issue notice u/s 143(2) of the Act has also expired. Thus the impugned assessment was unabated on the date of search. It is a settled law that in the unabated assessment, the AO has jurisdiction to make addition only on the basis of incriminating materials seized and found during the search. Since in the present case, no incriminating seized materials was there ,therefore, the AO did not have any jurisdiction to make addition in respect of share capital money. We note that ld. CIT(A) followed the decision of Hon'ble Apex Court in the case of Abhisar Buildwell Pvt. Ltd. (supra), wherein the Hon'ble Court has laid down the ratio that in absence of any incriminating seized material, the AO has no jurisdiction to make addition in an unabated assessment year. Considering these facts and ratio laid down by the Hon'ble

ITA Nos.48 &49/Kol/2026/AY 2015-16& 2017-18 DCIT vs. Shivam Iron & Steel Company Ltd. Apex Court, we are inclined to uphold that ld. CIT(A) by dismissing the appeal of the revenue.

IT(SS)A No.49/Kol/2026 (A.Y.2017-18):

8.

The issue raised in this appeal is substantially similar to one as decided by us in IT(SS)A No.48/Kol/2026 for A.Y. 2015-16. Therefore, our decision in ITA No.48/Kol/2026(supra) would apply,mutatis mutandis, to this appeal as well. Accordingly, the appeal filed by the revenue in IT(SS)A No.49/Kol/2026 is also dismissed.

9.

In the combined result, appeals of the revenue are dismissed.

The order is pronounced in the open Court on 01/09/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated: 01/09/2026 SAMANTA आदेश �ȧ ĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to: 1. \ �Ȣ�ȡ�ȸ/ The Appellant Ĥ×��ȸ/ The Respondent 2. 3. Ȳ�Ȳͬ��आयकर] �ǕÈ�/ Concerned CIT 4. आयकर] �ǕÈ�(अपील) / The CIT(A) 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, आयकर\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata 6. �ȡ�[ फाईल/ Guard file

BY ORDER, // TRUE COPY //

Deputy Registrar, ITAT, Kolkata

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