JCIT(IN SITU) CC22 KOLKATA, KOLKATA vs. MARINE PARK PRIVATE LIMITED, KOLKATA

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ITSSA 48/KOL/2025Status: DisposedITAT Kolkata28 January 20268 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the additions made by the Assessing Officer were not sustainable. The CIT(A) had categorically found that there was no incriminating evidence unearthed during the search that could be debited in the course of the appeal. Following the decision of the Hon'ble Supreme Court in PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., the Tribunal confirmed the CIT(A)'s finding that in cases of completed/unabated assessments, additions cannot be made in the absence of incriminating material found during the search. The CIT(A) had correctly deleted the additions on this ground, without going into the merits of the issue. The Tribunal found no reason to interfere with the CIT(A)'s order. Therefore, Grounds 1, 2, and 3 of the Revenue's appeal were dismissed. The Tribunal noted that the CIT(A) had suggested that the AO could examine the case for applicability of Section 147/148 read with Section 150 of the Act, subject to fulfilling the conditions therein, but this was not an issue before the Tribunal. No specific issue was left undecided.

What were the facts?

The Revenue filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging an order passed by the Commissioner of Income Tax (Appeals) for Assessment Year 2011-12. The appeal was filed with a delay of 41 days, which the Tribunal condoned, finding sufficient cause due to internal procedural requirements. The assessee, Marine Park Private Limited, had originally filed its return showing a loss. A search and seizure action was conducted in the case of the 'Saltee Group' on February 16, 2016, leading to a notice under Section 153A of the Income Tax Act, 1961, being issued to the assessee on May 6, 2017. The Assessing Officer (AO) made additions of ₹2,17,75,000/- under Section 68 for share capital/premium and ₹21,775/- for unexplained expenditure under Section 69C. The CIT(A) deleted these additions, relying on the Supreme Court's decision in PCIT vs. Abhisar Buildwell Pvt. Ltd.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made under Section 68 of the Act on account of bogus share capital/premium amounting to ₹2,17,75,000/- and unexplained expenditure under Section 69C of the Act amounting to ₹21,775/-. 2. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in ignoring that the addition was made based on documents seized during a search and the statement of Surya Prakash Bagla, the key person, recorded under Section 132(4), which made the entries incriminating and justified the AO's jurisdiction under Section 153A. 3. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in ignoring that the addition was made based on documents seized and the statements of entry operators, Gopal Banka and Manohar Lal Nangalia, who admitted to providing accommodation entries, making the entries incriminating and justifying the AO's jurisdiction under Section 153A. Assessee's contentions: The assessee argued that no incriminating material pertaining to AY 2011-12 was found during the search. The assessment for AY 2011-12 was unabated, and the CIT(A) correctly relied on the Supreme Court decision in Abhisar Buildwell Pvt. Ltd., as no incriminating evidence was found. The additions were made on the basis of statements and post-search investigations, not on incriminating materials found during the search. Revenue's contentions: The Revenue contended that the AO referred to seized documents and bank accounts. Shares were allotted, and share capital/premium was received. The statement of Surya Prakash Bagla under Section 132(4) and seized materials were relied upon. The Revenue also pointed to statements from entry operators admitting to providing accommodation entries to the 'Saltee Group', though specific names of the assessee's allottee companies were not always mentioned.

Which sections of the Income-tax Act were involved?

Section 68,Section 69C,Section 132,Section 132(4),Section 153A,Section 143(3),Section 139(1),Section 250,Section 253,Section 147,Section 148,Section 149,Section 150,Section 131(1)

AI-generated summary — verify with the full judgment below

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

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the Revenue is against the order of the Commissioner of Income Tax (Appeals)- 26, Kolkata [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2011-12 dated 18.12.2024. 1.1 The Registry has informed that the appeal is barred by limitation by 41 days. The Revenue has filed a petition along with an affidavit for condonation of delay explaining the reasons that on 18.12.2024 the appeal order was received by the office of the Ld. Pr. CIT, (Central-1), Kolkata and thereafter on 23.01.2025, the appeal scrutiny report was submitted before the Ld. Pr. CIT through JCIT, Range-2 (Central), Kolkata and finally on 09.04.2025, the approval for filing the second appeal before the Hon'ble ITAT u/s 253 of the Act had been received from the Ld. Pr. CIT and it has been requested to condone the delay. After perusing the same, we are satisfied that the Revenue had a IT(SS)A No.: 48/KOL/2025 Assessment Year: 2011-12 reasonable and sufficient cause for the delay on account of internal procedural requirement and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.

2.

The Revenue is in appeal before the Tribunal raising the following grounds of appeal: “1 Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made u/s 68 of the Act on account of bogus share capital/premium amounting to 2,17,75,000/- and unexplained expenditure u/s 69C of the Act amounting to Rs 21,7757. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in ignoring that the addition in the present case was made on the basis of document marked as SIL/1 to SIL/9 and SIL/HD/1 seized during the course of search and subsequent statement of on Surya Prakash Bagla, the key person of the assessee, recorded u/s 132(4) of the Act recorded during the course of search who was unable to explain the transactions regarding accommodation entries in case of assessee company, which makes entries recorded in the books of accounts in this regard, which were seized during the course of search and seizure, as incriminating and hence, the Assessing officer rightly assumed juri iction u/s 1534 of the Act ?

3.

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in. ignoring that the addition in the present case was made on the basis of document marked as SIL/1 to SIL/9 and SIL/HD/1 seized during the course of search and subsequent statement of entry operators, namely, Sri Gopal Banka and Sri Manohar Lal Nangalia, who admitted to have given accommodation entries to the assessee company, which makes entries recorded in the books of accounts in this regard, which were seized during the course of search and seizure, as incriminating and hence, the Assessing officer rightly assumed juri iction u/s 153A of the Act ?

4.

That the revenue reserves its rights to substantiate, modify, delete supplement and/or alter any or all grounds of appeal at any the time of appeal proceedings.”

3.

Brief facts of the case are that assessee is a company and had originally filed its return of income u/s 139(1) of the Act for AY 2011-12 on 20.09.2011 showing total loss of ₹1,23,988/-. A search & seizure action u/s 132 of the Act was conducted in the case of “Saltee Group” IT(SS)A No.: 48/KOL/2025 Assessment Year: 2011-12 at various office and residential premises. Accordingly, a notice u/s 153A of the Act was issued to the assessee on 06.05.2017. In response to the notice issued, the assessee filed the return and after issuing statutory notices on considering the facts of the case, the Ld. AO assessed the total income of the assessee at ₹2,17,96,775/- u/s 143(3) r.w.s. 153A of the Act after adding a sum of ₹2,17,75,000/- u/s 68 of the Act on account of share capital and share premium, besides another sum @ 0.10% per 100 rupees on the share capital of ₹2,17,75,000 /- i.e. ₹21,775/- as commission. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, following the decision of Hon'ble Supreme Court in the case of PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., [2023] 149 taxmann.com 399 (SC) allowed the appeal of the assessee.

4.

Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before the Tribunal.

5.

Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted that there was a search and seizure action on 16.02.2016 and no incriminating material pertaining to the assessee was found in the course of the search. The last date for issuing the notice u/s 143(2) of the Act for AY 2011-12 was 30.09.2011 and the return filed was originally accepted. The Ld. CIT(A) in para 14 has relied upon the statement of Mr. Manohar Lal Nangalia recorded u/s 131(1) of the Act and even in the statement recorded u/s 132(4) of the Act, no incriminating evidence was obtained. The assessee had raised the issue of no incriminating evidence being found in the course of the search and the fact that the assessment for AY 2011-12 was IT(SS)A No.: 48/KOL/2025 Assessment Year: 2011-12 unabated and the appeal was allowed. The relevant extract from the order of the Ld. CIT(A) is as under: “The company filed its return for A.Y 2011-12 on 20.09.2011. No notice u/s 143(2) was issued to assessee against the return filed u/s 139. A search & seizure operation u/s 132 of IT Act was conducted on 16-02-2016 at the premises of Saltee group. During the course of search and seizure operation, certain documents were seized. On examination of the seized material, it was found that the materials contain certain entries that pertain to the assessee. Accordingly, notice u/s 153A was issued to assessee on 06.05.2017. Since no notice was issued within the time u/s 143(2) in respect of the original return, this would be a case of completed or unabated assessment in terms of section 153A of the Act. The AO in the order of assessment has mentioned that from the details of various pages / entries of seized documents that the assessee has raised capital, details as asked for during assessment proceedings were furnished. The AO has not mentioned as to what documents are being referred to and how they are incriminating. Therefore, the additions have been made not on incriminating materials but on other material in respect of the completed/unabated assessment. In the recent Judgement of Hon’ble Supreme Court of India in case of PCIT, Central-3 vs. Abhisar Buildwell Pvt. Ltd., [2023] 149 taxmann.com 399 (SC), where in it was specifically narrated that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments The operative part of the judgement is as under:

“14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the juri iction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; Hi) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the juri iction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and IT(SS)A No.: 48/KOL/2025 Assessment Year: 2011-12 iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.” As mentioned above, no incriminating documents have been found during search against the assessee relevant to this particular assessment year. In the current case, additions have been made on the basis statements recorded and post search investigations. Hence, respectfully following the judgement of the Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd. (supra), it is held that the disallowances/additions made are not sustainable. In view of the facts narrated and the discussion above the disallowances/additions made by the AO vide order u/s. 143(3) read with section 153A in this particular assessment year are not sustainable, as these are not linked to any incriminating material found at the time of search. Hence, addition made in this order is deleted. No observations are being made on the merits of the issue involved, as relief is being provided on the ground that the additions made in proceedings u/s.153A are not sustainable, in the absence of incriminating material found during search. The Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) have held that the completed/ unabated assessments can be re-opened by the A.O. in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act. In light of the above decision, the AO may examine the case on applicability of Section 147/148 r.w.s 150 of the Act on the unabated assessment. In this connection, reference is invited to the decision in the case of Bhagya Kalita, vs ACIT, Central Circle-1, Guwahati in I.T.A. Nos.: 120 to 124/GTY/2024 dtd. 27/09/2024 wherein it was held:

4.2.

At this juncture, it deserves to be mentioned that Section 150 of the Act intends to lift the embargo of period of limitation u/s 149 of the Act to enable the Income Tax Authorities to re-open assessments not only on the basis of IT(SS)A No.: 48/KOL/2025 Assessment Year: 2011-12 orders passed in proceedings under the Act but also on orders of appellate authorities. In considering the action u/s 147/148 of the Act the Id. AO would be advised to refer to Instruction No. 1/2003 dated 23.08.2023, which was issued by CBDT to give effect to the case of Abhisar Buildwell (P.) Ltd. (supra). Needless to say, directions u/s 150(1) of the Act would need to be followed strictly and will need to be read in conjunction with the appropriate provisions contained u/s 147/148/149 of the Act. In the result, the appeal is allowed.”

6.

The Ld. DR on the other hand, relied upon page 2 para 5 of the assessment order and mentioned that the Ld. AO has referred to the seized documents and the bank accounts were also inventoried. Shares were allotted and share capital along with share premium was received. He referred to the statement of Mr. Surya Prakash Bagla, which was recorded u/s 132(4) of the Act. Our attention was drawn to question no.

38.

It is stated that in Ground No. 2 that there is a reference to the seized material. The Ld. AR submitted that the assessee had not filed any cross-objection but the Ld. CIT(A) has given categorical finding. There is a reference only to the allottees’ name and in the statement, none of the three company’s names was mentioned. It was stated that in question no. 39 as reproduced on page 3 of the assessment order, none of the three companies are mentioned and in page 5 Sh. Gopal Banka has mentioned the names of other group companies but the name of the assessee is not mentioned by him. It is stated that on page 7, the names of 28 companies are mentioned but the assessee’s name is not mentioned. Our attention was also drawn to page 5 of the assessment order being the affidavit of Sh. Gopal Banka, one of the entry operators, in which he had accepted that he had provided accommodation entries in the form of share capital/share premium to Saltee Group Companies. However, none of the three companies which had subscribed to the share capital of the assessee are mentioned. The IT(SS)A No.: 48/KOL/2025 Assessment Year: 2011-12 entry operator has mentioned the names of the other group companies as per page 5 of the assessment order but the name of the assessee is not mentioned. Further, on page 8 and page 9 as well, the names of the allottee companies are not mentioned. He stated that since the money had been received from companies whose names did not figure in the statement recorded u/s 132(4) of the Act, therefore, there was no justification for addition of ₹2,17,75,000/- u/s 68 of the Act and further, unexplained expenditure u/s 69C of the Act of ₹21,775/-.

7.

We have considered the facts of the case, the submissions made and the documents filed. The Ld. CIT(A) has given a categorical finding that there is no incriminating evidence which could not be debited in the course of the appeal before us. Therefore, in view of the decision in the case of Abhisar Buildwell Pvt. Ltd. (supra), the addition is liable to be deleted and there is no reason to interfere with the finding of the Ld. CIT(A) whose order is confirmed and Ground Nos. 1, 2 and 3 of the appeal are dismissed.

8.

Ground No. 4 being general in nature does not require any separate adjudication.

9.

In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 28th January, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 28.01.2026 Bidhan (Sr. P.S.) IT(SS)A No.: 48/KOL/2025 Assessment Year: 2011-12 Copy of the order forwarded to:

1.

JCIT (In Situ) CC-22, Kolkata.

2.

Marine Park Private Limited, 1/G/7C-1 Khudiram Bose Sarani, Kolkata, West Bengal, 700080. 3. CIT(A)-26, Kolkata.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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