JAMS BUILSERS PVT. LTD.,KOLKATA vs. ACIT, CENTRAL CIRCLE 4(2),, KOLKATA

Brief fact of the case are that the assessee originally filed its return of income under section 139 of the Act for the assessment year 2010-11 declaring total income of ₹5,11,180. A search and seizure operation under section 132 of the Act was conducted in the case of the Jhunjhunwala Group at various premises in Kolkata. During the course of search and survey, certain books of accounts, cash and jewellery were found and seized from the business premises of different concerns of the Group. In pursuant to the search, the assessee’s case was centralized with the juri iction of the ACIT, Central Circle. Thereafter, notice under section 153A of the Act was issued requiring the assessee to furnish a return of income. In response, the assessee filed its return once again declaring the same income of ₹5,11,180. Notices under sections 143(2) and 142(1) of the act were issued. The assessee submitted details as called for and produced books of accounts and explanations. The Ld. AO framed the assessment under section 153A r.w.s. 143(3) on 31.12.2017, determining total income at ₹30,11,180 after making a solitary addition of ₹25,00,000 under section 68 of the Act towards alleged unexplained share application money received from M/s Darshan Barter Pvt. Ltd. The Ld. AO noted that the assessee had received share application money of ₹25,00,000 from M/s Darshan Barter Pvt. Ltd. The AO issued notices to verify the transaction. According to the AO, although documents such as PAN, bank statements, acknowledgment of return of income and confirmation were filed, the director of the investor company did not appear. The AO held that the identity and creditworthiness of the investor and the genuineness of the transaction were not proved. On the above basis, without referring to any material seized in the search, the AO treated the share application money as unexplained cash credit under section 68 of the Act and added ₹25 lakhs to the assessee’s income.

Aggrieved assessee preferred an appeal before the Ld. CIT(A) challenging the addition contending that no incriminating material relating to the impugned share application money was found during the search and the share application money was duly recorded in the books of accounts prior to the date of search. Moreover, necessary documentary evidences for identity, creditworthiness and genuineness were furnished. Therefore, addition under section 153A of the Act cannot be made in absence of incriminating material, as settled by several judicial pronouncements. However, Ld. CIT(A), has upheld the addition primarily on the ground that the investor’s director failed to appear and therefore, the genuineness of the transaction was not proved.

Aggrieved by the order of the Ld. CIT(A), the assessee filed the present appeal before this tribunal. At the time of hearing, the learned AR submitted that the Ld. CIT(A) erred in confirming the addition under section 68 of the act as the impugned share application money did not emanate from any incriminating document found during the course of search as per the Supreme Court judgment in Abhisar Buildwell Pvt. Ltd., addition under section 153A of the Act can be made only on the basis of incriminating material found in the search if the assessment is non-abated. The Ld.AR reiterated that all primary evidences were furnished to the AO, including PAN of investor, Certificate of incorporation, Bank statement of investor showing the transaction, Share application form, Confirmation, ROC master data. But the Ld. AO rejected the same merely because the director did not attend. The AR argued that non-appearance cannot be a sole basis for making addition as held by several Hon'ble High Court decisions. Accordingly, the addition of ₹25,00,000 was pleaded to be deleted.

On the other hand, the learned DR supported the findings of both the AO and the CIT(A). He argued that despite opportunities, the investor failed to produce its director, thereby raising doubts about the genuineness of the transaction. However, when queried by the Bench, the DR could not controvert the fact that no incriminating material was found in the search relating to the impugned share application money.

We have carefully considered the rival submissions and perused the material placed on record. The primary issue is whether the AO was justified in making an addition under section 68 of the Act in a 153A assessment without any incriminating material by applicability of Supreme Court decision in Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212 (SC) where the Hon’ble Supreme Court in Abhisar Buildwell Pvt. Ltd. has settled the law that for completed (non-abated) assessments, Additions cannot be made under section 153A of Act unless they are based on incriminating material unearthed during the search. In the preset case of the assessee had originally filed return u/s 139 of the Act. no assessment was pending on the date of search. Thus, the assessment was non-abated. Therefore, the AO could make additions only if incriminating material was found during the search. On perusal of the assessment order, we find the AO has not referred to any seized document suggesting that the share application money of ₹25 lakhs was bogus. The addition was made solely on the basis of non-appearance of the director of the investor, and general suspicion. In present case the Revenue has also failed to point out any seized material that links the share application money with unaccounted income. Thus, the addition is not based on incriminating material.

Even on merits the assessee produced sufficient documentary evidence establishing the identity, creditworthiness and genuineness of the investor. Once these documents are filed, the burden shifts to the Revenue. Mere non-appearance of a director cannot invalidate documentary evidence filed by assessee. The Revenue has not conducted any independent inquiry nor brought any adverse material to disprove the evidences submitted by the assessee. Therefore the addition made under section 68 of the Act is not sustainable in law as it violates the ratio laid down as per Hon’ble Supreme Court judgment in Abhisar Buildwell (SC) and the addition also fails on merits due to lack of inquiry and lack of contrary evidence. Accordingly, the addition of ₹25,00,000 deserves to be deleted.

In view of the above discussion, we hold that the AO had no juri iction to make the impugned addition in a 153A assessment in absence of incriminating material. Accordingly, the addition of ₹25,00,000 made under section 68 of the Act is hereby deleted.

In the result, the appeal of the assessee is allowed.

""यथ" / The Respondent- 3. आयकर आयु"(अपील) / The CIT(A), 4. आयकर आयु"त / CIT 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, कटक / DR, ITAT, Cuttack

गाड" फाईल / Guard file. स"या"पत ""त ////