DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4), KOLKATA, KOLKATA vs. NAND KISHORE PANSARI, KOLKATA

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ITSSA 113/KOL/2024Status: DisposedITAT Kolkata31 December 2024AY 2017-185 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 orders of the Ld. CIT(A) were not infirm and were hereby upheld. The reasoning was that the impugned additions were made by the AO based on a statement recorded during a search action on third parties, which occurred more than two years prior to the search in the assessee's case. The Tribunal noted that no incriminating material was found during the search conducted in the assessee's own premises on 05.01.2021. The Tribunal relied on the decision of the Hon'ble Supreme Court in Pr. CIT Vs. Abhiser Buildwell (P) Ltd. (supra), which held that in cases of non-abated/completed assessments, no addition can be made under Section 153A in the absence of any incriminating material found during the search action. The Tribunal also observed that if incriminating material from the third-party search was linked to the assessee, the proper course would have been to proceed under Section 153C, which was not done. The Ld. DR could not present any distinguishing facts. The operative direction was to uphold the Ld. CIT(A)'s deletion of the additions.

What were the facts?

The Revenue has appealed against the orders of the Ld. CIT(A) for Assessment Years (AYs) 2017-18 to 2019-20. A search and seizure operation was conducted in the assessee's case on 05.01.2021, leading to assessment proceedings under Section 153A of the Income-tax Act, 1961. The Assessing Officer (AO) made additions based on a statement recorded during a prior search on third parties (M/s. RKS Nirman Pvt. Ltd., M/s. Keshari Nandan Projects Pvt. Ltd., and M/s. Sumit Projects Pvt. Ltd.) on 30.11.2018. In that statement, it was acknowledged that the assessee had made cash loans totaling Rs. 1.47 Cr. to Shri H. K. Choudhury and Rs. 0.75 Cr. each to Premier Marketing in FY 2016-17 and FY 2017-18. The assessee denied these transactions. The AO made additions of Rs. 81,75,000/- for AY 2017-18, Rs. 81,00,000/- for AY 2018-19, and Rs. 1,47,60,000/- for AY 2019-20, citing the inability to prove the source of these loan amounts.

What were the issues?

1. Whether the additions made by the Assessing Officer under Section 153A of the Income-tax Act, 1961, are sustainable in the case of non-abated/completed assessments without any incriminating material found during the search action conducted in the assessee's own case? The Revenue's contention is that the additions are justified based on the statement recorded during a third-party search, which indicated the assessee's involvement in cash loans. The Revenue argues that this information, even if from a prior search, formed the basis for the assessment. The Revenue's learned DR could not point out any distinguishing facts from the case law relied upon. The Assessee's contention, as upheld by the Ld. CIT(A), is that the impugned additions are not sustainable. The Ld. CIT(A) relied on the Hon'ble Supreme Court's decision in Pr. CIT Vs. Abhiser Buildwell (P) Ltd. [2023] 149 taxmann.com 399 (SC). The argument is that for non-abated/completed assessments, additions under Section 153A can only be made if incriminating material is found during the search conducted in the assessee's own case. Furthermore, the Ld. CIT(A) noted that the material used by the AO was from a search on third parties, and no proceedings under Section 153C were initiated, nor was any incriminating material found during the search in the assessee's own case.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 153C,Section 250,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH KOLKATA

Before: Shri Sanjay Garg & Shri Sanjay Awasthi

आदेश / ORDER

Per Sanjay Garg, Judicial Member : All the captioned appeals have been preferred by the revenue against the separate orders of even date 11.06.2024 for Assessment Years (AYs) 2017-18 to 2019-20 respectively of the Ld. Commissioner of Income Tax (Appeals), Kolkata-20 [hereinafter referred to as the “Ld. CIT(A)”] passed u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”). 2. Since common issues are involved in all these appeals, hence, the same have been heard together and are being disposed of by this common order. 3. The appeal for AY 2017-18 is time barred by 32 days. A separate application for condonation of delay has been filed. Considering the

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averments made in the condonation petition and the shortness of the delay period, the delay in filing the said appeal is hereby condoned. 4. The brief facts of the case are that a search and seizure operation was carried out in the case of the assessee u/s. 132 of the Act on 05.01.2021. Consequent upon the said search action, the assessment proceedings u/s. 153A of the Act were carried out for the assessment years under consideration. The AO noted that earlier a search and seizure operation was conducted in the cases of some third parties namely, M/s. RKS Nirman Pvt. Ltd., M/s. Keshari Nandan Projects Pvt. Ltd., and M/s. Sumit Projects Pvt. Ltd. on 30.11.2018. During the course of said search action, statement of one Sri Hitesh Kanodia, Accountant of the aforesaid three companies was recorded u/s. 132(4) of the Act, whereby, it was acknowledged by him that the assessee Shri Nand Kishore Pansari had made payment of Rs.1.47 Cr. as cash loan to Shri H. K. Choudhury at an interest rate of 1.5% on 01.10.2018. Further, an amount of Rs.0.75 Cr. Cash loan was paid by the assessee Shri Nand Kishore Pansari to premier Marketing during the financial year 2016-17 and an amount of Rs.0.75 Cr. in cash loan was paid by the assessee to Premier Marketing during FY 2017-18. The AO confronted the assessee during the present assessment proceedings relating to the aforesaid statement of Shri Hitesh Kanodia recorded on 03.11.2018. However, since the assessee denied the aforesaid transaction, the AO made the impugned additions for the assessment years under consideration in the separate assessment orders passed u/s. 153A/143(3) of the Act. The AO made impugned additions of Rs.81,75,000/- for AY 2017-18, Rs.81,00,000/- for AY 2018-19 and Rs.1,47,60,000/- for AY 2019-20 holding that the assessee could not prove the source of the aforesaid loan amounts given by the assessee during the previous years relevant to assessment years under consideration.

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5.

In appeal, the Ld. CIT(A), however, deleted the impugned additions observing that since no incriminating material was found during the course of search action carried on 05.01.2021 at the premises of the assessee and the assessment years under consideration were not abated but completed on the date of search action, therefore, the impugned additions were not sustainable as per the law laid down by the Hon’ble Supreme Court in the case of Pr. CIT Vs. Abhiser Buildwell (P) Ltd. [2023] 149 taxmann.com 399 (SC), wherein the Hon’ble Supreme Court has held that in the case of non-abated/completed assessments, no addition can be made by the Assessing Officer in an assessment carried out u/s.153A of the Act in the absence of any incriminating material found during the search action. 6. In this case, the impugned additions have been made by the AO on the basis of statement recorded during the course of search action carried out in the case of the third parties on 03.11.2018. If during the course of said search action in case of third parties, any incriminating material was found that could be linked to the assessee, the proper course for the AO of the searched person was to send those material to the AO of the assessee and to proceed u/s. 153C of the Act. Admittedly, no such proceedings u/s. 153C of the act were carried out against the assessee during or after the search action dated 03.11.2018, in case of third parties. Thereafter, after about more than two years of the said search action, a fresh search action was carried out in the case of the assessee u/s. 132 of the Act. However, admittedly, no incriminating material was found during the said course of search action. Under the circumstances, the AO was not justified in making the impugned additions by relying upon the statement of a third party recorded in case of a separate search action that was carried out more than two years back. The case is squarely covered by the decision of the Hon’ble Supreme Court in the case

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of Abhiser Buildwell (P) Ltd. (supra), wherein it has been held that in the case of non-abated/completed assessments, no addition can be made by the Assessing Officer in an assessment carried out u/s.153A of the Act in the absence of any incriminating material found during the search action. 7. The Ld. DR could not point out any distinguishing fact in this case. 8. In view of the above, we do not find any infirmity in the orders of the Ld. CIT(A) and the same are hereby upheld. 9. In the result, all the captioned appeals of the revenue are hereby dismissed. Order is pronounced in the open court on 31.12.2024. Sd/- Sd/- [Sanjay Garg] [Sanjay Awasthi] लेखा सद�/Accountant Member �ाियक सद�/Judicial Member Dated: 31.12.2024.

JD Sr. P.S Copy of the order forwarded to: Appellant – DCIT Central Circle 1(4), Kolkata 1. 2. Respondent – Nand Kishore Pansari 3. CIT(A), Kolkata-20. 4. Pr. CIT 5. CIT(DR), True Copy By Order Assistant Registrar, ITAT, Kolkata

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