DCIT CC-1(4),KOLKATA, KOLKATA vs. PARVATI RESOURCES PVT LTD, KOLKATA

At the outset we note that the revenue appeal for the Assessment Years 2014-15 and 2019-20 are time barred by 91 and 93 days respectively. Applications for condonation of delay have been filed by the revenue stating the administrative reasons for filing the appeals with delay. Considering the application of the revenue, we find the reasons to be sufficient , genuine and bona fide and accordingly we condone the delay and admit the appeals of the revenue for adjudication.

The revenue has filed appeal before us challenging the deletion of addition to the tune of Rs.1,35,00,000/- by Ld. CIT(A) as made by the AO u/s. 68 of the Act in respect of bogus unsecured loans.

The facts in brief are that the assessee filed the return of income u/s. 139(1) of the Act on 30.10.2019 declaring total income of Rs. 8,900/-. A search action u/s. 132 of the Act was conducted on 05.01.2021 and subsequent dates on the assessee. Accordingly notice u/s. 153A of the Act was issued which was duly served. The assessee complied with the said notice by filing a return of income declaring same income as was shown in the original return. Thereafter, statutory notices were issued along with questionnaires which were duly complied and replied by the assessee. Pertinent to state that the impugned assessment is an unabated assessment on the date of search as there were no pending proceeding on the date of search and also the time period prescribed under the Act for issuing notice u/s. 143(2) had also expired. The AO after taking into account the contentions and submissions of the assessee made two additions to the income of the assessee namely (i) in respect of share capital /share

The Ld. CIT(A) in the appellate proceeding allowed the appeal of the assessee on legal issue as well as on merit. So far as the legal issue is concerned, Ld. CIT(A) directed the AO to delete the addition in respect of share capital/share premium and also in respect of estimated commission on the ground that the additions were not linked to any incriminating materials found and seized during the course of search but are based on post search enquiries and statements recorded during that enquiry. On merits ld. CIT(A) deleted the additions on the ground that the assessee has proved the necessary ingredients as envisaged u/s 68 of the Act and AO has not brought any substantive materials/evidences on records to the contrary.

After hearing the rival contentions and perusing the material available on record, we find that the return of income was filed u/s 139(1) of the Act on 30.10.2019. A search action u/s 132(1) was conducted on the assessee on 05.01.2021. So on the date of search there were no pending proceedings before the AO qua this assessment year and also that the time limit for issuing notice u/s 143(2) had already expired. Therefore the impugned assessment was unabated on the date of search or had attained finality in terms provisions of section 153A of the Act. Now the issue before us for adjudication is whether the AO has jurisdiction to make additions without there being any incriminating materials seized during the search. In our opinion the addition in case of unabated assessment can only be made with reference to incriminating materials seized during search and not otherwise. We note that in the appellate order, Ld. CIT(A) has clearly recorded a finding of fact that AO has not referred to any incriminating materials found during the course of search qua the share capital/share premium and qua commission paid on for arranging entries of share capital/share premium. Accordingly, we are in agreement with the Ld. CIT(A) that addition in case of unabated assessment year can only be made on the basis of search material found and seized during search. The case of the assessee is squarely covered by the decision of Hon’ble Supreme Courtin 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

The issues raised in all other appeals in ITA No. 63,67 & 66/Kol/2024 for A.Y. 2014- 15,2015-16 and 2017-18 are substantially similar as decided by us in ITA No. 60/Kol/2024 A.Y. 2019-20 , therefore our decision in ITA No. 60/Kol/2024 would apply, mutatis mutandis, to other appeals as well. Accordingly, all the appeals of the revenue are dismissed.

In the result, appeals of the revenue are dismissed.