ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2), KOLKATA, KOLKATA vs. VINOD KUMAR SARAF, GORAKHPUR

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ITSSA 124/KOL/2024Status: DisposedITAT Kolkata07 November 2024AY 2015-167 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 assessment under Section 153A of the Income-tax Act, 1961, was completed without considering any incriminating document. The notice under Section 153A was issued without considering any incriminating material, rendering it void ab initio and the assessment infructuous. The Tribunal relied on the judgment of the Hon'ble Apex Court in Principal Commissioner of Income-Tax v. Abhisar Buildwell P. Ltd., which clearly states that in the case of unabated/completed assessments, no addition can be made by the AO in the absence of any incriminating material found during the course of search. The Tribunal found that the addition of bogus LTCG was not based on any incriminating material unearthed during the search. Therefore, the assessment proceedings under Section 153A were beyond jurisdiction. The Tribunal found no infirmity in the impugned order of the CIT(A) and dismissed the grounds of appeal raised by the Revenue. The merit of the case was not pressed before the bench as arguments were confined to legal grounds.

What were the facts?

The Revenue filed appeals against the order of the Commissioner of Income-tax (Appeals) [CIT(A)] for Assessment Years (AYs) 2014-15 and 2015-16. The CIT(A) had deleted an addition of Rs. 22,62,074 made by the Assessing Officer (AO) under Section 153A of the Income-tax Act, 1961. The addition was on account of alleged bogus Long Term Capital Gain (LTCG) from the sale of shares. The AO had treated the transaction as bogus and added the gain to the assessee's total income. The assessee challenged this before the CIT(A), who allowed the appeal, leading to the Revenue's present appeals before the Income Tax Appellate Tribunal (ITAT). The appeals were filed with a delay of 17 days, which was condoned by the Tribunal.

What were the issues?

1. Whether, on the facts and circumstances of the case, the CIT(A) erred in deleting the addition of Rs. 22,62,074 made under Section 68 of the Income-tax Act, 1961, on account of bogus Long Term Capital Gain, by holding that no incriminating documents were found, considering the judgment of the Hon'ble Apex Court in M/s Abhisar Buildwell Pvt. Ltd., and misinterpreting the word 'material' as 'documents'. (Revenue's Ground 1) 2. Whether, on the facts and circumstances of the case, the CIT(A) erred in not considering that 'incriminating material' can be in any form suggesting that documents/transactions claimed by the assessee were not genuine or that misrepresented/suppressed/non-existent facts were submitted. (Revenue's Ground 2) 3. Whether, on the facts and circumstances of the case, the CIT(A) erred in not considering that the assessee failed to discharge its onus to prove the genuineness of the transactions in light of the principle of preponderance of human probabilities, as held in Sumati Dayal vs. CIT. (Revenue's Ground 3) Assessee's Contention: The assessee argued that the assessment under Section 153A was beyond jurisdiction as no incriminating documents were found during the search. The assessee relied on the Hon'ble Apex Court's decision in Principal Commissioner of Income-Tax v. Abhisar Buildwell P. Ltd., which held that in the case of unabated/completed assessments, no addition can be made in the absence of any incriminating material found during the search. Revenue's Contention: The Revenue argued that the CIT(A) erred in deleting the addition by focusing only on the absence of 'incriminating documents' and misinterpreting the Apex Court's judgment. The Revenue contended that 'incriminating material' can be in any form and that the assessee failed to discharge its onus to prove the genuineness of the transactions.

Which sections of the Income-tax Act were involved?

Section 153A,Section 68,Section 139(1),Section 147,Section 148,Section 132,Section 132A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI ANIKESH BANERJEE & SHRI RAKESH MISHRA

For Appellant: Shri S.M. Surana, Advocate
Hearing: 06.11.2024Pronounced: 07.11.2024

आदेश/O R D E R PER BENCH:

A bunch of appeal was filed by the revenue against the order of the ld. Commissioner of Income-tax (Appeals), Kolkata-20, [in brevity ‘the learned CIT (A)’], order passed under Section 250 of the Income-tax Act, 1961 (in brevity, ‘the Act’) for A.Ys. 2014-15 & 2015-16. The impugned order was emanated from the orders of the learned ACIT, Circle 1(2), Kolkata (in brevity, ‘the learned AO’), order passed under Section 153A of the Act.

2.

The appeals were filed with a delay of 17 days. The revenue filed condonation of delay. That after a detailed discussion, the bench considered the condonation and accordingly, the delay for 17days is condoned. The ld. AR has also not made any objection on condonation of delay. Accordingly, the delay for 17 days is condoned and appeals were taken for adjudication.

3.

In the outset, we find that all the appeals are same nature of fact and having common issue. All the appeals are taken together, heard together and disposed of together. ITA No. 116/Kol/2024 is taken as lead case.

IT(SS)A No. 116/KOL/2024 for A.Y. 2015-16

“1. That on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 22,62,074/-made u/s 68 of the Income Tax Act, 1961, on account of bogus Long Term Capital Gain, holding that are not linked to incriminating documents considering the judgement of Hon'ble Apex Court in case of M/s Abhisar Buildwell Pvt. Ltd, ignoring the word "material" used by Hon'ble Apex Court and not the word "documents" as used by CIT(A). 2 That on the facts and circumstances of the case, Ld. CIT(A) erred in not considering that "incriminating material" can be in any form which could suggest that any documents/transactions claimed or submitted by assessee were not genuine or it had submitted misrepresented/suppressed/non- existent facts. 3 That on the facts and circumstances of the case, Ld. CIT(A) erred in not considering that the assessee failed to discharge its onus to prove the genuineness of the transactions in light of the principle of preponderance of human probabilities, as held by the Hon'ble Supreme Court in Sumati Dayal vs. CIT [1995] 2014 ITR 801(SC), where a host of documentary evidences were discarded. 4. That the revenue reserves its rights to substantiate, modify, delete supplement and/or alter the grounds at any time of the appeal proceedings.” 5. We heard the rival submissions and considered the documents available on records. The Revenue has filed the appeal by challenging the order of the ld. CIT (A). The search was conducted by the Investigation wing, Mumbai and unearthed the bogus Long Term Capital Gain (in short LTCG). During assessment the ld. AO noticed that assessee earned LTCG amount of ₹22,62,074/- by selling the share script “Sunstar Reality Development Ltd”. The ld. AO treated this sale as bogus transaction and added back the gain with total income of the assessee by the order U/s 153A of the Act. The assessee challenged the validity of the impugned assessment order before

During the argument the ld. Departmental Representative (in short, the DR) stated that the appeal was allowed by the ld. CIT (A) considering only the legal grounds of the assessee but it is accepted fact that the addition was confirmed by the ld. AO in absence of incriminating document u/s 153A of the Act.

6.

The ld. Authorised Representative (in short the AR), Mr. S.M. Surana argued and stated that the assessee is fully covered by the order of the Hon’ble Apex Court in the case of Principal Commissioner of Income-Tax v. Abhisar Buildwell P. Ltd. [2023] 454 ITR 212 (SC). The relevant paragraphs are reproduced as below: -

“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 jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction 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 (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

“4.3 Decision: I have carefully considered the facts of the case and submission of the appellant. Assessee had filed original return of income u/s.139(1) of the I.T. Act and no proceedings were pending in respect of the said return. Time for selecting the case for scrutiny was over long before the date of search. Thus, the current assessment year falls in the category of un-abated assessment year/completed assessment year. Appellant has cited several judicial decisions which have held that additions in search assessment could not be made in respect of any incriminating material found during search in the case of un- abated/completed assessment. Nature of additions in the current year reveals that the decisions are based on the information reflected in the return of income/Audit report and not on the basis of any incriminating evidences found during search. No incriminating evidence appears to have been found during search on this issue. This issue was raised before the A.O. as well. It appears that A.O. has acknowledged that no incriminating evidences were found during search but he has rejected assessee’s contentions on some other basis. According to the A.O. section 153A does not restrict

9.

As the rival parties argued only on legal ground. The merit of the case is not pressed before the bench.

11.

In the result, the appeals of the Revenue in ITA Nos. 116 to 124/KOL/2024 are dismissed.

Order pronounced in the Court on 7th November, 2024 at Kolkata.

Sd/- Sd/- (RAKESH MISHRA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Kolkata, Dated 07.11.2024 *SS, Sr.Ps आदेश की प्रतततिति अग्रेतषत/Copy of the Order forwarded to : अिीिार्थी / The Appellant 1. प्रत्यर्थी / The Respondent 2. संबंतित आयकर आयुक्त / Concerned Pr. CIT 3. 4. आयकर आयुक्त ) ( अिीि / The CIT(A)- तवभागीय प्रतततनति आयकर अिीिीय अतिकरण कोिकाता/DR,ITAT, Kolkata, 5. , , गार्ड फाईि / Guard file. 6.

आदेशानुसार/ BY ORDER, TRUE COPY

Sr. PS/ Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Kolkata

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