POONAM MOHTA,KOLKATA vs. ACIT,C.C 1(1), KOLKATA

आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA डॉ. मनीष बोरड, लेखा सदस्य एवं श्री संजय शमाा, न्याधयक सदस्य के समक्ष Before DR. MANISH BORAD, ACCOUNTANT MEMBER & SONJOY SARMA, JUDICIAL MEMBER I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta.........................................................Appellant [PAN: AEZPM 1243 A] Vs. ACIT, Central Circle-1(1), Kolkata.........................Respondent Appearances: Assessee represented by: Sh. S.M. Surana, Adv. Department represented by: Sh. Abhijit Kundu, CIT(D/R). Date of concluding the hearing : November 28th, 2023 Date of pronouncing the order : February 7th, 2024 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2013-14 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income-tax (Appeals)-20, Kolkata [in

I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. short ld. ‘CIT(A)’] dated 31.07.2023 arising out of the assessment order framed u/s 153A/143(3) of the Act dated 25.11.2016. 2. The assessee is in appeal before this Tribunal raising the following grounds: “1. That on the facts and circumstances of the case the Id CIT(A) passed the order u/s 250 of the I T Act 1961 without proper opportunity of being heard and thus the assessee was deprived of the reasonable and fair hearing in the matter being raised in the subsequent grounds of appeal. 2. That the order passed u/s 250 of the Act by the Ld. Commissioner of Income-tax (Appeals) is against law in as much as he was not justified to uphold the action of the Ld. Assessing Officer in making an addition of Rs. 1,17,09,000/- on account of Long Term Capital Gains which was exempt u/s 10(38) of the Act by treating it as unjustified and holding that the long-term capital gain are, allegedly, sham. 3. That the order passed by the Ld. Commissioner of Income-tax (Appeals) is against law and in as much as he was not justified to uphold the action of the Ld. Assessing Officer in making addition of Rs.8,27,672/- on account of alleged Charges for making transactions on the Long Term Capital Gains on sheer doubt of unrelated documents and on theory of human probabilities. 4. That the Id CIT(A) erred in against law and on the facts to uphold the action of the Assessing Officer in framing the assessment by ignoring the basic principles of natural justice by relying on statements of various persons and data without affording the Appellant any opportunity to cross examine such persons and thus making the assessment bad in law. 5. That the appellant craves leave to add, amend, alter or delete the ground or grounds of appeal.” 2.1. The assessee has also raised additional ground vide letter dated 17.11.2023 and the same reads as under:

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. “6. For that the proceedings and the assessment u/s 153A of the Act is itself bad in law and therefore the additions made are not maintainable.” 3. Brief facts of the case as culled out from the records are that the assessee is an individual and for AY 2013-14 filed the return of income u/s 139(1) of the Act on 19.07.2013 which was subsequently revised on 27.08.2013. Thereafter, a search and seizure operation u/s 132(1) of the Act was conducted on 17.03.2015. Notice u/s 153A of the Act was issued and duly served and in compliance, the assessee filed the return of income on 31.08.2016 declaring total income of Rs. 61,49,600/-. During the course of assessment proceedings which were carried out after issuing notice u/s 143(2) of the Act, ld. AO dealt with the issue on capital gain exemption u/s 10(38) of the Act earned by the assessee from purchase and sale of equity shares of Tuni Textiles Mills Ltd. Ld. AO referred to certain papers impounded during the course of survey from the premises of M/s. SVM Impex & Finance Pvt. Ltd. Based on the said impounded documents ld. AO came to a conclusion that the assessee has managed to take accommodation entry in the form of long term capital gain and after discussing the judicial pronouncements denied the exemption u/s 10(38) of the Act. Along with certain other disallowances and additions, income of the assessee assessed at Rs. 2,09,85,906/-. 4. The assessee challenged these additions before ld. CIT(A) and partly succeeded.

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. 5. Aggrieved, the assessee is now in appeal before this Tribunal. Apart from referring to the detailed paperbook, in support of the merits of the case, ld. Counsel for the assessee firstly made submissions with regard to the additional ground challenging the validity of the assessment proceedings u/s 153A of the Act stating them to be bad in law on the ground that no such incriminating material was found during the course of search at the premises of the assessee which is having any nexus with the alleged additions. It was submitted that the assessee had filed its regular return of income on 19.07.2013 and then revising it on 27.08.2013 and case being not selected for scrutiny by way of issue of notice u/s 143(2) of the Act until 30.09.2014. Therefore, as on the date of search, the assessment for AY 2013-14 was a completed assessment for which additions can be made only if certain incriminating material were found at the premises of the assessee relating to such additions. He also submitted that ld. AO has made the impugned additions by making reference to certain documents found at the business premises of another assessee namely M/s. SVM Impex & Finance Pvt. Ltd. during the course of survey proceeding u/s 133A of the Act but such material cannot be used to make addition in the hands of the assessee who has been subjected to search proceeding u/s 132 of the Act. The assessee placed reliance on the decision of this Tribunal in the case of Shri Krishna Kumar Singhania vs. DCIT in IT(SS)A Nos. 109 & 110/KOL/2017 order dated 06.12.2017, decision of Coordinate Bench Ahmedabad in the case of ACIT vs. M/s. Real Marketing Pvt. Ltd. in IT(SS)A Nos. 128 to 133/AHD/2021 order dated 19.05.2023, judgment of Hon'ble Gujarat High Court in the case of PCIT vs. Saumya Page 4 of 28

I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. Construction (P.) Ltd. reported in [2016] 387 ITR 529 (Gujarat) and also on the recent judgment of Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwell (P.) Ltd. reported in [2023] 149 taxmann.com 399 (SC). As far as the merits of the case are concerned, it was submitted that all the transactions have been carried out through banking channel and conditions necessary for exemption u/s 10(38) of the Act stands fulfilled. 6. On the other hand, ld. D/R apart from placing reliance on the finding of ld. CIT(A) also filed a detailed submission which reads as follows: “The instant appeal has been filed by the assessee against the order of CIT(A), Kolkata-20 dated 31.07.2023 in which the additions made by the AO vide his order dated 25.11.2016 were confirmed and the assessee's appeal was dismissed. The case was partly heard on 21.11.2023 and adjourned to 28.11.2023. A. Relevant Facts on record: 1. Unabated assessment 2. Search warrant in the name of Shrivardhan Mohta & Poonam Mohta 6/2, Queens Park, Kolkata-700019. Date of Search: 17.03.2015. 3. Conduct of Survey u/s 133A in the office premises of M/s SVM Impex & Finance (P) Ltd at the same address i.e. 6/2, Queens Park, Kolkata-700019 on 17.03.2015. 4. Based on information available in Page-6 & 13 of the impounded loose sheet bunch bearing Identification Mark SVM-3 from the office premises of M/s SVM Impex & Finance (P) Ltd, the AO concluded that the assessee earned bogus LTCG by rigging the price of penny stock, namely Tuni Textiles Mills Ltd. He added the entire sale proceeds of Rs.1.17 Crs. and the charges of Rs.8.27 lacs paid by the assessee for arranging the transaction, to the declared total income of the assessee in the assessment order u/s 153A/143(3) dated 25.11.2016, which has been confirmed by the CIT(A) vide his order dated 31.07.2023. In

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. his order the CIT(A) considered the loose sheet bunch bearing Identification Mark SVM-3 as "seized document" and not "impounded". It is pertinent to note that there was no compliance from the assessee in the proceedings before the CIT(A). B. A/R's oral argument: In course of hearing before the Hon'ble Bench on 21.11.2023 the AR relied primarily on the Hon'ble SC's decision in Abhisar Buildwell (P.) Ltd,[2023] 149 taxmann.com 399 (SC) dated April 24, 2023 and several other similar decisions to argue that since the impugned order of the AO was in respect of an assessment year for which the assessment was unabated and the incriminating material on the basis of which the AO made the addition was not found during search of the assessee, no addition could be made . Hon'ble SC held that-/n 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. It is, therefore, the case of the assessee that since the addition was based on impounded material and not any material found during the course of search, the addition was unlawful. The AR also filed an additional ground of appeal that the assessment u/s 153A itself is bad in law and, therefore, the additions made are not maintainable. It, however, appears that the AR has not challenged the incriminating nature of the impounded material. C. In the above background, it appears that the question which needs to be answered in the instant case is - whether information contained in the incriminating material impounded in course of survey u/s 133A conducted in the case of a person as a part of the larger search operation on a group of persons can be treated as incriminating material found during the course of search under section 132 and used in the unabated assessment of another person (assessee) belonging to the same group, who was searched u/s 132. D. Searches are conducted on large business houses u/s 132 and Surveys u/s 133A of the Act are conducted simultaneously on such associates and entities having close nexus with the person(s) so searched u/s 132. However, both are part of the same enforcement action of the ITD known as Search & Seizure operation. As per the guidelines provided in the Search& Seizure Manual, which is for the internal use of the ITD, each search party needs to carry Page 6 of 28

I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. Authorisation(s) u/s 133A apart from the Search Warrant(s), that can be utilised as and when required. Which spot/premise is to be covered u/s 132 and which ones u/s 133A is decided by the Investigation wing of the ITD depending upon the importance of the person to be covered, possibility of unearthing & seizure of various items, availability of manpower, logistics etc. In summary, it can be said that office premises/residence etc. of less important persons are covered u/s 133A, whereas those of the more important persons u/s 132. The operation is the same, only the scope differs. Whereas search u/s 132 has a much wider scope under the law, survey is having a narrower scope. However, when in a situation that happened in the instant case, a document containing information of incriminating nature is discovered from a different place in the same building covered u/s 133A, which pertains to the assessee who is covered u/s 132, it does not diminish the degree of incriminating-ness of the material itself only because it is found prom the possession of a person who was not being covered u/s 132. This is because, whether the document is incriminating or not has to depend on the nature of information it contains, not from where it was found or under the provision of which section of the income-tax Act that place is covered. Therefore, it may not be fair to adopt a narrow interpretation of the Hon'ble SC's observations and conclude that only if any incriminating material is found during the course of search under section 132 or requisition under section 132A, additions in an assessment u/s 153A can be made of its basis in an unabated proceedings and no such addition can be made if the same material is impounded u/s 133A. If the document is incriminating enough so as to lead to the detection of undisclosed income of the assessee, the AO should be able to consider it in the assessment and make additions on its basis. It may be mentioned that Hon'ble SC had stated in the same breath that the remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148. However, as is evident from the wordings of the sentence itself, the remedy is not automatic and depends on the fulfilment of certain conditions which may or may not exist in a particular case and in such a scenario it is possible that the undisclosed income would escape assessment for good. E. It has been time and again held by the courts, including in Abhisar Buildwell (supra)[para-11] that -As per the provisions of Section 153A, in case of a search under section 132 or requisition under section

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. Thus, there is no requirement of examination of seized material or recording any satisfaction w.r.t availability of seized material before issue of notice u/s 153A. Consequently, in the instant case, the AO was within his jurisdiction to issue notice u/s 153A to the assessee on 07.04.2016. The assessee complied to the said notice by filing return on 31.08.2016. Subsequently, the AO issued notice u/s 143(2), which was also duly complied. There is no doubt about incriminating nature of the documents being page-6 & 13 of the impounded loose sheet bunch bearing Identification Mark SVM-3 on the basis of which the addition was made by the AO. There is also no doubt that this document was impounded in course of survey u/s 133A which was carried out as a part of a larger search operation u/s 132 on the group to which the assessee belong. F. In this context, it may be pertinent to take a look at the provisions relating to Post Search Enquiry u/s 132. Section 132(9A): Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub- section (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period of sixty days from the date on which the last of the authorisations for search was executed and thereupon the powers exercisable by the authorised officer under subsection (8) or sub- section (9) shall be exercisable by such Assessing Officer. [Inquiry under section 132. Rule 112A. (1) Where any money, bullion, jewellery or other valuable article or thing (hereinafter referred to as assets) are seized, the [Assessing Officer], shall, within fifteen days of the seizure, and in a case where the assets are handed over to him by the authorised officer under sub-section (9A) of section 132, within fifteen days from the date on which such assets are handed over to him], issue to the person in respect of whom inquiry under sub-section [(5)] of section 132 is to be made requiring him on the date to be specified therein (not being earlier than fifteen days from the date of service of such Page 8 of 28

I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. notice) either to attend at the office of the [Assessing Officer] to explain or to produce or cause to be there produced evidence on which such person may rely for explaining the nature of the possession and the source of the acquisition of the assets. (2) The [Assessing Officer] may issue a notice to the person referred to in sub-rule (1) requiring him on a date specified therein to produce or cause to be produced at such time and at such place as the [Assessing Officer] may specify such accounts or documents or evidence as the [Assessing Officer] may require and may from time to time issue further notices requiring production of such further accounts or documents or other evidence as he may require. (3) The [Assessing Officer] may examine on oath any other person or make such other inquiry as he may deem fit. (4) Before any material gathered in the course of the examination or inquiry under sub-rule (3) is used by the [Assessing Officer] against the person referred to in sub-rule (1), the [Assessing Officer] shall give a reasonable notice to that person to show cause why such material should not be used against him.] [Emphasis provided] Thus, section 132(9A) read with rule 112 provides a reasonable period of time to the Authorised /Assessing officer for conduct of post search enquiry. Keeping in view the statutory requirements of section 132(9A), the seized books of accounts and other documents are required to be handed over to the assessing officer having jurisdiction over the searched person within a period of sixty days from the date on which the last of the authorisations for search was executed. In the mean time, the books of account and other documents are made available to the ADIT/DDIT (Investigation) for suitable post-search investigations and preparation of appraisal report(s). The main purpose of preparation of appraisal report is to highlight the relevant facts as well as evidence gathered as a result of search and subsequent investigations. This is also a means for communicating to the assessing officer the basis on which the search was conducted and the significant events that took place during the course of search and post-search investigations. Appraisal report should be based on an examination of the seized material and evidence found as a result of search and post-search investigations and enquiries. Before finalising appraisal report, hot pursuit enquiries should be

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. necessarily completed and their findings mentioned in the appraisal report. An Appraisal report should inter alia include the following : ♦ Details of premises covered under section 133A in connection with the search action. ♦ Details of post search enquiries and investigations, as also copies of search reports submitted by leaders of search teams. ♦ Analysis of seized material. ♦ A detailed appraisal of the evidence found as a result of search/survey (including, statements of persons recorded) and subsequent investigations in the form of books of account, documents, money, bullion, jewellery and other valuable articles or things for the purposes of assessment, penalty and prosecution. ♦ The appraisal report should also contain the main findings/issues emerging from the search action and post search investigation, stating clearly the amount of transaction involved. ♦ List of incriminating books of account and other documents (with core and non-core documents separately demarcated) and their specific attribution to each person covered under the search/survey. Suggestions for further follow-up enquiry/ investigations by the Assessing Officer (Point-wise/Issue-wise) and list and details of sensitive documents. It, therefore, goes without saying that during the post search investigation/examination of the material seized/impounded in course of search/survey and preparation of the Appraisal Report, the concerned officer has the scope under the legal framework of minutely analysing each and every document found during the search & seizure operation and establish a clear link with the person to whose undisclosed income the document relates. Consequently, if an incriminating document relating to one person was found in course of survey u/s 133A of another person, its significance with respect to the detection of undisclosed income and assessment thereof in the hands of the former cannot and should not be wished away merely because it was impounded during survey of the latter, even though a clear link has been established between the incriminating document and the undisclosed income of the former. Besides, in the instant case, the survey and the search was conducted as parts of a larger enforcement operation on the same date and at the same address.

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. G. In view of the above, it is prayed that the additions of sale proceeds of the penny stock for Rs.1.17 Crs. and the charges of Rs.8.27 lacs paid by the assessee for arranging the transaction, to the declared total income of the assessee made on the basis of information available in Page-6 & 13 of the impounded loose sheet bunch bearing Identification Mark SVM-3, which were sustained by the Ld. CIT(A), be upheld and the assessee's grounds of appeal on this issue be dismissed. 7. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions relied by both the sides. We will first take up the additional ground raised by the assessee contending that assessment proceedings u/s 153A of the Act are bad in law and liable to be quashed. At the cost of repetition we will go through the facts briefly. Admittedly a search was conducted on 17.03.2015 at the premises of the assessee u/s 132 of the Act. Prior to search the assessee had already filed its original return of income u/s 139(1) of the Act on 19.07.2013. Case was not selected for regular scrutiny as notice u/s 143(2) of the Act was not issued up to 30.09.2014. Thus, for AY 2013-14 assessment was not pending on the date of search. The transactions of earning capital gain stood duly disclosed in the regular return of income. As far as additions made by the AO are concerned, there is no reference of any incriminating material found during the course of search at the premises of the assessee. However, reference has been made to certain documents impounded during the course of survey u/s 133A of the Act from the business premises of the M/s. SVM Impex & Finance Pvt. Ltd. carried out on 17/18.03.2015. So, the fact remains that addition in the hands of the assessee who has been subjected to search u/s 132 of the Act has been made on the basis of documents

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. impounded during the course of survey at the premises of other business concern not directly related to the assessee. 8. On these facts and circumstances where the assessment year in question is a completed assessment year and specifically no incriminating material was found from the possession of the assessee during the course of search, we need to first go through the judicial pronouncements wherein it has been consistently held that under such circumstances, in absence of any incriminating material no addition can be made for the completed assessment yeas. This Tribunal in the case of Shri Krishna Kumar Singhania (supra) dealing with the almost similar facts and issue has observed as follows: “10. We have heard the rival submissions. We find that it is not in dispute that there were no documents that were seized from the premises of the assessee except loose sheets vide seized document reference KKS /1 comprising of 8 pages, for which satisfactory explanation has been given by the assessee and no addition was made by the ld. AO on this seized document. The seized document used by the ld. AO for making the addition in section 153A assessment is CG/1 to 11 and CG/HD/1 which were seized only from the office premises of Cygnus group of companies in which assessee is a director. In this regard, it would be pertinent to note that as per section 292C of the Act, there is a presumption that the documents, assets, books of accounts etc found at the time of search in the premises of a person is always presumed to be belonging to him / them unless proved otherwise. This goes to prove that the presumption derived is a rebuttable presumption. Then in such a scenario, the person on whom presumption is drawn, has got every right to state that the said documents does not belong to him / them. The ld. AO if he is satisfied with such explanation, has got recourse to proceed on such other person (i.e. the person to whom the said documents actually belong to) in terms of section 153C of the Act by recording satisfaction to that effect by way of transfer of those materials to the AO assessing the such other person. This is the

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. mandate provided in section 153C of the Act. In the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon’ble Delhi High Court in the case of CIT vs Pinaki Misra and Sangeeta Misra reported in (2017) 392 ITR 347 (Del) dated 3.3.2017, wherein it was held that, no addition could be made on the basis of evidence gathered from extraneous source and on the basis of statement or document received subsequent to search. Hence we hold that the said materials cannot be used in section 153A of the Act against the assessee. This opinion is given without going into the merits and veracity of the said seized documents implicating the assessee herein. 10.1. Hence now the only issue which is left to be addressed is the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2009-10 was not selected for scrutiny and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceeding, as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not confer any power on the ld. AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. The provisions of section 153A of the Act are reproduced hereunder for the sake of convenience:- "[Assessment in case of search or requisition 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall—

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:" 10.2. We find that the Co-ordinate Bench of this tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016- TIOL-167-ITAT-KOL had explained the aforesaid provisions as below:- "6. 4 In our opinion, the scheme of assessment proceedings should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act:- (a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s. 153A of the Act for those six assessment years. (b) In respect of the year of search, notice u/s. 143(2) of the Act would be issued and assessment thereon would be completed u/s. 143(3) of the Act. (c) In respect of concluded assessments prior to the year of search, no addition could be made in the relevant assessment year unless any incriminating material is found during the course of search with respect to the relevant assessment year.

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. (d) Pursuant to the search u/s. 132 of the Act, the pending proceedings would get abated. In respect of abated assessments, the total income needs to be determined afresh in accordance with the provisions of section 153A and other provisions of the Act. 6.4.1 The concluded assessments for the purpose of section 153A of the Act shall be (i) assessment years where assessments are already completed u/s. 143(1) and time limit for issuance of notice u/s. 143(2) of the Act has expired or; (ii) assessment years where assessments are already completed u/s. 143(3) of the Act; unless they are reopened u/s. 147 of the Act for some other purpose in both the scenarios stated above. 6.4.2 The scheme of assessment proceedings contemplated u/s. 153A of the Act are totally different and distinct from the proceedings contemplated u/s. 147 of the Act and these procedures of assessment operate in different fields and have different purposes to be fulfilled altogether. 6.4.3 The expression 'assess or reassess' stated in section 153A(1)(b) has to be understood as below:- 'assess' means assessments to be framed in respect of abated assessment years irrespective of the fact whether there are any incriminating materials found during the course of search with respect to relevant assessment years; 'reassess' means assessments to be framed in respect of concluded assessment years where incriminating materials were found during the course of search in respect of the relevant assessment year." 10.3. We also find that recently the Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) held as under:- '37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i) Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. preceding the previous year relevant to the AY in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the Ld. AOs as a fresh exercise. (iii) The Ld. AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The Ld. AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Ld. AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." (v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to complete assessment proceedings. (vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the Ld. AO. (vii) Completed assessments can be interfered with by the Ld. AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 38. The present appeals concern AYs 2002-03, 2005-06 and 2006- 07, on the date of the search the said assessments already stood Page 16 of 28

I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 10.4. We find that the decision relied upon by the ld. DR in the case of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) does not in any manner advance the case of the revenue as admittedly the Hon’ble Delhi High Court in para 24 of its order had held as under:- “24. We are not concerned with a case where no incriminating material was found during the search conducted under section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open.” 10.5. The ld. DR also relied on the recent decision of the Hon’ble Kerala High Court in the case of E.N.Gopakumar vs CIT reported in (2016) 75 taxmann.com 215 (Kerala) in support of his contentions. We find that the decision of Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla reported in (2016) 380 ITR 573 (Del) had duly considered the decisions of CIT vs Anil Kumar Bhatia reported in (2013) 352 ITR 493 (Del) ; CIT vs Chetan Das Lachman Das reported in (2012) 211 Taxman 61 (Del HC) ; Madugula Venu vs DIT reported in (2013) 215 Taxman 298 (Del HC) ; Canara Housing Development Co. vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) ; Filatex India Ltd vs CIT reported in (2014) 229 Taxman 555 (Del HC) ; Jai Steel (India) vs ACIT reported in (2013) 219 Taxman 223 (Del HC) ; CIT vs Murli Agro Products Ltd reported in (2014) 49 taxmann.com 172 (Bom HC) ; CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in (2015) 374 ITR 645 (Bom HC) and All Cargo Global Logistics Ltd vs DCIT reported in (2012) 137 ITD 287 (Mum ITAT) (SB). We also find that against the decision of the Hon’ble Delhi High Court in 380 ITR 573 (Del), the revenue preferred Special Leave Petition before the Hon’ble Supreme Court and the same was dismissed by the Hon’ble Apex Court which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon’ble Delhi HC in the case of Kabul Chawla supra would have to be considered on the impugned issue and in any case, the Hon’ble Supreme Court in the case of CIT vs Vegetable Products Ltd reported in 88 ITR 192 (SC) had held that if two reasonable constructions of a taxing provision are

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. possible, that construction which favours the assessee must be adopted. 10.6. We also find that the Hon’ble Jurisdictional High Court recently in the case of Principal CIT vs M/s Salasar Stock Broking Ltd in G.A.No. 1929 of 2016 ITAT No. 264 of 2016 dated 24.8.2016 had endorsed the aforesaid view of Hon’ble Delhi High Court in Kabul Chawla’s case and also placed reliance on its own decision in the case of CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC). 10.7. We find that the provisions of section 132 of the Act relied upon by the ld. DR would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e. pending proceedings on the date of search), fresh assessments are to be framed by the ld. AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld. AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act, as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. Hence the arguments advanced by the ld. DR in this regard deserves to be dismissed. 10.8. In view of the aforesaid findings and respectfully following the judicial precedents relied upon hereinabove, we hold that the assessment already deemed to have been completed for the Asst Year 2009-10, which was unabated / concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly no fresh addition could be made thereon without the existence of any incriminating materials found in the course of search from the premises of the assessee. Since the issue is addressed on preliminary ground of absence of incriminating materials, we refrain to give our

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. findings on the merits of the additions for the Asst Year 2009-10 in the case of Krishna Kumar Singhania. Accordingly the preliminary ground raised by the assessee in this regard is allowed.” 9. In the above decision, additions were made in the hands of the assessee based on the documents seized from the office premises of the company wherein he was the director. It was held by this Tribunal that no addition could be made on the basis of evidences gathered from extraneous sources and on the basis of statement or document received subsequent to search. 10. In the case of M/s. Real Marketing Pvt. Ltd. (supra) Coordinate Bench Ahmedabad dealing with similar issue held as follows: “11. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, there was search proceeding under section 132 of the Act dated 4th December 2014 (i.e. during the financial year 2014-15 corresponding to A.Y. 2015-16) carried out in the case of “Barter/Accommodation Entry Provider Group” including the assessee and in consequence to the same, the proceedings under section 153A of the Act were initiated in case of respondent assessee for the A.Y. 2009-10 to 2014-15. The assessment under section 153A r.w. section 143(3) of the Act for the year under consideration i.e. A.Y. 2009-10 was framed after making addition of Rs. 20,85,36,570/- being bogus accommodation entry in form of share capital, premium, unsecured land and unexplained expenses incurred for taking such accommodation entry. On appeal by the assessee, the learned CIT (A) deleted the addition made by the AO by observing that there was no material of incriminating nature found during the search at the premises of the assessee, therefore the year under consideration being unabated/completed assessment years, no addition should be made in the absence of any incriminating material. The learned CIT(A) also observed that the materials referred by the AO for making the addition in the hands of the assessee was found in the search proceedings at third parties, therefore the same cannot be utilized against the assessee without complying and invoking the provisions of section 153C of the Act. The learned DR before us vehemently argued that there is no provision under section

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. 153A/153C which restrict the assessment or reassessment in case of search to the extent of incriminating materials only. 11.1 With regard to fact that no addition can be made in absence of incriminating material we find that it has been settled by various Hon’ble Court including Hon’ble Jurisdictional High Court that the completed/ unabated assessments cannot be disturbed in the absence of any incriminating materials/ documents whereas the assessment/ reassessment can be made with respect to abated assessment years. The word 'assess' in Section 153A/153C of the Act is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to the completed assessment proceedings. The Hon’ble Gujarat High Court in the case of Saumya Construction reported in 81 taxmann.com 292 has held that there cannot be any addition of regular items shown in the books of accounts until and unless there were certain materials of incriminating nature found during the search. The word incriminating has not been defined under the Act but it refers to those materials/ documents/ information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee. Now coming to the case on hand, we note that there was no incriminating document of whatsoever found from the premises A-301, Wall Street II, Ellisbridge and 24, Jogeshwari Park against which panchanama was drawn in the name of respondent assessee. The AO in the assessment order while making the addition in the hands of assessee nowhere referred any material of incriminating nature found from the above 2 premises of assessee regarding credit of share capital along with premium and unsecured loan with reference to the year under consideration which would have made basis for the addition in the assessment. TheAO for making the addition referred the material found from the premises of the third parties Shri Shrish Chandrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah. We find that these parties are unconnected to the assessee and search carried on their premises were an independent search. Likewise, the AO also referred the materials found from the premises of Shri Ashit Vohra marked as annexure A/5, A/6 and A/7 and from the office of Anil Hiralal Shah situated at B-406, Wall Street- II Ellisbridge, Ahmedabad marked as page 247 of annexure A-1. In this regard, we note that though the search was carried on same date on the premises of Shri Ashit Vohra and A/7 and the office of Shri Anil Hiralal Shah and it was alleged to be part of the group to which

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. respondent assessee belongs. However, the search Panchama drawn on above premises of Shri Ashit Vohra and the office of Anil Hiralal Shah does not include the name of the respondent assessee which establishes search at those premises are independent from the search carried on the premises of the assessee. 11.2 At the time of hearing, the learned DR has not brought anything on record contrary to the finding of the learned CIT (A) suggesting that additions were made based on incriminating materials found from the premises of the assessee. Accordingly, we hold that there cannot be any addition of the regular items which were disclosed by the assessee in the regular books of accounts in the absence of material/information of incriminating nature found from the premises of the assessee. In holding so, we draw support and guidance from the judgment of Hon’ble Gujarat High Court in case of Saumya Construction (P.) Ltd (supra) wherein it was held as under: Thus, while in view of the mandate of sub-section (1) of section 153A in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, the earlier assessment would have to be reiterated. 11.3 In view of the above, we hold that there cannot be any addition to the total income of the assessee of the regular items as made by the AO in the present case. Accordingly, we do not find any infirmity in the finding of the learned CIT (A) to this extent.” 11. Hon'ble Gujarat High Court in the case of Saumya Construction (P.) Ltd. (supra) has held as follows:

“19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment Page 21 of 28

I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.” 12. Recently, Hon'ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) held as under:

“11. As per the provisions of Section 153A, in case of a search under section 132 or requisition under section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention Page 22 of 28

I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under section 153A of the Act is linked with the search and requisition under sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub-section (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 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 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. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.”

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. 13. Now, considering the ratio laid down by the Hon'ble Apex Court in the case of Abhisar Buildwell (P.) Ltd. (supra) and also the ratio laid by the Hon'ble High Court and Coordinate Benches of Tribunal it has been consistently held that so far as the assessment proceedings u/s 153A of the Act is concerned, for the completed/concluded assessment years addition can be made only with respect to any incriminating material found during the course of search at the assessee’s premises. So far as the instant case is concerned, as the assessee had filed its original return of income on 19.07.2013 subsequently revised on 27.08.2013 declared total income at Rs. 28,43,330/- and paid due taxes and the case of the assessee being not selected for scrutiny as no notice u/s 143(2) of the Act was issued on 30.09.2014, assessment year in question comes under the category of completed assessment. Ld. AO while making assessment u/s 153A of the Act has not referred to any incriminating material found from the assessee’s premises. Therefore, the judgment of Hon'ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) squarely applies on the facts of the case. Though ld. D/R had made detailed written submissions and had also stated that if an incriminating document relating to one person was found in course of survey u/s 133A of another person, its significance with respect to the detection of undisclosed income and assessment thereof in the hands of the former cannot and should not be wished away merely because it was impounded during survey of the latter, even though a clear link has been established between the incriminating document and the undisclosed income of the former. Besides, in the instant case, the survey and the search was conducted as parts of a larger Page 25 of 28

I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. enforcement operation on the same date and at the same address. However, we fail to find any merit in the contentions made by ld. D/R since the issue of making addition in the hands of searched person on the basis of documents impounded/seized from another searched person have been held to be bad in law by this Tribunal in the case of Shri Krishna Kumar Singhania (supra). The case of the assessee is rather on a stronger footing because in the case of Shri Krishna Kumar Singhania (supra) the reference was made to incriminating material found during the course of search at the company’s office where the assessee was a director and so there was a live connection between the assessee and the company. However, in the instant case, the addition has been made on the basis of documents found during the course of survey u/s 133A of the Act (not search u/s 132 of the Act) and that too at different assessee not having any direct connection with the assessee in the instant appeal. 14. Therefore, in our considered view, the issue raised by the assessee in the additional ground is squarely covered in its favour by the judgment of Hon'ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra). As the first hurdle to be crossed by the Revenue authorities while carrying out the search assessments of completed/concluded assessments is to make reference and establish nexus/live link of the proposed addition with the incriminating material found and seized from the assessee’s premises. In the instant case, no such incriminating material was found and seized from the assessee’s premises linked to the impugned addition, the information of which was already declared

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. by the assessee in the regular return of income. Thus, respectfully following the ratio laid down by the Hon'ble Apex Court in the case of Abhisar Buildwell (P.) Ltd. (supra), we are inclined to hold that assessment proceedings u/s 153A read with Section 143(3) of the Act for AY 2013-14 is bad in law and liable to be quashed and alleged addition stands deleted. As far as remaining grounds are concerned, since we have allowed the additional ground and quashed the assessment order, dealing with the other grounds including the grounds raised on merits will be merely academic in nature and are thus, held to be infructuous. 15. In the result, the appeal of the assessee is hereby allowed. Kolkata, the 7th February, 2024. Sd/- Sd/- [Sonjoy Sarma] [Manish Borad] Judicial Member Accountant Member Dated: 07.02.2024 Bidhan (P.S.)

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I.T.(S.S.)A. No.: 155/KOL/2023 Assessment Year: 2013-14 Poonam Mohta. Copy of the order forwarded to: 1. Poonam Mohta, 6/2, Queens Park, Ballygung, Kolkata-700 019. 2. ACIT, Central Circle-1(1), Kolkata. 3. CIT(A)-20, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order

Assistant Registrar ITAT, Kolkata Benches Kolkata

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