DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI vs. WHITELOTUS SOLAR PRIVATE LIMITED, HYDERABAD

The brief facts of the case emanating from the records are that the Search and Seizure operation u/s.132 of the Act was carried out at residential/business premises in the cases of M/s.Golden Shelters Private Ltd, NKV Krishna Group on 16.10.2019. During the course of search, statements of Mr. NKV Krishna and Mr. Saravana Kumar was recorded on 19.10.2019 and 24.10.2019. Based on the statement, Annexure I, II, and III were compiled on the basis of pen drive found and seized vide ANN/KP/BNC/ED/S1-(3) on 17.10.2019 from the residence of Shri Badri Narayan Kota, wherein details of unaccounted cash introduced in the group companies as unsecured loans/share application money was worked out.

The assessee is a group company of NKV Krishna Group, engaged in the business of generating power either by Hydro, Thermal, gas, diesel oil or through renewable energy sources. The assessee filed its return of income for the Assessment year 2015-16 u/s.139(1) of the Act on 29.09.2015 declaring a loss of Rs.10,76,863/-. The case was selected for limited scrutiny under CASS

Aggrieved by the addition the assessee challenged the order of the Assessing Officer before the ld.CIT(A). The assessee submitted that there is no seized material found during the search and therefore, no addition can be made in the absence of any incriminating material. Further, the assessee submitted that the impugned additions made by the Assessing Officer u/s.68 of the Act while passing the order u/s.153A of the Act, the exactly the same issue of allotment of shares was verified and added in the assessment order u/s.143(3) of the Act dated 29.12.2017. On appeal the ld.CIT(A) has deleted the same in his order dated 14.06.2018. Furthermore, there has been no change in the facts and circumstances that existed at the time of passing of the original assessment order u/s.143(3) compared to the time of passing of the assessment order u/s.153A of the Act.

On perusal of the submissions made by the assessee the ld.CIT(A) deleted the additions by passing an order dated 02.05.2025 by holding as under: “5.4.7 While giving relief against the additions made in the original assessment, the CIT(A) has held "that the source of Rs.9,98,20,000/- is duly proved and there is no basis to make addition in the hands of the appellant company in view of the :-4-: ITA. No:2134/Chny/2025

4.8 As the addition made in respect of preferential share capital in the assessment order u/s 153A under appeal, has been decided already by the CIT(A) in the original assessment under 143(3) and there being no change in facts and circumstances of the case, the addition made is deleted. Accordingly, ground No.2 is allowed.”

Aggrieved by the relief given to the assessee by the ld.CIT(A), the revenue is in appeal before us.

The ld.DR assailing the action of the ld.CIT(A), relied on the order of the Assessing Officer. Further the ld.DR submitted that the ld.CIT(A) has erred in relying the order of the ld.CIT(A), Hyderabad passed against the original assessment order u/s.143(3) of the Act, while deleting the impugned additions. Since the search action was taken place in the year 2019 and the order of the ld.CIT(A), Hyderabad against the order u/s.143(3) was passed in 2018, the order could not have captured the information unearthed in the search. In view of the above arguments the ld.DR prayed for setting aside the order of the ld.CIT(A) and to confirm the order of the Assessing Officer.

Per contra, the ld.AR for the assessee supported the order of the ld.CIT(A) and submitted that there was no seized material found during the search and therefore, no addition can be made in the absence of any incriminating material in the order passed u/s.153A r.w.s. 143(3) of the Act. Hence, there is no perversity in the order of the ld.CIT(A) in deleting the additions made by the Assessing Officer. Further, the ld.AR submitted that the impugned additions made by the Assessing Officer u/s.68 of the Act while passing the order u/s.153A of the Act, the exactly the same issue of allotment of shares was verified and added in the assessment order u/s.143(3) of the Act

The ld.AR drew our attention to the paper book (consisting of 44 pages), wherein the incriminating material found in pen drive, which has been extracted as Annexure I, II, III and IV ( page Nos. 1 to 16), in which though the assessee’s name is found, no amount has been mentioned in the impugned assessment year as undisclosed investments / cash transactions (Page No.8, sl.No.23 – F.Y.2014-15 – showing the amount as NIL). Therefore, the additions/disallowances made not based on incriminating material is bad in law. In support of his submission, the Ld.AR relied on the judgment of Hon’ble Apex Court in the case of PCIT vs. Abhisar Buildwell (P.) Ltd., reported in [2023] 454 ITR 212 (SC).

Further, the ld.AR submitted that the same issue has been raised before the coordinate bench of this Tribunal in the case of the group company M/s.Anantram Orchards Pvt. Ltd. vide ITA No.1791/Chny/2025 dated 21.10.2025 for the A.Y.2018-19 and has been decided in favour of the assessee by holding that no incriminating materials were found for making such additions. The relevant extract of the order is given below: 14. The CIT(A) has failed to appreciate the said pen drive did not contain any information whatsoever about the addition / disallowance made by the AO in the impugned assessment years. The Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell (P) Ltd., supra, had clearly held that in a case of unabated assessment, no addition can be made in the absence of any incriminating material found during the course of search. As mentioned earlier, the assessment years under consideration are unabated assessments and thus, the AO could not have made the addition in the absence of incriminating material found during the course of search. 15. On identical facts, the Chennai Bench of the Tribunal in another group company case, namely Reform Realty & Logistics Development Pvt. Ltd., vs.

In view of the above, the ld.AR reiterated that the ld.CIT(A) has rightly deleted the additions by following the order of the ld.CIT(A), Hyderabad passed against the original assessment order u/s.143(3) of the Act and prayed for confirming the same.

We have heard the rival submissions perused the material available on record including the orders of the lower authorities along with paper books filed. The undisputed facts emerging from the record are that the assessee had :-7-: ITA. No:2134/Chny/2025

Subsequently, a search and seizure operation u/s.132 of the Act was conducted in the NKV Krishna Group cases on 16.10.2019 including the assessee company. Pursuant to the said search, notice u/s.153A of the Act was issued to the assessee and in response thereto the assessee filed its return of income declaring the same loss as returned earlier. Thereafter, the Assessing Officer passed an order u/s.153A r.w.s.143(3) of the Act and once again made an addition of Rs.9,99,00,000/- u/s.68 of the Act on account of preference share capital.

The principal contention of the assessee before the ld.CIT(A) as well as before us is that the assessment for the impugned assessment year had already attained finality prior to the date of search and, therefore, in the absence of any incriminating material found during the course of search relating to the said assessment year, no addition could be made while framing assessment u/s.153A of the Act. The ld.CIT(A), after examining the seized material and the submissions of the assessee, accepted the contention of the assessee and deleted the addition.

From the material placed before us, it is evident that the seized material relied upon by the Revenue consists of certain data contained in a pen drive seized from the residence of Shri Badri Narayan Kota and subsequently compiled in the form of Annexures I, II and III. The ld.AR has drawn our attention to the relevant pages of the paper book wherein the details extracted from the :-8-: ITA. No:2134/Chny/2025

At this juncture, it is relevant to note that the assessment for the impugned assessment year had already been completed u/s.143(3) of the Act prior to the date of search and therefore constituted an unabated assessment. The law in this regard has been clearly settled by the Hon’ble Supreme Court in PCIT v. Abhisar Buildwell (P.) Ltd., wherein it has been held that in respect of completed/unabated assessments, the scope of assessment u/s.153A of the Act is limited to examining incriminating material found during the course of search and that no addition can be made in the absence of such incriminating material.

Applying the ratio laid down by the Hon’ble Apex Court to the facts of the present case, we find that the Revenue has not been able to demonstrate the existence of any incriminating material unearthed during the search which relates to the impugned addition made u/s.68 of the Act. The addition made by the Assessing Officer is essentially based on the very same issue which had already been examined during the original assessment proceedings u/s.143(3) of the Act and which was subsequently deleted by the ld.CIT(A), Hyderabad, vide order dated 14.06.2018. In the absence of any new material discovered during the search, the Assessing Officer was not justified in revisiting the same issue while framing the assessment u/s.153A of the Act.

We also find merit in the submission of the ld.AR that a similar issue arising in the case of a group concern, namely Anantram Orchards Pvt. Ltd.,

In light of the facts and circumstances and legal position, we are of the considered view that the ld.CIT(A) has rightly appreciated the facts of the case and correctly applied the settled legal principles in holding that the addition made by the Assessing Officer u/s.68 of the Act in the assessment framed u/s.153A of the Act is unsustainable in law. We do not find any infirmity or perversity in the order of the ld.CIT(A) warranting interference by this Tribunal. Accordingly, the order of the ld.CIT(A) deleting the addition made by the Assessing Officer is upheld and the grounds raised by the Revenue are dismissed.

In the result the appeal of the revenue is dismissed.

अपीलाथ'/Appellant 2. ()यथ'/Respondent

आयकर आयु4त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 2वभागीय (तन ध/DR 5. गाड% फाईल/GF