Loading judgment…
Facts
The assessee filed a Nil income return. A search operation on a third party, 'Golden Goenka Group', led to the finding of incriminating materials related to the assessee, prompting the AO to initiate proceedings under Section 153C. The AO made an addition of Rs. 9,35,00,000/- for unexplained bogus share capital, which the CIT(A) subsequently deleted, relying on an Apex Court judgment stating additions without incriminating material in unabated cases are not sustainable.
Held
The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, confirming that the AO failed to link the addition of bogus share capital to any incriminating material found during the search. Citing the Supreme Court's *Abhiser Buildwell* judgment, the ITAT reiterated that additions without incriminating material for unabated assessment years under Section 153C are invalid.
Key Issues
Whether an addition made under Section 153C for an unabated assessment year, without linking it to incriminating material found during a search, is valid.
Sections Cited
139, 132, 127, 153C, 143(2), 142(1), 143(3), 68
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM: These are the appeal preferred by the revenue against the separate orders of Commissioner of Income Tax (Appeals), -27, Kolkata (hereinafter referred to as the Ld. CIT(A)] dated 31.12.2024 for AY 2011-12 & 2012-13 respectively. Issues are AY 2012-13 as a lead case.
Brief facts of the case of the assessee are that the assessee had filed its original return of income u/s 139 of the Act on 12.10.2010 declaring a total income at Rs.Nil. Later, a search and seizure operation u/s 132 of the Income Tax Act 1961, was conducted on 17.03.2015 in the case of ‘Golden Goenka Group’, where incriminating materials with ID mark GG/HD/1, CG-9 etc. were found and seized which had a bearing on the determination of total income of the assessee for the subjected AY. Thereafter, jurisdiction of the group was transferred by the competent authority u/s 127 of the Act. Later, a satisfaction note was recorded by the AO of the assessee based on the incriminating material as the AO of the searched person and the AO of the assessee are the same. Subsequently, a notice u/s 153C of the Act have been issued to the assessee in timely manner. In response to the same, the assessee filed return of income on 09.06.2017 showing total income same as earlier i.e., at Rs. Nil. Subsequently, all the statutory notices u/s 143(2) and 142(1) were issued to the assessee in timely manner. In response to the same, the assessee had filed its submission later on. Later, the assessee had raised objections against the proceeding u/s 153C of the Act on multiple grounds. A rebuttal has been issued on merit by the AO justifying reopening of assessment u/s 153C of the Act and against the objections raised. The assessee had filed its replies later on in compliance to notice u/s 142(1) of the Act. The same was perused by the AO and the case was heard. Later, the AO had passed the asst. order u/s 153C r.w.s. 143(3) of the Act on 29.12.2017 determining total income of the assessee at Rs.9,35,00,000/-. On perusal of the assessment order, it is observed that the AO had made addition in only one ground viz. Addition of Rs.9,35,00,000/- in the form of unexplained bogus share capital raised by the assessee from five no. of alleged shell entities.
2. Aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been allowed on legal grounds, by considering the Hon’ble Apex Court judgment passed in the case of Pr. CIT Vs. Abhiser Buildwell & 693/Kol/2025 Assessment Years: 2011-12 & 2012-13 Aristro Capital Markets Limited (P) Ltd. [2023] 149 taxmann.com 399 (SC) that had made without linking with incriminating material in an unabated case.
Being aggrieved and dissatisfied the revenue has preferred an appeal before us.
The Ld. DR challenges the very impugned order thereby submitting that the Ld. CIT(A) has erred by allowing the appeal of the appeal by stating that the addition made without incriminating materials ignoring the fact that the AO passed an order that was based on incriminating materials and other has not been considered by the Ld. CIT(A). The Ld. DR further submits that the Hon’ble Apex Court judgment of Abhisar Buildwell Pvt. Ltd (supra) is not at all applicable in the revenue’s case. The Ld. D.R further submits that the Ld. CIT(A) at one hand has stated that the addition made without incriminating materials and on the other sustained the satisfaction note recorded by the AO which was based on the incriminating materials.
Contrary to that the Ld. A.R supports the impugned order thereby submitting that there was no incriminating materials found during the search and seizure operation in the case of searched person i.e. Golden Goenka Group which pertains to the assesse. The Ld. A.R further submits that the satisfaction notes recorded by the AO in fact based on the seized materials CG/9 which contains deposit of the assessee held with NSE and BSE and FD held with Federal Bank and HDFC Bank. The Ld. A.R further submits that for the current assessment year is unabated because the time of issuance of notice u/s 143(2) has already been lapsed, without any incriminating materials on record, the same cannot be assessed u/s 153C of the Act. The assessee further submits that the the satisfaction note dated 06.01.2017 contains only a fact about deposits held with NSE and BSE and FD held with Federal Bank and HDFC bank and the same was related to the party falling beyond the period covered related to the year under assessment i.e. AY 2011-12. The other contention of the Ld. A.R is that share subscription was reflected in the regular books, accounts record and returns the same cannot be assessed u/s 153C of the Act for making the addition u/s 68 of the Act.
& 693/Kol/2025 Assessment Years: 2011-12 & 2012-13 Aristro Capital Markets Limited 5. Upon hearing the submission of the counsel of the respective parties, we have perused the order of Ld. CIT(A). On perusal of the order and the facts of the assessee there is no denying to this fact that the assessee is unlisted public limited company registered under the Companies Act stated its variants in NSE Capital Market derivatives segment and BSE capital market segment and made a trading loss of Rs. 45,38,637/- company had filed return of income for AY 2012-13 on 28.09.2012 u/s 139 of the Act declaring Nil income. No satisfactory note u/s 143(2) of the Act was served on the assessee within prescribed time limit. A search was conducted at the premises of Golden Goenka Group on 17.03.2015 from where document in the name of Aristro (handwritten) was found. On the basis of submission made by the assessee the following facts have been emerged: a) That the assessment for the AY 2012-13 fall in the category of unabated assessment. b) That in the present case, no document was found containing any concealed income as document marked CG/9 page 12 contains a neutral fact of deposit with NSE, BSE & in fixed deposit held with Federal bank & HDFC bank. c) That the document referred in the satisfaction note (having ID CG/9 page 12) was related to 30/09/2012 (FY 2012-13) whereas the assessment is for the FY 2011-12. d) That the issue of share subscription was disclosed in the audited accounts & income tax return i.e. already with the record of the Revenue. e) That the issue of share subscription as informed by AO during assessment, is not more than an inference of undisclosed income drawn during post-search enquiry on which 153C would have no application. f) That the conditions of section 153C of the Act, are not satisfied and accordingly, the initiation of proceeding u/s 153C of the IT Act is not sustainable.
& 693/Kol/2025 Assessment Years: 2011-12 & 2012-13 Aristro Capital Markets Limited 6. The Ld. CIT(A) in its order has not only discussed the facts rather discussed the judicial pronouncements. The relevant portion of the Ld. CIT(A) are hereby essential to reproduce hereunder:
6.2.1. I have gone through the assessment order as well as the submission of the assessee. On examining the same it is noticed that a search & seizure operation u/s 132 of the Act was conducted in the case of ‘Golden Goenka Group of assessees’ on 17.03.2015. During the said search operation, certain incriminating material was seized, from which the Investigation wing had opined that the same had the bearing of the total income of the assessee. On the basis of the same, the AO who is AO of both the searched person and the assessee had recorded satisfaction note on the basis of the aforesaid incriminating material. Later, the case of the assessee was reopened by the AO and the assessment was done u/s 153C of the Act. The assessee contested that the addition was made without proper incriminating material. Reliance is placed by the assessee on ‘Dy. Commissioner of Income Tax Central Circle-20 vs U.K. Paints (Overseas) Ltd 2023 SCC On Line SC 818’ & ‘Principal Commissioner of Income-tax, Central- 3 vs. Abhisar Buildwell (P.) Ltd [2023] 149 taxmann.com 399 (SC)’ 6.2.2. I find force in the argument made by the appellant vide his written submission that AO failed to link the addition made by him with any of the incriminating material found during the course of search proceedings. Hon’ble Apex court in the matter of ‘Dy. Commissioner of Income Tax Central Circle-20 vs U.K. Paints (Overseas) Ltd 2023 SCC On Line SC 818’ & ‘Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd [2023] 149 taxmann.com 399 (SC)’ clearly stated that any addition made by the assessing officer without any incriminating material for the year which is unabated as per the provision of law is bad in law and should be quashed immediately. In the present case, the AO had treated the said share capital as bogus without linking the said issues with any incriminating material which is pre requisite for making any addition while framing the assessment order under section 153C of the IT Act, 1961, failure of which will make the addition void.
Keeping in view, the above discussion and considering the order of Ld. CIT(A), we do not find any infirmity in the impugned order. Accordingly, the appeal of the revenue is hereby dismissed.
The issue raised in the appeal no 692/Kol/25 is similar to one as decided by us in for AY 2012-13. Therefore, our decision in 693/Kol/2025 for AY 2012-13 would mutatis mutandis, apply to this appeal as well. Accordingly, this appeal of the revenue is also dismissed.
In the result, both the appeals of the revenue are dismissed.
Order is pronounced in the open court on 25th July, 2025
Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 25th July, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- ACIT, Central Circle-4(3), Kolkata 2. Respondent – Aristro Capital Markets Limited, 10th Floor, Magma House, 24, Park Street, Kolkata-700016 3. Ld. CIT(A)- 27, Kolkata 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)