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Facts
The assessee filed an original return of income declaring Nil income. Subsequently, search and seizure operations were conducted, leading to assessment orders. The assessee's appeal to the CIT(A) was partly allowed, deleting an addition of Rs. 9,45,00,000/- made on account of unexplained cash credit. The revenue appealed this deletion.
Held
The Tribunal held that the addition made by the AO was not sustainable as it was not linked to any incriminating material found during the search, especially in the case of an unabated assessment year. The principles laid down by the Apex Court in 'Pr. CIT Vs. Abhiser Buildwell (P) Ltd.' were applied.
Key Issues
Whether the addition made by the AO on account of unexplained cash credit under Section 68 of the Income Tax Act is sustainable without linking it to incriminating material found during a search, for an unabated assessment year.
Sections Cited
139(1), 132, 153A, 143(3), 68, 143(2), 142(1), 251, 147, 148, 149, 150
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM: This is the appeal preferred by the revenue against the order of Commissioner of Income Tax (Appeals), -27, Kolkata (hereinafter referred to as the Ld. CIT(A)] dated 29.10.2024 for AY 2010-11.
Assessment Year: 2010-11 M/s Dhansar Engineering Company Pvt. Ltd.
It appears from the report of the registry that the appeal has been filed after a delay of 6 days. At the time of hearing the counsel of the assessee explained the reason for delay in filing the appeal. The Ld. A.R did not raise any objection in condoning the delay. Keeping in view, the submission made by the A.R. and the judicial pronouncement that a case should be decided on merit not on technical issue, the delay is hereby condoned.
Brief facts of the case of the assessee is that the assessee had filed its original return of income u/s 139(1) of the Act on 30.09.2010 declaring income of Nil. Later, a search and seizure operation u/s 132 of the Income Tax Act 1961, was conducted on 30.08.2012 on the assessee as a part of ‘Deco Group’. The assessment was completed u/s 153A/143(3) on 31.03.2015 by determining total income of the assessee at Rs.19,54,341/-. Later, another search and seizure operation u/s 132 of the Income Tax Act 1961, was conducted on 13.01.2016 on the assessee as a part of ‘Deco Group’. Further, the case was centralized with the ACIT, Central Circle-4(4), Kolkata. Subsequently, a notice u/s 153A of the Act dated 18.05.2017 was issued to the assessee asking to file return of income. In response to the same, the assessee had filed its return of income on 11.03.2022, declaring 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 submissions. The said submissions were perused by the AO and the case was heard. Later, the AO had passed the asst. order on 31.12.2017 by determining total income of the assessee at Rs.9,64,54,341/-. On perusal of the assessment order, it is observed that the AO had made additions on only one ground viz. Addition of Rs.9,45,00,000/- in the form of unexplained cash credit u/s 68 of the Act in the form of bogus share capital received from nine entities.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been partly allowed.
Being aggrieved and dissatisfied the revenue preferred an appeal before us. i) That in the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made u/s.68 of the Income Tax Act, 1961 amounting to Rs.9,45,00,000/- on account of unexplained cash credit made in respect of bogus share capital received from nine entities without appreciating the material brought on record and facts evaluated by the A.O. in the assessment order which was indulged in providing accommodation entries. ii) That the case clearly falls under the exceptional clause i.e. cases of accommodation entries vide Para no. 3.1(h) of CBDT's latest Circular no. 05/2024 dt. 15.03.2024 by way of organized tax evasion. iii) That on the facts and in the circumstances of the case and in law, the Ld. CIT(A)- 27, Kolkata has erroneously observed that there is no incriminating material unearthed against the assessee, failing to appreciate that the seized bank account no. 30041198589 maintained with State Bank of India, SCB Dhanbad from which it revealed certain huge deposits were made mentioning the alleged transactions. iv) That on the judgments of the case law as cited by the Ld. CIT(A) cannot be accepted as it does not squarely applicable to the grounds of appeal filed by the assessee in this case. v) That the Department craves leave to add, modify or alter any of the ground(s) of appeal and / or adduce additional evidence at the time of hearing of the case.
6. Contrary to that the Ld. A.R supports the impugned order thereby submitting that there is no infirmity in the impugned order. The assessee filed original return of income on 30.09.2010 and search and seizure operation were conducted on 13.01.2016 goes to establish that no proceedings was pending before the AO on the date of the search. It has further been argued that in the course of search no incriminating material has been found on the basis of which any addition could be made nor the AO has not referred any incriminating seized documents for making additions/disallowances. The Ld. A.R Assessment Year: 2010-11 M/s Dhansar Engineering Company Pvt. Ltd. further submits that in the present case the Ld. CIT(A) has relied on the decision of Hon’ble Apex Court in the case of Pr. CIT Vs. Abhiser Buildwell (P) Ltd. [2023] 149 taxmann.com 399 (SC) and thereafter passed an order in favour of the assessee.
7. Upon hearing the submission of the counsel of the respective parties, we have perused the order and find that the assessee is a resident Indian Company of DECO group, filed its original return u/s 139(1) of the Act on 30.09.2010 declaring total loss of Rs. 83,23,492/-. The assessment was completed u/s 153A/ 143(3) of the Act on 31.03.2015 determining the total income of Rs. 19,54,341/- inter alia making addition of Rs. 1,00,00,000/- u/s 68 of the Act. The assessee filed an appeal before the Ld. CIT(A) and the appeal of the assessee was allowed. The appeal effect order was passed u/s 251 of the Act on 18.04.2017 by deleting the addition of Rs. 1,00,00,000/- u/s 68 of the Act. Further search and seizure operation was conducted u/s 132 of the Act on 13.01.2016 and consequent to search operation, notice u/s 153A of the Act was issued on 18.05.2017. On perusal of the facts of the case, there is no denying to this fact that assessment for the AY 2010-11 is not pending on the date of search and therefore AY 2010-11 is unabated assessment year of the assessee. It further appears to us that amount as received by the assessee, received from proper banking channels. The share applicant is bodies corporate registered with ROC having valid PAN. Further the said transaction is fully supported with copy of balance sheet, ledger copy, account confirmation etc. We have gone through the order passed by the Ld. CIT(A) and the relevant portion of the order passed by the Ld. CIT(A) is hereby reproduced as below:
“5.2. Discussion and decision: 5.2.1. I have gone through the submission made by the appellant and assessment order framed by the Assessing Officer. While making the said addition, assessing officer could not link the above issues with any of the incriminating material found during the search & seizure operation from the premise of the appellant. I find force in the argument made by the appellant vide his written submission that AO could not link the addition made by him with any of the incriminating material found during the course of search proceedings. Recently Hon’ble Apex court in the matter of ‘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 received from the said nine share subscriber entities 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 153A of the Act, failure of which will Assessment Year: 2010-11 M/s Dhansar Engineering Company Pvt. Ltd. make the addition void. The relevant portion of the judgement of the Hon’ble Apex Court in the case of ‘Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd [2023] 149 taxmann.com 399 (SC)’ is reproduced as under for ready reference: “13. For the reasons stated hereinabove, we are in complete argument with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujrat 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.
In view of the above and for the reasons stated above, it is concluded as under: i) that in the 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 of 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 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 or 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 reopened 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.” 5.2.2. Hence, in view of the principle laid down by the Apex court in the above judgement, no addition can be made in respect of the unabated completed assessments in absence of any incriminating material. Hence, the addition made by the AO without any incriminating material cannot be accepted. However, the Hon’ble Supreme Court stated that the completed/unabated assessments can be reopened 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. 5.2.3. Reliance is placed on the case of ‘Bhagya Kalita vs. ACIT, Central Cir-1, Guwahati, ITA 120 to 124/GTY/2024, dated 27.09.2024’, where the Hon’ble ITAT, Guwahati Bench, Kolkata had held that AO can consider the possibilities of invoking provisions of section 148/149 r.w.s. 150 of the Act. The relevant portion of the citation is as under: “4.1. Respectfully following the directions in the extracted portion of the above judgment (para 14 (supra), it deserves to be recorded in this order that the Id. AO needs to consider appropriate action u/s 147/148 of the Act keeping in view the express provisions contained in Section 150 of the Act. For the sake of reference, the said section deserves to be reproduced as under: "(1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law.
Assessment Year: 2010-11 M/s Dhansar Engineering Company Pvt. Ltd. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken." 4.2. At this juncture, it deserves to be mentioned that Section 150 of the Act intends to lift the embargo of period of limitation u/s 149 of the Act to enable the Income Tax Authorities to reopen assessments not only on the basis of orders passed in proceedings under the Act but also on orders of appellate authorities. In considering the action u/s 147/148 of the Act the ld. AO would be advised to refer to Instruction No. 1/2003 dated 23.08.2023, which was issued by CBDT to give effect to the case of Abhisar Buildwell (P.) Ltd. (supra). Needless to say, directions u/s 150(1) of the Act would need to be followed strictly and will need to be read in conjunction with the appropriate provisions contained u/s 147/148/149 of the Act.” 5.2.3. In view of the above discussion and judicial pronouncements, the addition made of Rs.9,45,00,000/- without linking up to incriminating materials is not sustainable. Hence, the addition made without incriminating material cannot be upheld. Therefore, these grounds raised by the assessee are allowed. However, the AO may examine the possibilities of invoking provisions u/s 147/148 r.w.s. 150 of the Income Tax Act, 1961.”
8. Keeping in view facts of the case and considering the order passed by the Ld. CIT(A), we do not find any infirmity in the impugned order. Accordingly, the appeal of the revenue is hereby dismissed.
In the result, the appeal of the revenue is dismissed.
Order is pronounced in the open court on 2nd 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: 2nd July, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- ACIT, Central Circle-4(2), Kolkata 2. Respondent – M/s Dhansar Engineering Company Pvt. Ltd., 2nd Floor, 46B, Rafi Ahmed Kidwai Road, Park Street, Kolkata-700016 3. Ld. CIT(A)- 27, Kolkata 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)