DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, JAIPUR, AMBEDKAR CIRCLE vs. A AND J INDUSTRIAL AND FINANCIAL CONSULTANCY PRIVATE LIMITED, JHOTWARA

vkns'k@ORDER This common order is to dispose of the above captioned two appeals, as the same arise out of same assessment order and both the appeals have been argued simultaneously. First mentioned appeal i.e. has been filed by the assessee, feeling aggrieved by order dated 23.03.2024, passed by Learned PCIT (Central), Jaipur, relating to the assessment order dated 21.06.2021, as regards the assessment year 2014-15. Second mentioned appeal i.e. 11.12.2024, passed by Learned CIT(A), whereby, while partly accepting the appeal filed by the assessee, Learned CIT(A) modified the abovesaid assessment order dated 21.06.2024, relating to the said assessment year i.e. 2014-15. As to what led to the passing of assessment order dated 21.06.2021 2. As per case of the department, the assessee filed return of income, relating to the assessment year under consideration, on 29.09.2014. Search on 09.7.2018 On 09.07.2018, a search was conducted in case of Supreme Group, Jaipur, to which the assessee belongs. Said search is stated to have led & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. to seizure various assets/books of account and documents, as per Annexure prepared in the course of search proceedings. Service of Notice under section 153A On 12.02.2019, notice u/s 153A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was served upon the assessee. Thereupon, the assessee filed return of income on 14.03.2019, declaring the same income, which was declared in the original return of income. Notices u/s 143(2) and 142(1) of the Act, were issued to the assessee. A questionnaire was also served during assessment proceedings and the assessee replied the same vide letter dated 09.04.2021. Supreme Group was stated to be involved in taking bogus and ingenuine share premium from the company- M/s Vindus Holding Ltd. To be specific, the assessee-appellant company was found to have received share premium. The total amount said to have been invested by the assessee company was Rs. 20,35,00,000/-, in respect of Rs. 37,00,000/- shares, with date of their allotment as 08.10.2013.

2. You have alleged that company has received Share Investment/Premium of Rs. 20,35,00,000/- for the captioned assessment year. In this regard it is to submit that it is factually incorrect. The assessee company had not received the entire amount of Rs. 20,35,00,000/-. During the year under review the company had allotted 37,00,000 equity shares of face value of Rs. 10/- at a premium of Rs. 45/- per share, to Vindus Holding Limited. These share were partly paid up. Full amount against the share was not paid by the Allottee. The total amount received by the company for the 3700000 Equity shares were Rs. 14,80,00,000/- only. The company received Rs. 7.50 towards face value of Equity share of Rs. 10/- and Rs. 32.50 towards Security Premium of Rs 45/- Thus the company had received Rs. 2,77,50,000/- towards equity share capital (Face Value) and Rs. 12,02,50,000 towards Security premium. Thus the company had received Rs. 40/- per share against the value of the share including premium of Rs. 55/- The same can be seen from the balance sheet of the company as on 31.03.2014 in which Rs. 2,77,50,000/- was shown under the head Party paid up Equity shares and amount of Rs. 12,02,50,000/- was shown in security premium account under the head Reserve and surplus. The balance amount is calls in arrear which is reflected in the Note no. 1 & 2 of the audited B/S of the company. Copy of Note no. 1 & 2 of the audited Balance sheet for the year ended 31.03.14 are enclosed as Annexure 1. Copy of audited Balance sheet has already been submitted in our earlier replies 3. The assessee company efiled its Original return of income for the Asstt year 2014-15 on 29.09.14. The case was taken up for scrutiny u/s 143(3) of the income tax act During the course of assessment proceedings the assessee company had submitted complete details of aforesaid allotment of shares alongwith Confirmation, copy of ITR and Balance Sheet of the shareholder and Valuation report for justifying the Security premium. Later on the case was assessed at Returned Income by Learned Assessing officer after necessary enquiry. During the course of assessment proceedings the assessee company had established the Credit worthiness, identity of payee and genuineness of & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. transaction. Copy of reply filed during the original assessment proceedings and copy of Asstt. order dated 28.11.2016 are enclosed as Annexure 2.

4. It is further, submitted that during the earlier assessment proceedings necessary enquiries were made by the Assessing Officer by issuing notice under section 133(6) of the Income Tax Act. 1961 to M/s Vindus Holdings Limited who has subscribed to the share capital as discussed above. Your good-self is already requested vide our earlier letter to provide certified copy of the replies/documents received in response to said notices Your humble assesse also requests to provide copy of all material relied by you.

5. Further in the notice issued, your goodself had alleged as follows:-

That that the survey was also conducted at most of the investor company, during search action at Supreme group. And it was found that the addresses were either fake addresses or were addresses that served only as post-box addresses for the shell companies. On analysis of their IT Returns, it was seen that they not had the kind of income to justify their creditworthiness for such huge investment. Entry operators Shri Satish Monga, Shri Kamlesh Gupta and Shri Shashikant Khetan were identified who confirmed that the share investment was nothing but accommodation entry arranged for a commission. Shri Sanjay Jain, the director of the Supreme Group company which received the commission could not even identify or recall any of the investor companies, nor could he give details of the persons from these investor companies with whom he allegedly corresponded. It is clear from the above that these trading are accommodation entry made in order to route your unaccounted income back into your regular books of accounts. It is also noticed that the entry operators who have facilitated this transaction have stated that they have provided accomodation entry in lieu of a commission. As conservative estimate, it is reasonable to presume that at least 2% commission has been paid in cash to the entry operators for facilitating the accomodation entry. Thus, an amount of Rs.40,70,000/- (2% of Rs. 20,35,00,000/-) was paid by you in cash as commission for arranging the bogus accommodation entry in A.Y. 2014-15. Please explain why the amount of Rs. 20,35,00,000/- for A.Y. 2014-15 may not be treated your undisclosed business income earned through bogus transactions and the amount of Rs.40,70,000/- (2% of Rs. 20,35,00,000/-)for A.Y. 2014-15 may not be treated your undisclosed commission expenditure as per provisions of section 68 of the Income Tax Act, 1961 & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur.

6. In this regard we would firstly like to mentioned here that the M/s Vindus Holding Limited was not a shell company and it is a listed company and actively operating its business. The entire amount was paid by the company through banking channel so genuineness of the transaction can be well established from it and as the payment was made from the bank account so there must be balance available in the account of the company from where it is making the payment towards share capital of the assessee company. However It is not necessary to advance from the income earned during the year only. The assesse company had also obtained the copy of audited Balance Sheet and Profit and Loss Account of the party for the year under review. From the perusal of these documents, it is found that the party had turnover of Rs. 635.80 Lakh during FY 2013-14 and its Net worth was of Rs. 4183.26 Lakh as on 31.3.2014, therefore creditworthiness of the party cannot be questioned. A person or party can make the payment from the funds available with it. In view of the availability of sufficient funds at the disposal of Investor, raising doubt on the creditworthiness is completely baseless and proposing addition on this ground is not justified. Besides we are hereby submitting the documents pertaining to the three ingredients as required u/s 68 of the 1.T. Act as identity, genuineness, creditworthiness etc. of the investors:- (a) Copy of bank statement showing share capital amount received (for verifying genuineness of the transaction) as Annexure 3 (b) Copy of PAN Card & ITR-V for AY 2012-13, 2013-14 and 2014-15 of the company (for verifying identity of the party) as annexure 4 (c) Copy of Balance Sheet of the company for the financial year 2013-14 which clearly shows the credit worthiness of the company to make this investment. As annexure 5 (d) Copy of Confirmations received from M/s Vindus Holdings Limited for share application money and First Call Money. As Annexure 6 (e) Copy of Share Application received from M/s Vindus Holdings Limited As Annexure 7 (f) Copy of Board Resolution regarding permission of Board of Director for above investment passed by Board of M/s Vindus Holdings Limited. As Annexure 8 (g) Copy of Form 2 Filed with the ROC As Annexure 9 (h) Copy of Valuation report regarding Book Value of Shares of the company As Annexure 10.

All these documents were already submitted during the course of assessment proceedings u/s 143(3) of the Income tax Act In addition of above documents we are also enclosing herewith following documents & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. a) Copy of rating certificate issued by ICRA assigning B+(Stable) rating. downloaded from internet., as Annexure 11 b) Copy of company data base of Calcutta Stock Exchange showing Vindus Holding Ltd as active listed company at the stock exchange, downloaded from Internet, as annexure 12

7. Your goodself have mentioned that "Mr. Sanjay Jain director of supreme group which received the commission" In this regard it is to submit that it is factually incorrect Mr. Sanjay Jain Director/ Supreme group company had not received any such commission Further your goodself have mentioned that Mr. sanjay jain the key person of the group could not even identify or recall any of the investor companies and has failed to satisfactorily explain the identity of the investor companies who have invested huge share premium in his company. In this regard it is humbly submitted that Sh. Sanjay Jain, in response to question no 57 of the statement recorded on 12.07.2018 at his residence, simply stated that he will provide the details of Share Capital including Share premium and after verifying from the records. It is very difficult to remember such old transactions. Further records are being maintained at office and the statements were recorded at his residence. Copy of relevant page of statement recorded on 12.07 2018 is enclosed as Annexure-13 Further In this regard, it is to mention here that it was undenied fact that lots of mental pressure was built up by department during search operation and continuous grilling of any person puts of lot of pressure on him, person does not remains in his own state of mind and such undue pressure, excess mental stress, person forgets everything and even not able to recall small things. And the assessee group search was continued for more 4-5 days at a stretch and he under such tremendous undue psychological pressure and distress not able to recall what was asked at that time about this share capital. And that cannot be by anyway considered to be as ground for making addition u/s 68.

8. Besides above your goodesif stated that alleged Entry operators Shri Satish Monga, Shri Kamlesh Gupta and Shri Shashikant Khetan were identified who confirmed that the share investment was nothing but accommodation entry arranged for a commission. In this regard we hereby submit that amount received by the company towards Share capital including Share premium from Vindus Holding Limited was a genuine transaction and not a accommodation entry. It is merely on the basis of statement recorded of Shri Satish Monga, Shri Kamlesh Gupta and Shri Shashikant Khetan, the genuine transaction cannot become bogus transaction and no incriminating document found during search pertaining to Share capital which shows that transaction was not genuine. It is pertinent to mentioned here that none of the 3 alleged entry provider are Director of M/s & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. Vindus Holding Ltd. In the absence of cross examination it is not possible to comment any further as to why and under what circumstances and under what pressure they made self-incriminating statement. It is also not known as to why they have not been prosecuted so far, by the department. for perpetrating fraud on the Revenue.

9. The Director of M/s Vindus Holding Ltd. had already confirmed aforesaid share capital including premium in response to enquiry made during the earlier assessment proceedings and their changing stand subsequently will make their subsequent statement not credible and have no evidentiary Value.

10. However, we wish to submitted further that these statements recorded from third parties behind the back of assessee by themselves cannot be construed as incriminating material found in the course of search against the assessee. It was not the case of the Revenue that the persons whose statements were recorded were acting under the control and superintendence of the assessee and they were present in the premises at the time when the search proceedings were carried out against the assessee. The proceedings conducted by the Revenue authorities were independent and separate and were taken against these persons in their own right and in the statements certain averments were purportedly made. The oral averments so made could not by themselves be construed to be incriminating material found from the assessee in the search conducted against the assessee It is for the person making the statement or the person using the statement for drawing inference against the assessee to prove the contents of the statement to be correct and truthfulness of the same, and not the other way round.

11. Thus during the course of search, statement recorded u/s 132(4) by themselves does not constitute incriminating material and assumption of jurisdiction by the Assessing Officer u/s 153A solely based on statement is unsustainable when there is no incriminating material found during the course of search. Further there is no evidence of introduction of cash of the assessee anywhere. Hence, there is no proof to say that the unaccounted cash of the assessee has been routed through these companies. Addition under section 68 of the Act, we would like to submit that not only such action would be contrary to facts but also legally unjustified and harsh and not permitted by the law of the land as elaborated by the judiciary of the country The amount was received by banking channels. The party was in existence and all the three requirements of genuine cash credit having been met, it would be improper in law to tax it as undisclosed income of the assessee under section 68 of the Act. However no document found during the search operation which shows that cash have been exchanged by the assessee against Share capital investment made by the company and also no other documents were seized by the department during & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. search which proves the transaction was to be sham. And when there is no relevant and admissible evidence in possession of the department, it is not permissible in law to come to a conclusion and hold this transaction bogus.

12. Completed assessments cannot be interfered u/s 153A if no incriminating material unearthed during the course of search It is further submitted that the issue has been examined thoroughly in the scrutiny assessment proceedings under section 143(3) of the Income Tax Act, 1961, which culminated in order dated 28.11.2016 It is a settled proposition of law that there cannot be a review under the garb of reassessment proceedings u/s 153A of the Act and therefore the reassessment proceedings are absolutely in the abuse of the process of law, illegal and had in law The provisions of Section 153A of the Act cannot be applied in respect of assessment year in respect of which assessment has already been completed unless some incriminating material/information comes in the possession/knowledge of the assessing officer during the course of search proceedings. It is relevant to mention here that the scope of the assessment u/s 153A of Income Tax Act, 1961 is limited to some incriminating documents/evidence found as a result of search and the same does not empower to the AO to make additions in search assessment without having any incriminating material found as the result of search over and above to undisclosed assets/expenses/income etc. found during the course of search. During the course of search the Income Tax department did not find any document/evidence/material to show that the assessee was having some unaccounted money/income which was brought in books of accounts in the form of share application/share premium and this fact is evident from the record found/seized as a result of search. From a plain reading of the provisions of section 153A, it is evident that if a search has been initiated under section 132(1) or requisition has been made under section 132A, then the Assessing Officer is obliged to issue notice under section 153A, requiring such person to furnish return of income of six years in the prescribed form for the immediately preceding the year of search. The Assessing Officer is legally required to assess or re- assess the total income of six assessment years immediately preceding to the year of search. The second proviso to section 153A provides that if the assessment or re- assessment of any of the assessment year, falling within the period of six years is pending on the date of search, then the same shall get abated. In the present case, for the years under consideration, the assessment was not pending and had attained finality, therefore, the assessment completed in the impugned assessment year will not get abated. Once that is so, the legal position as of now is that the additions over and above the finally assessed income cannot be made dehors the & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. incriminating material found at the time of search while completing the assessment under section 153A. This, inter-alia, means that if there is no incriminating material, then the original assessment made can he reiterated and no further addition is called for otherwise the addition can only be made on the basis of undisclosed income derived from material/documents seized as a result of search. In view of above, it is clear that the amount of Share Capital along with Security premium of Rs. 14,80,00,000 received by assessee company is completely genuine and cannot be classified as bogus/accommodation entry and it is requested that amount of Rs. 14,80,00,000 should not be treated as unexplained credit within the meaning of section 68 of the IT Act 1961.” Show cause notice 4. Case of the department is that show cause notice dated 13.04.2021 was issued to the assessee to clarify the sum shown as ‘call in arrear’, as depicted in the balance sheet as on 31.03.2014. The assessee filed reply on 21.04.2021 stating therein that said shares were partly paid up; that full amount against the shares was not paid by the allottee; the assessee company received Rs. 2,77,50,000/- toward equity share capital and Rs. 12,02,50,000/- towards security premium. Reply of the assessee is found not acceptable 5. The Assessing Officer, on perusal of the balance sheet for the assessment year 2014-15 to 2019-20, and on considering the reply furnished by the assessee, observed that the plea put forth by the & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. assessee company for the reply dated 09.04.2021 was not acceptable in this regard, the Assessing Officer observed as under:- “During the search proceedings, it is noticed that the assessee-company has issued shares of face value of Rs.10 at exorbitantly high premium of Rs.45/share during the A.Y. 2014-15 to a company viz. Vindus Holding Ltd. The total quantum of share capital and premium shown to have been invested by M/s Vindus Holding Ltd in the assessee-company is of Rs. 14,80,00,000/-, M/s Vindus Holding Ltd has has shown total income of Rs.82,600/- for A.Y. 2012-13. During the course of search action in the case of Supreme Group, at the given premises of M/s Vindus Holdings Ltd. At 46, B.B. Ganguly Street, 1st Floor, Room No.

4. Kolkata, the survey team found the room locked. In the building, the survey team recorded the statements of one Shri Tapan Mondal. He stated that the Room No. 4 in the said building is the office of M/s Vindus Holdings Ltd and the peon of Shri Shashikant Khetan comes once every 4-5 days and does cleaning work for 1-2 hours and leaves. Shri Tapan Mondal stated that he does not know what business M/s Vindus Holdings Ltd. is engaged in, and he does not have any idea of the activities of this company.”

6. In para 7 of the assessment order, the Assessing Officer observed that the assessee company having received a share premium during financial year 2013-14, was required to establish genuineness of said transaction and creditworthiness of the source. Case of the department is that during post search proceedings, Shri Sanjay Jain of Supreme Group was confronted entire evidence, relating to bogus share premium. He also confronted with statements of Shri Satish Monga and Shri Shashikant Khetan, the entry operators, controlling M/s & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. Vindus Holdings Ltd., and as both of them admitted on oath to have provided accommodation entries to Supreme Group.

8. Ultimately, the Assessing Officer observed in para 7.2 of the assessment order as under:- “7.2 This is a classic case of a bogus paper entity lacking of Creditworthiness - On verification, it came to light that the assessee-company has not filed ITR of investor-company for A.Y. 2014-15. Apparently the company was running on papers only and their bank accounts were used for layering of funds. However, it is pertinent to note that these observations were made during enquiries Additions are made 9. In para 7.4, the Assessing Officer observed that in view of the totality of the given facts and circumstances the share capital/premium received by the assessee company remained unexplained cash credit of Rs. 14,80,00,000/- received from M/s Vindus Holdings Ltd., within the meaning of section 68 of the Act. In para 7.6, the Assessing Officer observed that the entry providers had admitted in their statements to have received Supreme Group commission @ 2% for providing accommodation entry. In this regard, the Assessing Officer added a sum of Rs. 29,60,000/- to the total income of the assessee, as provided u/s 69C of the Act, the said amount being unexplained expenditure.

10. As per assessment order, the total income of the assessee came to be tabulated as under:- “In view of the above discussions, the total income of the assessee is computed as under:- Particulars Amount in Rs. Total income as per return filed 2,19,020/- 1. Add: on account of unverifiable share 14,80,00,000/- & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. capital/premium 2. Add: commissioner paid on this share capital @ 2% 29,60,000/- Assessed income 15,11,79,020/- PCIT sets aside the assessment 11. By way of present appeal, the assessee has challenged order dated 22.03.2024, whereby Learned PCIT set aside the above said assessment order and referred the matter to the files of the Assessing Officer to examine afresh unsecured loans said to have been taken by the assessee company, in light of the observations made in the order passed by him u/s 263.

12. Record reveals that Learned PCIT issued a show cause notice dated 05.03.2024, to the assessee after going through the above said assessment order and observing that there was a difference of Rs. 5,55,00,000/-, the net addition, which was required to be made being of the sum of Rs. 20,35,00,000/-.

Issue of condonation of delay

On behalf of the appellant, an application seeking condonation of delay has been filed. It is accompanied by affidavit of Shri Mukesh Goyal Accounts Head/Director of the applicant company.

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. Ld. AR for the appellant-applicant has submitted that initially the appeal was to be filed by the consultant engaged by the appellant company, and the deponent- director of the company was under the impression that the said consultant would file the appeal within the prescribed period, but, he did not file any appeal. It was thereafter that another tax consultant was engaged, who made enquiries and prepared appeal, which came to be instituted on 22.01.2025.

Accordingly, Ld. AR has prayed for condonation of delay.

Affidavit of the account’s head/director goes unchallenged. Even otherwise, in the course of argument, Ld. DR for the department has not raised any objection or made any contention opposing the prayer seeking condonation of delay.

It may be observed here that in the given situation, the appellant company should have filed supporting affidavit of the then consultant who was asked to file an appeal, but did not institute any appeal, but, no such affidavit of the then consultant has been filed.

However, taking into consideration, the unchallenged testimony of the director, we deem it a fit case to condone the delay in filing of the appeal.

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. 17. Ld. AR for the appellant has put forth written submission which is in the form of a paper book (at page 1 to 111 ).

One of the contentions raised by Ld. AR for the appellant is that Learned PCIT fell in error on facts, as out of the total amount of Rs. 20,35,00,000/- i.e. of share capital in premium, a sum of Rs. 5,55,00,000/- was not received by the appellant during the year under consideration i.e. assessment year 2014-15, and since said amount was outstanding as “calls in arrears” at the end of the year, the Assessing Officer proceeded to make addition only of a sum of Rs. 14,80,00,000/- found to have been actually received by the appellant, and that too on complete satisfaction.

Ld. AR has further contended that when complete enquiry was made on the issue involved, Learned PCIT incorrectly observed in the impugned order that the AO passed the assessment order in a routine and causal manner without verifying details. Consequently, Ld. AR has urged that the assessment order could not be said to be erroneous as regards the issue raised by Learned PCIT, and as such, the appeal deserved to be allowed.

In support of his contention, Ld. AR has relied on the following decisions, extracts whereof have been put forth in the written submissions:-

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur.  Principal Commissioner of Income Tax v. NYA International (2025) 173 taxmann.com 102 ( Gujarat)  Shree Siddhi Infrabuild (P.) Ltd. v. Principal Commissioner of Income Tax (2025) 172 taxmann.com 232 (Gujarat)  Principal Commissioner of Income Tax v. V-Con Integrated Solutions (p.) Ltd. (2025) 173 taxmann.com 774 (SC)  Sagar Jewellers v Deputy Commissioner of Income Tax (2025 ) 172 taxmann.com 201 (Rajkot-Trib.)  Poonam Marwaha v ACIT, DCIT (2025) 171 taxmann.com 57 (Amritsar-Trib.)  Principal Commissioner of Income Tax, Central1 Kolkata v. Green Touch Vincom (P.) Ltd. (2025) taxmann.com 880 (SC)  Commissioner of Income Tax v. Baboori Fibres Ltd. (2014) 51 taxmann.com 530 (Allahabad).

In the impugned order, Learned PCIT did not specify as to which fact was not at all verified by the assessing officer.

Conclusion

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. Notices u/s 153A, 143(2) and 142(1) of the Act, and finally a show cause notice were issued to the assessee on the information available with the department, on account of search and seizure action carried out in the case of the above named group, and the information was that the assessee was involved in taking bogus and in-genuineness shares premium from a company under the name and style M/s Vindus Holding Ltd. Said company was claimed to have invested a sum of Rs. 20,35,00,000/-, in the form of 37,00,000/- shares, allotted on 18.10.2023. In reply to the show cause notice, the assessee company submitted its claim, as regards the creditworthiness and genuineness of the above said investment in the shares by M/s Vindus Holding Ltd.. Said reply is reproduced for ready reference:-

“1. "That the inferences drawn by your goodself in para 14 of the aforesaid notice are incorrect and denied.

All these documents were already submitted during the course of assessment proceedings u/s 143(3) of the Income tax Act In addition of above documents we are also enclosing herewith following documents a) Copy of rating certificate issued by ICRA assigning B+(Stable) rating. downloaded from internet., as Annexure 11 b) Copy of company data base of Calcutta Stock Exchange showing Vindus Holding Ltd as active listed company at the stock exchange, downloaded from Internet, as annexure 12 7. Your goodself have mentioned that "Mr. Sanjay Jain director of supreme group which received the commission" In this regard it is to submit that it is factually incorrect Mr. Sanjay Jain Director/ Supreme group company had not received any such commission Further your goodself have mentioned that Mr. sanjay jain the key person of the group could not even identify or recall any of the investor companies and has failed to satisfactorily explain the identity of the investor companies who have invested huge share premium in his company. In this regard it is humbly submitted that Sh. Sanjay Jain, in response to question no 57 of the statement recorded on 12.07.2018 at his residence, simply stated that he will provide the details of Share Capital including Share premium and after verifying from the records. It is very difficult to remember such old transactions. Further records are being maintained at office and the statements were recorded at his residence. Copy of relevant page of statement recorded on 12.07 2018 is enclosed as Annexure-13 Further In this regard, it is to mention here that it was undenied fact that lots of mental pressure was built up by department during search operation and continuous grilling of any person puts of lot of pressure on him, person does not remains in his own state of mind and such undue pressure, excess mental & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. stress, person forgets everything and even not able to recall small things. And the assessee group search was continued for more 4-5 days at a stretch and he under such tremendous undue psychological pressure and distress not able to recall what was asked at that time about this share capital. And that cannot be by anyway considered to be as ground for making addition u/s 68.

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur.

Discussion

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 & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. of May, 2003 but on or before the 31st day of March, 2021, the Assessing Officer shall— (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 and for the relevant assessment year or 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 and for the relevant assessment year or years : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section 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 : Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless— (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. on or after the 1st day of April, 2017. Explanation 1.—For the purposes of this sub-section, the expression relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.—For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) 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 Principal Commissioner or Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.”

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. The words “taking into consideration the incriminating material unearthed during the search” are of much significance so far as the expression “incriminating material” is to be considered in case of completed assessments. In other words, in case of completed assessments, when there is a case of subsequent search by the department, “new incriminating material” must have been unearthed during the search.

Is it a case of “New Incriminating Material”?

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. Ld. DR for the department-appellant has referred to the observation made by the Assessing Officer that the assessee company had failed to establish genuineness of the transaction and creditworthiness of source, and in this regard relied on the statements made by Shri Shashikant Khetan before Directorate of Income Tax (Investigation), Kolkatta on 08.01.2014, wherein he had admitted that he was an entry operator and managing M/s Vindus Holding Ltd. for providing accommodation entries to clients.

Ld. DR for the department-appellant has also referred to the observations made by the Assessing Officer as regards the statement of Shri Satish Monga, wherein it transpired that the said investment was outcome of accommodation entries arranged by Shri Shashikant Khetan, Kolkatta. Then, he has referred to the observations made by the Assessing Officer as regards the statement of Shri Shahsikant Khetan recorded in the course of post search investigation as on 04.01.2018, wherein he admitted to have provided accommodation entry to Shri Sanjay Jain of Supreme Group through M/s Vindus Holding Ltd. for a commission.

The contention raised by Ld. DR is that in view of the material available with the department that the above said transaction was a bogus & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. accommodation entry, during post search proceedings, the entire evidence was confronted to Shri Sanjay Jain of Suprem Group and in addition thereto, he was also afforded to opportunity to cross examine Shri Satish Monga, but, despite repeated opportunities, he never came forward to cross examine him.

In view of the above material, Ld. DR has submitted that it stood established that there was sufficient incriminating material available with the department, and as such the Assessing Officer was justified in passing the assessment order making the two additions, but Learned CIT(A) has set aside the same, without just reasons and findings.

Contention raised by Ld. DR for the appellant is that even if the entries already made by the assessee company in respect of the said transaction had been examined during scrutiny proceedings, search having been conducted subsequently on 09.07.2018, in view of the facts disclosed by the above named persons before the Directorate of Income Tax (Investigation) and as it also transpired during post search proceedings, that the entries recorded in the books of accounts were actually bogus entries, the same entries contained in the books of the accounts, & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. especially, the ledger of the assessee can safely be termed to be “incriminating material” so as to justify proceedings u/s 153A of the Act.

While setting aside the assessment order, Ld. CIT(A) placed reliance on Abhishar Buildwell Pvt. Ltd.’s case; DCIT vs. U.K. Panats (Oversease) Ltd. (2023) 150 Taxmann.com 108; and Shyam Sunder Khandelwal vs. ACIT (2024) 161 Taxmann.com 255.

Learned DR has relied on decision in PCIT vs. Abhishar Buildwell Pvt. Ltd. Civil Appeal No. 6580 of 2021, on 24.04.2023 and assailed the findings recorded by Learned CIT(A) in setting aside the assessment order.

On the other hand, Learned AR for the assessee has relied on the given facts & circumstances of the case, when the assessment already stood completed, even on scrutiny, the decisions referred to, observations made, reasons and findings recorded by Learned CIT(A) in the impugned order, and submitted that no incriminating material having been found in the course of search conducted, Learned CIT(A) was fully justified in setting aside the impugned assessment, and urged that this appeal by the department is liable to be dismissed.

Learned AR for the assessee has submitted that in the course of search action carried out at its premises, Mr. Sanjay Jain, the director of & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. the assessee company denied having obtained accommodation entry in garb of the share capital transactions entered into with M/s Vindus Holding Limited. As regards statements of Mr. Sashikant Khetan recorded u/s 131 of the Act on 04-10-2018, the contention is that in absence of any other incriminating material, no reliance could be placed simply on said statements.

It is not case of the department-appellant that any document was discovered for the first time during search proceedings, which could be termed to be “New incriminating material”.

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. Admittedly, the transaction of allotment of shares were found recorded in books of account books of the assessee. Record reveals that Learned CIT(A) had called for remand report from the Assessing Officer. Following material was found annexed to the remand report received from the Assessing Officer, as finds mention in the impugned order:-  Statement of Sh. Tapan Mandal u/s 131 of the Act on 09-07-2018-Page No. 1 to 3  The copy of documents seized as Annexure - AS2 during the course of search action carried out at the premises of Sh. Satish Monga - Page 4 to 80  Copy of statement of Mr. Shashikant Khetan recorded on 04-10-2018 u/s 131 of the IT Act-page 81 to 85  Statement of Sh. Shatish Monga recorded u/s 132(4) of the Act during the course of search action carried out at his premises - 86 to 104  Statement recorded of appellant company's director Mr. Sanjay Jain uis 132(4) of the Act during the course of search action - 105 to 170 As regards the evidentiary value of the statements recorded during search and post search, Learned DR for the appellant has contended that same would form “Incriminating Material”. We have gone through the findings recorded by Learned CIT(A) wherein he rightly observed that in view of the ratio of the judgments cited therein, that the material unearthed during the search action on Sh. Satish Monga, could not be treated to have been unearthed during the course of search action on the appellant.

& 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. As regards the statement of the director of the assessee company, Learned CIT(A) rightly observed that said director was found to have stated therein that the investment was actual investment and denied taking any accommodation entry; that said director denied giving any commission, and further that there was no admission of accommodation entry in the statement; that there was no incriminating finding or admission in the statement of the director pertaining to the issue of addition in the assessment order under appeal. Record reveals that there was no evidence with the department to that unaccounted cash of the assessee has been routed through these companies. The fact remains that nothing new incriminating as regards the said transaction/entries appeared in the statement of the director of the assessee company. Even in the subsequent statement, nothing incriminating appeared as regards said transaction or entries. As a result, while applying the decision in Abhisar Buildwell’s case (supra), it can safely be said that no “new incriminating material” having been found or discovered during search, this was not a case where the Assessing Officer could assume jurisdiction to re-assess the total income, & 269/JPR/2025 A And J Industrial and Financial Consultancy Pvt. Ltd., Jaipur. on the material already available with the department, especially, when it was a case where assessment, on scrutiny, stood completed. Conclusion 36. In view of the above discussion, we do not find any illegality or irregularity in the impugned order passed by Learned CIT(A), whereby he allowed the appeal filed by the assessee, for the reasons and findings recorded therein, basing his decision on well settled law. Result 37. As a result, this appeal- filed by the department deserves to be dismissed. Same is hereby accordingly dismissed. Copy of the common order be placed on the record of the connected appeal. Files be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 26/08/2025.