ACIT, CENTRAL CIRCLE-3(3), KOLKATA, KOLKATA vs. M/S. PRAKASH PLY CENTRE PVT. LTD., KOLKATA

आयकर अपील�य अधीकरण, �यायपीठ – “B” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “B” KOLKATA Before Shri S.S.Godara, Judicial Member and Dr. A.L. Saini, Accountant Member IT(SS)A No.24-25/Kol/2017 & ITA No.1313-1314/Kol/2017 C.O. No.79-82.Kol/2017 Assessment Years :2009-10 & 2012-13 ACIT, Central Circle- V/s. M/s Prakash Ply Centre Pvt. Ltd., 4th Floor, 41, 3(3), Aaykar Bhawan Poorva, E/.M. Bye B.B. Ganguly Street, Pass,110, Shanti Pally, Central Plaza, Kolkata-700 4th Floor, Kolkata-107 012 [PAN No. AADCP 7132 J] .. अपीलाथ� /Appellant ��यथ�/Respondent IT(SS)A No.07/Kol/2017 Assessment Year :2013-14 Prakash Ply Centre Pvt. V/s. DCIT, Central Circle- Ltd., Central Avenue, 3(3), Aaykar Bhawan Bowbazar, Crossing, Poorva, E/.M. Bye Kolkata-700 012 Pass,110, Shanti Pally, 4th Floor, Kolkata-107 [PAN No.AADCP 7132 J] .. अपीलाथ� /Appellant ��यथ�/Respondent Shri S.M. Surana, Advocate आवेदक क� ओर से/By Assessee Shri Radhay Shyam, CIT-SR-DR राज�व क� ओर से/By Revenue 11-09-2019 सुनवाई क� तार�ख/Date of Hearing 18-09-2019 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER S.S.Godara, Judicial Member:- The instant batch of nine cases pertains to a single assessee M/s Prakash Ply Centre Pvt. Ltd. The Revenue and assessee have filed IT(SS)24- 25/Kol/2017 ITA 1313-1314/Kol/2017 alongwith latter’s cross objection(s)

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 2 No.79-82/Kol/2017 for assessment year(s) 2009-10 to 2012-13 and latter’s appeal IT(SS) No.07/Kol/2017 for assessment year 2013-14; against the Commissioner of Income Tax (Appeals)-21 Kolkata’s separate orders; all dated 23.03.2017 passed in case No.86-90/DCIT.CC-3(3)/CIT(A)-21/2016-17 and (assessment year-wise); involving proceedings u/s 153C/143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file(s) perused. 2. It transpires at the outset that the Revenue’s two appeal(s) IT(SS)A No.25/Kol/2017 & ITA No.1314/Kol/2017 for assessment year(s) 2010-11 and 2012-13 involve tax effect less than ₹50 lakhs prescribed in revised threshold limit in CBDT’s latest Circular No17/2019 dated 08.08.2019. 3. On perusal of the Circular No. 17/2019 dated 08.08.2019 and the materials available on record, we do not see these case(s) falling under any of the exceptions contemplated therein. We also find that this circular makes it very clear that the revised monetary limits shall apply retrospectively to pending appeals as well. Hon’ble apex court in Commissioner of Customs vs Indian Oil Corporation Ltd reported in 267 ITR 272 (SC) has settled the law that CBDT’s circulars are very much binding on revenue authorities. We therefore decline the Revenue’s instant two appeal(s) as involving lower than the prescribed tax effect. Learned authorized representative is equally fair in not pressing for assessee’s cross objection CO Nos. 80 & 82/Kol/2017. These assessee’s cross objections are dismissed as not pressed therefore.

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 3 Court on this issue. Calcutta High Court has time and again reiterated its view that the additions in case of the search assessments has to be made on the basis of incriminating material. Some of the recent decision of the Hon'ble jurisdictional High Court are discussed hereunder. PCIT-2. Kolkata Vs. Salasar Stock Broking Limited (ITAT No. 264 of 2016) dated 24.08.2016: (Calcutta) In this case, the Honorable High Court observed that the Ld. I.TAT. Kolkata was of the opinion that the assessing officer had no jurisdiction u/s 153A of the I.T. Act to reopen the concluded cases when the search & seizure did not disclose any incriminating material. In taking the aforesaid view, the Learned ITAT relied upon the judgments of Delhi High Court in the case of CIT(A) Vs Kabul Chawla in ITA No. 707/2014 dated 28.08.2014. The Court also observed that more or less an identical view has been taken by this Bench ITA No. 661/2008 in the case of CIT Vs. Veerprabhu Marketing Limited. Considering the above facts, the Honorable High Court did not admit the appeal filed by the Department.

"CIT, Kolkata-III Vs. Veerprabhu Marketing Ltd.[20161 73 taxmann.com 149 (Calcutta): In this case The Honorable Calcutta High Court expressed the follow Views: "We are in agreement with the views of 'the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowance of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." The Hon'ble Kolkata High Court in the above cases relied on the following judgments. CIT vs. Kabul Chawla (2016) 380 ITR 0573 (Del) Search and seizure-New scheme of assessment in search cases- Search was carried out u/s. 132 on a leading real estate developer operating all over India and some of its group companies-Search was also carried out in the premises of the assessee-Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns – As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1), assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies- AO declined to rectify the assessments-CIT also held that addition need not be restricted only to the seized material-ITAT on appeal however deleted addition on grounds that the additions made for relevant AY's u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law-Issue was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 4 additions were found during the course of search and further no assessments for such years were pending on the date of search-Held, present appeals concerned AYs,2002·03, 2005·06 and 2006·07-On the date of the search the said assessments already stood completed-Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed-Question framed by the Court was answered in favour of the assessee and against the Revenue-Revenue's appeal dismissed. 6. I further find that In this regard the Hon'ble ITAT Kolkata has time and again reiterated its view that the additions in case of the search assessments has to be made on the basis of incriminating material and any deviation from the same would render the assessment order invalid. Some of the recent decision of the Hon'ble Jurisdictional Tribunal is discussed hereunder M/s Adhunik Gases Ltd. & Others vs. DCIT CC-XXX, IT(SS)A No. 47/Kol/2015, IT(SS)A No. 49/Kol/2015, IT(SS)A No. 50-2/Kol/2015, IT(SS)A No. 54/Kol/2015, IT(SS)A No. 55/Kol/2015, IT(SS)A No. 94-96/Kol/2015 order dated 06.01.2017(ITAT Kolkata) In this case it is held that no addition u/s 68 of the I.Tax Act for the Share capital can be made in absence of any incriminating material. The concluding Para of the Hon'ble ITAT's order is as under. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as we are of the propositions canvassed by the Ld. AR for the assessee are supported by the judgments of jurisdictional ITAT and Hon'ble High Courts. Ld. AR has pointed out that no incriminating documents was found either during survey or during search procedure. The statement of Shri Naresh Kumar Chhaperia should not be relied on, because he is a double speaking person. The assessment proceedings were completed before the date of search. Besides, the time limit to issue notice u/s 143(2) was also expired. In order to initiate assessment proceedings u/s153A, there should be a new or incriminating document. The assessment which is already completed u/s 143(3)/143(1) should not be reopened. Therefore, considering the scheme of section 132 and section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of section 153A. Ld. DR for the revenue had pointed out that there is a direct nexus among the companies} which has been established by the statement of Mr. Naresh Kumar Chhapperia, which cannot be relied on} as he was a double speaking person. Therefore, considering the factual position and the judgments cited by Id. AR} we are of the view that the additions made by the AD u/ s 153A and confirmed by the Id. CIT(A) needs to be deleted. Therefore} we delete the addition." Furthermore, the decision of the jurisdictional tribunal in the case of M/s Tanuj Holdings Pvt Ltd Vs. DCIT CC-l(2), Kolkata vide ITAT No. 360 to 363/Kol/2015 dated 20.01.2016 is important. The relevant portion of the order is reproduced as under: We also find that no incriminating materials were found during the search in the respect of the issue of deemed dividend. Hence it cannot be the subject matter of addition in 153C proceedings in respect of completed assessments. We hold that when an addition could not be made as per law in section

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 5 153C proceedings, then the said order cannot be construed as erroneous warranting revision jurisdiction u/s 263 of the Act. " Shri. Manish Mundhra Vs. ACIT-CC-XXX in ITA-469-470/Ko1!2013 Dt. 16.12.2015 (ITAT Kolkata); We also are of the view that in the light of the admitted fact that no incriminating material was found in the course of search the impugned addition could not have been made in the proceedings u/ s 153A of the Act. The decision of the ITAT} Delhi Bench in the case of ACIT vs M/ s. Delhi Hospital Supply Pvt. Ltd. (supra) followed the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (supra) supports the plea of the assessee in this regard ..... “ ACIT-CC-XXVII Vs Kanchan Oil Industries Ltd. in ITA-725/Kol/2011 Dt. 09.12.2015 (ITAT Kolkata); In view of the aforesaid findings and judicial precedent relied upon, we hold that the denial of deduction u/s 80IB of the Act in the assessments framed u/s 153A of the Act for the Asst Years 2003-04 and 2004-05 without any incriminating materials found during the course of search with respect to those assessment years is not warranted and held, as not in accordance with law. Accordingly, the grounds raised by the revenue n this regard for the assessment years 2003-04 and 2004-05 are dismissed. We hold that the same decision would be applicable for the disallowance made by the Learned AO u/s 14A of the Act and accordingly no disallowance u/s. 14A of the Act could be made for the Asst Year 2004-05 by the Learned AO in the assessment framed u/s. 153a of the Act in the absence of any incriminating materials found during the curse of search with regard to the relevant assessment year and with regard to the relevant issue. With regard to the claim of deduction u/s 80IB of the Act for the Asst Years 2007-08 and 2008-09 are concerned, we find that the same is only consequential in nature and once the assessee has been granted deduction u/ s 80IB of the Act for the initial assessment year i.e. Asst Year 2003-04, the grant of deduction under the said section in respect of the same unit is only academic and hence the assessee is entitled for deduction u/ s 80IB of the Act for the Asst Years 2007-08 and 2008-09. Accordingly, the ground raised by the revenue in this regard for the assessment years 2007-08 and 2008-09 are dismissed." Since the decisions are rendered by us on legal grounds, we refrain to give our decision on the merits of the issues." Budhiya Marketing Pvt. Ltd. & Ors. Vs. ACIT in ITA Nos-1545-1546/Kol./2012 [reported in (2015) 44 CCH 03441 dt. 10.07.2015 (ITAT Kolkata) "The issue whether the addition in an assessment framed under section 153A can be made on the basis of the incriminating material found during the course of the search where the assessment has not been abated, has not been considered or decided by this Tribunal. Therefore, this decision, in our opinion will not assist the revenue while disposing of the plea of the assessee that since no incriminating material is found during the course of the search relating to the share capital and the share premium, therefore, no addition can be made while making an assessment under section 153A of the Income Tax Act. No contrary decision was brought to our knowledge by the ld. D.R. In

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 6 view of the aforesaid discussion and the decision of the Hon'ble Special Bench, Bombay High Court, as well as Hon'ble Delhi High Court, we confirm the order of the CIT(Appeals) deleting the addition made in each of the assessment years as we hold that the Assessing Officer was not correct in law in making the addition in the assessment made under section 153A read with section 143(3) when no incriminating material was found during the course of the search in respect of the addition made by him. We accordingly partly allowed the Cross Objections taken by the assessee. " ACIT Vs. Shanti Kumar Surana & Ors. in IT(SS}A Nos. 12 to 20 and CO Nos. 13 to 20 (reported in 44 CCH 241) order dt. 22.06.2015(ITAT Kolkata) “In view of the facts in. entirety and the legal principles enunciated by Hon'ble Bombay High Court In the case of Continental Warehousing Corporation (Nhava Sheva) Ltd., supra, of Hon'ble Allahabad High Court In the case of Shaila Agarwal, supra and Mumbai Special Bench decision in the case of All Cargo Global Logistics, supra, we are of the view that there is no incriminating material found during the course of search in the present case for these assessment year, except the statement in his remand report dated 23.09.2011 and despite number of opportunities revenue could not produce any incriminating material before the Bench and the assessments are already completed for these assessment years originally, the assessment s framed u/s. 153A of the Act is in valid and hence, quashed.” Trishul Hitech Industries Ltd Vs. DCIT-CC-XI. IT(SS)A 84-86/Kol/2011 dt. 24.09.2014 (ITAT Kolkata); From the above various discussions and precedence we are of the considered view that assessment in the impugned assessment years have been completed u/ s 143(3) of the Act. Hence the assessment for the concerned assessment year does not abate. Hence de horse any incriminating material, AO cannot made any addition in these cases. Accordingly we hold that assessment u/s 153C of the Act in these cases de horse any incriminating material is not sustainable. Hence we set aside the orders of the authorities below and decide the issue in favour of assessee. Since we are quashing the appeals on jurisdiction we are not adjudicating the merits of the appeal as the same is now only of academic interest. “ DCIT Vs. Merlin Project Ltd. IT(SS)A No-138/Kol/2011 Dt. 14.11.2013 (ITAT Kolkata); "We have heard the rival submissions and perused the material available on record. The undisputed fact about this case is that the original assessment in this case was completed under section 143(3) in which deduct ion was allowed in entirety under sect ion 80IB of the Act inter alia on the amount of interest income. It is also undisputed that no incriminating material was found during the course of search casting doubt about the allowability or otherwise of such deduction under sect ion 80IB. This fact has been fairly admitted by Id. D.R. during the course of proceedings before us as well. The Mumbai Bench of the Tribunal in the case of ACIT vs. Pratibha Industries (2013) 141 ITD 151 (Mum.) has held, inter alia, that having done original assessment u/s 143(3), if no incriminating material is found during the course of search, then it is permissible to make any addition in the assessment under section 153A pursuant to search action. The Special Bench of the Tribunal in the case of All Cargo Global Logistics Limited vs. DCIT (2012) 137 ITD 217 (SB)(Mum.) has also held to the same extent . In view of the foregoing discussion, we are of the considered

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 7 opinion that no exception can be found to the view taken by CIT(Appeals} for deciding this issue in assessee's favour. Before parting with this matter, we want to make it clear that our decision is based in the backdrop of the facts that the deduct ion under sect ion 80IB could not have been tinkered with because no incriminating material was found during the course of search on this issue when original assessment amounting deduct ion on this issue was completed under section 143(3). We have not expressed any opinion on the merits of the case about the allowability or otherwise of deduct ion under section BOIB on interest income arising the present facts and circumstances. In the result, the appeal filed by the Revenue stands dismissed." LMJ International Ltd Vs. DCIT(2008) 119 TTJ (Kot) 214. (ITAT Kolkata); "Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed; items of regular assessment cannot be added back in the proceedings under s. 153A/153C when no incriminating documents were found in respect of the disallowed amounts in the search proceedings. Furthermore, The Hon'ble Supreme Court has dismissed department's special leave petition (SLP) against the judgment dt.06-07 -2015 of the Delhi High Court in ITA No.369 of 2015 where the High Court held that no substantial question of law arose since there was factual findings that no incriminating evidence relate to share capital issued was found during the course of search. The AR has filed a written submission on this issue which is as under: "Whether section 68 could be invoked where no incriminating evidence related to share capital found. 7-12-2015 : Their Lordships MADAN B LOKUR and S A BOBDE JJ dismissed the Department's special leave petition against the judgment dated July 6, 2015 of the Delhi High Court in ITA No.369 of 2015, whereby the High Court held that no substantial question of law arose since there was a factual finding that no incriminating evidence related to share capital issued was found during the course of search and that the Assessing Officer was not justified in invoking section 68 of the Act for the purposes of making additions on account of share capital Pr. CIT v Kurele Paper Mills P Ltd, SLP (C) No.34554 of 2015". 7. The AR has also brought on record the case law of CIT, Kolkata-III vs Veerprabhu Marketing Ltd [2016] 73 taxmann 149 Kolkata In this case The Honorable Calcutta High Court expressed the following views: "We are in agreement with the views of the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances."

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 8 The Hon'ble Kolkata High Court in the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573(Del) Search and seizure-New scheme of assessment in search cases- Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies-Search was also carried out in the premises of the assessee-Pursuant to the search a notice u/s153A(1) was issued to assessee and thereafter he filed returns-As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1),assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies- AO declined to rectify the assessments- CIT also held that addition need not be restricted only to the seized material-ITAT on appeal however deleted addition on grounds that the additions made for relevant AY's u/s 2(22)(e} were not based on any incriminating material found during search operation and same was not sustainable in law- Issue was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search-Held, present appeals concerned AYs,2002-03, 2005-06 and 2006-07-0n the date of the search the said assessments already stood completed- Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed-Question framed by the Court was answered in favour of the assessee and against the Revenue-Revenue's appeal dismissed It was also informed/brought on record that the order passed by the Hon'ble Calcutta High Court has attained finality as the CBDT in it's letter No.ADG(L&R)- II/EZ/Pr.CIT(C)-1/Kolkata/1184/2016/729 dt.07/08-02-2017 has intimated that the proposal to file SLP in above case has not been approved by the Board. Apart from above mentioned case laws brought on record, the AR has also filed copies of appeal orders in different cases passed by my three esteemed predecessors on the same issue wherein they have discussed in length and arrived at conclusion that additions in search assessments u/s 153Aj 153C cannot be made except on the basis of the incriminating material found in the search. (reference a) appeal no.442/CC-3(1)/CIT(A)-21/14-15, date of order 05-12-2014, b) appeal no.440/CC-3(1)/CIT(A)-21/14-15, date of order 15-01-2015 c) appeal no.547/CC-3(1)/CIT(A)-21/14-15, date of order 10-04-2015 d) appeal no. 129/CC-XVII/CIT(A)-21/9-10, date of order 23-09-2010 e) appeal no.292/CC-VI/CIT(A)-C-VI/11-12, date of order 23-10-2013. I have considered the findings of the AO in the assessment order, different case laws brought on record and appeal orders passed by my predecessors on this legal issue. I find that it seems that during the search and seizure operations conducted u/s 132 of the I T Act, 1961, in the case of Sri Balaji Log Products Pvt Ltd (SBLP) no incriminating documents/papers related/pertaining to the assessee were seized. At least, additions made by the AO in the assessment order passed u/s 153C/143(3) are not based on any incriminating documents/papers seized during the search operation under identification mark SBLP-4. There was neither any search nor survey in this case. It would also not be out of context to mention here that in this case, on the date of search, no assessment for this year was pending. Therefore,

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 9 keeping in view the ratio decided by the Jurisdictional bench of Kolkata Tribunal in cases referred above and the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra) in the light of CBDT's decision of not filing SLP in this case in the Supreme Court and keeping in view the Apex Court's decision to dismiss SLP on similar issue in the case of Pr CIT vs Kurele Paper Mills Pvt Ltd : SLP (C) No.34554 of 2015 dt.07-12-2015, I am of this view that in order to maintain judicial continuity on this issue and respectfully following the ratio decided by the Hon'ble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra), assessee's appeal on grounds no 1 and 2 are allowed.” 5. It has come on record that there was no incriminating material found or seized during the course of the impugned search dated 21/22.11.2013. This clinching fact has gone unrebutted from the Revenue side. We therefore hold that CIT(A) has rightly quashed the impugned assessment to be not based on any incriminating material found or seized during the curse of search as per law settled by hon'ble jurisdictional high court in Veer Prbhu Marketing Ltd. (supra) and other judicial precedents. 6. Learned CIT-DR next places on record the relevant satisfaction dated 16.03.2015 reading as under:- “Prakash Ply Centre Pvt. Ltd. PAN: AADCP7132J A.Y 208-09 to 2013-14 and A.Y 2014-15 16/03/15 A search & seizure operation was conducted in the “Prakash Group” of cases on 21/22-11-2013. The assessee named M/s Prakash Ply Centre Pvt. Ltd., is connected with this group. During the curse of search operation, several books of account and documents were found and seized such as SBLP/01 to SBLP/05. On perusal of the seized documents, some documents vide ID marked SBLP/04 are related to M/s Prakash Ply Centre Pvt. Ltd. Thus, it is reason to satisfy that this case is considered to be a fit case for issuing a notice u/s.153C of the Act. Hence, issued notice u/s.153C to the assessee for compliance.” 7. The Revenue’s case accordingly is that the CIT(A) has erred in holding that the impugned assessment(s) are also invalid on account of no satisfaction having been recorded at the Assessing Officer’s behest. We find these Revenue’s arguments to be not sustainable since the Assessing Officer’s above extracted satisfaction note has nowhere indicated that the relevant category of assets or books of account etc. “belongs to” the assessee / a third person than that subjected to the search in issue. We make

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 10 it clear that the legislature has included “relates to by in sec. 153C way of an amendment by the Finance Act, 2015 with effect from 01.06.2015 whereas the satisfaction in issue was recorded much earlier than that on 16.03.2015. We hold that the CIT(A)’s findings under challenge to this effect deserve to be upheld. We order accordingly. The Revenue’s appeal(s) IT(SS)A No.24/Kol/2017 and ITA No.1313/Kol/2017 for assessment year(s) 2009-10 and 2011-12 fail accordingly. The assessee’s cross objection(s) CO No.79 & 81/Kol/2017 are dismissed as not pressed in view of the learned counsel fair statement made at the bar during the course of hearing. 8. We now come to the taxpayer’s appeal IT(SS)A No.07/Kol/2017 raising the latter issue of disallowance of sec. 35(1)(ii) deduction on account of its contribution made to the “School of Human Genatics and Population Health”. Both the lower authorities hold the above recipient organisation to be engaged in accommodation entry providing business than carrying out any scientific research and development. Learned CIT-DR refers to the lower authorities respective findings in seeking to confirm the impugned disallowance. We find no substance in Revenue’s instant plea since this tribunal’s co-ordinate bench decision in ITA No.s 341-342/Kol/2019 M/s Shyam Sunder Co. Jewellers vs. ACIT, Circle-2(2), Kolkata decided on 26.04.2016 deletes the very disallowance in case of the above stated recipient itself in assessment years 2013-14 and 2014-15 as under:- “6. Ground No.2 to 4 for the Assessment Year 2013-14 and Ground No.2 to 4 for the Assessment Year 2014-15 are on the issue of disallowance of claim of deduction u/s 35(1)(ii) of the Act of donations given to SHG &PH. The Assessing Officer disallowed the claim on the ground that survey was conducted on SHG &PH and it came to light that the donations received by cheque/RTGS were returned in cash to the donors. 7. Similar issues on identical facts and arguments were considered by different Benches of the Tribunal which are as under. 7.1 The Hon’ble Kolkata ITAT, B Bench in the case of Tushar Chawda, in ITA No.2362/Kol/2017 dated 21.03.2018 has held as follows: This is an appeal by the assessee directed against the order of the Commissioner of Income Tax-(A)-9, Kolkata relating to A.Y. 2014-15. 2. In this case the assessee had paid an amount of Rs.15,00,000/- as deduction u/s 35(1)(ii) of the I.T.Act, 1961 (Act) to School of Human Genetics

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 11 and Population Health and claimed weighted deduction u/s 35 of the Act [175% of 1500000] amounting to Rs.26,25,000/- from income under the head business. 3. The AO rejected this claim by observing as follows :- “From the submissions of the assessee, it is clear that the assessee made the donation with a motive to get a huge deduction from business income only to reduce the total income for avoiding the payment of tax. Further, the .assessee has failed to substantiate the payment of donation satisfactorily. It is clear that the donation, made by the assessee, was a bogus payment and to get some benefit for which the assessee chose this particular organization and particular FY. The assessee must have got some benefit in lieu of donation payment of Rs.15,00,000/-. Hence, the weighted deduction claimed u/s.35 amounting to Rs. Rs.26,25,000/- from income under the head business is disallowed and added to the total income of the assessee for the AY 2014-15.” 4. The ld. CIT(A) had rejected the contentions of the assessee by observing as follows :- 4.1. 1 have considered the submission of the appellant and perused the relevant assessment records. The M/S School of Genetics and Population Health, Kolkata had been granted approval u/s 35(1)(ii) of the I.T Act, 1961 vide Notification No. 4/201O/F. o. 203/64/2009/ITAT dated 28.01.2010 in the Official Gazetted by the Central Government. Any expenditure to such Notified .Institution which has as its object the undertaking of scientific research is eligible for weighted deduction equal one and three fourth times of any sum paid. However, the Ministry of Finance (Department of Revenue ) (Central Board of Direct Taxes) Vide Notification No. 82/2016/F.No. 203/64/2009/IT A.I1 dated 15.09.2016 in The Gazette of India: Extra Ordinary had rescinded the Notification granting approval by the Central Government to the appellant for the purpose of clause (ii) of sub section (1) of section 35 of the I.T. Act, 1961, read with Rule 5C and 5E of the Income tax Rule, 1962. The Notification reads as follows: "'Ministry of Finance, (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi, the 15th September, 2016, S.O. 2961(E)-In exercise of the powers conferred under clause (ii) of sub- section (1) of section 35 of the Income-tax Act, 1961 read with Rule 5e and 5E of the Income-tax Rules, 1962, the Central Government hereby rescinds the notification of the Government of India, Ministry of Finance, Department of Revenue number 4/2010 dated 28.01.2010 published in Gazette of India , Part 11, Section 3, Sub-section (ii) dated 28.01.2010 vide S.O. 348 with effect from 1st April, 2007 and shall be deemed that the said notification has not been issued for any tax benefits under the Income-tax Act, 1961 or any other law of the lime being in force [Notification No. 82/2016/F.No.203/64/2009/ITA- ll] Deepshikha Sharma, Director." The above notification makes clear that the earlier notification. No. 4/2010 dated 28.01.2010 shall be deemed not to have been issued for any income- tax benefits under the Income-tax Act. Therefore, the payment of Rs.15,00,000/- for the purpose of availing weighted

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 12 deduction of 175% u/s 35(1)(ii) of the Act made to M/s School of Human Genetics and Population Health, Kolkata is denied. It may be clarified here that explanation to section 35(l)(iii) of the Income-tax Act shall not come to the rescue of the appellant as it relates, only to approvals which have been withdrawn subsequent to the payment made to Institutions to which clause (ii) or cause (iii) applies. In the case of M/s School of Human Genetics and Population Health, Kolkata, the notifications had been deemed not to have been issued for any tax benefits under the Income-tax Act, 1961 or any other law of the time being in force. Though the appellant made a donation of only Rs.15,,00,000/-, however, he has claimed u/s 35(1)(i) and (ii) weighted deduction amounting to Rs.26,25,,000/- from his return income. The disallowance is, therefore, restricted to the deduction claimed at Rs.26,25,,000/-.” 5. After hearing rival contentions, I am of the view that the assessee cannot suffer on account of withdrawal of notification given to M/s. School of Human Genetics and Population Health, Kolkata granting approval u/s 35 (1) (ii) of the Act. This recognition was originally granted on 28th January, 2010 and renewed on 17th June, 2010 by Government of India. Ministry of Science and Technology. In response to letter dated 03.02.2014 given by M/s. School of Human Genetics and Population Health, to the assessee, donation of Rs.15,00,000/- was made on 31.03.2014 by the assessee. The said amount was given to the donee on 31.03.2014 and withdrawal was on 15.09.2016. i.e. after 17 months from the date of donation made in March, 2014. Such withdrawal in my view cannot take away the vested right of the assessee for claiming deduction under Section 35 (1) of the Act. 7.2 The Tribunal in the case of Rajda Polymers vide ITA No.333/Kol/2017 order dated 08.11.2017 at page 7 has held as follows:- “5.6. We find that the ld CITA had made an observation which has been heavily relied upon by the ld DR that the assessee’s line of business has got nothing to do even remotely with the healthcare or herbal healthcare industry much less in the area of research thereon and accordingly there was no need for the assessee to give donation of Rs 14,00,000/- to HHBRF . We find that this aspect has been duly addressed by the assessee by stating that one Cardiologist Doctor had introduced the assessee to HHBRF and donations were given after due satisfaction of the assessee based on personal visits to the two research centres of HHBRF and activities carried on by them. Moreover, it is well settled that it is always the prerogative of the assessee to give or not to give any donation to a particular institution, which wisdom cannot be questioned by the revenue. The question of business expediency of an expenditure had to be viewed from the point of view of the businessman and not from the view point of the revenue. The businessman knows his interest best. However, it cannot be denied that this donation paid to HHBRF is free from any suspicion. It definitely leads to further probe by the revenue, which has been carried out by the revenue by summoning the Director of HHBRF. The said Director Shri Swapan Ranjan Dasgupta, though could not appear in person before the ld AO for crossexamination (which was sought by the assessee) but had confirmed in writing that the donations given by the assessee to HHBRF were genuine in nature and had further confirmed that

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 13 HHBRF had not paid any cash back to assessee in lieu of cheque donations paid to them. The revenue had left the matter at this stage itself and did not further probe into it to check the veracity of the confirmation made by Shri Swapan Ranjan Dasgupta. Therefore, the ld AO proceeded to make the addition only based on the statement recorded from Swapan Ranjan Dasgupta at the time of survey. It may be true that in the said statement, Swapan Ranjan Dasgupta may have deposed to the fact that HHBRF were in receipt of various donations from various persons in cheques and the same were routed back to the donors in cash after retaining certain portion as their commission and intermediaries’ commission. This is only a general statement given by Swapan Ranjan Dasgupta about the modus operandi carried out by HHBRF. But nowhere in the said statement or in the subsequent enquires / investigation, it came to light that the assessee herein had indeed received back the cash in lieu of cheque donations given to HHBRF. This serves as a clinching missing evidence in the entire gamut of this case. 7. Respectfully applying the proposition of law laid down in this case law to the facts of case on hand and as the donation to “ School of Human Genetics and Population Health” was made while it was holding the approval in question, we direct the AO to grant the said deduction as claimed. In the result this issue is decided in favour of the assessee. 8. In the result the appeal of the assessee is allowed. 7.3 The Kolkata ITAT in the case of Zenith Credit Corporation in ITA No.718/Kol/2018 pronounced on 20th July, 2018 held as follows:- This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-10, Kolkata, (hereinafter the ‘Ld. CIT(A)’), dt. 23/02/2017, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2014-15, on the following grounds:- “1. For that the Ld. CIT(Appeals) was wrong and unjustified in confirming the disallowance of deduction u/s 35(1)(ii) of Rs.3,50,000/- on the donation of Rs.2,00,000/- made to School of Human Genetics & Pollution Health without properly appreciating the submission of the appellant. The court decisions cited by the Ld. CIT(Appeals) are not applicable in the facts of the appellant’s case. 2. For that the appellant craves leave to alter, amend, modify any of the grounds and/or take additional ground before or at the time of hearing of this appeal.” 2. Heard both the parties. The ld. Counsel for the assessee submits that from the statement recorded and relied upon by the Assessing Officer of Shri Avijit Sinha Roy, it is clear that he stated that after February, 2011, he left this activity of providing bogus donations for commission. He drew the attention of the Bench to page 3 para 6.6. of the assessment order and submitted that the donation in question was made on 03/06/2014. Thus, he submits that reliance placed on this statement of Shri Avijit Sinhar Roy, for making this addition, is wrong. He further submits that no opportunity was provided to the assessee for cross-examination of the persons on whose statements the revenue relied upon to make this addition. He submitted that under similar circumstances the Kolkata ‘SMC’ Bench of

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 14 the Tribunal in the case of Tushar Chawda vs ITO in ITA No. 2362/Kol/2017, order dt. 21/03/2018, and the Kolkata ‘B’ Bench of the Tribunal in the case of DCIT vs. M/s. Maco Corporation India (P) Ltd. in ITA No. 378/Kol/2017, order dt.13/04/2018, adjudicated the issue in favour of the assessee. 2.1. The ld. D/R, on the other hand submitted that statements were recorded from key persons of the Trust and in these statements, these persons have admitted that such accommodation entries were provided for donations. He specifically referred to question no. 12 at page 7 of the assessment order, wherein, Smt. Samadrita Mukherjee Sardar, secretary of the School of Human Genetics and Population Health, had admitted to such bogus entries. He further referred to pages 11 of the assessment order and submitted that Shri Avijit Sinha Roy had specifically stated that this amount of Rs.2 Lakhs from M/s. Zenith Credit Corporation was a bogus transaction. In his rejoinder, the ld. Counsel for the assessee submitted that, when Shri Avijit Sinha Roy has in his sworn statement stated that he has left his work of providing bogus donations far back in the year 2011 and hence, the question of his arranging these donations in the year 2014, does not arise. He further pointed out from the statement at page 11 of the assessment order, it is clear that the list was prepared by the revenue authorities and that Shri Avijit SInha Roy has simply signed the list by noting that he has seen the list. He submitted that the list cannot be taken as evidence. He submitted that opportunity of cross- examination has not been provided in this case and hence no reliance can be placed on the statements, based on which the revenue authorities to make this addition. 3. After hearing rival contentions, perusing the papers on record, orders of the authorities below as well as case-law cited, I hold as follows:- I find that in the statement recorded from Shri Avijit Sinha Roy u/s 131 of the Act, on 13/04/2015 he states that after the month of February, 2011, he left this bogus donation work. On the other hand, he has signed a declaration on 30/07/2015. The list prepared by the revenue was signed with a remark that he has seen the list. There is a contradiction in these two. In such circumstances, it has to be seen as to which is correct. No opportunity of cross-examining Shri Avijit Sinha Roy has been provided to the assessee. Hence the declaration as well as the statement cannot be the basis of addition. Similarly, the statement of the key persons of the trust cannot be the basis of addition as no cross-examination of witness was provided. No proof of money being returned is available with the revenue. 3.2. Similar view was taken by the ‘B’ Bench of the Tribunal in the case of DCIT vs. M/s. Maco Corporation (India) Pvt. Ltd. in ITA No. 16/Kol/2017; Assessment Year 2013-14, order dt. 14/03/2018. 4. Consistent with the view taken therein, we allow this appeal of the assessee and direct the Assessing Officer to grant the necessary deductions. 5. In the result, appeal of the assessee is allowed. 7.3 We also find that similar issue came up before the co-ordinate bench of this tribunal in the case of Saimed Innovation vs ITO in ITA No. 2231/Kol/2016 for Asst Year 2013-14 dated 13.9.2017, wherein it was held as under:-

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 15 “9. We note that the sole basis for making the addition is on the basis of the statement recorded on oath during survey at M/s. Herbicure of Shri Swapan Ranjan Dasgupta, other than the said statement there is no other evidence to show that the assessee has received back the donation as suggested in his general statement about providing accommodation entry by Shri Swapan Ranjan Dasgupta. We also note that the said Shri Swapan Ranjan Dasgupta has not stated anywhere that the assessee indulged in bogus donation or that the amount donated to it (M/s. Herbicure) was given back to the assessee after deducting the commission. We note that the statement recorded on oath during survey cannot be the sole basis for making the disallowance as decided by the Hon'ble Supreme Court in CIT Vs. S. Kader Khan Son (2013) 352 ITR 480 (SC). In any case, if the AO was of the opinion that the statement of Shri Swapan Ranjan Dasgupta, the founder Director of M/s. Herbicure has adversely affected the veracity of the donation made by the assessee then he was duty bound to summon Shri Swapan Ranjan Dasgupta and allowed the assessee to have cross examined him, failing which the statement of Shri Swapan Ranjan Dasgupta could not be used against the assessee trust as held by the Hon'ble Supreme Court in Andaman Timbers Ltd. Vs. Commissioner of Central Excise 62 Taxman 3. We note that the AO had in fact, recorded the fact that the partners of the assessee firm desired to cross examine the founder Director of M/s. Herbicure Shri Swapan Ranjan Dasgupta regarding the purported deposition made at the time of survey. However, AO did not grant him that opportunity to cross examine Shri Swapan Ranjan Dasgupta. We also note that the AO issued notice u/s. 131 of the Act to the partners of the assessee firm and has recorded their statement on oath on 28.12.2015. We note for question no. 14 as to how the partner knew about M/s. Herbicure, the partner of the assessee firm has answered that Dr. Bhuban Chakraborty, a Cardiologist friend introduced them to M/s. Herbicure and to question no. 15 as whether the partners have visited the office of M/s. Herbicure to which the partners answered that they had visited the premises of M/s. Herbicure on two occasions and for question no. 16 as to whether the partners were satisfied with the work of scientific research carried on by the said M/s. Herbicure, the partners of the assessee firm had replied that during their visit at Pailan and Baral they were satisfied with the scientific research work and for question no. 17 the partners replied that they had seen the certificate issued by Govt. of India and also have gone through the research paper of the people working there. For question no. 20 they have given the name of the doctor who was a Cardiologist who introduced them to M/s. Herbicure. We note that the AO enquired about Dr. Bhuban Chakraborty's address for which the partner replied that the doctor resides at Kshudiram Sarani, Rathtala, Kolkata. For question no. 21 as to whether they knew about the Directorate of Investigation, Kolkata carried out survey u/s. 133A and that its investigation is found that the activities were not genuine, the partners replied that they were not aware of the survey, however, they added that after their visit of the two centers they were on a bonafide belief that M/s. Herbicure was a competent institute and based on the recommendation of the Cardiologist Dr. Bhuban Chakrabrty they made donation to the said concern. We also note that the AO issued summons to Shri Swapan Ranjan Dasgupta who did not appear for cross examination due to ill health but the said Shri Dasgupta confirmed the donations made by the assessee firm to M/s. Herbicure in writing to the AO and clearly stated that no money was refunded back to assessee firm, which fact has been reproduced by the AO at page 7 of his order as under:

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 16 "Shri Swapan Ranjan Dasgupta, Director of M/s Herbicure Healthcare Bio-Herbal Research Foundation had filed a letter on 28/01/2016 stating "Referring to the above and your comments on my reply dated 22.01.2016, I would further request your good office to elaborate the financial years in question to enable our Accounts Deptt for verification and submission. However, we apparently observe from our records that following donations were received by us from M/s. Saimed Innovation, the assessee in the financial years mentioned against each: FYs Amount Mode of transaction Date Receipt No. 2012- 13 7,51,000/- RTGS:UTR No. BARBH 15.03.2013 HHBHRF/15-03-13/004 13074606758 2012-13 7,51,000/- RTGS:YTR Bi, VARVG 26.03.2013 HHBHRF/26-03-13/004 13985899500 Further, it is submitted for your kind record that no money was refunded to the above named assessee against donations given by them. Meantime, I may submit that I am critically indisposed due to acute lumber scoliosis and am not able to move. I am under strict medical supervision. As such, my personal appearance may kindly be waived on compassionate ground. I am attaching the current medical prescription/advice along with MRI reports for your kind record. However, the information as submitted above may please recorded as my witness." 10. Thus we note from the entire facts and circumstances, that the AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta during survey conducted at the premises of M/s. Herbicure. We have reproduced Question no. 22 and 23 and answers given by Shri Swapan Ranjan Dasgupta, wherein he admits to provide accommodation entries in lieu of cash. This information we should say can be the tool to start an investigation when the assessee made the claim for weighted deduction. The general statement of Shri Swapan Ranjan Dasgupta against donation made the claim of assessee for deduction suspicious. However, when the AO investigated, Shri Swapan Ranjan Dasgupta has confirmed that M/s. Herbicure was in receipt of the donation and it has not given any refund in cash, then the sole basis of disallowance of claim as a matter of fact disappeared. It should be remembered suspicion howsoever strong cannot take the place of evidence. The confirmation from Shri Swapan Ranjan Dasgupta fortifies the claim of the assessee for weighted deduction u/s. 35(1)(ii) of the Act. The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held by Hon'ble Supreme Court in Kader Khan & sons (supra). Moreover, we note that if the AO was hell bent determined to disallow the claim of the assessee, then he should have granted an opportunity to cross examine Shri Swapan Ranjan Das Gupta and Shri Kishan Bhawasingka as held by Hon'ble Supreme Court in Andaman Timber (supra). 11. In the light of the aforesaid facts and circumstances, we cannot sustain the order of the authorities below. Therefore, we set aside the impugned order and direct the AO to allow the deduction of Rs.26,28,500/- u/s. 35(1)(ii) of the Act. 12. In the result, appeal of assessee is assessee is allowed”.

IT(SS)A No.24-25 & 07/Kol/2017, ITA 1313-1314/Kol/2017 AYs 09-10 to 13-14 ACIT CC-3(3) Kol vs. M/s Prakash ply Centre Pvt. Ltd. Page 17 8. The facts of this case as identical with the facts of this case decided by the ITAT cited above. Copy of the statements was not confronted to the assessee. No evidence of the money being returned in cash is brought on record. The certificate is valid as on the date of donation. Hence, respectfully following of the judgment of Co- ordinate Bench of the Tribunal, we allow these grounds no.2 to 4 for Assessment Year 2013-14 & 2014-15.” We adopt the above detailed discussion mutatis mutandis to delete the impugned disallowance. This assessee’s appeal IT(SS)A No.07//Kol/2017 is allowed on merits. 8. To sum up, Revenue’s all four appeal(s) IT(SS)A No.24-25/Kol/2017 & ITA No.1313-1314/Kol/2017 are dismissed in above terms whereas assessee’s cross objections CO Nos.79-82/Kol/2017 are dismissed as not pressed. The assessee’s appeal IT(SS)A No.07/Kol/2017 is allowed in above terms. Ordered accordingly. A copy of this order be placed in the respective case files. Order pronounced in the open court 18/09/2019 Sd/- Sd/- (लेखा सद�य) (�या(यक सद�य) ( A.L.Saini) (S.S.Godara) (Accountant Member) (Judicial Member) Kolkata, *Dkp )दनांकः- 18/09/2019 कोलकाता । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. आवेदक/Assessee-M/s Prakash Ply Centre Pvt. Ltd., 4th Fl, 41, B.B.Ganghly Street Central Plaza, Kolkata-12 / Prakash Ply Centre Pvt. Ltd., 61, Central Avenue, Boubazar, Crossing, Kolkata-12 2. राज�व/Revenue-ACIT/DCIT Central Circle-3(3), 4th Floor, 110, Shantipally, Kolkata-107 3. संबं4धत आयकर आयु5त / Concerned CIT Kolkata 4. आयकर आयु5त- अपील / CIT (A) Kolkata 5. 8वभागीय �(त(न4ध, आयकर अपील�य अ4धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड= फाइल / Guard file. By order/आदेश से, /True Copy/ सहायक पंजीकार आयकर अपील�य अ4धकरण, कोलकाता ।