Income Tax Appellate Tribunal - Ranchi
Basudha Coke India Pvt Ltd, Kolkata vs Dcit Central Circle, Dhanbad on 15 February, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI Before Shri S.S.Godara, Judicial Member and Dr. A.L. Saini, Accountant Member IT(SS)A No.01/Ran/2017 Assessment Year :2011-12 Basudha Coke (India) V/s. DCIT, Central Circle, Pvt. Ltd. Chhaparia & Dhanbad, Aayakar Associates, Chartered Bhawan, L.C. Road, Accountants, 8, Camac 3 r d Floor, Room No. Street, Shantiniketan 405-8, Dhanbad-
Building, 5 t h Floor, Room 826001
No.2, Kolkat-17
[P AN No. AABCB 0602 M]
अपीलाथ /Appellant .. यथ /Respondent
अपीलाथ क ओर से/By Appellant Shri S.K. Poddar Advocate &
Devesh Poddar, Advocate
यथ क ओर से/By Respondent Shri Inderjit Singh CIT-DR
सन
ु वाई क तार ख/Date of Hearing 09-01-2019
घोषणा क तार ख/Date of Pronouncement 15-02-2019
आदे श /O R D E R
PER BENCH:-
This assessee's appeal for assessment year 2011-12 arises against the Commissioner of Income Tax (Appeals)-3 Patna's orders dated 19.10.2016 passed in case Nos.132/CIT(A)-3/PAT/14-15/ involving proceedings u/s 153A r.w.s. 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short 'the Act'.
Heard both the learned representatives. Case file perused
2. The assessee's sole substantive grievance challenges correctness of both the lower authorities action addition to its share capital sums of Rs.45 lac. to be in the nature of unexplained cash credits u/s. 68 of the Act.
IT(SS)A No.01/Ran/2017 A.Y. 2011-12 Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 2
3. The assessee has raised his legal ground first of all challenging validity of sec. 153A proceedings for the reason that the department had not come across any incriminating material in the two assessment years. Learned CIT- DR's case on the other hand is that the lower authorities have rightly ensured the impugned proceedings against the assessee in these two assessment years as it failed to prove genuineness and creditworthiness of the share capital / premium in issue. We find no substance in Revenue's instant arguments. The clinching fact is that remains unrebutted from the Revenue side is that assessee's balance-sheet for the impugned two assessment year had already disclosed the relevant share capital / premium sums and therefore, it cannot be held that the same saw light of the day in the course of search only. This tribunal's co-ordinate bench's decision in M/s Garg Brothers Pvt.Ltd. vs. DCIT CC-3(2), Kolkata decided on 18.04.2018 deleting identical addition as under:-
50. We have heard both the parties and perused the materials available on record, we note that there was a search u/s 132(1) of the Act which was conducted against the assessee company on 29.05.2012 (hereinafter referred to the 'first search') triggering section 153A proceedings against the assessee which proceedings culminated in the AO framing order u/s 153A/143(3) passed on 30.03.2015, which order of the AO has been interfered by the ld. Pr. CIT exercising his jurisdiction u/s 263 of the Act, which action of the ld. CIT is under challenge before us. Before this first search, we note certain important facts which are germane to decide the "lis"
before us. We note that the assessment year under consideration is Assessment Year 2009-10. It is an undisputed fact that the original return of income was filed by the assessee on 25.09.2009 declaring total income of Rs.4,28,560/- .Thereafter, the return of income was processed u/s 143(1) dated 25.11.2011. It is pertinent here to note that no notice u/s 143(2) was issued against the assessee for scrutiny of the assessment and it got expired on 30.09.2010. Therefore, when the first search happened on 29.05.2012, there was no assessment proceeding pending before the Assessing Officer on the date of ITA No.2519/Kol/2017 M/s. Garg Brothers Pvt. Ltd.
ITA No.2520/Kol/2017 M/s. Cliff TreximPvt. Ltd. ITA No.2521/Kol/2017 M/s. SpanFoundation Pvt. Ltd. Assessment Year: 2009-10 36 first search. The Assessing Officer, thereafter, completed the assessment u/s 153A read with 143(3) at Rs.7,73,640/- on 30.03.2015 by making additions of Rs.3,41,973/- u/s 14A and other additions of Rs.2812 & Rs.499 to the returned income by the assessee to the tune of Rs.4,28,560/-. 51. We note that on 02.03.2016 another search and seizure operation was conducted on assessee (hereinafter termed as "second search"). Thereafter, impugned action of Pr. CIT started by issuance of a show-cause notice dated 04/09.11.2016 calling upon the assessee as to why the order passed by the Assessing Officer dated 30.03.2015 u/s 153A/143(3) should not be interfered by invoking his revisional jurisdiction u/s 263 of the Act. According to the ld. Principal CIT, the order passed by the Assessing Officer dated 30.03.2015 (which is the assessment framed u/s 153A/143(3) as a fallout of first search) is erroneous and prejudicial to the interest of the Revenue because the Assessing Officer has not IT(SS)A No.01/Ran/2017 A.Y. 2011-12 Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 3 conducted proper investigation in respect of share capital and premium to the tune of Rs.10.40 crores. In the SCN the ld. Principal CIT, has mentioned about certain statement recorded by the Investigation Wing during search and seizure dated 02.03.2016 (second search) wherein the statement of certain purported entry operators were recorded against the assessee company in respect of the share capital introduced in the assessment year under consideration. Based on the aforesaid reasoning, the ld. Principal CIT found fault with the assessment order passed by the Assessing Officer u/s 153A/143(3) passed on 30.03.2015. The assessee company has challenged in the first place, the very usurpation of jurisdiction by ld. Principal CIT to invoke his revisional powers enjoyed u/s 263 of the Act. Therefore, first we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is there existing before the Pr. CIT to exercise his power. For that, we have to examine as to whether in the first place the order of the Assessing Officer ITA No.2519/Kol/2017 M/s. Garg Brothers Pvt. Ltd. ITA No.2520/Kol/2017 M/s. Cliff TreximPvt. Ltd. ITA No.2521/Kol/2017 M/s. Span Foundation Pvt. Ltd. Assessment Year: 2009-10 37 found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assessment of fact; or
(ii) incorrect application of law; or (iii)Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue "unless the view taken by the Assessing Officer is unsustainable in law". Taking note of the aforesaid dictum of law laid down by the Hon'ble Apex Court, let us examine whether the Assessing Officer passed order u/s 153A/143(3) dated 30.03.2015 (assessment framed after first search) is erroneous as well as prejudicial to the interest of the revenue. Undisputedly, the assessment year under question i.e. Assessment Year 2009-10 which was not pending before the Assessing Officer on the date of search on 29.05.2012 (first search), therefore, the assessment which is not pending before the Assessing Officer is an unabated proceeding and the Assessing Officer is empowered to make any addition only based on incriminating materials found/unearthed during search. This is a settled position of law and is no longer res integra. The following judgments are given in support of the above proposition of law:-
The Hon'ble Delhi High Court in Kabul Chawla (supra) has laid down the law which spells out the power of the AO while exercising power u/s 153A after search u/s 132 of the Act was conducted by the Revenue.
IT(SS)A No.01/Ran/2017 A.Y. 2011-12 Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 4
The same is reproduced as under: "Summary of legal position 37.On a conspectus of Section 153A(1) of the Act, read with provisions thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
(i)Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place.
ii. Assessments and re-assessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.
iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the `total income' of the aforementioned six years in separate will be only one assessment order in respect of each of the six `AYs " in which both the disclosed and the undisclosed Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material."
v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word `assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word `reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record the AO. vii. Completed assessment can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.
53. The Hon'ble Jurisdictional Calcutta High Court in Veerprabhu Marketing Ltd though in the context of section 153 of the Act has held as under:
"We agree with the view expressed by the Delhi High Court that incriminating material is pre-requisite before power could have been exercise u/s 153(C) R.W. Section 153(A). In the case before us, the AO has made a disallowance of the expenditure, which was held disclosed, for one reason or the order, but such disallowances made by the AO were upheld by the L.D.CIT (A) but the Ld. Tribunal deleted these disallowance. We find no infirmity in the aforesaid Act of the Ld. Tribunal. The appeal is therefore, dismissed.
54. The Hon'ble Apex court in the case of CIT v. Sinhgad Technical Education Society 397 ITR 344 in the context of section 153 of the Act has held as under:
"18) In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out IT(SS)A No.01/Ran/2017 A.Y. 2011-12 Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 5 and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred." Support, is also drawn from the following judgments:
i) Biswanath Garodia Vs. DCIT (2016) 76 taxmann.com81
ii) CIT Vs.Continental Warehousing (Nhava Sheva) Ltd (2015 374 ITR
645).
iii) Jai Steel (India) Jodhpur Vs. ACIT (2013) 259 CTR 281
iv) CIT Vs. Deepak Kumar Aggarwal (2017) 398 ITR 586
v) Principal CIT Vs.Dipak Jashvantala Panchal (2017) 397 ITR 253.
vi) Principal VIT vs.Lalit Jain (2017) 384 ITR 543
vii) Pr.CIT vs. Dvangi Alias Rupa (2017 394 ITR 184
viii) Chintels India Ltd Vs. DCIT (2017) 397 ITR 416
ix) Smt. Anjli Pandit Vs. ACIT (2017) 157 DTR (Mum) (Tri.) 17
x) Pr.CIT Vs. Meeta Gutgutia (2016)395 ITR 526. 55.
In view of the aforesaid ratio decidendi of the Hon'ble High Court as well as Hon'ble Supreme Court's decisions cited above, since assessment for Assessment Year 2009-10 was not pending before the Assessing Officer on the date of search i.e. on 29.05.2012 (first search), no addition can be made by the Assessing Officer without the aid of incriminating material unearthed during the search conducted on 29.05.2012. Therefore, we have to examine whether there was any incriminating materials unearthed by the Department during search conducted on 29.05.2012 (first search). We have gone through the assessment order of Assessing Officer in all the counts before us and we find that the Assessing Officer has not made a whisper of any incriminating material which has been unearthed/seized during first search on 29.05.2012. The Assessing Officer having no incriminating materials unearthed during the search on 29.05.2012 against the assessee company, did not make any additions (with the aid of any incriminating material) against the assessees before us for Assessment Year 2009-10. 56. We are aware of the fact that the Assessing Officer's role while framing an assessment is not only an adjudicator. The AO has a dual role to dispense with i.e. he is an investigator as well as an adjudicator;
therefore, if he fails in any one of the role as afore-stated, his order will be termed as erroneous. We note that in this case since there was no incriminating material unearthed during the first search, the Assessing Officer has not made any additions in his assessment order dated 30.03.2015 based on incriminating material since there was none unearthed. We take note that it is not the case of ld. Principal CIT that AO failed to made any additions/disallowances based on incriminating material seized/unearthed during search. On this finding of fact by us, we cannot term the assessment order passed by the AO u/s 153A/143(3) dated 30.03.2015 as erroneous.
57. However, we note that the ld. Principal CIT while invoking the jurisdiction u/s 263 of the Act, has taken note of the second search which happened on 02.03.2016 and has referred to the investigation carried out by the investigation wing after the IT(SS)A No.01/Ran/2017 A.Y. 2011-12 Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 6 second search on 02.03.2016. In this context, it would be appropriate to reproduce the again the show-cause notice issued by the Principal CIT which is as under:
OFFICE OF THE PR. COMMISSIONER OF INCOME TAX, CENTRAL, KOLKATA - 2 42 Aayakar Bhawa Poorva, 110, Shantipally, E M Bye Pass, Kolkata - 700 107. F.No. Pr.CIT/Central II/KOL/263/2016-17/6186 Dated: 04/11/2016 To The Principal Officer, M/s. Cliff Trexim (P) Ltd. 57, Burtolla Street, Kolkata - 700 007. Sir, Sub: Show Cause Notice u/s 263 of the I.T. Act, 1961 in the case of M/s. Cliff Trexim (P) Ltd..., (PAN-AABCC0961E) for the A.Y 2009-10. Please refer to the above. "Assessment for the A.Y 2009-10 u/s 153A of the Income Tax Act, 1961 in the case of M/s. Cliff Trexim Pvt. Ltd. which is a part of Banktesh Group was completed on 30.03.2015 by the DCIT, Central Circle 3(2), Kolkata. On analysis of assessment records, it is observed that in the year under consideration, the assessee raised share capital and premium to the tune of Rs.10.40 crore. During the assessment proceeding, the assessee furnished the list of investors who subscribed in shares of the assessee company. The assessee furnished the supporting documents regarding share transactions of investor companies. But no detailed investigation was carried out at the time of assessment regarding genuineness of introduction of share capital. Meanwhile a search operation against Banktesh group was once again conducted on 02.03.2016 by DDIT(lnv.), Unit 2(2),Kol. During the course of search & post search investigation it was found that accommodation entries in the form of bogus share capital have been taken by different group of companies by the said Group with the help of different known accommodation entry operators. The allotment of shares made by the above assessee amounting to Rs.10.40 crore. On 31.09.2009 is one of the transactions found as accommodation entry by the Investigation wing. The allottee companies were found to be bogus and non-existing. The statements of entry operators were also recorded during the search & seizure operation which confirmed the findings of the Investigation Wing. The entry operators admitted to have provided accommodation entry in the form of share capital/premium to the Banktesh Group of Companies in lieu of commission. In view of the above discussion, the assessment completed on 30.03.2015 may be erroneous in so far as it is prejudicial to the interest of the revenue. You are, therefore, requested to show cause as to why the Assessment Order passed on 30.03.2015 u/s.153A by the DCIT, Central Circle 3(2), Kolkata should not be treated as erroneous in so far as it is prejudicial to the interests of the revenue as per the provisions of sec.263 of the Income Tax Act." You are given an opportunity of being heard before the undersigned on 22.11.2016 at 3:00 P.M. at my office chamber of Aayakar Bhawan Poorva, Room No.301, 3rd Floor, 110, Shantipally, Kolkata - 700 107 to furnish your explanation in the matter. Yours faithfully, (ARVIND KUMAR, IRS) Pr. Commissioner of Income Tax (Central - 2), Kolkata.
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58. From a reading of the above show-cause notice of ld. Principal CIT when we analyse the same, what is revealed is the following:
(i) The assessment u/s 153A/143(3) against the assessee being a part of Banktesh Group for A.Y 2009-10 has been completed on 30.03.2015 by the AO. (ITA No.2519/Kol/2017 M/s. Garg Brothers Pvt. Ltd. ITA No.2520/Kol/2017 M/s. Cliff Trexim Pvt.
Ltd. ITA No.2521/Kol/2017 M/s. Span Foundation Pvt. Ltd. Assessment Year: 2009-10 commission they provided accommodation entry in the form of share capital/premium to the Banktesh Group of Companies (ix) In view of the aforesaid facts, the Pr. CIT is of the view that assessment completed on 30.03.2015 may be erroneous in so far as it is prejudicial to the interest of the Revenue.
59. Further, we note that pursuant to the aforesaid SCN, the assessee's replied to the Pr. CIT, extracts of which has been reproduced by the Principal CIT in the impugned order before us. In the impugned order, we note that the Principal CIT has added only the list of shareholders to whom the shares were allotted. In other words, other than the factual contents given in the SCN issued by him (supra), only the list of shareholders are reproduced by the Principal CIT in his order. In the impugned order of Principal CIT, after reproducing certain extracts of the reply of the assessee and judicial precedents, we note that the Principal CIT without giving any factual finding or reasoning as to how the order of the AO can be held to be erroneous in so far as it is prejudicial to the interest of Revenue has simply without adducing any new facts other than what has been stated and reproduced by us in SCN (supra) has simply held that "no enquiry or examination and verification was done at the time assessment regarding the genuineness of introduction of share capital to the tune of Rs.10.40 crores. Therefore, the assessment made is lacking such examination/verification which is necessary to assess the income of the assessee and such omission to make necessary enquiry has made the order erroneous in so far as prejudicial to the interest of the Revenue''.
Since, there is nothing new in the impugned order other than what is stated in SCN reproduced above and detailed analysis stated in Para52 above, we note that facts stated in (i) to (v) are that which is relevant to assessment for A.Y 2009-10 after the first search on 29.05.2012 which is reproduced again for better understanding:
(i) The assessment u/s 153A/143(3) against the assessee being a party of Banktesh Group for A.Y 2009-10 has been completed on 30.03.2015 by the AO.
(ii) The Prin. CIT did an analysis of assessment records and he observed that in the year under consideration, i.e A.Y 2009-10, the assessee has raised share capital and premium to the tune of Rs.10.40 crores.
(iii) During the assessment proceedings, the assessee furnished the list of investors who subscribed in shares of the assessee company.
(iv) The assessee furnished the supporting documents regarding
share transactions of investors companies
IT(SS)A No.01/Ran/2017 A.Y. 2011-12
Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 8
(v) But no detailed investigation was carried out at the time assessment regarding genuineness of introduction of share capital 60. From a perusal of the above facts reveal that ld.
Principal CIT is finding fault with the AO in not conducting detailed enquiry about the share capital introduced into the assessee company. Though in the same breath, the Principal CIT admits that assessee has produced all relevant documents before the AO in respect to the share capital.
However, the ld. Principal CIT missed the most important fact that A.Y 2009-10 was not pending before the Assessing Officer on the date of first search on 29.05.2012, so it is an unabated assessment and the AO could have only reiterated the assessment crystallized as per intimation forwarded by the Department u/s 143(1) dated 25.11.2011 wherein the Department accepted the returned income filed by the assessee on 25.09.2009, because there was no incriminating material unearthed/seized during search (first) on 29.05.2012. It is very important to take note of the Hon'ble Delhi High Court in Kabul Chawla case (supra) wherein on a similar situation laid the law as under:
v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word `assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word `reassess' to completed assessment proceedings.
61.So from the aforesaid dictum of law laid by the Hon'ble High Courtin the absence of any incriminating material unearthed during first search on 29.05.2012, we have no hesitations to hold that for A.Y 2009-10, the AO could have only reiterated the assessment intimated u/s 143(1) of the Act, because the time for issuance of scrutiny notice u/s 143(2) expired on 30.09.2010 and the assessment for this relevant assessment year, therefore, was not pending before the AO on the date of search on 29.05.2012 and, therefore, is an unabated assessment. Therefore, as per the law laid down by the Hon'ble High Court, the AO could not have disturbed the assessment already existing without the aid of incriminating materials seized during search on 29.05.2012 (first search). Therefore, the order of the AO cannot be held to be erroneous order. Therefore, without finding the order of the AO to be erroneous, the ld. Principal CIT lacks jurisdiction to usurp the revisional jurisdiction u/s 263 of the Act. 62.For completeness of the adjudication, when we look at the SCN and the impugned order of ld. Principal CIT, we note that the following facts have influenced him to invoke the section 263 jurisdiction which are (vi) to (ix) which are again reproduced for better understanding. (vi).On 02.03.2016 another search was conducted against the Banktesh Group by DDIT(Investigation), Unit-2, Kolkata (vii).During the search (second search) & post search investigation, it was found that accommodation entries in the form of bogus share capital have been taken by different group of companies by the said group with the help of accommodation entry operators and that the IT(SS)A No.01/Ran/2017 A.Y. 2011-12 Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 9 allottee companies are bogus and non-existing. (viii).The statement of entry operators were also recorded during search and seizure operation which confirmed the finding of the investigation wing that in lieu of commission they provided accommodation entry in the form of share capital/premium to the Banktesh Group of Companies (ix).In view of the aforesaid facts, the Pr. CIT is of the view that assessment completed on 30.03.2015 may be erroneous in so far as it is prejudicial to the interest of the Revenue. From the reading of the aforesaid facts taken note by the Principal CIT, it is evident that the sheet anchor on which the Principal CIT based his foundation to find fault with the Assessing Officer is emanating from the second search which happened on 02.03.2016 based on which investigation report has been made wherein the share capital raised by the assessee company for Assessment Year 2009-10 is under suspicion/cloud. So, the Principal CIT refers to the second search which happened on 02.03.2016 and the investigation report thereafter made by the investigation wing which is subsequent and obviously a development after framing the assessment order by the Assessing Officer dated 30.03.2015. The Assessing Officer cannot be said to be a clairvoyant, who could have forecasted or foreseen that a second search would take place on 02.03.2016 and thereby some material/oral/evidence would be collected by the investigation wing a year before i.e. on 30.03.2015 when the assessment order was framed by AO after the fallout of first search conducted on 29.05.2012. From the facts narrated above, we note that it is not the case of the Principal CIT that Assessing Officer failed to take into consideration any incriminating material unearthed during first search on 29.05.2012 and has failed to make any investigation on it or make any additions / disallowances thereon. The case of the Principal CIT is simply that during second search on 02.03.2016, the investigation wing has found fault with the share capital raised by the assessee company for Assessment Year 2009-10. It should be noted that the Assessing Officer has framed assessment u/s 153A on 30.03.2015 as per the law laid down by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) and other High courts/Apex Court as stated above which according to us is the correct view or at the most can be definitely termed as a plausible view. Therefore, the view taken by the Assessing Officer cannot be held to be erroneous order and prejudicial to the interest of the revenue as held by the Hon'ble Supreme Court in the case of Malabar Industries vs. CIT (supra). The Assessing Officer's order dated 30.03.2015 at any rate cannot said to be unsustainable in law.
65. In any event, we note that the Assessing Officer has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the revenue as held by Hon'ble Supreme Court in Malabar Industries Ltd. vs. CIT (supra). Since the order of the Assessing Officer cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances narrated above, the usurpation of jurisdiction exercising revisional jurisdiction by the Principal CIT is ''null'' in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 by the Principal CIT. Therefore, we quash all the orders of the Principal CIT dated 15.03.2017 being ab initio void.
66. Before we part, we would like to address the contention of ld. CIT(DR), that since intimation u/s 143(1) was only issued by the Department in this case, it cannot be viewed IT(SS)A No.01/Ran/2017 A.Y. 2011-12 Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 10 that the assessment was unabated on the date of search. We note that the very same issue was before the Hon'ble Delhi High court in Kabul Chawla (supra) wherein also the issue of 143(1) intimation and the expiry of time to issue 143(2) notice by Assessing Officer before the date of search was also adjudicated and thereafter only the law was laid down by the Hon'ble High Court of Delhi, so the issue raised by the ld. CIT(DR) is no longer res integra and therefore, has no merit. The Hon'ble Calcutta High court's order in Tata Metaliks Ltd. is distinguishable on facts and pertained to filing of revised return of income in cases where assessee received intimation u/s 143(1) of the Act and is not in conflict with the view of Hon'ble Delhi High Court in Kabul Chawla (supra) which is on 153A proceedings after search is conducted by the Department.
67. Moreover, it has to be remembered that Principal CIT cannot do indirectly what he could have done directly. The said proposition of law has been laid in a similar case by this Tribunal in the case of M/s Ujjal Transport Agency vs. CIT, Central-II in IT(SS) No.58/Kol/2013 Assessment Year 2007- 08 wherein it has held as under: 16. Having held that the scope of the proceedings u/s.153A in respect of assessment year for which assessment have already been concluded and which do not abate u/s.153A of the Act, that the assessment will have to be confined to only incriminating material found as a result of search, the question to be decided is as to whether the proceedings u/s.143(1) of the Act can be said to be assessment proceedings concluded that have not abated u/s.153A of the Act" Section l53A of the Act, uses the expressing "pending assessment or reassessment". When a return is filed and acknowledgement or intimation issued u/s.143(1), the proceedings initiated by filing the return are closed, unless a notice u/s 143(2) of the Act is issued. In the present case, the period for issuing the notice u/s 143(2) elapsed. Therefore the process has attained the finality which can only be assailed u/s 148 or 263 of the Act. It can thus be concluded that making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed under section 143(1) of the Act, thereby resulting in non-abatement of such assessment in terms of the Second Proviso to section 153A(1) of the Act. 17. In the light of the discussion above, our conclusion is that in the present case, the issue with regard to additional depreciation could not and ought not to have been examined by the AO in the assessment proceedings u/s.153A of the Act as the said issue stood concluded with the assessee's return of income being accepted u/s.143(1) of the Act prior to the date of search and no notice having been issued u/s.143(2) of the Act within the time limit laid down in that section which time limit as per the law prevailing on the date when the Assessee filed return of income i.e.,30.10.2007, would expire on 31.12.2008. Such assessment u/s.143(1) of the Act did not abate on the date of search which took place on 15.1.2009.In respect of assessments completed prior to the date of search that have not abated, the scope of proceedings u/s.153A of the Act has to be confined only to material found in the course of search. Since no material whatsoever was found in the course of search, the question of allowing additional depreciation or not could not have been subject matter of proceedings u/.s.153A of the Act. Consequently, the CIT in exercise of his powers u/s 263 of the Act ought not to have or could not have directed examination of the said issue afresh by the Assessing Officer. Thus ground no.1 raised by the assessee is allowed. The proceedings u/s 263 of the Act is accordingly quashed. In view of the above conclusion, the other ground of appeal raised by the assessee does not require any consideration. 18.In the result, appeal of the assessee is allowed."
68. Since, we have quashed the Section 263 proceedings; therefore, we are not adjudicating the other arguments of the ld. AR.
69. In the result, these three appeals of the assessee's are allowed."
IT(SS)A No.01/Ran/2017 A.Y. 2011-12 Basudha Coke (I) Pvt. Ltd. Vs. DCIT CC-Dhanbad Page 11
We adopt the above detailed reasoning mutatis mutandis to hold that the impugned proceedings itself initiated sec. 153A is not sustainable. The same is quashed therefore.
4. This assessee's appeal is allowed.
Order pronounced in accordance with Rule 34(4) of the ITAT Rules by putting on Notice Board on 15/02/2019 Sd/- Sd/-
(लेखा सद य) ("या#यक सद य)
(Dr. A.L. Saini) (S.S.Godara)
(Accountant Member) (Judicial Member)
Ranchi,
*Dkp
$दनांकः- 15/02/2019 Ranchi ।
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. अपीलाथ /Appellant-Basidha Coke (II) Pvt. Ltd. Chhaparia &Associates, Chartered Accountants, 8 Camac St, Shantiniketan Bldg. 5th Fl, R. No.2 Kolkata-17
2. यथ /Respondent-DCIT, CC-Dhanbad Aayakar Bhawan, L.C. Road, 3rd Fl, R. No.405-8 Dhanbad--826001
3. संब0ं धत आयकर आय3 ु त / Concerned CIT Ranchi
4. आयकर आय3 ु त- अपील / CIT (A) Ranchi
5. 6वभागीय #त#न0ध, आयकर अपील य अ0धकरण, / DR, ITAT, Ranchi
6. गाड< फाइल / Guard file.
By order/आदे श से, /True Copy/ SR.PS, ITAT, RANCHI