Income Tax Appellate Tribunal - Ranchi
M/S Subarnrekha Coal Complex Pvt. ... vs Dcit, Central Circle-1, Ranchi on 6 March, 2020
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.06/Ran/2018 Assessment Year :2004-05 M/s Subarnrekha Coal बनाम DCIT, Central Circle-
Complex Pvt. Ltd., 193, V/s. 1, Ranchi
Bishnu Residency, Netaji
Subash Chandra Bose
Road, Kolkata-700 040
[P AN No. AADCS 7932 D]
अपीलाथ /Appellant .. यथ /Respondent
अपीलाथ क ओर से/By Appellant Shri Devesh Poddar, Advocate
यथ क ओर से/By Respondent Shri Inderjeet Singh, CIT-DR
सन
ु वाई क तार ख/Date of Hearing 06-03-2020
घोषणा क तार ख/Date of Pronouncement 06 -03-2020
आदे श /O R D E R
PER BENCH (oral):-
This assessee's appeal for assessment year 2004-05 arises against the Commissioner of Income Tax (Appeals)-3 Patna's order dated 31.07.2017 passed in case No.106/CIT(A)-3/PAT/13-14 involving proceedings u/s 153A r.w.s.143(3) of the Income Tax Act, 1961; in short 'the Act'.
Heard both the parties. Case file perused
2. Mr. Poddar's first and foremost argument during the course of hearing is that the impugned sec. 153A r.w.s. 143(3) proceedings initiated in furtherance to the search(es) in question dated 31.10.2009 and 16.02.2010 are invalid since not baaed any incriminating materials found or seized during the course IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 2 of search. Learned CIT-DR took a strong exception to assessee's foregoing plea on the ground that the same has been raised for the first time before the tribunal without even containing any application for additional ground as per hon'ble apex court's landmark decision in case of National Thermal Power Co. Ltd. vs. Commissioner of Income Tax (1998) 229 ITR 383 (SC) as considered this tribunal's 'Special Bench's order in the case of M/s All Cargo Global Logistics Ltd. vs. DCIT (2012) 137 ITD 26 (Mum). We find no merit in Revenue's instant technical arguments. Case file suggests that the Revenue had also preferred its appeal(s) IT(SS)12-14/Ran/2018 against the learned CIT(A)'s very appellate order following this tribunal's co-ordinate bench's findings dated 20.02.2019 quashing the proceedings. The lower authorities' discussi under challenge reads as follows:-
"2. In these appeals, the Revenue as well as assessee have raised multiple grounds or appeal, but at the time of hearing the main grievance of the Revenue and assessee are concised and summarized. These summarized and common grounds of Revenue and assessee are given below:
i) Id. CIT(A) estimated profit @ 20% of turnover / coal trading, whereas as per assessee it is 10%. However. Revenue in cross appeals stated that estimated profit on unaccounted sales should be 40%.
ii) During the search action no document relating to profit estimated fund.
iii) Addition made on account of understatement purchases Rs.34,99,535/-
iv) Ad hoc disallowance @ 20% freight, labour and other expenses.
v) Other grievances of Revenue:
a) Disallowance of expenses restricted to Rs.37,27,655/- from Rs. 84,67,802/-.
b) Disallowance of expenses restricted to Rs.13,87,532/- from Rs.1,79,63,546/-
3. Shri Devesh Poddar, the Id. Counsel for the assessee begins by pointing out that in the assessee's case under consideration search and seizure operation was under taken u/s 132(1) of the Act on 31.10.2009 and 16.02.2010 against the persons and business concern of Manohar Paul group of cases. During the search and seizure operation, the search team did not find or unearthed any incriminating material in respect of the assessee. This search and seizure operation was' a part of mega search conducted in Madhu IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 3 Koda group of cases but the search team did not find any incriminating material in respect of assessee under consideration. The search team also did not find any incriminating material regarding the estimation of profit made by the assessee, therefore the addition made by the Assessing Officer and sustained by the CIT(A) u/s 153A / 143(3) of the Act should be deleted.
4. On the other hand, Id. OR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity.
5. We have heard both the parties and perused the material available on record. We note that there is no incriminating unearthed by the search team during the search and seizure operation. There is no whisper of incrementing material so far assessee is concerned. During the assessment proceedings. the Assessing Officer adopted pro/it ratio on estimated basis ignoring the books of accounts of the assessee. We note that the assessee's books of accounts are audited and profit has been ascertained by the assessee based on the audited results. We note that the action of the Assessing Officer to make the estimation of profits are without any base and therefore it is not sustainable in law. The AO did not take into account the profit declared by the assessee in his audited books of accounts. Moreover, the search team did not find any incriminating material regarding estimation of profit therefore the addition made by the Assessing Officer is without am base. For that we rely on the judgment of Co-ordinate Bench of Kolkata in the case of Garg Brother Pvt. Ltd in I.T.A. No. 2519/Ko1/2017 for assessment year 2009-10 order dated 18.04.2010 wherein it was held as follows:
"50. Ire haw 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 Id. Pr. CIT exercising his jurisdiction us 263 of the Act. which action of the Id. CIT is under challenge before us. Before this first search, we note ceria in important facts which are germane 10 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 [he assessee on 25.09.2009 declaring total income of Rs.4,28.560/-. Thereafter, the return of income was processed u/s 143(l) dated 25.11.2011. It is pertinent here 10 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 proceeding pending before the Assessing Officer on the date of first search. The Assessing Officer, thereafter, completed the assessment u/s 153A read with u/s 14A at Rs.7,73.640/- on 30.03.2015 by making additions of Rs.3,41,973/- and 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/-.
IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 4
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 Id. 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 conducted proper investigation in respect of share capital and premium to the tune of Rs.10.40 crores. In the SCN the Id. 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 Id. 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 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 assumption 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 IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 5 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".
52. 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 vending 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 'hie Delhi High Court in Kabul Chawla (supra) has laid down the low 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 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 lakes place under Section 132 of the Act. notice under Section 153A(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 .4}' in which the search takes place.
ii. Assessments and re-assessments pending on the dale of the search shall abate. The total income for such A Ys 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 10 the relevant A Y 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 IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 6 which both the disclosed and the undisclosed income would be brought to tax ".
Although Section 153A 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 he 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 153A 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 A Y 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 a/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 disallowance made by the AO were upheld by the Learned. CIT(A) but the Ld. Tribunal. The appeal is therefore, dismissed.
54. The Hon 'hie Apex court in the case of CIT v. Sinhgad Technical Education Society 397 ITR 344 in the context of section J 53 of the Act has held as under:
IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 7
"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 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 the specifically recorded that the counsel for the Department could not point out to the contrary . It is for this reasons 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) Vuswanath Garodia vs. DCIT (2016) 76 taxmann.com.81
ii) CIT vs. Continental Warehouing (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 253
v) Principal CIT vs Dipak Jashvantala Panchal (2017) 397 ITR 253
vi) Principal CIT vs. Lalait 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 (Tribunal.) 17
x) Pr. CIT vs. Meeta Gutgutia (2016) 95 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 IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 8 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 one of 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 incriminating material unearthed during the first search, the Assessing Officer has nor 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 Id 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, love 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 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 THT PR. COMMISSIONER OF INCOME TAX, CENTRAL KOLKAT4 - 2 Aayakar Bhawa Poorva. 1 10. Shanupally, E.M.Bye Pass. Kolkata -700107.
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 - 700007.
Sir, Sub: Show Cause Notice U/S 263 of the I. T. Act, /96/ in the case of M/s. Cliff Trexim (P) Ltd. , (PA N-AA BCC 0961E) 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.:015 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 IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 9 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 Assessing Officer 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 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 Kolaktata-700 107 to furnish your explanation in the matter Yours faithfully, S/d Arvind Kumar, IRS (ARVIND KUMAR, IRS) Pr. Commissioner of Income Tax
58. From a reading of the above show-cause notice of Id. Principal CIT when we analyse the same, what is revealed is the following:
(i) The assessment u/s 153AI143(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.
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(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.
(v) But no detailed investigation was carried out at the time assessment regarding genuineness of introduction of share capital.
(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 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.
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 IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 11 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 at is stated in SCN reproduced above and detailed analysis stated in para 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:
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
(v) But no detailed investigation was carried out 01 the time assessment regarding genuineness of introduction of share capital
60. From a perusal of the above facts reveal that Id Principal CIT is findings 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 of the share capital. However, the Id Principal CIT missed the most important fact that A.Y 2009-10 was not pending before the Assessing Officer on the dale 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 10 lake 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 Court in 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 IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 12 before the AO on the dale 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 hare 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 Id 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 Id Principal CIT, we note that the following facts hare 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 a different group of companies by the said group with the help of accommodation entry operators and that the 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
63. 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.
IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 13
64. 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 jurisdictional 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 Id CIT(DR), that since information u/s 143(1) was only issued by the Department in this case, it cannot be viewed 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 Id 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:
IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 14
16, Having held that the scope of the proceedings u/s.153A /11 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 153A 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 ill 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 is 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 nor 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 Id. AR."
IT(SS)A No.06/Ran/2018 A.Y. 2004-05 M/s Subarnrekha Coal Complex Pvt. Ltd. Vs. DCIT CC-1, Ranchi Page 15
We adopt that above findings of the co-ordinate Bench in the case of Garg Brothers (supra) is mutatis mutandis applicable to the assessee under consideration and therefore we allow the appeal of the assessee In IT(SS)A No. 08, 09, 10 & 11/Ran/2018), whereas the appeal filed by the revenue in IT(SS)A Nos. 12, 13 & 14/Ran/2018 are dismissed."
It is therefore clear from the tribunal's order in Revenue's cross-appeal that very proceedings forming the subject-matter of the instant lis stand quashed. We thus decline the Revenue's above stated technical argument and follow suit herein as well as a necessary corollary.
Assessee's all other pleadings on merits are rendered infructuous.
3. This assessee's appeal is allowed in above terms.
Order pronounced in the open court at the close of hearing on Friday, 6th March 2020 Sd/- Sd/-
(लेखा सद य) ("या#यक सद य)
(Dr. A.L. Saini) (S.S.Godara)
(Accountant Member) (Judicial Member)
Ranchi,
*Dkp
$दनांकः- 06/03/2020 रांची
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. अपीलाथ /Appellant-
2. यथ /Respondent-i
3. संब/ं धत आयकर आय2
ु त रांची / Concerned CIT Ranchi
4. आयकर आय2
ु त- अपील रांची / CIT (A) Ranchi
5. 5वभागीय #त#न/ध, आयकर अपील य अ/धकरण, रांची/ DR, ITAT, Ranchi
6. गाड; फाइल / Guard file.
By order/आदे श से,
SR.PS, (on Tour), RANCHI