Per Shri P.M. Jagtap, Vice-President (Kolkata Zone):- This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-21, Kolkata dated 04.05.2017.

2. The relevant facts of the case giving rise to this appeal are as follow:- The assessee is a Company, which belongs to The SAFECHEM Industries Group. The return of income for the year under consideration was originally filed by it under section 139 of theon 04.10.2010 declaring total income of Rs.9,83,700/-. A search and IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 2 seizure action under section 132(1) was conducted in the case of the assessee on 17 t h & 18 t h December, 2014. Pursuant to the said action, notice under section 153A of thewas issued by the Assessing Officer on 05.10.2015, in response to which the return of income for the year under consideration was filed by the assessee on 19.11.2015 declaring total income of Rs.9,83,698/-. During the year under consideration, the assessee-company had raised a share capital of Rs.11,80,000/- alongwith a share premium of Rs.2,83,20,000/- aggregating to Rs.2,95,00,000/-. As found during the course of search and seizure action, the assesee-company had raised the said share capital and share premium from seven companies. As per the information available with the Assessing Officer, some of the said companies were paper/jamakharchi companies maintained by certain entry operators having dummy Directors. The Assessing Officer also noted that as per the statements of the said entry operators and dummy directors recorded by the Investigation Wing, Kolkata, the amount of share capital and share premium was brought into the books of account of the assessee through the jamakharchi companies, routing assessees unaccounted cash. In order to verify the share capital and share premium amount claimed to be received by the assessee during the year under consideration, notices under section 133(6) were issued by the Assessing Officer to the share subscriber companies. The said notices, however, could not be served or remained un-complied with. Even the summons issued by the Assessing Officer under section 131 failed to invoke any response from the share subscriber companies. When this position was confronted by the Assessing Officer to the assessee, the later submitted certain documents in the form of income-tax acknowledgements, audited accounts and Bank statements of the share subscriber companies in order to support and substantiate its claim of having received the share capital and share premium amount in question. The assessee, however, failed to produce the Directors of(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 3 the share subscriber companies for verification before the Assessing Officer. The Assessing Officer, therefore, held that there was failure on the part of the assessee to prove the creditworthiness of the concerned share subscriber companies as well as the genuineness of the relevant transactions involving share capital and share premium money and by relying on certain judicial pronouncements discussed in the assessment order, he made an addition of Rs.2,95,00,000/- to the total income of the assessee under section 68 by treating the share capital and share premium amount as unexplained cash credit.

3. The addition made by the Assessing Officer under section 68 in the assessment completed under section 153A/143(3) of thevide an order dated 30.12.2016 by treating the share capital and share premium amount received during the year under consideration as unexplained cash credit was challenged by the assessee in the appeal filed before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), a detailed written submission was filed by the assessee stating, inter alia, that the scope of unabated assessment completed by the Assessing Officer under section 153A/143(3) was limited to assess the undisclosed income only on the basis of incriminating material found during the course of search and in the absence of any such incriminating material found during the course of search, the addition made by the Assessing Officer under section 68 by treating the share capital and share premium amount as unexplained cash credit was unjustified. The ld. CIT(Appeals) found merit in this contention raised on behalf of the assessee and after extracting the entire written submission filed by the assessee in his impugned order, he deleted the addition made by the Assessing Officer under section 68 after recording his observations/findings as under:-

5. I have considered the findings of the AO in the assessment order and the written submission as well as different case laws brought on record by the AR. The main IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 4 argument of the AR is that additions made by the AO in the assessment order passed u] s 153A/143(3) are not based on any incriminating documents/papers seized during the search operation. The AR has brought on record many case laws decided by the Jurisdictional Kolkata bench of ITAT and Jurisdictional Calcutta High Court on this issue. Calcutta High Court has time and again reiterated its view that the addition in case of the search assessments has to be made on the basis of incriminating material. Some of the recent decisions of the Honble 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. ITAT, Kolkata was of the opinion that the assessing officer had no jurisdiction is] 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 Ld. 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 in 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 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." The Honble Kolkata High Court in the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573( Del) IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 5 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 AYs 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- Revenues appeal dismissed.

6. I further find that In this regard the Honble 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 Honble 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 Honble ITATs order is as under. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 6 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 the propositions canvassed by the Ld. AR for the assessee are supported by the Judgments of jurisdictional !TAT and Honble High Courts. Ld. AR has pointed out that no incriminating document 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/s 153A, 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 Aa u/ s 153A and confirmed by the ld. 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 363jKol/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 153C proceedings, then the said order cannot be construed as erroneous warranting revision jurisdiction u/s 263 of the." Shri. Manish Mundhra Vs. ACIT-CC-XXX in ITA-469- 470/Kol/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. The decision of the fTAT, Delhi Bench in the case of ACIT vs M/s. Delhi Hospital Supply Pvt. Ltd. (supra) followed the(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 7 decision of Honble Delhi High Court in the case of Kabul Chawla (supra) supports the plea of the assesee 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 ix] s 801B of the in the assessments framed u/s 153A of the 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 in 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 Aa u/ s 14A of the and accordingly no disallowance u/ s 14A of the could be made for the Asst Year 2004-05 by the Learned AO in the assessment framed u/ s 153A of the in the absence of any incriminating materials found during the course 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 80lB of the for the Asst Years 2007-08 d 2008-09 are concerned} we find that the same is only consequential in nature and once the assessee has been granted deduction u/ s 80lB of the 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 80lB of the 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 03441dt. 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 eassessment has not been abated, has not been considered or decided by this Tribunal. Therefore, this decision, in our opinion will not assist the(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 8 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 view of the aforesaid discussion and the decision of the Honble Special Bench, Bombay High Court, as well as Honble 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 Honble Bombay High Court in the case of Continental Warehousing Corporation (NhavaSheva) Ltd., supra, of Honble 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 years, except the statement of one Shri Sambhu Kr More, as admitted by the AO 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 assessments framed u/s. 153A of the is in valid and hence, quashed." Trishul Hitech Industries Ltd Vs. DCIT-CC-XI. IT(SS)A84- 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. Hence the assessment for the concerned assessment year does not abate. Hence dehorse any incriminating material, AO cannot made any addition in these cases. Accordingly we hold that assessment u/s 153C of the in these cases dehorse 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 IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 9 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 801B of the 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 section 80IB. This fact has been fairly admitted by ld. 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 (SD)(Mum.) has also held to the same extent. In view of the foregoing discussion, we are of the considered opinion that no exception can be found to the view taken by CIT(Appeals) for deciding this issue in assessees 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 granting deduct ion on this issue was completed under sect ion 143(3). We have not expressed any opinion on the merits of the case about the allow ability or otherwise of deduct ion under section 80IB on interest income arising in the present facts and circumstances. In the result, the appeal filed by the Revenue stands dismissed." LMJ International Ltd Vs. DCIT(2008) 119 TTJ (Kol) 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 IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 10 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 Honble Supreme Court has dismissed departments 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 Departments 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 thefor 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." The Honble Kolkata High Court in the above cases relied on the following judgments. CIT Vs Kabul Chawla (2016) 380 ITR 0573( Del) IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 11 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 AYs 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- Revenues appeal dismissed. It was also informed/brought on record that the order passed by the Honble Calcutta High Court has attained finality as the CBDT in its letter No.ADG(L&R)- IIjEZjPr.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 153A/153C cannot be made except on the basis of the incriminating material found in the search. reference a) appeal n0.442/CC-3(1)/CIT(A)-21j 14-15, date of order 05-12-2014, IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 12 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)-Ij09-10, date of order 23-09-2010 e) appeal no.292/CC-Vl/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 from the assessment order that during the search and seizure operations conducted u/s 132 of the I.T. Act, 1961, incriminating documents/papers were not seized. At least, additions made by the AO in the assessment order passed u/s 153A/ 143(3) are not based on any incriminating documents/papers seized during the search operation 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, keeping in view the ratio decided by the Jurisdictional bench of Kolkata Tribunal in cases referred above and the ratio decided by the Honble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra) in the light of CBDTs decision of not filing SLP in this case in the Supreme Court and keeping in view the Apex Courts decision to dismiss SLP on similar issue in the case of Pr. CIT vs.- Kurele Paper Mills Pvt. Limited: SLP(C) No. 34554 of 2015 dated 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 Honble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra), assessees appeal on grounds no 1 is allowed on technical ground and as such I am not inclined to adjudicate appeal on ground no 2 on merit

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4. Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal on the following grounds (as revised): (1) The ld. CIT(A)-21/Kolkata was not justified in allowing the appeal of the assessee on technical ground, without considering the relevant provision of section 153A which provides for assessing or reassessing the total income. (2) The ld. CIT(A)-21/Kolkata was not justified in allowing the appeal of the assessee only on technical ground without considering the facts and circumstances of the case on merit and without IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 13 considering the material gathered by the Assessing Officer on assessment stage while making assessment order. (3) The ld. CIT(A)-21/Kolkata, has failed to perform his statutory equivalent and coextensive power with that of the Assessing Officer as held in by the Honble Supreme Court in the case of Kanpur Coal Syndicate (SC) 53 ITR 225 .

5. The ld. D.R. vehemently assailed the impugned order of the ld. CIT(Appeals) giving relief to the assessee on the issue under consideration by deleting the addition made by the Assessing Officer under section 68 by treating the share capital and share premium amount received during the year under consideration as unexplained cash credit. In support of the Revenues case on this issue, he furnished a written submission containing Revenues arguments as under:-

1. The language of section 153A makes it very clear that there is no explicit or intended requirement of seizure of incriminating material during the search u/s 132(1) before issuing the notices u/s 153A. The jurisdiction of section 153A is automatic from the moment a search is initiated. There is no requirement of examination of seized material or recording any satisfaction w.r.t availability of seized material before issue of notice u/s 153A. In my opinion, the intention of legislature in allowing so could be that the initiation of search itself is subject to recording of satisfaction u/s 132(1) by the PDIT(lnv) on grounds that: (i) Upon issue of summons u/s 131(1), the assessee has failed to produce or would not produce the books of accounts or other documents so requisitioned; or (ii) The assessee is in possession of money, bullion jewellery, article or thing which represents wholly or partly income has not been or would not be disclosed for the purposes of the. Hence a conjoint reading of section 153A and 132(1) would clearly imply that a satisfaction to issue notice u/s 153A is already deemed to be imported from the satisfaction recorded by PDIT(lnv) at the time of issuing warrants u/s 132(1). The existence of satisfaction recorded by PDIT(lnv) is liable to be challenged before courts. Hence, until such satisfaction for issue of warrants u/s 132(1) are held invalid by any court, the satisfaction recorded by PDIT(lnv) shall continue to hold the(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 14 fort for purposes of 153A also and it is for this reason there is no further requirement of recording any belief or satisfaction by AO for issue of notice u/s 153A. As may be noted from the conditions of recording the satisfaction of PDIT(lnv), one of the conditions is regarding books or other documents which were not produced or would not have been produced on issue of summons. Thereby implying that post search, while the AO is making assessment, it has to examine the correctness of income disclosed not only based on what material has been gathered during search but also based on these books or documents which in the opinion of PDIT(lnv) would not have been produced upon issue of summons, whether or not such books of accounts or documents have been actually found during search. In fact, there are numerous instances when even the books of accounts as per already filed audit reports are not found at any of the premises during search, more so when the searched entities represent only the shell companies. Similarly, there is a requirement of satisfaction by PDIT(lnv) in respect of income being fully or partly not disclosed for the purposes of the. Hence, even if some income/ entry is disclosed in books or audited accounts, the AO is mandated to examine whether such income / entry was disclosed fully or partly and/ or represents its real nature and source for the purposes of the. This inter alia would mean that even the entries disclosed in accounts which might represent income fully or partly would in itself be an incriminating material for which a search was initiated. When the non-production of books or other documents can give rise to a belief for initiating search u/s 132(1), then it may be counterproductive to conclude that the power of AO is restricted to assessment based only on incriminating material found in search, irrespective of any other item of income which might have remained fully or partly undisclosed for the purposes of the, based upon the entries already appearing in such books, if any.

1.2 It is the assessment of total income which is required to be made u/s 153A. The total income as defined u/s 2(45) would be the total income computed as per section 5 of the. The word assessment cannot have a different meaning for different purposes under the same Act, unless restricted by specific provisions. The process of assessment for the purposes of the is wide enough to include every kind of enquiry/examination for discovery, quantification and assessment of any income wholly or partly for the purposes of the. Hence, the process of assessment of total income u/s 153A can neither be restrictive nor have a different connotation for assessment under section 153A vis a vis 143(3) or 147. As per the scheme under the, the satisfaction recorded u/s 132(1) and the results of search are intended to be brought to a logical conclusion by initiating the proceedings IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 15 u/s 153A without any further act of the AO. Hence it is in the scheme of the that after issuance of notice u/s 153A, the next action of the AO must follow the examination of all aspects for which a search has been initiated. Hence, it cannot be said that the AO u/s 153A cannot proceed to examine the books of accounts or documents, entries which were produced before him subsequently, wherein might also represent income wholly or partly, which has not been disclosed for the purposes of the. Hence, it may be contrary to the scheme of the provisions of 132(1) r/w 153A, if it were to be held that power of AO is restricted only to make assessment the evidence found during search. The provisions of 153A not only require assessment of undisclosed income but total income also. The expression total income would include the income emanating from disclosed items, income emanating from partly or wrongly disclosed items as well as income emanating from undisclosed items. U/s 153A, no distinction is made for assessment of total income in the cases which were earlier completed u/s 143(1), the cases which were earlier completed u/s 143(3)/147 or the cases were no return was filed prior to search. Thus, in all the three categories, it is as per the scheme of the that the total income of the assessee as defined u/s 2(45) needs to be assessed for all the 6 AYs for which the Aa is mandated to issue notice u/s 153A.

1.3 Further u/s 153A, there is a provision for abatement of pending assessments whether or not any evidences were found for that year. There can also be a situation where neither any regular assessments were made earlier nor any proceedings were pending, which could be abated. The section also envisages the issue of notice u/s 153A whether or not any evidences were found for that year. It is also implicit that u/s 153A, the items of total income which could be assessed u/s 153A in abated proceedings cannot be different for the cases which could not be abated such as I) where no proceedings were pending; or ii) where earlier assessments were completed u/s 143(3)/147; or iii) where earlier assessments were not made at all. The only caveat could be that before making any addition to the total income, the AO must bring on the record how such items are falling into the category of total income for the purposes of the. Thus, if it were to be held that no addition can be made without any incriminating material in respect of the years covered by section 153A, then it would lead to an absurd consequence whereby the powers granted to issue notices u/s 153A would be rendered otiose in cases which got abated for any particular AY. In the absence of any seized material, AO may not be able to proceed to make any assessment of any other item of total income implying that the process of making assessment of total income as envisaged in section 153A fails in abated cases. However, a statute can never be interpreted in a manner to make it redundant. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 16

1.4 Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of search or on the basis of any other post-search material or information available with the AO though such assessment cannot be arbitrary. The provisions section of 147 and section 153A, though have different conditions to assume" jurisdiction but both operate to make the assessment of total income only. The Memorandum explaining the provisions of Finance (No. 2) Bill of 2009 while inserting explanation 3 to section 147 reads as under: "Some courts have held that the Assessing Officer has to restrict the reassessment proceedings only to issues in respect of which the reasons have been recorded for reopening the assessment. He is not empowered to touch upon any other issue for which no reasons have been recorded. The above interpretation is contrary to the legislative intent. Therefore to articulate the legislative intent clearly, explanation 3 has been inserted in section 147 to provide that assessing officer may examine, assess or reassess any issue relevant to income which comes to his notice subsequently in the course of proceedings under this section, notwithstanding that the reasons for such issue has not been included in the reasons recorded under sub-section(2) of section 148". Hence, even in absence of any explanation u/s 153A also similar to the explanation 3 u/s 147, the intention of the legislature and the scheme of the for making assessment u/s 153A where search u/s 132 is initiated, is same i.e. in order to make assessment of total income, after having assumed the jurisdiction to assess total income, the powers of AO shall not remain restricted to mere those material which were seized during search but shall also include the assessment of income based on any entry already recorded prior to search or any claim/relief allowed prior to search, which has been found to be erroneous during the proceedings u/s 153A.

1.5 There is divergence of judicial opinion on the question of whether assessment u s 153A can be restricted to only the incriminating material seized during the search or whether the AO can also take view based on something which might be noticed otherwise during the course of assessment proceedings u/s 153A Some of the judicial verdicts are as under: (a) Allahabad High Court in Raj Kumar Arora 367 ITR 517 has held that there is no requirement of incriminating material for invoking provisions of 153A. (b) However, the same Delhi High Court in case of Dayawanti Gupta Vs CIT 390 ITR 496 (Del) in para 16 has observed that: IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 17 "Section 153A, which provides for an assessment in case of search, and was introduced by the Finance Act, 2003with effect from 1-6-2003, does not provide that a search assessment has to be made strictly on the basis of evidence found as a result of search or other documents and such other materials or information as are available with the Assessing Officer and relatable to the evidence found. The earlier section 15888 which is not applicable in case of a search conducted after 31- 5-2003, provided that the computation of the undisclosed income can only be on the basis of the evidence found as a result of search or other documents and materials or information as are available with the Assessing Officer, provided they are related to the materials found. Section 153A(1)(b) requires assessment or reassessment of total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. This, however, does not mean that the assessment under section 153A can be arbitrary or made without any relevance or nexus with the seized material". (c) Filatex India Ltd Vs CIT-IV 229 Taxman 555 (Delhi) Whether during assessment under section 153A, additions need not be restricted or limited to incriminating material found during course of search and, hence, argument of assessee that addition under section 115JB was not justified in order under section 153A as no incriminating material was found concerning said addition had to be rejected - Held, yes. (d) Sunny Jacob jewelers and wedding center Vs DCIT 362 ITR 664 (Ker) Whether there is no requirement under provisions of Act requiring department to collect information and evidence for each and every year for six previous years in order to initiate proceedings under section 153A - Held, yes (f) CIT Vs Anil Kumar Bhatia 352 ITR 493 (Delhi) Whether even if assessment order had already been passed in respect of all or any of those six assessment years, either under section 143(1)(a) or section 143(3) prior to initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings under section 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search - Held, yes (g) CIT-II Vs continental warehousing corporation 235 Taxman 568 (SC) The High Court by impugned order held that no addition can be made in respect of assessments which have become final if no IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 18 incriminating material is found during search or during 153A proceeding - Whether Special Leave Petition filed against impugned order was to be granted - Held, yes (i) The dismissal of SLP by supreme court in case of PCIT vs Meeta Gutgutia wherein also the same views were expressed as in Kabul Chawla, would also not lead to conclusion that the question decided by Delhi High court against the revenue in Meeta Gutgutia is settled because the SLP has already been admitted by SC for hearing on the same question in several other cases such as Continental warehousing, Best Infrastructure (supra). Further, Supreme Court in Sinhgad Tech Edu Society 397 ITR 344 (SC) held that no notice u/s 153C could be invoked unless there was incriminating material is also of no consequence as the provisions of section 153C has been amended w.e.f 1/4/2005 and that the decision of Sinhgad Tech Edu society was for period prior to 1/4/2005.

1.6 The sum and substance of all the decisions above could only indicate that the question of whether the AO has powers u/s 153A to assess total income as defined u/s 2(45) dehors the incriminating material also, has not at all become final and the same is yet pending final adjudication before the SC in SLPs admitted. Hence the arguments made in preceding paragraphs can be pitched up to support the revenues contention before courts.

2. Now next set of questions which are required to be answered are:

2.1 The incriminating material can be in any form such as evidence in the nature of i) a document, content of any document; ii) an entry in books of account; iii) an asset; iv) a statement given on oath; v) absence of any fact claimed earlier but coming to notice during search; vi) absence of books being found during search; or vii) absence of the office/ business premises as claimed during returns filed or any other documents, etc. In short, any fact/ evidence which could suggest that the documents/ transactions claimed or submitted in any earlier proceedings were not genuine, being only a device/ make belief based on non-existent facts or suppressed/ misrepresented facts, would constitute an incriminating material sufficient to make assessment for the purposes of the. A mere statement u/s 132(4) is an evidence for making an assessment as also held by apex court in B Kishore Kumar Vs DCIT 234 Taxman 771 (SC) as under: High Court by impugned order held that since assessee himself had stated in sworn statement during search and seizure about his undisclosed income, tax was to be levied on basis of IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 19 admission without scrutinizing documents - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes Hence even a statement u/s 132(4) shall also constitute incriminating material to dislodge any earlier finding for the purpose of making an assessment u/s 153A. The requirement of incriminating material is not specifically mentioned in the. However, w.e.f. 1/4/2005 the provisions of section 153C have been amended so as to allow the invocation of proceedings u/s 153C if any document, an entry or an asset is found in relation or pertaining to a person other than the searched person, which has a bearing on the assessment of total income as per the provisions of the I T Act. Hence the word "incriminating", as used by the courts in context of section 153C, needs to be applied in the context of section 153A also which has to be seen as something which can have a bearing on the assessment of correct total income u/s 2(45) as per provisions of the.

2.3 The expression have a bearing on determination as used u/s 153C also has a wide connotation which implies that the nexus of the seized documents/ assets to income should only be a logical nexus to the ultimate process of determination of total income and that such evidence need not be in the nature of direct hard evidence. Applying the same principles, the incriminating material for the purposes of section 153A also has to be necessarily construed to be in the nature of a prima facie evidence only (including a circumstantial evidence) and not as hard evidence. The use of the expression books of accounts u/s 153C again suggests that even the entries recorded in the books of accounts, which have not been correctly recorded or camouflaged would also partake the character of incriminating material, if the same has a bearing on the determination of income which has not been already disclosed in the return filed, if any. Hence, the entries in the regular books of accounts would also trigger the assessment u/s 153A/C, if there is some prima facie evidence that the entry recorded therein is camouflaged, or incorrect, wholly or partially, and such entries have a bearing on determination of total income of such person. The definition under clause (ii) of 271AAB(c) also defines undisclosed income as "any income based on entry in books of accounts wholly or partly false and would not have been found to be so, had the search not been conducted". This clearly implies that any entry even recorded in the books, which is found to be wholly or partly false along with having a bearing on determination of income based on evidence gathered during search, would also be in the nature of incriminating material. Further, recently introduced section 270A, which is also applicable to search asstt. for AYs other than specified years, mandates to levy penalty even in cases IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 20 where the expenses had been claimed in the books without any evidence or where the entries recorded in the books were found to be false. This also supports the contention that mere recording of an entry in the books of accounts does not take away its incriminating character, if such entry was without evidence or had been falsely recorded in the books of accounts. The same principle will also hold good for the documents submitted earlier in relation to entries recorded in the books but later found that the documents were not genuine or manipulated or camouflaged. Supreme Court in Sinhgad Tech Edu Society or Delhi High Court in Kabul Chawla never considered the implication of section 270A and 271 AAB as explained above while considering as to what material would constitute incriminating for the purposes of assessment of total income under section 153A/C.

2.4 The provisions of section 153A/153C are not the normal assessment provisions like 143(3); rather they are curative provisions to plug the mischief of evasion of taxable income based on evidences found in pursuance to search. Hence, if on account of search, the facts and circumstances suggest that any entry already appearing in books or accepted in earlier assessments based on documents submitted at that point of time, are camouflaged or manipulated or reflected to be in the nature or from a source which is different from the real nature or source as appearing from the evidences found during a subsequent search, then such material/ facts coming to fore now will definitely constitute an incriminating material. In consequence of the same the earlier recorded entries/earlier admitted documents and evidence shall have no force as genuine evidence. If it were held not to be so, then the purpose of 153A would be defeated as it would fail to prevent the mischief, which it sought to prevent just because the entries were already recoded in the books or some documents had already been accepted. Hence applying the Haydens rule of mischief, the mere fact that such entries are recorded in the books of accounts or some fabricated or colourful documents have already been accepted as correct, will not prevent such material or entry from being incriminating, if the circumstances suggest otherwise. The Haydens rule of mischief has been judicially accepted and applied by Calcutta High Court in Reckitt Colman of India Ltd. vs. ACIT (2001) 252 ITR 550 (Cal). The incriminating material can be from the search or even from subsequent surveys or any other enquiries. Recently in CIT Chennai vs.-Ajit S. Kumar 93 taxman.com 294(SC), the Court in the context of section 158BB has upheld the use of information collected in a survey in case of connected person carried along with search in other person for the purpose of making asstt. u/s 158BB. Provisions of 158BB are Pari material to section 153A. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 21 The Delhi High court in PCIT Vs Kabul Chawla in para 37(iv) observed as under: "iv. 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 the 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." The Delhi High court has thus explained the underlying principle that though the assessment may not be based on seized evidence only but the addition cannot be arbitrary. There can be no dispute on this proposition. It has to be based on evidences found during search, or post search or information available with the AO which can be related to the evidence found. Thus, any entry already recorded in the books which is not true in its nature or source and any information even coming to the AO post search shall constitute incriminating material for the purpose of making an assessment u/s 153A.

3. There is a distinction between a mere change of opinion and a change of opinion based on fresh facts. The latter would imply that the earlier conclusions of the AO were misled by placing evidence on suppression or misrepresentation of material facts. An order passed by the AO relying upon such make belief documents, suppressed or misrepresented facts, which were later found to be not true, shall become void or voidable, as the case may be. Under such circumstances, the acceptance of any claim, relief etc. in any earlier order shall also have no binding force in any subsequent proceedings and the change of opinion would be permissible. The Courts have accepted the principle that any fraud practiced on the court is always a ground for vacating the judgment, as where the court is deceived or misled as to material circumstances, or its process is abused, resulting in the rendition of a judgment, which would not have been given if the whole conduct of the case had been fair". The Madras High Court in case of L. Mohanam vs Mohamed Idris on 24 June, 2011 in O.S.A.No.310 of 2010 has observed as under:

19. In support of his contention, the learned senior counsel for the appellant/plaintiff relied on the decision of the Honble Supreme Court in Hamza Haji V. State of Kerala and another reported in (2006) 7 SCC 416 , wherein it has been observed that a decision obtained by playing a fraud on IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 22 Court is liable to be set aside on the basic principle that the party who secured such a decision by fraud cannot be allowed to enjoy its fruits. The learned senior counsel also relied on the observation of the Honble Supreme Court in State of Andhra Pradesh and another Vs. T.Suryachandra Rao reported in (2005) 6 SCC 149 to the effect that the fraud vitiates every solemn Act and fraud and justice never dwell together. In A. V.Papayya Sastry and Others Vs. Govt. Of Andhra Pradesh and others reported in (2007) 4 Supreme Court Cases 221 also, the Honble Supreme Court has observed that fraud vitiates all judicial acts whether in rem or in personam and that a judgment, decree or order obtained by fraud has to be treated as non-est and nullity, whether by the Court of first instance or by the final Court and that the same can be challenged in any Court, at any time, in appeal, revision, writ or even in collateral proceedings. In North Eastern Railway Administration, Gorakhpur Vs. Bhagwan Das (dead) By Lrs reported in (2008) 8 Supreme Court Cases 511, the Honble Supreme Court has again reiterated the point that a judgment or decree obtained by fraud either in the first court or in the highest Court, is a nullity in the eye of law. Section 44 of the Evidence Act also enables a party otherwise bound by a previous adjudication to show that it was not final or binding because it is vitiated by fraud. The provision therefore gives jurisdiction and authority to a Court to consider and decide the question whether a prior adjudication is vitiated by fraud. Thus, the above propositions of law abundantly make clear that the AO also being a quasi- judicial authority, while functioning under the, shall also be bound by similar principles of jurisprudence. Hence, for the purposes of assessment of total income u/s 153A also, any findings given in respect of any claim/relief in earlier proceedings shall stand vacated by operation of legal principles (as held by the Apex court above), where it is found that in earlier proceedings the AO has been misled by suppression or misrepresentation of material facts or by producing only make belief documents, which were not found to be genuine subsequently based on emergence of new facts during enquiries. Hence the view that the AO cannot rescind from accepting the documents admitted earlier is not a gospel truth which can be applied in each and every circumstance.

3.1 Further the Apex court in ITO Vs. Techspan India (P.) Ltd. 92 taxmann.com 361 (SC) observed as under: Whether before interfering with proposed re-opening of assessment on ground that same is based only on a change of opinion, Court ought to verify whether assessment earlier IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 23 made has either expressly or by necessary implication expressed an opinion on a matter which is basis of alleged escapement of income that was taxable; if assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to Assessing Officer any opinion on questions that are raised in proposed re-assessment proceedings - Held, yes - Whether every attempt to bring to tax income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where order of assessment does not address itself to a given aspect sought to be examined in re- assessment proceedings - Held, yes In view of the above, applying the same principle in the present context also, it can be safely concluded that in the absence of any categorical finding on the genuineness of a claim in an earlier assessment having being accepted on make belief documents/evidences only, it cannot be said that the A.O. has expressed any opinion on the correctness or otherwise of the items/entries disclosed in the return of income already filed prior to the search. The judicial view is very clear wherein it has been held that the mere submission of some documents proving identity or bank account, affidavits in contrast to the other evidences suggesting the transaction to be suspicious cannot be accepted to have established the genuineness of transaction. Hence, if any earlier finding has been found to be vitiated or incorrect based on material found subsequently, the AO shall have powers to review such findings based on any tangible material coming to his notice, while exercising power of assessment of total income u/s 153A.

4. In this regard it is further pertinent to mention here that the expression incriminating material is not found in the provisions of the and it is only the Honble Courts which had imported those words while rendering the decisions. As per the decision of the Honble Karnataka High Court in the case of Canara Housing Development Co. vs. D.C.I. T. reported in (2014) 49 taxmann.com 98 (Kar Hc) and also as per the decisions of Kerala High Court in the case of St. Francis Clay Decor Tiles 2016, 70 taxmann. 234 Kerala, 22. March, 2016 and E. N. Gopa Kumar vs. C.I. T.(Central), 30 October, 2016 it was held that search assessments could be framed even without the existence of incriminating materials found in the course of search.

5. The basic foundation for conducting the search is governed by the provisions of section 132 of thewhich has to be read harmoniously with section 153A of the. There are three conditions based on which a search action IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 24 could be initiated u/s. 132 of the on an assessee. They are :- Section 132(1) - If the concerned authority has in consequence of information in his possession, has reason to believe that - where a person fails to produce the books of accounts and other documents in response to notice u/s. 142(1) or summons issued u/s. 131 (1) of the; or where a person fails to comply with the requirements of summons issued u/s. 131 (1) of the; or where a person is in possession of any money, bullion, jewelry or other valuable article or thing and such assets represents either wholly or partly income of property which has not been, or would not be, disclosed for the purposes of the (hereinafter referred to as the undisclosed income or property) ; then the officer, so authorized could conduct a search and proceed as per the requirements laid down in the said section. The aforesaid three primary conditions for invoking search proceedings cannot be given a go by while framing section 153A assessments and the instant case falls under section 132(1 )(c) of the. Once the search is conducted and notice u/s. 153A is issued the appellant has to file the return of "total income" whether there was any seized material or not. It shows that seized material or undisclosed income is not the criteria for filing of return declaring total income. What is required to file return of income for appellant is that (1) there should be search and (ii) 153A notice should be issued. Once the notice is issued u/s. 153A and appellants file its return of income for six years then the earlier returns became non est and the returns filed in response to notice u/s. 153A becomes the final return and the AO has power to assess or reassess the case for entire six years. The earlier assessment also becomes non est as the earlier return filed by the appellant became non est.

6. The aforesaid view get strength from Delhi High Court decision of Pr. Commissioner of Income Tax vs. Niraj Jindal dated February 9, 2017 wherein it is held that once the assessing officer accepts the returns filed u/s. 153A the original return filed u/s. 153A becomes non est which means there was no such return in the eyes of law and action taken over such assessment also becomes non est which shows that Section 153A empowers appellant to file its disclosed and undisclosed return both and similarly it IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 25 empowers to the AO also to assess or reassess the income accordingly.

7. The decision of Pr. Commissioner of Income Tax vs. Niraj Jindal of Delhi High Court which has been affirmed by the Honble Supreme Court, has also interpreted the same and holds that once notice under section 153A is issued and appellant files returns before the assessing officer, the eai1ierTeturn filed by the appellant becomes non est. The aforesaid decision is in consonance with the interpretation of clause (a) and (b) and proviso one of Section 153A( 1).

8. It is further to point out that the provision of Section 153A are non obstante clause which does not have any conditions of seized material or incriminating material for making assessment, filing of return or conditions for issuance of notice u/s. 153A Wherever the search has been conducted 153A has to be issued indiscriminately without any seized material and assessment of that return is to be made. It has been directive of Honble Supreme Court that anything should not be complied which is not examined. "In interpreting a taxing statute, equitable consideration are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency". The aforesaid view is held in the decisions of the Apex Court in the case of CST v. Modi Sugar Mills Ltd. [1961] 12 STC 182 (SC) ; AIR 1961 SC 1047 has observed that (page 190 of 12 STC). The same view has been expressed by the Supreme Court in CIT v. Calcutta Knitwears [2014] 362 ITR 673 (SC) has held that the while interpreting fiscal statutes, the court must not add or substitute the word in the provision. Keeping in view of aforesaid fact it is submitted that the matter may be decided in favour of revenue

.

6. The ld. Counsel for the assessee, on the other hand, fully supported the impugned order passed by the ld. CIT(Appeals) giving relief to the assessee on the issue under consideration by making the following submissions in writing:-

1.1 A search & seizure operation was conducted u/s 132 of the on

17.12.2014 by the Investigation Wing, Kolkata at the business as well as residential premises of the "SAFECHEM Group" at Kolkata and IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 26 other places. Assessment u/s 153A/143(3) was completed on

30.12.2016 determining total Income of Rs.3,04,83,700/- inter-alia making the following addition: (i) Unexplained Cash credit u/s 68 of the I.T. Act - Rs.2,95,OO,OOO/- The above additions made in this impugned order are part & parcel of the regular income tax return filed u/s 139(1) and the audited Balance sheet & profit & loss account. In the instant case the above additions are not based on any incriminating seized material.

1.2 As per Section 153A, the assessments are classified in two categories, i.e. (i) Completed Assessment and (ii) Pending or Abated Assessment. Completed Assessment refers to the assessment which are not pending as on the date of search and the time limit for issuance of notice u/s 143(2) has expired. Thus, the assessment for the year has attained finality and any addition in the completed assessments can be made only on the basis of Incriminating material found during the course of search. Pending or Abated Assessment refers to the assessment which are pending as on the date of search and hence merges with the Block Assessment proceedings u/s 153A and assessment is made normally by the AO.

1.3 The instant case of the assessee falls in the category of the Completed Assessment as no assessment for the instant year was pending as on the date of search. The assessee filed the original return u/s 139 on 04.10.2010 declaring total income of Rs.9,83,700/- The return was processed u/s 143(1) of the I.T. Act. The period within which the statutory notice u/s 143(2) could be issued by the department also expired on 30.09.2011, i.e. much before the search and seizure operation conducted on 17.12.2014. That means no proceedings was pending before the AO on the date of search. In the course of search no incriminating documents were found on the basis of which any addition could be made. The AO has made the additions u/s 68 of the as the Share holders did not comply the summons u/s 131 and assessee did not produce the Directors of the investor companies. The AO has not referred any incriminating seized documents for making above additions/ disallowances. This fact is evident from the assessment order. Brief facts of the case are tabulated hereunder;

04.10.2010 Date of filing of return u/s 139 9,83,700/- Returned income

30.09.2011 Time limit for issuance of notice u/s 143(2)

17.12.2014 & 18.12.2014 Date on which search & seizure operation was conducted Rs.3,04,83,700/- Assessed income u/s 153A/143(3) vide order dat3ed 30.12.2016 Total addition made u/s 153A/143(3) IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 27 Rs.2,95,00,000/- Rs.2,95,00,000/- Addition of share application money received u/s 68. The instant appeal is against the addition of the items of regular assessment in the assessment made under sec.153A of the without having any incriminating material to that effect found and seized in the course of search & seizure operation. The Ld. AO while exercising the powers conferred within him u} s 153A of the has failed to appreciate the legal position that the addition in the case of search assessments has to be made only on the basis of incriminating material. The Ld. AO also can not start doing a fresh assessment that had already been completed either u/s 143(3) or u/s 143(1) under the without having any incriminating material on record. In proceedings u/s 153Aj153C to reopen the completed assessment is restricted only to the extent of incriminating documents if any. The various High Courts including the jurisdiction Calcutta High Court and jurisdictional ITAT have already held that issues forming part of the items of the regular assessment, is beyond the scope of the search assessment u/s.153A/153C and the AO has no jurisdiction to make additions otherwise than on the basis of the incriminating material found in the course of search.

1.4.2 In the instant case, the AO has made the addition of Rs.2,95,00,000/- u/s 68 of the I.T. Act on account of share capital on the ground that the share applicants did not company to summons u/s 131 of the and the assessee did not produce the Directors of the investor companies. The AO also alleged that some applicant companies are jamakharchi companies. He also alleged that as per the data base of the Investigation wing, Kolkata the companies namely M/s Tramel Treading Pvt Ltd and M/s Giltedge Vincom Pvt Ltd are also jamakharchi companies maintained by entry operator Mr. Jivendra Mishra whose statement was recorded. In the course of assessment all the supporting documents of the share applicants were filed to explain the identity, creditworthiness and genuineness of the transaction. The share applicants also filed reply against notice u/s 133(6) and confirmed their investment.

1.4.3 The Ld. DR during the course of hearing has alleged that statement of the entry operators was recorded which can be treated as incriminating material in the case of the assessee. In this regard, we would like to submit that the statement of alleged entry operator was not recorded consequence to search & seizure operation against the assessee. The statement was recorded on

26.09.2014 in connection to search & seizure operation of some other group. The statement was retracted vide an affidavit dated

14.10.2014 duly notarized before the Notary Public copy of which was provided to us by the ld. D.R. during the course of earlier hearing before the Honble Bench. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 28

1.4.4 Further, no survey has been conducted nor any statement of any operator has recorded in consequence or parallel to the search of the assessee. The statement as been alleged by the DR has been recorded prior to the search of the assessee in case of some group and the same has been referred by the department from the data base of the department available with the AO. It is important to mention here that at the stage of assessment proceedings, neither the copy of the statement of the so-called entry operator was provided to the assessee to know the contents of the same nor any opportunity was given to the assessee for any revertal. Also, no opportunity was given to the assessee for any cross examination of the entry operator before relying on the statement thereof.

1.4.5. Further these are pre search enquiries which have no evidentiary value in absence of any incriminating seized material. No value can be attached to his statement as he has retracted his statement submitted before the department (as evident from the affidavit given by the Ld. DR during the course of hearing). His conduct neutralizes his value as witness of the department. They are double speaking person. In course of search & seizure operation no incriminating material or assets were found to link the share capital raised by the assessee with the statement of so called entry operator. The assessee was not provided opportunity to cross examine the entry operators. Therefore, statement obtained from the entry operator later on retracted by an affidavit has no evidentiary value & no substance and are irrelevant and cannot be treated as incriminating material for the purpose of making the addition in the hands of the assessee. In the course of search, no incriminating document relating to the addition made u/s 68 in respect of share ital was found and seized. This fact is evident from the assessment order as the Ld AO is silent about any incriminating documents found in the course of search.

1.5 During the course of hearing before the Honble Bench, the Ld. OR has made a written submission before the Honble Bench with regard to the instant matter. The Ld. DR in the submission have made generalised allegations which are completely irrelevant given the facts of the instant case. The Ld. DR in his submission has alleged that the term incriminating material has not been defined under any provisions of the act. He further relied on various case laws of different courts saying that additions u/s 153A can be made without having any incriminating material on record.

1.6 In this regard, we would like to submit that the submission made by the Ld. DR is completely irrelevant given the facts of the instant case. The DR in the submission filed have relied on certain decisions out of which most of the decisions are irrelevant to the instant case. We would like to distinguish some of those judgements as under: IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 29 (i) First of all, the Ld. DR relied on the decision of Honble Delhi High Court in case of Mls Filatex India Ltd vs CIT (229 Taxman 555) and CIT vs Anil Kumar Bhatia (352 ITR 493) in which it has been held that addition u/s 153A can be made without having any incriminating material on record. In this regard, we would like to submit that both the decisions as relied by the OR are completely on different facts and has been considered and distinguished by the Honble High Court of Delhi while passing the decision of CIT Vs.- Kabul Chawla (380 ITR 573) . Therefore, the decision of Kabul Chawla (supra) supersedes the decisions relied by the OR as above. (ii) The Ld. dR also relied on the decision of Honble Allahabad High Court in case of Raj Kumar Arora (in 367 ITR 517) . In this regard, we would like to submit that the above mentioned decision of Raj Kumar Arora has been given by the Honble Allahabad High Court by relying on the decision of Honble Delhi High Court in case of CIT vs Anil Kumar Bhatia (352 ITR 493) . As mentioned above, The case of Anil Kumar Bhatia has been considered and distinguished by the Honble High Court of Delhi while passing the decision of CIT vs Kabul Chawla (380 ITR 573) . Therefore, the decision of Kabul Chawla (supra) supersedes the decisions relied by the DR as above. (iii) The Ld. OR further relied on the decision of High Court of Kerala Sunny Jacob Jewellers and Wedding Center vs DCIT in 362 ITR 664; In this regard, we would like to submit that the facts of the above mentioned case are completely different from the present case and thus have no relevance. In this case, there were incriminating material found against the assessee and thus the case was set aside to the file of the AO for considering the same after giving an opportunity to the assessee. But in our case, no such incriminating material has been found by the department as a result of search nor the addition has been made based on the incriminating documents. As such the reliance placed by the Ld. OR in the instant case is completely irrelevant. (iv) The Ld. DR also relied on the decision of Honble Delhi High Court in case of Smt. Dayawanti (390 ITR 496) ; In this regard, we would like to submit that the facts of the above case are not relevant for the assessee case. In the above case, statements of family members were recorded on the basis of which addition was made. Further, none of the statements made were retracted by them. Thus, the Honble High Court held that the statements so recorded consequent to search can be treated as incriminating material. However, in the current case, no such statement has been recorded with regard to the search of the assessee group and the statements as relied by the revenue were from the data base of the department and were recorded in case of some other group not relevant to the assessee. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 30 Further, the alleged statement was also retracted by the so called entry operator vide an affidavit dated 14.11.2014 filed as provided by the ld. DR during the course of hearing. As such, the case relied by the Ld. DR are completely on different footing and not reliable for the instant case. (v) Further, the Ld. OR has mentioned that SLP has been admitted by the Honble Apex Court in case of Continental Warehousing Corporation 235 Taxman 568. In this regard, we would like to submit that mere acceptance of SLP does not state that the case has been decided in favour of the revenue. (vi) The Ld. DR has further relied on the decision of Honble Apex Court in case of CIT vs S. Ajit Kumar in 404 ITR 526 ; In this regard, we would like to submit that in the above case, Honble Apex court have held that material found or statement recorded in a survey conducted simultaneously at the premises of a connected person can be treated as incriminating material for the purpose of making the addition u/s 153A. However, in our case, no such survey has been _conducted u/s 133A nor any documents have been found connected to us nor any statement has been recorded. As such, when there is no survey, neither any documents have been found related to the assessee nor any statement has been recorded uls 132(4), they cannot be treated as incriminating material for the purpose of making addition in the hands of the assessee. Therefore, the reliance placed by the Ld. DR is irrelevant. (vii) Apart from the from relied case laws, the Ld. DR has also relied on various case laws which have no relevance with the case of the assessee.

1.7 As submitted above that the Ld. CIT DR pointed out that the statement recorded is an incriminating material. In this regard, it is submitted that the statement so made and retracted subsequently does not contain any / evidentiary value and in absence of any corroborative evidence or seized or impounded documents cannot be treated as an incriminating material under any circumstances. Therefore, those statements do not have any evidentiary value to place reliance on them for the purpose of making the addition in the hands of the assessee. In this regard, we would like to rely on the CBDT Instruction: F. No.286/2/2003-IT(INV.II) as under: "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 31 circumstances, such confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders".

1.7.1. In this regard, we rely on the following decisions of the jurisdictional High Court and co ordinate bench as under: (i) CIT Vs Eastern Commercial Enterprises (1994) 210 ITR 103 (Kol HC). "We have considered the contesting contentions of the parties. It is true that Shri Sukla has proved to be a shifty person as a witness. At the earlier stages, he claimed all his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double-speaking cannot be said by any means a truthful man at any stage and no Court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what remains is accounts, vouchers, challans, bank accounts, etc. But we would observe here that which way lies the truth in Shri Suklas depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact the right to cross-examination a witness adverse to the assessee is an indispensable right and the opportunity of such cross- examination is one of the cornerstones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re-examination, if necessary

. (ii) Mls Adhunik Gases Ltd. v/s DCIT, IT(SS)A No. 47/Kol/2015 ITAT(Kol) dt 06.01.2017; "9. 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 the propositions canvassed by the Id. AR for the assessee are supported by the judgments of jurisdictional ITAT and Honble High Courts. Ld. AR has pointed out that no IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 32 incriminating documents was found either during surveyor during search procedure. The statement of Shri Naresh Kumar Chhaparia 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/s.153A there should be a new or incriminating document. The assessment which is already completed u/s.143(3)/143(l) 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 cornpemes. which has been established by the statement of Mr.Naresh Kumar Chhaparia, 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 AO u/s.153A and confirmed by the Id CIT(A) needs to be deleted. Therefore, we delete the addition. 10.In the result, appeal filed by the assessee on ground No.IT(SS)A No.47, 49, 50, 51, 52, 54, 55, 94, 95, 96/Ko1/2015 is allowed. " (iii) DCIT vs M/s. Warren Tea Ltd. in IT(SS)A No. 72-78/Ko1/2015 dated 23.08.2017; "6. Aggrieved by the assessment order passed by the AO, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who has deleted the addition made by Assessing Officer. The key findings of the order of the Id. CJT(A) are narrated below: (i) It was observed by the CJT(A) that in the course of search/survey operation u/s 132/133A of the conducted on 27.01.2011 in the cases of suppliers, service providers and contractors etc. of the assessee company, the statements of the persons concerned who controlled the business along with other family members etc. were recorded. These persons were Shri Ram A vtar Mittal, Director of M/s Eastern Road Carriers Pvt. Ltd. and M/s Aska Roadways Pvt Ltd; Shri Pankaj 8agaria, Director of M/s Harshit Commercial Pvt. Ltd. M/s Janaki Commercial Pvt. Ltd; Shivam Commercial Pvt. Ltd: TDS Commercial Pvt. Ltd (earlier known as Thakurdas Sureka Engg. Corporation Pvt. Ltd.). Kalinga Commercial Pvt. Ltd: M/s 8asant Commerce Pvt. Ltd; M/s Omkara Merchants Pvt. Lid, and M/s Glamour Mercandise Pvt.Ltd: Smt. Neema Bagaria, Director of M/s Prachi Commercial Pvt. Ltd; and Smt. Pushpa Bagaria, Shri Ajay Chokhan Director of M/s Glamour Merchandise Pvt. Ltd; Shri Ram Gopal Drolia, father of Shri Saket Drolia (Proprietor of M/s S.B. Commercial Company) and director of M/s Dholisati Business Pvt It et karta of Ram Gopal Drolia (HUF) having proprietorship concern M/s Durga Enterprises and Smt. Bela Drolia Director of M/s Gopal Timber Trading Company: Shri Pawan Kumar Goeake, Director of M/s PM Traders etc. All these persons, in their statement recorded Vis 132(4)/133A had stated that through their various business concerns IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 33 they had provided only the accommodation entries to the assessee company. But later on they had retracted their statements on

02.02.2011 i.e. within seven days of initiation of search. However, the assessing officer made various additions based on their statements/ like addition on account of transportation charges/ revenue expenses/ capital expenses/ purchase of organic manures etc. However. the Id CIT(A) observed that though the statement given by a person in the course of search/survey proceedings has evidentiary value but the said statement should be supported by the corroborating materials and evidences or at least circumstantial evidences. In the absence of corroborating evidences the statement has no evtdentiery value if retracted later on. The Apex court has observed in Pullengode Rubber Produce Co. Ltd. vs. State of Kerala, 91 ITR 18 (SC) that an admission is an extremely important piece of evidence but it cannot be said to be conclusive. It is open to the person who made the admission to show that it was incorrect. The CJT(A) further cited the following judgments: . Based on the above reasoning the CJT(A) observed that though Initially all the parties who supplied goods/ materials or provided services or executed works in the nature of contract stated that they had provided accommodation entries to the assessee company without doing actual transactions but later on they all retracted their statements on the ground that they were pressurized to give such statements and that their all business transactions with the assessee company were actual business transactions. In support of their claim in the affidavit they all appeared before the AD and produced their books of account bills/vouchers and bank statements. After verification of such books of account and primary documents nothing adverse was noted by the AO end. Therefore, he did not mention anything about the books of account, bills/vouchers and bank statements produced by all of them before him. He did not record the statement of any of the persons appeared before him and he did not ask any question about their business transactions with the assessee company or purchase made by them to execute the works of the assessee company. Thus, it can be said that all the persons successfully explained before the AO that the admission of providing accommodation entries to the assessee company was not correct. The retracted statement has no evidentiary value until and unless the AO proves that the retraction was not correct and the statement is substantiated by the corroborating evidences. Therefore, the Id CIT(A) deleted the additions, which were done by the AO based on the statements.............. .

7. The Id Counsel for the Assessee has submitted, before us, that the date of search was 27.01.2011 whereas the assessments were already completed under sections 143(1)/143(3) of the and the date of issue of statutory notice u/s 143(2) had already elapsed on the date of search, in respect of the assessment years 2005-06, 2006-07, 2007- 08, 2008-09 and 2009-10, and no incriminating material was unearth by the search team, therefore no addition can be made in those assessment years. Therefore, in nutshell the Id. counsel submitted IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 34 that no any incriminating documents were found by the Assessing Officer in unabated (Completed) assessments. The AO made additions based on the statements recorded during search and seizure, which the assessee does not accept because these statements are not supported by any corroborative evidence. The assessee has relied on the following judgmen~ and instruction of CBDT, wherein it was held that addition can not be made merely based on the statements: i). Taxmann - Instruction: F. No.286/2/2003-IT(INV.II) Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the coarse of the seerdt & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, such confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what as not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders .

8. Undisputedly, since the search happened on 27.01.2011, the assessments in respect to assessment years 2005-06 to 2009-10 were undisputedly not pending before the AO, we note that the statements recorded simultaneously of the persons while search was going on at the Warren Tea Group premises i.e. Shri Pankaj 8agaria, Shri Ramgopal Drolia, Shri Pawan Kumar goenka, Shri Deepak lhunihunwala and Shri Ram Avtar Mittal and statements recorded on behalf of M/s Asian Udyog and on behalf of M/s. P. M Traders u/s 132(4) as well as survey u/s.133A has been retracted within a span of weeks time and they have sworn affidavit stating these facts before Notary Public and the same have been forwarded to the investigation wing. In the statements in the affidavit, the deponents have clearly stated that the statements recorded u/s.132(4) and during survey were made on coercion and undue pressure and thus the contents of the statements thus recorded u/s 132(4) and survey were vitiated and consequently lost its evidentiary value, if any. In the aforesaid backdrop, we note that these statements recorded u/s.132(4) and survey could not be treated as incriminating msteretstn the ... light of the affidavits filed by the deponents retracting the said statement recorded during search and moreover when the Assessing Officer has relied on the statements recorded u/s132(4) and statements recorded during survey, cannot be made the sole basis for additions because the said statements made by the Deponents has not been cross- examined by the assessee. If the Assessing Officer was relying on IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 35 statements recorded under section 132(4) and statements recorded during survey, then the assessee should have been provided with an opportunity to cross-examine the witnesses and WIthout doing so, the statements recorded u/s132( 4) and during survey is fragile for violation of natural justice and cannot be the sole basis for making additions. When we discard the statements recorded u/s.132(4) and statements recorded during survey; there is no other relevant evidence or material to corroborate the allegations made during the statements recorded u/s.132(4) and during survey. When there is no material at all to support the impugned additions, the statements recorded u/s.132(4) and survey cannot be treated as incriminating materials in the facts and circumstances of the case. In the light of the aforesaid facts and arcumstsnces. therefore, for Assessment Year 2005-06 and 2009-10 which were not pending on the date of search no additions can be made without incriminating materials as held by the Hon1Jle Delhi High Court in the case of CfT; Central-Ill Vs. Kabul Chawla which has been upheld by the Honble Kolkata High Court in ITA no.661 of 2008 CIT Vs. Veerprabhu Marketing Ltd. Therefore, it is an unabated assessment and the settled position of law is that no addition can be made for unabated assessments without incriminating materials. The Honble Delhi High Court in theA No. 707, 709 & 7013 of 2014 CIT Central-Ill vs. Kabul Chawla, wherein their lordships have held as under: .

11. In the light of the aforesaid ratio laid by the Honble High Courts, wherein, the Hon1Jle High Court held that in the absence of any incriminating materials, the concluded assessment need to be reiterated and in the essessees cases before us from a perusal of the above chart, it is clear that on the date of search i.e. on 27.01.2011, assessments pertaining to A. Y. 2005-06, 2006-07, 2008-09 and 2009- 10 were not pending before the AO and the last date for issuance of Section 143(2) notice for scrutiny had elapsed. Therefore/ it can be safely assumed that these assessments were not pending before the AO and as per the ratio laid by the Honble High Courts these assessments are concluded assessments/ which cannot be tinkered with and fresh additions cannot be made without direct nexus to the incriminating materials seized during search. Therefore/ no addition without incriminating materials ought to have been saddled on the assessee for A. Y. 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 and so we allow the appeal of the assessee on the legal issue raised and direct deletion of the addition/disallowances made in these assessment years. (iv) DCIT vs M/s Yash Alloys Pvt. Ltd., In ITA NO. 689/Kol/2015 dated 14.09.2018; 3. We have given our thoughtful consideration to rival contentions. Case file including a detailed compilation of judicial precedents as well as documentary evidence has been perused. The Revenues sole argument during the course of hearing is that the Assessing Officer had rightly made the impugned additional income addition of Rs.10 crores as per Shri K.P. Agarwalas statement recorded during the(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 36 search. It is strongly emphasized that the CJT(Appeals) has erred in law as well as on facts in deleting the impugned additional income in lower appellate proceedings. We find no merit in the Revenues sole grievance. Two basic facts emerge from the rival pleadings. First one is that the Revenue has based its case on Shri K.P. Agarwalas search statement. The CJT(appeals) has held that Shri Agarwala was never the authorized person to depose or to offer any income at assessees behest. We reiterate that this assessee is a company. It was very much imperative for the Revenues to place on record the corresponding details to reverse this clinching finding. There is no such evidence on record. Equally significant is the latter tact: in our considered opinion that there is no incriminating material found or seized during the course of search which could be taken as evidence for adding additional income sum of Rs. 10 acres. The CBDTs circular dated 10.03.2003 makes it very clear that the an authorized officer during the course of search or survey has to collect evidence rather than obtaining search statements of undisclosed income. Vile find that there is no even a single such evidence in foregoing facts which could be taken as the relevant material for making the impugned addition. The CIT(Appeals) has discussed a catena of case law to this effect as well that such an addition is not sustainable in absence of any incriminating material found or seized during the course of search or survey carrying presumption u/s 292C of the. We accordingly see no reason to interfere with the CJT(Appeals) detailed conclusion in deleting the impugned addition ot additional income amounting to Rs.10 crores. The Revenue fails in its sole substantive ground. (v) CIT vs S. Khader Khan &. Sons, Honble Madras High Court, in 300 ITR 157; "What is more relevant, in the instant case/ is that the attention of the Commissioner and the Tribunal was rightly invited to the circular of the Central Board of Direct Taxes dated March 10/ 2003/ with regard to the confession of additional income during the course of search and seizure and survey operations. The said circular dated March 10, 2003 reads as follows: Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned asses sees while filing returns of income. In these circumstances/ on confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search and seizure and survey operations no attempt IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 37 should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further; in respect of pending/ assessment proceedings also, the Assessing Officers should rely upon the evidences/materials gathered during the course-of search/survey operations or thereafter while framing the relevant assessment orders. " (vi) Saimed Innovation vs ITO, ITA No. 2231/Kol/2016 dated 13.09.2017;

1.7.2 Thus, as per the above discussion and case laws relied on, the statements of the so called entry operators as relied by the Ld. DR has no evidentiary value and thus, they can in no way be treated as an incriminating material as evident from the assessment order for the purpose of making the addition in the hands of the assessee. Further, the statements were recorded in some other case prior to the search of the assessee and thus, they can in no way be treated as incriminating material for the purpose of making the addition.

1.8 Further, we would like to submit that our case is completely covered in the favour of the assessee by various decisions of various High courts & ITAT including the jurisdictional High court & ITAT and also by the decision of Honble Apex Court.

1.8.1 We would like to place our reliance on the decision of Honble Supreme Court in case of PCIT Vs. Meeta Gutgutia, Honble Supreme Court in 96 taxmann.com 468 dated 02.07.2018, wherein the Honble Supreme Court has held as under: Section 153A of the Income-tax Act 1961 - Search and seizure (General principles) - Assessment years 2001-02 to 2003-04 and 2004- 05 - High Court in impugned order held that invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year - Whether SLP against said decision was to be dismissed - Held, yes (Para 2) [In favour of assessee] II. Section 69 read with sections 132 and 153A of the Income-tax Act 1961 - Undisclosed investment (Franchise fees) - Assessment years 2001-02 to 2004-05 - During course of search, assessee made a disclosure on account of change in method of accounting of franchise fee and undisclosed franchise fees for relevant year - On basis of said statement Assessing Officer opined that number of outlets for which franchise fee was received had more or less remained same in all assessment years from 2001-02 to 2006-07 and estimated undisclosed income at a certain percentage of amount of disclosure made by assessee in her statement under section 132(4) - High Court in impugned order held that since no incriminating material was unearthed to show that there was failure by assessee to disclose franchise income/ addition made by Assessing Officer was unjustified IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 38 - whether SLP against said decision was to be dismissed - Held, yes [Para 2] [In favour of assessee]."

1.8.2 The appellant further rely on the judgment of the Honble Delhi High court in the case of PCIT Vs. Kurele Paper Mills Pvt. Ltd. (2016) 380 ITR 571(DEL) where it has been held that in case of search assessment, addition u/s 68 is not justified if no incriminating evidence relating to share capital found in the course of search. The relevant extracts of the same is as under: "SEARCH AND SEIZURE - ASSESSMENT IN SEARCH CASES - SHARE APPLICATION MONEY- NO INCRIMINATING EVIDENCE RELATED TO SHARE CAPITAL ISSUED FOUND DURING COURSE OF SEARCH - DELETION OF ADDITION UNDER SECTION 68- JUSTIFIED INCOME TAX ACT, 1961, SS. 68, 153A. Held dismissing the appeal,that the order of Commissioner (Appeals) revealed that there was a factual finding that no incriminating evidence related to share capital issue was found during course of search as was manifest from the order of AD. Consequently, it was held that AO was not justified in invoking section 68 for the purposes of making addition on account of share capital. There was nothing to show that above factual determination was perverse. The judgment of the Horrble High court is reproduced as under: "1. The Revenue has filed the appeal against an order dated November 14, 2014, passed by the Income -Tax Appellate Tribunal (ITAT) in 3761/De1/2011 pertaining to the assessment year 2002-03. The question was whether the learned Commissioner of Income -tax (Appeals) had erred in law and on the facts in deleting the addition of Rs. 89 lakhs made by the Assessing Officer under section 68 of the Income -Tax Act 1961 ( the) on bogus share capital. But the issue was whether there was any incriminating material whatsoever found during the search to justify initiation of proceedings under section 153A of the.

2. The court finds that the order of the Commissioner of Income-Tax (Appeals) reveals that there is a factual finding that "no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the Assessing officer: Consequently; it was held that the Assessing Officer was not justified in invoking section 68 of thefor the purposes of making additions n account of share capital.

3. As far as the above facts are concerned, there is nothing shown to the court to persuade and hold that the above factual determination is perverse. Consequently after considering all the facts and circumstances of the case, the court is of the opinion that no substantial question of law arises in the impugned order of the Income-lax Appellate Tribunal which requires examination. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 39

4. The appeal is, accordingly dismissed." The department had filed special leave petition before the HonbIe Apex Court against the above judgment of the Delhi High court. (Pr. CIT V KURULE PAPER MILLS P. L TD: 5.L.P (C) No-34554 of 2015[2016] 380 ITR (st) 64-Ed). The Honble Apex court dismissed the special leave petition filed by the department; The relevant Para as mentioned in theR is reproduced as under. "Their Lordships Madan B.Lokur and SA. Bobde JJ dismissed the Departments special leave petition against the judgment dated July 06,2015 of the Delhi High Court in I.T.A 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 thefor the purpose of making additions on account of share capital".

1.8.3 In this regard, further we would like to place reliance on the decision of Honble Jurisdictional ITAT, Bench A in case of DCIT vs M/s MBL Infrastructure Ltd., in IT(SS)A No. 65,66,67 &. 76/Kol/2016 dated 01.05.2019 wherein it has been held that in the proceedings u/s 153A, neither any fresh claim can be made by the assessee which was not claimed at the time of original assessment proceedings nor any addition can be made by the department in absence of any incriminating material on record. The relevant extracts of the decision is as under: "11. We have heard the arguments of both the Sides on this issue and also perused the relevant material available on record. It is observed that the claim of the assessee for deduction under section 80lA to the extent of Rs.5,46,96,237/- was disallowed in the original assessment proceedings and since the said assessment had become final before the search and seizure operation conducted on 28.10.2010, there was no reason or occasion to raise this issue in the proceedings under section 153A read with section 143(3), especially when there was no incriminating material found during the course of search relating to this issue. As a matter of fact, in the return of income filed on

30.09.2011 in response to the notice issued under section 153A pursuant to the search and seizure action, deduction under section 80IA was claimed by the assessee only to the extent of Rs.3,36,24,913/- as allowed in the original assessment and the additional claim of Rs.5,46,96,237/- for deduction under section 80IA was made by the assessee by way of revised computation of total income filed during the course of assessment proceedings under section 153A read with section 143(3). The Assessing Officer declined to entertain the said claim while the Id. CIT(Appeals) not only entertained the said claim but also allowed the same on merit. Keeping in view all the facts of the case as discussed above including especially the fact that the original assessment proceedings resulting into disallowance of Rs.5,46,96,237/- under section 40(a)(ia) had IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 40 become final, we are of the view that the Id. CIT(Appeals) was not justified in entertaining and allowing the new claim made by the assessee on this issue and even the Id. Counsel for the assessee has not disputed this position. We accordingly reverse the impugned order of the Id. CJT(Appeals) on this issue and allow the appeal of the Revenue.

14. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record It is observed that the return of income originally filed by the assessee on

30.09.2008 claiming deduction of Rs.5,77,16,153/- under section 80lA was accepted by the Assessing Officer under section 143(1) and since no notice under section 143(2) was issued by him till the expiry of the statutory time limit which ended on 30. 09.2008 the original assessment for the year under consideration i.e. A. Y. 2008-09 had become final before the search and seizure operation conducted on

28.10.2010. As rightly contended by the Id Counsel for the assessee, there was thus no reason or occasion to raise this issue in the proceedings under section 153A read with section 143(3) and the disallowance made by the Assessing Officer to the extent of Rs.4,49,85,993/- on account of assessees claim for deduction under section 801A, which was allowed in the original assessment and that assessment had become final, was not sustainable, especially when there was no incriminating material found during the course of search, which could form the basis of the said disallowance. Even the Id D.R. has not disputed this position which is clearly evident from the record including the assessment order passed by the Assessing Officer under section 153A read with section 143(3). We, therefore, find no infirmity in the impugned order of the dl. CJT(Appeals) deleting the disallowance made by the Assessing Officer on this issue and upholding the same, we dismiss Grounds No. 1 & 2 of the revenues appeal.

1.8.4 In this regard the Honble jurisdictional Calcutta High Court Kolkata has time and again reiterated its view that the additions in case of the search assessments have to be made on the basis of incriminating material. Some of the recent decision of the Honble Jurisdictional High Court as well as other courts are discussed hereunder for your honors ready reference; (i) 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. ITAT, Kolkata was of the opinion that the assessing officer had no jurisdiction u/s 153A of the LT. Act to reopen the concluded cases when the search & seizure did not disclose any incriminating material. In taking the aforesaid view, the Ld. ITAT relied upon the judgments of Delhi High Court in the case of CIT(A) Vs. Kabld chawla in ITA No. 701/2014 dated 28.08.2014. The Court also observed that more or less an identical view has been taken by this Bench in ITA No. 661/2008 in the case of Veerprabhu Marketing Limited. Considering IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 41 the above facts, the Honorable High Court did not admit the appeal filed by the Department. (ii) "CIT,Kolkata-III Vs. Veerprabhu Marketing Limited [20161 73 taxmann.com 149 (Calcutta) : In this case The Honorabie Calcutta High Court expressed the following views: "We are in agreement with the views of the Karnataka High Court that incriminating materia! is a pre-requisite before power could have been exercised under section 1S3C 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. (iii) 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 A Ys 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 A Ys 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 A Ys 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 A Ys,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- Revenues appeal dismissed. (iv) Mridul Commodities Pvt. Ltd. Vs DCIT, Cent. Cir-XXI, Kol. in (IT(SS) A Nos.14 & 15/Kol/2015) dt.07.10.2016. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 42 (v) M/s. All Cargo Global Logistics Ltd. Vs DCIT, Cent. Circle - 44, Special Bench Mumbai (IT Appeal Nos.S018 to S022 & SOS9 (Mum) of 2010 dt.06.07.2012. (vi) ACIT vs M/s PHPL Stock Broking Pvt. Ltd. in IT(SS)A No.12/Ko1/2017 dt. 21.08.2018; (vii) DCIT vs M/s B.R. Infraprojects Pvt. Ltd. in IT(SS)A No.11/Ko1/2017 dt. 26.09.2018; (viii) DCIT vs M/s Rosemarry Sponge &. Ispat Pvt Ltd. in IT(SS)A No.7S &. 76/Kol/2017 dt. 30.11.2018.

1.9. Further, we would like to submit the Ld. CIT(A) has given a very categorical finding that no incriminating material has been found during the course of search based on which the addition has been made by the AO. The observation given by the Ld. CIT(A) is reproduced as under: I have considered the findings of the AO in the assessment order, different case laws was brought on record and appeal orders passed by my predecessors on this legal issue. I find from the assessment order that during the search & seizure operations conducted u/s 132 of the Ace 1961, incriminating documents/papers were not seized. At least addition made by AO in the assessment order passed u/s 153A/143(3) are not based on any incriminating documents/ papers seized during the search operation. It would also not to be out of context to mention here that in this case/ on the date of search no assessment for this year was pending. Therefore/ keeping in view the ratio decided by the jurisdictional bench of Kolkata tribunal in case referred above and the ratio decided by the Honble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra) in the light of CBDTs decision of not filing SLP in this case in the Supreme Court and keeping in view the Apex courts decision to dismiss SLP on the similar issue in the case of Pr CIT vs Kurele Paper Mills Pvt Ltd: SLP (e) 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 Honble Calcutta High Court in the case of Veer Prabhu Marketing Ltd (supra), assessees appeal on ground no 1 is allowed and as such I am not inclined to adjudicate appeal on ground no. 2 on merit."

1.10 Thus, we rely fully on the order of the Ld. CIT(A) and further in view of the above discussions made and case laws relied on it is, therefore, prayed that all the above additions made u/s 153A cannot be sustained in the eyes of law in the re-assessment proceedings in the absence of any incriminating seized material/document. The submissions made by the Ld. DR have no relevance in the instant case. Therefore, it is prayed that the additions so made may kindly be deleted. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 43

7. We have considered the rival submissions and also perused the relevant material available on record. In this case, a search and seizure action under section 132(1) of thewas conducted on 17 t h & 18 t h December, 2014 and the addition made by the Assessing Officer in the unabated assessment completed in pursuance of the search under section 153A of theon account of share capital and share premium received during the year under consideration by treating the same as unexplained cash credit was deleted by the ld. CIT(Appeals) on the ground that the same was not based on any incriminating material found during the course of search. It is true that when a search under section 132(1) is conducted, the Assessing Officer gets jurisdiction to issue notice under section 153A for the relevant years and complete the assessments for the said years. It is also true that there is no explicit mention in the language used in section 153A that the addition made under section 153A should be based on the incriminating material found during the course of search. The scope of assessment to be made under section 153A, however, is considered and defined in the various judicial pronouncements. In this regard, the assessments are classified in two categories, i.e. completed assessment and pending or abated assessment. It is held that if the assessment for the relevant year is pending as on the date of search and it is not completed, the same gets abated and the scope of assessment to be made under section 153A for the said year is wide, which includes assessment of income on the basis of incriminating material found during the course of search as well as the assessment of income, which is the subject matter of regular assessment. On the other hand, if the assessment for the relevant year is not pending as on the date of search, the same is to be regarded as completed assessment and the scope of assessment to be made under section 153A is limited to the assessment of undisclosed income on the basis of incriminating material found during the course of search. This legal position IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 44 clearly emanates from the various judicial pronouncements cited and relied upon by the assessee in the written submission filed before us. No doubt, there are certain judicial pronouncements cited by the ld. D.R. in his written submission, wherein a contrary view has been taken, which is in favour of the Revenue. However, a consistent view has been taken by the Honble Calcutta High Court on this issue in several cases, which is in favour of the assessee. For instance, in the case of DCIT vs.- Salasar Stock Broking Limited (supra), the decision of the Tribunal holding that the addition made by the Assessing Officer in the assessment completed under section 153A was beyond the scope in the absence of any incriminating material found during the course of search was upheld by the Honble Calcutta High Court. It is noted by Their Lordships that the Tribunal while arriving at its decision had relied upon the judgment of the Honble Delhi High Court in the case of Kabul Chowla (supra) and more or less an identical view had been taken by the Court even in the case of Veerprabhu Marketing Limited (supra). In the case of Kabul Chowla, search was conducted under section 132 of the. As on the date of search, no assessment proceeding was pending for the relevant assessment year and the addition made by the Assessing Officer in the assessment completed under section 153A pursuant to the search on account of deemed dividend under section 2(22)(e) was deleted by the Tribunal on the ground that the same were not based on any incriminating material found during the course of search. The decision of the Tribunal was upheld by the Honble Delhi High Court by holding that the additions made to the income of the assessee for the relevant assessment years under section 2(22)(e) were not sustainable because no incriminating material concerning such additions was found during the course of search and further no assessments for the said years were pending on the date of search. IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 45

8. In the case of S. Ajit Kumar (supra), relied upon by the ld. D.R., Honble Supreme Court has held that the material found or statement recorded in the survey conducted simultaneously at the premises of a connected person can be treated as incriminating material for the purpose of making the addition under section 153A of the. In the present case, it is observed that no such survey had been conducted under section 133A simultaneously either at the premises of the assessee or of a connected person. The statements of the so-called entry operators and dummy Directors relied upon by the Assessing Officer for making the addition were thus not recorded in any proceedings such as survey conducted simultaneously or in connection with the search conducted in the case of the assessee and since the said statements were also retracted subsequently by the deponents, we find merit in the contention raised on behalf of the assessee that the same could not be treated as an incriminating material on the basis of which the addition made in the assessment under section 153A can be justified.

9. As regards the contention of the ld. D.R., that the process of assessment of total income under section 153A can neither be restricted nor have a different connotation, we find that the same is contrary to the law laid down by the various judicial pronouncements discussed above including the decision of Honble Jurisdictional High Court. Although there are certain judicial pronouncements taking the view in favour of the Revenue on the issue under consideration, we find that the consistent view taken by the Honble Jurisdictional High Court is in favour of the assessee and respectfully following this binding precedent, we hold that since the assessment for the year under consideration was not pending as on the date of search, there was no abatement and the addition made by the Assessing Officer in the unabated assessment completed under section 153A on account of share capital and share premium amount IT(SS)A No. 102/KOL/2017 Assessment Year: 2010-2011 M/s. Shantinath Financial Services Limited 46 by treating the same as unexplained cash credit was not sustainable as the same was not made on the basis of any incriminating material found during the course of search. We accordingly uphold the impugned order of the ld. CIT(Appeals) deleting the said addition made by the Assessing Officer and dismiss this appeal of the Revenue.

10. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on September 12, 2019. Sd/- Sd/- (S.S. Viswanethra Ravi) (P.M. Jagtap) Judicial Member Vice-President (KZ) Kolkata, the 12 t h day of September, 2019 Order pronounced by Sd/- Sd/- (S.S.Godara) (P.M. Jagtap) J.M. V.P.(KZ) Copies to : (1) Assistant Commissioner of Income Tax, Central Circle-3(2), Kolkata, Aayakar Bhawan Poorva, 5 t h Floor, 110, Shanti Pally, Kolkata-700107 (2) M/s. Shantinath Financial Services Limited, 17, Crooked Lane, Kolkata-700 069 (3) Commissioner of Income Tax (Appeals)-21, Kolkata (4) Commissioner of Income Tax, Kolkata- , Kolkata; (5) The Departmental Representative (6) Guard File By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.