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IN THE HIGH COURT OF ALLAHABAD
SURYA PRAKASH KESARWANI, JAYANT BANERJI, JJ.
Principal Commissioner of Income Tax - Appellant
Versus
M/s Shri Mehndipur Balaji & Ors. - Respondents
Income Tax Appeal Nos. 51, 45, 46 of 2021, 2, 11, 12, 17, 18 of 2022, Income Tax Appeal Defective Nos. 29, 30, 31, 32 of 2021, 13 of 2022
Decided On : 04-07-2022
Income Tax Act 1961 - Section 153-A, 132, 127, 143(2)/142(1), 69, 68 – Appeal - Assessment Years - Search and seizure operation - Whether assessment or re-assessment under Section 153-A of the Income Tax Act 1961, can be framed only on the basis of incriminating material found during course of search under section 132 of the Act - Whether assessment or re-assessment under Section 153-A of the Income Tax Act 1961 can be framed where no incriminating material has been found in the search under Section 132 of the ActHeld, On the basis of certain incriminating materials found regarding accommodation entries, the proceedings under Section 153A of the Act, 1961 was initiated by the Assessing Officer. Bogus unsecured loans and bogus LTCG/ STCG were assessed in the hands of the respondents-assessees - Thus, it cannot be said that either no incriminating materiel was found or that no incriminating material was available on record against the respondents - assessees on the basis of which assessment orders under Section 153A of the Act, 1961 have been passed. Thus, findings recorded and conclusion drawn by the ITAT, cannot be sustained – Appeal allowed.
JUDGMENT :
Surya Prakash Kesarwani, J.
1. All these appeals are admitted on the following substantial questions of law :-
(ii) Whether assessment or re-assessment under Section 153-A of the Income Tax Act 1961 can be framed where no incriminating material has been found in the search under Section 132 of the Act.
2. Since substantial questions of law involved in all these appeals are similar, therefore, all these appeals have been heard together.
Facts:-
3. The facts with regard to disclosed and assessed income of the assessees involved in the ''First Set' of appeals are briefly described as under:-
| Sl. No. | First Set of Income Tax Appeal Nos. | Assessment Year | Income as per return (in Rs.) | Accommodation entries in the form of unsecured loan shown from/ entry provider/ bogus LTCG | Bogus LTCG/ STCG/ Commission added under Sections 68/69 |
| 1. | 51 of 2021 | 2012-13 | Rs.1,06,500/- | Subodh Agarwal, Success Vyapar Ltd and Neil Industries Ltd. | Rs.3,67,59,615/- (bogus unsecured loan and interest) + Rs.42,05,902/-(bogus unsecured loan and interest) |
| 2. | 45 of 2021 | 2011-12 | Rs.9,18,941/- | Success Vyapar Ltd and Neil Industries Ltd. | Rs.63,35,927/-(bogus LTCG and commission) + Rs.46,79,384/-(bogus unsecured loan and interest) |
| 3. | 46 of 2021 | 2011-12 | Rs.86,500/- | Success Vyapar Ltd and Neil Industries Ltd. | Rs.2,69,43,868/- (bogus unsecured loan and interest) + Rs.56,68,482/-(bogus unsecured loan and interest) |
| 4. | 29 of 2021 (defective) | 2014-15 | Rs.38,37,442/- | Success Vyapar Ltd and Neil Industries Ltd. | Rs.5,28,78,477/- (bogus LTCG and commission) + Rs.73,50,000/-(bogus unsecured loan and interest) |
| 5. | 30 of 2021 (defective) | 2012-13 | Rs.6,15,440/- | Success Vyapar Ltd and Neil Industries Ltd. | Rs.21,02,540/- (Disallowed interest, accommodation entry amount already added) |
| 6. | 31 of 2021 (defective) | 2013-14 | Rs.2,02,890/- | Success Vyapar Ltd and Neil Industries Ltd. | Rs.6,78,969/- (Disallowed interest, accommodation entry amount already added) |
| 7. | 32 of 2021 (defective) | 2013-14 | Rs.15,45,170/- | Success Vyapar Ltd and Neil Industries Ltd. | Rs.2,29,56,388/- (bogus LTCG and commission) + commission |
4. All these appeals arise out of assessment orders passed by the competent Assessing Officer under Section 153A of the Income Tax Act, 1961 (hereinafter referred to as ''Act, 1961'). Common facts in all these appeals are that a search and seizure operation under Section 132(1) of the Act, 1961 was carried out in Chaurasiya Group on 27.11.2015. Simultaneously, search was also conducted at the premises No.B-2, Surya Nagar, Ghaziabad in the case of Ashish Kumar Chaurasia, Atul Kumar Chaurasia, Shree Mehandi Balaji Enterprises (P) Ltd., M/s Ghata Mehendipur Balaji Agri Extraction (P) Ltd., M/s Tejas Food (P) Ltd., Ashish Kumar Chaurasia HUF and Kanishk Iron (P) Ltd. Warrant of Authorisation was also issued and executed. Punchnama was also drawn. A survey under Section 133A of the Act, 1961 was also carried out in the case of M/s Mehndipur Balaji Enterprises (P) Ltd. at Kila No.202, Village Hasangarh, District Rohtak. Various incriminating documents were found and impounded. The cases were centralized to the office of the Deputy Commissioner of Income Tax, Central Circle-II, Kanpur vide order dated 14.09.2016 under Section 127 of the Act, 1961 passed by the Principal, CIT-18, Delhi. Thus, search operations were conduced in respect
An assessment under Section 153A cannot be made without incriminating material; completed assessments are not subject to reopening based solely on retracted statements.
Post-search u/s 132, pending u/s 147 proceedings abate u/s 153A if escapement > Rs.50 lakhs; additions u/s 153A require incriminating material from assessee's premises only; third-party material need....
Reassessments under s.147 void ab initio post-search if proceedings pending and escapement >Rs.50L in relevant years; s.153A additions invalid absent incriminating material from assessee's premises –....
Scope of assessment – No addition can be made in respect of completed assessments in absence of any incriminating material.
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