# Pr. Commissioner of Income Tax, (Central), Kanpur v. M/s Shri Mehndipur Balaji Ent. Pvt. Ltd. Opp. Party

- **Citation:** (2022) 7 ILRA 1135
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-07-04
- **Case number:** Income Tax Appeal No. 51 of 2021
- **Bench:** Surya Prakash Kesarwani, Jayant Banerji
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/pr-commissioner-of-income-tax-central-kanpur-v-m-s-shri-mehndipur-balaji-ent-48737
- **Pages:** 32

## Headnote

A. Tax Law - Income Tax Act 1961 -
Section 68- The initial burden of proof lies on
1136 INDIAN LAW REPORTS ALLAHABAD SERIES
the appellant to prove three vital ingredients u/s
68 of the act i.e. the identity, credit capacity of
the
creditor
and
genuineness
of
the
transactions.
However,
mere
filing
of
confirmation or ITRs or Bank St.ments is not
sufficient to prove the credit capacity of
creditors and genuineness of the transaction.
Whatever material taxing authorities collect will
have to be placed before the tax paying
assessee if adverse inference is going to be
drawn against him - audi alteram partem is a
well-known principle of natural Justice.

B. Tax Law - Income Tax Act 1961 -
Section
132,
153-A
-
provides
for
assessment or reassessment of the total
income and not merely computation of
undisclosed income on the basis of evidence
found as a result of search. Thus, for
assessment or reassessment under Section
153A, it is not the mandatory requirement
that assessment or reassessment has to be
made only on the basis of incriminating
materials found in the search. Section 153A
does not exclude assessment or reassessment
on
consideration
of
other
incriminating
materials including incriminating materials
available on record. in cases where the
assessment or 34 reassessment proceedings
have already been completed and assessment
orders
have
been
passed,
which
were
subsisting when the search was made, the
Assessing Officer has the power to reassess
the returns of the assessee not only for the
undisclosed income, which was found during
the search operation but also with regard to
the material that was available at the time of
the original assessment.

Appeal allowed. (E-12)

List of Cases relied upon:-

## Text

_Characters 0–39,976 of 102,741. This is a partial read: ask again with offset=39976 for what follows._

7 All. Pr. Commissioner of Income Tax, (Central), Kanpur Vs. M/s Shri Mehndipur Balaji Ent.
Pvt. Ltd.
1135
achieved and also in keeping with the
social,
economic
and
educational
rehabilitation of the members of the family.
The area of relocation has to be socially
conducive to the family members apart
from being conducive to their economic
and educational rehabilitation. This would
take sometime, therefore, we direct the
State Government to consider this aspect of
the matter in the light of the observations
made hereinabove and take a decision
within six months. After taking such a
decision a report shall be submitted to the
Special Court where the trial is pending
through the District Magistrate, Hathras
and as already stated hereinabove the
family members, if they are aggrieved
thereafter, may raise a grievance before the
said Court unless there are exceptional
reasons for approaching the High Court.

97. From the scheme of the Act 1989
and Rules made thereunder, we also find that
in Section 21(2)(ii) one of the measures
which the State Government is required to
take for the effective implementation of the
Act is the provision for travelling and
maintenance expenses to witnesses, including
the victims of atrocities, during investigation
and trial of offences under this Act. There are
pleadings by the family members to the effect
that these expenses are not being paid to
them. We also find that Rule 11 of the Rules
1995 also deals with travelling allowance,
daily allowance, maintenance expenses and
transport facilities to the victim of atrocity,
his or her dependents and witnesses.

We,
therefore,
direct
the
District
Magistrate, Hathras to look into the request
by the family members on a representation
being submitted by them in this regard, if
they raise any claim as regards to the
expenses referred in the Act 1989 and the
Rules 1995, he shall verify the same and the
do the needful as per law, but, with
expedition. Section 21(2)(ii) read with Rule
11 of the Rules 1995 enjoins upon the State
and its Authorities specifically the District
Magistrate or the Sub-Divisional Magistrate
or any other Executive Magistrate to make
necessary
arrangements
for
providing
transport facilities or reimbursement of full
payment thereof to the victims of atrocity
etc., therefore, first and foremost the State
and its authorities have to comply their
statutory obligations in this regard and
thereafter, if the family members are still
aggrieved, they can approach the Court
concerned under Section 15-A(6)(b) of the
Act, 1989.

Ordered accordingly. Order Date :-
26.07.2022
----------
(2022)07ILR A1135
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 04.07.2022

BEFORE

THE HON'BLE SURYA PRAKASH
KESARWANI, J.
THE HON'BLE JAYANT BANERJI, J.

Income Tax Appeal No. 51 of 2021
along with other connected Income Tax Appeals

Pr.
Commissioner
of
Income
Tax,
(Central), Kanpur ...Appellant
Versus
M/s Shri Mehndipur Balaji Ent. Pvt. Ltd.
 ...Opp. Party

Counsel for the Appellant:
Sri Praveen Kumar

Counsel for the Opp. Party:
Sri Ashish Bansal, Sri Ashish Bansal, Sri Tarun
Gulati(Senior Adv.)

A. Tax Law - Income Tax Act 1961 -
Section 68- The initial burden of proof lies on
1136 INDIAN LAW REPORTS ALLAHABAD SERIES
the appellant to prove three vital ingredients u/s
68 of the act i.e. the identity, credit capacity of
the
creditor
and
genuineness
of
the
transactions.
However,
mere
filing
of
confirmation or ITRs or Bank St.ments is not
sufficient to prove the credit capacity of
creditors and genuineness of the transaction.
Whatever material taxing authorities collect will
have to be placed before the tax paying
assessee if adverse inference is going to be
drawn against him - audi alteram partem is a
well-known principle of natural Justice.

B. Tax Law - Income Tax Act 1961 -
Section
132,
153-A
-
provides
for
assessment or reassessment of the total
income and not merely computation of
undisclosed income on the basis of evidence
found as a result of search. Thus, for
assessment or reassessment under Section
153A, it is not the mandatory requirement
that assessment or reassessment has to be
made only on the basis of incriminating
materials found in the search. Section 153A
does not exclude assessment or reassessment
on
consideration
of
other
incriminating
materials including incriminating materials
available on record. in cases where the
assessment or 34 reassessment proceedings
have already been completed and assessment
orders
have
been
passed,
which
were
subsisting when the search was made, the
Assessing Officer has the power to reassess
the returns of the assessee not only for the
undisclosed income, which was found during
the search operation but also with regard to
the material that was available at the time of
the original assessment.

Appeal allowed. (E-12)

List of Cases relied upon:-

1. Commissioner of Income Tax Central Kanpur
Vs Kesarwani Zarda Bhandar Sahson Allahabad.
Income tax Appeal No. 270 of 2014

2. Commissioner of Income Tax Vs Raj Kumar
Arora (2014) 367 ITR 517 (All)
(Delivered by Hon'ble Surya Prakash
Kesarwani, J.)

1. All these appeals are admitted on
the following substantial questions of law :-

(i)
Whether
assessment
or
reassessment 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.

(ii)
Whether
assessment
or
reassessment 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
Inco
me
Tax
Appe
al
Nos.
Assess
ment
Year
Income
as
per
return
(in Rs.)
Acco
mmo
datio
n
entrie
s
in
the
form
of
unsec
ured
loan
show
n
from/
entry
provi
der/
Bog
us
LTC
G/
STC
G/C
om
miss
ion
adde
d
und
er
Secti
ons
68/6
9
7 All. Pr. Commissioner of Income Tax, (Central), Kanpur Vs. M/s Shri Mehndipur Balaji Ent.
Pvt. Ltd.
1137
bogus
LTC
G
1
51 of
2021
201213
Rs.1,06,
500/-
Subod
h
Agar
wal,
Succe
ss
Vyapa
r Ltd
and
Neil
Indust
ries
Ltd.
Rs.3,
67,5
9,61
5/-
(bog
us
unse
cure
d
loan
and
inter
est)
+
Rs.4
2,05,
902/
-
(bog
us
unse
cure
d
loan
and
inter
est)
2
45 of
2021
201112
Rs.9,18,
941/-
Succe
ss
Vyapa
r Ltd
and
Neil
Indust
ries
Ltd.
Rs.6
3,35,
927/
-
(bog
us
LTC
G
and
com
miss
ion)
+
Rs.4
6,79,
384/
-
(bog
us
unse
cure
d
loan
and
inter
est)
3
46 of
2021
201112
Rs.86,5
00/-
Succe
ss
Vyapa
r Ltd
and
Neil
Indust
ries
Ltd.

Rs.2,
69,4
3,86
8/-
(bog
us
unse
cure
d
loan
and
inter
est)
+
Rs.5
6,68,
482/
-
(bog
us
unse
cure
d
loan
and
inter
est)
4
29 of
2021
(defec
tive)
201415
Rs.38,3
7,442/-
Succe
ss
Vyapa
r Ltd
and
Rs.5,
28,7
8,47
7/-
(bog
1138 INDIAN LAW REPORTS ALLAHABAD SERIES
Neil
Indust
ries
Ltd.
us
LTC
G
and
com
miss
ion)
+
Rs.7
3,50,
000/
-
(bog
us
unse
cure
d
loan
and
inter
est)
5
30 of
2021
(defec
tive)
201213
Rs.6,15,
440/-
Succe
ss
Vyapa
r Ltd
and
Neil
Indust
ries
Ltd.
Rs.2
1,02,
540/
-
(Dis
allo
wed
inter
est,
acco
mmo
datio
n
entry
amo
unt
alrea
dy
adde
d)
6
31 of
2021
(defec
201314
Rs.2,02,
890/-
Succe
ss
Vyapa
Rs.6,
78,9
69/-
tive)
r Ltd
and
Neil
Indust
ries
Ltd.
(Dis
allo
wed
inter
est,a
cco
mmo
datio
n
entry
amo
unt
alrea
dy
adde
d)
7
32 of
2021
(defec
tive)
201314
Rs.15,4
5,170/-
Succe
ss
Vyapa
r Ltd
and
Neil
Indust
ries
Ltd.
Rs.2,
29,5
6,38
8/-
(bog
us
LTC
G
and
com
miss
ion)
+
com
miss
ion

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
7 All. Pr. Commissioner of Income Tax, (Central), Kanpur Vs. M/s Shri Mehndipur Balaji Ent.
Pvt. Ltd.
1139
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 of the assessees who
are respondents in the above noted income
tax appeals. Notices under Section 153A of
the Act, 1961 were issued to the assessees
requiring them to furnish return of the
Income for the Assessment Years and the
assessees filed return of income. Thereafter,
notices under Section 143(2)/142(1) of the
Act, 1961 were also issued and served upon
the assessees. Show cause notices were also
issued to the assessees requiring them to
explain as to why the L.T.C.G. or
unsecured loans shown from Success
Vyapar Ltd. and Neil Industries Ltd. or
payment of interest or commission be not
added in the income. The explanation
submitted by the assessees were not
accepted by the Assessing Officer and
certain amounts shown as unsecured loan
from the aforesaid two companies or
L.T.C.G. and interest/ commission shown
were added to the income of the assessees
under Section 68 of the Act, 1961.
Similarly, interest payment shown and
commission shown were disallowed and
added under Section 69 of the Act, 1961 on
account of accommodation entries.

5. Against the Assessment Orders, the
assessees filed appeals before the CIT
(Appeals), Kanpur which were dismissed.
The
aforesaid
appellate
orders
were
challenged by the assessees before the
Income Tax Appellate Tribunal, Lucknow
Bench
"B",
Lucknow
who
vide
consolidated
order
dated
27.05.2021
allowed the appeal of the assessees by
holding that the assessment for the
assessment years under consideration
stood concluded and the Assessing
Officer has not made additions on the
basis of any incriminating material,
therefore, additions sustained by the CIT
(A) are not sustainable. In the said order
the Tribunal has relied its own order
dated 16.12.2020 in the case of M/s.
Sigma Casting Ltd. Vs. DCIT in ITA
No.510 to 512 / LKW/ 2019.

6. The facts with regard to disclosed
and assessed income of the assessees
involved in the ''Second Set' of appeals are
briefly described as under:-

Sl.
No.
Second
Set
of
Income
Tax
Appeal
Nos.
Assess
ment
Year
Income
as
per
return
Bogus
LTCG/
STCG/
Commis
sion
added
under
Sections
68/69
1
12
of
2022
2012-13 Rs.13,21
,870/-
Rs.23,16
,765/-
(bogus
LTCG)
Rs.1,15,
838/-
1140 INDIAN LAW REPORTS ALLAHABAD SERIES
(commis
sion)
Rs,13,00
,000/-
(bogus
unsecure
d loans)
2
2
of
2022
2011-12 Rs.40,38
,840/-
Rs.9,66,
00,000/-
(bogus
unsecure
d loans)
Rs,72,97
,989/-
(interest
disallow
ed)
3
11
of
2022
2012-13 Rs.3,91,
20,210/-
Rs.6,01,
00,000/-
(bogus
unsecure
d loans)
Rs,1,82,
27,831/-
(interest
disallow
ed)
4
13
of
2022
(defecti
ve)
2012-13 Rs.21,32
,660/-
Rs.6,28,
961/-
(bogus
LTCG)
Rs.31,44
8/-
(commis
sion)
Rs,2,00,
000/-
(bogus
unsecure
d loans)
5
17
of
2022
2011-12 Rs.12,38
,250/-
Rs.21,25
2/-
(bogus
LTCG)
Rs.1,060
/-
(commis
sion)
Rs,25,00
,000/-
(bogus
unsecure
d loans)
6
18
of
2022
2011-12 Rs.8,95,
140/-
Rs.4,03,
656/-
(bogus
LTCG)
Rs.20,18
0/-
(commis
sion)
Rs,17,00
,000/-
(bogus
unsecure
d loans)

7. All these appeals of ''Second Set'
relate to M/s Goldie Masale and Shree
Santosh Kumar Agarwal group of cases.
Common fact in all these appeals are that a
search and seizure operation under Section
132 of the Act, 1961 was conducted in M/s
Goldie
Masale
and
Shree
Santosh
Kumar Agarwal Group at the residential/
business
premises
on
31.08.2015.
Simultaneously,
search
and
seizure
operations were also carried out at the
residential premises of Smt. Sapna Gupta
wife of Sri Siddharth Gupta. During the
course of proceedings, cash, jewellery and
various incriminating documents were also
found
and
seized.
The
cases
were
centralized to the Central Circle-I, Deputy
Commissioner of Income Tax, vide Order
No.02 of 2016-17, F.No.Pr.CIT-I/KNP/1202/Cent./Goldie Masale Gr./2016-17/684
7 All. Pr. Commissioner of Income Tax, (Central), Kanpur Vs. M/s Shri Mehndipur Balaji Ent.
Pvt. Ltd.
1141
dated 27.05.2016 passed by the Principal
CIT-I, Kanpur. Notices under Section 153A
of the Act, 1961 were issued requiring the
asssessees to file return of income. The
notices were duly served upon the assessees.
Thereafter, notices under Section 142(1)
along with questionnaire were issued which
were also duly served upon the assessees.
Notices under Section 143(2) along with
specific questionnaire were also issued which
were also well served. The assessees filed
their return of income in response to the
aforesaid
notice.
After
following
due
procedure of law, the assessment orders under
Section 153A of the Act, 1961 were passed
making certain additions. Aggrieved with the
assessment orders, the assessees filed appeals
before the CIT (Appeals), Kanpur, which
were dismissed by common order. Aggrieved
with the appellate orders, the assessees filed
Income Tax Appeals before the Income Tax
Appellate Tribunal, Lucknow which were
allowed by the impugned common order
dated 14.09.2021.

8. Aggrieved with the orders of the
Income Tax Appellate Tribunal, Income Tax
Department has filed the present appeals
which have been admitted on the substantial
questions of law aforenoted.

9. Thus, these appeals are in two sets.
The ''First Set' of appeals relates to
''Chaurasia Group' and the ''Second Set' of
appeals relates to ''Goldie Masale Group.'
Facts have already been noted above. For
deciding the controversy involved in these
appeals in ''First Set' of appeals, the Income
Tax Appeal No.51 of 2021 is being treated as
the leading appeal and in ''Second Set' of
appeals, the Income Tax Appeal No.12 of
2022 is being treated as the leading appeal.

Submissions
on
behalf
of
the
appellants :-

10.
 Learned
counsels
for
the
appellants submits as under :

(i) Subsequent to completion of assessment
of the respondent assessees, a search under
Section 132 of the Income Tax Act, 1961
was carried on his premises in November,
2015. Another search was conducted on
28.04.2015 on Nikki Global Finance Ltd.
Searches were also conducted on premises
of certain other companies on 24.04.2014
and statement of one Sri Subodh Agrawal
was recorded on 28.10.2015 who appeared
to be the real operator of Success Vyapar
Ltd. through his employee Sri Rishi Kant
Awashty as a nominal Director. Several
companies
including
one
M/s.
Neil
Industries Ltd. were also found being run
from the same premises at Kanpur. On the
basis of certain incriminating material
found regarding accommodation entries,
the proceedings under Section 153 A of the
Income Tax Act, 1961 was initiated by the
Assessing Officer and unsecured loans as
unexplained income were assessed to tax in
the hands of the respondent assessee under
Section 68 and 69 of the Act, 1961. The
Assessment Orders passed by the assessing
authority were affirmed by the CIT
(Appeal) but it was upset by the impugned
order passed by the Income Tax Appellate
Tribunal.

(ii) The finding of the Tribunal that
there was no incriminating material or that
in the absence of any incriminating
material found in search, no reassessment
under Section 153 A can be made, is not
only incorrect but also perverse and against
the provisions of Section 153 A of the Act.

(iii) Reliance is placed upon the
judgment of this Court i.e. the jurisdiction
of High Court in Commissioner of Income
Tax VS. Raj Kumar Arora, (2014) 367
ITR 517 (Alld.) and Commissioner of
Income
Tax
Vs.
Kesarwani
Zarda
1142 INDIAN LAW REPORTS ALLAHABAD SERIES
Bhandar in ITA No. 270 of 2014 decided
on 06.09.2016, and the judgments in
Assistant Controller of Estate Duty Vs.
Devaki Ammal (1995) 2012 ITR 395 SC,
Taylor Instrument Co.(India) Ltd. Vs.
Commissioner of Income Tax (1998) 99
Taxman 155 (Delhi) = (1998) 232 ITR
771(Delhi) and State of U.P. Vs. Aman
Mittal and another 2019 (19) SCC 740
(para 24 and in ITA No.31 of 2016 E.N.
Gopakumar
Vs.
Commissioner
of
Income Tax, decided on 3.10.2016 by
Kerala High court (para 8).

Submissions
on
behalf
of
the
respondents/Assessees:-

11. Sri Tarun Gulati, learned Senior
Advocate, assisted by Sri Ashish Bansal
learned
counsel
for
the
respondent
Assessee, has referred to the provisions of
Section 153A and 153 C of the Acrt 1961
and certain judgments of Delhi High Court
and submitted as under :-

(i) No incriminating material was
found in the search on the assessee
conducted by the Officers under Section
132 of the Act, 1961.

(ii) Since no incriminating material
was found, therefore, provisions of Section
153-A of the Act, 1961 could not be
invoked inasmuch as assessment of all the
assessees for all the assessment years in
question were already completed and
finalised.

(iii) The original assessment proceeding
of the assessee were completed by the
Assessing Officer under Section 143 (3) of
the Act. Therefore, on the pretext of
proceedings under Section 153-A of the Act
1961 the assessing authority does not get
jurisdiction for reappreciation or reappraisal
of
the
assessment.
Consequently,
the
Assessment Orders passed by the Assessing
Officer under Section 153 A of the Act, 1961
were lawfully annuled by the Income Tax
Appellate Tribunal.

(iv) There
is
distinction
between
proceedings "abated" and the proceedings
which are "concluded", as evident from bare
reading of Section 153-A of the Act, 1961.
Since
assessment
proceedings
of
the
respondent assessees fall under the category
"concluded", therefore, provisions of Section
153-A could not have been invoked unless
some specific incriminating material was
found in the search. Since no incriminating
material was found in the search conducted
on the assessee, therefore, reassessment
proceedings under Section 153-A of the Act
could not have been initiated by the
Assessing Officer and such initiation of
proceedings was wholly without jurisdiction.

(v) Reliance is placed upon the
judgments
of
Delhi
High
Court
in
Commissioner of Income Tax Vs. Sinhgad
Technical Education Society reported in
(2017) 397 ITR 344 (SC) (paras 4,13,18);
Commissioner of Income Tax Vs. Kabul
Chawla reported in (2015) 380 ITR 573
(Delhi) (paras 2,14,15,17) and Principal
Commissioner of Income Tax Vs. Ram
Avtar Verma reported in (2017) 395 ITR
252 (Delhi) ( para 4).

(vi) No incriminating material against
the assessee was found during the course of
search conducted under Section 132 of the
Act, for the Assessment Years in question.
Therefore, no reassessment under Section
153 A of the Act 1961 could have been made.
Consequently, the Income Tax Appellate
Authority has lawfully and correctly set aside
the order passed by the Assessing Authority.

Discussion and Findings

12. We have carefully considered the
submission of learned counsel for the
parties.
7 All. Pr. Commissioner of Income Tax, (Central), Kanpur Vs. M/s Shri Mehndipur Balaji Ent.
Pvt. Ltd.
1143

13. Before we proceed to decide the
aforequoted substantial questions of law, it
would be appropriate to reproduce the
provisions of Section 153A and Section
153 C of the Act, 1961, as under :-

"153A. (1) Notwithstanding anything
contained in section 139, section 147,
section 148, section 149, section 151 and
section 153, in the case of a person where
a search is initiated under section 132 or
books of account, other documents or any
assets are requisitioned under section
132A after the 31st day of May, 2003, but
on or before the 31st day of March, 2021,
the Assessing Officer shall-

(a) issue notice to such person
requiring him to furnish within such
period, as may be specified in the notice,
the return of income in respect of each
assessment
year
falling
within
six
assessment years and for the relevant
assessment year or years referred to in
clause (b), in the prescribed form and
verified in the prescribed manner and
setting forth such other particulars as may
be prescribed and the provisions of this Act
shall, so far as may be, apply accordingly
as if such return were a return required to
be furnished under section 139;

(b) assess or reassess the total income
of six assessment years immediately
preceding the assessment year relevant to
the previous year in which such search is
conducted or requisition is made and for
the relevant assessment year or years :

Provided that the Assessing Officer
shall assess or reassess the total income in
respect of each assessment year falling
within such six assessment years and for
the relevant assessment year or years :

Provided further that assessment or
reassessment, if any, relating to any
assessment year falling within the period of
six assessment years and for the relevant
assessment year or years referred to in this
sub-section pending on the date of
initiation of the search under section 132
or making of requisition under section
132A, as the case may be, shall abate :

Provided
also
that
the
Central
Government may by rules made by it and
published in the Official Gazette (except in
cases
where
any
assessment
or
reassessment has abated under the second
proviso if any, relating to any assessment
year falling within the period of six
assessment years and for the relevant
assessment year or years referred to),
specify the class or classes of cases in
which the Assessing Officer shall not be
required to issue notice for assessing or
reassessing the total income for six
assessment years immediately preceding
the assessment year relevant to the previous
year in which search is conducted or
requisition is made and for the relevant
assessment year or years:

Provided also that no notice for
assessment or reassessment shall be issued
by the Assessing Officer for the relevant
assessment year or years unless-

(a) the Assessing Officer has in his
possession books of account or other
documents or evidence which reveal that
the income, represented in the form of
asset, which has escaped assessment
amounts to or is likely to amount to fifty
lakh rupees or more in the relevant
assessment year or in aggregate in the
relevant assessment years;

(b) the income referred to in clause (a)
or part thereof has escaped assessment for
such year or years; and

(c) the search under section 132 is
initiated or requisition under section 132A
is made on or after the 1st day of April,
2017.

Explanation 1.-For the purposes of
this sub-section, the expression "relevant
1144 INDIAN LAW REPORTS ALLAHABAD SERIES
assessment year" shall mean an assessment
year
preceding
the
assessment
year
relevant to the previous year in which
search is conducted or requisition is made
which falls beyond six assessment years but
not later than ten assessment years from
the end of the assessment year relevant to
the previous year in which search is
conducted or requisition is made.

Explanation 2.-For the purposes of the
fourth
proviso,
"asset"
shall
include
immovable property being land or building
or both, shares and securities, loans and
advances, deposits in bank account.

(2) If any proceeding initiated or any
order of assessment or reassessment made
under sub-section (1) has been annulled
in appeal or any other legal proceeding,
then, notwithstanding anything contained
in sub-section (1) or section 153, the
assessment or reassessment relating to any
assessment year which has abated under
the second proviso to sub-section (1), shall
stand revived with effect from the date of
receipt of the order of such annulment by
the
Principal
Commissioner
or
Commissioner:

Provided that such revival shall cease
to have effect, if such order of annulment
is set aside.

Explanation.-For
the
removal
of
doubts, it is hereby declared that,-

(i) save as otherwise provided in this
section, section 153B and section 153C, all
other provisions of this Act shall apply to
the assessment made under this section;
(ii) in an assessment or reassessment made
in respect of an assessment year under this
section, the tax shall be chargeable at the
rate or rates as applicable to such

153C. (1) Notwithstanding anything
contained in section 139, section 147,
section 148, section 149, section 151 and
section 153, where the Assessing Officer is
satisfied that,-

(a) any money, bullion, jewellery or
other valuable article or thing, seized or
requisitioned, belongs to; or

(b)
any
books
of
account
or
documents,
seized
or
requisitioned,
pertains or pertain to, or any information
contained therein, relates to,

a person other than the person
referred to in section 153A, then, the books
of account or documents or assets, seized
or requisitioned shall be handed over to the
Assessing Officer having jurisdiction over
such other person and that Assessing
Officer shall proceed against each such
other person and issue notice and assess or
reassess the income of the other person in
accordance with the provisions of section
153A, if, that Assessing Officer is satisfied
that the books of account or documents or
assets seized or requisitioned have a
bearing on the determination of the total
income of such other person for six
assessment years immediately preceding
the assessment year relevant to the previous
year in which search is conducted or
requisition is made and for the relevant
assessment year or years referred to in subsection (1) of section 153A :

Provided that in case of such other
person, the reference to the date of
initiation of the search under section 132
or making of requisition under section
132A in the second proviso to sub-section
(1) of section 153A shall be construed as
reference to the date of receiving the books
of account or documents or assets seized or
requisitioned by the Assessing Officer
having jurisdiction over such other person
:

Provided further that the Central
Government may by rules made by it and
published in the Official Gazette, specify
the class or classes of cases in respect of
such other person, in which the Assessing
Officer shall not be required to issue notice
7 All. Pr. Commissioner of Income Tax, (Central), Kanpur Vs. M/s Shri Mehndipur Balaji Ent.
Pvt. Ltd.
1145
for assessing or reassessing the total
income
for
six
assessment
years
immediately preceding the assessment year
relevant to the previous year in which
search is conducted or requisition is made
and for the relevant assessment year or
years as referred to in sub-section (1) of
section 153A except in cases where any
assessment or reassessment has abated.

(2) Where books of account or
documents or assets seized or requisitioned
as referred to in sub-section (1) has or have
been received by the Assessing Officer
having jurisdiction over such other person
after the due date for furnishing the return
of income for the assessment year relevant
to the previous year in which search is
conducted under section 132 or requisition
is made under section 132A and in respect
of such assessment year-

(a) no return of income has been
furnished by such other person and no
notice under sub-section (1) of section 142
has been issued to him, or

(b) a return of income has been
furnished by such other person but no
notice under sub-section (2) of section 143
has been served and limitation of serving
the notice under sub-section (2) of section
143 has expired, or

(c) assessment or reassessment, if any,
has been made,

before the date of receiving the books
of account or documents or assets seized or
requisitioned by the Assessing Officer
having jurisdiction over such other person,
such Assessing Officer shall issue the
notice and assess or reassess total income
of such other person of such assessment
year in the manner provided in section
153A.

(3) Nothing contained in this section
shall apply in relation to a search initiated
under section 132 or books of account,
other
documents
or
any
assets
requisitioned under section 132A on or
after the 1st day of April, 2021."

14. In the ''First Set' of appeals (leading
Income Tax Appeal No.51 of 2021) relating
to Chaurasia Group of cases, we find that in
assessement order passed under Section
153A of the Act, 1961 the Assessing
Officer and in the Appellate order, the
CIT(A) have very exhaustively dealt with
evidences including incriminating materials
found at the time of search/ survey and
have recorded detailed findings of fact
based
on
consideration
of
relevant
evidences on the point of bogus unsecured
loan and bogus LTCG/ STCG. It would be
appropriate to reproduce the relevant
portion of the order of the CIT(A) dated
29.11.2018
in
Appeal
No.CIT(A)-
IV/10363,
10351,
10354,
10355
&
10358/DCIT-CC-II/KNP/2017-18/697
to
701. The relevant portion of the aforesaid
order of the CIT(A) containing findings of
fact are reproduced below:-

"Discussion & decision on legal
grounds of these cases:

A.Y 2012-13 to A.Y. 2015-16:

5.1 Ground no. 1 to 3 for all the
assessment years pertain to legal challenge
to notice u/s 153A of the Act. It is also
submitted by the ld. A.R. of the appellant
that order u/s 153A of the Act is invalid in
absence of incriminating material found as
a result of search for these relevant
assessment years in appeals.
5.2 Undersigned has carefully considered
the submission and the case laws cited by
the appellant. However, considering the
express provisions of section 153A of the
Act, undersigned would like to differ with
the submission of the appellant, because
section 153A of the Act clearly provides the
power to AO to assess/reassess the cases of
person searched u/s 132(1) of the Act for
1146 INDIAN LAW REPORTS ALLAHABAD SERIES
immediately six preceding years. Section
153A of the Act does not provide existence
of incriminating material as essential
requirement. In the opinion of the
undersigned, the action u/s 132/132A of the
Act
would
automatically
trigger
the
provisions of section 153A of the Act for
computation of total income of the
appellant. This provision does not restrict
the Assessing Officer to take action in
those cases where assessment has already
been completed. Since, the AO has rightly
exercised his powers to assess/reassess the
case u/s 153A of the Act.

5.3 The contention of the ld. A.R. is also
not acceptable after placing reliance on
following Judicial pronouncement.

In the case of E.N. Gopakumar Vs CIT
[(2016) 75 taxmann.com 215 (Kerala)]-
Hon'ble Kerala High Court held that
assessment
proceedings
generated
by
issuance of a notice under section 153A(1)(a)
can be concluded against interest of assessee
including making additions even without any
incriminating
material
being
available
against assessee in search under section 132
on basis of which notice was issued under
section 153A(1) (a).

The above order has been passed after
considering cases of:

(i) CIT v Kabul Chawla [2016) 380 ITR
573/(20151
234
Taxman
300/61
taxmann.com 412 (Delhi).

(ii) CIT v Continental Warehousing
Corpn. (Nhava Sheva) Ltd. [2015] 374 ITR
645/232 Taxman 270/58 taxmann.com 78
(Bom.),

(iii) Principal CIT v. Kurele Paper
Mills (P.) Ltd. [2016] 380 ITR 571 (Delhi).

(iv) CIT v Lancy Constructions [2016]
383
ITR
168/237
Taxman
728/66
taxmann.com 264 (Kar.),

(v) CIT v ST. Francies Clay Decor
Tiles
[2016]
240
Taxman
168/70
taxmann.com 234 (Ker.) and

(vi) CIT v Promy Kuriakose [20l6]
386 ITR 597 (Ker.).

Further, in the case of CIT Vs Rai
Kumar Arora [2014] 52 taxmann.com 172
(Allahabad)/(2014)
367
ITR
517
(Allahabad)-_ Hon'ble Allahabad High
Court held that Assessing Officer has
power to reassess returns of assessee not
only for undisclosed income found during
search operation but also with regard to
material available at time of original
assessment.

Similarly, in the case of ClT Vs
Kesarwani Zarda Bhandar Sahson Alld.
HTA No. 270 of 20141 (Allahabad)-
Hon'ble Allahabad High Court held that
Assessing Officer has power to reassess
returns of assessee not only for undisclosed
income found during search operation but
also with regard to material available at
time of original assessment.

Also, in the case of CIT Vs St. Francis
Clay Decor Tiles (385 ITR 624)-Hon'ble
Delhi Kerala Court held that notice issued
under section 153A- return must be filed
even
if
no
incriminating
documents
discovered during search.

In the case of CIT Vs Anil Kumar
Bhatia (24 taxmann.com 98. 211 Taxman
453. 352 ITR 493)- Hon'ble Delhi High
Court held that jurisdiction of AO under
153A is to assess total income for the year
and not restricted to seized material. Post
search reassessment in respect of all 6
years can be made even if original returns
are already processed u/s 143(1)(a) -
Assessing Officer has power u/s 153A to
make assessment for all six years and
compute total income of assessee, including
undisclosed income, notwithstanding that
returns for these years have already been
processed u/s 143(1)(a). Even if assessment
order had already been passed in respect of
7 All. Pr. Commissioner of Income Tax, (Central), Kanpur Vs. M/s Shri Mehndipur Balaji Ent.
Pvt. Ltd.
1147
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.

In the case of Filatex India Ltd Vs CIT
(49 taxmann.com 465)- Hon'ble Delhi High
Court held that during assessment under
section 153A, additions need not be restricted
or limited to incriminating material, found
during course of search.

7.5 The undersigned has carefully gone
through the assessment order, grounds of
appeal, written submission of the ld. A.R. of
the appellant submitted during these appeals
proceedings. AO has noted, the following
uncontroverted finding of fact in his
assessment orders. The relevant observation
of AO is extracted from the assessment
order as follows:

i) An incriminating dairy was seized
during the course of Shri Subodh Agarwal,
which was hand written by him and relevant
incriminating entries and its explanation as
follows,

a. At page number 45 " VMM-Sulabh+
Neil mein loss+ MKU mein. Profit"

b. At page number 43 "Gravity-->
merger order

c. At page number 31, 32 and 33 names
of Manoj Agrawal,.... i.e.. family members
has been written in multiple places along
with details of transactions where money has
been received and given to them. The nature
of entries are self-evident.

This clearly establishes that you have
very close nexus with Sh. Subodh Agrawal
who also has been one of the directors of
your company M/s Sulabh Engineering &
Services Limited along with Sh. Manoj
Agrawal.

The above entries at page number 45
also
clearly
explain
the
nature
of
transactions in Neil industries limited is
that of providing ''accommodation entries'
as in the case of Success Vyapar Limited.

Sh. Subodh Agrawal has already
accepted that he has provided bogus
LTCG in Oasis Cine Communication
Limited, apart from Sulabh Engineering
& Services Limited and Nikki Global
Finance Limited The above entries at page
number 43 further clearly establishes that
Sh. Subodh Agrawal has provided the
bogus LTCG in Oasis Cine Communication
Limited through merger/ amalgamation of
Gravity Barter Limited and Makeover
Vintrade Limited. All the three companies
are registered at the same premise In
Kolkata at Bijan Theatre, 5A, Raja RaJ
Kissan Street, Kolkata- 700006.SO, it
further cements the basic allegation that
the LTCG/STCG/unsecured loans accrued
to you through is nothing but your own
cash routed as such."

ii) "It is also observed that search u/s
132
was
conducted
by
Investigation
Directorate, Kanpur in Rich Udyog Group
of Kanpur on 28.04.2015. Nikki Global
Finance Limited is one of the companies of
this group which was subjected to search
u/s 132. This company has Sh. Subodn
Agrawal as one of its directors, apart from
Sh. Sashwat Agrawal and his family and
friends. Nikki Global Finance Limited is
also covered in total 84 scrips investigated
by Investigation Directorate, Kolkata.

After Search, two of the group
companies subjected to search u/s 132
challenged the same before the Hon'ble
Allahabad High Court in WT No.458/459
of 2015. Hon'ble Allahabad High Court
after perusing the satisfaction note and all
the seized material dismissed the writ
petitions and observed that this group is
involved in ''clandestine activity of taking
1148 INDIAN LAW REPORTS ALLAHABAD SERIES
cash and making dubious transactions in
cheque, thereby ''laundering the money'.
This group is also centralized with the
Central Circle and you are hereby shown
the page number 8, 9 and 11 of BK-8 of the
seized material which mentions bogus
transactions with Success Yapar Limited.
The similar findings have been made by the
AOs in Kolkata of Success Vyapar Limited
and Neil Industries Limited where they
have disallowed losses claimed by these
two companies in sale of Nikki Golabl
Finance Limited as being held bogus and
Part of racket of LTCG/STCG/unsecured
loan. The above evidence and findings
further makes your loans from these two
companies non-genuine".
iii) "Careful Study of the assessment orders
reveal that, there are three directors in M/s.
Success Vyapar Ltd. i.e. "Shri Rishikant
Awasthy, Shri Abhiset Basu and Shri
Pradeep Dey" AO has scanned and
reproduced the statements of Shri Abhiset
Basu and Shri Pradeep Dey. From the
perusal of these statements, it is evident
that, actual business activity of their
concerns is to provide the accommodation
entries in the form of capital gains/share
capital/share
premium
and
unsecured
loans. It is also accepted by them that, they
are the dummy directors and they were
acting on the behest and behalf of Raj
Kumar Tharad and Anil Kumar - Khemka
respectively. The statement of Raj Kumar
Tharad and Shri Anil Kumar Khemka,
which were recorded on oath reveals that,
their concerns were engaged in providing
the accommodation entries in various
forms through their paper companies,
which included the alleged creditors. As
per statement of Mr. Subodh Agarwal
related to the search of Godiee group by
investigation wing of Kanpur, has accepted
on oath that, Mr. Rishi Kant Awasthi was
an employee in the office of Mr. Subodh
Agarwal. Since, all the dummy directors
and the details found at the office premises
of the Mr. Subodh Agarwal, it is concluded
that, creditor company M/s. Success
Vyapar Ltd. is controlled by Mr. Subodh
Agarwal. As discussed earlier, it is
established that, Mr. Subodh Agrarwal is
an entry provider through various paper
companies including the M/s. Success
Vyapar Ltd. and M/s. Neil Industries Ltd.,
which advanced unexplained unsecured
loans to various group companies of this
appellant group in the different financial
years in the form of accommodation entry.
The facts of another creditor M/s. Neil
Industries Limited is no different. In fact
hard evidence of payment of cash for
providing the accommodation entries were
found in the search of Shri Subodh
Agarwal, Rich capital and Goldiee group.
7.6 It is a settled preposition of law u/s 68
of the Act that, the initial burden of proof
lies on the appellant to prove three vital
ingredients u/s 68 of the act i.e.