Patna High Court
Assistant Commissioner Of Income Tax ... vs M/S Ganesh Ram Dokania on 6 August, 2024
Bench: Chief Justice, Partha Sarthy
IN THE HIGH COURT OF JUDICATURE AT PATNA
Miscellaneous Appeal No.642 of 2018
======================================================
Assistant Commissioner Of Income Tax, Circle 2, Patna
... ... Appellant/s
Versus
M/s G R D Construction Pvt. Ltd.
... ... Respondent/s
======================================================
with
Miscellaneous Appeal No. 643 of 2018
======================================================
Assistant Commissioner Of Income Tax, Central Circle 2, Patna
... ... Appellant/s
Versus
M/s G R D Construction Pvt. Ltd.
... ... Respondent/s
======================================================
with
Miscellaneous Appeal No. 644 of 2018
======================================================
Assistant Commissioner Of Income Tax, Central Circle 2, Patna
... ... Appellant/s
Versus
M/s G R D Construction Pvt. Ltd.
... ... Respondent/s
======================================================
with
Miscellaneous Appeal No. 645 of 2018
======================================================
Assistant Commissioner of Income Tax, Central Circle- 2 Patna.
... ... Appellant/s
Versus
M/s Ganesh Ram Dokania 207, Basudeo Vihar Apartment, Nageshwar
Colony, Patna.
... ... Respondent/s
======================================================
with
Miscellaneous Appeal No. 646 of 2018
======================================================
Assistant Commissioner of Income Tax, Central Circle-2, Patna Patna.
Patna High Court MA No.642 of 2018 dt.06-08-2024
2/10
... ... Appellant/s
Versus
M/s Ganesh Ram Dokania 207, Basudeo Vihar Apartment, Nageshwar
Colony, Patna.
... ... Respondent/s
======================================================
with
Miscellaneous Appeal No. 648 of 2018
======================================================
Assistant Commissioner of Income Tax, Central Circle- 2 Patna.
... ... Appellant/s
Versus
M/s Ganesh Ram Dokania 207, Basudeo Vihar Apartment, Nageshwar
Colony, Patna.
... ... Respondent/s
======================================================
with
Miscellaneous Appeal No. 649 of 2018
======================================================
Assistant Commissioner of Income Tax Central Circle-2 Patna.
... ... Appellant/s
Versus
M/s Ganesh Ram Dokania 207, Basudeo Vihar Apartment, Nageshwar
Colony, Patna.
... ... Respondent/s
======================================================
Appearance :
(In Miscellaneous Appeal No. 642 of 2018)
For the Appellant/s : Mrs. Archana Sinha @ Archana Shahi, Sr. SC
For the Respondent/s : Mr.
(In Miscellaneous Appeal No. 643 of 2018)
For the Appellant/s : Mrs. Archana Sinha @ Archana Shahi, Sr. SC
For the Respondent/s : Mr.
(In Miscellaneous Appeal No. 644 of 2018)
For the Appellant/s : Mrs. Archana Sinha @ Archana Shahi, Sr. SC
For the Respondent/s : Mr.
(In Miscellaneous Appeal No. 645 of 2018)
For the Appellant/s : Mrs. Archana Sinha @ Archana Shahi, Sr. SC
For the Respondent/s : Mr.
(In Miscellaneous Appeal No. 646 of 2018)
For the Appellant/s : Mrs. Archana Sinha @ Archana Shahi, Sr. SC
For the Respondent/s : Mr.
(In Miscellaneous Appeal No. 648 of 2018)
For the Appellant/s : Mrs. Archana Sinha @ Archana Shahi, Sr. SC
For the Respondent/s : Mr.
(In Miscellaneous Appeal No. 649 of 2018)
For the Appellant/s : Mrs. Archana Sinha @ Archana Shahi, Sr. SC
For the Respondent/s : Mr.
Patna High Court MA No.642 of 2018 dt.06-08-2024
3/10
======================================================
CORAM: HONOURABLE THE CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE PARTHA SARTHY
CAV JUDGMENT
(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 06-08-2024
The above appeals are with respect to two entities;
sister concerns, challenging the order of the Tribunal which set
aside the assessments based on a single search conducted in the
residential and business premises on 01.08.2014 at Banka and
Kolkata. Subject assessment years are also different insofar as
MA No. 642, 643 and 644 of 2018 being respectively concerned
with assessment years 2009-10, 2010-11 and 2011-12, with
respect to the assessee M/s. G.R.D Construction Private
Limited. M.A. Nos. 645, 646, 648 and 649 of 2018 with respect
to M/s. Ganesh Ram Dokania are respectively concerned with
assessment years 2012-13, 2013-14, 2009-10 and 2015-16.
2. The questions of law arising in the above appeals
are re-framed as follows: -
(i) Whether the Tribunal was right in having found
the assessment under Section 153A to be not
possible by reason of the second proviso having
mandated that any assessment or reassessment
relating to any assessment year falling within the
Patna High Court MA No.642 of 2018 dt.06-08-2024
period of six assessment years, pending on the date
of limitation of search under Section 132 or making
of requisition under Section 132A, shall abate?
(ii) Whether the assessment under Section 153A
based on the search and conducted in the premises
of the assessee, can be set at naught on the strength
of the second proviso, merely because the
assessment of the said year was completed prior to
the search?
(iii)Whether the finding of the Tribunal; of no
incriminating material found on search, is factually
correct, especially in the context of the First
Appellate Authority also having found enough
materials to have been recovered in search for the
purpose of proceeding for assessment under Section
153A of the Income Tax Act and is not the finding
perverse in the fact and circumstances?
3. In all the appeals, the issue arises with respect to
the additions made by the assessing officer based on the search
and seizure operation carried out under Section 132(1) of the
Income Tax Act, 1961 in the residential and business premises
of Sri Krishna Kumar Dokania and his family on 01.08.2014 at
Patna High Court MA No.642 of 2018 dt.06-08-2024
Banka and Kolkata. The family is in management of a business
group engaged in civil construction and real estate which has
M/s Dinesh Ram Dokania as the flaghship company engaged in
civil construction work whereas M/s GRK Construction Private
Limited is engaged in real estate business. Notice under Section
153 of the Income tax Act was issued and the assessee filed
return of income. From the examination of the books of
accounts produced by the assessee, allotment of shares in the
financial year 2008-09 was found to the extent of Rs.
4,78,10,000/-. The existence of the entities to whom such shares
were allotted, from whom the amounts were received for such
allotment, were asked to be proved alongwith their
creditworthiness and the genuineness of the transaction. The
assessee did not do anything to establish the three aspects which
were specifically asked to be proved, in which circumstance the
said amounts were added to the income of the assessee.
4. The 1st Appellate Authority made a remand and
based on the remand report found that the assessee produced the
books of accounts and filed report as also acknowledgment of
filed ITR of third parties, bank statements and confirmation of
loans from various parties; pursuant to summons issued after
search. However, the fresh introduction of share capital of Rs.
Patna High Court MA No.642 of 2018 dt.06-08-2024
95,62,000/- on a premium of Rs. 4,78,00,000/- was not found
proved. The 1st Appellate Authority found that a sum of Rs. 1.74
Crores has been received by the appellants in the earlier
assessment year which was deleted from the instant assessment
year and directed to be included in the earlier assessment year
i.e. AY 2008-09.
5. The Tribunal laid down the procedure under
Section 153A of the Income Tax Act correctly in paragraph no.
8, which we would extract hereunder: -
"37. i. Once a search takes place
under Section 132 of the Act, notice under
Section 153 A (1) will have to be mandatorily
issued requiring him to file returns for six AYs
immediately preceding the previous year
relevant to the AY in which the search takes
place.
ii Assessments and reassessments
pending on the date of the search shall abate.
The total income for such AYs will have to be
computed by the AOs as a fresh exercise.
iii. The AO will exercise normal
assessment powers in respect of the six years
previous to the relevant AY in which the search
takes place. The AO has the power to assess and
reassess the 'total income' of the aforementioned
six years in separate assessment orders for each
of the six years. In other words there will be
only one assessment order in respect of each of
the six AYs "in which both the disclosed and the
Patna High Court MA No.642 of 2018 dt.06-08-2024
undisclosed income would be brought to tax".
iv. Although Section 153A does
not say that additions should be strictly made on
the basis of evidence found in the Course of the
search, or other post-search material or
information available with 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.
v. In absence of any incriminating
material, the completed assessment can be
reiterated and the abated assessment or
reassessment can be made. The word 'assess' in
Section 153A is relatable to abated proceedings
(i.e. those pending on the date of search) and
the word 'reassess' to completed assessment
proceedings.
vi. Insofar as pending assessments
are concerned, the jurisdiction to make the
original assessment and the assessment under
Section 153A merges into one. Only one
assessment shall be made separately for each
AY on the basis of the findings of the search
and any other material existing or brought on
the record of the AO.
vii. Completed assessments can be
interfered with by the AO while making the
assessment under Section 153A only on the
basis of some incriminating material unearthed
during the course of search or requisition of
documents or undisclosed income or property
discovered in the course of search which were
Patna High Court MA No.642 of 2018 dt.06-08-2024
not produced or not already disclosed or made
known in the course of original assessment."
(underlining by us for emphasis)
6. We are of the opinion that the Tribunal has
correctly interpreted Section 153 of the Income Tax Act and it
has not been stated anywhere that merely because the
assessment was completed prior to the search, there could be no
further proceedings taken on the search effected under Section
132 or the requisition made under Section 133 of the Income
Tax Act. We find the two questions of law sought to be framed
by the learned Senior Standing Counsel for the assessee to have
not arisen in the above cases.
7. However, the Tribunal found that the panchnama
recorded in the search, refers only to the tendering documents
and other details which has no connection with the share
application money/share capital/share premium on account of
which the additions were made. It has been stated that there is
no reference to the documents in detail from where the
Assessing Officer has picked up the information regarding share
application money. In this context we have to specifically notice
that there was search conducted and requisition made and the
specific ground taken by the Assessing Officer on verification of
the books of accounts produced by the assessee is that as for the
Patna High Court MA No.642 of 2018 dt.06-08-2024
shares allotted on a premium, the source, identity and
genuineness are not proved. The 1st Appellate Authority has also
noticed the verification of the books of accounts, presumably
produced on the requisition made which has led to the additions.
In such circumstance, we are of the opinion that the Tribunal
erred in appreciating the facts correctly and answering the
question of law, 3rd raised, in favour of the revenue and against
the assessee, we remand the matter for fresh adjudication before
the Tribunal; which is the last fact finding authority. The
Tribunal would do well to also examine the remand report filed
before the 1st Appellate Authority.
8. Insofar as the other appeals are concerned, all of
them relate to a fresh consideration of the return filed from
which the net profit was found to be comparatively low. While
the returns disclosed net profit of 5.29 per cent of the gross
proceeds, the assessing officer applied 8 per cent on the gross
proceeds; without any reasoning behind that and also not on the
basis of any material seized on search conducted.
9. We find absolutely no reason to entertain the
above appeals for the other years with respect to the two
entities; wherein no question of law arises and hence the appeals
stand rejected.
Patna High Court MA No.642 of 2018 dt.06-08-2024
10. MA No. 642 of 2018 is allowed to the limited
extent ordering remand and the other appeals stand rejected.
(K. Vinod Chandran, CJ)
Partha Sarthy, J: I agree.
(Partha Sarthy, J)
ranjan/-
AFR/NAFR NAFR
CAV DATE NA
Uploading Date 07.08.2024
Transmission Date NA
