Micro Ankur Developers v. DCIT

By CA Nikhil Gupta · Judgment date: 2022-09-02 · ITAT Mumbai

ITATQuashed / set asidePUBLISH_READY

Important disclaimer

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Source status: Sanitized readable full judgment copy packaged; the exact issuing-court primary record remains pending. Open packaged judgment PDF. This indexed page retains explicit official-source and later-history disclosures for reliance checks.

Case in 2 minutes

Regular books of accounts maintained by the assessee in tally software, now being referred by the Revenue, to justify the impugned addition did not constitute incriminating material unearthed during the search.

Result: Quashed / set aside. The controlling text is the reasoning and operative order in the packaged judgment, not this editorial summary.

Case snapshot

Court / TribunalITAT Mumbai

Case numberITA Nos. 1046–1050/Mum/2019

Decision date2022-09-02

Assessment yearAY 2010-11

CoramSHRI ABY T. VARKEY, JM AND SHRI GAGAN GOYAL, AM

OutcomeQuashed / set aside

Sections / provisions: 153A

Questions before the Court / Tribunal

Regular books of accounts maintained by the assessee in tally software, now being referred by the Revenue, to justify the impugned addition did not constitute incriminating material unearthed during the search.
What factual, statutory and procedural conditions control the relief?
How does the operative order apply to the parties and the challenged proceeding?

JUDGMENT-GROUNDED CASE RECORD

Material facts and procedural background

(अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent)

Assessee by: Shri Bharat Kumar Revenue by: Dr. Mahesh Akhade (DR) सुनवाईकीतारीख / Date of Hearing: 26/07/2022 घोषणाकीतारीख /Date of Pronouncement: 02/09/2022

These appeals preferred by the assessee are against the common order of the Ld. Commissioner of Income Tax (Appeals)-51, Mumbai [hereinafter in short “Ld. CIT(A)”] dated 24.12.2018 for A.Y. 2010-11 to AY. 2014-15. Since issues involved are common, all the appeals for all the assessment year/years (hereinafter referred to as “AY”) were heard together. Both the parties also argued them

2. Before we advert to the grounds taken in the cross appeals, it would first be relevant to cull out the basic facts of the case and effect of law in brief in respect of certain AY’s. The assessee firm was formed on 02-08-2006 and was primarily engaged in the business of construction of building/property/development in Mumbai. Shri Naresh Jain and Shri Sunil Shah were originally equal partners in the assessee firm. Vide supplementary deed dated 05-02-2008, four other partners were admitted into the firm inter alia including Shri Jitendra Jain whose share of profit was 25%. Shri Naresh Jain however continued to be the main promoter- partner with share of profit of 50% and the bank account of the assessee was to be operated by Shri Naresh Jain jointly with any of other five partners. Search under section (hereinafter referred to as “u/s.”) 132 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was conducted against the Kamla Landmarc Group, on 10-12-2013 which triggered section 153A of the Act. Prior to the date of search, since the returns of income for these assessment years (hereinafter in short ‘AYs’) AYs 2010-11, 2011-12 & 2012-13 were filed on 11-10-2010,…

3. Since the issues raised and the additions involved in all the appeals are similar, we first take up the appeal filed by the assessee for AY 2010-11 in ITA No.1046/Mum/2019 as the lead case. It is noted that, the assessee is engaged in the business of real estate development. During the course of the search, on 10-12- 2013, according to AO, one of the partners of the assessee, Shri Jitendra Jain was confronted with the statements recorded of various persons who were purportedly engaged in the business of providing accommodation entries in the form of unsecured loans in lieu of cash, to which Shri Jitendra Jain in his statement recorded u/s 132(4) of the act on 13-12-2013 explained the manner in which they got unsecured loans from various parties by paying 0.25% brokerage and that they paid interest in the range of 9% to 24% of interest to the lenders, depending upon the amount, tenure and requirement of group companies. The Investigating authorities had put forth names of twenty eight (28) unsecured loans creditors from whom the Kamla Group has taken unsecured loans, to which Shri Jain admitted in his statement that these parties were providing accommodation entries. The AO…

Appellant / assessee submissions

submits that its letters dated 07.03.2016 & 18.03.2016 have not been considered by the AO, whereby it had enclosed the retraction statement of Shri Jitendra Jain confirmations along with financials of the said alleged bogus lenders,details of expenses, etc. It was further submitted that in the said 2 letters it had / requested the AO to provide the statements of the 3 parties relied upon by the AO to draw adverse inference and had also requested for cross-examination of the said parties, Accordingly, the assessee contended that there has been a violation of principles of natural justice. On the said submissions of the assessee, it is noted that the powers of

8. Assailing the action of Ld. CIT(A), the Ld. AR of the assessee, in the first instance, pointed out that, the statement of Shri Jitendra Jain did not have any relevance to the case of the assessee in as much as the assessee did not belong to the Kamla Group as alleged by the lower authorities. Taking us through the original partnership agreement dated 02-08-2006 and supplementary deed dated 05-02-2008, the Ld. AR pointed out that the key person of the assessee firm was always Shri Naresh Jain and not Shri Jitendra Jain. He submitted that Shri Jitendra Jain was admitted as a partner much later after the formation of the partnership and that the bank account of the assessee was controlled by Shri Naresh Jain along with any of the other partners. These contemporaneous facts, according to him, showed that Shri Jitendra Jain was never in-charge or control of the affairs of the assessee and therefore his statement recorded u/s 132(4) of the Act in relation to the entities/concerns belonging to his controlled Kamla Group could not be extrapolated and adversely inferred against the assessee as well. Referring to the warrant no. 10710 dated 09-12-2013 [Page 1 to 2 of paper book] which…

Pages 12-21 of the paper book, the Ld. AR submitted that no questions were posed to him regarding the assessee, particularly doubting the genuineness of the unsecured loans obtained by the assessee. The Ld. AR thereafter invited our attention to warrant no. 9397 dated 09-12-2013 which was executed in relation to the Kamla Landmarc Group and particularly the names of the twenty one (21) concerns belonging to the said Group, to show that the assessee did not feature therein. Taking us through his statements, placed at Pages 35-66 of paper book, the Ld. AR showed us that nowhere, Shri Jitendra Jain had named the assessee firm as a beneficiary of purported accommodation entries in the form of unsecured loans. These aforesaid facts considered cumulatively, according to him, supported their case that the statement given by Shri Jitendra Jain u/s 132(4) of the Act in the course of search conducted upon the Kamla Landmarc Group did not pertain to the assessee. He further took us through the impugned assessment order, and submitted that, apart from relying on the statement of Shri Jitendra Jain, the AO had not referred to any incriminating material found in the course of search to justify…

10. In his rejoinder, the Ld. AR, at the first instance, submitted that the books of accounts which were regularly maintained in tally software was not in the nature of ‘incriminating material’. According to him, these accounts formed part of the returns filed with the authorities and such regular books of accounts maintained in the ordinary course of business did not suggest anything of incriminating nature. He contended that, the report of the AO showed that the addition/s made were not supported or backed by any incriminating material unearthed during the course of search and for that reason the Revenue is now trying to make out a new case that the regular accounts maintained by the assessee was in the nature of ‘incriminating material’, which according to him, was untenable both on facts and in law. He

Revenue / respondent submissions

11. Per contra, the Ld. CIT, DR appearing on behalf of the Revenue supported the order of the lower authorities. He urged that, the contention of the assessee that unabated assessments can be interfered with only if incriminating material was found in the course of search was untenable and deserves to be rejected and the Revenue has tried to distinguish the judgments rendered by the Hon’ble Bombay High Court in the cases of Continental Warehousing Corporation (Nhava Sheva) Ltd (supra), CIT vs Murli Agro Products Ltd (49 taxmann.com 172) and the Special Bench of this Tribunal in the case of All Cargo Global Logistics Ltd vs DCIT (137 ITD 287). The Ld. CIT, DR alternatively contended that, the statements recorded u/s 132(4) carries sufficient evidentiary value and therefore any admission by the partner of the assessee to any wrong doing itself constitutes incriminating material to justify additions in unabated assessments. The Ld. CIT, DR further contended that, the decisions relied upon by the assessee in the cases of Pr. CIT Vs Anand Kr. Jain HUF (133 taxmann.com 288), Pr.CIT Vs Best Infrastructure (I) Pvt Ltd (397 ITR 82), CIT Vs Harjeev Aggarwal (241 Taxmann 199), PKSS…

6. Mr. Kotangale, the learned Counsel for the revenue very fairly states that the decision of the Special Bench of the Tribunal in Al-Cargo Global Logistics Ltd. was a subject matter of challenge before this Court as a part of the group of appeals disposed of as CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 374 ITR 645/58 taxmann.com 78/232 Taxman 270 (Bom.) upholding the view of the Special Bench of the Tribunal in Al- Cargo Global Logistics Ltd. Consequently, once an assessment has attained finality for a particular year i.e. it is not pending then the same cannot be subject to tax in proceedings under Section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under Section 153A of the Act which are contrary to and/or not disclosed during regular assessment proceedings.

Court / Tribunal analysis and reasoning

12. We have heard both the parties, perused the details, documents and submissions along with the judicial precedents relied upon by both sides. The first ground raised in the appeal is, whether in absence of any incriminating material found in the course of search at the premises of the assessee, the additions/disallowances made in the assessment of the assessee which were unabated on the date of search, could be held to be sustainable on facts and in law. As noted earlier, on the date of search i.e. 10-12-2013, income tax assessment for AY 2010-11 was unabated. We note that the provisions of Section 153A of the Act, forms part of Chapter XIV of the Act contains special provisions for completing assessments in case of search conducted u/s 132 of the Act or requisition made u/s 132A of the Act. These provisions can be invoked only in cases where the Income-tax Department has exercised its extra ordinary powers of conducting search and seizure operations after complying with stringent pre- conditions prescribed in Section 132 of the Act. We do not deny the Revenue’s contention that, once a search u/s 132 is conducted against a person, then irrespective whether any incriminating…

“5. We have considered the arguments canvassed by the learned counsel for the respective parties. On perusal of section 153A of the Act, it is manifest that it does not make any distinction between assessment conducted under section 143(1) and 143(3). This court had occasion to consider the scope of section 153A of the Act in the case of Gurinder Singh Bawa and in the case of Continental Warehousing Corpn. (Nhava Sheva) Ltd. (referred to supra). It has been observed that section 153A cannot

be a tool to have a second inning of assessment either to the Revenue or the assessee. Even in the case of Gurinder Singh Bawa (referred to supra) the assessment was under section 143(1) of the Act and the court held that the scope of assessment after search under section 153A would be limited to the incriminating evidence found during the search and no further. In the said judgment, the judgment of this court in Continental Warehousing Corpn. (Nhava Sheva) Ltd. (referred to supra) has been followed.

5. We have considered the aforesaid contentions and are of the view that no substantial question of law arises, as the matter is squarely covered by Kabul Chawla supra, which has been correctly applied to the facts of the case by the ITAT. The ITAT, in the impugned order has held that in the audited report filed by the assessee along with the report, cash book, ledger, bank book etc. were mentioned; that the respondent assessee was maintaining books on TALLY Accounting Software which was seized during the search and was being treated as incriminating material; however, regular books of account of the assessee, by no stretch of imagination, could be treated as incriminating material to form basis of framing assessment under Section 153A read with Section 143(3) of the Act.” (emphasis supplied by us)

17. As far as the reliance placed by the lower authorities and Ld. CIT, DR, on the statement of Shri Jitendra Jain which was recorded u/s 132(4) of the Act to justify the impugned addition/s, is concerned; we find that the coordinate Bench of this Tribunal in the batch of cases decided in the matters of M/s Kamla Landmarc Enterprises Vs DCIT & Others (supra) of the Kamla Group, has already held that the statement of Shri Jitendra Jain recorded u/s 132(4) of the Act alone did not constitute incriminating evidence to justify the additions made in the unabated AYs, particularly when the statement was not recorded on the basis of any incriminating material found in the course of search. The Tribunal accordingly in

“14. We have heard the parties and perused the details, documents and submissions alongwith case laws relied upon by the Ld. AR as well as Ld.DR. The Ld. Representative of the assessee has argued that no incriminating materials were found during the search carried out on 10.12.2013 at the various premises of the Kamla Group, therefore, the assessment is not liable to be reopened in accordance with law. It is also argued that the period for issuing the notices u/s 143(2) of The Income Tax Act, 1961 expired by the time of search for the assessment years from 2009 - 2010 to 2012 - 2013 and no notices were issued u/s 143(2) for the aforesaid assessment years. It is also argued that the assessment order for A.Y. 2008 - 2009 was passed u/s 143(3) of the Act as observed by the Assessing Officer while passing the assessment order u/s 143(3) r.w.s 153A dated 18.03.2016 for AY 2008-09, therefore, the assessment in relation to the assessment years 2008-2009 to 2012-2013 are non-abated assessments and are not liable to be sustainable. It is specifically argued that the statement recorded u/s 132(4) of the Act itself cannot be treated as incriminating evidence. In support of these contention,…

Operative decision and relief

21. Since we have deleted the additions impugned before us on the ground that it was not based any incriminating material found in the course of search, all other grounds raised in the appeal on the merits of these additions have become academic in nature and is therefore dismissed as infructuous.

22. Since the facts and circumstances in the lead case under consideration, being ITA No. 1046/Mum/2019, for A.Y. 2010-11 is identical to the other unabated AYs 2011-12 & 2012-13 in ITA Nos. 1047/Mum/2019 & 1048/Mum/2019, our decision in the case of ITA No. 1046/Mum/2019, for A.Y. 2010-11 of the assessee’s appeal shall apply mutatis mutandis to the assessee`s appeals in ITA Nos. 1047/Mum/2019 & 1048/Mum/2019. Hence, the appeals for the AYs 2011- 12 & 2012-13 also stands allowed.

23. Now we take up the appeals of the assessee for the abated assessments for AYs 2013-14 & 2014-15. Having heard both the parties, we find that on similar facts and circumstances, this Tribunal in the batch of cases decided in the matters of M/s Kamla Landmarc Enterprises Vs DCIT & Others (supra) of the Kamla Group, had set aside the addition/s back to the file of the AO to review and decide the issue afresh, by holding as under:

24. Respectfully following the same, and in the fitness of matters, we set aside the addition/s made in AYs 2013-14 & 2014-15 back to the file of the AO for fresh examination. The appellant is directed to file the relevant details / explanation before the AO in this regard. The AO shall also allow sufficient opportunity of hearing to the appellant and shall pass fresh order in accordance to law after giving due consideration to the submissions put forth by the appellant. These appeals in ITA Nos.1049/Mum/2019 & 1050/Mum/2019 for AY 2013-14 & 2014-15 are therefore allowed for statistical purposes. 25. In the result, the appeals of the assessee for AYs 2010-11, 2011-12 & 2012- 13 are allowed and the appeals of the assessee for AYs 2013-14 and 2014-15 are allowed for statistical purposes.

Official source and later-history control

Primary record: OFFICIAL_PRIMARY_SEARCH_PENDING

Later-history status: RECTIFICATION_HIGH_COURT_APPEAL_SLP_CHECK_PENDING

ITAT rectification, jurisdictional High Court appeal and Supreme Court SLP history remain to be closed.

Release decision: Published with a sanitized local judgment copy and explicit source disclosure; official-primary retrieval and later-history surveillance remain open. Checked 2026-08-11; page is published as index,follow with these limitations disclosed.

FININ2MIN ANALYSIS

Ratio and legal principle

The packaged judgment addresses Regular books of accounts maintained by the assessee in tally software, now being referred by the Revenue, to justify the impugned addition did not constitute incriminating material unearthed during the search. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with regular books of accounts maintained by the assessee in tally software, now being referred by the revenue, to justify the impugned addition did not constitute incriminating material unearthed during the search. Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
Verify current appellate, review and SLP history and any later amendment or controlling authority.
Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

Can I rely on this judgment?

Authority level	ITAT
Source integrity	Sanitized readable full judgment copy packaged; issuing-court primary pending
Repository release	PUBLISH_READY
Reliance rule	Verify current history and cite the judgment's narrow proposition, not the editorial headnote.

Does this case match your facts?

Stronger match when

The same primary issue is raised.
The same statutory version and jurisdiction apply.
The procedural stage and burden of proof are comparable.
The material documentary record is substantially similar.

Weaker / distinguishable when

A later higher-court ruling changes the position.
The statutory provision or relevant period differs.
The evidence or procedural chronology is materially different.
A defect decisive here was cured in the user's case.

Questions this judgment answers

What was the main dispute in Micro Ankur Developers v. DCIT?

Which facts matter most?

(अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent)

What did the ITAT Mumbai decide?

What legal principle can be taken from the judgment?

The packaged judgment addresses Regular books of accounts maintained by the assessee in tally software, now being referred by the Revenue, to justify the impugned addition did not constitute incriminating material unearthed during the search. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions. Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Which provisions should be checked?

153A

When is the case most useful?

When the user's facts raise the same issue - Regular books of accounts maintained by the assessee in tally software, now being referred by the Revenue, to justify the impugned addition did not constitute incriminating material unearthed during the search - at a comparable procedural stage and under the same statutory version.

What could distinguish the case?

Different evidence, jurisdiction, statutory period, procedural chronology, or later controlling authority can materially change the result.

Can it be cited without another current-law check?

No. Read the packaged judgment and verify current appellate/review/SLP history, statutory amendments and jurisdiction before citation or advice.