TaxTMI 
TaxTMI 
2013 (12) TMI 135
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....e, for the sake of convenience a common order is passed. ITA NOS. 1828 TO 1831/Hyd/12 - REVENUE APPEALS 3. To dispose of these appeals, we refer to the facts in AY 2003- 04 and the grounds raised therein, which are common in all the appeals, as under: "1. The ld. CIT(A) erred both in facts and in law in deleting the additions made. 2. The ld. CIT(A) erred in not appreciating the total facts of the case in purely allowing the appeal on technical grounds. 3. The ld. CIT(A) erred in not appreciating the fact that the order of the Special Bench, ITAT, Mumbai was distinguished by the Hon'ble Delhi High Court in the case of CIT-VII Vs. Chetan Das and Lachman Das. 4. The ld. CIT(A) erred in not appreciating the detailed discussion made before disallowing sub-contract payments of Rs. 1,54,00,000/-. 5. The learned CIT(A) erred not appreciating the detailed discussion made before disallowing the unexplained share application money of Rs. 1,75,000/- (wrongly mentioned as Rs. 1,75,00,000/-) 6. The ld. CIT(A) erred on facts in not confirming the depreciation disallowed of Rs. 43,625/-." 4. Briefly stated, Assessee company is engaged in the business of civil contracts.....
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....ainable in law. It was further contended that as the original assessment is still validly subsisting, reassessment order passed is not in accordance with the judicial principles laid down and no fresh addition/disallowances can be made on the same set of facts unless corroborated by material evidence found or seized. After considering the submissions of Assessee, the learned CIT(A) held that the various additions made by the AO in the assessment order is not justified and the same are directed to be deleted by observing vide paras 6.0 to 6.13 in his order, as under: "6.0 I have gone through the facts of the case and the submissions of the appellant. I find that apart from the grounds of appeal on the merit of the additions made by the Assessing Officer, the appellant has raised a legal ground stating that addition in the assessment u/s 153A should be made based on incriminating and adverse material found during the course of search. Accordingly, I am deciding the legal ground raised by the appellant before going into the merit of the case. 6.1 As stated by the appellant, the addition in an assessment made u/s 153A should be confined to the material found during the course of ....
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.... number of judicial decisions wherein, it has been held that the additions made in course of assessment proceedings u/s 153A should be derived from the incriminating material found during the course of search. Some such decisions are mentioned hereunder: a) LMJ International Ltd Vs. DCIT (22 SOT 305 ITAT) (b) Abhay Kumar Shroff Vs. CIT(290 ITR 114) (Jhar.) (c) CA Abraham vs ITO (41 ITR 425)(SC) (d) Manish Maheswari Vs. ACIT(289 ITR 341)(SC) (e) ACIT vs. Rupesh Volidas Patil (ITA No.2390 to 2394/Ahd/2007) 6.5 In the case of LMJ International Ltd the Hon'ble ITAT Kolkata has observed that items of regular additions cannot be taken up in the assessment u/s 153A/153C. The Head note in the said case is reproduced below. "Section 153C, read with section 153A, of the Income-tax Act, 1961 - Search & seizure - Assessment of income of' any other person - Assessment year 1999-00 - Whether items of regular assessment can be added back in proceedings under section 153C - Held, no - Whether only undisclosed income detected in course of search of searched person or any other person can be added and charged to tax under section 153C - Held, yes" The Hon'ble ITAT....
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....he AO does not have any jurisdiction for framing assessment u/s 153A of the Act. Reliance was placed on the decision of ITAT, Kolkata in the case of LMJ International Ltd Vs DCIT. The Hon'ble ITAT Ahmadabad after discussing the issues in detail observed that the assessment u/s 153A of the Act shall be with reference to the valuable articles or things found or documents seized during the search which are not disclosed in the original assessment. 6.7 Incidentally, similar view has been held by Hon'ble ITAT, Visakhapatnam Bench in the case of KGR Exports Vs. JCIT, Vizag in ITA No. 494/V/2007. One of the issues raised before the Hon'ble Tribunal was whether the AO was right in making additions while completing the assessment u/s 153A of the Act, when no incriminating material was found during the course of such proceedings. Before the ITAT, the AR of the appellant while arguing the case had relied on the decision of ITAT, Kolkata in the case of LMJ International referred to above as also the decision of Jharkhand High Court in the case of Abhay Kumar Shroff Vs. CIT (290 ITR 114), wherein it was held that only undisclosed income can be assessed u/s 153A of the Act. The is....
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....ch at page 6 of the order have made an observation that while making assessment u/s 153A of the Act, it is essential that only such additions can be made which are based on material found in the course of search. 6.9 Reference can also be made to the latest decision of the Special Bench of ITAT, Mumbai in the case of All Cargo Logistics (147 TTJ 513), which is also relied upon by the appellant. In that case, the Hon'ble Special Bench observed as under: (a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately; (b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - 6.10 It is just clear from the decision of the Special Bench that in the assessments u/s 153A, the Assessing Officer has to restrict himself to the incriminating material found during the course of search, where, the assessments were already completed earlier and accordingly not abated. Only in assessments ....
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....ellant, I hold that the various additions made by the AO in the assessment order for the AY 2003-04 is not justified. The same is directed to be deleted." 6. Revenue is aggrieved and is in appeal before us. 7. The learned CIT-DR relied on the orders of the AO to submit that Assessee has not furnished books of account and in the absence of books of account, the AO is justified in making disallowance 50% of the sub-contract payments made and other additions, but, the CIT(A) is not correct in holding that the AO cannot make any additions. It was submitted that in this case the AO made investigation and referred the matter to special audit and then only made the additions, therefore, the opinion of the learned CIT(A) is not correct. Further relying on the principles laid down by the decision of the Hon'ble High Court in the case of Gopal Lal Bhadruka Vs. DCIT [2012] 346 ITR 106 (AP) and CIT vs Chetan Das Lachman Das In ITA 2045/2010 and others dt. 14-05-2012, the learned CIT-DR submitted that assessments can be made in other years if there is seized material found even in one year. 8. The learned counsel submitted that no incriminating material was found in any of the years un....