TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 540
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....rder of the CIT (A)-36, Mumbai dated 27.1.2009 for the AY 2001-02. In this appeal, assessee raised the following grounds which read as under: "1. The Ld CIT (A) has erred in law and facts in passing the order u/s 250 of the Act. 2. The Ld CIT (A) has erred in law and in facts in not holding that the assessment proceeding and consequential assessment order u/s 143(3) r.w.s 153C is without jurisdiction in the absence of issuance of issuance of mandatory legal notice u/s 143(2) of the Act. 3. The Ld CIT (A) has erred in law and facts in not holding that the assessment proceeding and consequential assessment order u/s 143(3) r.w.s 153C is without jurisdiction in the absence of valid notice u/s 142 of the Act as one single common notice u/s 142 dated 20.10.2008 was issued for the six assessment years ranging from AY 2001-2002 to 2006-07. 4. The Ld CIT (A) has erred in law and in facts in not holding that the assessment proceeding and the order passed u/s 143(3) r.w.s. 153C is bad in law. 5. The Ld CIT (A) has erred in law and in facts in holding that the provisions of section 292BB are applicable in the present case and that the same are clarificatory in nature. 6. The Ld CI....
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....before the first appellate authority, after considering the submissions of the assessee, CIT (A) partly allowed the appeal and confirmed the addition to the extent of Rs. 7 lakhs. Again aggrieved and not satisfied with the said decision of the CIT (A), assessee is in further appeal before the Tribunal by raising the abovementioned Grounds and also raised a legal ground that the addition made by the AO is not based on the incriminating material seized during the course of search. 6. During the proceedings before us, Ld Counsel for the assessee narrated the brief facts of the case. At the outset, Ld Counsel for the assessee demonstrated that in all the 6 appeals of the assessee involving the AYs 2001-02 to 2006-07 have a common legal issue and submitted that issue relates to when the assessments involved are non-abated assessment (either regular assessments are completed u/s 143(3) and the quantum proceedings are not pending or the due date for issue of notice us 143(2) has expired, the additions, if any, in the search assessment can be made basing on any incriminating material seized u/s 132 of the Act and forwarded to the concerned AO as per the procedure laid down in the Act. Dra....
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....IT 137 ITD 287(Mum)(SB) which has now been upheld by the Hon'ble Bombay High Court referred above. 8. In view of the above, it is humbly submitted that on the basis of the legal propositions, the additions made by the Assessing Officer are bad in law and hence are to be deleted. 9. We would like to bring to Your Honours kind attention the following points:- a. The additions made by the Ld. AO on account of Share application money received is not based on any incriminating seized material found during of Search. b. Further, additions on account of share application is not arising out of any finding of search Action u/ s. 132(4) of the Act. Also, Aa is not referring to any seized material in his entire Order. c. Further, the addition was made on account of findings / information received from ACIT - 45, Mumbai. However the Hon'ble IT AT, Mumbai in case of SKS Ispat and Power Limited vs. DCIT CC 45 (ITA 8746/M/12 and ITA 8747/M/12) have held that additions u/s. 68 in absence of incriminating seized material cannot be made an hence ought to be deleted. Copy of Order placed on record. d. As per Section 153C of the Act, notice issued u/ s. 153C would be date wherein a....
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....d on the accounted transactions. The instant case for the AY 2002-03 deals with the case of disturbing the 'completed assessment'. Earlier the assessment was completed u/s 143(1) of the Act. Completeness of the summary assessment is considered and held in favour of the assessee vide many judgments cited above. In the assessment u/s 153A, the AO made (i) Addition u/s 68 on account of artificially inflated investment in house duly disclosed in the balance sheet of the assessee Rs. 31,33,070/-; and (ii) disallowance u/s 14A: Rs. 23,31,469/-. Admittedly, there is no incriminating material before the AO to support the above additions. The valuation report, which is garnered by the authorities constitutes mere estimates and the provisions of section 132 is not required to obtain such report from the DVO. As such, for making aforesaid additions of Rs. 31,33,070/-, AO has not used even the said valuation report and the AO disallowed what is reported in the books. Similar is the case with the additions u/s 14A of the Act. Therefore, undisputedly, the impugned quantum additions are made merely based on the entries in the accounted books and certainly not based on either the unaccounted books....
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....shed being made without jurisdiction available under section 153A - Held, yes [Para 6.2] [In favour of assessee] Para 6.1 of the Order: The Special bench in the case of Alcargo Global Logistics Ltd. (supra), has held that provisions of section 153A come into operation if a search or requisition is initiated after 31.5.2003 and on satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income for six years immediately preceding the year of search. The Special Bench further held that in case assessment has abated, the AO retains the original jurisdiction as well as jurisdiction under section 153A for which assessment shall be made for each assessment year separately. Thus in case where assessment has abated the AO can make additions in the assessment, even if no incriminating material has been found. But in other cases the Special Bench held that the assessment under section 153A can be made on the basis of incriminating material which in the context of relevant provisions means books of account and other documents found in the course of search but not produced in the course of original assessment and undisclo....
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....on the notices issued u/s 153A of the Act and the same is pronounced in the context of the notice u/s 153C of the Act. Further, also, the Coordinate Bench decision in the case of Scope (P) Ltd (supra) has granted relief to the assessee though the notice issued u/s 153A of the Act was upheld. However, this order has not considered the then existing decision of the Coordinate Bench decision in the case of Pratibha Industries Ltd (supra) which is relevant for the proposition that the completed assessment may not be disturbed in the absence of any incriminating material specific to the assessee. In fact, all these judgments take spirit from the Special Bench decision in the case of All Cargo Global Logistics Ltd (supra), which is relevant for the proposition that the assessment u/s 153A will be made on the basis of incriminating material such as books of accounts, other documents found in the search but not produced in the course of original assessment and undisclosed income or property discovered in the course of the search. 15. ....... 16. In these circumstances, we have no doubt about the absence of any seized material which are incriminating in nature to back the additions u/s ....
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....t in the case of Jai Steels Ltd, supra, we have no difficulty in (i) upholding the issue of notice u/s 153A of the Act and (2) in disapproving the making of the impugned additions u/s 68 and 14A of the Act, which are not backed by the incriminating materials. In the absence of incriminating material, the role of the AO is only to reiterate the returned income filed in response to the notice u/s 153A of the Act. Accordingly, in substance, the common legal issue raised in the grounds for both the appeals of the assessee (ITA NO 3389&3390/M/2011) is allowed." 9. Further, in the recent past, similar issue was adjudicated by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla vide ITA Nos. 707/2014 and others, dated 28.8.2015, wherein the Hon'ble Delhi High Court has reiterated the above settled legal proposition that since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. In this regard, we find it relevant to extract the summary of the legal propositions and the conclusion of said judgment of the Hon'ble Delhi High Court which is as follows: Summary of the legal position: 37. On a conspectus ....
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....ed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue." 10. From the above settled legal position of the issue that in the absence of any incriminating material found during search, additions made on the assessed income are unsustainable in law, we are of the considered opinion that the additions made in the instant case are not sustainable and accordingly, we delete the additions made in the assessment u/s 68 on account of share application money. Considering our decision on the legal issue in favour of the assessee, the other grounds demand no specific adjudication. Thus, the legal ground raised by the assessee is allowed and re....