TaxTMI 
TaxTMI 
2015 (11) TMI 1439
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.... the AO in passing an order under section 143(3) r.w.s. 153C of the Act and also contested certain other additions such as disallowance made under Rule 8D, etc. Since the learned counsel for the assessee strongly challenged the action of the AO in passing the order under section 143(3) r.w.s. 153C of the Act, both the parties agreed that the preliminary issue has to be decided first and in the event of finding justification in issuing notice under section 153C of the Act the other issues can be taken up for consideration. Accordingly I proceed to dispose of the appeals filed by the Assessee as well as the Department. 3. Search and seizure action was carried out on 20.01.2012 at the office of Provogue (India) Ltd. and residence of the Directors and it was concluded on 17.03.2012. Prior to the search action assessee filed its regular return on 03.09.2011 declaring total loss of Rs. 10,62,071/-. No notice was issued under section 143(2) of the Act for taking up the matter for scrutiny and thus the return filed by the assessee is deemed to have been processed under section 143(1) of the Act. 4. During the course of search, loose papers with serial Nos. 9 to 32 have been found and....
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....t any pending assessment or reassessment will abate. Fresh determination of total income would be required only when there is incriminating material. The case law relied upon by the AO, i.e. Shri Anil Kumar Bhatia (352 ITR 493) was distinguished on the ground that it was examined by the Special Bench of ITAT in the case of All Cargo Global Logistics Ltd. It was contended that no addition can be made unless there is any incriminating material found in the course of search for each year. 7. The learned CIT(A) held that in the light of the decision of the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia it is mandatory on the part of the AO to initiate proceedings under section 153A of the Act, consequent to search and seizure action. He also observed that in this case return of income was filed on 03.09.2011 and hence the time limit for issuance of notice under section 143(2) would be expiring after the date of search. He also admitted that it is not clear as to whether any notice under section 143(2) was issued which got abated. In his opinion there is no purpose in making two assessments in the same assessment year, once a notice is issued under section 153C of the ....
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....uired to be reached by the AO having jurisdiction over the searched person is that the valuable articles seized during the search belong to a person other than the searched person. There is no requirement, under section 153C of the Act, that the AO should also be satisfied that such valuable articles or documents belong to the other person and it reflects any undisclosed income. 11. On the other hand, the learned counsel for the assessee submitted that an assessment completed can be reopened by the AO only on the basis of some incriminating material unearthed during the course of search proceedings. In the instant case the AO having jurisdiction over the other persons acted mechanically, without any verification of facts, and as such the process is not in accordance with law because the Hon'ble Delhi High Court as well as the Hon'ble Kerala High Court were concerned with the requirement of the AO who had to merely transfer the case to the AO having jurisdiction over the third person and those decisions are not rendered in the context of the powers of the AO who had to directly deal with third party. He also submitted that identical issue was considered by the ITAT SMC Be....
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....of the Act, in the peculiar facts of the case, are not validly initiated and the additions are not in accordance with law in the light of the fact that there is no incriminating material even during the course of search, a fact which is not disputed by Tax Authorities. He mainly relied upon the following orders of the Third Member of ITAT to submit that the amendments to provisions of section 153C of the Act are clarificatory in nature and therefore applicable retrospectively and hence in order to initiate proceedings under section 153C of the Act for each year the AO should have, in his possession, incriminating material concerning third party: - i) Trishul Hi-Tech Industries vs. DCIT -(2014-TIOL-862-ITAT-KOL) ii) DCIT vs. Royal Cartons Pvt. Ltd. (ITA 472/Coch/2013) It was submitted that in the instant case no incriminating material was found in respect of the assessment years under consideration and in fact no addition was made based on the so called incriminating material. Thus initiation of proceedings under section 153C of the Act and the assessments for the years under consideration are bad in law in the light of the binding decisions of the Third Member of ITAT. ....