TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 60
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....ion 153C not to be bad in law, without jurisdiction and void ab initio. 2. The Commissioner of Income-tax (Appeals) erred in upholding the Assessing Officer's order of treating the gift of Rs. 2,00,000 as unexplained cash credit, as no material was found during the search for such addition and under the facts and circumstances of the case. 2. During the course of hearing, Shri Harshad J. Shah and Shri Ashok Kumar Suthar, learned counsel on behalf of the assessee and Shri L. K. S. Dahia, Departmental representative (learned Commissioner of Income- tax-Departmental representative) on behalf of the Revenue, argued the case. 3. During the course of hearing, it has been argued by the learned counsel appearing on behalf of the assessee that in this case no jurisdiction as per law could have been assumed under section 153C because nothing incriminating was found against the assessee, in the case of search carried out at the premises of Shri Prakash H. Savla. It has been submitted that in any case additions made in the assessment order are illegal on the ground that these have been made without there being any incriminating material. Thus, additions are without any basis and withou....
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....upon any incriminating material, the response of the learned Commissioner of Income-tax-Departmental representative was very fair. It was clarified that the additions were not based upon any incriminating material. But he argued that it is not necessary that in the assessment order framed under section 153C additions could be made only qua incriminating material. According to him, these proceedings are akin to the proceedings carried out under section 147, wherein the Assessing Officer is permitted to make additions/disallowances in the reassessment even beyond the scope of reasons recorded by him for reopening of the case. In a nutshell, he justified the action of the lower authorities in framing the assessment and making the impugned additions. 3.3. We have heard both the sides very carefully and gone through the material placed, the orders of the lower authorities as well as the judg ments relied upon before us. The brief facts as culled out from the orders of the lower authorities are that during the search conducted at the residence of Shri Prakash H. Savla, documents related to the firm, M/s. Mahavir Builders, were found and seized. Subsequently, Shri Prakash H. Savla and Sh....
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....Logistics Ltd. [2015] 374 ITR 645 (Bom), copies of which are placed on record. On a perusal of the said decisions, we find they are relevant for the proposition that 'when no assessment has abated, the question of making any addition or making disallowance which are not based on only material found during the search is bad in law'. In this regard, we find it relevant to extract the relevant paragraphs from the decision of the Tribunal in the case of Govind Agarwal (ITA No. 3389/Mum/2011, dated January 10, 2014) and the same is as follows : '12. We have heard the parties and their divergent stands on the legal issue and the validity of the instant assessment/reassessment with the routine additions under section 68 and section 14A of the Act based on the accounted transactions. The instant case for the assessment year 2002-03 deals with the case of disturbing the "completed assessment". Earlier the assessment was completed under section 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 under section 153A, the Assessing Officer made (i) addition under section 68 o....
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....n of the entire provision would lead to an irresistible conclusion that the word "assess" has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents.' B. [2012] 28 taxmann.com 328 (Mumbai-Trib.) in the case of Gurinder Singh Bawa v. Deputy CIT. '. . . Whether since assessment under section 153A was passed by Assessing Officer on basis of material available in return of income and there was no reference to any incriminating material found during search and since no assessment was abated, assessment under section 153A was to be quashed being made without jurisdiction available under section 153A-Held, yes (paragraph 6.2) (In favour of assessee) Para 6.1 of the order : The Special Bench in the case of All Cargo Global Logistics Ltd. [2012] 18 ITR (Trib) 106 (Mumbai) [SB] ; [2012] 137....
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....iginal assessment, and (ii) undisclosed income or property discovered in the course of search." 14. Thus, in case of the completed assessments either under section 143(1) or 143(3), the above extracts are uniform in advocating against making additions in routine manner in the assessments made under section 153A of the Act when there is no incriminating material gathered in the search action. Statutory notice under section 153A of the Act can also be issued to reiterate the returned income or for making additions based on the incriminating material or unproduced books of account. Otherwise, additions made in routine matter as in the present appeal are not sustainable. Further, for the sake of completeness of the order, we have perused the orders/judgments relied upon by the learned Departmental representative for the Revenue and found they are distinguishable on facts for one reason or other. To start with, we have perused the judgment of the honourable Delhi High Court in the case of Madugula Venu v. DIT [2013] 29 taxmann.com 200 (Delhi), and find that, though explained the provisions in plain language, it does not dealt with the relevance or factum of incriminating material. Fur....
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....nus Rs. 14.8 lakhs, the investment made on the land plots. The Assessing Officer made addition for the assessee's failure to provide evidences/bills in support of the claim of expenditure on the construction. If the presumption of the Assessing Officer that the plots since acquired only by July 2001, the assessee would not have spend Rs. 31,33,007 by March 31, 2002. This is merely a presumption rather conclusion based on any evidences. Such additions are unsustainable in law in the assessments made under section 153A read with section 143(3) of the Act. 17. Rajasthan High Court judgment in the case of Jai Steel (India) [2013] 1 ITR-OL 371 (Raj) ; [2013] 36 taxmann.com 523 (Raj), vide para 21, it is categorically mentioned that 'the requirement of assessment or reassessment under the said section (153A) has to be read in the context of sections 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration . . . .' Thus, the judgment of the honourable High Court in the case of Jai Steel (India) [2013] 1 IT....
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....not on account of 'gifts' but on account of 'source of funds for repayment of loans'. In this regard, we find the said loans are repaid through journal entries. Therefore, the Revenue authorities are not supposed to make such additions in the assessment. Considering the factual matrix of the case as well considering 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 same. Considering our decision on the legal issue in favour of the assessee, the other grounds demand no specific adjudication. Thus, on the legal ground the assessee succeeds and rest of the grounds are dismissed as academic." 3.5. The honourable Delhi High Court in the case of CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi) (ITA Nos. 707/2014, decided on August 28, 2015) has held that completed assessments could only be interfered with by the Assessing Officer on the basis of any incriminating material unearthed during the course of the search or re....
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....ssments 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 assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer 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 not produced or not already disclosed or made known in the course of original assessment." 3.6. Similar view has been taken by the honourable Delhi High Court in a very recent judgment passed in the case of CIT v. RRJ Securities Ltd. [2016] 380 ITR 612 (Delhi) ; [2015] 62 taxmann.com 391 (Delhi) (order dated October 30, 2015). The relevant portion of the order is reproduced as under (page 636) : "The decision in SSP Aviation Ltd. v. Deputy CIT [2012] 346 ITR 177 (Delhi) cannot be understood to mean that the Assessing Officer has the jurisdiction to....
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....unal. In the petition for seeking condonation of delay for filing of cross objections, the assessee has, inter alia, explained the following reasons for explaining delay : "It is submitted that the respondent/cross objector briefed that counsel about the filing of the appeal by the Department as against the order of the learned Commissioner of Income-tax (Appeals) which was far beyond the due date for filing the cross objection. Then the counsel opined that a cross objection be filed and instructed the respondent/cross objector to do so. Soon after obtaining the professional advice from the counsel the respondent/cross objector has within reasonable time filed this cross objection before this honourable Tribunal. It is submitted that the respondent/cross objector, inadvertently, due to lack of proper professional advice on this issue, could not filed the cross objections before this honourable Tribunal well in time, i.e., on or before December 26, 2012, and by the time the respondent/ cross objector sought the counsel's advice, there arose 54 days delay in filing the cross objection before the honourable Tribunal." 5.1. The aforesaid petition is also supported with an affi....
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....e note that the facts involved in this year are identical to the facts of the assessment year 2005-06. Accordingly, following our order, the delay in filing of the cross objection is condoned, and cross objection is admitted for adjudication, and ground Nos. 4 and 5 of the cross objection of assessment year 2006-07 are allowed. Therefore, appeal of the Revenue becomes infructuous. 8. As a result, cross objection filed by the assessee is partly allowed and appeal filed by the Revenue is dismissed. Appeals in the case of Mr. Pankaj Gangar ITA No. 159/Mum/2012 (Revenue's appeal) and C. O. No. 36/Mum/2013 for assessment year 2005-06 9. In these appeals also there is a delay of 54 days in filing cross objection before the Tribunal by the assessee. The facts are identical to that of Ms.Chhaya Gangar for the assessment year 2005-06 above, thus following our order, the delay is condoned and cross objection is admitted for adjudication. 9.1. It is further noted that ground Nos. 4 and 5 of the cross objection are identical to the case of Ms. Chhaya Gangar and, therefore, these are allowed. The cross objection is treated as partly allowed. 9.2. In the Revenue's appeal, grounds N....
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....ed that the entries are relating to the payment and receipt and the balance amount shown by the appellant with Vividham Sweets and Snacks Shop. The entries of Rs. 50,000 given at page 25 of July, 2005, and page 32 of March, 2006, against which expense of Rs. 14,169 and Rs. 73,670 has been mentioned and the balance of Rs. 35,831 and minus Rs. 23,670 has been given. Similarly other entries are mentioned on various dates and the total amounts of Rs. 1,88,555 against which the expense of Rs. 1,32,135 and the balance of Rs. 56,420 has been shown. The interpretation of these entries shows that the assessee has made payment of Rs. 1,88,555 against the expenses of Rs. 1,32,135 and the balance of Rs. 56,420 due from M/s. Vividham Sweets and Snacks Shop. It is also mentioned that the seized material notings are related to wedding of the daughter of Shri Prakash Savla and the declaration has been made under section 132(4) in the hands of the partnership firm where Shri Prakash Savla and the appellant is a partner. The expenditure incurred shown on these loose papers have been offered to tax in the hands of the partnership firm and due tax have been paid on this amount. On the other hand, the ....
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....We do not find any infirmity in the order of the learned Commissioner of Income-tax (Appeals) and nothing wrong could be pointed out by the learned Commissioner of Income-tax-Depart mental representative in the detailed factual findings of the learned Commissioner of Income-tax (Appeals), and, therefore, we uphold the same. Accordingly, ground No. 4 of the Department's appeal is dismissed. 11. As a result, cross objection filed by the assessee is partly allowed and the appeal filed by the Revenue is dismissed. ITA No. 160/Mum/2012 (Revenue's appeal) and C. O. No. 37/Mum/2013 for assessment year 2006-07 12. It is noted that in this year also the facts are identical and, therefore, the cross objection is admitted for adjudication condoning the delay, following our order for the assessment year 2005-06. 12.1 Further, in consistency with our order for the assessment year 2005-06, ground Nos. 4 and 5 of the revised and concise grounds of cross objections filed by the assessee are allowed. 13. Grounds Nos. 1, 2, 3, of the Revenue's appeal are identical to grounds Nos. 1, 2 and 3 of the assessment year 2005-06, and, therefore, following our order, these grounds are dismis....
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....ain print out from accounting software were found and seized, showing that in the ledger account under the name of commission and brokerage, there was an entry of cash received of Rs. 6,00,000 on March 31, 2007, in the books of account of the assessee. The assessee submitted that this entry has already been considered in the offer of income made by the assessee for an aggregate amount of Rs. 30,00,000, and, therefore, it should be adjusted with that. Being not satisfied, the Assessing Officer made the addition. In the appeal before the learned Commissioner of Income-tax (Appeals) detailed arguments were made wherein the assessee reiterated its stand and requested for telescoping of this amount against the income offered. 18.2. In the order passed by the learned Commissioner of Income-tax (Appeals), he accepted the claim of the assessee and granted the benefit of telescoping. 18.3. Being aggrieved, the Revenue filed an appeal before the Tribunal. It has been argued by the learned Commissioner of Income-tax-Depart mental representative that there were no basis with the learned Commissioner of Income-tax (Appeals) to grant the benefit of telescoping. 18.4. We have carefully gone th....
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....disclosed expenditure under section 69C on the basis of jottings in seized material. 24. The brief facts are that during the course of assessment proceedings the Assessing Officer found that there was jotting on a document found during the course of search page, i.e., No. 16 of annexure GS4/A2. The assessee explained that he did not know Mr. Arun Bhai whose name was mentioned in the seized document, and that he had nothing to do with this document. But the Assessing Officer made addition of the same. 24.1. Being aggrieved, the assessee contested the matter before the learned Commissioner of Income-tax (Appeals) wherein the assessee made detailed submissions reiterating its stand but the learned Commissioner of Income-tax (Appeals) did not agree with the submission of the assessee on the ground that the assessee failed to produce Mr. Arunbhai before the Assessing Officer for his examination and also failed to submit any documentary evidences to explain this entry, and, accordingly, he confirmed the addition. 24.2. Before us, the learned counsel has vehemently argued that there is no evidence to show that the impugned document belongs to the asses see and it was not clear that whe....
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....ng a loan of Rs. 50,000 received in the impugned year from Mr.Dhara M. Bahuva. The assessee submitted a copy of bank pass book in support of identity and financial capacity and genuineness of the loan. The Assessing Officer was not satisfied and, therefore, addition was made. Before the learned Commissioner of Income-tax (Appeals), the assessee made detailed submissions. The Commissioner of Income-tax (Appeals) has deleted this addition by recording detailed findings which are reproduced hereunder : "I have considered the submissions of the appellant, the order of the Assessing Officer and the facts of the case carefully, it is noticed that the appellant has received loans and advances in the year under consideration. The Assessing Officer has asked to submit the confirmations of the creditors to prove the genuineness of the transactions. The confirmations and the bank pass book of the creditors was filed before the Assessing Officer but it was not accepted with the argument that the creditors were not having permanent account number because they were not Income-tax assessees. On the other hand, the authorised representative of the appellant has submitted that the loans received ....
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....6,58,750, hence, it was treated as unexplained investment under section 69B of the Income-tax Act and added back to the taxable income. 27.2. Being aggrieved, the assessee carried the matter before the learned Commissioner of Income-tax (Appeals) and filed detailed submission. The learned Commissioner of Income-tax (Appeals) was satisfied with the submissions of the assessee and, accordingly, he deleted the addition after recording the following detailed findings : "I have considered the submissions of the appellant, the order of the Assessing Officer and the facts of the case carefully, it is noticed that during the course of search jewellery of Rs. 31,29,480 was found out of which the diamond jewellery of Rs. 16,58,750 was seized. The Assessing Officer has given opportunity to the assessee to explain the source of jewellery. The appellant has submitted that as per the seized documents, the diamond jewellery of Rs. 31,50,000 was mentioned and payment of Rs. 10,00,000 each was shown as made and balance of Rs. 11,50,000 was pending. The appellant has accepted the payment of Rs. 20 lakhs and also to avoid litigation the diamond jewellery worth of Rs. 31,50,000 was declared under s....