2016 (6) TMI 50

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....3A/143(3) of the Income-tax Act, 1961. 2. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. At the outset of hearing, the Learned AR pointed out that disallowance of Rs. 4,91,404 claimed on account of deduction under sec. 80IB of the Act has been wrongly sustained by the Learned CIT(Appeals) without appreciating that the proceedings initiated under sec. 153A of the Act and framing assessment in furtherance thereto making the said disallowance in absence of incriminating material found during the course of search and abatement of assessments made earlier on 15.12.2006 under sec. 143(3) of the Act and under sec. 143(3)/147....

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....f DG sets. She, however, contended that no such legal issue questioning the validity of initiation of proceedings under sec. 153A of the Act and assessment made in furtherance thereto was raised before the authorities below. 5. In rejoinder, the Learned AR submitted that it is an established proposition of law that a ground involving the legal issue going to the root of the matter and adjudication of which does not require consideration of fresh material outside the record can be raised even for the first time before the appellate authority. As an abundant precaution and to avoid technical defect if any the ground raised on the issue can be treated as an additional ground and the same may be allowed for adjudication by the ITAT, prayed t....

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.... of search on the basis of which the claimed deduction under sec. 80IB of the Act was disallowed. We thus concur with the contention of the Learned AR that in absence of incriminating material found during the course of search and abatement of assessment on the date of search, the assessment in question framed under sec. 153A/143(3) of the Act can be held as valid. This view is supported by the ratios laid down by the Hon'ble jurisdictional High Court of Delhi in its recent decision in the case of CIT vs. Kabul Chawla - [2016] - 380 ITR 573 (Delhi). The Hon'ble High Court has been pleased to summarized the legal position on the application of the provisions laid down under sec. 153A of the Act in para No. 37 of the decision, which i....

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....can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments 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 AY on the ba....