TaxTMI 
TaxTMI 
2016 (9) TMI 1072
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.... 153A were not without jurisdiction as no incriminating document was found as a result of search. 2. That, in the facts and circumstances of the case, the ld. CIT(A) erred in maintaining addition of Rs. 5,61,761/- (correct amount Rs. 4,33,473/-) towards unexplained investment in construction of residential house. I.T.(SS)A.No.49/Ind/2015 - A.Y. 2006-07: 1. That the ld. CIT(A) erred in holding that in the facts and circumstances of the case the proceeding of assessment u/s 153A were not without jurisdiction as no incriminating document was found as a result of search. 2. That, in the facts and circumstances of the case, the ld. CIT(A) erred in maintaining addition of Rs. 5,66,527/- towards unexplained investment in construction of residential house. 4. The brief facts as culled out from the proceedings of lower authorities are that the assessee Shri Rakesh Gupta is a Director of flagship companies i.e. M/s. Star Delta Private Limited and M/s. Bhopal Wires Private Limited and he is member of Guptasons group of Bhopal. The assessee has filed his regular returns of income for the assessment year 2005-06 on 25.2.2007 declaring income of Rs. 7,03,500/- and for assessment year 20....
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....cessed u/s 143(1) of the Act and no notice u/s 143(2) of the Act had been issued. Therefore, the assessment had become final and were not pending on the date of search. Therefore, there was no question of abatement of assessment, in such a case, no addition can be made unless there was some material found during the course of search. It was contended that no material was found during the course of search and, therefore, no addition could have been made legally u/s 153A of the Act in the cases where assessments were not pending. The assessee has also placed reliance on some case laws, which are discussed at para 4.3 of the appellate order. However, the ld. CIT(A) noted that during the course of search, it was found that the assessee has constructed/renovated his house in respect of which certain documents containing map of the house with details of each room, doors, windows etc. as well as some loose papers were also found and seized containing the list of certain items purchased for the house such as pages in seized documents BS-1/15 and also during the course of search itself, on the spot, valuation of the house was got done from Registered Valuer according to which investment in ....
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....e ld. Authorized Representative of the assessee contended that no material was found during the course of search showing unexplained investment shown in the construction of the house and, therefore, no addition could have been made. The ld. Authorized Representative of the assessee has also placed reliance on some of the case laws in this regard. As regards maintaining the addition of Rs. 5,61,761/- for the assessment year 2005-06 and Rs. 4,33,473/- for assessment year 2006-07, it was contended that no addition can be made solely based on valuation report of DVO. It was submitted that the entire exercise of reference to valuer and process of valuation is vitiated in law. The AO has referred the matter for determination of fair market value of the property without recording any finding and rejecting the books of the assessee. The reference was made for the purpose of Wealth Tax Act and not to determine cost of construction. The DVO has obtained comments of the assessee only on one report dated 14.03.2014, which was issued under the provisions of the Wealth Tax Act to determine the fair market value of the property on various dates. The DVO has estimated the fair market value of the ....
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....o the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate." From the above, it can be seen that the legislature has provided in clear and unambiguous language in Section 153A that in case of a person where a search is initiated u/s 132 after 31.05.2003, the AO shall assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. This is again explained in the first proviso to Section 153A which provides that 'the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such assessment years'. Thus, where there is a search, the AO has no ....
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....e of each of earlier six assessment years involved on the basis of incriminating material/documents found in the course of search. In the instant case, the ld. CIT(A) has mentioned in para 4.4 of his order that certain loose papers relating to house property under consideration showing details of map of each room, doors and windows were found and seized. Therefore, the assumption of jurisdiction by the AO u/s 153A of the Act is in accordance with law, which is also supported by the land mark decision in the case of CIT vs. Kabul Chawla, (2016) 380 ITR 0573 (Del), wherein it was held that completed assessment can be interfered with by the AO while making the assessment u/s 153A only on the basis of some incriminating material un-earthed during the course of search or requisition documents for 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. Since in the case of assessee, the renovation/construction of house was undertaken during the course of assessment year under consideration, therefore, assumption of jurisdiction u/s 153A by the AO is justified. 12. As regards t....