TaxTMI 
TaxTMI 
2017 (8) TMI 945
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.... ab initio and deserve to be quashed as such, as the same is in respect of a closed assessment which has not abated and is made not on the basis of any incriminating material unearthed during the course of search ( i.e. not on the basis of any concealed material which was either not disclosed or was intended not to be disclosed ). Rather the addition is made to the normal income already assessed/disclosed and not in respect of any undisclosed income detected based on any incriminating material seized as a result of the search but by misinterpreting the provisions of law and ignoring the real income test and subjecting the impugned amounts to double taxation. 2. That, without prejudice to the above ground of appeal in any manner whatsoever, the learned CIT (A) has erred in law in not allowing the deletion of the impugned additions of Rs. 2,35,951.00 to the salary income of the assessee on the merits of the case. 3. That without prejudice to the above grounds of appeal, on the facts and in the circumstances of the case, the learned CIT (A) is not justified in law in confirming the charge of interest u/s 234B. The appellant craves leave to add, alter, amend or vary from the g....
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.... as merit of the addition. 3.2 The Ld. CIT-A, rejected the objection of the assessee that no search was conducted on the premises of the assessee and held that the fact of search conducted on 21/01/2011 at E-1A, Maharani Bagh, New Delhi i.e residence of the assessee was evident from the assessment order for AY 2011-12. As a result of search, jewellery worth Rs. 6,65,43,710/- was found and jewellery worth Rs. 3,32,04,460/- was seized and the notice under section 153A issued in the year under consideration was in consequence of search action dated 21/01/2011. 3.3 Further, the assessee contested that as on date of search, no assessment was pending for year under consideration and no incriminating material was found in respect of the year under consideration and therefore, no addition could have been made under 153A proceedings for the year under consideration. However, the Ld. CIT-A held that if there is incriminating evidence for one assessment year covered under search assessment, the Assessing Officer has power to assess total income under section 153A in respect of all assessment years covered under search assessment, following the decision of the Hon'ble Delhi High Court in the....
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.... addition could have been made in the year under consideration. 5. The Ld. CIT(DR), on the other hand, relied on the decision of the Hon'ble Delhi High Court in the case of Anil Bhatia (supra), Filatex India Ltd. Vs. CIT-IV, [2014] 49 taxmann.com 465 (Delhi). According to the Ld. CIT(DR) incriminating material in the form of jewellery was seized during the course of search. He submitted that incriminating material would be such, which can change state of mind of the Assessing Officer and which may be intangible. According to the learned CIT(DR) benefit of pension was not disclosed prior to search and it was known subsequent to search thus, it was in the nature of incriminating material. 6. In rejoinder, the Ld. counsel referred to the order of the Ld. CIT-A and the ITAT for assessment year 2011-12 and submitted that the Ld. CIT-A deleted the addition for unexplained investment in jewellery and sustained 10% of the unexplained investment towards making charges, which has also been deleted by the Tribunal and now no addition stands towards unexplained jewellery. 7. We have heard the rival submission and perused the relevant material on record. We note that decision of the Hon'ble ....
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....sment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A 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." 8. Thus, we find that in case of completed assessments addition can only be made on the basis of some incriminating material unearthed during the course of search. 9. In the instant case, the fact that no assessment was pending has not been disputed by the Ld. CIT(DR). The only dispute is with regard to incriminating material. We find that no addition in respect of unexplained jewellery was made during the year and the addition made in respect of assessment year 2011-12 has already been deleted by the Tribunal in para-No. 8.3 of order in ITA No. 5296 and 5369/Del/2013 for assessment year 2011-12. The Ld. CIT(DR), however, contested that fa....
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.... and thus the ratio of the decision of the Kabul Chawla (supra) was not applicable in the year under consideration and thus the assessee challenged addition on merit. 14. In ground No. 1, the assessee challenged addition of Rs. 4,22,648/- for various deductions claimed by the assessee out of gross salary, on merit. 14.1 The Ld. counsel of the assessee relied on the submission made before the Ld. CIT-A and submitted that deductions made out of the gross salary were in respect of federal pension, Canton pension, Social Security charges etc. which are overriding charges and diversion at source and not application of income. He further submitted that the pension, whenever received, would be taxable and thus taxing of the pension contribution in the year under consideration would amount to double taxation. 14.2 The Ld. CIT(DR), on the other hand, relied on the order of the Ld. CIT-A. 14.3 We have heard the rival submission and perused the relevant material on record. On the issue in dispute in the year under consideration, the Ld. CIT-A has followed his finding in assessment year 2011-12. The Ld. CIT-A in assessment year 2011-12, after considering the submission of the assessee in t....
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....to the employee through regulated by the Government Law. Hence, such deduction cannot be called diversion of Income. Second deduction mentioned in the certificate is fixed cantonal tax if this deduction does not provide direct benefit to the appellant but made for the benefit of citizen at large, then it will constitute diversion of income. Similarly in the case of insurance whether it is made for the direct benefit of the employee. In view of above, I direct the Assessing Officer to examine whether cantonal tax, insurance and other deduction will directly benefit the employee if so, it is not diversion of income, if not then it is diversion of income. In case, it is diversion of income, addition should be deleted. As a result, this ground of appeal is partly allowed." 14.4 In the year under consideration, the Ld. CIT-A also considered other arguments of the assessee and held as under: "I have given the findings that if the appellant derives benefit from such statutory deduction, then the same is not diversion of income. The Ld. AR has argued for reconsideration of the decision mainly on the ground that such deduction are in voluntary, non returnable and go to foreign government....
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....ded by the Ld. CIT-A as under: "5. Ground no. 3 for all assessment years are against charging of interest u/s 234B of I.T. Act while assessing income u/s 153A. The ld. AR has argued that the appellant was on bonafide belief that such income was not liable for advance. He relied upon the decision of hon'able ITAT Delhi in the case of Haryana Warehousing Corporation Vs. DCIT(2000) 69 TTJ TM Del 859. I have perused the judgement. In the said case the fact was disallowing exemption u/s 10(29) which was allowed upto High Court in favour of assessee and the same was reversed by hon'ble Supreme Court. In that perspective, the decision was delivered. In present case, the facts are not similar as the issue of addition on account of statutory deduction has not proven to be on the basis of change of opinion. Second arguments of Ld. AR is that as per section 234B(3) interest cannot be charged in view of the decision of hon'able ITAT. Hon'able ITAT has given the verdict in view of provisions of section 234B(3) i.e. interest is chargeable from the date of regular assessment while completing the assessment u/s 153A or 147. With great respect, in my view, where the reassessment is made u/s 147 o....
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....erpreting the provisions of law and ignoring the real income test and subjecting the impugned amounts to double taxation. 2. That, without prejudice to the above ground of appeal in any manner whatsoever, the learned CIT (A) has erred in law in not allowing the deletion of the impugned additions of Rs. 3,40,931.00 to the salary income of the assessee on the merits of the case. 3. That without prejudice to the above grounds of appeal, on the facts and in the circumstances of the case, a) the learned CIT (A) has erred in law in not deleting the charge of the interest u/s 234A (mentioned as 244A) and b) is not justified in law in confirming the charge of interest u/s 234B. The appellant craves leave to add, alter, amend or vary from the grounds of appeal at or before the time of hearing. 18. The facts in brief of the case are that a search and seizure action under section 132 of the Act was carried out on 21/01/2011 at the premises of the assessee and in response to notice under section 153A of the Act issued by the Assessing Officer on 09/01/2012, the assessee filed return of income on 24/02/2012 declaring total income of Rs. 76,07,621/- including the income from sal....