TaxTMI 
TaxTMI 
2017 (9) TMI 459
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....sallowance sustained deserves to be deleted. 3. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in sustaining an addition of Rs. 2,60,713/- by considering the same as unexplained investment in the construction of house arbitrarily. 3.1 That the Ld. CIT(A) has further erred in ignoring the facts by not allowing the credit of Rs. 3,33,800/- being the amount withdrawn by appellant's wife for construction purpose particularly when the Ld. CIT(A) has himself admitted the said fact while observing at page 22 Par 3.2.2 of his order as under:- " ..... Assessee is unable to justify the rent payment of Rs. 72,000/- to his father when he and his wife have incurred entire expenditure towards the cost of construction of the house. ..." Therefore, the cost of construction declared by the assessee is based on actual expenditure incurred and duly accounted for in the books of account of the assessee thus the addition sustained deserves to be deleted. 4. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal." 2. Briefly stated the facts are that the, a sear....
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....t bringing on record any corroborative material unearthed as a result of search or collected during the course of assessment proceedings to support the allegation of unexplained investment in the construction of house. It is also a matter of fact that ld. CIT(A) while dismissing this ground of appeal, nowhere had alleged that the additions were made on the basis of loose papers or documents found/ seized as a result of search and simply rejected the plea of the assessee for the sole reason that the SLP has been accepted by the hon'ble apex court against the decision of hon'ble Delhi high court delivered in the case of Kabul Chawla 281 CTR 45. It is humbly submitted that, the impugned assessment order of Ld. AO suffers from serious error in-as-much-as, it is not based on a single loose paper found / seized as the result of search conducted in the case of assessee; on the other hand and contrary to the law, this order is clearly in the nature of regular assessment order and therefore, could not have been made under the garb of section 153A particularly when the returned income was accepted by department and the case of assessee was not picked up for scrutiny and thus assessment fo....
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....efore us is answered as under : (a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately ; (b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. CIT vs Kabul Chawla Delhi High reported in 234 Taxman 300(Delhi) vide ITA Nos. 707/2014 and others, dated 28.8.2015, wherein the Hon'ble Delhi High Court has reiterated the above settled legal proposition that since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed....................... Summary of legal propositions and the conclusion of judgement of Hon'ble High Court is as follows: Summary of the legal position: 37. On a conspectus of Section 153A(1) o....
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....he 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. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue." Rajasthan High Court in the case of Jai Steel (India) vs ACIT reported in 259 CTR (Raj) 281 "....The requirement of assessment or reassessment under the said section has to be read in the context of sections 132 or 132A, inasmuch as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. ....... ....... Para 26 of the Judgme....
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....r section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search.............there was no assessment pending.............in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search." This Hon'ble Bench in the case of Damodar Das Modi has also expressed the same view. In view of above, it is requested before your honour that since no incriminating documents were found as a result of search and no assessment was abated, addition made by AO is not justified and deserves to be deleted." 4.2 On the contrary, Ld. Departmental Representatives opposed the submissions as made in the written submissions and the oral arguments in support thereof as made by the Ld. Counsel for the assessee. 4.3 We have heard the rival contentions, perused the material available on record. There is no dispute with regard to the fact that no incriminating material is found on basis that the assessment is framed u/s 153A of the Act. It is also not in dispute that no proceedings were pending on the date of search and the time limit for taking the case for scrutiny assessment has al....
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....ted 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 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. (ii) In the case of ACIT v. PACL India Ltd. New Delhi, the Hon'ble ITAT, F. Bench, Delhi has considered the various decisions of different judicial authorities and in para 10 of the order has held that: "Therefore, the question arises whether AO can make any addition in the reassessment proceedings u/s 153(A) after making inquiries which are not suggested by any document or asset seized during the search. It depends on the nature of addi....
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....ssessed 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. 9.1 Further, regarding the non-abated nature of the assessments relating to the AYs 2007-08, 2008-09 and 2009-10, it is a decided issued that the time limit for the issue of the notice u/s 143 (2) in the said AYs since expired on 30.09.2008 and they constitute non-abated assessments and therefore, the assessments for those AYs have to be reassessed under the special provisions in the light of the incriminating material seized during the search. The above said ratio was also followed by the Tribunal in the case of Gurinder Singh Bawa vs. CIT (supra) wherein it was held that.......................where the assessment had been completed under summary scheme under section 143 (1) and time limit for issue of notice under section 143 (2) had expired on the date of search................there was ....