TaxTMI 
TaxTMI 
2017 (11) TMI 73
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....submitted that in this case return of income was filed on 31/10/2010 and in support of the same he filed a copy of acknowledgement of return of income which is duly stamped and acknowledged on the date of 31/10/2007. He pointed out that the last date for issuance and service of notice under section 143(21) was 31/10/2008, however, no such notice under section 143(2) was issued and accordingly, the returned income stood finally assessed, which had attained finality. The search and seizure action was conducted at the business and residential premises of the assessee on 19/10/2010 and on that date assessment for assessment year 2007-08 was not pending and hence will fall within the scope of 'unabated assessment' in terms of second proviso to section 153A. Shri Rakesh Gupta further pointed out that the additions, which have been roped in, in the impugned assessment order, is firstly, income from rent which has been treated as business income by the assessee has been taxed under the head income from house property by the Assessing Officer who has treated rent amount of Rs. 1,03,750/- as income from house property; and secondly, addition of Rs. 30,69,374/- by way of ad-hoc disallowance o....
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....any incriminating material or document was found for the impugned assessment year qua the addition made, then no addition can be made over and above income originally assessed. Now it is quite settled law in the jurisdiction of Hon'ble High Court that for making any addition for the unabated assessment covered under section 153A, it is sine-qua-non that some incriminating material or documents should have been found at the time of search qua that assessment year which warrants additions while reassessing the completed assessments for those years. This proposition of law has been well settled and reiterated by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in [2016] 380 ITR 573 (Delhi) and has been reiterated in the case of Pr. CIT vs. Meeta Gutgutia reported in [2017] 152 DTR 153 (Delhi). 6. In the case of CIT vs. Kabul Chawla (supra), the Hon'ble High Court, after discussing various judgments and analysing section 153A in-extenso, have laid down the following legal proposition:- i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requirin....
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....also taken note of the judgment of their earlier judgment in the case of CIT vs. Anil Kumar Bhatia reported in [2013] 352 ITR 493 (Del) and observe that this was not the issue before the Court. Again in the case of Pr. CIT Vs. Meeta Gutgutia's (supra), their Lordships have again reiterated the same principle in a very detailed manner and have also distinguished one of their earlier judgment in the case of Smt. Dayawanti Gupta reported in 390 ITR 496. The relevant observations made by their Lordships are as under:- "56. Section 153A of the Act is titled "Assessment in case of search or requisition". It is connected to Section 132 which deals with 'search and seizure'. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power which enables the Revenue to reopen at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under Section 132 incriminating material justifying the re-opening of the assessments for six previous years is found that the invocation of Section 153 A qua each of the AYs would be justified. 57. The question....
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....ITA No. 369 of 2015 {Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section I53A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT (A), affirmed by the ITAT, deleting the addition, was not interfered with." 59. In Kabul Chawla {supra), the Court referred to the decision of the Rajasthan High Court in Jai Steel (India) v. Assn. CIT [2013] 36 taxmann.com 523/219 Taxman 223. The said part of the decision in Kabul Chawla {supra) in paras 33 and 34 reads as under: '33. The decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. A CIT {supra) involved a case where certain books of accounts and other documents that had not been produced in the course of original assessment were found in the course of search. It was held where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into cons....