TaxTMI 
TaxTMI 
2018 (1) TMI 1038
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....stone, making of burnt lime, trading in lime products and quarrying of lime stone etc., and has filed the original return of income on 31.3.2006 admitting total income of Rs. 9,89,730/-. A search & seizure operation u/s 132 of the Income Tax Act, 1961 (hereinafter called as 'the Act') was conducted on 21.1.2011 in the case of the assessee and during the course of search, the assessee had offered the additional income of Rs. 3.00 crores for various assessment years. 2.1. The Assessing Officer (A.O.) has issued the notice dated 4.1.2012 u/s 153A of the Act and the assessee has filed the return of income on 31.3.2012 in response to the said notice admitting total income of Rs. 14,89,729/- including Rs. 5,00,000/- of additional income offered during the course of search. The A.O. has passed the assessment order making an addition of Rs. 23,90,000/- and Rs. 62,83,906/- respectively u/s 68 of the Act as unexplained cash credit and unexplained gift. Regarding the cash deposits the A.O. observed that the amount of Rs. 23,90,000/- was deposited by the assessee in the savings bank A/c No.01 /0000714 in Andhra Bank for which the assessee failed to explain the source, thus the A.O. ha....
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....f Rs. 6,07,459/- in respect of Andhra bank, Piduguralla and the the return of income for the A.Y.2005-06 was filed on 31.3.2006. The time limit for issue of notice u/s 143(2) of the Act got expired. The Ld.A.R. argued that since the assessee had disclosed the bank account in the balance sheet and in the return of income, and any addition in respect of completed assessments required to be made only on the basis of the incriminating material. The Ld.AR further argued that the addition of Rs. 23,90,000/- was not made on the basis of any incriminating material but made on the basis of the information furnished by the assessee in the regular return of income and the books of accounts. Accordingly, argued that the addition made by the A.O. required to be deleted. With respect to the gifts of Rs. 62,83,906/- the Ld.AR submitted that the addition was also from capital account, which was disclosed in the regular return of income. He further submitted that the assessee has received the gifts of Rs. 62,83,906/- for which the details were furnished by the assessee. The gifts were received from B. Satya Kumar, son of assessee in US dollars. Since the assessee had already filed the return of inc....
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....O. is right in making additions without any seized materials in respect of assessment years for which the assessment proceedings have been concluded as on the date of search. The Ld. A.R. for the assessee, submitted that the issue has been already considered by the coordinate bench of Visakhapatnam ITAT in the case of Sri Hari Prasad Bhararia Vs. DCIT in ITA Nos.435 to 441/Vizag/2014, wherein it has been observed that the A.O. has no jurisdiction to make additions in the absence of any seized materials in the assessments made u/s 143(3) r.w.s. 153A of the Act, for the assessment years which are concluded and no proceedings are pending as on the date of search. The relevant portion of the order is extracted below: 12. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that there was a search action u/s 132 of the Act. Consequent to the search, the assessee case was centralized and accordingly, notice u/s 153A of the Act was issued requiring assessee to file return for 6 assessment years immediately preceding the assessment year in which search is conducted. The assessee f....
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....dditions u/s 153A of the Act, for the assessments which are not pending as on the date of search and also the time limit for issue of notice u/s 143(2) of the Act has been expired. The relevant portion of the order is extracted below: 19. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that there was a search action u/s 132 of the Act. During the course of search, incriminating documents found reveals that the assessee has inflated labour charges for the assessment years 2008-09 & 2009-10. Based on the documents found during search, the assessee has accepted that he has inflated 10% labour charges and which is common in this line of business. Consequent to search action u/s 132 of the Act, the assessee case has been centralized and accordingly fresh assessment proceedings have been initiated by issuing notice u/s 153A/153C of the Act for the six assessment years immediately preceding the assessment year in which search was conducted. The assessee has filed revised returns in response to notice u/s 153A of the Act and admitted the additional income disclosed during the....
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....urther contended that where assessments are not pending as on the date of search and time limit for issue of notices u/s 143(2) of the Act has been expired, irrespective of the fact that those assessments have been completed u/s 143(1) or 143(3) of the Act, then the A.O. has no power to reassess the income of those completed assessment years. 21. We find force in the arguments of the assessee for the reason that the issue no longer res integra, as the issue has been already decided by the ITAT, special bench and held that where the assessments are not pending as on the date of search, the A.O. losses jurisdiction u/s 153A of the Act to reassess the income of those completed assessments. Though the provisions of section 153A of the Act does not specify abated and completed assessments, the natural meaning assigned to it should be given to interpret the provisions in such a way that which shall not cause undue hardship to the tax payers. The provisions of section 153A of the Act explained the procedure of assessments, abated assessments and the manner in which the assessment should be framed, which was further supported by circular no.7 of 2003 issued by the CBDT. When the law has ....
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....d 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." 24. The assessee relied upon, A.P. High Court decision in the case of CIT Vs. M/s. AMR India Ltd. in ITTA No.354 of 2014 dated 12.6.2014. The Hon'ble High Court held that the A.O. has no jurisdiction to re-agitate the assessments which were already completed and subsiding. The relevant portion is extracted below: "We have heard Sri J.V. Prasad, learned counsel for the appellant, and gone through the impugned judgement and order of the learned Tribunal. It appears that the learned Tribunal found on fact that after completion of assessment proceedings and after reaching finality thereon, the Assessing Officer tried to reagitate the assessments. According to us, the learned Tribunal has rightly held that the Assessing Officer has no jurisdiction to reagitate the assessments which were already completed and subsisting. We therefore do not find any element of law to be decided in this appeal. Hence, the appeal is dismissed. There will be no order as to costs." 25. The assessee has relied upon the coordinate bench decision....
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....gs are not pending, is that the undisclosed income should be ascertained only on the basis of materials found during the course of search. If no incriminating material showing any undisclosed income was found in the case of concluded proceedings, then the question of making any addition does not arise. in that case, the assessing officer should complete the assessment of those years by determining the very same total income that was assessed in the earlier proceeding. 24. In view of the above, we are unable to agree with the contentions of Ld Standing Counsel that the assessing officer would get unfettered powers in the case of unabated assessments, once they were reopened us 153A of the Act. In our view, in the case of unabated assessments, the total income should be determined by the assessing officer by combining the income already assessed/disclosed in the return of income and the undisclosed income, if any, found during the course of search proceeding. Even otherwise, it is settled proposition of law that the assessee is entitled to take support of the decision in his favour, when two contradictory views have been expressed by the High Courts. In the instant case the Hon'ble....
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....ee any reason to interfere with the order of CIT(A). Hence, we inclined to uphold CIT(A) order and direct the A.O. to delete the additions made towards deemed dividend for the assessment year 2005-06 to 2009-10. 12. In this case, search was taken place on 24.7.2008. As on the date of search, the assessments for the assessment years 2004-05 & 2005-06 are already concluded and there is no pending proceeding for those assessment years. The time limit for issue of notice u/s 143(2) of the Act, for the assessment years 2004-05 & 2005-06 has been expired. The A.O. made additions towards deemed dividend u/s 2(22)(e) of the Act without any incriminating materials and also based on the books of accounts and financial statements, which were already part of regular return of income filed by the assessee u/s 139(1) of the Act, for those assessment years. Therefore, considering the facts and circumstances of the case and also respectfully following the decision of coordinate bench of ITAT, Visakhapatnam in the case of Sri Hari Prasad Bhararia Vs. DCIT (supra), we are of the view that the A.O. has no jurisdiction to make additions in respect of concluded assessments in the absence of any incri....
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....ssessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed by absence of issue of intimation under section 143(1) of the Act or by not issuing notice u/s.143(2) of the Act within the time limit laid down in the proviso to Sec.143(2) of the Act, results in an assessment proceedings and where such assessment proceedings are completed prior to the date of search then they do not abate in terms of the Second Proviso to section 153A(1) of the Act. The decision of the ITAT Kolkata Bench rendered in the case of Shri Bishwanath Garodia (supra) on identical facts of the case as that of the Assessee in the present case, clearly supports our conclusions as above. 26. In the light of the discussion above, our conclusion is that in the present case, the issue dealt with by the AO in the assessment order u/s.153A of the Act, could not and ought not to have been examined by the AO in the assessment proceedings u/s.153A of the Act as the said issue stood concluded with the assessee's return of income being accepted prior to the date of search and no notice having ....
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....hough the assessing officer has made its all efforts to get the transactions verified, but he could not bring anything on record to doubt the same. Under these circumstances, we are of the view that the genuineness of the gift received by the appellant from his son should not be doubted. We accordingly set aside the order of the CIT(A) and delete the addition made in this regard." 9.1. Since the issue is on identical facts, respectfully following the view taken by this tribunal the addition made in respect of the gifts is deleted on merits also. 10. In the result, the appeal filed by the assessee in ITA No.261/Vizag/2017 is allowed and the cross appeal filed by the revenue in ITA No.354/Vizag/2017 is dismissed. ITA 262 & 349/Vizag/2017 (A.Y. 2007-08): 11. During the course of assessment u/s 153A, the A.O. found that the assessee has withdrawn a sum of Rs. 2,25,90,000/- for purchase of agricultural lands. Since the purchase of land was not materialized the assessee has re-deposited a sum of Rs. 1,72,05,000/- and the balance amount of Rs. 53,85,000/- was utilized by the assessee but not reflected in his returns. The A.O. made the addition of Rs. 1,72,05,000/- for not explaining t....