2018 (8) TMI 1132

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.... 1.1 The Ld.CIT(A) erred in holding that no notice u/s.143(2) was required to be served on the appellant for the purpose of completing the asst. u/s.153A and hence, just because the notice u/s.143(3) was not found within the time limit prescribed did not mean that the asst. order passed by the AO was null and void. 1.2 The Ld.CIT(A) failed to appreciate that issue of notice u/s.143(2) was the basic requirement for starting the asst. proceedings u/s.153A and once, the notice u/s.143(2) was not issued within the prescribed time limit, the asst. ought to have been held as null and void. 2. The Ld.CIT(A) erred in not appreciating that the asst. was barred by limitation and without jurisdiction since the asst. order was served on the appellant on 11-01-2010 which was beyond the limitation period prescribed u/s.153B and therefore, the asst. order ought to have been declared null and void. 3. The Ld.CIT(A) erred in not admitting the additional ground of appeal relating to the issue of warrant of authorization without appreciating that the issue raised was purely legal issue and since all the facts were on record, the same ought to have been admitted. 3....

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....ame are dismissed as 'not pressed'. 5. Referring to the Ground Nos. 6 and 7, Ld. AR for the assessee submitted that the same are either consequential or general, as the case may be. Accordingly, the same are dismissed as such. That leaves the Grounds Nos. 4, 4.1, 5 and 5.1 are only to be adjudicated by us. Relevant facts are narrated as follows. 6. Briefly stated relevant facts of the case for the A.Y. 2002-02 include that the assessee is a partner in M/s. K.K. Estate Enterprises, a real estate dealer. There was search and seizure action on the assessee on 18-09-2007. AO issued notice u/s.153A of the Act calling for the returns in February, 2008. Assessee filed the return of income on 24-03-2008. AO issued notice u/s.143(2) of the Act on 12-08-2009 and completed the assessment determining the assessed income at Rs. 1,35,750/- against the returned income of Rs. 74,550/-. AO made addition on account of rental income from Kondhwa Flat amounting to Rs. 42,000/-. AO also made another addition of Rs. 19,200/- on account of claim of agricultural income. The relevant discussion on these 2 accounts are given in Para Nos. 3 to 5 of the assessment order and the same are extracted below ....

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....ed in the balance sheet and financial statements of the assessee originally disclosed in the return so income filed u/s.139(1) of the Act. Further, Ld. AR submitted that this is a case of non-abated assessment and therefore, the additions can only be made which are supported by the seized material/incriminating material found during the search and seizure operations u/132 of the Act. Referring to the addition of Rs. 42,000/- Ld. AR brought our attention to the above extracted Para Nos.4 and 5 of the assessment order and submitted that the balance sheet contains the details of house property, source of information about the properties in Lonavala and Kondhwa. The said paras did not refer to any seized material whatsoever that assisted the AO to make addition on this account. Similarly the AO made addition of Rs. 19,200/- which is claimed as agricultural income by the assessee. In the assessment, AO took a different view and taxed the same as income from other sources. Therefore, Ld. AR for the assessee submitted that the AO did not have any incriminating material for the aforesaid addition too. 9. Ld. Counsel filed a written note on these issues and the same is extracted here ....

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....r has not referred to any incriminating evidence relating to this issue and therefore, the addition made is not justified in law." 10. Ld. DR for the Revenue relied on the orders of AO and the CIT(A). 11. We heard both the sides and perused the orders of the Revenue as well as the written note furnished by the Ld. AR for the assessee. Considering the undisputed position in this regard, we are of the opinion that this is a case where both the additions are made without having support of any incriminating material and therefore, they constitute the additions to be made in the regular assessment only. Regarding the regular assessment, it is a fact that the same is an unabated assessment in this case. Relevant facts include that the assessee filed the return u/s.139(1) of the Act on 22-11-2000. Return was processed u/s.143(1A) of the Act. The due date for issue of notice u/s.143(2) expired in November, 2003. Considering the above facts as well as considering the decision of Hon'ble Jurisdiction High Court in the case of CIT Vs. Deepak Kumar Agarwal vide Writ Petition No.1709/2014 and others, dated 11-09-2017 and the decision of ITAT, Pune in the case of Shri Gajendra Pawar vid....

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....that of issues in A.Y. 2002-03. We have already held that these additions made by the AO are unsustainable as they were made without the support of any incriminating material and the regular assessment is unabated one. Therefore, for the reasons mentioned by us while deciding the issues in the A.Y. 2002-03, we allow these grounds in favour of the assessee for the A.Yrs. 2003-04 to 2005-06 as well. 17. Assessee raised the ground relating to charging of interest u/s.234A, 234B and 234C in all these appeals. We dismiss the said ground in all these appeals being consequential in nature. 18. Further, there is couple of new issues raised by the assessee for the A.Yrs. 2003-04 to 2005-06 that remains to be adjudicated. The said grounds are discussed in the following paragraphs. 19. The first common issue that is raised by the assessee in the appeals for A.Yrs 2003-04 to 2005-06 is on the disallowance made by the AO u/s.40A(3) of the Act. The said ground reads as under : "6. The Ld.CIT(A) erred in confirming the disallowance made u/s.40A(3) of Rs. 2,16,485/- without appreciating that in the course of search, no incriminating evidence was found pertaining to this issue and....

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....ssments. The addition made by the AO on this issue cannot be sustained on technical grounds in the absence of any incriminating material. Thus, we direct the AO to delete the disallowance u/s.40A(3) of the Act in all these assessment years under consideration. Accordingly, the Ground No. 6 and 6.1 raised by the assessee in the appeals for A.Yrs. 2003-04 to 2005-06 stands allowed in favour of the assessee technically. 23. The second common issue that is raised by the assessee for the A.Yrs. 2003-04 and 2005-06 is on the addition of Rs. 2,20,277/- for the A.Y.2003-04 and Rs. 9,89,248/- for the A.Y. 2005-06. On this issue, the grounds raised by the assessee for A.Y. 2003-04 read as under : "7. The Ld.CIT(A) erred in confirming the addition of 2,20,277/- (4,36,762-2,16,486) by treating the gain on sale of agricultural land as business income as against the claim of the assessee that the said gain was exempt from tax and without appreciating that no such addition could be made in the asst. u/s.153A particularly because no incriminating evidence was found in the course of search pertaining to this issue. 7.1 The Ld.CIT(A) erred in holding that the gain arising on sal....