TaxTMI 
TaxTMI 
2018 (12) TMI 403
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce the delay is condoned and appeal admitted. 4. The assessee is a company and it filed its original return of income on 03/09/2009 for the Assessment Year 2009-10 declaring total income of Rs. 14,15,796/- and on 09/09/2010 for the Assessment Year 2010-11 declaring Nil income. A search and seizure operation u/s 132 of the Act, was conducted at the business and residential premises of Rashmi Group at Kolkata and other places, on 18/02/2013. Thereafter the Assessing Officer issued notices u/s 153A dt. 08/05/2014 for the Assessment Years 2009-10 & 2011-12 and was served upon the assessee on 25/06/2014. In response to the notices, the assessee filed revised returns for both the Assessment Years declaring total loss of Rs. 14,15,796/- for the Assessment Year 2009-10 and Nil income and book profit of Rs. 83,555/- for the Assessment Year 2010-11. The Assessing Officer completed the assessments for both the Assessment Years u/s 153A r.w.s. 143(3) of the Act on 31/03/2015 determining total income of the assessee at Rs. 3,69,15,770/- for the Assessment Year 2009-10 & Rs. 2,47,28,440/- for Assessment Year 2010-11. 4.1. Aggrieved the assessee carried the matter in appeal. The ld. First Appel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessment Years 2002-03, 2005- 06 and 2006-07- whether completed assessment can be interfered with Assessing Officer while making assessment U/S 153A only on the basis of some incriminating materials unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment- Held, yes- Pursuant to search carried out in the case of assessee, a notice U/S 153A(J) was issued- in course of assessment. The Statute nowhere makes it conditional that the Department has to unearth some incriminating material to conclude some method against the assessee in events where the assessment is triggered by a notice u/s 153(1)(a) of the Act. v. That on the fact and in the circumstances of the case, the Ld. CIT(A) had erred in allowing the assessee's appeal by observing that additions made by the AO in the assessment order passed u/s 153A/143(3) are not based on any incriminating documents/papers seized during the search operation." vi. That on the fact and in the circumstances of the case, the Ld. CIT(A) had erred in not adjudicating the appeal on merit. vii. That on the fact and in the circumstances of the case, the department craves....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the course of search, and hence the additions made by the Assessing Officer in the assessment framed u/s 153A r.w.s. 143(3) of the Act, during the course of assessments which have not abated, are bad in law. He submitted that the entire addition in question was of share application money received and alleged commission paid on the same in addition to disallowance u/s 14A of the Act, for Assessment Year 2010-11 as well as for Assessment Year 2009-10. He submitted that the cash trial is not part of the seized documents and was prepared by the revenue in post search proceedings and that they do not relate to the relevant Assessment Years and that the material based on which cash trial was prepared was bank statements of disclosed accounts and hence not incriminating material. He referred to page 2 to 5 of the assessment order and submitted that factual mistakes have been made by the Assessing Officer. The factual mistakes were pointed out for both the Assessment Years. 7.1. He relied on certain case-law to submit that deposits made in the earlier year cannot be taxed in the current Assessment Year. He pointed out on facts that no cash has been deposited in these Assessment Years.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on this matter. He distinguished the judgment of the Hon'ble Kerala High Court and submitted that even otherwise, the judgment cannot be followed in view of the binding nature of the judgment of the Hon'ble Jurisdictional High Court. 8. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 8.1. We first consider the legal position as to whether, an addition can be made in an assessment u/s 153A r.w.s. 143(3) of the Act, which is not based on any incriminating material found during the course of search and seizure, when the assessment for the Assessment Year in question has not abated. In the case on hand, the assessee filed its original return of income on 03/09/2009 for the Assessment Year 2009-10 and on 09/09/2010 for the Assessment Year 2010-11. The time limit for issual of notice u/s 143(2) of the Act, was 30/09/2010 and 30/09/2011 respectively for Assessment Year 2009-10 & 2010-11. The search and seizure operation was conducted in this case on 18/02/2013. The statutory period for issual of notice u/s 143(2) of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances." PCIT-2, Kolkata Vs. Salasar Stock Broking Limited (ITAT No. 264 of 2016) dated 24.08.2016 : (Calcutta) In this case, the Honorable Jurisdictional High Court observed that the Ld. ITAT, Kolkata was of the opinion that the assessing officer had no jurisdiction u/s 153A of the I.T. Act to reopen the concluded cases when the search & seizure did not disclose any incriminating material. In taking the aforesaid view, the Ld. ITAT relied upon the judgments of Delhi High Court in the case of CIT(A) Vs. Kabul Chawla in ITA No. 707/2014 dated 28.08.2014. The Court also observed that more or less an identical view has been taken by this Bench in ITA No. 661/2008 in the case of CIT Vs. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed assessment, the additions which can be roped-in, in the assessments framed u/s.153A, would only be with regard to any incriminating material or evidence unearthed or found during the course of search. If no incriminating material has been found during the course of search, then no addition can be made in the assessment years where assessments had attained finality. The relevant observations and the ratio laid down would be discussed in the later part of this order. 15. Now coming to the ratios laid down by the Hon'ble Jurisdictional High Court, first of all, in the case of Kabul Chawala (supra), the Hon'ble Court after discussing the issue threadbare and analysing the various judgments of different High Courts laid down the following legal proposition in terms of scope of addition which can be made u/s. 153A(1) which are as under:- "37. On a conspectus of Section 153A (1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents not only by the Hon'ble Delhi High Court but also by other Hon'ble High Court like, Pr. CIT vs. Somaya Construction Pvt. Ltd. 387 ITR 529 (Guj), CIT vs. IBC Knowledge Park Pvt. Ltd. 385 ITR 346 (Kar) and CIT vs.Gurinder Singh Bawa reported in 386 ITR 483. In the latest judgment the Hon'ble Delhi High Court in Pr. CIT vs. Meeta Gutgutia, their Lordships reiterated the same principle after discussing and analyzing catena of decisions including that of Anil Kumar Bhatia (supra) and Dayawanti Gupta. The Hon'ble HighCourt observed and held as under:- "62. Subsequently, in Principal Commissioner of Income Tax-1 v. Devangi alias Rupa {supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Principal Commissioner of Income Tax v. Saumya Construction P. Ltd. {supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High Court is concerned, it has in CIT v. IBC Knowledge Park P. Ltd. {supra) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d time and again is that something should be found as a result of search which is incriminating in nature so as to implicate the assessee and acquire jurisdiction to make the addition, because for the completed assessment, or in other words, assessment which are not abated, the Assessing Officer is required to make reassessment u/s.153A which is only possible when any incriminating material has been found during the course of search." The Hon'ble Delhi High Court in the case of Pr. CIT vs. Kurule Paper Mills P. Ltd. [2016] 380 ITR 571 (Delhi) held as follows:- 1. The Revenue has filed the appeal against an order dated 14.11.2014 passed by the Income Tax Appellate Tribunal (ITAT) in 3761/Del/2011 pertaining to the Assessment Year 2002-03. The question was whether the learned CIT (Appeals) had erred in law and on the facts in deleting the addition of Rs. 89 lacs made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 ('ACT') on bogus share capital. But, the issue was whether there was any incriminating material whatsoever found during the search to justify initiation of proceedings under Section 153A of the Act. 2. The Court finds that the order of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dition can be made based on such evidence which is not confronted to the assessee. The contents of the statements are also not brought out in the assessment order. Only a general reference is made that there were certain statements recorded from various entry operators by the investigation wing. No addition can be made on such general observations. We also find that the assessee has not been given an opportunity to cross-examine any of these persons, based on whose statements, the ld. D/R claims that the additions have been made. The Hon'ble Supreme Court in the case of Kishinchand Chellaram vs. CIT, 125 ITR 713 (SC) had held that the opportunity of cross-examination must be provided to the assessee. The Jurisdictional High Court in the case of CIT Vs Eastern Commercial Enterprises (1994) 210 ITR 103 (Kol HC) held as follows:- As a matter of fact, the right to cross-examination a witness adverse to the assessee is an indispensable right and the opportunity of such cross-examination is one of the cornerstones of natural justice. 9.1. Even otherwise, it is not clear as to which of these statements were recorded during the course of search operation u/s 132 of the Act or whether th....