TaxTMI 
TaxTMI 
2018 (12) TMI 1266
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....s Saluja Construction Co. Ltd. in Appeal No. 28/14-15/1605 for AY 2006-07. The grounds of appeal in these three appeals filed by Revenue are as under: ITA No. 2045/Del/2016:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing the A.O to delete the addition made u/s 68 of the I T. Act on account of unexplained cash credits. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts by relying on the decision in the case of Sh. Kabul Chawla by the jurisdictional High Court which has not been accepted by the department and SLP against the same has been filed before Hon'ble Supreme Court. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words 'total income' as used in Section 153A would only mean undisclosed income discovered from seized / incriminating material. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in adopting a restrictive and pedantic interpretation of the scope of assessment u/s 153A of the Act. 5. On the facts and in....
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.... 'Incriminating document' is not defined anywhere in the Act and is open to various interpretations. 6. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words 'total income' as used in section 153A would only mean income unearthed during search when the decision of the Hon'ble High Court of Karnataka in the case of Canara Housing Development Company Vs. DCIT dated 09-08-2014 has held that total income includes income unearthed during search and any other income. 7. That the order of the CIT(A) is perverse, erroneous and is not tenable on facts and in law. 8. That the grounds of appeal are without prejudice to each other. 9. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal. ITA No. 2050/Del/2016:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing the A.O. to delete the addition made u/s 68 of the I.T. Act on account of unexplained cash credits. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in la....
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....herein an addition of Rs. 24,74,32,560 was made U/s 68 of I.T. Act towards unexplained cash credits. Another separate Assessment Order was passed on 14.03.2014 in the case of Mr. Ankush Saluja U/s 153C, read with Section 153A of I.T. Act wherein an addition of Rs. 18,81,42,080 was made U/s 68 of I.T. Act towards unexplained cash credits. The three Assessees filed separate appeals before the Ld. CIT(A). Vide separate appellate Orders as mentioned earlier (The impugned Orders) the Ld. CIT(A) deleted the aforesaid additions in the cases of all the three Assessees; on the ground that these additions were not based on any incriminating document found during search U/s 132 of I.T. Act. The Ld. CIT(A) placed reliance on Order of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla 61 Taxmann.com 412 (Delhi) / 380 ITR 0573 (Del) and another Order of Hon'ble Delhi High Court in the case of CIT vs. Jakson Engineers Ltd. 2015-T10L- 2789-HC-DEL-IT. The three appeals filed by Revenue are against the aforesaid impugned Orders of the Ld. CIT(A). (3) During appellate proceedings in ITAT the Ld. Authorized Representatives for the Assessee filed two separate Paper Books. The contents of the....
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....nding before the Hon'ble High Court is no ground to take a contrary decision against the decision of the jurisdictional Delhi High Court. We may also refer to judgment of Hon'ble Gujrat High Court in the case of Vijay Bhai N. Chandrani vs. ACIT 333 ITR 436 in which it was held as under.] "Held, Allowing the petition, that admittedly, three loose papers recovered during the course of search proceedings did not belong to the petitioner. It was not the case of the Revenue that three documents were in hand-writing of the petitioner. In the circumstances, when the condition precedent for issuance of notice was not fulfilled, action taken under section 153C of the Act stood vitiated." In the present case, even no incriminating document was found during the course of search so as to make the addition under section' 68 of the I.T. Act on account of unexplained cash credit. The Ld. CIT(A) in view of these findings did not decide the issue on merit. The above discussion clearly show that department has no case tor interference The Ld. D.R. has not pointed out any infirmity in the order of the Ld. CIT(A). In the result, appeal of the department stands dismissed." (5) Th....
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....inating materials found in the course of search U/s 132 of I.T. Act. Both sides agree that there was no pending assessment in the case of any of the three concerned Assessees on the date of search U/s 132 of I.T. Act i.e. on 12.01.2011. From perusal of records, we find that in the case of Saluja Construction Co. Ltd. earlier return U/s 139(1) of I.T. Act on 31.07.2006 pursuant to which Assessment Order U/s 143(3) of I.T. Act on 28.12.2007. No assessment proceeding was pending on date of search i.e. 12.01.2011. Therefore, the aforesaid Assessment Order dated 14.03.2014, was not in pursuance of an abated Assessment within the meaning of 2nd Proviso to Section 153A(1) of I.T. Act. In the case of Smt. Archana Saluja earlier return U/s 139(1) of I.T. Act on 31.07.2006 pursuant to which Assessment Order U/s 143(3) of I.T. Act on 28.12.2007. No assessment proceeding was pending on date of search i.e. 12.01.2011. Therefore, the aforesaid Assessment Order dated 14.03.2014, was not in pursuance of an abated assessment within the meaning of 2nd Proviso to Section 153A(1) of I.T. Act. In the case of Ankush Saluja, earlier return U/s 139(1) of I.T. Act was filed on 31.07.2006, however, this was....
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....dditions can be made in assessments u/s 153A of I.T. Act even for those assessment years in respect of which no incriminating material was unearthed during search u/s 132 of I.T. Act even if no assessments or reassessments are pending for those assessment year(s) on the date of search u/s 132 of I.T. Act; provided some incriminating material in the case of the assessee for any assessment year(s) { referred to in clause (b) of section 153A(1) of Income Tax Act} is unearthed as a result of search u/s 132 of I.T. Act whether by way of statement u/s 132(4) of I. T. Act or by way of undisclosed investment, or by way of incriminating documents, or in any other manner?" 4. I have gone through the relevant material on record and considered the rival submissions in so far as understanding the difference of opinion between the two Members is concerned. In my considered view, the controversy on this issue gets properly reflected through following question: - "Whether on the facts and in the circumstances of the case and as per law, the ld. CIT(A) was justified in upholding the additions made by the AO for the years of completed assessments, which were not based on any incriminating mate....
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....rious expenses was not verifiable. In the absence of such details furnished before the ld. CIT(A) as well as the Tribunal, he approved the action of the authorities below. He, however, did not approve the view point of the Revenue in not allowing set off of loss for the assessment year 2003-04 against the income for the assessment year 2006-07 and for this limited purpose, remitted the matter to the file of Assessing Officer for fresh adjudication. The ld. JM did not concur with the view canvassed by the ld. AM in not allowing the loss for the assessment years 2004-05 and 2005-06. He opined that since no incriminating material was found during the course of search in respect of expenses claimed as deduction and, hence, the loss so determined was eligible for carry forward to be set off against the income for assessment year 2006-07. That is how, the matter has been placed before me for adjudication as third Member. 6. I have heard both the sides and perused the relevant material on record. The short controversy is whether the loss declared by the assessee in its returns u/s 153A of the Act for the assessment years 2004-05 and 2005-06 at Rs. 23,05,880/- and Rs. 23,59,200/- respec....
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....essee filed returns for these years originally u/s 139 at the material time. Whereas the return for the assessment year 2004-05 was processed u/s 143(1) of the Act, assessments were completed u/s 143(3) in respect of the assessment years 2005-06 and 2006-07. The assessee's Profit & Loss Account for the assessment year 2004-05 shows incurring of expenses at Rs. 95.21 lac against which loss of Rs. 24.30 lac was computed and claimed in the return of income. The return of the assessee was processed u/s 143(1) determining loss at the declared figure. Profit & Loss Account of the assessee for the assessment year 2005-06 shows incurring of expenses at Rs. 1.31 crore and the assessee filed return at a loss of Rs. 23,59,200/-. After making some disallowance, the Assessing Officer completed assessment u/s 143(3) on 30.11.2007 at a loss of Rs. 18.17 lac. In so far as the assessment year 2006-07 is concerned, the assessee filed return and the assessment was completed u/s 143(3) on 02.12.2008 determining Nil income, but charging tax u/s 115JB on book profit of Rs. 10,90,440/-. Thus, it is evident that the assessments for the assessment years 2004-05 to 2006-07 stood completed on the date of sea....
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....ther notice u/s 143(2) is issued and the same cannot be issued because of the time limit setting in, the Intimation sent to the assessee u/s 143(1) is also treated as a completed assessment for this purpose. 10. Au contraire, the assessment years having non-completed or pending assessments mean the years for which the assessments were pending on the date of search which are abated in terms of the express provisions of the second proviso to section 153A. This will also embrace the years in respect of which the time limit for issuing notice u/s 143(2) is still available with the AO as on the date of search. 11. Adverting to the extant factual matrix, it is seen that the assessment years under consideration fall in the category of 'completed assessments' and not the 'pending assessments' abating on the date of search. Both the ld. Members have considered the judgment of the Hon'ble jurisdictional High Court in the case of Kabul Chawla (supra). The facts of that case are that a search was carried out u/s 132 on 15.11.2007 on BPTP Ltd., a leading real estate developer operating all over India and some of its group companies including the premises of the assessee, who owned and....
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.... assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed 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....
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....90 lac as against the declared income of Rs. 2.42 lac. The CIT (A) reduced the gross profit rate to be applied at 12%. Some additions were sustained and others were deleted. The Tribunal rejected the plea of the assessee that since no material was recovered during the course of search, finalized assessments for the periods covered by the block years could not be reopened. The assessee relied on the judgment in the case of Kabul Chawla (supra) and argued that since no incriminating material was found, no additions could be made in respect of the completed assessments. The Hon'ble High Court dismissed the appeals on the ground that the additions were not baseless as these were based on the inferences drawn by the Assessing Officer. It further held that if the element of guess work has some reasonable nexus with the statement recorded and documents seized, then, the additions can be sustained. 14. It is, thus, seen that whereas the judgment in Kabul Chawla (supra) clearly lays down that in the absence of any incriminating material found during the course of search, no fresh addition can be made in respect of completed assessments, the judgment in the case of Smt. Dayawanti (sup....
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....termined by the AO in the original assessment order passed u/s 143(3) on 30.11.2007 for the assessment year 2005-06 was Rs. 18,17,685/-. In the fresh assessments u/s 153A, the Assessing Officer was authorized to repeat the originally assessed income (loss) plus fresh additions, if any, based on the incriminating material found at the time of search. Admittedly, no incriminating material was found in respect of the assessment years under consideration. There is no reference whatsoever to any incriminating material found during the course of search casting shadow of doubt on the genuineness of such expenses. Since these expenses were claimed as deduction in the original returns and the Assessing Officer accepted the loss so declared except for making some modification for the assessment year 2005- 06, the AO was supposed to restrict his exercise of completing assessments u/s 153A only to the amount of income/loss determined originally. It was not open to him to venture to re-examine the details in respect of expenses in assessment proceedings u/s 153A read with section 143(3) of the Act for the patent reason that, admittedly, no incriminating material in respect of such expenses was ....
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....nd Dayawanti (supra), the facts and circumstances of the instant case are fully covered by the ratio in the case of Kabul Chawla (supra), which view has been reiterated by the Hon'ble Delhi High Court in a more recent decision in Principal CIT vs. Meeta Gutgutia (2017) 395 ITR 526 (Del). In view of the foregoing discussion, I agree with the view canvassed by the ld. JM in holding that the amount of determined loss for the assessment years 2004-05 and 2005-06 be allowed to be carried forward for set off against the income for the assessment year 2006-07. The question proposed is, therefore, answered in negative by holding that the ld. CIT(A) was not justified in upholding the additions made by the AO for the years of completed assessments, which were not based on any incriminating material found during the course of search relating to such years and consequently denying the benefit of carry forward and set off of the resultant loss in subsequent year." (9) In the appeals before us, Ld. CIT (DR) failed to establish that the additions made in the case of Assessees were based on any incriminating material found in the course of search U/s 132 of I.T. Act. On perusal of the Assess....