TaxTMI 
TaxTMI 
2019 (4) TMI 406
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....sment Year 2011-12 and was served upon the assessee on 08/10/2013. In response to the notice, the assessee filed revised return declaring the same income as filed in the original return. The Assessing Officer completed the assessment u/s 153A r.w.s. 143(3) of the Act on 30/03/2015 determining total income of the assessee at Rs. 78,40,440/-. 4.1. Aggrieved the assessee carried the matter in appeal. The ld. First Appellate Authority granted part relief. He relied on the decisions of the Hon'ble Calcutta High Court in the case of PCIT vs. Salasar Stock Broking Limited (ITA No.264 of 2016) dt. 24.08.2016 and the judgment in the case of CIT vs. Veerprabhu Marketing Ltd. [2016] 73 taxmann.com 149 (Calcutta) and held that, incriminating material is a prerequisite for making additions in an assessment framed u/s 153A/143(3) of the Act, wherever assessments for the respective Assessment Years have not abated. He pointed out that the Hon'ble Jurisdictional High Court has concurred with the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (2016) 380 ITR 0573 (Del). He further relied upon a number of decisions of the ITAT Kolkata Bench and deleted all the additio....
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.....s. 143(3) of the Act. Further reliance was placed on the judgment of the Hon'ble Kerala High Court in the case of E.N. Gopakumar v. Commissioner of Income-tax (Central) [2016] 75 taxmann.com 215 (Kerala) and the judgment in the case of CIT vs. St. Francis Clay Decor Tiles 385 ITR 624 (Ker) for the proposition that no incriminating material is necessary for making an addition in an assessment u/s 153A r.w.s. 143(3) of the Act. 7. The ld. Counsel for the assessee, on the other hand, opposed the contentions of the ld. D/R and argued that the issue in question is covered in favour of the assessee by a catena of judgments of the Hon'ble High Courts as well as that of the Hon'ble Supreme Court. He vehemently contended that none of the additions in question in this case was made based on any material found during 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 of donation ....
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....sessing Officer. He further argued that the copies of the alleged statements were not provided to the assessee nor any opportunity given for cross-examining these persons. He further relied on the judgment of the Hon'ble Madras High Court in the case of CIT vs S. Kader Khan Son [2008] 300 ITR 157 for the proposition that the statements recorded during the course of survey cannot be used as evidence. He relied on the order of the ld. CIT(A) and submitted that the same should be upheld in view of the binding decisions of the Hon'ble Jurisdictional High Court 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 materi....
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....r dated 18th December, 2015 by which the learned Tribunal dismissed an appeal preferred by the Revenue registered as ITA No.1775/Kol/2012 and allowed a cross-objection registered as CO-30/Kol/2013 both pertaining to the assessment year 2005- 06. The learned Tribunal was of the opinion that the Assessing Officer had no jurisdiction under Section 153A of the Income Tax Act to reopen the concluded cases when the search and seizure did not disclose any incriminating material. In taking the aforesaid view, the learned Tribunal relied upon a judgement of Delhi High Court in the case of CIT[A] vs. Kabul Chawla in ITA No.707/2014 dated 28th August, 2014. The aggrieved Revenue has come up in appeal." ....In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed." The 'A' Bench of the Delhi ITAT, recently in the case of Anurag Dalmia vs. DCIT in ITA Nos. 5395 & 5396/DEL/2017; Assessment Years: 2006-07 & 2007-08, dt. 15/02/2018, has explained the law on this issue in the following manner:- "12. We have heard the rival submissions, perused the relevant material placed on record and the finding given in the impugned order with respec....
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....ments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one 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....
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....bul Chawla (supra). In CIT v. Gurinder Singh Bawa {supra), the Bombay High Court held that: "6...once an assessment has attained finality for a particular year, i.e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under section 153A of the Act which are contrary to and/or not disclosed during the regular assessment proceedings." 63. Even this Court has in CIT v Mahesh Kumar Gupta {supra) and The Pr. Commissioner of Income Tax-9 v. Ram Avtar Verma {supra) followed the decision in Kabul Chawla (supra). The decision of this Court in Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd. {supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue's SLP on 7th December, 2015." 18. Post the judgment of Meeta Gutgutia (supra), also the same principle have been reiterated in the case of PCIT vs. Best Infrastructure (India) Pvt. Ltd. (supra), wherein the Hon'ble High Court held that during the course of search, state....
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....dence related to share capital issued was found during the course of search as is manifest from the order of the AO." Consequently, it was held that the AO was not justified in invoking Section 68 of the Act for the purposes of making additions on account of share capital. 3. As far as the above facts are concerned, there is nothing shown to the court to persuade and hold that the above factual determination is perverse. Consequently, after considering all the facts and circumstances of the case, the Court is of the opinion that no substantial question of law arises in the impugned order of the ITAT which requires examination. 4. The appeal is, accordingly, dismissed. The department had filed special leave petition before the Hon'ble Apex Court against the above judgment of the Delhi High court. (Pr CIT V KURULE PAPER MILLS P. LTD: S.L.P (C) No-34554 of 2015[ 2016] 380ITR (st) 64-Ed).. The Hon'ble Apex court dismissed the special leave petition filed by the department. The relevant Para as mentioned in the ITR is reproduced as under. "Their Lordships Madan B.Lokur and S.A.Bobde JJ dismissed the Department's special leave petition agai....
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....ded during the course of survey operation cannot be used as evidence under the Act. 10. Coming to the alleged cash trail, none of the material gathered by the Assessing Officer by way of bank account copies of various companies supposed to be part of the chain of companies was not confronted to the assessee. The alleged statements that were recorded from directors of these companies which formed this alleged chain were also not brought on record. Only a general statement has been made. There is no evidence whatsoever that cash has been routed from the assessee company to any of these chain of companies. There is no evidence that any cash was deposited by the assessee company. Moreover, there is no material whatsoever brought on record to demonstrate that the alleged cash deposit made in the bank account of a third party was from the assessee company. No opportunity to cross-examine any these parties was provided to the assessee. The bank statements based on which the cash trail was prepared are part of the disclosed documents and cannot be held as incriminating material. 10.1 The Judgment of the Hon'ble Kerala High Court in the case of E.N. Gopakumar vs. CIT (Supra) lays down....