2019 (5) TMI 741

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....2009-10 was filed declaring total income at Rs. 28,240/- and book profit under Section 115JB of the Act at Rs. 28,240/-. Notice dated 17.09.2013 u/s 143(2) was served upon the assessee followed by a further notice u/s 143(2) dated 02.12.2013 and 142(1) along with a questionnaire. The AO during the assessment proceeding observed that the share capital of the assessee has increased by Rs. 1,79,25,000/- (Rs. 20,00,000/- for A.Y. 2010-11). The details/evidences were called upon from the appellant with regard to the same and after considering the same the Learned AO concluded that the "share capital introduced by the assessee company in this year is its unexplained cash credit and the same is added u/s 68". The AO also additionally brought to tax the commission @ 0.5% of the amount so introduced, thus resulting into total additions as under: A.Y. Total Amount Made 2009-10 Rs. 1,39,94,625/- 2010-11 Rs. 12,06,000/- The contention of the appellant was this that both the assessments of 2009-10 and 2010-11 under appeal had attained finality on the date of search which took place on 13.10.2013, and therefore, did not "abate" within the meaning of second proviso to section 153A, and ....

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....ditions. This view in Kabul Chawla (supra) has been reiterated by Ahmedabad Bench of Tribunal in Saumy a Construction (supra), which in turn, and eventually, has also now been approved and reiterated by the Hon. Gujarat High Court. In Saumya Construction, Ahmedabad Tribunal disapproved the AO's action of making addition of Rs. 11,05,51,000/- u/s 68 as unexplained investment in "unabated" assessment being refrained u/s 153A on the ground that the AO's action of making addition u/s 68 was not based on any incriminating seized documents. Tribunal, while relying on Sanjay Agarwal 47 taxmann.com 210 (Del), observed that the AO while reframing "unabated" assessment u/s 153A, is not authorized to "get influenced" by items of income other than those based on material "unearthed during the course of search". This, view of the Hon. Tribunal is further approved authoritatively by Hon. High Court by observing that in "unabated" assessments being refrained u/s 153A, in the absence of incriminating seized material enabling the AO for the year under" reference "to" enquire/make addition, the AO is duty-bound merely to "reiterate" the concluded assessment which had attained finality befo....

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....ring the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided wider section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs. 11,05,51,000/-on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier' and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section-132A, while computing the total income of the assessee under, section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, i....

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....ot. authorized to 'interfere" except on the basis of and except having been prompted by incriminating seized documents relatable to that assessment year. It is clear that the additions as explained share capital made by the AO are not based on any seized documents. As such, as per even the AO in the assessment order, the additions; based on "post-search" enquiry on and verification of information which was already available in the pre-search return of income filed by the appellant which had attaint finality as on the date of search. It is also clear that the assessment under reference had attained finality and therefore remained unabated as on the date of search. These facts are not disputed by the AO in his report dated 21/10/2016. Thus and therefore, the Ld. AR is absolutely right in contending that the additions, de hors any incriminating seized documents, made by the Ld. AO in these unabated assessments reframed by him u/s 153A, are without requisite authority in law and are therefore not sustainable in law. In view of this, and respectfully following the Jurisdictional High Court mandate, I have no hesitation in deleting the additions a under: A.Y. Additions deleted ....