TaxTMI 
TaxTMI 
2019 (5) TMI 1156
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....r 2008-09 and the sole issue under challenge before us is the confirmation of disallowance of Rs. 18,78,416/- made u/s 14A of the Income Tax Act, 1961 (hereinafter called 'the Act') read with Rule 8D of the income Tax Rules, 1962( hereinafter called 'the Rules' ). 2.0 Brief facts of the case are that a search and seizure action u/s 132 of the Act was conducted in Monnet Group of cases on 19.11.2010. In this search and seizure operation, certain documents belonging to the assessee company were also found and seized. Subsequently, a statutory notice u/s 153C of the Act was issued to the assessee for assessment years 2005-06 to 2010-11. The assessee objected to invocation of section 153C which was rejected by the Assessing Officer (....
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.... the fact and in the circumstances of the case the order passed by the Ld. CIT (A) is bad in law, violative of principles of natural justice and void-abinitio. 2(a) That the Ld. CIT(A) has erred in confirming the action of the Ld. AO in invoking the provisions of Section 153C of the Income Tax Act particularly when the satisfaction note is absolutely devoid of any categorization / specification of undisclosed income with reference to the documents mentioned therein which is a legal pre-requisite for invoking provisions of section 153C of the Income Tax Act. b) That on the fact and in the circumstance of the case the Ld. CIT (A) has failed to appreciate that in the impugned assessment order framed u/s 153C of the Act the is....
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....nce suo moto made by the assessee was correct and no further interference/disallowance was called for. 4.0 In response, the Ld. C.I.T. Departmental Representative (CIT DR) vehemently argued that once material pertaining to the assessee had been seized, the Assessing Officer was within his powers to assume jurisdiction u/s 153C of the Act. The Ld. C.I.T. DR also submitted that it is not necessary that the disallowance should relate to any incriminating material found and seized during the course of search. The Ld. C.I.T. DR also placed reliance on the findings of the Ld. C.I.T. (A) in upholding the disallowance on merits and submitted that the disallowance made by the Assessing Officer was rightly upheld because the assessee had not been ....
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.... be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments 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....
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....y discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 5.1 As per Para (iv) above it has been held that though Section 153A does not say that addition should be strictly made on the basis of the 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 made without any reference or establishing any nexus with the seized material. Thus, as per this judgment, the existence of the seized material found during search is a must for making addition in those assessment years which have not abated. Although the judgment of t....