TaxTMI 
TaxTMI 
2019 (5) TMI 1595
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....f search and seizure which is extracted for ready reference:- S.I No Premises/Name Assets found & Value in Rupees Assets seized and value in Rupees 1, Duplex No. 2A, Vivine Valley Lake Land Country Club Campus Post: Munshidanga Dist:- Howrah - 711 403 (W.B.) Cash Jewellery Others Cash Jewellery Others Rs. 1,17,650/- Rs. 3,17,604/- --NIL-- Rs. 1,17,650/- Rs. 3,17,604/ ---NIL-- 2.1. A notice u/s 153A of the Act was issue to the assessee on 15/06/2010. The assessee objected, to the issue to this notice u/s 153A of the Act on the ground that as no search was conducted against the HUF and hence, no notice u/s 153A of the Act, can be issued to the HUF. We note that this notice was given addressed to "Jugal Kajaria". Following the objection made by the assessee on 21/12/2011, the Assessing Officer states that he dropped the proceedings u/s 153A of the Act ad issued a notice u/s 153C of the Act on the same date, requiring the assessee to file a return of income on 26/12/2011. 2.1.1. During the course of search, no books of account were found at the residential premises of the searched party i.e., Jugal Kajaria (individual). This fact is evident from the r....
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....ssessee, ground against non-recording of satisfaction in the file of the searched person prior to issue of notice u/s 153C of the Act and also that the additions were bad in law as no incriminating material was found or seized during the course of search as the assessments have abated. The ld. CIT(A), called for a remand report. Thereafter he quashed the assessment holding as follows:- a) That the CIT(A), does not have the power to examine the validity of the search. b) That he has no powers to decide on the validity of the orders passed u/s 127(2) of the Act, transferring jurisdiction of the assessee to the Central Circle- 1, Ranchi and thereafter to the DCIT Central Circle-25, Kolkata. c) That the mistake in the spelling of the name of the assessee is a curable mistake in view of the provisions u/s 292 B of the Act. d) That the proceedings u/s 153A of the Act, initiated by the Assessing Officer were not proceeded with and hence there is no illegality in initiating of proceedings u/s 153C of the Act. e) That even when no incriminating material was found during the course of search proceedings notice can be issued u/s 153A or under section 153C of the Act, as held by the ....
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.... the Act were legal when no incriminating documents were found during the course of search u/s 132 of the Act and no proceedings were pending on the date of search for the Assessment Year under appeal. 4) That the Ld. CIT(A) erred in not adjudicating the grounds of appeal of the assessee against the disallowance of Rs. 74,69,406 under section 40(a)(ia) of the Income tax Act, 1961 on account of Hire Charges paid for Hiring of Earth Moving Equipments actually used by other parties on the ground that the Assessee failed to deduct Tax at Source u/s 194 I of the Income Tax Act, 1961 when the assessee was not responsible to deduct such tax at source. 5) That the Ld. CIT(A) erred in not adjudicating the grounds of appeal of the assessee against ad hoc disallowance of Rs. 11 ,81 ,770 out of Hire Charges on the alleged ground that the Assessee failed to submit details of such Hire Charges although the original assessment was completed under sec. 143(1) of the Income Tax Act, 1961 by the Income Tax Officer, Ward 43(2), Kolkata and neither any proceedings were pending on the date of search nor any incriminating documents were found. 6) That the Ld. CIT(A) erred in not adjudicating the g....
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....n the case of the searched person. He relied on the CBDT circular no. 24/2015 dt. 31/12/2015, which explained the law on the issue of recording satisfaction by the assessing officer u/s 158BB and 153C of the Act. He relied on a number of case law in support of his contentions. We would deal with these case-law as and when necessary. 6. 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:- 7. The assessee has raised this contention that notice u/s 153C of the Act, was issued to the assessee without recording satisfaction during the assessment proceedings or thereafter of the searched party i.e., Jugal Kajaria (individual). It is well settled that the power to issue notice u/s 153C of the Act, arises only after recording a satisfaction in the assessment proceedings or thereafter in the case of the searched party and handing over the material seized, to the Assessing Officer assessing the other person. This is clear from the mandate of CBDT circular number 24/2015 dt. 31/12/2015. The Honourable Supreme Court in the case of ....
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....irms the claim made by the appellant. That being so, it stands established that the satisfaction for issue of notice u/s 153C in this case was recorded in the file of the appellant and not in the file of the person searched i.e., Sri Jugal Kajaria Individual, as is required by law." 8.1. Thus, we uphold the finding of fact by the ld. CIT(A) that satisfaction was never recorded by the assessing officer in the case of the searched person Shri Jugal Kajaria (individual). We find that the revenue could not contradict the factual findings of the ld. CIT(A). In view of the above discussion we uphold the finding of the ld. CIT(A) and dismiss both these appeals of the revenue. 9. We now take up the cross objections filed by the assessee. 10. The ld. Counsel for the assessee, did not press Ground Nos. 1 & 2. Hence they are dismissed as not pressed. 11. On Ground No. 3, the ld. Counsel for the assessee, relied on a number of case law for the proposition that no addition/disallowance can be made in an assessment made u/s 153C r.w.s. 143(3) of the Act, in the absence of any incriminating material being found during the course of search. The undisputed fact is that there was no incriminatin....
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....h respect to legal issue raised vide ground no.5 by the assessee that the additions made in this year are beyond the scope of assessment u/s.153A, as no incriminating material was found during the course of search for the impugned Assessment Year; and the assessment had attained finality and was not abated in terms of 2nd Proviso to Section 153A. As stated above, the original return of income was filed in July, 2006 and said return was duly accepted and processed u/s. 143(1) vide intimation dated 25.05.2007. Since no notice u/s. 143(2) was issued thereafter or any other proceedings have been commenced to disturb said return of income, accordingly, it had attained finality much prior to the date of search which was on 20.01.2012. Hence in terms of 2nd Proviso to Section 153A the assessment for the Assessment Year 2006-07 was not pending and accordingly, has to be reckoned as unabated assessment. Under the jurisdiction of Hon'ble Delhi High Court, the law is well settled that in case of unabated 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 cour....
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.... 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 any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." This judgment of the Hon'ble Delhi High Court has been followed in several judgments 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. 38....