TaxTMI 
TaxTMI 
2019 (10) TMI 998
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....riate to dispose of them by this common order. First we take quantum appeals. 2. Grounds of appeal taken by the assessee are argumentative and descriptive in nature; they are not in consonance with Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963. In the first fold of grievance, it is pleaded by the assessee that the ld.CIT(A) has erred in confirming the action of the AO in passing the assessment orders under section 153A of the Act. In other words, the grievance of the assessee is that cognizance taken under section 153A in these assessment years is illegal at the end of the AO. 3. Brief facts of the case are that search under section 132 of the Income Tax Act was carried out at the premises of the assessee on 11.10.2006. According to the AO, during the course of search certain incriminating material were found and seized. Notice under section 153A of the Act was issued on 1.10.2007 which was duly served upon the assessee. In response to the notice, the assessee has filed return of income on 24.9.2008. It is pertinent to note that the facts in this regard are common in all the years, and therefore, for the facility of reference, we take up the facts mainly from t....
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....light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to 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 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, ....
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....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 under 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, it is on the basis of some material collected by the Assessing ....
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.... the assessee. In other words, no material was found during the course of search relating to this assessment year exhibiting escapement of taxable income or availability of undisclosed income for the purpose of assessment under section 153A of the Income Tax Act. If there is no material available, and on re-appraisal of that very material addition has been made by the AO, then such assessment order is not sustainable in the eyes of law, because, the AO has no jurisdiction to invoke section 153A in view of principle laid down by the Hon'ble Delhi High Court in the case of Kabul Chawla (supra). No proceedings were pending on the date of search for this assessment. Therefore, nothing would abate for making a fresh assessment under section 153A of the Act. We have perused the comments of the AO at the time of hearing. The AO has not given any comments qua first fold of grievance shown by the assessee. His comments are related to various additions made by him with regard to unexplained income from Somnath building, agriculture income etc. Accordingly, we allow the appeal of the assessee, and quash the assessment order passed under section 153A of the Act. Since we have quashed the asses....
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....search, his accountant was made to write on a piece of paper various expenditure relating to construction activities of Somnath building whose total worked out at Rs. 80,69,186/-. He alleged that nothing was found during the course of search and an affidavit to this effect was filed. The ld.AO did not accept this affidavit of the assessee by observing that it was filed after 25 months from the date of search. The assessee is a regular assessee and engaged in the business of construction. He would not sit idle waiting for the department to take initiative and prove his guilt. He should have retracted his admission immediately after the search by appraising the higher authorities. In other words, the AO was of the view that disclosure made under section 132(4) is an admissible evidence, it could not be ignored. More so, this declaration is based on the discovery of certain notings on a piece of paper. The ld.AO made addition of Rs. 80,69,186/-. The appeal to the CIT(A) did not bring any relief. The ld.CIT(A) has concurred with the AO. The relevant finding of the ld.CIT(A) reads as under: "4.7 The appellant was never been asked to file any affidavit. The copy of affidavit fil....
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....eized material brought to his notice while recording the statement u/s 132(4) of the Act. He himself admitted the unaccounted income in the statement. If the statement was extracted under coercion or thread, what prevented the assessee to retract the statement soon after conclusion of the search. Moreover, except the allegations in the affidavit, there is no direct or circumstancial evidence brought on record by the assessee to prove that the statement was taken under coercion or threat. The evidences seized during search corroborates the genuineness of the statement given at the time of search. No iota of evidence is given by the assessee in support of retraction. This view is well supported by the decision of the Hon'ble Ahmedabad Tribunal in the case of Dy.CIT vs. Bhogilal Moolchand 96 ITD 344 (Ahd.). Thus, the statement cannot be said to be forcefully taken. 4.9 In view of the above discussion, the contention of the appellant that the appellant was forcefully made to admit an amount of Rs. 80,69,186/- as unexplained expenditure on 11.10.2006 is baseless and no cognigence can be taken for the so called affidavit filed before the Assessing Officer after 25 months of ....
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....ding of the ld.CIT(A) from para-4.7 to 4.9 and emphasised that the statement recorded in the presence of witnesses was sufficient to prove the case of the Revenue. He has not produced his accountant showing that entries are recorded at the behest of the Department under coercion. 13. We have duly considered rival contentions and gone through the record carefully. No doubt, the disclosure or admission made under section 132(4) of the Act during the course of search proceedings is an admissible evidence but not conclusive one. This presumption of admissibility of evidence is a rebuttable one, and if an assessee is able to demonstrate with the help of some material that such admission was either mistaken, untrue or based on misconception of facts, then solely on the basis of such admission no addition is required to be made. It is true that admission being declaration against an interest are good evidence, but they are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of admission, if the AO is satisfied that it was true and was voluntari....
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....the AO. If some proceedings remained open before the investigation wing, and their adjudication give rises to refund of tax or collection of tax, probably, the Revenue authorities would be justified in making such observation. Passage of time before passing of the assessment order would not legalise any illegality. If something has been inherently gone wrong, at the time of search, then during the assessment proceedings, that facts should have been ascertained by the AO. It was for the AO to call for independent witness as well as accountant of the assessee in support of the report of the investigation wing. Onus is not upon the assessee. It is the AO who has to first establish that some undisclosed expenditure was incurred by the assessee and details recorded to that were found. On the basis of simple declaration even under section 132(4) addition cannot be made. Revenue authorities have failed to carry out this inquiry, and therefore, after relying upon the decision of Hon'ble jurisdictional High Court in the case of CIT Vs. Maulikkumar K. Shah, and K.P.M. Nair Vs. ACIT, we do not have any hesitation that addition is not sustainable. We allow third ground of appeal and delete ....
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....ction 153A for passing impugned assessment order. This aspect has been considered by us in the first opening part of this order. We will deal with other issues in the light of our finding recorded in the opening part of the order. If we peruse the record in the light of our discussion made, then it would reveal that in this year during the course of search a cash of Rs. 11,25,536/- was found; out of which cash balance of Rs. 1,25,480/- was available in the books. Remaining cannot be explained, and the assessee has admitted Rs. 10 lakhs as his undisclosed income. Therefore, there was a material found during the course of search authorizing the AO to take cognizance under section 153A. Accordingly, both the grounds are rejected. 23. In ground no.3, the assessee has pleaded that the ld.CIT(A) has erred in confirming the addition of Rs. 5.00 lakhs. 24. Brief facts of the case are that FDR of Rs. 5.00 lakhs was found. The AO has directed the assessee to explain the source of Rs. 5 lakhs. The assessee has contended that this FDR belongs to M/s.Kenson Motor Pvt.Ltd. and this also appeared in the balance sheet of said company. The Revenue has rejected the explanation of the assessee ....
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....al, grievance of the assessee is that the ld.CIT(A)has erred in confirming the addition of Rs. 9,000/-. 29. Finding of the AO qua this addition of Rs. 9,000/- reads as under: "(8.0) It is also seen that, the assessee has shown rent receipt of Rs. 30,000/- from Kenson Sales Corporation. However, in spite of repeated reminders, the assessee has not furnished books of accounts like balance sheet, profit and loss a/c, capital a/c etc. Absence of books of accounts, house property income of Rs. 30,000/- is treated as unexplained cash credit u/s 68 of the IT Act and added back in the income of the assessee. Since the assessee has already shown a sum of Rs. 21,000/- (after claiming standard deduction of 30% from gross receipts), the difference of Rs. 9,000 is being added here. Penalty proceedings u/s 271(1 )(C) of the Act is initiated for concealment of income." 30. The ld.CIT(A) has confirmed the addition of Rs. 9,000/- on the ground that the assessee has not shown from which property this rental income was received. The stand of the assessee is that since this is the assessment order framed under section 153A, therefore, no addition ought to be made without supporting of a....
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.... ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits: Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, (A) Such person fails to of....
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.... the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 36. In the light of the above, let us examine the facts of present case. Perusal of the re....
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....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 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 t....