TaxTMI 
TaxTMI 
2019 (11) TMI 997
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....ppeals of the assessee (for the assessment years 2009-2010 to 2012-2013 i.e. IT(SS)A Nos.34 to 37/Ran/2019. For the sake of brevity and convenience, we shall take into consideration the facts and grounds mentioned in IT(SS)A No.34/Ran/2019 (AY: 2009-2010) for deciding the above appeals and decision of which will apply mutatis mutandis to the other appeals also. Grounds of appeal raised by the assessee (Shri Kamal Deo Sharma) for A.Y.2009-2010 in IT(SS)A No.34/Ran/2019 :- 1. For that search operation was only carried out at Transit Office of the appellant in Orissa whereas the appellant resides in Una, Himachal Pradesh since last 15 years. No document or paper relating to appellant was found, as such, no search took place. Initiation of proceedings u/s 153 A, therefore, is ab-initio void and illegal. 2. For that no notice u/s 143(2) was received by the appellant at his place of residence or registered office or at the place of search. As such, the order of assessment passed is ab-initio void and illegal since no notice U/s 143(2) was served. 3. For that the appellant has been regularly assessed to tax U/s 143(1) or 143(3). During the course of sea....
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....n of Rs. 52,000/- being made as deemed rental income. There was no vacant residential property for which deemed income from rent can be estimated. Complete detail of the properties held by the appellant was furnished before the lower authorities. As such, the addition made in absence of any incriminating material is fit to be deleted. 8. For that ld. CIT(A) was not justified in confirming the addition of Rs. 98,88,221/- made by ld AO by disallowing expenses. 50% of the expenses claimed under breaking, sizing, picking, shorting & stacking expenses were disallowed on the ground that bills and vouchers were not produced. Further general expenses and salary to staff claimed in full was disallowed being said as bogus. Disallowance of expenses is arbitrary, illegal and uncalled for. Appellant had disclosed reasonable profit. As such, no disallowance of expenses is called for. There was no incriminating material found during the course of search operation to suggest the same. As such, the ad-hoc disallowance made by Ld AO and confirmed by Ld. CIT(A) is fit to be deleted. 9. For that following the decision of Hon'ble Jharkhand High Court the interest U/s 234A....
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....3,80,54,250 -do- 43,69,10,380 16,15,85,199 2015-16 93,62,216 143(3) 22,43,61,280 8,69,67,269 5. Aggrieved from the assessment order, the assessee appealed before the CIT(A), however, the CIT(A) after considering the findings of AO and submissions of the assessee, dismissed the appeals of the assessee for the respective years under consideration. 6. Aggrieved from the order of CIT(A), the assessee is in further appeals before the Income Tax Appellate Tribunal. 7. Ld. AR before us submitted that during the search proceeding a panchnama was drawn, copy of which is annexed in paper book -1 at Page No. 108 to 113. It is seen vide the said panchnama that at page 112 certain inventories/bank account details of the assessee and his group was recorded and in page 113 certain documents/books of account such as purchase bills, sales bills, and raising bills of this group was seized. Vide the said panchnama in page 110 of the paper book-1 it is said during the course of search, statement of Sri Sanjay Pati was recorded who looks after the entire work of the assessee and his group. Ld. AR further as a matter of fact, contended that during the course of assess....
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....he course of assessment there is absolutely no reference to any seized document which would suggest the same. However, in the course of remand proceeding, Ld. AO has made a reference to some seized document from third person which is marked as CMB-24 and CMB-1 wherein it is stated that the assessee had some transactions with Core Minerals. Even in the course of remand proceeding Ld. AO has failed to correlate a single entry from the seized document which could suggest the addition made in the hands of the sundry creditors. It would be pertinent to mention that no opportunity was allowed to the assessee during the course of remand proceedings, rather remand report was prepared at the back of the assessee. It was only when Ld. CIT(A) forwarded the copy of the assessee for counter comments that we made our submissions. We would like to mention that the said seized documents has only been referred for a simple reason that the name of the assessee appeared on the same. As mentioned above there was absolutely no reference to any seized document during the course of assessment and even in the course of remand proceeding Ld. AO in particular has failed to correlate the seized docu....
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....t income wherein excise duty, customs etc is also include, whereas in the profit and loss account, all these heads are booked separately and the turnover amount only includes the net turnover. As such, the difference if any should have been reconciled. In any view of the case as stated above, the addition being made is completely unjustified, illegal and fit to be deleted, since, not being made on basis of any seized material. 4. Rental income Rs. 52,500/-: Ld. AO made addition of Rs. 52,500/- being deemed rental income. During the course of assessment proceeding Ld. AO failed to even specifically mention for which property said addition has been made. However, in the course of remand proceeding Ld AO states that the addition is being made for the house property in Joda, Orissa stating that the assessee failed to establish that the said property was used as transit office. We would like to mention that the search upon the assessee was only conducted on the said premises which can be clearly seen from the copy of panchnama which is annexed in paper book No. 1 at page No. 108 onwards. This itself is sufficient to show an establishment that the said property was used as trans....
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....to any incriminating material. He aso invited our attention the tax evasion petition and which has been referred by the AO. He also submitted that the remand report was called from the AO and the AO has referred some documents which has been mentioned in the remand report. The CIT(A) has also not enhanced the income of the assessee considering any incriminating material found and referred by the AO in the assessment order. Ld. AR also submitted that these all exercise must be done by the AO while framing the assessment order. Accordingly, ld AR of the assessee submitted that the additions made by the AO on various heads and confirmed by the CIT(A) may kindly be deleted and appeals of the assessee may kindly be allowed. 9. On the other hand, ld. DR relied on the orders of authorities below and submitted that with regard to ground No.1 this forum has no right to hear the case. In respect of ground No.2, ld. DR submitted that the ld. CIT(A) has rightly discussed this issue and the order of CIT(A) should not be disturbed as this issue has not been objected by the assessee before the Assessing Officer. With regard to ground No.3, ld. DR submitted that the proceedings u/s 132 is suffi....
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....utional bench. In the present case, we also noted that this issue has not been raised before the AO. However, when raised before the CIT(A), the CIT(A) on receiving remand report from the AO confirmed that the search was duly conducted in the premises of the assessee. So far as our considered opinion, the Tribunal has no power to hear the validity of search. In the totality of facts and circumstances of the case, we decline to accept the ground No.1 taken by the assessee regarding validity of search proceedings. Therefore, this ground of appeal is dismissed. 11. With regard to ground No.2, the assessee has contested that the assessee has not received notice u/s.143(2) of the Act at his registered office or place of search. The CIT(A) while dealing with the issue has dismissed the ground of assessee after observing as under :- 5.1 Appellate finding and decision : The appellant through the above ground contended that he has not received Statutory notice u/s. 143(2) either at his registered office or place of search and therefore the AO has no jurisdiction to pass order u/s. 153A/143(3) of the Act. However, it is evident from assessment order vide para 4, the AO c....
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....t shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was - (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of su assessment or reassessment." 5.4 In the instant case of the appellant, the AR of the appellant Sri Deepak CA appeared from time to time and cooperated in the assessment proceedings. No objection as to issue and service of notice u/s. 143(2) was ted before the AO till the completion of assessment. Therefore the appellant can't raise the validity of issue of notice u/s. 143(2) during appellate proceeding. Hence the contention of the appellant is rejected even on this count also. In this regard reliance is placed on the decision of the Hon'ble Punjab & Haryana High Court in the case of ....
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....passed the impugned order of assessment and that the said order was set aside by the Commissioner (Appeals) for the said irregularity in the service of notice to the assessee and the Tribunal ought not to have interfered with the order of the Commissioner (Appeals). HELD that the alleged irregularity in the service of notice as pointed out by the assessee virtually faded into insignificance insasmuch as the assessee was represented by her own auditor, who filed the return on behalf of the assessee. That apart, neither in the course of the hearing before the Assessing Officer or before the Commissioner (Appeals), the assessee raised any grievance as regards the appearance made by the auditor on her behalf, on the footing that there was no proper service of notice in relation to the assessment proceedings initiated originally by the assessing authority, viz., the Joint Commissioner. Thus, it was rightly held by the Tribunal, that the alleged irregularity was practically waived by the assessee which could not be found fault with inasmuch as, at no point of time till the final order was passed by the Commissioner (Appeals), the assessee made any grievance as ....
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....the assessment year 2003-04 since they were inserted with effect from 1-4-2008 and were accordingly applicable only from the assessment year 2008-09. In this view of section 292BB, the Tribunal held that despite the fact that the assessee participated in the assessment proceedings, it could still object to the validity of the assessment order. Accordingly, the Tribunal set aside the impugned assessment order. On revenue's appeal HELD The only question that arises for consideration is whether the notice issued on 30-12-2004 under section 143(2) was validly served upon the assessee-firm on 31-12-2004 as claimed by the Assessing Officer. One proceeds on the assumption that the notice was not served on either of the two partners of the assessee-firm and that it was served on some person who was not specifically authorized to receive notice. Even so, one is not persuaded to hold that there was no valid service of the notice upon the assessee-firm. It should be remembered that the basic purpose of issuing a notice under section 143(2) is to give an opportunity to the assessee, who has submitted his return, to support the same by adducing the necessary evidence,....
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....essing Officer on behalf of the assessee. This argument is an afterthought because the initial argument was that the appearance made on behalf of the assessee on 5-1-2005 was not pursuant to the notice issued on 30-12-2004. Perhaps realizing the difficulty that this argument is likely to cause to the assessee, the argument was modified later to the effect that there was no evidence to show that the case was fixed for hearing on 5-1-2005 or that any one appeared before the Assessing Officer on that date on behalf of assessee. The Commissioner (Appeals) has noted in his order that in the remand report the Assessing Officer has stated that in the notice dated 30-12-2004, the case was fixed for hearing on 5-1-2005. This statement constitutes sufficient evidence to refute the contention advanced on behalf of the assessee. As regards the other part of the contention that there was no evidence of any one appearing before the Assessing Officer on behalf of the assessee on 5-1-2005, one may refer to the grounds taken by the revenue in the appeal. In one ground it has been asserted that pursuant to the notice issued on 30-12-2004 the counsel for the assessee appeared before....
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...., including those of this Court to the effect that if there is no valid service of the notice under section 143(2) of the Act, the assessment order is null and void. The question is whether there was a valid service of the notice upon the assessee. Considering the facts of the case and the conduct of the assessee, it is opined that there has been a valid service of the notice upon the assessee. He has also participated in the proceedings. In the decided cases to which attention was drawn, the discussion has proceeded on the basis that there was no service of the notice upon the assessee and therefore the assessment order was null and void. Where the facts show that there has been effective service of the notice upon the assessee pursuant to which he has also participated in the proceedings for assessment of his income, there is nothing in law to compel the Court to hold that despite notice that his case is posted for hearing before the Assessing Officer, the assessment order passed after giving him full opportunity of being heard would still be invalid. That will be a travesty of justice. [Para 14] In the instant case, authorized representative appeared before the....
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.... by the very person for whose benefit it is intended and should not be permitted to become a tool to ward off the liability to pay the tax. [Para 17] In view of the foregoing discussion, it is held that the Tribunal was not right in quashing the assessment proceedings. The assessee was properly served with the notice under section 143(2) and within the statutory period prescribed by the proviso to the said sub-section. Since, the Tribunal has not examined the order of the Commissioner (Appeals) giving relief to the assessee in respect of various additions made in the assessment because of the view it took on the question of validity of the assessment, the issue was to be remitted to the Tribunal for a fresh disposal. [Para 20] 5.7 Reliance is also placed on the decision of Hon'ble Delhi High Court in the case of CIT-II, New Delhi Vs. Madhsy Films Pvt Ltd reported in 301 ITR 69 wherein the Hon'ble court held that, where notice issued to assessee under section 143(2) had been dispatched by speed post at its address as per its return and same had not been received back, it could be presumed that it had reached assessee, particularly when no affidavit had been filed b....
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....r section 143 (2) must be issued and omission to do so cannot be a procedural irregularity and the same is not curable. It is to be noted that the above said judgment was in the context of Section 158BC. Clause (b) of Section 158BC expressly provides that "the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of Section 142, sub sections (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply. This is not the position under section 153A. The law laid down in Hotel Blue Moon, is thus not applicable to the facts of the present case. 10. The decision of Lunar Diamond Ltd. (supra), Vardhman Estates (supra) and Bhan Testiles (supra) relied upon by learned counsel for the assessee related to the requirement of service of notice upon the assessee within a prescribed time and thus not applicable to the present case. The case of Pawan Gupta (supra) related to mandatory issue of notice under Section 143(2) of the Act in the case of regular assessment as also on block assessment. This being not a case of assessment based on search under Section 153A, the same is not appli....
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....section 147 and 148 and thus cannot be said to be the decision laying down the law regarding mandatory issue of notice under Section 143(2). 13. The words "so far as may be" in clause (a) of sub section (1) of Section 153A could not be interpreted that the issue of notice under Section 143(2) was mandatory in case of assessment under Section 153A. The use of the words, "so far as may be" cannot be stretched to the extent of mandatory issue of notice under Section 143(2). As is noted, a specific notice was required to be issued under Clause (a) of sub-section (1) of Section 153A calling upon the persons searched or requisitioned to file return. That being so, no further notice under Section 143(2) could be contemplated for assessment under Section 153A. 14. No specific notice was required under section 143(2) of the Act when the notice in the present case as required under Section 153A (1) (a) of the Act was already given. In addition, the two questionnaires issued to the assessee were sufficient so as to give notice to the assessee, asking him to attend the office of the AO in person or through a representative duly authorized in writing or produce or cause to be ....
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....for the assessment years under consideration i.e. AYs. 2009-2010 to 2012-2013, that assessment for these years are pending before the AO. On further perusal of assessment order at page No.3 we noticed that the submissions of the assessee has been incorporated in which it has been stated that the assessment has been completed u/s.143(3) of the Act, which has not been controverted by the revenue authorities. Therefore, these assessment years (AYs. 2009-2010 to 2012-2013) shall be unabated. In case of unabated assessment for the last four years, addition could be made only on the basis of any incriminating material found during the search. It is the case of the assessee that additions/disallowances could not be made in the assessment framed u/s.153A of the Act de horse reference to any incriminating material found in the course of search in this regard. The return of income was filed by the assessee u/s.139 of the Act, which was processed u/s.143(1)(a) of the Act. Even in page 4 of the assessment order in second para, the AO has observed as under :- "Further, this is to state that finding of incriminating document is not a necessity to complete assessment u/s.153A under the I....
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....d above. We find that the additions made by the AO are beyond the scope of section 153A of the Income Tax Act, 1961, because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noticed that as on the date of search i.e. 17.8.2011, no assessment proceedings were pending for the year under consideration and the AO was not justified in disturbing the concluded assessment without there being any incriminating material being found in search. In fact, in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone the question of any incriminating material for the year under appeal. Perusal of the assessment orders framed u/s. 153A r.w.s. 143(3) dated 30.3.2014 would reveal that the addition made in respect of share capital and premium does not pertain to any incriminating material found during the course of search. It is only for the reason of making enquiries after the conduct of search and during the course of assessment proceedings carried out in pursuance to section 1....
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....that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an ITA Nos. 707, 709 and 713 of 2014 of 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 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....
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....ase also, as admittedly no incriminating material relating to these assessment years or as a matter of fact for any of the assessment years were found during the course of search and accordingly, we set aside the orders of both the authorities below and held that when no incriminating material has been found during the course of search then, no addition can be made while framing the assessment under section 153A of the Act. Thus, the grounds raised by the assessee for the assessment year 2010-2011 are allowed. 16. In the instant case, on perusal of the assessment order, it was noticed that the AO has not disallowed any specific amount of expenses on account of any incriminating materials found at the time of search. It is pertinent to note that the assessee had filed the return of income on the basis of audited trading profit and loss account and balance sheet. The AO has made addition only on the basis of tax evasion petition filed by somebody else. Copy of the tax evasion petition is placed on record at page Nos.102 to 107. 17. It is pertinent to mention here that completed assessments can be interfered with by the Assessing Officer while making the assessment under sect....
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....ation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : [Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made [and for the relevant assessment year or years]:] [Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the inco....
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....:- "8. We have carefully considered the rival submissions. In order to appreciate the controversy, it is pertinent to observe that Section 153A of the Act postulates an assessment in case of search or requisition under section 132 or under section 132A of the Act respectively. The said section envisages that the Assessing Officer shall assess or reassess the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. The second proviso to section 153A(1) of the Act also prescribes that assessment or re-assessment, if any, relating to any assessment year falling within the period of six years referred to in sub-section(1) of section 153A of the Act, which is pending on the date of initiation of search or making of requisition, as the case may be, shall abate. Thus, in so far as the pending assessments are concerned, the competence of the Assessing Officer to make the original assessment converges with the assessment to be made under section 153A of the Act, i.e. only one assessment shall be made for such assessment years, based on the findings of the search as well as any other material existin....
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....3A(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 places. 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 afresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search take 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 153A 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....
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....000/- out of expenditure on gifts has been made and the relevant discussion is contained in para-9 of the assessment order. The discussion shows that the Assessing Officer was not satisfied with the justification for incurrence of expenditure and out of the total expenditure of Rs. 30,00,000/- on gifts made, he disallowed an amount of Rs. 28,00,000/-. Lastly, the Assessing Officer disallowed the interest expenditure of Rs. 10,79,724/- as per the discussion contained in para-8 of the assessment order. The only reason advanced is the failure of the assessee is to prove that the corresponding borrowings were made for the purposes of business. The respective discussion made by the Assessing Officer with respect to each of the additions does not reflect reference to any incriminating material or any other information, which was unearthed in the course of search, so as to justify the additions. Even at the time of hearing before us, there is no reference to any incriminating material, much less any material found during the course of search in order to justify the additions made in the impugned assessment. Thus, on facts, it has to be concluded that the additions made to the returned inc....
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....at additions/disallowances have been made without reference to any specific incriminating material/document found as a result of search and seizure action under s.132 of the Act and is based on re-appreciation of facts unconnected to search. 6.2. We also note that the income-tax return for the relevant assessment years were filed prior to the search in the normal course suo motu incorporating the items of income/expenditure which are subject matter of considerations in the assessment framed under s.153A of the Act. The returns for various assessment orders in question so filed in ordinary course were accepted under s.143(1) of the Act and/or assessed under s.143(3) of the Act and as such no assessment was eventually pending on the date of initiation of search which may get abated in consequence of search. Accordingly, we are of the view that various additions/disallowances made by the AO are clearly beyond the scope of authority vested under s.153A of the Act owing to absence of any incriminating material or evidence deducted as a result of search. No reference of such incriminating material, if any, is found in any of the assessment orders for the purposes of mak....
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....y incriminating material found during the course of search which could be the foundation of these additions. There is not even a whisper of any incriminating material having been found and relied upon by the Department relating to these additions on account of perceived benefits under section 2(24)(iv) of the Act. There are a plethora of decisions in which the hon'ble High Courts have held that there can be no valid assessment under section 153A/153C of the Act in the absence of any incriminating material. We find that the reliance of the learned authorised representative on the judgment of the hon'ble Delhi High Court in the case of Mahesh Kumar Gupta (supra) is well placed and squarely covers on the issue. In this case, the Income-tax Appellate Tribunal had concluded, based upon the material available, that the search and seizure operations had not yielded any fresh material warranting addition under section 153A of the Act and, therefore, could not clothe the Commissioner of Income-tax (Appeals) with the authority to add the amount on the basis of a fresh appraisal of the existing material that formed part of the original assessment. The hon'ble Delhi High Court adju....
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....ITR 573 of the hon'ble Delhi High Court, we hold that proceedings under section 153A were against the scheme of the Act in case of all the assessees. We also hold that the learned Commissioner of Income-tax (Appeals) was not justified in upholding the validity of the proceedings under section 153A. We are of the considered opinion that it was not open for the Assessing Officer to assume jurisdiction under section 153A de hors any incriminating material. Accordingly, we quash the proceedings under section 153A in case of all the five assessees and accordingly allow the cross-objections of all the five assessees. 20. Hon'ble Bombay High Court in the case of Pr. CIT Vs. Jignesh P. Shah [2018] 99 taxmann.com 111 has held as under :- 6. The aggrieved assessee approached the Tribunal. After considering the rival submissions, the Tribunal answered the legal issue in favour of the assessee. While answering it, in para 8, the scheme of the law was discussed. Then, the principle which was enunciated by the judgment of this Court rendered in the case of CIT v. Murli Agro Products Ltd. [2014] 49 taxmann.com 172 was applied. That judgment held that, once the assessment ....
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....The issue before us is, whether in case of assessments framed under section 153A of the Act, addition could be made in the absence of any incriminating material in those years where no assessment proceedings were pending and assessment had been made u/s 143(1)/143(3) of the Act. 16. We are in complete agreement with the contention of the Ld. AR that the issue is no longer res integra in view of various decisions of the High Courts holding that completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A 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. 17. We find, that the issue first came up for consideration before the High Court of Bombay in the case of Murli Agro Products Ltd. (supra), wherein on the issue of exercise of revisionary powers by the Commissioner of Income Tax u/s 263 of the Act, on the order passed by the Assessing Officer under section 153A, it was contended ....
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....ld only reopen the completed assessments and include therein undisclosed income. The High Court went on to hold that such determination would be similar to orders passed in any re-assessment where the total income determined in the original assessment order and income that escaped assessment are clubbed together and assessed as total income. 19. The Bombay High Court in the case of Continental Warehousing (supra) upheld the interpretation of the section by the Division Bench of the same Court in the case of Murli Agro (supra) and held that finalized assessments cannot be touched by resorting to the provision of section 153A and addition was to be made only on the basis of material unearthed during search, since 'search' and 'requisition' are the crucial words appearing in the substantive provision and proviso and they would throw light on the issue of applicability of the provision. The Court upheld the understanding of the legal provision of section 153A by the Special Bench in the I.T.A.T. in this case and further held that the Delhi High Court had in the case of Anil Kumar Bhatia also reached to the same conclusion. It also referred to the judgm....
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....' 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. viii. Completed assessments can be interfered with by the AO while making the assessment under section 153A 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." 21. The Delhi High Court further reiterated the proposition laid down in Kabul Chawla (supra) in the case of CIT v. RRJ Securities, [2015] 62 taxmann.com 391/[2016] 380 ITR 612 (Delhi) and Pr. CIT v. Lata Jain [2017] 81 taxmann.com 83/[2016] 384 ITR 543 (Delhi). 22. On going through the above judgments, we find that the reason for upholding the proposition that addition u/s 153A, in case of ea....
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....e as they are not pending on the date of initiation of search or making of requisition. 23. We may add that that the requirement of the section is limited to opening or reopening of the cases for the purpose of making assessment or reassessment of the total income of preceding six assessment years prior to the year of search. It does not contain any provision regarding the concept of making assessment of undisclosed income as was there in the earlier Block assessment regime under chapter XIVB. It does not specifically contain any provision regarding the nature of addition which can be made under this section. The section has provided, for the removal of doubts, by way of insertion of Explanation at the end of the section that save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to assessment made under this section. This implies that nature of assessment or reassessment made under this section shall be governed by the normal provisions of the Act. In case it is an assessment made for the first time, all provisions of assessment which are applicable to assessments made u/s 143(3) shall apply and in case it i....
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....ddition under section 153A of the Act is to be restricted to the extent of incriminating material found/undisclosed income" (term used by the learned D.R.) there would be no difference between the procedures prescribed under the Block assessment regime prescribed in chapter XIV and the current search assessment proceedings under section 153A and the very purpose of introducing the new procedure to do away with controversies relating to undisclosed income, would be defeated. We find no merit in this contention of the learned D.R. also since, the restriction of addition under section 153A of the Act to the extent of incriminating material found, is to be made only in the case of completed assessments or re-assessments, which do not abate under section 153A of the Act. There is therefore no similarity between the assessment procedures prescribed under Block assessment regime and the current procedures u/s 153A/B/C/D of the Act. Moreover, by prescribing one assessment for each of the six years, covered under search, the Legislature has done away with the requirement of making assessment only of undisclosed income prescribed in the earlier block assessment requirement, and thus doing aw....
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....iminating material found during the search determined and added to the already assessed income and thus total income computed. Thus, restricting the addition made to the extent of incriminating material would not mean, that total income is not determined. 32. As for the reliance placed by the learned D.R. on the decisions against the proposition,we agree that there are divergent views of the High Courts on this issue,but as stated above we uphold the view favouring the assessee in view of the apex court decision in case of Vegetable Products Ltd. (supra). Further we may add that the Hon"ble Delhi High Court ,in its decision rendered in the case of Kabul Chawla (supra), has dealt and distinguished most of these decisions primarily by finding that those decisions dealt with the fact situation where material had been unearthed during search and therefore could not apply in situations where no material was found during search. 33. The Ld. DR further contented that the statement of Sh. Kishan Kumar Goyal which was recorded during the course of search conducted on the Modern Group, constituted incriminating material. As per the Ld. DR, in the statement, Sh. Kishan Kumar....
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.... Any statement recorded during the course of search cannot on a standalone basis without reference to any other material discovered during search and seizure operation would empower the Assessing Officer to make the addition. The words "evidence found as a result of search" would not take within its sweep statement recorded during search and seizure operations. Therefore, the Revenue's stand that the addition u/s 153A can be made in respect of share capital on account of statement of Shri Tarun Goyal and Shri Anu Aggarwal cannot be accepted." 36. In view of the above the stand of the Revenue that the statement of Sh. Kishan Kumar Goyal constituted incriminating material for the purpose of making disallowance of interest on housing loan u/s 153A cannot be accepted. 37. In view of the above we hold that in the absence of any incriminating material found during the course of search and the assessment proceedings having not abated at the time of search, the assessing officer has no jurisdiction to make the addition u/s 153A of the Act. 38. This ground of appeal of the assessee is therefore allowed. The additions made in the order u/s 153A/143(3) are accor....
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....aterial but we are unable to see any observations of description regarding the same in the said remand report, explaining or substantiating that the so-called incriminating material was related or belonging to the assessee. From the said remand report or orders of the authorities below, it is also not clear or discernible that in which manner it can be tagged or levelled as incriminating material belonged or related to the assessee. In the Income Tax Act, the "Assessing Officer has been defined as per Section 2(7A) of the Act, which reads as under:- [(7A) "Assessing Officer" means the Assistant Commissioner [or Deputy Commissioner] [or Assistant Director] [or Deputy Director] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the [Additional Commissioner or] [Additional Director or] [Joint Commissioner or Joint Director] who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act ;] ....
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...., the order of assessment passed is ab-initio void and illegal since no notice U/s 143(2) was served. 3. For that the appellant has been regularly assessed to tax U/s 143(1) or 143(3). During the course of search no document whatsoever was found relating to the appellant, as such, Ld. A.O. had no authority to disturb the income originally assessed. The addition made by Ld. A.O. making an assessment u/s 153A is ab-initio void and illegal. Additions were made of the various amounts mentioned in the audited Profit and Loss A/c and Balance Sheet which stands accepted in the regular assessment, as such, in light of the various decisions and judicious pronouncements additions made is fit to be deleted. 4. For that Ld. C1T(A) was not justified in confirming the addition of Rs. 20,58,79,432/- made U/s 2(22)(e) against the credit balance of M/s Rajat Minerals and M/s KDS Contractors Pvt Ltd. The said amount includes opening balance, salary, TDS and transaction in regular course of business, as such, no addition is called for U/s 2(22)(e). The amount stands disclosed in books of account which were accepted in regular course of assessment, as such, the addition made in cours....
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.... following the decision of Hon'ble Jharkhand High Court the interest U/s 234A and 234B should only be charged on the returned income and not on the assessed income. 10. For that any other grounds in detail shall be argued at the time of hearing. 25. In addition to the written submissions filed by the assessee, which is placed on record and also incorporated by us somewhere in the foregoing paragraphs, ld. AR, during the course of hearing before us, submitted that the assessment framed in the present case is abated. The AO has issued show cause notice to the assessee on 21.11.2016. Thereafter the AO proceeded to frame assessment on 28.11.2016 only on the basis of TEP filed by somebody else on 21.11.2016, without providing any reasonable opportunity of being heard to the assessee. Ld. AR also submitted that it is not just and fair case that once the date of hearing has been fixed on 28.11.2016 and on the same date the order has also been passed in all the group cases. Ld. AR further submitted that when he reached office on 29.11.2016, he came to know that the order was passed on 28.11.2016. Hence, the AO asked the assessee that there is no room for incorporat....
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....purposes. 28. Since, the issues involved in IT(SS)A Nos.39 & 40/Ran/2019 for the assessment years 2014-2015 & 2015-2016 are similar and identical to the grounds raised in IT(SS)A No.38/Ran/2019 for the assessment year 20013-2014, wherein we have remitted the matter back to the file of AO for de novo assessment, therefore, our observations made in the above appeal of the assessee for A.Y.2013-2014 shall apply mutatis mutandis to these appeals of the assessee for A.Y.2014-2015 & 2015- 2016, respectively. Accordingly, IT(SS)A Nos.39&40/Ran/2019 are allowed for statistical purposes. 29. Thus, appeals in case of Shri Kamal Deo Sharma in IT(SS)A Nos.34 to 37/Ran/2019 are allowed partly and IT(SS)A Nos.38 to 40/Ran/2019 are allowed for statistical purposes. IT(SS)A Nos.27 to 33/Ran/2019 (AY: 2009-2010 to 2015-2016)(Assessee-Smt. Tripta Sharma) 30. First we shall take up appeals of the assessee for the assessment years 2009-2010 to 2012-2013 i.e. IT(SS)A Nos.27 to 30/Ran/2019. 31. Ground Nos. 1 & 2 raised in appeals for A.Y.2009-2010 to 2012-2013 are similar to the grounds No.1 & 2 decided by us in the case of assessee-Shri Kamal Deo Sharma in IT(SS)A No.34/Ran/2019. Accordi....