2019 (12) TMI 1110

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....als and since the first appellate authority has disposed these appeals by a common order and both these appeals were heard together, these are being disposed of by this common order for the sake of convenience and brevity. 2. Briefly stated, the facts of the case are that a search and seizure operation u/s 132 of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] was carried out at various premises of HBN Group on 20.11.2009, which included premises of the assessee also. Statutory notice was issued and served upon the assessee and pursuant to the said notice, the assessee filed its return of income declaring total income of Rs. 84,540/- for Assessment Year 2005-06 and Rs. 25,680/- for Assessment Year 200....

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....section 153A of the Act. 6. The contention of the assessee did not find any favour with the ld. CIT(A). The ld. CIT(A) was of the firm belief that neither during the assessment proceedings nor during the appellate proceedings, the assessee has explained the source of cash deposits in the bank account and, accordingly, confirmed the assessment. 7. Before us, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. It is the say of the ld. counsel for the assessee that the issues are squarely covered in favour of the assessee and against the Revenue by the decision of the Hon'ble High Court of Delhi in the case of Kabul Chawla 380 ITR 573. 8. Per contra, the ld. DR supported the findings of t....

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....ly apply wherein the Hon'ble High Court of Delhi held as under: "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the 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. ....

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....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 thecourse 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." 11. This view was further fortified by the decision of the Hon'ble Supreme Court in the case of Meeta Gutgutia 96 Taxmann.com 468 wherein it was held as under: "57. The question whether unearthing o....

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....terial. Obviously an assessment has to be made under this Section only on the basis of seized material." 69. What weighed with the Court in the above decision was the "habitual concealing of income and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions of franchisee commission. 70. The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal positio....