AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 507
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.... (1) Whether in the facts and in the circumstances of the case, the Ld. CIT CA) erred in law by deleting the additions holding that these additions have not been made on the basis of incriminating materials or documents found during Search & seizure action u/s 132 of the IT Act. (2) Whether on the facts and in the circumstances of the case the Ld. CIT CA) erred in law in interpreting section 153A of the IT Act. (3) Whether in the facts and in the circumstances of the case the Ld. CIT CA) erred in law by allowing the appeal of the assessee in not appreciating the Circular No. 7 of2003 dated: 05/09/2003 issued by the CBDT, New Delhi. (4) Whether in the facts and in the circumstances of the case the Ld. err CA) erred in law by not appreciating the fact that there is no precondition for initiation as well as assessment/reassessment u/s 153A of the I'I' Act that documents pertaining to each of the assessment year falling under provisions of section 153A/l53C should be found. 4. Against the appeals filed by the Revenue assessee has also filed Cross Objections for all the three Assessment Years raising following grounds of appeal; C.O. No.3....
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....ssue on merits with respect to the addition of Rs. 53,425/- and Rs.l,03,500/- made by the AO in the respondent's income by disallowing 50 of the expenditure actually incurred and claimed by the respondent on account of 'Legal Expenses and Salary Expenses' respectively for deriving income from MCX transactions merely on guess work, surmises and conjectures. That, the cross objector further craves leave to add, alter and/or amend Ground of Cross-objections, as and when considered necessary. C.O. No.36/Ind/2016 (Assessment Year 2006-07) 1.That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in law in not admitting the additional ground of appeal raised by the respondent before the ld. CIT(A) inasmuch that the impugned Assessment Order passed by the learned AO was barred by the time limit prescribed under . 153 B(1 )( a) of the Income Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2011 and consequently, the Assessment Order Was statutorily required to be passed uptill 31-03-2013 whereas such Assessmen....
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.... facts and in law, in not deciding the issue on merits with respect to the addition of Rs. 3,55,995/- made by the AO in e respondent's income on account of alleged unexplained investment in Plot No. R-8, Shreeji Velly, Gram Bicholi Mardana, Indore, by invoking provisions, of Section 69B of the Income-Tax Act, 1961, on extraneous considerations, without giving proper opportunity of being heard and without considering the material fact that the entire investment was made by the respondent out of his explained sources only. 8. That, the cross objector further craves leave to add, alter and/or amend Ground of Cross-objections, as and when considered necessary. C.O. No.37/Ind/2016 (Assessment Year 2009-10) 1.That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in law in not admitting the additional ground of appeal- raised by the respondent before the Id. CIT(A) inasmuch that the impugned Assessment Order passed by the learned AO was barred by the time limit prescribed under s.l53B(l)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed du....
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....considering and appreciating the explanation of the respondent made before the AO. 6.That, the cross objector further craves leave to add, alter and/or amend Ground of Cross-objections, as and when considered necessary. 5. Brief facts of the case as culled out from the records are that the assessee is an individual engaged in the business of MCX trading. A search u/s 132 of the I.T. Act was conducted on 25.11.2010 at the residence of the assessee. Consequently notice u/s 153A was issued on 29.11.2011 and in response to the notice assessed has filed return of income on 20.01.2012. Thereafter notices u/s 143(2) and 142(1) along with questionnaire were duly served upon the assessee. Income of the assessee was assessed u/s 153A r.w.s. 143(3) of the I.T. Act after making various additions. 6. Aggrieved assessee preferred appeal before Ld. CIT(A) onobserving that since there is no incriminating material found during the course of search for all the Assessment Years 2005-06, 2006-07 & 2009-10, Ld. CIT(A) following the decision of the Co-ordinate Bench in the case of Kalani Bros. & others IT(SS) No.71/Ind/2015 dated 6.11.15 did not uphold the validity of the assessment u/s 1....
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....in the category of incriminating material and thus no addition could have been made. Ld. Counsel for the assessee apart from relying various judgments and decisions relied by the Ld. CIT(A) also relied on the decision of Hon'ble High Court of Delhi in the case of Principal CIT & Ors V/s Meeta Gutgutia (2017) 395 ITR 0526. Against this judgment of Hon'ble High Court of Delhi the appeal filed by the Revenue in Special Leave Petition before the Hon'ble Supreme Court was dismissed vide order dated 2.7.2018. 11. We have heard rival contentions and perused the records placed before us and carefully gone through the various judgments and decisions relied by the Ld. Counsel for the assessee. Common grievance of the revenue for Assessment Year 2005-06, Assessment Year 2006-07 and Assessment Year 2009-10 is that the Ld. CIT(A) erred in law by deleting the addition holding that these addition have not been made on the basis of incriminating material found during the course of search and seizure action u/s 132 of the Act. 12. During the course of hearing when after giving sufficient opportunity to the revenue authorities to produce the incriminating material if any which are the sole bas....
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.... such source of investment. Vide submission dated 26/10/2012 the assessee submitted that he has incurred total investment of Rs. 3,80,200/-(Rs. 1 ,90,100/- *2) including registry expenses and the source of investment can be verified from the fund flow statement. On examination of bank statement and the explanation for credit entries for bank entries tiled by the assessee it was noted that no amount has been withdrawn from the bank during F.Y. 2005-06 for the payment towards investment in subject property. The assessee also failed to furnish the copy of registry for the said property even asking repeatedly. In absence of verifiable details the amount of Rs. 3,80,200- invested remain unexplained therefore added to the income of the assessee u/s 69B of the LT. Act. Penalty proceedings u/s 271(l)(c) is initiated separately. Addition: Rs. 380,200/- 3.UNEXPLAINED INVESTMENT:- Vide question No.15 of the-statement of the assessee dated 25/11/2010 recorded during the course of search on 25/11/2010 the assessee was required to explain the Source of investment in the plot at H-8 4500 Sq. Ft. At Shreeji Velly, Gram Bicholi Mardana, Indore - purch....
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....xus with any incriminating material found/seized during the course of search. In the given case where the return of income were originally filed u/s 139(1) of the Act and assessee's case was not selected for scrutiny u/s 143(2) of the Act, validity of such assessment u/s 153A of the Act needs to be examined in the light of judicial pronouncements. 17. We observe that Ld. CIT(A) allowed the assessee's legal ground quashing the assessment proceedings u/s 153A of the Act by commonly observing as follows:- "5. Ground No.1 & 3: By these grounds the appellant has challenged the validity of the assessment made u/ s 153A of The Act by contending that no incriminating material j details of undisclosed income were found and hence the assessment was bad in law. Detailed submissions of the appellant on the issue are reproduced at P8rFl No.3 above. 5.1 The thrust of the appellant's contention is that for the assessment year 2005-06 the return of income was originally filed on 19.10.2005. Income was assessed at Rs. 345510/- by order u/s 143(3) of The Act dated 23-10-2007. In view of the above the assessment stood concluded as on 23-10-2007. The additions made in....
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.... be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized. No assessment proceedings were abated in these assessees. Thus assessments for these assessment years were completed on the date of search. The assessments were completed u/ s 143(3} of the Act read with section 153A/ 153C of the Act after the search. There was no abatement of any proceedings in these cases for these assessment years in terms of second proviso to section 153A of the Act. There is no seized material belonging to the assessee which was found and seized in relation to additions made. In. a recent decision, Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) has held that completed assessments can be interfered with by the Assessing Officer while making assessment u/ s 153A of the Act, 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 was not produced or not already disclosed or made known in the course of original assessment. In. all these cases no assessments w....
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....nating material was found during the course of search to justify any enquiry on the above issues. In view of the fact that no incriminating documents/material/evidences were found related to the issues considered in the assessment order during the search and keeping in view the decisions of the Jurisdictional IT AT cited above the validity of the assessment ii] s 153A of the Income Tax Act, 1961 cannot be upheld. These grounds of the appellant are therefore allowed. 18. We also observe that similar view came for adjudication before us in the case of Om Prakash Gupta & Ors IT(SS)A No.277 to 281 & 283 to 287/Ind/2017 order dated 28.2.19 and after considering the settled judicial precedence, it was decided in favour of assessee. Relevant portion is extracted below:- "27. These appeals for assessment years 2009-10 to 2012-13 are concluded and non abate assessments. The A.O. has no time to issue notice u/s 143(2) of the Act and until and unless there is an incriminating material found during the course of search no addition can be made. Nowhere in the assessment order shows that additions are based on the incriminating material even in the order of the Ld. CIT(A). A....