TaxTMI 
TaxTMI 
2020 (2) TMI 1037
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....income of the assessee on account of client code modification by the broker in the assessment proceeding U/s 153C of the Act even when nothing incriminating was found from the premises of the person search. 1.2] That on the facts and in the circumstances of the case the Ld CIT[A] erred in maintaining addition of Rs. 2,20,500/- to the income of the assessee in the nonabate assessment in absence of any incriminating documents found during the course of search. 1.3] That on the facts and in the circumstances of the case the Ld CIT[A] erred in maintaining addition of Rs. 2,20,500/- to the income of the assessee on account of change in code by the broker even when no such reason was recorded by the assessing officer of the person searched and also by the assessing officer of the assessee prior to the issuance of the notice u / s 153C of the Act. 2] That on the facts and in the circumstances of the case the Ld Assessing officer erred in passing the order u/s 153C of the Act in this year even when information from the assessing officer of the person searched is received during the financial year 2015-16 and therefore assessment order as passed by the assessing o....
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....him 3] That on the facts and in the circumstances of the case and in law the Ld CIT[A] erred in maintaining the addition of Rs. 2,72,226/- to the total income of the assessee on account of Change in client modification code even when no such loss was actually claimed by the assessee in his return of total 4) That the appellant reserves its right to add, alter and modif'y the grounds of appeal as taken. 4. Brief facts of the case as culled out from the records are that the assessee is an individual and derives income from salary and other sources. Return of income for Assessment Years 2009-10 and 2010- 11 were filed on 30.07.2009 and 28.07.2010 declaring income of Rs. 7,38,200/- and Rs. 6,71,060/-. A search u/s 132 of the Act was carried out at various residential and business premises of DBL Group including the residence of Shri Sanjay Mehta at Saket Nagar, Indore. During the search Page No. 36 to 51 of DS were found and seized. DCIT(Central)-I, Bhopal on the belief that these documents belongs to assessee and notice u/s 153C were issued to the assessee. Assessment was completed u/s 153C r.w.s. 143(3) of the Act at Rs. 9,58,700/- for Assessment Year 2009-10....
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....th the provisions of section 153A, if, that assessing officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of Section 153A. 1.4.2] That it is now settled position of law that addition in the case of the assessee U/s 153C r.w.s 153A of the Income Tax Act can be made only on the basis of incriminating documents as found and seized during the course of search, as held by Hon'ble Delhi high court in the case of Kabul Chawla [Appeal No ITA 707/ 2014 dt 28-08-2015] and followed by the Hon'ble ITAT Indore bench in the case of Anant Steels P Limited [ Appeal Nos IT(SS)A Nos. 31, 28, 29&30/Ind/2010 A.Ys. 2001- 02 to 2004-05 dt 18-11-2015]. 1.5] That as stated by the assessing officer in the assessment order, a search and seizure operation was executed in the premises of M/s Dilip Buildcpon Limited group on 20-06-2012 including in the residential premises of Shri Sanjay Mehta located at 338, Saket Nagar, Indore. During the course of search Page Nos 36 to 51 was found and seized ....
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....the Act filed its return of total income and then assessment order is to be passed 1.8.2] That in the present case, two separate reason was not recorded the assessing officer of the person searched and the assessing officer of the other person also failed to record the reason based on documents found and seized from the remises of the person seized. 1.8.2.2 That it is also settled position of law that in absence of two separate reason the jurisdiction as assumed b the assessing officer was not proper. The assessment order as passed by the assessing officer without assuming proper jurisdiction over the case was neither legal nor proper. Hence, the assessment order as passed was legally not sustainable. The same now requires to be quashed. 1.9] That as per the order passed U/s 143(3) r.w.s 153C of the Act, addition can be made only based on the document found and seized from the premises of the person searched. But in the present case, assessing officer had not made any addition based on documents as found and seized. However, addition was made on the basis of Investigation Report of Ahmedabad in respect to client code modification. Therefore the order as p....
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.... premises of Shri Sanjay Mehta some documents relating to sale of property were found and seized marked as page No.36 to 51 of DS. On the basis of these documents assessee was issued notice u/s 153C for carrying out the assessment proceedings for 6 years prior to the search was conducted i.e. Assessment Year 2007-08 to Assessment Year 2012-13. On issuance of notice u/s 153C of the Act and after commencement of assessment proceedings information was received from PDIT (Investigation) dated 08.03.2016 sharing the list which stated that the assessee has shifted his net profits of Rs. 2,20,500/- and Rs. 2,72,226/- for Assessment Years 2009-10 and 2010-11 respectively through Client Code Modification. This information was part of the 593 page survey report. The assessment was completed after making addition of Rs. 2,20,500/- and Rs. 2,72,226/- for Assessment Years 2009-10 and 2010-11 respectively. There is no mention about the seized document, its analysis, source of purchase of property by the assessee which was subsequently sold to Mr. Sanjay Mehta. No addition has been made on account of the document seized during the course of search. The fact remains is that no addition was made....
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....o abatement of assessments and assessments were completed on the date of search then addition can 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 di....
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....erial found as a result of search action. The appellant has also stated that no incriminating 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. 12. We also observe that similar issue 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 ....