TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 594
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....d with Smt. J. Kavita on 26th February, 2016. The Panchanama prepared for the said search and seizure shows that nothing was found or seized. 4. After the search, the Assessee's case along with other cases in the group was centralised with the ACIT, Central Circle-I, Bhubaneswar and notice was issued to her under Section 153A of the Act on 27th January, 2017. In response to the notice the Assessee informed the Department on 10th August, 2017 that her original return be treated as a return under Section 153A of the Act. Thereafter notice was issued to her under Section 143 (2) of the Act. A questionnaire was also issued under Section 142 (1) of the Act on 10th July, 2017. 5. Although nothing was found during the course of the search, it was observed in the assessment order that "during the course of search operation it was found that the assessee company had made expenditure amounting to Rs. 64,86,371/- during the year which paid in the mode of cash of Rs. 20,000/- or above in a single day to a single party." The assessment order also sought to disallow the payments made to the cultivators and Hamalis in the sum of Rs. 64,22,721/-. The total assessed income was revised as Rs. 72,2....
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.... the reasons explained hereafter the Court finds that impugned assessment order is entirely without jurisdiction. Therefore, this Court is not precluded under Article 226 of the Constitution of India from interfering with it. 11. Turning to the merits, the legal position in respect of the search conducted under Section 153A of the Act is well settled. The assessment made pursuant to the search has to be on the basis of incriminating materials gathered or unearthed during the course of the search. In CIT v. Kabul Chawla (supra), the Delhi High Court summarized the legal position thus: "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." 12. Subsequently, in Principal CIT v. Mita Gutgutia (2017) 395 ITR 526 (Del), the legal position was further elaborated as under: "56....
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....ourt in Kabul Chawla (supra) beginning with the Gujarat High Court in Principal Commissioner of Income Tax v. Saumya Construction Pvt. Ltd. (2016) 387 ITR 529 (Guj). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of the Assessee of Rs. 14.5 crores against declared income of Rs. 3.44 crores. The ITAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYs under consideration i.e., AY 2006-07. The Gujarat High Court referred to the decision in Kabul Chawla (supra), of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (2013) 36 Taxman 523 (Raj) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 as under: "15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice un....
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....s held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should (be) connected with something found during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition' or disa....
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....ct to six preceding years ; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year." 62. Subsequently, in Principal Commissioner of Income Tax- 1 v. Devangi alias Rupa 2017-TIOL-319-HC-AHMIT, another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Principal Commissioner of Income Tax v. Saumya Construction P. Ltd. (supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High Court is concerned, it has in CIT v. IBC Knowledge Park P. Ltd. 385 ITR 346 (Kar) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure operation. The Calcutta High Court in CIT-2 v. Salasar Stock Broking Ltd. 2016-TIOL-2099-HC-KOLIT, too, followed the decision of this Court in Kabul Chawla (supra). In CIT v. Gurinder Singh Bawa (2016) 386 ITR 483 (Bom), the Bombay High Court held that: "6...once an assessment has attained finality for a particular year, i.e., it is not pending then the....