TaxTMI 
TaxTMI 
2021 (12) TMI 781
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....3. Besides the above, the assessee has raised two legal issues. The first legal issue relates to the validity of search proceedings and this ground has been urged in all the three years. At the time of hearing, the Ld. A.R. did not press this legal ground in all the 3 years. Accordingly, the grounds relating to this issue are dismissed as not pressed. 4. In assessment year 2008-09 & 2009-10, the assessee has raised another legal issue by way of an additional ground. The legal issue urged in the additional ground is that the additions made during assessment years 2008-09 and 2009-10 are not valid, since assessments of these two years did not abate as per provisions of sec.153A and further no incriminating material relating to the additions made in these two years were found during the course of search. 4. The facts relating to the case are discussed in brief. The assessee is a partnership firm and is engaged in the business of trading and transportation of iron ore. The assessee was subjected to search operation u/s 132 of the Income-tax Act,1961 ['the Act' for short] on 15.2.2011. Consequently, the present assessments were completed u/s 153A r.w.s. 143(3) of the Act. Unde....
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....he basis of above said legal ground. He submitted that, even on merits these additions are liable to be deleted. 8. The Ld D.R, however, submitted that the AO is entitled to make any addition in the case of unabated assessment years also as per the decision rendered by jurisdictional Hon'ble Karnataka High Court in the case of Canara Housing Development Company vs. DCIT (274 CTR 122)(Kar). He submitted that the parties to whom the payments were made for purchase of minerals and transportation charges have disowned the transactions. Accordingly, he submitted that the AO was justified in making the impugned additions. 9. In the rejoinder, the Ld A.R submitted that the parties had initially denied transactions. However, they have filed letters subsequently, accepting the transactions and they have explained as to why they denied the transactions earlier. In respect of purchase of minerals, the assessee has produced the income tax returns of the supplier, wherein he had duly disclosed the sales made to the assessee. The Ld A.R submitted that the AO did not consider these documents. 10. We heard rival contentions and perused the record. The present appeals pertain to AY 2008-09 t....
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.... finalized assessments are contrary to the material unearthed during the course of search. We notice that the Hon'ble Karnataka High Court also considered the decision rendered by it in the case of Canara Housing Development Company (supra) and also the decision rendered in the case of IBC Knowledge Park (P) Ltd (385 ITR 346)(Kar) while rendering its decision as stated above. The relevant observations made by Hon'ble jurisdictional High Court in the case of Delhi International Airport (P) Ltd (supra) are extracted below:- "26. In the light of these judgments, we have analyzed Section 153A of the Act vis-à-vis the material on record. Strong reliance was placed by the Revenue on the Canara Housing Development Company supra, in support of the contention that search under Section 132 of the Act is sine qua non for initiation of proceedings under Section 153A of the Act but it is not dependent on any undisclosed income being unearthed during search. There is no cavil on this proposition that search under Section 132 or requisition under 132A is a condition precedent for invoking Section 153A of the Act, the assessing officer can assess or re-assess the total income with....
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....hall not abate. 28. Section 153B provides for the time limit for completion of search assessments. 29. Section 153C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account documents seized or requisitioned belong or belongs to a person other than the person referred to in Section 153A, then the books of account, or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. 30. Thus, it is clear that the Assessing Officer while passing the order under Section 153A read with Section 143[3] of the Act, ordinarily cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings establishes that the finalized assessments are contrary to the material unearthed during the course of 153A proceedings, as held by the Coordinate Bench of this Court i....
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....all be made separately for each assessment year on the basis of the income unearthed during search and any other material existing or brought on the record of the Assessing Officer. Even in the absence of any incriminating material abated assessment or reassessment could be done. The returns filed under Section 139 of the Act gets replaced by the returns filed under Section 153A[1] of the Act. Pending proceedings in appeal, revision/application shall not abate subsequent to initiation of Section 153A proceedings. Further, recording of satisfaction under Section 153A may not be necessary unlike Section 153C of the Act which mandates recording of satisfaction. For the reasons aforesaid, substantial question of law in ITA Nos.322/2018 to 324/2018, 354/2018 and 355/2018, substantial question of law No.1 in ITA Nos.380/2018, 382/2018 to 385/2018 and 197/2021 to 199/2021 and substantial question of law Nos.1 and 2 in ITA No.381/2018 are answered in favour of the assessee and against the revenue. Substantial question of Law No.2 in ITA Nos.380/2018, 383/2018 to 385/2018 is squarely covered by the ruling of the coordinate Bench of this Court in ITA No.352/2018 and connecter! matters ....
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....tal income of assessment year 2009-10 in order to avoid double taxation. It is also pertinent to note that Shri Prakash G. Hegde, partner of the assessee firm also agreed for inclusion of the difference amount of Rs. 1,51,44,860/- in the total income for assessment year 2008-09. 14. Before Ld. CIT(A), the assessee challenged the above said addition contending that the right to receive the above said payment accrued to the assessee only in the succeeding year and accordingly, it has been offered correctly as income of assessment year 2009-10. The said contention was not accepted by Ld. CIT(A) and accordingly he confirmed the addition. 15. We have held that the assessing officer could not have made any addition in AY 2008-09 since no incriminating material relating to this addition was unearthed during the course of search. A perusal of the assessment order of AY 2008-09 would show that the assessing officer has found out this discrepancy only during the course of assessment proceedings upon comparing the Balance Sheets of the assessee and M/s DLC. We have held earlier that this addition could not be sustained, since it is not based upon any incriminating material. Accordingly, thi....
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....chased iron ore from Banni Minerals to the tune of Rs. 6.83 crores and the payment of Rs. 5.98 crores was made towards the above said purchases. It was also submitted that he has filed VAT returns before the sales tax authorities declaring the above said turnover. The assessee also submitted that Shri Basavaraj Banni has filed return of income. Accordingly, it was submitted that Shri Basavaraj Banni is not giving true picture. The AO did not accept the explanations of the assessee and accordingly treated the payment of Rs. 5.98 crores made to Shri Basavaraj Banni as bogus expenditure and added the same to the total income of the assessee in AY 2008-09. Similarly, the AO added Rs. 5,53,18,500/- in AY 2009-10. The Ld. CIT(A) also confirmed the same. 19. The Ld. A.R. submitted that during the financial year 2007- 08, the assessee has purchased iron ore to the tune ofRs. 36.65 crores, which included iron ore purchased from Shri Basavaraj Banni to the tune of Rs. 6.83 crores. The assessee has made payment of Rs. 5.98 crores to Shri Basavaraj Banni towards the above said purchases. The Ld. A.R. further submitted that the assessee has reported gross sales of iron ore to the tune of Rs. 5....
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....he above said concern has been duly recorded and further the assessee has also sold them. The sale transactions have been accepted by the AO. It is also a fact that M/s Banni Mines and Minerals have filed VAT returns under Sales tax Act and it has reported the sales made by it to the assessee. Further Shri Basavaraj Banni has filed revised return of income disclosing the sales made to the assessee. His return of income has been accepted by the department in an order passed subsequent to the date of search. Shri Basavaraj Banni has later accepted that he has given wrong statement earlier and has given reasons for doing so. We notice that Shri Basavaraj Banni is changing his stands and is non-co-operative with the department. Hence we are of the view that his statements could not be relied upon. The fact remains that the materials available on record disproves his earlier statement. Under these set of facts, we do not find any reason to disbelieve the purchases as well as payments made to M/s Banni Mines and Minerals. Accordingly, we are of the view that the addition of Rs. 5,98,65,880/- made in AY 2008-09 cannot be sustained. 22. In AY 2009-10, the AO has assessed payment of Rs. 5,....
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....itted that Shri Jagadish Devadiga has provided transportation services to the assessee. He submitted that before the AO, the assessee has furnished copies of invoices given by Shri Jagadish Devadiga, which included working sheets relating to the transportation services. He submitted that the assessee has also furnished copies of income tax returns, tax audit report of Shri Jagadish Devadiga. He submitted that the AO has not considered material evidences, but relied upon the statement given by Shri Jagadish Devadiga at the time of search, even though the said statement is contrary to the materials available and further the said statement has been retracted. He submitted that Shri Jagadish Devadiga is not the person, who has been subjected to search. He is only a witness. He hails from a small village which did not have proper postal facilities. He has given statement before the search officials out of fear and hence he has retracted the same later. Hence the time period taken by him in order to give true picture of transactions is not relevant. He submitted that the AO has disregarded the material evidences and instead relied upon wrong statement given by Shri Jagadish Devadiga. The....