TaxTMI 
TaxTMI 
2022 (5) TMI 611
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....ade. 4. Briefly the facts of the case are that the appellant had filed its original return of income for A.Y 2011-12 on 28.09.2011 declaring income of Rs.93,20,506/- and the assessment was completed on 25.02.2014 by assessing the total income of the appellant at Rs.1,16,83,780/-. Subsequently, search and seizure operations u/s.132 of the IT Act, 1961 were carried out in the case of Shri Imtiaz Farooqi on 20.07.2015. The appellant's case had been centralized and notice u/s.153A had been issued to the appellant and in response, the appellant filed its return of income for A.Y. 2011-12 on 20.06.2016 declaring income of Rs.92,90,980/-. The assessment was completed u/s 143(3) r.w.s 153A of the IT Act by disallowing house rent expenses of Rs.9,88,987/- debited under the head 'Traveling expenses' and by disallowing claim of expenditure of Rs.12,83,810/- being expenses not related to the heads under which they were claimed. 5. When the assessee preferred an appeal before the CIT(A), the CIT(A) partly allowed the appeal of the assessee without adjudicating the technical grounds raised by the assessee. 6. Aggrieved by the order of CIT(A), the assessee is in appeal before....
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.... And wherein it was clearly observed that no notice u/ s 153A can be issued wherein no search u/ s 132 of the Act was conducted; 4.1 A Warrant is in the nature of judicial writ to carry out the search of the premises of the person. Warrant or the authorization for the search is the key document which in motion the process of search. It culminates in the assessment of income determined on the basis of incriminating evidence. The very sustainability or otherwise a search assessment depends on the valid issue and execution of search warrant. Further, it is submitted that assessment under section 153A need to be annulled on the very basis that as the warrant is person specific and premises specific. It should contain the reasons for authorizing the search in the name of the person and incriminating evidence against the person who is to be assessed u/s 153A of the Act. It is settled law that every person is distinctive in the judicial eyes of law. If no pendent warrant is issued against the person no proceedings u/ s 153A can be initiated. Thus, for the case under consideration there hasn't been raised any search authorization against the assessee and thus, the assessment u....
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....mpleted ul s 143(3) r.w.s 153A on 29-12-2017 is, thus, invalid, and is without jurisdiction 5. Proceedings u/s.153A of the Act are void as no incriminating material was found (Ground No. 2.3J: Books of accounts do not form part of incriminating material:- 5.1 In this regard it is to submit that the Assessing Officer has completed the assessment u/s 143(3) r.w.s 153A which does not stand valid since no incriminating/ impound material was found during the course of search proceedings in the premises of the assessee company for the relevant year under consideration. Further, it is clearly evident from the observation of the assessment order that the Ld. Assessing Officer has not referred/relate or mentioned to any kind of incriminating material that was found during the course of search and the addition is made based on financial statements belonging to the appellant in making the additions. As the search proceedings did not yield to any incriminating material relating to the assessee, the AO is not justified in making the addition for the assessment year under consideration. 5.2 Further, the addition made in the hands of assessee for the relevant y....
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....urse of search. 5.5 Concluded Assessments: Further, in the case of the appellant, for the AY 2011-12, no incriminating material was found during the course of alleged search proceedings, whereas the AD has made certain additions basing on the return of income which is not permissible to make such additions in the assessment to be completed u/ s 153A of the Act, as the assessment in the case was originally completed u/s 143(1) and the AD has to stop in these proceedings and restrict himself to the income already concluded proceedings for the year, whether u/s 143{l) & 143(3) of the Act. 5.6 Thus, when no incriminating material was found at the time of search, no addition can be made in the assessment basing on the return of income filed. Further, it would be necessary to address the preliminary issue of whether the addition could be framed u/ s. 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2011-12 was originally com....
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....der: "After considering the rival contentions, we do not see any reason to differ from the order of Ld. CIT(A). Clearly there is no incriminating material found in the course of search. As per provisions of section 153C, the proceedings can be initiated only where the A.D. is satisfied that any money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized or acquisitioned belonging to a person other than the person referred in section 153A (i.e., person searched), then the proceedings can be initiated on other person. As there is already finding that no incriminating material had been found pertaining to assessee, very issuance of notice under section 153C itself is bad. Therefore, the consequential proceedings also become bad in law. Accordingly, following the Coordinate Bench decisions on the issue as relied upon by Ld. CIT (A) in his order and also taking support from Special Bench (however, given in the context of section 153A which may not directly apply to the proceedings under section 153Cj, we are of the opinion that there is no merit in Revenue contention. Accordingly, all the grounds raised by Revenue in three years are dis....
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....3 would come to an end and the matter becomes final. Thus, the proceedings for assessment stands terminated. In the appellant's case, the return of income was processed u/s 143(1) and demand was issued. Thus, the proceedings for assessment stands terminated. 5.9 Also, the validity or other-wise of the issuance of notice u/s 153A of the Act for the year under consideration is to be considered basing on the following facts. On going through the provisions of section 153A, clause(b) of section 153A, 2"d proviso, three possible circumstances emerge on the date of initiation of search u/ s 132(1) of the I. T. Act, 1961 viz., (i) proceedings are pending; (ii) proceedings are not pending but some incriminating material found in the course of search, indicating some income and / or assets not disclosed in the return and (iii) proceedings are not pending and no incriminating material has been found. In the appellant's case under consideration, no proceedings were pending on the date of search and no incriminating material was found. Since the assessment was completed u/s 143(l){a) long back determining the appellant's total income and such orders were subsisting at the ....
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....f drawing panchanama does not arise. He submitted that name of the appellant company as appearing in the panchanama is not a valid one when no search u/s 132 was conducted in the business premises of the appellant company. He submitted that when warrant of authorization u/ s 132 of the Act was not issued in the name of the appellant company, the question of recording statement u/s 131 of the Act from the Directors relating to the issues of the appellant company during the, course of search conducted u/s 132 in the residential premises of the individuals, who were happened to be the Directors of the said appellant company, cannot and shall not evolve any power, whatsoever, as vested with thee AO for issuing notice u/s 153A of the Act. He submitted that there is no provision in the Income Tax Act to accord power to the AO for issue notice u/ s 153A of the Act in respect of the connected group cases, wherein, search u/ s 132 of the Act was conducted in one of the cases of such connected group cases. In this connection, he referred to the provisions of section 153A wherein it is clearly mentioned that "153A. (1) Notwithstanding anything contained in section 139, section 147, s....
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....rt of our observations, we rely on the judgment of the Hon'ble High Court of Delhi in the case of CIT Vs. Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi) wherein it was held as under: "On a conspectus of section l53A(l), read with the provisos thereto, and in the light of the law explained in various decisions, the legal position that emerges is as under: (J) Once a search takes place under section 132, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (iJ) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment ord....
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....ring search operation for making an assessment of undisclosed income of assessee. On careful reading of para Nos. 9 & 10 in the case of Gopal Lal Bhadruka (supra), on money was received in the hands of assessee and held that there was sufficient evidence to show that the true sale proceeds had been suppressed and on money was received in respect of transactions. Therefore, the case law relied upon by the ld. DR is distinguishable on facts to the present case. 9.3 In view of the above observations, we set aside the order of the CIT(A) and since no incriminating material was unearthed during search, no additions could have been made to income already assessed. Therefore, we direct the AO to delete the additions made by the AO on the assessment framed u/s 153A of the Act. 10. As the facts and grounds raised in AY 2012-13 are materially identical to that of AY 2011-12, following the conclusions drawn therein we delete the additions made in this year as well. 11. In the result, both the appeals of the assessee are allowed in above terms. A copy of this order be placed in the respective case files. Pronounced in the open court on 5th May, 2022. ============= Document 1 S....
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....any, the question of drawing panchanama (Preliminary as well as last panchanama) does not arise for considering the time limit for issue of notice u/s 153A of act. The Ld. CIT(A) failed to appreciate the fact that there is no provision in the Income Tax Act to accord power to the AO to issue notice u/s 153A of the Act in respect of the connected group cases, wherein , search u/s 132 of the Act was conducted in one of the cases of such connected group cases The Ld. CIT(A) ought to have appreciated the fact that the travelling expenses were incurred wholly and exclusively for the purpose of business. The Ld. CIT(A) ought to have appreciated the fact that the appellant company is maintaining complete books of account which are being audited under the provisions of Companies Act and Income Tax Act , Technical Technical Technical Technical 1961. Document 2 Count Citation Notice u/s.153A cannot be issued if no incriminating material found Para No. Page No 1 All Cargo Global Logistics Ltd. Vs DCIT ITAT Mumbai [2012] 23 taxmann.com 103 (Mum.) (SB) Para 58 Page 26 1 to 29 2....