TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 147
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....g total income of Rs. 10,45,490/- under the head 'income from salary, 'house property', business & profession and 'other sources. Subsequently, during the course of assessment proceedings, the AO noticed that the assessee had forfeited an amount of Rs. 70 lacs said to have been received as advance against the sale of property. This amount was received in assessment year 2011-12 from a Delhi based company M/s. Namo Resorts Private Limited and the amount was shown under the head 'current liability' in the Balance Sheet. The Assessing Officer (AO) required the assessee to submit complete details regarding the transaction alongwith documentary evidences like copy of agreement, ITR, bank account and Balance Sheet of M/s. Namo Resorts Private Limited. The assessee submitted a reply alongwith the copy of bank account and submitted that he was the co-owner of the property bearing No. 171/2, Major Gurdial Singh Road, Civil Lines, Ludhiana alongwith his brother Shri Sandeep Garg and that they had entered into an agreement with M/s. Namo Resorts Private Limited to sell the said property for a total consideration of Rs. 1,40,00,000/-. It was further submitted before the....
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....d CIT(A) was not justified to hold that a document (page No. 63) seized from Nalagarh which revealed the details of bank accounts of the appellant was in the nature of an incriminating document particularly when all bank accounts reflected in the sheet of paper were duly disclosed." 3. At the outset, the Learned Authorized Representative (Ld. AR) submitted that no incriminating material in respect of this transaction had been found during the course of search and pertaining to assessment year 2011-12 in respect to the impugned sale of property or advance received from M/s. Namo Resorts Private Limited and, therefore, in absence of such material, no addition could have been made in terms of the provisions of section 153A r.w.s. 143(3) of the Act. Our attention was drawn to para 5 of the assessment order wherein the AO has stated that he had found out from the assessment proceedings in assessment year 2011-12 that the assessee had received an advance. The Ld. AR highlighted the fact that the AO had made no reference to any incriminating material having been found. The Ld. AR placed the reliance on numerous judicial precedents to support his contention that in absence of any incrimin....
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.... obvious that the assessee had failed to establish the creditworthiness of the party. 4.1. Regarding the arguments of the Ld. AR that no incriminating material had been found during the course of search which could be made the basis for making the impugned addition, it was submitted that the Hon'ble Kerala High Court in the case of CIT Vs. K.P. Ummer had held that when a notice u/s. 153A of the Act is issued, it enables the Department to carry out assessment/re-assessment with respect to six immediately preceding years and this does not require any incriminating material recovered during search relating to those prior years in which there is no time left on the date of search for framing of assessment u/s. 143(3) of the Act. The Ld. Sr. DR pointed out that in this case the original assessment had been framed u/s. 143(1) and, therefore, as per the judgment of the Hon'ble Kerala High Court, as above, the AO had the jurisdiction to make the impugned addition. 5. We have heard the rival submissions and have also perused the material on record. We have also gone through the various documents filed by the assessee in support of his plea. The main thrust of the arguments of the ....
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.... produced or not already disclosed or made known in the course of original assessment. 17. We find, that the issue first came up for consideration before the High Court of Bombay in the case of CIT Vs. M/s. Murli Agro Products Ltd. (supra), wherein on the issue of exercise of revisionary powers by the Commissioner of Income Tax u/s. 263 of the Act, on the order passed by the Assessing Officer under section 153A, it was contended by the Revenue that the impugned order was erroneous and prejudicial to the interest of the Revenue since the Assessing Officer had only determined the undisclosed income and not the total income which is the mandate of section 153A. The Hon'ble High Court, while adjudicating the issue, dealt at length with the purpose of introduction of the new search assessment procedures, as against the earlier block assessment procedures and then went on to interpret the proviso to section 153A(1), and held that it is only pending proceedings which are abated on initiation of proceedings under section 153A of the Act, while the assessments which have attained finality cannot be disturbed unless materials gathered in the course of proceedings under section 153A of ....
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....sition' are the crucial words appearing in the substantive provision and proviso and they would throw light on the issue of applicability of the provision. The Court upheld the understanding of the legal provision of section 153A by the Special Bench in the I.T.A.T. in this case and further held that the Delhi High Court had in the case of Anil Kumar Bhatia also reached to the same conclusion. It also referred to the judgment of the Karnataka High Court in the case of Canara Housing Development Co. Vs. DCIT (2014) 49 Taxmann..98 and stated that even as per that judgment, the scope of enquiry in search carried under section 153A had to essentially revolve around search or requisition under section 132A of the Act. 20. In the case of Kabul Chawla (supra), the Delhi High Court after considering various decisions of High Courts, summarized the legal position in paragraph 37, which is reproduced below: "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section....
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....ther reiterated the proposition laid down in Kabul Chawla (supra) in the case of CIT Vs. RRJ Securities, 380 ITR 612 and Pr. CIT Vs. Lata Jain in ITA No. 274/2016 dt. 29-04-2016. 22. On going through the above judgments, we find that the reason for upholding the proposition that addition u/s. 153A, in case of earlier completed assessments, can be made only on the basis of incriminating material found during search or requisition is that: 1. Assessment u/s. 153A can be framed only in cases where a search is initiated u/s. 132 or Books of Accounts, other documents or any assets are requisitioned u/s. 132A of the Act. Moreover notices u/s. 153A(1)(a) can be issued and income assessed or reassessed of six years preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Thus the crucial words "search" and "requisition" appear in the substantive provision and the proviso, which throws light on the issue of applicability of the provision. Such assessments have a vital link with the initiation and conduct of search. Since search can be authorized only on the fulfillment of conditions enumerated in section 132, those conditions will ....
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....s that nature of assessment or reassessment made under this section shall be governed by the normal provisions of the Act. In case it is an assessment made for the first time, all provisions of assessment which are applicable to assessments made u/s. 143(3) shall apply and in case it is a reassessment being made all principles of reassessment which are applicable in case of proceedings u/s. 147/148 shall become applicable. Thus in cases where assessments have already been made addition to be made in proceedings u/s. 153A is to be restricted to incriminating material found if any. 24. It is amply evident from the above that the issue is settled, with a number of decisions of the High Courts holding that in the case of completed assessments, no addition can be made in the absence of any incriminating material. Though we do agree that there are decisions of High courts which hold otherwise and state that u/s. 153A, addition in case of completed assessments need not be restricted to incriminating material, but in view of the Apex court decision in CIT vs Vegetable Products Ltd. (1973) 88 ITR 192 which states that where there are two reasonable constructions of a statute, the construc....