2022 (8) TMI 255

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....quiring the assessee to file its return. Notice under section 143(2) of the Act dated 20.07.2017 was issued fixing the hearing on 28.07.2017. None attended. On 31.08.2017 the assessee asked for copy of panchnama stating that no search has ever been conducted in respect of company AGM Properties Pvt. Ltd. and therefore notices under section 153A and 143(2) are unwarranted. Vide letter dated 06.12.2017 the Assessing Officer ("AO") gave copy of panchnama and intimated that warrant of authorisation was issued in the name of erstwhile company M/s. Automobile Component (India) Ltd. and that the proceedings under section 153A have validly been taken. So return for AY 2010-11 to 2015-16 be filed by 11.12.2017 as the case will be barred by limitation on 31.12.2017. 2.2 However, the assessee did not file return and the Ld. AO proceeded to complete the assessment ex-parte. He computed the total income by adding current liability of Rs. 59,98,500/- and 2% commission thereon amounting to Rs. 1,19,970/- on protective basis to the income of Rs. 4,330/- shown as per return. He thus completed the assessment on total income of Rs.61,22,800/- on 29.12.2017 under section 153A read with section 144 ....

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....f search also there cannot be any 153A assessment. It was requested that not only the addition be deleted but the assessment itself be quashed. 3.1 In remand report obtained by the Ld. CIT(A) the Ld. AO stated that it was intimated to the assessee that warrant was issued in the name of M/s. Automobiles Components (India) Ltd., Now known as M/s AGM Properties Pvt. Ltd. and that search was conducted at the premises of Shri Nem Chand Gupta who was director in M/s. AGM Properties Pvt. Ltd. 3.2 In rejoinder, it was stated that no assessment was pending and hence there was no abetment. Even during the course of search there was no seizure of anything whatsoever. Hence, assessment made under section 153A is invalid. It was also stated that there was no search on the assessee company and a search on the director even though present or old could never amount to search on the assessee company. It was further stated that the solitary submission is that no pendency of assessment, no abetment and no seized material and hence there cannot be any section 153A assessment and if invalidly made, the same deserves quashing. 4. The Ld. CIT(A) extracted the observations of the Ld. AO made in t....

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....the facts and in the circumstance of the case and in law the CIT(A) was incorrect and unjustified in not agreeing that search on Nem Chand is not a search on the assessee. 9. On the facts and in the circumstance of the case and in law the Authorities below were incorrect and unjustified in holding that large number of incriminating documents were seized but as per Panchnama there is no seizure at all. 10. On the facts and in the circumstance of the case and in law the CIT(A) was incorrect and unjustified in sustaining the addition in the hands of the assessee even when as per the assessment order Deepak Aggarwal had floated various companies and was engaged in providing accommodation entries and when it was so there is no question of any addition in the hands of the assessing company." 6. We have heard the Ld. Representative of the parties. 6.1 The Ld. AR reiterated the same arguments and contentions which were advanced before the Ld. CIT(A). He pleaded that the Ld. CIT(A) was not justified in confirming the addition incorrectly made by the Ld. AO even when during search nothing was found and seized. According to him, the assessee had filed its return for AY....

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.... pending. Therefore, the acceptance of the return of income amounts to an assessment and such assessment did not abate in terms of the second proviso to section 153A(1) of the Act. During the course of search no incriminating material whatsoever was found and seized. The Ld. CIT(A) himself observes in para 6 of appellate order that it is a fact that the punchnama does not depict any seizures. 7.1 In the background of the above factual matrix, the decision of Hon'ble Delhi High Court in CIT vs. Kabul Chawala 380 ITR 573 (Delhi) squarely applies to the facts of the assessee's case wherein their Lordships held that assessment under section 153A can be carried out only on the basis of seized material. Where no incriminating material was unearthed during the search, no additions could be made to the income already assessed. The Hon'ble Delhi High Court in Kabul Chawala 's case (supra) recorded in para 37 summary of the legal position as under:- "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 pl....