TaxTMI 
TaxTMI 
2022 (7) TMI 1327
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....ee. Therefore, it is required to be taken on the record for adjudication. The additional ground of appeal raised by the assessee reads as under:- "That on the facts and in the circumstances of the case and in law, admittedly the impugned proceedings pertains to unabated year of assessment requiring presence of incriminating materials or documents found pursuant to search for fastening additions in assessment framed u/s 153A of the Act, the Ld. A0 erred in making additions in an unabated assessment year inspite of the fact that no incriminating materials or documents were found pursuant to search and that the learned CIT(A) erred in upholding the said additions." 2.1. The ld. CIT D/R, on the other hand, contended that the assessee should have raised all the grounds together. 3. We have duly considered the rival contentions and gone through the record carefully. Under the additional ground of appeal, the assessee has raised a legal issue, whereby it has alleged that no addition can be made to the income of the assessee u/s 153A of the Act, unless some incriminating material was founded during the course of search for making such addition. It is the case of the assessee....
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....nd submitted that the ld. AO has nowhere made reference to any seized material. He investigated the unsecured loan transaction by issuance of notice u/s 133(6) to the lender companies as if he was passing regular assessment order u/s 143(3) or 147 of the Act. According to ld. Counsel for the assessee this is not a searched year and he is not supposed to make additions in this manner. For buttressing his contention he placed reliance a large number of decisions whose copies have been placed on the record. 6.1. The ld. Counsel for the assessee further relied on the following caselaws:- • PCIT vs. Meeta Gutgutia [2018] 96 taxmann.com 468 (SC) • CIT vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) • Smt. Yamini Agarwal vs. DCIT, CC-3(3), Kolkata • Lalji Khimjibhai Patel vs. ACIT, Cent. Cir.II in ITA Nos. 712 to 715/RJT/2010 and 388 to 391/RJT/2013; order dt. 21/10/2019 7. On the other hand, the ld. CITDR contended that there were large number of documents found and seized during the course of search. After perusal of all these documents, the Ld. AO culled out specific points which were required to be investigated. Hence he has....
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.... (v)In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. (vi)Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. (vii)Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." ITAT Delhi Bench in the case of DIT Vs. Smt. Shivali Mahajan and others, rendered in ITA No.5585/Del/2015 has considered this as....
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.... "6. The Assessee went in appeal before the Commissioner of Income Tax (Appeals) who dismissed it by an order dated 27th November, 2014. A further appeal was filed by the Assessee before the IT AT. The ITAT, inter alia, found substance in the contention of the Assessee that the assessment under Section 153(A) of the Act, in the absence of any incriminating material found during the search on the premises of the Assessee was not sustainable in law. Reliance was placed on the decision of this Court in Commissioner of Income Tax v. Kabul Chawla, [2016] 380ITR 573. 7. A question was posed to the learned counsel for the Revenue whether in the present case anything incriminating has been found when the premises of the Assessee was searched. The answer was in the negative. The entire case against the Assessee was based on what was found during the search of the premises of the AEZ Group. It is thus apparent on the face of it, that the notice to the Assessee under Section 153A of the Act was misconceived since the so- called incriminating material was not found during the search of the Assessee's premises. The Revenue could have proceeded against the Assessee on the basis of ....
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....ngthens 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 disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending ass....
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....ed under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.l 1,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequen....
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....hese acceptance of returns processed under Section 143(1) of the Act was construed by the Hon'ble Delhi Court as completion of assessments and this acceptance of return, according to the Hon'ble Delhi High Court, could be tinkered with if some incriminating material was found at the premises of the assessee. Though, it is not necessary to recite and recapitulate this proposition in other judgments, suffice to say that in the following judgments, unanimous view is taken by Hon'ble High Court as well as ITAT on this point. They concur with the Hon'ble High Court. Just for reference, we note the citations as under:- Sl. No. Particulars 1. CIT vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) 2. PCIT -vs.- Kurele Paper Mills (P) Ltd. [2017] 81 taxmann.com 82 (Delhi) 3. PCIT -vs.- Ras hmi Infrastructure Pvt. Ltd. ITAT 99 of 2019, GA No. 1211 of 2019 (Cal cutta HC) 4. CIT -vs.- Veerprab hu Marketing Ltd. [2016] 73 taxmann.com 149 (Calcutta) 5. PCIT -vs.- Salasar Stock Bro king Ltd. ITAT No. 264 of 2016, GA No. 1929 of 2016 (Cal cutta HC) 6. M/s. Mani Square Ltd. -vs .- ACIT [IT(SS)A Nos. 58/ KOL/2019 & others 7. ACIT -vs.- Majestic Commerc....
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....concerned parties. Subsequently, Summons u/s 131 of Income Tax Act, 1961 was issued to the Directors of some Shareholder Companies, while keeping provisions of CPC in mind. Directors of the following companies did not appear in response to the Summons till the finalization of this order; though the date for appearance mentioned in the Summons expired long ago. AR of assessee confronted with the fact but he could not offer any satisfactory reply to it. As Directors in the following cases, did not appear in response to summon, all the three parameters set by the various Appellate Authorities i.e., Existence, Genuineness of transaction and Creditworthiness, regarding genuineness of share capital received could not be ascertained in following casesI. S.No. Name of Shareholder Share Capital (in Rs.) 1. M/s Abhoy Knitwear Pvt. Ltd. 39,50,000 2. M/s. Gadhari Tea Traders Pvt. Ltd. 26,00,000 3. M/s. Krishna Kanhia Combines Pvt. Ltd. 44,50,000 4. M/s. Parasramka Holdings Pvt. Ltd. 24,00,000 5. M/s. Sumit Iron Pvt. Ltd. 20,00,000 6. M/s. Vasudha Electrical & Electronics Pvt. Ltd. 1,31,00,000 Total 2,85,00,000 ....