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2022 (12) TMI 346
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.... Kanwar Ratnawat 2012-13 25.10.2021 4. ITA No. 323/JP/2021 Smt. Ratan Kanwar Ratnawat 2013-14 25.10.2021 2. Since the issues involved in the Revenue's appeals for all the years are almost identical except the difference in figure of additions disputed, are common, all these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. DR has submitted that the matter pertaining to pertaining to Shri Mahendra Singh Ratnawat in ITA No. 30/JP/2022 for A. Y. 2015-16 may be taken as a lead case for discussion as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are exactly identical except the difference in the amount in other assessee and assessment year. The ld. AR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 30/JPR/2022 is taken as a lead case. Based on the above arguments we have also seen that for three appeals grounds are and for A.Y. 2016-17 in Mahendra Singh Ratnawat grounds are ....
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....lant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal" 5. The skeletal facts essential for deciding the appeal are that the assessee derives his income from salary, business and other sources. The assessee filed his original return of income u/s 139(1) of the Act, on 30.09.2015 for the assessment year 2015-16 declaring a total income of Rs. 1,67,70,610/-. The assessee belongs to Kiran Fine Jewellers Group, on whose premises a search and seizure u/s 132 on/or survey action u/s 133A of the Act was carried out on 02.08.2017. Pursuant to this, AO issued a notice u/s 153A of the Act to the assessee in compliance of which assessee filed his return of income of Rs. 1,67,70,610/-. Finally, AO Completed the assessment u/s 143(3) r.w.s. 153A of the Act vide order dated 26.12.2019 at a total income of Rs. 23,89,84,760/- by making the following addition/ disallowance: (i) addition of Rs. 22,16,60,000/- u/s 68 treating the unsecured loan from M/s Gemini Commerce Pvt Ltd. as non genuine loan. (ii) addition of Rs. 5,54,150/- on account of alleged commission paid u/s 69C of the Act. 6. Aggrie....
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....observed that the aforesaid addition made by the AO u/s 143(3) r.w.s. 153A for the year under consideration is legally not tenable, not being based on any incriminating document/ evidence found in the course of the search and hence is not liable to be sustained. Accordingly, the Ground of Appeal No. 1 is treated as allowed. 6. Since the appellant succeeds on legal ground, therefore the Grounds of Appeal No. 2 raised by the appellant on merits of the case is not required to be adjudicated upon. Accordingly, this ground of appeal is treated as disposed off. 7. Ground No. 3 relates an addition of Rs. 5,54,150/- on account of alleged commission paid u/s 69C of the Act. 7.1 The submissions of the appellant as per the statement of facts enclosed with Form No. 35 and reiterated during the appellate proceedings are summarized as under: The ground No. (3) of appeal relates to objecting the action of Ld. AO in making the addition of Rs. 554150/- u/s 69C of the I T Act, 1961 by holding that the appellant has allegedly paid commission at the rate of 0.25 percent on above said unsecured loan. The addition of Rs. 554150/- made u/s 69C for alleged commission is wrong in law. The additio....
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....ent years immediately preceding the assessment year relevant to the previous year in which search was Conducted. Further as per provisions of section 153A(1)(b), the AO has to assess or reassess the total income of such years. Therefore, in pursuance to these notices issued u/s 153A(1), the AO has to assess or reassess the total income for the relevant assessment years. Further, there is no mention in the section that these assessments should be based on incriminating material found during the course of search. 2.1 Further, even otherwise, if a return of income was filed u/s 139 of the Act, which was processed u/s 143(1)(a) of the Act and no assessment order was passed u/s 143(3)/144, the AO can made addition to the total income of the assessee in pursuance to notice issued u/s 153A even in the absence of incriminating material as the said processing/intimation u/s 143(1)(a) is not an assessment order as held by the Hon'ble Apex Court in the case of ACIT Vs Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316 (SC) and subsequently reiterated in Dy. CIT v. Zuari Estate Development & Investment Co. Ltd. [2015] 63 taxmann.com 177/[2016] 236 Taxman 1 (SC). 2.2 As per 2n....
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....r any statement made during course of search by assessee is a valuable piece of evidence in order to invoke section 153A - Held, yes [Para 21][Matter remanded/In favour of revenue] (ii) The head note in the case of E.N. Gopakumar Vs CIT [2016] 75 taxmann.com 215 (Kerala) is as under: "Section 153A, read with section 132, of the Income-tax Act, 1961 - Search & seizure - Assessment in case of (Scope of) - Whether for issuance of a notice under section 153A(1)(a), it is not necessary that search on which it was founded should have necessarily yielded any incriminating material against assessee or person to whom such notice is issued - Held, yes - Whether, therefore, assessment proceedings generated by issuance of a notice under section 153A (1)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(1)(a) - Held, yes [Paras 7 and 8] [In favour of revenue] " (iii) In the case of CIT Vs MGF Automobiles Ltd. [2016] 72 taxmann.com 240 (SC), the SLP filed by the department has been admitted. The head note is as....
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.... 153A will also not absolve assessee from his liability to submit returns as provided under section 153A(1)(a) - Held, yes [Paras 5 & 6] [In favour of revenue] (v) The head note in the case of Canara Housing Development Co. Vs DCIT [2014] 49 taxmann.com 98 (Karnataka) is as under: "Section 153A, read with section 263, of the Income-tax Act, 1961 - Search and seizure - Assessment in case of search or requisition (Conditions precedent) Assessment year 2008-09 - Whether once proceedings under section 153A is initiated, pursuant to search, order of assessment in respect of six years stands reopened and, therefore, in absence of any valid assessment order in existence, revisional proceedings under section 263 cannot be initiated in such a case - Held, yes [Paras 10 and 111 [In favour of assessee] Section 153A, read with section 132, of the Income-tax Act, 1961 - Search and seizure - Assessment in case of search or requisition (Conditions precedent) Assessment year 2008-09 - Whether condition precedent for application of section 153A is that there should be a search under section 132, however, initiation of proceedings is not dependent on any undisclosed income being unearthed duri....
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....on under section 153A and consequent additions made by Assessing Officer on said basis were not justified - Whether SLP against said impugned order was to be allowed - Held, yes [Para 1] [In favour of revenue] " (IX) The head note in the case of DR. A. V. Sreekumar Vs CIT [2018] 90 taxmann.com 355 (Kerala) is as under: "Section 153A, read with sections 132 and 143 of the Income-tax Act, 1961 Search and seizure - Assessment in case of (Scope of) - Assessment years 19992000 and 2000-2001 - Search was conducted at premises of assessee on basis of two documents received before search by Department through a Tax Evasion Petition allegedly filed by one of brokers involved in transaction pursuant to which notices under sections 153A and 143 were issued and assessment orders were passed for respective years making additions - Assessee contended that documents relied on to make additions, being not one seized in search conducted, proceedings under section 153A read with section 143 were non-est - However it was pursuant to search and enquiry conducted thereafter that it was revealed that assessee had rental income from a flat purchased at Bangalore which had been sold - Further, suppres....
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....ating material unearthed during course of search or requisition of documents - Tribunal further concluded that since no incriminating documents during course of search were found, impugned addition made by Assessing Officer was not sustainable - High Court upheld Tribunal's order - Whether, on facts, SLP filed against order of High Court was to be granted - Held, yes [Para 2] [In favour of revenue]" (XII) It is therefore humbly submitted that the issue has not been conclusively decided by the Hon'ble Apex Court in the case of Meeta Gugutia (Supra) as relied upon by the ld. AR, otherwise, these SLPs should not have been admitted by the Hon'ble Apex Court. (XIII) In the case of Sunny Jacob Jewellers And Wedding Centre v. DCIT [2014] 48 taxmann.com 347 (Kerala), it was held that: In the case of CIT v. Hotel Meriya [20101 195 Taxman 459 (Ker.) it was held that none of the provisions under Chapter XIV-B mandates, for making block assessment there shall be evidence regarding the concealment of income for every year for the block period. Though technically one is not concerned with the block assessment, based on the information as stated above for six previous assessment....
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.... In the said statement Sh. Arpit Khandelwal has admitted that he was even not aware about the full name of the company and all transactions were done on the directions of Sh. Harsh Agrawal. It is to be noted that in the case of Kabul Chawla or any other case following the same ratio decidendi, it has never been held that incriminating material should be found from the premises of the assessee itself These judgements only talk about the ' incriminating material' which was not available at the time of original assessment. The statement of the director of the party from with transactions have been done is definitely an incriminating material, if such statement recorded during the course of search. If this is not admitted as incriminating material' then all the transactions done by the syndicate of the taxpayers in collusion with one another in a systematic manner to evade the taxes would not be within the purview of scrutiny by the Income-tax Department and will defeat the purpose of search action itself. Reliance is placed on the judgement of Hon'ble Delhi Tribunal in the case of MGF Automobiles Ltd v ACIT in ITA Nos 4212 & 4213/DEL/2011dated 28.06.2013, wherein the h....
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....in he admitted that it is a paper company. Sh Khandelwal stated that he was just a dummy director and Sh Harsh Agrawal made him the dummy director. He even could not tell the full name of the company. The statement of Sh Khandelwal is placed at page no. 1-11 of the DPB. Further, statement of Sh Harsh Agrawal was also recorded u/s 131 on 05.08.2017 simultaneously with search operation in the assessee group. Sh Harsh Agrawal who was controlling many shell companies, Gemini Commerce Pvt Ltd being one of such companies. The statement of Sh Harsh Agrawal is placed at page no. 12-19 of the DPB. Sh Harsh Agrawal also could not tell anything about actual business of Gemini Commerce Pvt Ltd. The Hon'ble Madras High Court in the case of B. Kishore Kumar v DCIT, 52 taxmann.com 449 has held that- "When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. The document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorre....
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....lery, deposits or other valuable assets etc, do not corroborate with his returned income (which includes earlier Ars return also) and/or there is a material difference in the actual valuation of such assets and the value declared in the hooks of accounts. Further, incriminating evidence may also constitute of information, tangible or intangible which suggests or leads to an inference that the assessee is conducting transactions outside the regular hooks of account which are not disclosed to the Department. Incriminating material may also comprise of document or evidence found in search which demonstrates or proves that what is apparent is not real or what is real is not apparent . In other words, let us assume that an assessee has recorded transactions in his hooks or other documents maintained in the ordinary course of business, then it is discovered in the search certain material or evidence in such an event then, in order to hold the discovered material or evidence to be incriminating in nature, only when the discovered/seized material/evidence/document should affect the veracity of the entries made in the books of the assessee and thus lead to the conclusion that the entries ma....
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....e material collected or found during the survey or any other method while making the block assessment. [Para 15] It is to be noted that in the provisions related to block assessment, there was specific requirement to assess undisclosed income on the basis of the evidence found during the course of search or relatable material. In that scenario also, the Hon'ble Supreme Court held that findings of simultaneous survey operation can be used in the search assessment. The assessment under section 153A of the Act is a better case scenario, where there is no such requirement in the Act. Therefore, the finding of the Hon'ble Supreme Court will be applicable with more force in such cases. Thus, it is clear from the above discussion that there was incriminating material in this case and the Hon'ble Bench should not sway away by the observation of the AO in the remand report and should decide the legal issue in correct perspective, as the observation of the AO on a legal issue is her interpretation. The appellate authorities should not decide a legal issue only on the basis of the interpretation of the AO. This may lead to dangerous consequences. Suppose in a case, the AO inte....
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....mission during the course of hearing submitted that during the year under consideration the assessee has accepted unsecured loan to the extent of Rs. 22,16,60,000/- . In the search carried out in the Kiran Fine Jewellers group the assessee is also covered. The information related to Gemini Commerce Private Limited, lender company was examined and it is found that the company is one of the company out of 16794 companies which has been declared as a shell company by the Serious Fraud Investigation Office [ SFIO ] which is a fraud investigating agency in India. The list is mostly comprised of real estate, finance and entertainment companies. He further submitted that the ld. AO has already on perusal of the Balance Sheet and Profit & Loss Account of the said lender company found that the company is not involved in any business activity. The lender company is showing its income mainly from interest, dividend , commission and capital gains only. Despite this the company has advanced substantial amount of loan to the assessee. These companies are showing high share premium and are almost exclusively utilizing all this capital for extending loans and advances or investing in unlisted comp....
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....ed that the order of the ld. CIT(A) be set a side and order of the AO be upheld. 10. Per contra, the ld. AR appearing on behalf of the assessee has reiterated its arguments as advanced before CIT(A) and supported the findings recorded in the order of the ld. CIT(A). The ld. AR in addition also submitted his written submission which is reproduced here in below:- "The case laws relied upon by the Department in the written submissions dated 19.04.2022 are on some different issues and are distinguishable from the facts of the assessee's case. The assessee submits facts of every case as follows :- 1. CIT vs. ST. Francis Clay Decor Tiles - (2016)(Kerala 11C) 2. E.N. Gopalkumar vs. CIT (Central)- (2016) (Kerala (HC) 3. CIT vs. Dr. P. Sasikumar - (2016) (Kerala HC) 4. Sunny Jacob Jewellers and Wedding Centre vs. DCIT- (2014) (Kerala HC) In all these cases, the Hon'ble High Court has decided the validity of notice issued under section 153A of the IT Act, 1961 for 6 years and the Hon'ble Court held that for issuing the notice under section 153A there is no requirement of any incriminating material with the Department. It is also held by the Hon'ble Court that once the no....
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.... incriminating document no addition can be made in the unabated or completed assessment. The Hon'ble Supreme Court has only granted SLP. 12. Orma Marble Palace P. Ltd. vs.CIT - (2019)(Supreme Court) In this case additions have been made on the basis of incriminating document in the assessment completed under section 158BB of the IT Act 1961. Thus the facts of this case are distinguishable from the facts of the assessee's case. 13. MGF Automobiles Ltd. vs. ACIT - (ITAT Delhi Bench 'E) The ld. D/R has submitted a copy of the order for the reason that any statement recorded under section 132(4) of the Act, is an incriminating document. Although the Hon'ble ITAT has decided the issue that in case of no incriminating material, no addition can be made in case of completed assessment. 2(i) In this regard it is submitted that now it is a settled position of law that merely a statement without any supporting corroborative material has no legal evidentiary value. The submissions are supported by the Hon'ble Jurisdictional High Court judgment in case of PCIT vs. Mantri Share Brokers Pvt. Ltd. The SLP filed by the revenue against the said judgment, has been dismis....
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....at the whether any incriminating document is found or not. The Ld. AO after taken into consideration the facts of the M/s Gemini Commerce Pvt. Ltd. and the statement of Shri Arpit Khandelwal given in writing that no incriminating document(s) were found during the course of search neither in physical record seized nor in digital data lying seized. The said finding of non-incriminating document(s) was confirmed by the Add. CIT and Principal CIT, Jaipur. Thus, the arguments of Ld. CIT(DR) that a statement of Shri Arpit Khandelwal, is an incriminating document is without jurisdiction. Not only that No question was asked from Arpit Khandelwal regarding assessee Shri Mahendra Singh Ratnawat. In the statement of the assessee not a single question was asked/raised regarding Gemini Commerce Pvt. Ltd. and/or statement of Shri Arpit Khandelwal. Shri Arpit Khandelwal referred the name of Shri Harsh Agarwal, and Shri Harsh Agarwal stated that he is advancing loan to M/s Gemini Commerce Pvt. Ltd. which prove that M/s Gemini Commerce Pvt. Ltd. is an existing company. All the cash laws were relied upon by Ld. CIT (DR) are altogether on different facts. In all the said cases there were incriminatin....
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....2015-16. As requested, issue-wise comments are as follows: a) In this case no incriminating documents were found during the course of search proceedings. Seized digital record has also been operated/examined and nothing adverse has been found. Without prejudice to the above, it is mentioned that during the course of search, statement of one of the directors of M/s Gemini Commerce Pvt. Ltd. (lender Company in the instant case), namely Shri Arpit Khandelwal was recorded u/s 132(4) wherein he admitted that M/s Gemini is a shell company providing only accommodation entries to various persons in the guise of unsecured loans. b) As per para 7.4 of the assessment order, search u/s 132 of the I.T. Act was conducted at the residence of one of the directors of M/s Gemini Commerce Pvt. Ltd. It was not conducted on the company M/s Gemini Commerce Pvt. Ltd. but on one of its directors, namely Shri Arpit Khandelwal. And search on the director Shri Arpit Khandelwal was conducted on 05.08.2017 and that was the day when his statement was recorded. The mention of search on him on 05.08.2019 in the Assessment Order is apparently a typographical error. With regard to the reference to incriminati....
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....while completing the assessment of search cases. It is held by various courts and Tribunals that when the assessee has primarily discharged the initial onus casted upon them in terms of section 68 by providing details to establish genuineness of transaction, identity and creditworthiness of depositors then the assessee is not expected to prove the source of credits in his books of account but not the source of source. The ld. DR has also not controverted the arguments of the ld. AR of the assessee that out of the total addition of Rs. 22,16,60,000/-, Rs. 18,79,00,000/- is repaid and Rs. 3,14,00,000/- is comprising of opening balance thus effectively there is not money which is in real terms accepted by the assessee in the year under consideration. We found from the records that assessee have filed the copy of accounts, confirmation, bank statement and ITR of the loan creditors and the same is not disputed by the AO. The DR also did not controvert these basic facts. Thus, as held in the case Dy. CIT v. Rohini Builders [2003] 127 Taxman 523/[2002] 256 ITR 360 (Guj.), the Hon'ble Gujarat High Court held that when the assessee has primarily discharged the initial onus laid on him i....
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....ation furnished by assessee is not acceptable and while doing so documents/ explanation furnished cannot be rejected arbitrarily and summarily without commenting upon it. But the ld. AO did not examine the evidence and did not bring anything controvert the evidence filed by the assessee but based on some report of SFIO additions were made. 13. In the instant case, assessee has not only offered explanation regarding nature and source of credits but also substantiated the same with documentary evidences in the shape of ITRs, Confirmations and bank statements. Further, Ld. AO has not pointed out any discrepancy in the details furnished, rather has made addition solely on the basis of some investigations carried out in some other unrelated/ unknown parties, and it was alleged that the loans taken by assessee are bogus and accordingly addition was made u/s 68 of the Act. Apart from above investigation of some unknown parties there was no material available with the Ld. AO or referred to by him in the assessment order found as a result of search or gathered during the course of assessment proceedings in support of the impugned addition made by him. It is also a matter of fact that no re....
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....ttled position of law that there cannot be a review under the garb of reassessment proceeding under section 153A of the Act. Therefore, the proposed reassessment proceedings are absolutely in abuse of process of law, illegal and bad in law. The provisions of section 153A cannot be applied in respect of assessment which has already been completed unless some incriminating material/information comes into the possession/knowledge of the AO during the course of search proceedings. Since the assessment for the assessment year 2015- 16 was not pending as on the date of search and there is no incriminating material found or seized during the course of search, then the AO is bound to reassess the total income as it was assessed on the original return of income. Though the AO is legally bound to assess or reassess the total income of six years immediately preceding to the year of search, however, the assessments which are pending on the date of search gets abated and the assessments which were not pending on the date of search had attained the finality. Therefore, the addition over and above the assessed income cannot be made de hors the incriminating material found at the time of search wh....
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.... of initiation of search or making of requisition as the case may be, the assessment under section 153A would be in the nature of reassessment. The Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla while analyzing the provisions of section 153A read with section 132 of the Act has observed in para 37 and 38 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 place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYS immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYS will have to be computed by the AOS as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income....
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....the word "reassess" related to completed assessment proceedings. Therefore, the completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of document 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. This view is supported by the decision of Hon'ble Jurisdictional High Court in the case of M/s. Jai Steel India Ltd. vs. ACIT (supra). Even on the issue of addition made by the AO in the proceedings under section 153A in respect of the assessment year which was already completed on the date of search, the Hon'ble High Court has held that in the absence of any material which was subsequently unearthed during the search and was not already available to the AO, the additions made by the AO on account of security deposits were rightly deleted by the Id. CIT (A). The relevant observations of the Hon'ble High Court in case of Principal CIT vs. Meeta Gutgutia (supra) are in para 53 as under : "53. At this stage, it is....
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....t year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature this Section is that the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. This is significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the 'total income' of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. 20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, havi....
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....ed in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of hose six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in case where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee's total Income and such orders subsistig at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will r....
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....ing assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. 27. The Allahabad High Court in Smt. Shaila Agarwal's (supra) has held as under: "19. The second proviso to Section 153A of the Act, refers to abatem....
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....ds completed, only because a assessment under Section 153A of the Act in pursuance of search or requisition is required to be made." 18. The Id. CIT (A) thus following the legal proposition on this issue, accepted the Contention of the assessee and allowed the appeal of the assessee. The relevant part of the finding of the Ld. CIT (A) are as under: The present appeal concerns AY 2015-16. On the date of the search, the said assessment already stood completed u/s 143(3) of the Act, as discussed supra and the additions made by the AO u/s 143(3) r.w.s. 153A on account of loan obtained from M/s Gemini Commerce Pvt. Ltd. is without any reference to the seized material. Since no proceedings under the Income Tax Act were pending for AY 2015-16 as on the date of search, and accordingly scope of examination of issues in the assessment u/s 153A was required to be restricted to the incriminating material, if any, found as a result of search. It is observed that the addition is neither based on any single loose paper found/seized as also admitted by the AO in her remand report nor on any statement recorded during the course of search conducted in the case of the appellant which can be consid....
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....mention in the section that these assessments should be based on incriminating material found during the course of search. Further, even otherwise, if a return of income was filed u/s 139 of the Act, which was processed u/s 143(1)(a) of the Act and no assessment order was passed u/s 143(3)/144, the AO can made addition to the total income of the assessee in pursuance to notice issued u/s 153A even in the absence of incriminating material as the said processing/intimation u/s 143(1)(a) is not an assessment order as held by the Hon'ble Apex Court in the case of ACIT Vs Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316 (SC) and subsequently reiterated in Dy. CIT v. Zuari Estate Development & Investment Co. Ltd. [2015] 63 taxmann.com 177/[2016] 236 Taxman 1 (SC). Thus, in view of the above, it is submitted that if no scrutiny assessment u/s 143(3)/144 of the Act was made earlier, then the AO is duty bound to assess the total income of the assessee, whether it is based on incriminating material found during the course of search or on the basis of information available on record or comes to his notice during the assessment proceedings. Otherwise, in the case of assessee, i....
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....n gathered during the search should be of such nature that it should not be merely raise doubt or suspicion but should be of such nature which would prima facie show that the real and true nature of transaction between the parties for the definition of incriminating material. Further, ld. DR has placed on the following judgment in the case of Mani Square Ltd. vs. ACIT reported in 118 taxmann.com 452 (Kolkata Trib.). On the other hand the ld. AR for the assessee submits that the assessments were completed that the ld. AO and Pr.CIT has accepted the submissions made by the assessee and all the books of account were there for perusal, returns were filed and entire records was verified by the AO and ld. PCIT also. The ld. AR for the assessee submits that the evidentiary value should be supported with the Corroborative evidence, where the ld. DR cannot only relied upon the statements of Arpit Khandenwal and Harsh Agrawal as there is no corroborative evidence and the ld. DR contentions is full and totally incorrect During the assessment proceedings the ld. AO has passed a detailed order and recorded the submission made by the assessee and the AO has made the findings which is contrary an....
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....ax Appeals No. 502/2011 vide order dated 05.09.2017. Subsequently the SLP filed by the Revenue against the said judgment has been dismissed by the Hon'ble Supreme Court vide SLP No. 1646 of 2018. Whereas, the ld. DR has supported his submissions by the Hon'ble Supreme Court in the case of Bannalal Jat Constructions (P) Ltd. Vs. ACIT reported in (2019) taxmann.com 128 and in jurisdictional High Court decision in the case of Pr.CIT vs. Roshan Lal Sancheti in D.B. Income Tax Appeal No. 47/2018 dated 30.10.2018. We have noted that the facts of the case law relied upon by the ld. DR are on the facts difference with the case of the assessee. 22. The fact remains that the Revenue itself is not disputing that in respect of the unsecured loan taken by the assessee no incriminating documents were found in the search proceedings and the finding of the ld. CIT(A) on this very fact is not challenged before us in any of the grounds raised by the revenue. The requirement that the incriminating material to have the co-relation to the particular addition sought to be made is a logic that will hold good not only for Section 153 C of the Act but in relation to Section 153A of the Act as well. Conseq....