AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 10
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.... raised and hence, the grounds raised in ITA No. 499/Bang/2021 are reproduced below:- 1. On facts and in circumstances of the case, whether the Ld. CIT(A) is right in deleting the assessed income u/s. 153A, wherein section 153A empowers the 'AO to "assess" or "reassess" the income. 2. On facts and in circumstances of the case, whether the Ld. CIT(A) is right in not considering the fact that the Hon'ble High Court of Karnataka in the case of Canara Housing Development Co Ltd. vs DCIT held that "When once the proceedings are initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened". 3. On facts and in circumstances of the case, whether the Ld. CIT(A) is right in not considering the fact that the AO has to re-determine the total income of the assessee by considering all the additions made previously while completing the order u/s. 153A of the IT Act. 3. Similarly, common grounds are raised in CO Nos. 12 to 14/Bang/2021 and hence, the grounds raised in CO 12/Bang/21 are reproduced as under:- 1. The order of the learned Commissioner of Income-tax [Appeals] in so far as it is against the Respondent/....
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....-tax [Appeals] failed to appreciate that before issuing a notice under section 153A of the Act, an inference of liability ought to have been recorded based on the materials seized during the course of search which are said to be incriminating in nature and in the absence of incriminating materials or in the absence of such recording, no notice under section 153A of the Act should have been issued on the facts and circumstances of the case. 7. Without Prejudice the Respondent/Cross Objector denies itself liable to be assessed over and above the total income reported by the Respondent/Cross Objector of Rs. NIL/under the facts and circumstances of the case. 8. The learned Commissioner of Income-tax [Appeals] failed to appreciate that centralization of case of the Respondent/Cross Objector from regular circle to Central Circle is without proper jurisdiction and the order of assessment passed under section 153A r.w.s. 143[3] of the Act is without jurisdiction on the facts and circumstances of the case. 9. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Responde....
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....ng and seizure of incriminating material during the search conducted in the premises belonging to the appellant. The appellant has argued that consequently centralization of its case is also invalid. Further the material relied upon to make the addition was not found in any premises belonging to the appellant but alleged to have been found during the course of a survey proceeding u/s. 133A of the Act in a premise not belonging to the appellant and not connected to the appellant. Thus, the appellant contends that initiation of proceedings u/s. 153A is incorrect and invalid. 9. The appellant has also objected to the notice under section 143(2) of the Act dated 17/05/2018 since it does not contain the date of return of income filed by the appellant and states that the said notice was issued to the Principal Officer which is also bad in law. The appellant states that under section 143(2) ought to have been issued to the appellant M/s. Gokula Education Foundation (Medical). Further the notice issued is not as per the prescribed format as per Notification No. F. No. 225/157/2017/ITA II dated 23/06/2017. Consequently no valid mandatory notice under section 143(2) has been issued to the ....
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....needs to necessarily belong to the appellant. Any premises which the investigating authorities opine may contain material etc pertaining to the appellant can be searched u/s. 132 or subjected to survey u/s. 133A. Thus, the objection on the ground that the material relied upon to initiate proceedings u/s. 153A was not found in the premises belonging to the appellant and therefore no proceeding can be initiated u/s.153A is untenable and is therefore rejected. 14. Further the objection that the notice issued u/s. 143(2) is defective as it is not in the prescribed format, that notice was not drawn up on the appellant but on a person other than the appellant and that it also does not specify the return of income which is proposed to be assessed cannot be the basis of declaring it as null and void. The defects, if any, pointed out by the appellant are curable in nature and does not vitiate the assessment proceedings by virtue of the provisions of section 292BB of the Act. This objection is also rejected. 15. The appellant has also questioned the validity of the very warrant of authorisation of search. The explanation to section 132(1), does not empower the CIT(A) to look into this is....
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....e in earlier assessment proceedings being repeated and the same has resulted in duplicity of additions and duplicity of demand as these additions have been made substantively. The interest of the department is not in any way disturbed on these issues as the original assessments are in various stages of appeal for the respective assessment years. 22. The jurisdictional Hon'ble High Court of Karnataka in the case of Canara Housing Development Co Ltd. vs DCIT 48 Taxmann.com 98 has said that in the case of a person searched and whose assessments are to be initiated and completed u/s. 153A of the Act, it is expressly provided that the Assessing Officer shall assess or reassess the "total income" of six assessment years which means the said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. If the Commissioner has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furnished to the assessing authority and the assessing authority shall take note of the said income also in d....
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....return has been filed, the entire income shall be regarded as undisclosed income. Consequently, AO would have the authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). No requirement to restrict to documents found during the course of search. 2. Return of Income just filed by the assessee - return yet to be processed u/s 143(1) - Time limit for issue of notice u/s 143(2) not expired. Since return filed is even pending to be processed, the return would be treated as pending before the AO. Consequently, AO would have authority/jurisdiction to assessee the entire income, similar to jurisdiction in regular assessment u/s 143(3). 3. Return of Income filed by the assessee - return processed and intimation issued u/s 143(1) - Time limit for issue of notice u/s 143(2) not expired. Since intimation is not akin to assessment and time limit for notice u/s 143(2) hs not expired, even though return has been processed, it will be case where return has not attained finality. Consequently, AO would have authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). 4. Return of income filed ....
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....assessment (ii) undisclosed income of property disclosed in the course of search. The argument of the Ld. A.R. is that in these assessment years, there were no seized material none the less incriminating materials to frame the assessment u/s. 153A of the Act and there is no necessity of framing any assessment u/s. 153A of the Act. On the other hand, Ld. D.R. submitted that AO has not made any addition in these assessment years. He only reinstated the income what is assessed u/s. 143(3) of the Act. In these cases, the AO framed the assessment u/s. 153A of the Act as he framed the assessment u/s. 143(3) of the Act, which can be seen from the following table. Assessment year Income determined by AO in assessment order passed u/s. 143(3) of the Act Income determined by AO passed u/s. 153A of the Act 2011-12 8,33,22,427/- 8,33,22,427/- 2012-13 53,65,39,688/- 53,65,39,688/- 2013-14 29,91,29,660/- 29,91,29,660/- 7.3. As seen from above, there is no change in the total taxable income as computed u/s. 143(3) of the Act and section 153A of the Act in these assessment years. Further, Hon....
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....s which amount to double taxation of same income. We make it clear that the department cannot enforce both the demands, which is created vide assessment u/s. 143(3) of the Act and assessment framed u/s. 153A of the Act. As held by Hon'ble Delhi High Court in the case of Kabul Chawla cited (supra), department has to ensure the enforcement of only one demand created consequent to the search action and framing of assessment u/s. 153A of the Act and we direct accordingly. 7.6. In the result, the department's appeals in ITA Nos. 499, 500 & 501/Bang/2021 are dismissed and COs filed by the assessee in CO Nos. 12 to 14/Bang/2021 are dismissed as infructuous. ITA Nos. 508 & 509/Bang/2021 & CO Nos. 15 & 16/Bang/2021: (A.Y. 2014-15 & 2017-18) 8. Now we will take up ITA Nos. 508 & 509/Bang/21 CO Nos. 15 & 16/Bang/21 for adjudication for the AYs 204-15 & 2017-18 respectively. 9. The revenue has raised common grounds of appeal in ITA No. 508/Bang/2021 & 509/Bang/2021 for the A.Y. 2014-15 & 2017-18, which are as follows: 1. "Whether CIT(A) is justified in holding that assessment order passed in case of assessee in status of AOP is bad in law as correct status of assessee would be AO....
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....53A is null and void-ab-initio on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajith Jain, reported in 260 ITR 80. iii. The learned authorities below have not discharged the burden of proving that there is a valid initiation of search under section 132[1][a], [b] & [c] of the Act, its execution and its completion in accordance with taw to render the proceedings valid and to assume jurisdiction to make an assessment under section 153A of the Act. 4. Without prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153A of the Act on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajit Jain, reported in 260 ITR 80 and also reliance is placed on the decision of the Hon'ble Karnataka High Court in the case of C. Ramaiah Reddy Vs. DCIT, reported in 339 ITR 210. 5. Without further prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that the order of assessment passed by the learned assessing officer is bad in law as the mandatory conditions to invoke the jurisdiction u/s....
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....ged above. 12. In view of the above and other grounds that may be urged at the time of hearing of the Cross Objection, your Respondent/Cross Objector humbly pray that the Cross Objection may be allowed in the interest of equity and justice." 11. First, we will address ground No. 3 in revenue's appeals:- 11.1. Facts of the case in AY 2014-15 are that the AO made an addition of Rs. 4,65,00,000/- under the terminology 'Unaccounted Fees Received in Cash'. The said addition was made based on certain notings found in page 4 of impounded material labelled as GEF(M)/133A/5 which are loose sheets as, holding the same to be fees received in cash. It is the case of the AO that the assessee collected these amounts mentioned against the names of the persons mentioned therein by way of fees and has not accounted the same in its books of accounts. The AO has in the assessment order relied upon the statements of Mr. D.V. Guruprasad which are found at pages 11, 12 and 13 of the assessment order and which are reproduced below, for the sake of convenience:- "2.2.3. A statement under oath of Shri. D V Guruprasad, CEO of Gokula Education Foundation (Medical) was also recorded on 26.08....
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.... Varsha 75, 00,000 Jeria 1,85,00,000 Sujata 1,25,00,000 Poornima 80, 00, 000 4,65,00,000 Ans: I think the name Ashok D. R represents our former principal of MSR Medical college Dr. Ashok, who resigned about 9-10 months back. The other names I do not recollect now. 22. Please go through the list of students for NRI/IP PG admission for the academic year 2013-14. The above four names "Varsha", "Jeria", "Sujatha" and "Poornima" are appearing in the list. Now, please confirm that whether names appearing on the page 4 of the referred impounded document are same as appearing in serial number 2, 8, 12, 21 in the said list. Ans: It looks to be the same. 23. Now, in the said list the fee fired for the above-mentioned students are Rs. 10 lacs, 15 lacs, 40 lacs, 105 lacs, whereas in your noting. figures are Rs. 75 lacs, 185 lacs, 125 lacs and 80 lacs respectively for the four students. Please explain. Ans: It is apparent that there are discrepancies between fees fixed for these four students and the amount written with their name in the page 4 of the referred impounded document. But I don't remember whether anybody explained me the reason for higher figures as men....
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.... in the case of CBI vs VC Shukla (1998) 3 SCC and Common Cause (A Registered Society) and Others vs Union of India in Writ Petition Civil Appeal No. 505 of 2015 reported in 394 ITR 220(SC). Therefore, one is constrained from sustaining an addition so made without necessary corroborative evidence in view of the decisions of the Hon'ble Supreme Court cited supra. In view of the above facts, Ld. CIT(A) observed that addition of Rs. 4,65,00,000/- made for AY 2014-15 is found to be unsustainable. Against this revenue is in appeal before us. 11.4. We have heard the rival submissions and perused the materials available on record. In this regard, as held by Hon'ble Supreme Court in the case of Kishinchand Chellaram Vs. CIT 125 ITR 713 (SC), wherein it was held that "evidence collected from the witness cannot be considered without giving an opportunity of cross examination to the assessee". In the aforesaid case the Hon'ble Supreme Court held as under:- "Held, reversing the decision of the High Court, (i) on the facts, that the two letters dated February 18, 1955, and March 9, 1957 did not constitute any material evidence which the Tribunal could take into account for the pur....
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....e would observe here that which way lies the truth in Shri Sukla's depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right to cross-examine a witness adverse to the assessee is an indispensable right and the opportunity of such cross-examination is one of the corner-stones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re-examination, if necessary. 9. It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on A....
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....ative instance of gross profit rate but it is also necessary for the Department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit. Again, it is the comparative instance that alone can be the foundation of such estimate in case the accounts are really found to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result we decline to answer the question." 11.6. The Delhi Tribunal in Vijay Kumar Aggarwal v. ACIT 2017 (5) TMI 1354 held that it is clear that the presumption of facts u/s. 292C of the Act is not a mandatory or compul....
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....y any corroborated evidence. In such circumstances, we are not in a position to uphold the addition made on that basis. Accordingly, the Ld. CIT(A) is justified in deleting the addition. The order of the Ld. CIT(A) on this issue is confirmed. 12. Next ground is with regard to deletion of addition of Rs. 12.25 crores. Facts of the case are that Ld. CIT(A) in his detailed order stated that the AO has relied upon the notings in page no. 3 of impounded material GEF(M)/133A/05 which are loose sheets as seen in para 23 page 19 of assessment order and the answers given to Q. No. 28 & 29 by Mr. D.V. Guruprasad in his statements recorded on 26/08/2016, which are reproduced below: 27. Please go through the contents of Page No. 3 of impounded document GEF(M)/133A/05 which has the following notings and explain the same. Total R DU 7,00,00,000 PU 5,25,50,000 Ashok 4,65,00,000 Total 16,90,50,00 0 Total P Ramchan 2,50,00,000 Chair - 1 2,00,00,000 Chair - 2 2,64,00,000 Chair - 3 5.24.00,000 12,38,00,000 Hand 4,52,50,000 To Pritam 50,00,000 Ans: I do not recollect at this stage under what circumstances I made this notings in the above said page and what it represents.....
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....e in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said, that the rule as laid down in Section 34 of The Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts." 12.2. Further, Ld. CIT(A) observed that ....